Evening Report | September 1, 2023

Check our advice monitor on ProFarmer.com for updates to our marketing plan.

Your Pro Farmer newsletter is now available... We’ve had a week to do additional analysis of the data from the more than 3,500 corn and soybean samples scouts gathered Aug. 21-24. Our page 4 feature takes a deep dive into the data gathered during this year’s Crop Tour. One of the unanswered questions we had following Crop Tour was how much damage was done to crops in the Corn Belt by the extreme temps. And then Hurricane Idalia ripped through the Southeast. We take a look at the potential impacts from both weather events. Another issue that could arise shortly is low water levels on the upper Midwest rivers, something that could drive up barge rates, back up supplies and pressure basis as harvest gets underway. Canada’s initial wheat crop estimate came in well below last year and lower than expected. That could impact U.S. wheat exports, especially for high-protein supplies. On the policy front, EPA and the Army Corps released the new WOTUS definition, which drew criticism from multiple sectors, suggesting legal and legislative battles over the jurisdiction of federal waters will likely continue. We cover all of this and much more in this week’s newsletter, which you can access here.

Happy Labor Day from Pro Farmer... Markets and government offices are closed on Monday, Sept. 4, for Labor Day. As a result, there will be no Pro Farmer market updates that day. Grain markets reopen at 7:00 p.m. CT on Monday, Sept. 4, for the overnight session. Livestock markets resume trading at 8:30 a.m. CT on Tuesday, Sept. 5. Have a happy and safe extended holiday weekend.

Soy crush a little stronger than expected... U.S. processors crushed 184.8 million bu. of soybeans during July, which was 800,000 bu. more than the average pre-report trade estimate. Crush increased 10.3 million bu. (5.9%) from June and was 3.4 million bu. (1.9%) above July 2022.

Soyoil stocks totaled 2.149 billion lbs., down 54 million lbs. from June and 118 million lbs. less than last year despite the stronger crush pace.

Corn-for-ethanol use rises less than expected... Corn-for-ethanol use totaled 454.0 million bu. during July, according to USDA, which was 8.7 million bu. less than analysts expected. But corn ethanol consumption increased 11.9 million bu. (2.7%) from June and was 8.3 million bu. (1.9%) above last year.

Production of dried distillers grains with solubles totaled 1.784 million short tons, down 3.5 million tons from June and 150.1 million lbs. less than July 2022.

Russia confirms meeting Putin with Erdogan... The Kremlin confirmed Russian President Vladimir Putin he will hold talks regarding Black Sea grain exports with Turkish President Tayyip Erdogan on Monday in the Russian resort of Sochi, though no further details were provided. Turkish Foreign Minister Hakan Fidan met Russian Defense Minister Sergei Shoigu in Moscow today to discuss grain trade ahead of Monday’s meeting. Shoigu said it was not Russia's fault that the grain deal had failed and repeated the Russian position that Moscow would return to it if all the promises made to Russia were fulfilled.

“It's not our fault today, but it’s stopped,” Shoigu said in a statement. “Here we can say only one thing, that if everything that was promised to Russia is fulfilled, the deal will be extended. It turned out that it is more difficult to do this than to build new corridors, new ground routes.”

USDA cuts ag export, import forecasts... USDA now forecasts fiscal year (FY) 2023 ag exports at $177.5 billion, down by $3.5 billion from the May outlook, while ag imports are expected to reach $196.5 billion, a reduction of $1.5 billion from May. Based on these projections, USDA anticipates an agricultural trade deficit of $19.0 billion for FY 2023, up from the $17.0 billion previously.

For FY 2024, USDA projects ag exports falling to $172.0 billion, with imports expected to rise to $199.5 billion. The preliminary forecast for FY 2024 indicates an ag trade deficit of $27.5 billion.

POET reopens Indiana ethanol plant idled since 2019... POET’s ethanol plant in Cloverdale, Indiana, plans to be fully functional again on Monday, Sept. 11. The company idled the plant in 2019. Doug Berven, Vice President of Corporate Affairs for POET, said: “We invested about $30 million to bring that plant from an 80-million-gallon facility to a 95-million-gallon facility. Part of the reason we’ve brought Cloverdale back on is we’re increasing the blend rate of bioethanol in the fuel supply. That’s going to lower the price at the pump and that’s going to offer more markets for farmers all over the country, and frankly, all around the world.”

Voluntary carbon markets experience their first contraction in at least seven years... Companies like Nestle and Gucci are reducing purchases, and forest protection projects are showing unmet emissions-saving promises. Forest conservation is crucial for meeting global temperature increase limits and combating climate change. This decline also has implications for developing nations that depend on funding from multinational companies to support climate mitigation projects. Kenya, for example, aims to establish itself as a carbon offset trading hub.

Demand for carbon credits is projected to decrease in 2023, with credit usage falling 6% in the first half of the year, marking the first dip in seven years, as per BloombergNEF data. Ecosystem Marketplace’s data indicates an 8% drop for the same period. Quality concerns of carbon credit schemes and negative studies have led some companies to pause purchases, favoring higher-quality credits. This change comes after years of growth in the voluntary carbon market, triggered by shareholder pressure for net-zero policies. The market was valued at around $2 billion in 2021, with forecasts by Shell and Boston Consulting Group anticipating a potential $10 billion to $40 billion market by 2030. However, challenges in inspiring confidence and demonstrating real emissions reductions have persisted. Consequently, carbon offset prices through the Xpansiv market CBL, the world’s largest spot carbon exchange, have slid over the past 18 to 20 months, with reductions of over 80%.

NGFA supports CFTC changes to large trader reporting requirements... The National Grain and Feed Association (NGFA) noted its endorsement for changes proposed by the Commodity Futures Trading Commission (CFTC) in relation to large trader reporting requirements. In their comments submitted to CFTC, NGFA requested the agency to make improvements by publishing daily Commitments of Traders (COT) reports and reducing the time lag of three days between data collection and report publication. CFTC had introduced revisions to the reporting rules for large trader positions in futures and options, with the aim of enhancing market surveillance and the accuracy of its weekly COT reports. These reports provide insights into open interest positions held by various market participants, aiding informed decision-making and risk management. The COT report, which is widely downloaded, serves as a crucial resource for market participants. The proposed changes in data reporting standards are anticipated to facilitate quicker and more frequent publication of COT reports. Ideally, NGFA suggested CFTC should aim to release the COT report on the day following data collection, providing more timely and relevant information about open positions in the market.

Jobs market expands in August... Non-farm payrolls increased 187,000 in August, up from a downwardly revised figure of 157,000 for July and higher than the average estimate of 170,000. The unemployment rate rose to 3.8%. Average hourly earnings increased 4.3% over the past year.

Fed fund futures now show virtually no chance the Fed will raise rates later this month and are down to about one-third odds of a hike by year-end.