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Corn Crushed, Soy Smashed
Friday's USDA crop report showed US corn stockpiles at 1.849 billion bushels, 155 million above earlier estimates. Corn futures fell the limit down but bounced slightly to close down 23 cents on the day and down 20 cents/bushel on the week. This was the largest US corn crop in history. Soybean's numbers were also quite bearish and took beans down more than 15 cents per bushel midday but then recovered slightly by Friday's close. Wheat was pulled down by the others despite a relatively small size crop.
Food Prices Eat Up Savings
Despite the lower prices that our famers are receiving, world food prices were up in September reaching their highest level in nearly four years. Logistics disruptions and weather concerns have affected crop markets. Fears of a severe El Nino have pushed sugar prices to an 18-month high. War related issues in the Black Sea pushed wheat futures to a three-year high last week. Extreme increase in the cost of fertilizers and pesticide (made from petroleum) added dramatically to the cost of corn production.
Strait Issues Grow Farm Worries
The Iran war is disrupting fertilizer transfer, which could affect the food we eat. One-third of the world's fertilizer passes through the Strait of Hormuz. The Department of Agriculture predicts that US farmers will spend 15.3% more on fertilizer, lime and soil conditions in 2026 with fuel and oil costs rising 28.8%. If fertilizer delivery is delayed by the Strait issues, farmers will use less fertilizer than usual, leading to smaller crop harvests.
Diesel Prices Reach Upwards
Ukraine’s recent attacks have taken Russian refineries offline, cutting back on Russian diesel exports. Shipping through the Strait of Hormuz has also slowed. China has cut back, adding to a limited supply of the fuel that powers much of the industry supply chain. US insufficient capacity to make diesel fuel from crude has pulled diesel up faster than crude. Prices have risen to about $2.60 higher than this time last year. With an executive order, President Trump aimed to lower costs for frequent diesel users by making "red dyed diesel" more accessible. The dyed diesel is strictly intended for off-road vehicles such as farm and construction vehicles.
Monster El Nino Makes Storms Tardy
Hurricane Isaias hit the Gulf Coast toward week's end, threatening some oil well production areas and causing a third of Florida to be placed on state of emergency.
Meteorologists, including the US National Hurricane Center, have been predicting this year's extremely strong El Nino would cause our hurricane season to arrive late which it sure did -- the storm was on track to "make or break the 121-year-old-record as the latest arriving initial of the Atlantic season." The strong El Nino disrupts storm formation over the Atlantic Ocean.
CME midday prices: November Soybeans, $12.87; December Corn, $4.78; December Wheat, $6.68. Livestock per 100 pounds: December Cattle, $227; December Hogs, $67.75. Metals per troy ounce: December Gold, $4,223; December Silver, $61.20, December Copper per pound: $6.70. November Crude oil per barrel: (WTI) $92. September S&P futures traded at 7860.
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Walt Breitinger is a commodity futures broker in Indiana. He can be reached at 800-411-FUTURES (3888) or www.indianafutures.com.
Pinion Futures, LLC, a CFTC registered Introducing Broker and NFA Member (NFA #0284447,) is a fully owned subsidiary of Pinion Risk Management LLC. Information contained herein is believed to be reliable but cannot be guaranteed as to its accuracy or completeness. Futures and options trading involve substantial risk of loss and is not suitable for all investors.