Editor’s Note: Catch Randy Martinson every Friday after the markets close on the Agweek Market Wrap on agweek.com.
The second week of September was a wild week. Grains started the week mixed, with wheat starting the week down while corn and soy went up. The market responded to the USDA’s September crop production report. For the remainder of the week, wheat was mixed in while corn and soy lost ground. By the end of the week, Minneapolis wheat was up 6 to 10 cents, Chicago wheat was down 9 cents, Kansas City wheat 4 to 6 cents, corn 6 to 8 cents less. and soybeans halved their earnings at the end of the week. with earnings from 36 to 37 cents.
So what has changed so much from Monday to Friday? Wheat found support in talk of improving demand due to rice shortages in Asia. Support has also come from adverse weather conditions in the United States as rain is expected to slow the spring wheat harvest while warm, dry conditions will help advance the progress of winter wheat planting, but will not help the crop emerge. . Pressure on hedging sales pushed corn and soybean contracts down. Although early harvests were disappointing, corn and soybeans are retreating at this time of year.
On the bright side, the USDA finally released the export sales report on Thursday. Wheat sales continued to be lackluster at best, falling below expectations. Corn sales over the past month have been as expected and soybean sales have been above expectations.
The grains had another potential black swan in preparation in the form of a potential rail strike. The strike has had the potential to paralyze the United States as over 30% of our products are moved by rail. Towards the end of the week, a deal was concluded, but it has yet to be approved by the grassroots. That vote will come in late September.
The grains appear to be in decision mode. Corn and soybeans have risen to recent highs. December corn traded close to $ 7 and November soybeans close to $ 15. Technical selling and crop pressure came under pressure on both markets.
Wheat continued to be on an island by itself. It was the only gains in possession of wheat recorded towards the end of the week, as fears increase that Russia will not renew Ukraine’s export program. The need to buy increases the additional support. US grain stocks and world grain stocks are limited and the US must persuade producers to plant more winter wheat. The base price for crop insurance will certainly encourage more acres. The first estimate for the base price of winter red soft wheat crop insurance is $ 8.40 versus $ 7.14 last year, an increase of 31%. For red winter durum wheat, the estimated base price is estimated at $ 8.79 versus last year’s $ 7.08, up by as much as 31%.
To add to the news of the week, Stats Canada’s production estimates were negative grain, but canola friendly. The report put all grain production at 34.7 million tons compared to expectations of 34.5 million tons and up from 34.57 million tons in August. Spring wheat production was estimated at 26.01 million tons compared to 25.57 million tons in July. Canola production was estimated at 19.1 million tons, in line with expectations but lower than the August estimate of 19.5 million tons.
On a negative note, Russia’s Vladimir Putin and China’s Xi Jinping recently met and agreed to increase mutual cooperation and trade. This could lead to Russia supplying China with all the wheat and corn they need.
The US drought monitoring map shows an expanding drought as Montana, North Dakota, Nebraska, and Kansas experienced sharp increases in drought conditions while Texas saw conditions improve.
The third week of September began with cereals having a mixed performance on Monday. Wheat took a hit while corn managed to bounce back to finish steadily as soybeans rose. Wheat has been under pressure from the stronger US dollar. Selling pressure has increased from the news Russian officials have once again raised their estimated grain production, this time by 2 million tons to 99 million tons. The USDA is at 91 million tons. Reports of an increase in shipments from Ukraine have added pressure as boats appear to be going a bit faster now as most expect the program to end at the end of the month due to concerns from Russia.
Corn was traded alternately in September. 19, stuck in a tug-of-war between the lower wheat complex and the upper soybean. Soybeans won this battle when corn bounced higher in the close, but not by much. The anticipatory selling pressure came from wheat, with hedging selling pressure adding to the losses. Harvesting has begun, but according to the USDA crop production report, it is running slower than expected.
We are at the end of the growing season and crop ratings are becoming less important as the harvest begins, but Monday’s crop rating was interesting. It appears the crop valuation was not in line with individual states as Illinois fell 1%, Indiana remained stable, Nebraska fell 5%, Ohio fell 3%, and the South Dakota fell 4%. But the national crop valuation slipped by only 1%.
Soybeans were the bright spot in cereals on Monday, pushing export news higher. China entered and bought 136,000 tons of US soybeans overnight. A slower-than-expected collection rate added support. Crop pressure took soybeans off Monday highs, but expectations of higher Chinese demand and lower than expected initial yield reports helped support soybeans. A stronger market for soybean meal has added support.
South America continues to be on the dry side and this adds support to the soybean market. The rains did not arrive in Brazil as expected, which slowed progress in soybean planting. Rains are expected within the next week, and if done, the progress of planting will advance rapidly.
Just like in the case of corn, the soybean crop condition rating seemed a bit higher when considering individual state ratings. Illinois remained unchanged, Indiana fell 2%, Iowa remained unchanged, Minnesota fell 2%, Nebraska fell 3%, Ohio fell 2%, and South Dakota fell 9%. North Dakota bucked the trend and grew 5%. The valuation of the national crop fell by only 1%.
Traders, along with the rest of the world, are a little nervous about the news of Russian troops firing missiles at the nuclear power plant in northern Ukraine. Once again, on Monday night Russian forces fired missiles near the plant, the plant was not damaged but the infrastructure around the plant was.
Furthermore, Putin is now seeking to annex the four regions of Ukraine that Russia currently has control over. The amount of land that Russia has control amounts to about 15% of Ukraine. Any attempt to annex parts of Ukraine is likely to lead to an escalation of the war. This was support grain as traders now expect very little grain to be planted in Ukraine and the export agreement to move grain out of Ukraine’s ports is likely to expire.
Cattle lost ground in the second week of September with most of the sales tied to economic concerns and a disappointing cash trade. Cattle traded a little better the third week of the month. Support came from the square position before September. 23 Livestock feed report, which was to come after the expiration of this column. The first estimates are: On Feed: 100%, Placed: 99% and Marketed: 106%. The Federal Reserve raised interest rates by 0.75%, as expected.
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