Sept. 29 a bad day for grain markets

By Doug Tenney, Leist Mercantile

For a weekend breakfast weekend earlier this month Cindy filled a skillet with eggs, peppers, onions, bacon, then asked me to take over. I hesitated for a moment, then decided to make an omelet, failing to communicate that idea to Cindy. She passed by and the eggs were scrambled with her fast acting spatula. He who hesitates, loses. The eggs didn’t seem to care as the outcome was quite tasty. Harvest is also a team effort, with a combination of methods and techniques, generating quality production! Good communication doesn’t hurt.

Sept. 29 was a bad day on multiple fronts for the grains with weeks end, month end, and the end of the third quarter for the year. First, the USDA Quarterly Grains Stock Report was bearish for soybeans with Sept. 1 stocks of 268 million bushels, higher than traders had estimated at 244 million bushels. November 2023 CBOT soybeans closed at $12.75, down 25 ½ cents for the day. Just 30 days prior they had reached $14.09 while the high for year was $14.35 in late July. In addition, November soybeans closed at a 3-month low with the next support level at $12.57 which took place late June. However, November soybeans that day were still considerably above the lows for 2023 made late May at $11.30.

The second surprise for the bad grains day from that report took place as U.S. 2023 all wheat production was estimated at 1.812 billion, up 78 million bushels from August. Very few had expected an increase as the average trader estimates indicated a small decrease in production. December 2023 CBOT wheat on report day closed down 37 ¼ cents at $5.41 ½. State by state yields for spring wheat production jumped up much more than expected.

Crude oil prices closed out September with NYMEX November reaching $90.79, down 92 cents for the day reaching levels not seen since July 2022. It’s low for the year was $64.11 reached in early May. Both OPEC Plus and Russia have been pumping less oil in the past year with cuts of 2 million barrels as of October 2022 and an additional cut of 1.1 million barrels in April 2023. President Biden has made multiple appeals for OPEC to increase production in the past two years which have fallen on deaf ears as he has received a resounding “no,” at each plea. The crude oil increase from $70 to $90 a barrel did not seem to affect gas prices at the pump.

Ohio’s corn and soybean harvest had not reached a fever pace as of the end of September with harvest nearly two weeks behind normal for some producers. The first week of October was pegged by some producers as the beginning point for harvest before the Farm Science Review ever took place. Producers were even more aggressive in regions of Ohio this year with fungicide applications applied to both corn and soybeans by numerous operators across the state. Optimism for better than average corn yields seems to be the norm with above average soybean yields lower than corn.

Producers planning on storing corn and soybeans into 2024 will need to account for much higher interest rates than in past years, as they are at a 15-year high. In fact, younger farmers could easily be accounting for those higher interest rates on operating lines of credit the first time in their farming careers. If you assume interest rates on operating lines of credit at 8%, corn prices of $5 and soybeans of $13, monthly interest charges will be near 3 ½ cents for corn, while soybeans are almost 9 cents a month.

Congress got their act together late last month with a continuing resolution of the budget passed before the stroke of midnight on Sept. 30. The House of Representatives had multiple failing votes on the budget before finally getting one passed. The Senate seemed to have an easier path with some bipartisan efforts taking place. Lest you think all the politics and name calling is over, remember that the spending agreement on Sept. 30 only keeps the federal government running through Nov. 17. To be continued…

The Oct. 12 and Nov. 9 WASDE Reports (Supply and Demand) should take place as planned. Some are expecting the U.S. corn yield at 173.8 and the U.S. soybean yield of 50.1 to decrease by the Jan. 2024 final yield report.

Thought for the day. “Cooking demands attention, patience, and above all, a respect for the gifts of the earth. It is a form of worship, of giving thanks.” – Judith B. Jones.