Grain Markets and Other Stuff
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Corn Prices are STRONG During Harvest: Why??
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October 2, 2024
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🌾 Corn Futures Rally as Hedge Pressure Remains Low
Corn futures reached new multi-month highs overnight, with the Dec24 contract peaking near $4.33 per bushel. The rally has now reached 48 cents from its August low. Here's what's driving the surge:
Large money managers have been aggressive buyers, reducing their net short positions from a peak of 356k contracts in July to just 50-60k.
Despite an extremely active US harvest, hedge pressure is minimal, possibly due to concerns of a tighter new crop balance sheet after USDA’s lighter-than-expected old crop carryout estimate.
📉 US Farmer Sentiment Hits Eight-Year Low
US farmer sentiment took a dive, hitting its lowest level in more than eight years:
The Purdue University CME Group Ag Economy Barometer dropped to 88 in September, a 12-point decline from August.
Main concerns include low commodity prices, high input costs, trade uncertainties, high interest rates, and potential policy changes post-election.
Farmers expect much lower profitability in the coming year compared to their outlook at this time last year.
🔗 View the Purdue/CME Ag Barometer report here
🌍 Iran’s Direct Attack on Israel and Market Impacts
Tensions flared in the Middle East as Iran launched its largest direct attack on Israel:
Hundreds of ballistic missiles were fired, with Israel’s Iron Dome intercepting most of them.
The US Navy assisted, launching about a dozen interceptors.
Oil prices surged over 5% amid concerns about possible supply disruptions in the region. In response, the US has increased its military presence and plans to send more troops and fighter squadrons in the coming days.
🌱 StoneX Raises US Corn & Soybean Crop Estimates
StoneX has adjusted its forecasts for this season’s crops:
Corn yield is now projected at 184 bpa, up from 182.9 bpa. This puts corn production at 15.22 billion bushels, an increase from 15.13 billion.
Soybean yield is estimated at 53.5 bpa, up slightly from 53 bpa, with production forecasted to reach 4.61 billion bushels.
🛢️ Renewable Diesel Production Decline
US renewable diesel production saw its largest monthly decline on record in July:
Production fell by 6% to roughly 4.6 billion gallons per year.
The market has reached a surplus, with output surpassing demand despite government-mandated consumption targets and subsidies.
The demand for vegetable oils as a feedstock also dropped by more than 5.6% to 1.2 billion pounds.
🚜 USDA Flash Sales of Corn & Soybeans
USDA reported multiple flash sales on Tuesday:
195,000mt (8 million bushels) of corn was sold to unknown destinations for the 2024/2025 marketing year.
120,000mt (4 million bushels) of soybeans were also sold to unknown destinations for the 2024/2025 marketing year.
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