Weekly Market Update 9-21-23
Here is your weekly market update from the Garden City Co-op Grain Origination Team.
“Ladies and gentlemen, rock and roll,” were the first words spoken on what cable channel that launched at 12:01 a.m. on August 1, 1981?
Who is the all-time touchdown leader in NFL history?
Answers at the bottom.
Mississippi River & Panama Canal Concerns: Water level concerns in the Mississippi River continue to cause issues. Water levels are 10-20ft. lower than they were a year ago and since a brief flooding event earlier in the spring, river levels have dropped 20ft. since May. This has caused a trickle down effect that will hit farmers. Freight costs have skyrocketed to move anything down the river to the Gulf and in turn caused basis levels to decrease which ends up hurting farmers in their own backyard. A similar situation at the Panama Canal is occurring as well. In July, the number of vessels allowed through the canal daily was lowered from 36 to 32, which may seem like a decent number but there are hundreds of ships needing access through the canal. The cost to navigate through the canal has also shot up exponentially. This disruption in exports makes it very difficult for the U.S. to get export sales on the books and goods delivered around the world. This also affects global markets, making our goods and competing goods cheaper (this touches futures and could disrupt basis values). For soybeans and corn this gives Brazil an advantage on the global stage, having cheaper crops and easier access to the Pacific for transport. A rainy October could return the canal to normal passage which would help U.S. exports.
Fed holds rates steady The Federal Reserve Open Market Committee met on Wednesday and opted to hold interest rates steady, while also indicating that they still expect one more hike before year end and fewer cuts than previously indicated next year. Markets were largely expecting a no-hike at this meeting, which kept the targeted range between 5.25%-5.5%. The Fed also sharply revised its economic growth expectations for this year, with gross domestic products now expected to rise 2.1% this year, more than double the June estimate.
Exports The US is struggling with soybean exports, while Brazil's production is rapidly increasing. The US has had reductions to yields and production that fluctuates yearly. Despite Brazil's geographical advantage in exporting to China, the USDA reported a flash sale of 120,000 metric tons of US soybeans sold this week, with 15.9 million bushels sold and 25.9 million bushels sold the previous week. Corn sales were at 22.3 million bushels, down from 29.7 million bushels the week before. Wheat sales were at 11.3 million bushels, and Milo had no sales this week. Wheat new crop sales were up from the previous week at 500k bushels. Export inspections showed that corn was at 25.3 million bushels shipped, with Mexico being the top destination, and soybeans at 14.4 million bushels heading to China being the destination. Wheat inspections showed 13.5 million bushels, while milo inspections showed only 1.9 million bushels shipped—all commodities checked between trade estimates.
Temperatures should remain steady at least for the coming week, with highs in the upper 80s and nighttime lows in the 50s. Chances of rain are slim-to-none for the next two weeks, but do provide a good window for some fall harvest and wheat drilling action. Looks like we have some breezy days ahead - particularly Saturday with winds between 20-30 mph and some higher gusts possible.
Jerry Rice (208 touchdowns)