CORN HIGHLIGHTS:

• The corn market finished lower for the first time in four sessions as prices dropped back to test support. Selling in the wheat market, hedge pressure, and the stronger US Dollar likely limited the corn market on Thursday.
• The US Dollar Index has traded higher for the past four sessions and is at its highest level since early August. A stronger dollar plus the rally in corn prices could price US bushels out of the export market versus cheaper global competition.
• Weekly export sales for corn rebounded after last week’s disappointing totals. US exporters reported new sales of 66.3 million bushels (1.684 mmt), which was well above market expectations. This was the strongest weekly volume since last November for corn sales.
• The weather forecast for the central US remains drier and warmer than normal, which should allow corn harvest to move along at a rapid pace. The selling pressure from freshly harvested bushels could limit rallies in the corn market in the short term.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day lower, posting lower highs and lower lows for the past three trading days, as improved Brazilian weather forecasts have pressured the markets. While funds had been exiting their short positions over the past few weeks, they are likely now adding back to them. Soybean meal closed lower, while soybean oil finished higher.
• Today’s losses in soybean meal may be tied to the dockworker strike that has ports on the East Coast shut down for the past three days. The shutdown will likely impact exports of soybeans and soybean meal to China as they are shipped by container. Soybean oil was higher as it followed the sharp increase in crude oil.
• Today’s export sales report showed an increase of 53.0 million bushels in soybean export sales for 24/25 and an increase of just 37,000 bushels for 25/26. This was towards the higher end of trade estimates but slightly below last week’s export sales. Export shipments of 26.6 mb were below the 36.8 mb needed each week to meet the USDA’s estimates. Primary destinations were to China, Bangladesh, and the Netherlands.
• Forecasts for South America predict significant rainfall in both Brazil and Argentina over the next 15 days. While scattered showers have fallen intermittently, the extremely dry central region is expected to receive over an inch of rain, with southern regions likely to get even more.

WHEAT HIGHLIGHTS:

• Wheat closed lower across the board, alongside the rest of the grain complex. Profit-taking after the recent rally, along with a general lack of fresh news, may have contributed to today’s decline. Additionally, the US Dollar Index continues to rise, rallying back above the 102 level, reaching an area not seen since late August, which could pressure US commodity exports.
• The USDA reported an increase of 16.3 million bushels in wheat export sales for 24/25. Shipments last week at 19.5 mb exceeded the 15.3 mb pace needed per week to reach the USDA’s export goal of 825 mb. Sales commitments for wheat have reached 427 mb, which is up 23% from last year.
• Yesterday it was reported that Egypt purchased 3.1 mmt of wheat, likely from Russia. Since then, they have also announced that they plan to change their flour mix in order to reduce wheat consumption. Now 25% of their flour may be made from corn or sorghum, while the remaining 75% would be wheat. This is estimated to potentially decrease their annual wheat use by 1 mmt.
• Drought conditions in US winter wheat areas have improved. According to the USDA as of October 1, about 44% of US winter wheat acres are experiencing drought, compared with 50% a week prior. This should aid establishment of the crop currently being planted.
• The European Commission has proposed a one-year delay to a law aimed at reducing global deforestation. The law, if passed, would require commodity trading firms that sell food products in Europe to prove that the commodities did not originate on land cleared of forest after 2020. There was large pushback from many who claimed that this would result in inflation and increased costs in the world food supply chain.

DAIRY HIGHLIGHTS:

• The US cheese market just cannot find demand, despite 10 red sessions in a row and the block/barrel average falling nearly 40c to $2.06375/lb.
• On Thursday, blocks were down 2c to $2.0075/lb on 5 loads traded while barrels dropped 3.25c to $2.12/lb on no loads traded.
• Spot butter sellers took a pause today, while the price holds at $2.68/lb. This is the lowest price for spot butter since January.
• Milk futures are continuing to rollover and nearby contracts are starting to retest their 50-day moving averages.
• On Friday the USDA will release its Dairy Products report for August. The report will show total butter and cheese production for the month.

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Author

John Heinberg