Morning Comments September 12, 2022

Harvesting Soybeans

Wheat, corn, and beans all managed to have strong finishes to the week, with Friday’s gains adding 26 cents to November beans, allowing them to close down 8 on the week. December corn was up 16 for the day, finishing the week 19 higher, while December wheat was up 40 cents on Friday, gaining 58 on the week.

Worries over what happens next when it comes to Black Sea exports was seen as supportive to the market on Friday. The uncertainty over Russia’s next move and how long the corridor will remain open has begun to limit trade out of the region as shippers are beginning to charge more and farmer sales are reportedly slow. 

In addition, with so much uncertainty regarding what the situation will look like in a few months and struggles to access capital, many farmers in the country say they are unlikely to plant wheat this fall. Some estimates have planted acres dropping by over a third, though some observers will say we had heard similar stories prior to the spring planting campaign with actual planting cuts far less than expected.

Over the weekend news of Ukraine’s progress in pushing back Russian forces was very much welcomed, though concerns are beginning to rise when it comes to determining what a Putin loss, or the battle to avoid a loss could look like.

Reports indicate the twin counter-offensives by Ukraine have gained back over 1500 miles of territory, with Forbes reporting Russian losses are equal to a battalion's worth of people and equipment per day. Ukraine on the other hand is reportedly gaining, with more foreign equipment arriving in addition to captured Russian inventory.

In other news, Covid cases in China are on the decline, though case counts in Beijing have been on the uptick in recent days. The fear over the spread of Covid and mass lockdowns is very much evident in travel data as movement over the holiday weekend was down 35% from last year’s levels and down 63% from 2020. 

Looking ahead, we will get updated information from the USDA today at noon eastern. Ahead of the report, traders are expecting a slight increase in old crop corn carryout, up to 1.547 billion bushels, from 1.53 in last month’s estimate. New crop production is expected to come in 271 million bushels lower than last month, with a nearly 3 bushel per acre cut to production from August estimates anticipated. 

At 172.5 bushel per acre as expected by traders we would be off 8.5 bushel per acre from USDA trendline estimates. We will get updated acreage estimates courtesy of FSA data, though many feel there was not much in the FSA information that would point to a major adjustment one way or another.

With the adjustment to production as expected and some potential adjustments to new crop demand as a whole, traders are expecting new crop corn carryout to come in at 1.217 billion bushels, down 171 million bushels from last month’s projection.

For soybeans, traders are expecting a slight reduction in production as well, with the average trade guess coming in at 51.5 bushels per acre, down from last month’s 51.9 projection. Old crop carryout is expected to see a slight increase due to minor reductions in both crush and exports, with the average trade guess putting soybean carryout at 236 million bushels, versus last month’s 225.

With the adjustment to production and some changes to demand, traders are expecting new crop soybean carryout to come in at 247 million bushels, up 2 million bushels from last month. 

Wheat carryout is expected to come in relatively close to last month, with most of the production and demand estimates for wheat left unchanged.

Global adjustments are expected to be minimal for beans and wheat, with a cut to global corn ending stocks anticipated due to the expected cut in US supplies.

We have already been back and forth decently overnight and this morning, with wheat down much of the night only to bounce back. In addition to USDA data today we get updated CPI data this week, with traders starting to look forward to the Fed September meeting in two weeks.

We’re right back up to resistance levels and recent highs for the move in corn, with some pretty bullish expectations coming into today’s report that are going to need to be confirmed. 

Corn down 2 to 5

Beans down 2 to 4