Headlines:
- BIG US GRAIN HARVEST THREATEN STORAGE SPACE SQUEEZE
As farmers gear up for potentially record breaking corn and soybean harvests, concerns are circulating over just how they will store this massive crop. Farmers have been holding on to corn, in particular, ever since last harvest, in hopes of higher prices. And expectations are that they will do so again. “Farmers are still going to try to hold as much corn off the market at harvest as possible while letting soybeans go off the combine,” said Tregg Cronin, at Halo Commodities this week. But the combination of heavy carryover stocks and a big harvest about to start rolling in means that space is at a premium. Based on the US Department of Agrimony numbers for carry-over grain closing stocks, plus estimates for the year’s harvest, there will be 24.3bn bushels of corn, wheat, and soybeans to store. US storage capacity, meanwhile, is estimated at 24.2bn bushels. So time is starting to run out for farmers, who need to clear the previous season’s stocks before combines start running this month. - UN LOWERS BAR FURTHER ON EU WHEAT EXPORT HOPES
The European Union will lose top rank in world wheat exports in even more dramatic style than had been expected, the United Nations said, in a report which pegged cereals prices at a nine-year low, but flagged a watershed in dairy markets. The European Union will see its overall wheat exports tumble by roughly one-quarter to a four-year low of 25.5m tonnes in 2016-17, the UN’s food agency, the Food and Agriculture Organization, said. The estimate is even lower than forecasts from many other commentators, with the US Department of Agriculture seeing shipments at 27.0m tonnes, and the International Grains Council at 27.3m tonnes.
Summary:
On Monday September 12th the USDA will release their latest Supply & Demand estimates. Ahead of Monday’s monthly report the Corn, Wheat and Beans have been mixed in their trading the past two days. Investors have been weighing the prospect of flooding that has reportedly led to fungal diseases against the backdrop of what has long been expected to be record Corn and Soybean crops.
The short term weather outlook (6-10 days) is calling for drier weather in the Midwest but the 11-15 day outlook is not so positive. It has more rain on deck for the Midwest.
Even still record yields are still expected but investors have been a bit more cautious. The export sales numbers that were released today pushed futures prices up on the onset but as the trading day transpiresd prices backed off a bit from their watermark highs. Wheat reported 662.1k metric tons (MT) in sales versus trade expectations that ranged from 200k to 700k MT. Beans edged just past the high end of expectations at 1.123 million MT (MMT) versus 500k to 1.1 MMT. Soybeans rounded out the figures at 1.778 MMT vs expectations of 1.1 to 1.6 MMT.
The narrative that surrounds demand is perhaps going to be one of the key factors that drives perception in the coming weeks. As long as enough demand is able to surface that meets supply price stabilization/support may have a chance.
