The market has effectively paused this week while it awaits the September USDA Crop Report, to be released on Friday. Typically not a massive market mover, the Sept report will have increased importance placed upon it following the storm damage in the US.

Some analysts are already forecasting some significant production losses due in part to the Iowa ‘derecho’ but also a hot, dry spell that has taken some of the shine off of what had been an almost perfect season in the US.   Early estimates indicate the trade are looking for the national US corn yield to be trimmed from 181bu/ac (a record) to 178bu/ac (still a record).  It is a sizeable cut and will likely have an impact on the carryout.

Assuming the USDA numbers come in within expectations, the market will likely shrug off the production losses.  A cut deeper than what the trade is expecting could make life very interesting.

While wheat futures have been rallying, so has the AUD.  While off its seasonal high for 0.739USD last week, the AUD has remained stubbornly strong.  Part of the reason is strong Chinese demand for iron ore.  Another is the fact that the Australian cash interest rate remains higher than most of the other currency crosses, making it a low risk investment.  Lastly, the US has been printing money hand over fist as it struggles to break out of the COVID-19 inspired economic slump.  This factor has contributed to the weakening of the USD against the AUD.

Commodity Conversations

Next week

All eyes on the USDA report.  Assuming corn and bean production figures are within expectation, don’t expect the market to change too much

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Click on graph to expand

Click on graph to expand

Data sources: USDA, Reuters

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