Written Commentary
The Ghost in the Machine Q3 2023
September 19, 2023
MORNING OUTLOOK
US Fed day. Grains are quietly mixed to higher. SN is unch and near 16.30. SX is near 14.78. SMN is near 425.6. BON is near 80.56. CN is up 2 cents and near 7.95. CZ is near 7.36. WN is up 9 cents and near 10.54. KWN is up 11 cents and near 11.04. MWN is up 8 cents and near 11.63.
US stocks are mixed. Crude is higher. US Dollar is mixed. Trade assumes US Fed will increase rates 50 basis points. Key will be if they look for more increases. India and Australia raised rates. EU proposing to ban Russia energy imports by the end of the year. Proposal also includes removing Russian Banks including Sberbank from SWIFT. Proposal would include massive aid to Ukraine and fast track EU membership.
China is on holiday. Key USDA report is May 12. US Midwest 7 day forecast is wet. Following week could be warmer and drier. US north plains and east Canada prairie forecast is wet. US corn crop will be planted late. C Brazil is dry. Talk of higher
Soybeans futures have dropped to 4 week low on declining open interest. SMN lowest since January. Canada canola futures at 3 week low. Trade longs evening up before Feb meeting and next week’s USDA report. Trade is looking for USDA to lower South America soybean supply and raise US soybean demand and lower US 2021/22 carryout. Most also look for a lower US 2022/23 soybean carryout. SN is below both the 20 DMA and 50 DMA and becoming oversold.
Corn futures have dropped to 1 week low on declining open interest. Trade longs evening up before Feb meeting and next week’s USDA report. Trade is looking for USDA to lower South America corn supply and raise US corn demand and lower US 2021/22 carryout. Most also look for a lower US 2022/23 corn carryout. Key could be USDA first estimate of US 2022 corn yield. USDA will have to deal with impact Ukraine war will have on USDA 2022/23 trade matrix. Some estimate Ukraine crop acres down 33 pct with 30 pct crops planted to date.
Wheat futures have dropped to 4 week low. Trade longs evening up before Feb meeting and next week’s USDA report. Increase central rains have also weighed on what futures. Next week looks drier. USDA could increase US 2021/22 wheat carryout due to lower exports. Key to 2022/23 US wheat carryout could be USDA first estimate of US 2022 wheat crop with WW ratings lowest since 1996 and wet weather delaying US spring wheat planting. USDA will have to deal with impact food and fuel inflation and Ukraine war will have on USDA 2022/23 wheat trade matrix.
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