Good morning.
Commodity markets are mixed to start Thursday in what has been a fairly active overnight trading session. Ag’s are fairly quiet with the grains again trading either side of unchanged, while soybean futures extend their rally into a fourth day; markets including energies, metals and equities have all seen active, wide-ranging trade though to begin the second to last trading day of the week. The CBOT continues to be a case of push and pull as managed money/spec traders continue to cover shorts, while the US farmer/elevator is hedging off newly harvested grain. Question going into the weekend is whether there will be enough buying to sustain this week’s rally another two days, or if hedge pressure will take over and knock values lower by the end of the day on Friday. Corn futures this morning are trading around a penny lower, soybean futures are trading 6-8 cents higher, and the Chicago wheat market is trading 4-5 cents higher. Products are in the green, soybean meal is up $1-2/ton, and soybean oil is up 40-60 points. Outside markets are mixed, crude oil futures are down $1.80-1.90/bbl, the Dow Jones index is up 170 points, and the US$ index is down 20 points. The S&P500 is up 50 points, and the NASDAQ is up 290 points. Metals are again higher, with gold making new contract highs for the fifth consecutive trading session.
This morning’s weekly export sales report for the week ending September 19th is expected to show corn sales in a range of 600k-1.3 mil mt’s, soybean sales in a range of 900k-2.0 mil mt’s, and wheat sales in a range of 200k-600k mt’s. On average, the corn sales would be up slightly from last week while soybean sales would be down slightly.
According to a regional port terminals association in Brazil, the Madeira River has reached water levels of around just 2 meters in some places, which has halted grain shipments. The river is a crucial artery for getting crops to Brazil’s northern ports; last year, some of 34% of the country’s soy exports and roughly 43% of the corn exports were shipped through northern ports.
Officials do not expect any significant impact on exports however, as farmers have already shipped most of their 2023/24 crops. Sources also say exporters in the northern region had been prepared for this, as traders in this region “work with a very high level of precaution.”
European ag consultant SovEcon said in a report that only about 8.3 mil hectares of winter grains have been seeded so far in Russia, which is down nearly 1 mil hectares from last year and is the slowest seeding pace since 2013. Western Russia has received less than 20% of normal rainfall over the past 30 days, which has led to the delays.
Similarly in Ukraine, winter grain seeding has reached just 944,500 hectares, compared to 1.1 mil as of this time last year. The ag ministry says seeding is ongoing in ‘all Ukrainian regions’, but here too moisture over the last 30 days has been just a fraction of normal.
Officials in Australia say severe frosts have potentially impacted the country’s wheat crop, as temperatures fell to 28 degrees F over the past month on nearly 1.2 mil hectares of wheat. The extent of the damage is unknown at this point, with estimates ranging anywhere from a 10% to 60% loss on an area that was expected to produce nearly 3.3 mil tons of wheat. Total wheat production in Australia is estimated at 31.8 mil tons.
The US National Grain and Feed Association, along with roughly 55 other trade groups, sent a letter to the Biden administration on Wednesday urging him to avert a potential port strike along the Gulf and east coasts of the US. Ports in these areas handle roughly 40% of all containerized US ag exports, according to the letter, meaning a labor strike during harvest would have major impacts.
The USDA, in its September food price outlook, lowered its estimate for retail food inflation in 2025 from 2% to 1.6%, while also lowering its estimate of 2024 inflation from 2.3% to 2.2%. A 1.5% drop in the fats/oils category accounted for most of the 2025 decline.
US poultry slaughter in the month of August fell to 5.96 bil lbs., which was down nearly 4% from the same month last year. Cumulative slaughter through the month of August was seen at 46.236 bil lbs., which is down just 0.2% from last year.
Crude oil futures are lower again this morning and have lost more than 5% over the past two sessions, as a Financial Times article reported that Saudi Arabia was ready to abandon its unofficial $100/bbl price target in order to regain market share; this would mean an increase in production.
Stock index futures are trading higher again this morning as officials in China continue to pump out new stimulus measures to help the country’s beleaguered economy; President Xi Jinping overnight called for sufficient fiscal spending measures to stabilize the country’s property sector, as well as “forceful” rate cuts.
In the US, the data slate is packed today and pre-recorded comments from Fed Chair Jerome Powell are set to be released this morning; the trade is curious whether Powell will mention anything about future monetary policy, and whether he thought further rate cuts were likely by the end of the calendar year.
Hurricane Helene continues to churn in the Gulf, while overnight updates were mostly minimal. Models are seeing better confidence in a westward curl to the storm as it gets into TN/KY – a shift that was picked up on yesterday. Otherwise, no changes as far as expected strength/location/timing of the storm’s landfall.
The EU model still sees Helene providing rainfall further north and west of what the GFS sees, but both have picked up on the previously mentioned westerly curl that will see rains back further to the west than was originally expected. Models see rainfall amounts ranging anywhere from 1″ to 10″ through the southeast.
Forecast changes for the Midwest were otherwise minimal overnight. Week-two outlooks continue to be dry, while temps will continue to stay warmer in the west and cooler in the east into the first part of next week.
Rinse and repeat for South American rainfall over the last 24 hours; satellite data continues to show steady rains in Brazil’s south and into Uruguay, while spotty showers dotted the north, and the rest of the country was dry. Forecast runs continue to offer a pattern change for the second half of October but are lessening their wetter bias of late.
This will need monitoring, as concern will begin growing beyond October 15th. As we’ve mentioned recently, it is still just too early to get overly concerned with the bulk of Brazil’s soybean planting in a normal year occurring during the month of October.
Have a great day.
Grain Comments: 09-26-2024
Good morning.
Commodity markets are mixed to start Thursday in what has been a fairly active overnight trading session. Ag’s are fairly quiet with the grains again trading either side of unchanged, while soybean futures extend their rally into a fourth day; markets including energies, metals and equities have all seen active, wide-ranging trade though to begin the second to last trading day of the week. The CBOT continues to be a case of push and pull as managed money/spec traders continue to cover shorts, while the US farmer/elevator is hedging off newly harvested grain. Question going into the weekend is whether there will be enough buying to sustain this week’s rally another two days, or if hedge pressure will take over and knock values lower by the end of the day on Friday. Corn futures this morning are trading around a penny lower, soybean futures are trading 6-8 cents higher, and the Chicago wheat market is trading 4-5 cents higher. Products are in the green, soybean meal is up $1-2/ton, and soybean oil is up 40-60 points. Outside markets are mixed, crude oil futures are down $1.80-1.90/bbl, the Dow Jones index is up 170 points, and the US$ index is down 20 points. The S&P500 is up 50 points, and the NASDAQ is up 290 points. Metals are again higher, with gold making new contract highs for the fifth consecutive trading session.
This morning’s weekly export sales report for the week ending September 19th is expected to show corn sales in a range of 600k-1.3 mil mt’s, soybean sales in a range of 900k-2.0 mil mt’s, and wheat sales in a range of 200k-600k mt’s. On average, the corn sales would be up slightly from last week while soybean sales would be down slightly.
According to a regional port terminals association in Brazil, the Madeira River has reached water levels of around just 2 meters in some places, which has halted grain shipments. The river is a crucial artery for getting crops to Brazil’s northern ports; last year, some of 34% of the country’s soy exports and roughly 43% of the corn exports were shipped through northern ports.
Officials do not expect any significant impact on exports however, as farmers have already shipped most of their 2023/24 crops. Sources also say exporters in the northern region had been prepared for this, as traders in this region “work with a very high level of precaution.”
European ag consultant SovEcon said in a report that only about 8.3 mil hectares of winter grains have been seeded so far in Russia, which is down nearly 1 mil hectares from last year and is the slowest seeding pace since 2013. Western Russia has received less than 20% of normal rainfall over the past 30 days, which has led to the delays.
Similarly in Ukraine, winter grain seeding has reached just 944,500 hectares, compared to 1.1 mil as of this time last year. The ag ministry says seeding is ongoing in ‘all Ukrainian regions’, but here too moisture over the last 30 days has been just a fraction of normal.
Officials in Australia say severe frosts have potentially impacted the country’s wheat crop, as temperatures fell to 28 degrees F over the past month on nearly 1.2 mil hectares of wheat. The extent of the damage is unknown at this point, with estimates ranging anywhere from a 10% to 60% loss on an area that was expected to produce nearly 3.3 mil tons of wheat. Total wheat production in Australia is estimated at 31.8 mil tons.
The US National Grain and Feed Association, along with roughly 55 other trade groups, sent a letter to the Biden administration on Wednesday urging him to avert a potential port strike along the Gulf and east coasts of the US. Ports in these areas handle roughly 40% of all containerized US ag exports, according to the letter, meaning a labor strike during harvest would have major impacts.
The USDA, in its September food price outlook, lowered its estimate for retail food inflation in 2025 from 2% to 1.6%, while also lowering its estimate of 2024 inflation from 2.3% to 2.2%. A 1.5% drop in the fats/oils category accounted for most of the 2025 decline.
US poultry slaughter in the month of August fell to 5.96 bil lbs., which was down nearly 4% from the same month last year. Cumulative slaughter through the month of August was seen at 46.236 bil lbs., which is down just 0.2% from last year.
Crude oil futures are lower again this morning and have lost more than 5% over the past two sessions, as a Financial Times article reported that Saudi Arabia was ready to abandon its unofficial $100/bbl price target in order to regain market share; this would mean an increase in production.
Stock index futures are trading higher again this morning as officials in China continue to pump out new stimulus measures to help the country’s beleaguered economy; President Xi Jinping overnight called for sufficient fiscal spending measures to stabilize the country’s property sector, as well as “forceful” rate cuts.
In the US, the data slate is packed today and pre-recorded comments from Fed Chair Jerome Powell are set to be released this morning; the trade is curious whether Powell will mention anything about future monetary policy, and whether he thought further rate cuts were likely by the end of the calendar year.
Hurricane Helene continues to churn in the Gulf, while overnight updates were mostly minimal. Models are seeing better confidence in a westward curl to the storm as it gets into TN/KY – a shift that was picked up on yesterday. Otherwise, no changes as far as expected strength/location/timing of the storm’s landfall.
The EU model still sees Helene providing rainfall further north and west of what the GFS sees, but both have picked up on the previously mentioned westerly curl that will see rains back further to the west than was originally expected. Models see rainfall amounts ranging anywhere from 1″ to 10″ through the southeast.
Forecast changes for the Midwest were otherwise minimal overnight. Week-two outlooks continue to be dry, while temps will continue to stay warmer in the west and cooler in the east into the first part of next week.
Rinse and repeat for South American rainfall over the last 24 hours; satellite data continues to show steady rains in Brazil’s south and into Uruguay, while spotty showers dotted the north, and the rest of the country was dry. Forecast runs continue to offer a pattern change for the second half of October but are lessening their wetter bias of late.
This will need monitoring, as concern will begin growing beyond October 15th. As we’ve mentioned recently, it is still just too early to get overly concerned with the bulk of Brazil’s soybean planting in a normal year occurring during the month of October.
Have a great day.
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