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Karl Setzer Grain Commentary

Morning Comments; Thursday, September 20th, 2018

Corn is steady and soybeans are weaker on the overnight session.

Despite recent news of reduced ethanol output, ethanol manufacturing for the week ending September 14th showed an average of 1.051 million barrels of ethanol were produced each day, up 31,000 barrels from the prior week. Even with the increased production ethanol reserves dropped 148,000 barrels. Reserves currently stand at 22.75 million barrels, 7.6% higher than a year ago at this time. Trade will be watching this data for the next several weeks to see if production does in fact decrease and how much impact it will have on corn demand.

The increase in demand for protein has driven more acres into soybean production in recent years. According to a study by Advance Trading Inc., soybean production has grown in the state of North Dakota dramatically, acres have jumped 82% from 2009 to 2017 to 7.1 million, becoming the 4th in total soybean plantings behind Illinois, Iowa and Minnesota. A large increase was also noted in Canada, where from 2013 to 2017, soybean acreage increased 55%. In both instances, the majority of the increased acres came at the expense of wheat. With the depressed values it’s not surprising to see estimates of decreased soybean acres next year.

China imported 9.15 MMT of soybeans during the month of Aug., nearly all originated from Brazil. Brazil’s infrastructure has greatly increased in recent years and it has been reported that they have the ability to ship up to 330 million bu in a months’ time. The increased exports have some questioning their reserves.

Market Movers: fund activity, export sales and yield reports.


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