October 3, 2023
US agriculture prices are under pressure due to higher-than-expected supply and increased competition from emerging sellers.
CBOT Wheat Prices on Free Fall from Late July
- CBOT Wheat prices have plunged more than -28.8% from July 25th, as wheat weekly exports data started to be announced weaker compared to seasonality.
- U.S. wheat prices fell last week as supplies from the northern hemisphere enter the market, vessels of Ukrainian wheat traveled safely through the Black Sea, and Russia continues to dominate exports.
- Furthermore, speculators added extra short positions to SRW CBOT wheat futures and expanded for the 3rd consecutive week their net money-managed funds position to 73,607 contracts short.
- From supply side, all-wheat production for the 2023/24 marketing year was pegged at 1.81B bushels, above market expectations of 1.73B bushels, according to the latest USDA Small Grains Summary report.
Corn Futures Have Been Stable Since August
- CBOT corn futures have been relatively stability since early August as corn exports have regained their pace after the fierce decrease in June.
- Lower demand from China was driven by increasing imports from rival Brazil, adding extra downward pressure to corn futures.
- Meanwhile, corn stocks in the US stood at 1.36B bushels as of September 1, below market expectations of 1.43B bushels, according to the US Agriculture Department’s quarterly stocks report.
- The lack of domestic demand and the seemingly expanding balance sheet will weigh on prices over the next quarter, though demand, particularly export demand, can pick up at a moment’s notice.
CBOT Soybeans Futures on 4-Month Low
- Soybean futures fell to below $12.8 per bushel, the lowest in 16 weeks after data showed soybean stocks stood at 268M bushels as of September 1, above market expectations of 242M bushels.
- Still, it was the lowest level for this time of year since 2021 as strong demand from crushers depleted supplies.
- Soybean stocks stored on farms totaled 72.0 million bushels, up 14% from a year ago. Off-farm stocks, at 756 million bushels, are down 13% from a year ago.
- Soybeans exports are above the seasonal levels by 101% and 22.8% compared to 2022 and 2021, respectively.Meanwhile, the US soybean harvest is progressing, adding to ample supplies from Brazil.