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Grain Comments: 09.21.23

Renewed concerns over the long-term picture of the US economy weighed on overnight trade. Corn futures were 2 to 3 cents lower, soybeans were down 12-15 cents, and wheat was 2-4 cents lower. The US dollar was higher, equities lower, and energies mixed.

 

Today’s Reports: Export Sales, Jobless Claims

 

  • Fed leaves interest rate unchanged
  • Fed indicates rates will remain higher for a longer period
  • Cash flow impacting Argentine power supply

 

Market attention is starting to shift from being mostly focused on production to showing more interest in the demand side of balance sheets. This is not uncommon as harvest starts to take place and pipeline reserves start to fill. Export demand for the 2022/23 marketing year was less than expected and it now appears the same may be true for the current marketing year. This is especially the case on corn. Total corn demand for the 2023/24 marketing year is projected at 14.39 billion bu, an increase from last year of 695 million bu. Of this elevated demand, 385 million bu is to exports. Our current export pace on corn is down 12% from last year and sales are down 5%. These are both well below trade expectations and suggest the USDA is too high in their yearly estimates. The same scenario is taking place in soybeans where loadings are down 11% on the year. There is less concern on soybean balance sheets though as the stocks to use on that commodity is much tighter. Until these deficiencies are corrected trade may be slow to react to export data, including today’s sales report.

 

Highlights

* Dredging continues on US rivers

* Farmers letting crops dry in fields

* Optimism on Chinese economy record low

* Renewable fuel demand remains strong

* Weekly ethanol production -413,000 barrels

* Ethanol production hit a 4-month low

* Weekly ethanol reserves +510,000 barrels

* Blender credit demand lowest in 30 months

* Global import trade slowing

* Importers back to hand to mouth

 

Corn

* Weekly corn use for ethanol was 98 mbu

* Use needs to average 104 mbu to meet projections

* US pipeline starting to fill

* Brazil corn area needs rain

* Ukraine exports larger than thought

 

Soybeans

* Export demand on US offers slows

* Crush demand record high

* Southern US harvest filling pipeline

* Analysts starting to question 22/23 crop size

* US Sep 1st stocks est tightest in 7 years

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