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Closing Market Commentary

Closing Market Commentary

Grains close mixed:

Dec Corn -1 3/4 cent/bu (4.80 1/2)

Nov Soybeans + 10 3/4 cents/bu (13.60 1/2) ßHolding by the 50-Day Avg of 13.58

Dec Chi Wheat – 3 1/2 cents/bu (5.93 3/4) ßBounced off of 2-year lows of 5.70 two days ago

Cdn $ +0.00325 (74.045 cents)

WTI Crude Oil +2.20/barrel (90.72)

Grains finished mixed today. Corn and wheat especially are likely going to continue moving in a sideways motion until the next injection of market moving information.

Export sales this morning showed within-estimate numbers, with China being the featured buyer of US corn in the first week of the new marketing year at a net 6.8 million bushels, although 6.5 million of that was a switch from previous purchases by "unknown destinations". China was also the featured buyer of US soybeans in the week ending Sept. 7 at a net 10.9 million bushels, including a switch of 2.0 million from unknown destinations and a reduction of 2.4 million bushels. Export sales have been lower lately as Brazil and Argentina have continued to insert themselves as a strong option in the global trade.

The new drought monitor was released and showed that Grain Production Areas Experiencing Drought (+/- weekly change) included corn: 54% (+5%), Soybeans: 48% (+5%), Spring Wheat: 59% (+3%), and Winter Wheat: 46% (+0%). The Seasonal Drought Outlook predicts drought fully covering the Midwest by November.

August PPI inflation rises to 1.6%, above expectations of 1.2%. Core PPI inflation fell to 2.2%, in-line with expectations of 2.2%. Both PPI and CPI inflation have risen for 2 consecutive months. The last time this happened was July 2022. The dollar index as a result has poking up to a 7-month high. Stocks rallied today on the belief that today's data supports a pause in rate hikes by the Federal Reserve. That optimism was also grounded in statements by the European Central Bank that today's rate hike in Europe may be the last of the series there, with a pivot in the future. Additionally, oil production cuts that Saudi Arabia and Russia extended to the end of 2023 will create a “significant supply shortfall” and threaten a renewed surge in price volatility, the International Energy Agency (IEA) warned.

Russia continues to control the lion’s share of global exports, with the majority of the world’s surplus stocks on hand. With little to no resolution to the war in Ukraine in sight, any type of disruption in Russian shipments could send shockwaves throughout the market. That being said, China and Russia are reportedly working on phytosanitary agreements that would open the door to Russian wheat. While Russia is also working with Turkey to send grain to African nations in order to keep up their humanitarian façade. Today, Bulgaria broke with the rest of the surrounding states and will be ending its restrictions on Ukraine imports.

Ukrainian grain exporters could be close to loading the first bulk agriculture vessels from the country's deep water ports since the end of the Black Sea grain corridor initiative in July, trade sources have told Agricensus.  If true, the move could pose a serious challenge to the Russian-imposed blockade of Ukrainian ports that has followed the collapse of the agreement and likely will be closely watched by market participants. The main concern in the trade is how the Black Sea terminals will be operating, as trade sources expect more attacks from Russia on the facilities along Ukraine's coast - particularly the increased risk should the vessels arrive in port.

Statistics Canada this morning raised their 2023 wheat production estimate, from 29.5 to 29.8 MMT; that remains the second-lowest in eight years and 13% below last year’s crop. The trade was looking for a 30.4 MMT figure from StatsCan this month.

August NOPA soybean crush is expected to come in at 167.8 million bushels tomorrow morning, down from 173.3 mbu in July but above 165.5 mbu in August 2022, and the second largest on record for the month (behind 168.1 mbu in August 2019). Trade estimates range from 161.3-171.0 mln bushels.

Funds were thought to have been mixed today with corn and wheat sellers and beans a buyer.

Megan McGrail, Grain Merchandiser

Wanstead Farmers Co-operative


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