Written Commentary
The Ghost in the Machine Q3 2023
September 19, 2023
SOYBEANS
Soybeans traded lower. Demand concerns and long liquidation continues to drive futures lower. 2 week US Midwest forecast call for below normal rains but normal temps. Continued slow US weekly soybean exports is weighing on futures. Cash soybean values remain strong and over delivery prices. USDA rated the US soybean crop 68 pct G/E. Highest rated crops are in IA, AR, TN and SD. Lowest is MN, NE, ND, IL, MO and OH. June 30 USDA will est US soybean acres and June 1 stocks. Analyst estimate US soybean acres up 1.0 from USDA March est. Stocks could be near 970 mil bu vs 769 last year. Dalian soybean, soymeal, soyoil and palmoil continues to slide lower on demand concerns. Matif and Canada rapseed futures also are lower. Lower soyoil futures are also weighing on soybean future. SU traded below the 100 DMA and is becoming oversold. BOU and Matif rapeseed are back to near early April lows.
CORN
Corn futures closed mixed. Strong domestic cash basis helped CN end near 7.68. Slow US export demand and concern higher inflation will lower global food and fuel demand weighed on CU to near 7.02. CZ dropped to near 6.93 in part due to 2 week Midwest benign temperature forecast. Rainfall may be lower than normal. USDA rated the US corn crop 70 pct G/E. Highest rated crops are in IA and SD. Lowest is MN, NE and OH. June 30 USDA will est US corn acres and June 1 stocks. Analyst estimate US corn acres either down 1.0 or up 1.0 from USDA March est but still below last year. Stocks could be near 4,320 mil bu vs 4,111 last year. CU is under demand value with next 30 days of US Midwest weather key for next 12 months price direction. Some weather watchers look for July US Midwest weather to be warmer and drier than normal. WSJ reported that Russian forces targeted at least two large North American owned grain terminals in the Ukrainian port of Mykolaiv on Wednesday. This may be part of what Kyiv and Western governments say is a campaign to degrade Ukraine’s ability to export food.
WHEAT
Wheat futures have seen a steep drop in prices since their mid May highs. Slow demand for US exports and ongoing rumors that a deal will be made to open Ukraine exports and increase in Russia wheat crop and exports weighed on prices. Speculators also liquidated long positions on weak technical price action. Some Managed funds were forced out of grain longs due to steep losses in stocks and energies. US winter wheat harvest is 25 pct. KS yields are near USDA estimate. KS protein is higher than last year. Futures continue to trade headlines which adds to volatility. Talk of increase Ukraine exports may be unfounded. Matif fell to further losses and a 9-wek low close, despite the recovery in the US. Reports of a 20-year low yield for Indian wheat would give a crop of just 80 mmt, or 26 mmt below the USDA. Russia cannot get forward sales on the books due to Ruble strength and difficulty to get freight or insurance.
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