Wheat futures hold on to gains despite pressure from the higher US dollar
Soybeans started the day higher, but a turnaround in the Dow Jones and US Dollar Index put on the pressure and contracts couldn’t hold on to their gains. Soybean prices continue to get hammered by concerns about slowing global economies. Soybean meal also closed lower for the fourth time in the last five days. Weather looks favorable to help bolster harvest activity. Soybean harvest is running behind the 5-year average. Some Southern states have a good start on harvest while states like Illinois and Iowa are just getting underway. Markets are also under pressure from South America, as Brazil could see a record crop with decent growing conditions. There is concern that energy prices could spike this winter, that could spark some demand for soybean oil, keeping demand for soybeans strong.
Corn futures, like soybeans started the day with solid gains but fell victim to a turnaround in the US Dollar and the Dow Jones. Corn futures did manage to eke out some gains in the nearby contracts. But demand has been lackluster as US corn is met with a significant premium compared to other countries like Ukraine and South America. The extended forecast is mostly dry and promotes harvest progress this week. Hurricane Ian is expected to bring heavy rainfall to much of the coastal and southeastern US, and if/when it makes landfall, it will likely delay all harvest activity. While still early in the marketing year, the 2022/23 export pace is running behind 2021/22, partially because of slower demand from China and competition from other parts of the world. Corn demand for ethanol has also been under pressure as crude oil futures have tumbled and gasoline demand has declined.
Wheat futures shrugged off the higher dollar and held on to gains on Tuesday. US and world wheat supplies remain tight. Markets continue to watch developments in the Black Sea region of the world. Planting is for winter wheat, but much rain is still needed, especially in parts of the southern plains. Plantings are expected to be much smaller in Ukraine putting 2023-24 wheat production at risk to be similar to that of the current year, which was limited by drought and the war in Ukraine. There is some bullishness in the forecast as the USDA is estimated US ending wheat stocks in 2022-23 at 610 mb, the lowest in nine years.