The US Dollar traded to 110.785 this week, marking a new 20-year high. Today, the USD is retreating which has offered some support to commodities, but it is far from a verified technical breakdown. Trendline support from the February lows coms in near 107.35. The last traded on the USD as of writing this, 108.735.
USDA Report
All eyes are focusing in on Monday's USDA report. The average estimate for the U.S. Corn yield is at 172.5 bushels per acre for corn, down from the 175.4 we saw in August. This drops production estimates from 14.359 to 14.088 billion bushels.
The average estimate for soybean yield is at 51.5 bushels per acre, down from the 51.9 that was in the August report. This drops overall production estimates from 4.531 to 4.496 billion bushels.
Seasonal Trends
A bearish seasonal trend for November soybeans starts on September 17th and goes through October 2nd. This seasonal trend has played out for 13 of the last 15 years with the average decline being roughly 45 cents (which doesn’t sound like much after some of the moves we’ve seen over the last two years).\
Ukraine Grain
The market was spooked earlier in the week when Russian President Vladimir Putin suggested the possibility of withdrawing support of the Black Sea corridor. Thus far it has been more words than action, but don’t be surprised to see this headline pop up a few more times.
It’s also being reported that there are not enough ships arriving in Ukraine to move out the backlog of grain.
Since the start of the week, we've talked about the likelihood of the market consolidating into the USDA report, which is mostly what we've seen playout. That has presented some good opportunities for short term traders. Unfortunately, that has kept this week's technical section pretty dull, as there hasn't been many technical developments to write about.
With Wednesday's bearish reversal, we would have thought that would have triggered more sustained pressure in yesterday's session, but that wasn't the case. The market was able to find its footing, which has helped prices firm in the early morning trade. We are still a little more concerned about the downside potential, with the gap near 1350 from July 26th still being open. For this reason, our bias is still in bearish territory. A close above the top end of our pivot pocket would neutralize our bias.
Wheat futures attempted to breakout above the top end of the range this week, which dates back to mid-July. Thought it hasn't been a verified breakout, it does appear that the market is trying to carve out a bottom, with a recent trend of higher lows and higher highs, which has come on the back of the January/February lows holding. We remain cautiously optimistic.
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The European Commission cut its forecast for the 2024 European Union wheat crop to a four-year low amid a projected bigger decline in planted area than previously expected.
Grain and livestock close mixed Thursday. Alan Brugler, Brugler Marketing says wheat rallied for a 6th day pulling along corn and may still have some upside. Cattle recover with the help of better cash news.
Cattle futures plunge again on HPAI news but Scott Varilek, Kooima Kooima Varilek says cash is holding together. Hogs fall with cattle. Corn follows wheat but may not take out the top of the trading range.
