9/22/2022

Corn and soybeans made another attempt at a strong move higher but enthusiasm was lacking. Corn was firm around the 3 higher mark and soybeans traded as much as 15 higher before flipping red shortly after 9:00 this morning. The dollar continues to rally but there is already evidence of how it is affecting export demand for U.S. grains. Corn, soybeans, and wheat all missed their targets low last week with 184k tonnes of wheat, 446k tonnes of soybeans, and a dismal 182k tonnes of corn reported sold last week. It was also seen in the report that China was already quietly cancelling U.S. new crop soybean purchases, likely in favor of cheaper soy out of Argentina. Comparing this year's total 2022/23 export sales volumes to this same point last year, wheat sales are slightly ahead, corn sales are running only about 50%, and soybean sales are running about 11% higher (was roughly 30% higher one month ago). We need to be very cautious about getting bullish at these price levels with demand already lacking. The U.S. does not necessarily have a crop issue, we have a basis issue. Once we know which areas inside the U.S. need corn, it will be solved rather quickly. The combination of funds committed long and the projected 2022/23 ending stocks are lending the most support to the market right now. The USDA's export sales goals are already beginning to look very lofty to achieve.

In the past two weeks, both attempts to break back above the 700’0 level have failed, creating a short-term double top on the chart. Trade retreating away from $7 so quickly should be concerning for anyone bullish. U.S. corn is simply priced too high and we are less than one month out from a fresh new crop supply.