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Limit Up

By Tori Uhland

September 19, 2023

Over the last several weeks, the grain and oilseed markets have really struggled to hang on to any positive momentum. There have been moments of upside potential and others with even more concern to the downside. A few years ago, these prices would have seemed pretty normal, but after a couple of years of volatility and historically high prices, it’s easy to feel like the markets are down in the dumps.

Last week, the USDA released the September World Agricultural Supply and Demand Estimates (WASDE) report. The WASDE is released monthly, and some months tend to have a little more significance than others. September can be an interesting month in the markets. It marks the beginning of a new marketing year for corn and soybeans, it’s the end of the quarter and the USDA will release their Quarterly Stocks report at the end of the month, and fall harvest begins to pick up and move farther north, increasing harvest pressure on both the futures and basis.

Grain prices were mixed but mostly lower after last week’s WASDE report. Corn prices have been trending lower but seem somewhat range bound. Corn needs some fresh supply and demand news to help move it in one direction or the other. In their report, the USDA pegged corn production at 15.1 million bushels, which is 23 million more than August. Their numbers are assuming that a larger harvested area will more than offset a reduction in yield. The USDA yield estimate is 173.8 bushels per acre, whereas analysts were expecting it to come in a little lower at 173.5 bushels per acre. The record United States corn yield is 177 bushels per acre, achieved in 2021. While the 2023 harvest may be a little ways off from the record yield, the 2023 harvest still looks to be the second-largest U.S. corn crop in history.

Soybean prices have also been trending lower, but the USDA report was a mixed bag. The USDA estimated lower beginning stocks, production, crush, exports, and ending stocks. Harvest will be a negative influence on both corn and bean prices, so good demand (especially export demand) will be vital to help prices stay firm. The USDA increased both the number of soybean acres planted and harvested, expanding the crop by 100,000 acres. On the other hand, they reduced the soybean yield by .8 bushels per acre, making the estimate 50.1 bushels per acre, which was a little below the average analyst guess.

Kansas City wheat prices have fallen pretty significantly over the course of the last two months and got down to multiyear lows last Tuesday. In the last couple of weeks, prices have been up and down, mostly trading on headlines. The USDA report was pretty much a non-event for wheat as there were no changes in the balance sheet.

Last week, Ukraine announced that they seriously damaged two Russian naval vessels and struck port infrastructure in the Crimean city of Sevastopol on Wednesday. This was what appeared to be the biggest attack of the war on the home of the Russian navy’s Black Sea Fleet. The wheat markets are struggling to find some middle ground between these ongoing geopolitical concerns in the Black Sea region and ample global supplies and lukewarm U.S. wheat exports. This did add some premium back into the wheat markets for the day. However, despite a pretty big development in the war and the unlikeliness of the trade deal starting back up, the markets have since fallen back down. The lack of reaction in the futures prices isn’t a bullish signal, and we probably won’t be seeing those record highs come back anytime soon.

Keep that in mind if you have been waiting for the markets “to go back up” so you can price your grain!

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