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Grain Comments: 09.28.23

Liquidation of weak long positions weighed on overnight trade with corn 1-2 cents lower, soybeans down 8-10 cents, and wheat 1-2 cents lower. The US dollar was lower while energies and equities were mixed.

 

Today’s Reports: Export Sales, Hog and Pig Report, GDP

 

  • WTI crude 13-month high
  • 10-year treasury note yield over 4.6%
  • Government shut down appears likely

 

Once again trade will be heavily vested in today’s export sales report. Cumulative export sales of corn, soybeans, and wheat all remain underneath trade expectations. This is one of the primary reasons we have not seen more reaction to recent daily sales when announced. The string of daily sales we had earlier in the month have also slowed down and become much less of a factor in daily price discovery. While there is time for demand to improve, the fact South America is selling inventory for the fall months when the US normally dominates global trade is concerning. If nothing else this will narrow the window for US sales between South American crops. The approaching deadline to avert a government shut down is also starting to have more of an impact on trade in all markets. If the US government shuts down, we will not receive our normal string of reports which tend to drive our markets. As a result, markets tend to quiet down. While the quarterly stocks data will still be released tomorrow, next week’s reports are in question. Not only will the stocks numbers be released tomorrow, but it is also month and quarter end which will elevate positioning for the next two sessions.

 

Highlights

* 2024 world food inflation est 2.2%

* Previous estimate was 2.8%

* 2023 food inflation was 5.8%

* Biggest food cost decline was vegetable oil

* Weekly ethanol production +203,000

* Weekly ethanol stocks +367,000

* Fossil fuel use to fall 25% by 2030

* Fossil fuel demand could be minimal by 2050

* Sep 1st stocks data tomorrow at 11:00 AM CT

* Tomorrow FND on October contracts

 

Corn

* Weekly corn use for ethanol 100 mbu

* Fund corn short largest since Aug 2020

* Funds have room for more selling

* Feed demand being questioned

* Wheat agai9n being used in rations

 

Soybeans

* Brazil planting faster than normal

* Funds trim long position

* Sep crush margins a 2-month low

* Soy oil is 43% of crush margin

* Oil value 3-month low in crush return

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