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Corn, soybeans, wheat under pressure as US dollar surges

Soybean sell-off continued amid concerns about the broader markets, rising interest rates, the higher US dollar, and the potential for slowing economies.  Harvest pace for soybeans is running behind the five-year average.  The storm track for Hurricane Ian could threaten crops in that region.  The next big headwind for soybean markets will come from Brazil, where decent growing conditions could mean a record harvest early next year.  According to Dow Jones and the private firm, Safras and Mercado, 2% of soybeans were planted in Brazil as of Thursday with another week of favorable rains expected. The recent strength in the dollar and that week’s uncertainties about a railroad strike are likely contributing factors. There is concern that energy prices could spike this winter, which could spark some demand for soybean oil, keeping demand for soybeans strong.   

Corn futures ended the day lower as markets were pressured by bearish outside market influences.  The US Dollar Index continues to push higher.   While running slightly behind the five-year average, harvest is picking up pace around the country.  The extended forecast is mostly dry and promotes harvest progress this week.  Hurricane Ian is expected to bring heavy rainfall to much of the coastal and southeastern US, and if/when it makes landfall, it will likely delay all harvest activity.  It is early, but the 2022/23 pace is running behind 2021/22, partially because of slower demand from China and the hefty competition from other parts of the world, like South America.  Rain is in the forecast for Brazil, helping growers get their first corn crop planted.  However, dry weather in Argentina is keeping many farmers out of the fields.  Exports of US corn should improve in the coming months, helped by the ongoing war in Ukraine and the drought in Europe.

Wheat futures were also lower amid rising interest rates and a soaring US Dollar Index.  Planting is underway or is right around the corner for winter wheat crops, and much rain is still needed, especially in the southern plains.   Plantings are expected to be much smaller in Ukraine putting 2023-24 wheat production at risk to be similar to that of the current year, which was limited by drought and the war in Ukraine.  There is some bullishness in the forecast as the USDA has estimated US ending wheat stocks in 2022-23 at 610 mb, the lowest in nine years. 

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