Recession Fears Drive Agriculture Futures

Wheat

Wheat futures strengthened due to limited supply from Europe

• Wheat prices attracted some bargain buying after suffering significant losses earlier in the previous trading session.
• December CBOT wheat closed at 568-00, marking a +8.2% gain since August 26th’s low.
• Supply tightness from the war in Ukraine, along with drought conditions that had driven wheat prices up last week, eased as competitive exports from the Black Sea continued.
• Nevertheless, Ukrainian wheat exports are projected to decline to 16.2 million tons this season, down from 18.3 million tons last year, prompting officials to consider stricter limits on milling wheat exports to protect domestic flour production.

Corn prices slump at $4 as exports fall and production estimates amplify

• Corn futures have retreated to around $4 from a seven-week high of $4.13 on September 13th, driven by oversupply concerns and weak demand.
• USDA’s September report projects a record US corn production of 15.186 billion bushels and an increase in ending stocks, heightening fears of oversupply.
• Global corn stocks for 2024-25 are forecast at 308.35 million metric tons, a slight decrease from 309.63 million metric tons in 2023-24.
• Despite some short-term gains fueled by market volatility, technical buying, spillover support from wheat, and a weaker US dollar, the broader outlook remains bearish.
• Additionally, potential economic slowdown in major economies such as the US or China add downward pressure on demand prospects.

Soybeans steady above $10 due to lower ending stocks estimates

• Soybean prices have stabilized around $10.1 per bushel after touching a four-year low of $9.30 in August.
• Demand optimism, following a flash sale to China that was announced this week, was a contributing factor.
• Latest WASDE report showed US soybean production is expected to decline by 3 million bushels for the 2024-25 season, bringing the total to 4.6 billion. This would result in ending stocks of 550 million bushels, a reduction of 10 million bushels from previous estimates.
• Globally, however, foreign soybean production is anticipated to increase by 0.6 million tons, driven by higher output in Paraguay and Canada.
• This will lead to a slight rise in global ending stocks to 134.6 million tons, as increased reserves in Argentina and Canada offset reductions in the US and the EU.