Weekly Market Update 9/15/22

Here is your weekly market update from the Garden City Co-op Grain Origination Team.

Trivia

1. Which linebacker was the first Kansas City Chief to be inducted into the NFL Hall of Fame? Hint: He was inducted in 1983.

2. Who was the head coach of the first Kansas City Chiefs Super Bowl win?

Answers at the bottom.

Market News

• Potential railroad strikes have been in the headlines this week, but major railroads and unions secured a tentative deal today after 20 hours of intense talks brokered by the White House. The deal includes major wage increases and protections for certain kinds of medical care. Union members still have to vote on the agreement, but regardless of the outcome the deal does push the rail strike back several weeks from the original start date of this coming Friday. A rail strike could have major implications for local grain markets, as well as other sectors including energy, manufacturing, healthcare and retail.

• Stock markets are lower today, following a modest rebound yesterday from the stock market's worst day since June 2020. Initial jobless clains fell for a fifth-straight week to the lowst reading since May, at 213,000 first-time unemployment filers. Meanwhile, data from the Commerce Department showed consumers kept up spending in August despite continued pressures from inflation. Retail sales unexpectedly increased 0.3% last month after a downwardly revised 0.4% decline in July. Last month's Consumer Price Index (CPI) showed prices rose a more-than-expected 8.3% over last year.

• ​USDA released the September WASDE on Monday and it was mostly as-expected across the board. Soybeans got probably the only surprise, with a bigger-than-estimated reduction in yield that lowered production on an already tight balance sheet. Check out the below graphic and commodity sections for more specific information.

Weather

It seems like these extended forecast maps keep getting copy and pasted, because our area is once again in the above average temperature and below average precipitation zone. Temperatures are stay steady with highs in the 90s, with chances for scattered thunderstorms forecasted across our area this evening. It currently looks like the end of next week could bring a slight cool down in temperatures.

Corn

Corn futures have seen pressure this week on what was a looming railroad strike, but the unions and management reached a tentative deal early Thursday morning. This deal did not give corn the bounce it was hoping for, however. Last week’s CFTC showed a small bump from last week in corn managed money longs at 226,479 contracts. Monday held a data dump for corn as the market saw export inspections, crop conditions, and the USDA’s September WASDE. Export inspections came in at a disappointing 17.6 million bushels, down from last week’s 2.9 million bushels and off the 10-week average of 30.3 million bushels. Crop conditions showed the state of the US crop continuing to decline, dropping 1 % to 53% good to excellent. Kansas conditions stayed steady at a disheartening 22%. Corn harvest was pegged at 5% complete for the US and 38% complete for Kansas. Export sales this morning showed 23.0 million bushels with no new crop sales. USDA’s September WASDE showed a significant yield pull back on corn that the market was expecting. The USDA’s bpa estimate came in at 172.5 bpa with a production number of 13.944 billion bushels on 80.8 million harvested acres. Locally corn harvest starts to trickly in in Southwest Kansas as basis continues to heat up with a dismal-looking crop coming off.

Wheat

Wheat is sliding back a bit today after have a green start for the first half of the week. Monday the USDA released the September WASDE report. For wheat it was a non-event with the USDA not touching the wheat balance sheet this month. This could led to adjustments later or they are optimistic about feeding in previous reports, time will tell what the USDA decides. Export inspections pegged wheat at 27.1 million bushels shipped above trade estimates. HRS was the number one variety followed by HRW. Mexico was the number one destination. We finally have export sales back after 4 weeks of no data. Wheat sales were not spectacular, current week reported 8 million bushels sold. HRS was the number one variety followed by HRW. Mexico was the top destination followed by the Philippines. News of the railroad strike being averted has put a drag on the market. CFTC report showed managed money selling 1,371 contracts of KC wheat lowering the long position to 11,087 contracts. The main thing to look for this afternoon is what comes from the meeting between Russia, Turkey, and China regarding the grain corridor.

Soybeans

Beans have been the big mover of the week. Everything started Monday from the September WASDE where bean yield dropped 1.4bpa lower to 50.5bpa. Production also took a hit with 4.378 billion bushels expected lower than all trade estimates. This was a perfect concoction for bulls to put their rally caps on and steer the ship. We have seen a slight draw back with the USD rallying hard to bulls to sleep the past could of days. Export inspections showed soybeans with 12.1 million bushels shipped below trade estimates. China was the number one destination. Soybeans are getting strength from export sales being reported this week. Current we showed 31 million bushels of old crop and 1.1 million bushels of new crop sold. China was by far the number one destination. So far 2 weeks into the new export sales year beans are well above seasonal pace. Soybeans crop condition dropped another point to 56% good to excellent. Kansas stayed at 25% good to excellent on the week. Managed money sold off 2,172 contracts bringing the current long under 100k contracts to 99,629. With the rail agreement in place expect the market to tread water today.

Milo 

Milo conditions also pulled back this week at US conditions came in at 20% good to excellent versus 21% last week, and Kansas came in at 17% versus 19% last week. Harvest progress came in at 23% for the US and 2% complete for Kansas. This week’s export inspections were shown at 1.8 million bushels. Export sales showed 0.5 million bushels. Locally milo basis feels steady as the crop continues to deteriorate.

Trivia Answers

1. Bobby Bell

2. Hank Stram