Grains closed lower on Tuesday:
Corn – 3 ½ cents/bu (Dec @ 3.66)
Soybeans – 8 cents/bu (Nov @ 9.91 ½ )
Chi Wheat – 7 ½ cents/bu (Dec @ 5.38 ¼ )
Cdn $ -0.00020 (75.885 cents)
WTI Crude Oil +1.02/barrel (38.28)
Grain prices pulled back today, despite lower USDA Crop Condition Ratings in yesterday’s weekly update, and despite more USDA flash sale announcements regarding new sales to China.
The USDA announced more export business this morning, as the following sales were confirmed:
- 132,000 tonnes of soybeans to China
- 132,000 tonnes of soybeans to Unknown
- 120,000 tonnes of corn to Unknown
Weather for the USA Midwest is forecast to be dry and free of frost for the next two weeks, which has the market anticipating a ramping up of harvest, and therefore more tonnage coming to the market. While export demand continues to be very strong, some potential issues over USA domestic demand allowed for the grain rally to stall today. The US Grains Council made a prediction today that indicated that fuel usage (ethanol) would not return to “normal” levels until at least 2022. That would have a very negative impact on corn volumes being processed for fuel. Add to that the fact that the USDA is forecasting a 0.6% decline in overall livestock feeding capacity for 2020/21, yet is forecasting a 5.5% expansion in corn feeding for the same period. Those numbers just don’t jive, leaving open the possibility of some further adjustments down the road. At the end of the month, the USDA will update it’s Quarterly Stocks Report, which should clarify the size of feed demand for the 2019/20 marketing year.
The National Oilseed Processing Association (NOPA) announced their August crush statistics. Those showed 165.055 million bushels of soybeans were crushed last month, well below the average trade guess of 169.468 million bushels. August crush represented a 9 month low in monthly crush volumes, and the first time in 9 months that a new record was not set.
Despite the downturn in grain prices today, farmer selling was light. The trade expects to see an uptick in selling if prices weaken again tomorrow.