If you would like to receive our technical comments including price projections and cycle analysis for important tops and bottoms, click on the link at the bottom of the commentary to sign up for a 30-day free trial subscription. Follow Ag Watch Market Advisors on Facebook and Twitter for timely information not posted in our blog
Newsworthy items in the grains will likely be sparse until the crop report on October 12th. In the meantime, corn will face challenges from harvest pressure, the rising dollar, and subpar exports. As of last week, twenty-three percent of the crop had been harvested, which is ahead of a year ago at 19 percent, and the average of 21 percent. The weather forecast through the middle of the month is open which means few harvest interruptions are likely. Looking at exports, USDA projects them at 2.050 BB. Inspections last week were 24.6 MB and well below the average of 40.5 MB needed each week to reach their target. Although the pace of shipments has improved since the marketing year began, we are only averaging shipments of 25.1 each week. Unless they improve dramatically, corn faces a strong headwind, especially with ending stocks forecast at 2.2 BB.
Soybeans will likely face headwinds from harvest that is getting into full swing, in addition to the planting of a record crop in Brazil. As of last week, 23 percent of the crop had been harvested, which is ahead of last year’s pace of 20 percent, and the average of 22 percent. Meanwhile, planting is underway in Brazil with Conab forecasting acres at 111.8 million, up 2.8 percent from a year ago, and record production of 162.4 million tons. USDA’s current forecast is 163.0 million tons. Meanwhile, exports are a big question mark. Last week, inspections were a marketing year high at 24.3 MB with China taking 14.1 MB. Although shipments have risen since the beginning of the marketing year, they must average 35.7 MB each week to meet USDA’s projection of 1.790 BB. So far, we are only averaging 25.1 MB. As I have mentioned in prior comments, our exports tend to peak in November, and they are off to a slow start.
Wheat has been supported this week from a new round of Russian strikes against Ukraine. The aggression in the Black Sea is a never-ending story that is not going away anytime soon. In other matters, winter wheat planting is 40 percent complete compared to 39 percent a year ago and 43 percent for the average. Meanwhile, exports are picking up with inspections last week at 14.6 MB, and above the average of 13.6 MB that must be shipped weekly to meet USDA’s target of 700 MB. While this may offer the bulls some encouragement, we must keep in perspective that the dollar is rising, and their target is an historic low.
Comments and suggestions are provided for information purposes only. Information contained herein is obtained from sources believed to be reliable but not guaranteed to its accuracy or completeness. Readers using the information contained herein are responsible for their own actions. No presentations can be made that recommendations will be profitable or that they will not result in losses. This information is neither an offer to sell nor solicitation to buy of the commodity futures mentioned herein. The writer may be trading in the commodities mentioned.