Weekly Market Update 9-19-24

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

Trivia

1. In what city is the NFL Hall of Fame located?

2. How many minutes are in a full week?

Answers at the bottom.

Market News

 
ALPINE PRO: The Grain Team is currently enrolling bushels in our Alpine Pro wheat contract. This contract prices July 2025 (new crop) wheat futures through a combination of committee pricing and a proprietary rules-based algorithm. Especially unique to this contract is a provision that allows a farmer to be released from the contract in cases of verified crop failure. This managed contract is a great tool to add diversification to your grain marketing portfolio. Reach out to your grain originator to see if this contract could be a good fit for your operation. Enrollment is open through September 27^th.

MARKET OVERVIEW: Wheat continues to retreat from last weeks highs, that were largely driven by short covering and Russian weather. Rains falling across Wheat Country just in time for wheat planting is only adding pressure to the market. Exports are poor and domestic demand feels pluggy with the glut of wheat that’s moved prior to fall harvest. Corn and soybeans are rangebound as harvest really starts to kick off across the Corn Belt. While bulls want the market to pay attention to the dry areas in northern Brazil, the overall consensus among forecasters is that the pattern will shift by mid-October. Southern Brazil and Argentina have rains in their 5 day maps, while the rest of Brazil remains dry in the 6-10 day. Local demand feels steady for corn. Export demand for milo stinks with China on the sidelines. Ethanol and feed are supporting milo values today as a backstop against what they are paying for corn.

CROP PROGRESS: Earlier this week, corn conditions represented 65% good-excellent versus 64% the previous week. The USDA reports 9% of US corn has been harvested as of early this week, compared to 5% last week; with 26% of the state’s corn reported as harvested. Soybean conditions declined to 64% good-excellent this week, compared to 65% last week. Overall, soybean harvest across the US is reported as 6% harvested this week, majority of that activity occurring in the southeastern regions of the United States. Sorghum conditions declined this week at 44% good-excellent versus 48% last week. Of the total fall crop, the USDA reports that 24% of the country’s crop has been harvested, with Texas leading the way at 81% harvested, followed by Oklahoma and Kansas.
 
EXPORT SALES: While no N/C corn sales were reported this week, O/C sales totaled 33.4 million bushels. New crop soybean sales totaled 0.3 million bushels this week, with O/C sales at 64.2 million bushels; surpassing the total bushels reported throughout much of this summer/early fall. Old crop wheat sales dialed back down this week, with 9.1 million bushels reported versus last week’s total of 17.4 million bushels. New crop wheat sales totaled 0.4 million bushels this week. Yet another week with no N/C milo sales reported, however N/C sales declined this week compared to last, at only 0.3 million bushels sold in the export market. No export inspection reports this week.

INTEREST RATE MARKET: The cutting cycle has officially started. Powell initiated it with a 50-basis point move lower. This comes after a historically long period of "higher for longer" rates spanning 14 months. The justification was plainly stated in the first paragraph of the official FOMC statement: "Job gains have slowed, and the unemployment rate has moved up.” In a rare occurrence, there was a dissenting vote (11-1) for the first time in years, with Governor Michelle Bowman favoring a smaller 25 basis point cut. This marks the first dissent by a Fed Governor since 2005 and the first from any member since 2022. The market, which had already priced in a 40 out of 50 basis point cut, received what it wanted today. However, there may be disappointment in how it was framed, indicating that 50 basis point cuts are not to be expected as the base case going forward and that the Fed is in no rush to return to neutral because "the economy is fine." Leading up to the meeting, there was a lot of anticipation in the market for something dramatic to happen. However, it seems like we didn't really learn anything new today. Powell's plan is to make larger interest rate cuts if we receive weak job reports between meetings. If there are no weak job reports, we can expect 25 basis points cuts. The aim is to return to a neutral interest rate, which is around 3% according to the Fed's Dot Plot, relatively quickly - possibly by next year. They may not explicitly say they have achieved their goal on inflation, but their actions indicate otherwise. Therefore, the focus going forward will be on employment.
 

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  WEATHER: The rest of your Thursday is looking sunny, with a high temperature near 89°F with a north wind blowing at 10 to 14 mph. Throughout the overnight hours, you can expect partly cloudy skies with a low around 59°F, winds starting the evening out of the north/northeast at 5 to 7 mph, shifting to the east after midnight. So far Friday looks to be mostly sunny with a high temperature near 92°F; wind gusts are possible as a high as 28 mph. Overnight temperatures dip to the mid-60s, with winds coming out of the south at 11 mph. Moving into this weekend, a 60% chance of showers and thunderstorms are likely after 1 pm. New rainfall amounts between a quarter and half of an inch are possible. The chance of precipitation increases during the overnight hours Saturday, moving from 60% to 90%, with new rainfall amounts anywhere from 1 to 2 inches. The earlier part of the day on Sunday once again looks like a slight chance of rain, with a 30% chance likely before 1 pm. Skies are expected to be partly sunny, with a high near 66°F the remainder of the afternoon. Overnight temperatures are anticipated around 42°F. Temperatures finally begin to cool off the remainder of the week with a high temperature in the low- to mid-70s throughout the day Monday, Tuesday, and Wednesday. A 20% chance of scattered showers and thunderstorms presents itself Tuesday and is anticipated to carry through the overnight hours too; with a high near 71°F throughout the day and temperatures expected around 48°F during the overnight hours.

Trivia Answers

1. Canton, OH
2. 10,080