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Global issues create uncertain demand

World map with grain

An interest rate hike from the Federal Reserve poses another uncertain factor for equity and agriculture markets, as consumer demand is expected to wane. However, global issues continue to be the major driving factor in the markets as U.S. harvest gets underway.

After a neutral USDA report and a lack of excitement from the Sept. 15 export sales report, markets are looking to other countries for demand.

“Corn demand needs to hold to keep lower ending stocks estimates in play,” Jack Scoville said. “There are increasing concerns about demand with the Chinese economic problems caused by the lockdowns creating the possibility of less demand as South America has much better crops this year to compete with the U.S. for sales.”

Scoville said there is the chance of additional Chinese needs this year as hot and dry weather concerns may bring their crop into question.

Soybean markets were boosted by strong crop sales in the export sales report, Scoville said. Combined with a shrinking projected yield, the outlook for soybeans looks bright, but there are still worries about sustainable demand. COVID lockdowns in China and a stronger U.S. dollar may cause weakness moving forward.

“There are still renewed Chinese lockdowns and there are fears that China has been importing less as a result,” Scoville said. “Brazil is still offering and South America as a whole is expected to produce a very big crop later this year.”

Wheat markets have been sliding on the strength in the U.S. dollar and Russia’s ongoing war in Ukraine. Supply and demand estimates showed more production out of that region, Scoville said.

“The world feels that the wheat is there and people will not go hungry,” he said. “Russia has threatened to cut off exports from Ukraine unless it can have more exports, too. Russia now appears to be losing the war and could do something rash to try to hold things together.”

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