Written Commentary
MORNING AG OUTLOOK
Corn:
Corn’s weaker than expected performance yesterday can be attributed to CONAB’s larger Brazil production estimate and weak energy prices. Other fundamentals remain mostly friendly including; French conditions dropping another 2% this week, limited moisture and high temperatures expected in Ukraine next week, Russia saying they are unwilling to resume the previous grain corridor initiative of a few years ago, Germany’s crop expected down 14.2% year-over-year, French growers estimating production at 7 – 8 million tonnes, down from 9.5 last month and Argentina farmers expected to plant 5.4% less corn this coming season. Additionally, yesterday’s CPC report of a nearly 70% chance of the strongest El Nino in 75 years is a supportive factor. US area under drought rose 1% to 29%, compared to only 4% last year and Argentina harvest has reached 77% complete. Ukraine is buying grain storage bags, otherwise known as silo bags, to address their shortage of storage due to the export problems, no ships have loaded grain at the Odessa port over the last 2 weeks. The EU will finally see better chances for rain next week, but it is too late in the season now to expect anything but very minor crop improvement.
Soybeans:
Beans are getting a boost this morning on China demand optimism after SinoGrain announced another 360,000 tonne auction of reserve beans for early next week, indicating they continue to make space for US imports. Additionally, a 90% chance of a strong El Nino through winter may be encouraging some new buying on the potential global weather disruptions that are likely through early next year. Rain is moving through eastern Nebraska, central Iowa, northern Illinois and Indiana this morning and flooding concerns in Indiana are getting media attention after 10 – 15 inches of rain fell north and east of Indianapolis and more is expected. The active pattern over the central Midwest and eastern belt will continue through the end of next week, while the southern Plains and lower Midwest remain under the influence of the heat dome. The 8 – 14 day outlook calls for below normal precipitation for the northern Midwest which will give fields a chance to dry out. US bean area under drought was unchanged this week is 26%, compared to only 3% last year. The Rosario Grain Exchange says Argentina soy area is likely to expand this fall as farmers plant more beans due to leafhopper concerns in corn. Cumulative old crop bean export sales with just 2 weeks to go in the marketing year are the lowest since 2020.
Wheat:
The market had another strong night session and is up double digits to start the morning on Russia’s comments they see no reason to give Ukraine a temporary reprieve from attacks and there will be no return to the previous grain initiative corridor of a few years ago. Yesterday, there were reports Ukraine had sent a letter to Russia about a truce, but it appears to be falling on deaf ears. Ukraine attacked a large Russian port on the Baltic Sea overnight. Most of today’s fundamental news is friendly with a strong if not super El Nino expected this winter, Russia’s Novorossiysk grain terminals remain closed and have halted grain arrivals by rail, Germany’s crop is expected down 11% year-over-year, US HRS under drought jumped another 5%, and a drying trend in Australia prompting the Western Australia Grain Association to reduce production estimates to 9 million tonnes, down from 9.5 million last month. CONAB’s monthly update yesterday cutting Brazil production and forecasting the largest wheat imports in 20 years was another bullish factor.
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