Monthly Archives: September 2024

30 September 2024

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  • HEADLINES: USDA September 1 stocks report bullish corn, neutral wheat, and soybeans; Chicago close is Important.
  • Chicago grain futures are mixed at midday with corn/wheat futures higher while soybean futures sag post the USDA September Stocks and Final small grains report. The surprise of the report was USDA September 1 corn stocks at 1,747 million bu which was down around 100 million from trade expectations. June-August corn feeding/residual was larger than expected. NASS kept the 2023 US corn yield at a record large 177.3 bushels/acre with soybeans at 50.6 bushels/acre. Very modest adjustments were made to old crop production through the adjustment of harvested acres. US 2023/24 corn stocks were supportive, but wheat and soybean end stocks were at trade forecasts.
  • The UDSA estimated 2023/24 US corn end stocks at 1,760 million bu, up 400 million from last year. The fourth quarter corn feeding use rate is adjusted up to 849 million bu, up 115 million from last year.
  • The Q4 US corn feed/residual use rate would be the largest since 2019 which would drop old crop stocks/use ratio to 11.8%. We note that the upside for December corn based on the report is $4.25-4.30 and we see March corn above $4.45/bu and December 2025 corn above $4.60 as offering a new sales opportunity. Of the September 1 US corn stocks total, 780 million bu were stored on farm, up 29% from last year with off farm stocks being 980 million bu, which was up 30% from a year ago. The percentage of corn that was held on and off farm did not change from a relative percentage basis from last year.
  • US September soybean stocks at 342 million bu were up 29% from last year with off farm stocks being 231 million bu or up 20% while on farm stocks at 111 million bu was up a huge 11%. US farmers were holding more soybeans on farm on September 1 than any time since 2019. These old crop soybean stocks on farm will add to the farm storage glut that will develop later this autumn. We calculate June-August US soybean residual at a negative 83 million bu. This compares to -119 million bu (negative) last year and -85 million bu (negative) in 2022/23. We note that US 2023/25 soybean end stocks of 342 million bu are the largest since 2020/21 when final US soybean end stocks were 515 million bu.
  • The US soybean market is holding based on the post report rally in corn/wheat. Our analysis of Chicago soybean futures is that rallies to $11-11.20 March soybean futures will be laboured unless adverse S American weather worsens during the last half of October. The upside potential in soybeans/soymeal appears limited. Private crop estimates will be released in the coming days which will direct price into the USDA October 11 Crop report.
  • NASS’s wheat data leans supportive in that final all-wheat production was trimmed slightly and Jun-Aug feed/residual use is up slightly year on year. Final all-wheat production is pegged at 1,971 million bu, down 11 million from August. HRW production was reduced 5 million to 770 million bu. SRW production was left unchanged at 342 million. HRS production was raised 4 million to 503 million bu. Soft white production was lowered 7 million bushels.
  • 2024/25 beginning stocks were trimmed a modest 6 million to 696 million bu, vs. 702 million bu previously. Sep 1 US wheat stocks totalled 1,985 million bu, vs. 1,767 million bu a year ago. Jun-Aug wheat disappearance is calculated at 710 million bu, vs. 642 million a year ago. Feed/residual use is estimated at 242 million, vs. 240 million bu, but the jump in first quarter consumption was largely a function of expanded export demand.
  • 2024/25 US wheat end stocks are expected to be lowered to 795-800 million bu, vs. WASDE’s estimate of 828 million in September. It is not a dramatic change, but the trend in the US wheat balance sheet has been one of tightening, not loosening. Wheat market focus shifts back to Black Sea weather and Russian fob prices.
  • Major surprises were absent, but the relative tightening of US corn and wheat supply and demand keeps upside potential intact nearby. It is soy that lacks a story assuming regular rain begins to fall in Northern Brazil mid-October onward. The midday GFS weather forecast is hot/arid in central and northern Brazil through Oct 8 before better rain chances expand throughout Northern Brazil. December 2025 corn above $4.70 and November 2025 soybeans above $11.25 will be difficult to sustain.

20 September 2024

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  • Chicago mixed at midday with row crops under harvest pressure; GFS midday weather forecast takes a hurricane into NOLA on Sept 28 (confidence low).
  • The Gaza war appears to be broadening with Israel’s attack on Lebanon overnight. The energy markets have failed to sustain an initial rally, but a broadening Mideast war must be monitored in terms of crude oil supplies and supply chains in general. World freight rates are back rising adding cost to importers and end users.
  • The International Grains Council (IGC) lowered their world wheat production estimate to 798 million mt, down 1 million amid a cut of the EU soft wheat production to 122 million mt while raising Australia to 31.8 million mt. World corn production was lowered 2 million to 798 million mt as EU corn production was cut 59.8 million mt. This was a downward revision from 61.4 million last month.
  • Chicago grain futures are mixed at midday with harvest hedge/chart selling pressuring row crop futures while wheat values rally following a weeklong decline. The wheat price bounce appears to be short covering ahead of the weekend amid uncertainty surrounding the Russian war against Ukraine. And private analysts are trimming 2024 Russian wheat (and total) crop estimates on late harvests due to excessive rains across Siberia. The Russian Government has declared 5 crop areas as emergencies due to excessive rainfall which has produced widespread flooding. The area impacted is estimated to contain 1.1 million acres of crops. Spring wheat harvests are being degraded to feed, but this area does not have large livestock herds, and the grain must be transported east. Talk is growing that the final 2024 Russian wheat crop will end up between 79.5-81.5 million mt. This will trim Russian 2024/25 wheat exports to under 45 million mt. We look for a firm wheat close but hedge related pressure in corn and soybeans on the fast and expanding harvest pace.
  • Chicago brokers report that managed money has sold 3,300 contracts of soybeans and 5,100 contracts of corn, while buying 3,800 contracts of wheat. In the products, funds have sold 2,100 contracts of soyoil and 3,400 contracts of soymeal.
  • FAS’s daily reporting system indicated that China purchased 121,000 mt of soybeans in the 2024/25 crop year. We believe that China used the early Chicago break to secure 3-5 cargoes of US soybeans for November this morning.
  • The oil share spread has been a significant rally this week based on the return of US soyoil export demand and 3 new US crush plants that will come online in Q4 that would add to domestic US soy supplies. The new crush plants are owned by Bartlett, Norfolk Crush, and CGB/Minnesota Soybean Processors. The plants are expected to begin operations in October/November and add 340,000 bushels daily to US crush capacity. Note that it took Platinum Crush (May/June) more than a month to get up to normal daily capacity last summer, so it will take considerable time to fully bring these 3 new plants online.
  • The midday weather forecast is wetter across the Southern US as a hurricane takes aim on NOLA on September 28. It is too far out in the forecast for a specific hurricane forecast with other models now showing such landfall. Yesterday, the midday model had a hurricane targeting Tampa, so be prepared for sizeable changes in tropical storm positioning.
  • The S American forecast is drier with this run less enthused about breaking out rains across Northern Brazil in the 11-15-day period. Some light rain would fall across Northern Mato Grosso on October 2-4, but that is too far out for any confidence. Extreme heat persists for another 10-12 days.
  • The expanding/ advancing Central US harvest has corn/soy under pressure while wheat rallies on falling Russian production fears and the ongoing dryness to seed the SW Russian new wheat crop. Soybeans won’t break until needed rain drops across Northern Brazil.
To download our weekly update as a PDF file please click on the link below:

19 September 2024

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  • Grains sag on charts and harvest pressure; Soybeans bounce with US soyoil export sales; Volume slows at midday.
  • Chicago grain futures are lower at midday with wheat futures leading the decline. The expanding Midwest harvest and chart-based selling has pushed corn lower. Soybeans have traded on either side of unchanged with stronger than expected weekly export sales offering support. US wheat futures are pulling back for chart-based reasons as Russian wheat fob prices hold stubbornly at $216/mt, a price level that has existed for weeks. The Russia wheat export pace has been record large due to their price competitive position. EU/US and Aussie fob wheat offers are holding well above Russia, but dryness is starting to gain the attention of the Russian farmer with a calendar need to get seed in the ground ahead of winter. SW Russian farmers like to have their winter wheat crop seeded by the middle of October and the 2-week forecast offers limited rainfall. The Black Sea drought is ongoing and could adversely impact new crop wheat without a pattern change. We look for a lower Chicago close on US harvest considerations with support noted below $4.04 in December corn futures and below $5.60 in December Chicago wheat.
  • Chicago brokers estimate that managed money has sold 4,300 contracts of wheat, 6,100 contracts of corn, and 1,200 contracts of soybeans. In the products, fund managers have sold 1,300 contracts of soymeal while buying 2,900 soyoil.
  • FAS’s daily reporting system was void of new US export sales. Chinese demand is lacking for US soybeans following their Autumn Festival holiday.
  • For the week ending September 12, the US sold 9 million bu of wheat, 33.4 million bu of corn and 64.2 million bu of soybeans. Soybean sales were larger than expected with the grains disappointing. For their respective crop years to date, the US has sold 405 million bu of wheat (up 88 million or 28%), 559.4 million bu of corn (up 97 million or 21%), and 588 million bu of soybeans (down 37 million or 6%). We maintain that WASDE is too low on 2024/25 US corn and wheat exports, and too high on soybean exports. However, the US soybean export pace has scored solid strides as China has boosted purchases in the past 6 weeks. We estimate that China has now purchased more than 10 million mt of US 2024/25 soybeans or about 45% of their projected annual total with the crop year just starting.
  • The US also sold 46,700 mt of US soyoil with Canada and Mexico the largest weekly buyers. US 2023/24 soyoil crop year commitments stand at 280,300 mt. We look for WASDE to trim its 2023/24 soyoil export estimate of 650 million pounds slightly, but a large share of today’s sales is being shipped out. US Gulf soyoil is priced at parity or slightly below crude palmoil which will enhance future US soyoil exports. The enhanced renewable diesel and export demand looks to further drop US 2023/24 soyoil end stocks. The demand bull story for soyoil is building on strong domestic demand.
  • The midday weather forecast is further south with rainfall across the Western and Southern Plains. A hurricane is forecast to push NE across Tampa Bay on 29 September. No frost/freeze is indicated with the Midwest harvest to make rapid progress through October 4.
  • The forecast is a touch drier with this run less enthused about breaking out rains across Northern Brazil in the 11-15-day period. Some light rain would fall across Northern Mato Grosso on October 2-4, but that is too far out for any confidence. Rainfall totals would range from traces to 0.5” during early October. A deepening drought grips N Brazil with extreme heat to persist.
  • The expanding/advancing Central US harvest has corn under pressure while wheat sags on the premium of US/EU fob wheat vs Russian offers. Soybeans won’t break until needed rain drops across Northern Brazil.

18 September 2024

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  • US Central Bank interest rate decision awaited; French wheat protein levels disappointing; US weekly ethanol grind holds strong.
  • Chicago grain futures opened higher on macroeconomic expectations that the US Central Bank will start a new rate cutting cycle this afternoon. A weaker US dollar, lower borrowing costs amid a more balanced labour market contributed to a broad commodity index rally. The 2-year period of rate hikes in the US Central Bank’s battle against inflation is ending.  Traders are hoping for a 0.5% cut in the US’s Fed funds lending rate this afternoon and a broadening raw material rally. It is the reaction of the financial markets to the Fed’s rate cut, not the rate cut itself, which has been telegraphed.
  • Managed money has been cutting back their net short grain positions for nearly a month as price reached downside targets. Managed money was let out of their net shorts without much market disruption as US farmers made old crop cash sales into the managed money profit taking. Now the US farmer is expected to store as much of their new crop harvest as possible with the cash bids being well below breakeven. US farmers see corn as having more upside price potential vs soybeans. We could agree with this assessment as S American farmers prepare to seed record large soybean acres. The longer-term bearish price risk rests in soybean values if Brazilian farmers harvest a record large soybean crop in early 2025.
  • FAS’s daily reporting system was void of new US export sales. China has been on a 2-day holiday and is expected to get back to securing US soybeans for November/December on weakness.
  • Just 41% of the French wheat crop had a protein level greater than 11.5%, which meets milling standard for most of the EU. In a normal year, nearly 60% of the French soft wheat crop reaches 11.5%. Excessive rainfall has produced a greater share of the French wheat crop being classified as feed. The smaller exportable share of French milling wheat has produced record demand/exports for Russian wheat.
  • Weekly US ethanol production at 308 million gallons was down 10 million gallons from the prior week, but up 4% from last year. US ethanol stocks at 999 million gallons were up 3 million gallons from last week, but up 10% from last year. US ethanol production margins are positive with the grind record large in the first couple of weeks of the crop year. Pace analysis will be closely followed with 2024/25 production likely to exceed last year. The US crude oil stock fell to 418 million gallons, down 1 million gallons on the week. The Biden Administration is using the price break to add supply to the US Petroleum Reserve. December crude oil has support at $63-65/barrel.
  • US Deputy Sec of State Kurt Campbell indicated to the US House of Foreign Affairs Committee that challenges posed by China now exceed those of the cold war. Beijing’s support for the Russian defence industry have come directly from the top Chinese leaders. America needs to dramatically to improve its naval capacities to counter the new partnership of Russia/China. The growing political stress between the US and China/Russia offer a challenging future.
  • The midday weather forecast run is little changed from the overnight solution, except that a tropical storm is forecast to develop in the Gulf of Mexico and make landfall around September 26 in the Florida Panhandle. Look for the tropical activity in the Gulf of Mexico to produce run to run forecast uncertainty beyond the next 5-6 days.
  • Traders will await the US Central Bank’s interest rate decision early this afternoon. A US longshoreman strike remains a risk on October 1 to US ag exports from the Gulf and Eastern US ports. And the US Government could shut down without a continuing budget resolution that is tied to non-citizen voting in the November election. Early US corn and soybean yield data is impressive, but it is too early to call for a trend vs USDA. We expect that rallies and breaks will fail into October.

17 September 2024

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  • Chicago little changed in mediocre volume; Brazilian, Black Sea weather issues linger; No new US export sales announced.
  • Chicago futures are mixed, but little changed, with wheat contracts forced to contend with selling in Paris milling futures and the ongoing absence of upward momentum on Russia’s cash fob market, while corn and soy add very modest premium. Market focus is transitioning from record US yields to positive seasonal trends in all market between early autumn and early spring, while numerous weather issues linger in the background. Other market-driving input is lacking. Volume is rather mediocre so far today.
  • CONAB in its first look at new crop production pegged 2024/25 Brazilian soybean production at 166.3 million mt, vs. USDA’s 169. 2024/25 total Brazilian corn production is forecast at 119.8 million mt, vs. USDA’s 127. There is not much that can be said about new crop Brazilian output and exports until seeding is complete, and seeding dates today are highly uncertain, and until Dec-Jan weather patterns are better known.
  • We note there is less confidence in CONAB’s forecast given the lack of convergence with USDA balance sheets. Additionally, trade data implies USDA’s 2023/24 Brazilian soy production estimate of 153 million mt, vs. CONAB’s 147.4, is closer to reality. Unfortunately, it remains that it is exports 8-10 months after harvest that is the best indicator of Brazilian crop yields production.
  • FAS’s daily reporting system was void of new US export sales. US Gulf corn is quoted near parity with other origins into Asia for early autumn arrival, and so there is competition for nearby importer demand.
  • There is time for weather improvement in the Black Sea and South America but worry accelerates if pattern changes stay absent into early October. We would note recent rainfall in Ukraine was less widespread than expected, and a pattern of net soil moisture loss is most probable in key winter crop producing areas of E Ukraine and S Russia into Oct 1.Soil moisture is insufficient (absent entirely) in eastern and southern Ukraine as well as southern Russia.
  • The midday GFS weather forecast keeps in place a pattern of complete dryness and abnormal heat across central and northern Brazil throughout the next two weeks. Sustaining drought at tropical latitudes of Brazil, including Mato Grosso, is difficult, but it is soybean seeding dates that are in the hands of Mother Nature. A year ago, Mato Grosso soybean seeding was 35% complete on Oct 15. Rain is needed before fieldwork begins this year.
  • In the US the GFS weather forecast maintains needed rainfall across the eastern Midwest and Great Lakes Region in the 6-10 day period. Heavy showers remain projected across the Central Plains, and so rainfall of 1-2” will be spread from KS/NE into OH/PA Sep 22-25. It is too late to aid yield potential but any/all rain is welcomed following the expansion of abnormal dryness/drought and as river levels across southern sections of the Mississippi remain deflated. Temperatures lean above normal to well above normal throughout the next 10 days.
  • It is a dull/choppy day. Crop conditions imply little change to NASS’s projected yields in mid-Sep. Combine data over the next 3-4 weeks will determine the extent that late season heat and dryness had on pod and kernel weights. Be prepared for choppy/rangebound trade through the remainder of September, but lingering issues in Brazil and the Black Sea along with positive seasonal price trends suggest breaks are opportunities for end users.

16 September 2024

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  • Soybeans sag on lacklustre US export demand; Paris wheat struggles with expirations/convergence; N Brazilian weather dry into October.
  • Chicago futures are mixed at midday with soy futures lower while the grains hold onto an overnight rally. Cash hedge related pressure in soybeans along with speculative demand in corn has produced the mixed midday session. Talk that Brazil has sold China a few additional cargoes of October soybeans along with the expectation of hedge pressure at the close as caused values to pull back. December Chicago wheat nearly reached $6.00 resistance while December Paris wheat futures targeted €230.00. The market has a tired feel at midday with neither the bulls or bears feeling inspired. Look for a mixed close with soy futures under pressure due to fund related selling in soyoil and buying in wheat/corn.
  • The USDA reported that 100,000 mt of US soybeans was sold to China for the 2024/25 crop year. Amid this week’s purchases, China’s known purchases of US soybeans are over 5.0 million mt with unknown sales estimated at 4.0 million. So far, it appears that China has booked circa 9.0 million mt of soybeans out of an estimated total of 22-23 million for the 2024/25 crop year. Last year, China imported 24.3 million mt of US soybeans.
  • Chicago brokers report that funds have bought 5,600 contracts of corn and 5,900 contracts of wheat, while selling a net 5,400 contracts of soybeans. In the soy products, funds have sold 3,900 contracts of soyoil and 2,100 soymeal.
  • Paris wheat futures have had a big week of trade with the expiration of the September futures at €188/mt and the push by December near €230/mt. A large weekly reversal has been scored on the charts that has not gone unnoticed by hedge funds. Paris wheat is having trouble with expirations with big downward price falls followed by surges in the next futures contract. Some are questioning the integrity of Paris wheat futures with cash/futures being discounted at expiration and back months holding at sizeable premiums. Both May and September expirations have lacked convergence with the cash market. The only way that a regulator knows that a wheat futures contract has integrity with the cash market is to converge at expiration. Otherwise, the contract is disconnected from the cash market causing headaches for hedgers and end users. Part of the problem with Paris wheat is delivery is at Rouen France with storage rates beyond the first 10 days up to private negotiations. Accordingly, few are willing to take ownership of cash wheat at delivery. Rouen is an export port, which is unhelpful to convergence.
  • We look for weekly NASS corn and soybean good/excellent crop conditions to decline 1-2% on Monday amid the ongoing flash drought.
  • Dry/warm weather is maintained across the Midwest next week with just a few showers over the N Plains next Friday. Otherwise, the hot/dry Midwest weather pattern is unrelenting. The Eastern Midwest will be the driest with some areas having not seen rain for a month. Crop maturity is being pushed with high temperatures ranging from the upper 70’s to the lower 90’s. Rains break out across the W Plains next weekend with a new tropical storm in the Atlantic to target the Eastern US states.
  • The 10-day forecast offers no rain across Northern and Central Brazil. The drought will worsen with the monsoon showing no sign of activation. Showers will form across NE Argentina and far Southern Brazil into late September. Spring row crop planting is on hold as farmers await at least 2-4.00” of rainfall.
  • Harvested yield reports will become numerous next week amid ongoing hot/dry Midwest weather that is pushing crop maturity. NOPA will be out on Monday, and we would look for an August crush rate of 173 million bu and soyoil stocks of 1,290 million pounds. A sustained break in the soy complex will not occur until needed rain falls across N Brazil. Likewise, corn rallies are capped by new crop selling.

13 September 2024

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  • Soybeans sag on lacklustre US export demand; Paris wheat struggles with expirations/convergence; N Brazilian weather dry into October.
  • Chicago futures are mixed at midday with soy futures lower while the grains hold onto an overnight rally. Cash hedge related pressure in soybeans along with speculative demand in corn has produced the mixed midday session. Talk that Brazil has sold China a few additional cargoes of October soybeans along with the expectation of hedge pressure at the close as caused values to pull back. December Chicago wheat nearly reached $6.00 resistance while December Paris wheat futures targeted €230.00. The market has a tired feel at midday with neither the bulls nor bears feeling inspired. Look for a mixed close with soy futures under pressure due to fund related selling in soyoil and buying in wheat/corn.
  • The USDA reported that 100,000 mt of US soybeans was sold to China for the 2024/25 crop year. Amid this week’s purchases, China’s known purchases of US soybeans are over 5.0 million mt with unknown sales estimated at 4.0 million mt. So far, it appears that China has booked circa 9.0 million mt of soybeans out of an estimated total of 22-23 million for the 2024/25 crop year. Last year, China imported 24.3 million mt of US soybeans.
  • Chicago brokers report that funds have bought 5,600 contracts of corn and 5,900 contracts of wheat, while selling a net 5,400 contracts of soybeans. In the soy products, funds have sold 3,900 contracts of soyoil and 2,100 soymeal.
  • Paris wheat futures have had a big week of trade with the expiration of the September futures at €188/mt and the push by December near €230/mt. A large weekly reversal has been scored on the charts that has not gone unnoticed by hedge funds. Paris wheat is having trouble with expirations with big downward price falls followed by surges in the next futures contract. Some are questioning the integrity of Paris wheat futures with cash/futures being discounted at expiration and back months holding at sizeable premiums. Both May and September expirations have lacked convergence with the cash market. The only way that a regulator knows that a wheat futures contract has integrity with the cash market is to converge at expiration. Otherwise, the contract is disconnected from the cash market causing headaches for hedgers and end users. Part of the problem with Paris wheat is delivery is at Rouen France with storage rates beyond the first 10 days up to private negotiations. Accordingly, few are willing to take ownership of cash wheat at delivery. Rouen is an export port (like a hotel) which is unhelpful to convergence.
  • Dry/warm weather is maintained across the Midwest next week with just a few showers over the N Plains next Friday. Otherwise, the hot/dry Midwest weather pattern is unrelenting. The Eastern Midwest will be the driest with some areas not having seen rain for a month. Crop maturity is being pushed with high temperatures ranging from the upper 70’s to the lower 90’s. Rains break out across the W Plains next weekend with a new tropical storm in the Atlantic to target the Eastern US states.
  • The 10-day forecast offers no rain across Northern and Central Brazil. The drought will worsen with the monsoon showing no sign of activation. Showers will form across NE Argentina and far Southern Brazil into late September. Spring row crop planting is on hold as farmers await at least 2-4.00” of rainfall.
  • Harvested yield reports will become numerous next week amid ongoing hot/dry Midwest weather that is pushing crop maturity. NOPA will be out on Monday, and we are looking for an August crush rate of 173 million bu and soyoil stocks of 1,290 million pounds. A sustained break in the soy complex will not occur until needed rain falls across N Brazil. Likewise, corn rallies are capped by new crop selling.
To download our weekly update as a PDF file please click on the link below:

12 September 2024

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  • Sep WASDE lacks fireworks; US corn yield raised; Soy yield unchanged.
  • The NASS US September corn yield at 183.6 bushels/acre was slightly bearish, being up 0.5 bushels/acre from August. The US NASS September soybean yield was 53.1 bushels/acre or right at the August forecast and market expectations. Although the US corn yield was slightly better than forecast, traders expect that US corn/soybean yields will decline in October due to dry Central US weather for the past 3 weeks. Chicago values are likely to chop sideways as the harvest begins with combine yield reports being key to daily price direction.
  • NASS estimated the 2024 US September corn yield at a record 183.6 bushels/acre, up 0.5 from August. The IL corn yield fell 3 bushels/acre to 222 while IA was up to a record 212 bushels/acre. The IN corn yield rose to a record 210 bushels/acre. There were 9 US states that produced a record corn yield with ears per acre being down 1.7% from last year at 28,900. It is important to note to note that the record large US corn yield was produced by a record ear weight. This produces downside yield risk in future NASS reports as ear counts tend to seasonally decline.
  • US 2023/24 corn end stocks were reduced by 55 million bu to 1,812 million with 2024/25 corn end stocks dropping 16 million to 2,057 bushels/acre. WASDE made no adjustment to new crop corn demand. The average US corn farmgate corn price was cut by 10 cents/bu to $4.10.

  • US soybean old crop soybean end stocks were dropped 5 million bu based on a like bump in crush to 2,295 million bu which placed stocks at 340 million bu. We note that the new crop US soybean supply fell 8 million bu to 4,941 million with end stocks falling 10 million to 550 million bu. The average farmgate price held steady at $10.80. The modest fall in old and new crop end stocks produced a modest post report rally, but amid large S American harvests, the rally faded. WASDE left its estimate of the 2025 Brazilian soybean crop at a record large 169 million mt with the Argentine soybean crop at 51.0 million mt. China is estimated to import a record 111.5 million mt of soybeans in 2023/24 and 109 million mt in the 2024/25 crop year. Whether it is world or domestic balance sheet changes, the September adjustments were modest, and traders will look to actual harvest yield results and the export demand for price direction. We note that without adverse S American weather, a gradual decline in price is forecast into Q2 2025.
  • NASS/WASDE row crop estimates were uninspiring. Chicago choppiness is forecast to prevail as the harvest advances and farmers hold fast to newly gathered supply. US crush and ethanol grind margins will stay profitable well into yearend.

  • Sep WASDE wheat data is rather dull as very few adjustments were made to US and global production. In fact, the US wheat balance sheet was left completely untouched, even by-class numbers are unchanged. We reiterate that US production is never altered in mid-Sep as NASS’s Small Grains Summary on Sep 30 is awaited. US end stocks remain estimated at 828 million bu, vs. 702 million in 2023/24.
  • 2024/25 world wheat end stocks were increased 600,000 mt, and the increase was largely a function of an upward revision to Canadian beginning stocks, which was known via Stats Can data earlier in the week. 2024/25 world wheat production was lowered 1.4 million mt as a smaller EU harvest (-4 million mt) more than offset higher estimated production in Australia (+2) following ABARES’ estimate in early Sep and Ukraine (+0.7). The Russian balance sheet is unchanged. World wheat trade in 2024/25 was lifted to a near record 216.5 million mt, vs. 214.9 in August, as larger supplies in Australia and Canada will be absorbed by importer demand.
  • Major exporter wheat stocks/use is pegged by WASDE at 13.3%, vs. 13.2% and vs. 2007’s record low of 13.1%. The balance sheet stays tight and key in Oct/Nov is whether larger Aussie output offsets coming downward adjustments to Russian and Kazakhstan spring wheat crop sizes.
  • The Sep WASDE data lacks fresh input. US combine yield data takes priority beginning in late September. US corn yields in Oct are typically changed only slightly, while changes in US soy yield in Oct range from 0.3-0.8 bushels/acre. The next few weeks will be a battle between large US cash supplies at harvest and concerning dryness in S America and the Black Sea region. Choppy/sideways market are forecast though the balance of Sep.

10 September 2024

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  • Chicago soy extends overnight on absence of daily export sales; GFS weather forecast wetter in US Central Plains; Crude down sharply.
  • Chicago ag futures at midday are mixed, with wheat higher and row crops lower. The next two sessions will be defined by adjusting risk ahead of NASS’s corn and soy objective yield data. We expect USDA’s Sep WASDE to be lacking in statistical fireworks, but there is a battle between August dryness, disease pressure, rapid maturation but also above-average crop ratings. We maintain price choppiness is most probable until the US corn and soy harvests reach 20-25% complete. Combine data is critical this year. It is only when soy crop size is better known that a bottom in Chicago soy futures can be confirmed. WTI crude at midday is down $3.10/barrel at $65.60.
  • FAS’s daily reporting system was void of new export demand, which has compounded long liquidation in the soy complex. Weekly soy export sales of 45-50 million bu are needed throughout autumn to validate USDA’s annual 2024/25 US export forecast of 1,850 million bu.
  • We expect soy purchasing from China and others to stay active into the holiday season as Brazilian beans don’t materially compete with US origin until January, but the USDA’s Sep WASDE will act as a reminder that US soy end stocks exceed 550 million bu without S American supply dislocation.
  • Other breaking news is absent. Argentine company Biocere’s HB4 GMO wheat variety won’t be available in the US for at least two years, and then the issue globally is one of consumer preference. This will be a challenge. Algeria is seeking 160,000 mt of optional origin corn for autumn delivery. Wheat cash basis levels in W Europe steady. Cash corn in Ukraine is unchanged. Fresh input is being sought, but it is the USDA’s Sep WASDE that matters most.
  • The midday GFS weather forecast is consistent in keeping S American rainfall into Sep 24 isolated to Rio Grande do Sul and Santa Caterina and southern Parana (25% of soy total production) in far southern Brazil. A pattern of complete dryness persists elsewhere, while abnormal heat stays in place across central and northern Brazil. Max temperatures in Mato Grosso do Sul, Mato Grosso, and Goias will be 100-103 each of the next 10 days, with heat alerts there widespread. The market is rightly not concerned about S American weather today, but there is no doubt a change is needed prior to Oct 1 to facilitate Brazilian soy exports in the second half of January. Wheat in Argentina is most exposed to weather currently.
  • In the US the GFS weather forecast is much wetter across the Central Plains and W Midwest after Sep 18. The GFS forecast projects a sweeping cold front to travel across the W US Sep 18-20, which produces rainfall of 2-4” in OK, E KS, NE, and parts of IA/MN. Confidence in GFS details is low, but there has been consistency in advertising better rain chances across the C Plains in the second half of September. Hurricane Francine’s path is unchanged, with soaking rainfall due in LA, MS, and W TN over the next 72 hours. The E Plains and Great Lakes region stays arid. There are still no signs of frost in the Dakotas/MN.
  • It is a low volume/low input session, with negative macro sentiment spilling into ag markets. Corn and wheat have very likely scored seasonal bottoms, while whether NASS pegs US soy yield above or below 53.5 determines soy complex direction through the balance of September.

9 September 2024

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  • Chicago steady/higher at midday; US sells beans to China; Canadian wheat stocks larger than expected.
  • Chicago ag futures are steady to higher at midday, with soybeans still the leader on additional Chinese pricing, the ongoing absence of rainfall in Central and Northern Brazil in late month, and partly due to questions over USDA’s yield revisions on Thursday. Crop ratings even this afternoon will support a national yield corn yield above 180 and a soybean yield above 53, but the lack of rainfall since Aug 1 across key parts of NE, IA, OH, and the southern Midwest. This places a greater emphasis on combine data beginning late Sep/early Oct. We doubt there will be many statistical fireworks in Thursday’s release, but the market is equally aware of that seasonal price trends transition from bearish to neutral at late summer.
  • Exporters sold another two cargoes of US soybeans to China this morning. We would maintain that while annual US soy exports will be a function of Brazilian production in early 2025, China and others will be active purchasers of US origin between now and the holiday season.
  • Stats Canada pegged 2023/24 Canadian wheat end stocks at 4.6 million mtg, vs. USDA’s estimate in August of just 1.8 million. Higher than expected wheat stocks were a function of upward revision to 2022/23 end stocks, Stats Can is notorious for large retroactive revisions, which were increased from 3.5 to 5.6 million mt.
  • Larger Canadian stocks have most pressured Dec Minneapolis wheat, and assuming no change to US HRS yield, there will be abundance of N American spring wheat available in autumn and early winter.
  • Stats Can pegged 2023/24 canola end stocks at 3.1 million mt, vs. USDA’s projected 2.0. Total domestic consumption and exports were below USDA’s forecast in August, but stocks of 3.1 million mt were largely expected by the Canadian trade. Nov Canadian canola at midday is $11/mt. Unlike wheat, there is concern over 2024 Canadian canola production following bouts of heat this summer.
  • Nov Brazilian corn is up $0.11/bu at $5.11, with the nearby market there trading above $5.00/bu for the first time since March. Brazilian dryness matters little today but will warrant attention in October. And the issue is that short, and medium-term guidance offers no real change from current dryness and incredible heat across key areas of central and northern Brazil. High temperatures this week in southern Mato Grosso and Mato Grosso do Sul will reach 103-105 degrees. We view any sustained heat/dryness in Brazil this autumn as more threatening to corn supply and demand given the precarious nature of safrinha seeding dates and Mar-Apr rainfall.
  • Export inspections included 33 million bu of corn, vs. 38 million the previous week, 13 million bu of soybeans, vs. 18 million the previous week, and 21 million bu of wheat, vs. 22 million the previous week. USDA will increase its 2023/24 US corn export forecast 25-40 million bu, keeps its soy forecast unchanged, and very likely hikes 2024/25 US wheat exports by 15-25 million bu. River levels along the lower Mississippi are a concern, but Gulf loadings have performed normally so far in September.
  • The midday GFS weather forecast is slightly drier in IL/IN, but the overall pattern is consistent. Tropical storm six makes landfall on Wed/Thurs in LA and moves across the Delta and into the TN, KY, and southern Midwest over the following 2-3 days. Rainfall of 2-4” blankets LA, MS, AR, TN, KY, and far southern parts of IL and IN. The remainder of the Corn Belt stays arid into Sep 19. Temperatures warm steadily into late week, peaking in the 80s on Wednesday.
  • Net soil moisture loss continues across the C Plains, W Midwest, and Great Lakes, but a smooth/quick harvest is anticipated. Helpful showers also projected to impact the TX/OK panhandles Sep 18-19, though confidence in details there is low.
  • It is a pre-report short covering session. Seasonal recoveries are typical in all markets between late summer and mid-winter, but the intensity and speed of 2024’s recovery first requires clarity over crop sizes.