Evening Report | September 30, 2024

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Sept. 1 stocks fuel corn price gains... USDA’s Sept. 1 corn stock figure came in 84 million bu. lower than the average pre-report estimate, which triggered a round of buying after the report that pushed December futures to the highest level since late June. That means beginning stocks for the 2024-25 marketing year are tighter than expected at 1.760 billion bushels. But it also suggests USDA’s analysts continued to use too low of a percentage for feed (and residual) use, which could have bullish implications for the new-crop marketing year if they make adjustments. Sept. 1 soybean stocks were mildly lower than anticipated, while wheat stocks topped expectations. The final 2024 wheat crop estimate was slightly bigger than expected, though down 11 million bu. from August. Click here to view full report details.

Corn conditions decline as expected... USDA rated the corn crop as 64% “good” to “excellent” as of Sunday, down one percentage point from the previous week, as expected. The “poor” to “very poor” rating held at 12%.

USDA reported 96% of the crop was dented (95% average) and 75% was mature (70%). Harvest increased seven points to 21%, three points ahead of the five-year average for the end of September.

Soybean conditions unchanged... USDA rated 64% of the soybean crop as “good” to “excellent,” unchanged from last week, as expected. The “poor” to “very poor” rating held at 11%.

USDA reported 81% of the soybean crop was dropping leaves, eight points ahead of average. The harvest pace doubled to 26%, also eight points ahead of the five-year average.

Cotton conditions decline... USDA rated 31% of the cotton crop as “good” to “excellent,” down six points from last week. The “poor” to “very poor” rating increased four points to 37%. The good/excellent rating plunged 26 points each in Georgia and North Carolina following impacts from Hurricane Helene over the weekend. Given the timing, it’s possible (probable) not all of the destruction from the storm was factored into this week’s report.

USDA reported 72% of the crop had bolls open, one point ahead of average. Harvest increased six points to 20%, four points ahead of average.

Winter wheat planting passes two-thirds mark... USDA reported winter wheat planting reached 39% as of Sunday, one point ahead of average for the end of September. Planting stood at 43% in Texas (39% average), 22% in Oklahoma (32%) and 32% in Kansas (32%). The winter wheat crop was 14% emerged, one point ahead of average.

Soyoil use for biofuels declines in July... Soybean oil used to produce biofuels in the U.S. declined to 1.139 billion lbs. in July, down from 1.267 billion lbs. the previous month, according to the Energy Information Administration. That was down 10.5% from last year’s all-time monthly record. Biofuel usage included 642 million lbs. by biodiesel plants and 497 million lbs. by renewable diesel facilities. Usage for biodiesel plants increased 64 million lbs. from June but renewable diesel plants used 197 million lbs. less soyoil.

India records best rainy season in four years... India recorded its best monsoon season since 2020, setting the stage for a bumper harvest. The country received 934.8 millimeters (36.8 inches) of rain during the June through September monsoon season, compared with a normal of 868.6 millimeters according to the India Meteorological Department (IMD). India received 11.6% more rainfall than average in September, following 9% and 15.3% above-average rainfall in July and August respectively, IMD data showed. IMD noted:

· Rainfall in the central region was 19% above normal.

· The eastern and northeastern regions received 14% below-normal rains.

Powell: Fed not on preset course with interest rates... Fed Chair Jerome Powell gave no indication of an obvious lean toward the size of the next interest rate cut in prepared remarks delivered at a National Association for Business Economics conference in Nashville, Tennessee. He sees two more interest rate cuts totaling 50 basis points this year as a baseline “if the economy performs as expected,” though the Fed could cut faster or slower if needed. Powell reiterated his confidence that inflation will continue moving toward the Fed’s 2% target.

“Looking forward, if the economy evolves broadly as expected, policy will move over time toward a more neutral stance,” Powell said, one that neither stimulates nor holds back the economy.

Powell described the labor market as solid, but said conditions have “clearly cooled over the past year. We do not believe that we need to see further cooling in labor market conditions to achieve 2% inflation.”

Blinder: Powell prioritizes economic risks over consensus in Fed’s 50-point rate cut... Alan Blinder is a professor of economics and public affairs at Princeton and also served as vice chairman of the Federal Reserve from 1994 to 1996. Writing in the Wall Street Journal, Blinder said Fed Chairman Powell demonstrated a willingness to prioritize economic considerations over consensus-building, noting he pushed for the larger cut despite knowing it would lead to dissent. This marks the first governor dissent since 2005, highlighting the significance of the decision, according to Blinder. Powell’s choice suggests a determination to avoid being “late” in responding to economic shifts, as the Fed was criticized for in 2022, Blinder reasons. He says the FOMC’s decision reflects its current view of the economy:

· Inflation progress: The 12-month inflation rate has decreased from 7.1% in June 2022 to 2.5%, nearing the Fed’s 2% target.

· Employment concerns: While unemployment remains low at 4.2%, the Fed appears more worried about employment risks than inflation.

· Policy rate adjustment: Even after the cut, the real federal funds rate (4.9% minus 2.5% inflation) stands at 2.4%, still above the Fed’s estimated neutral rate of 0.9%.

Blinder also noted the Fed’s decision demonstrates its independence from political pressure: The committee wasn’t deterred by potential criticism from former President Donald Trump, writing they understood the minimal impact a September rate cut would have on the November election.