Corn, soybeans and wheat were sharply lower July 31, right out of the starting gate. Cooler and wetter weather forecasts encouraged the market that we could still get trendline yields over much of the 18-state area that produces most of the crops in the U.S.
The good weather is overcoming the bullish reaction to export problems in war-torn Ukraine so last week’s net gains are being lost.
Most of the participants in the Monday morning “biscuit break” conference call I take part in were optimistic that good rain coverage the last 10 days has helped crops recover where they were suspect and helped us toward trendline or better crops in other areas.
Other than Southern Minnesota, most areas have had either rescuing or restorative rains. All areas were well-cooked by the heat wave last week, but temperatures had receded, and the forecast was for ideal temperatures in the 80s and low 90s. Most participants said the nights were cool enough that the hot weather did not hurt them much.
The last few weeks have seen several significant political and production events that have given us, in the moment, reason to jerk the market higher or lower.
First, we had a revision of U.S. Department of Agriculture acreage estimates. We were surprised to find USDA thinks we added three million acres of corn and subtracted a couple of million acres of soybeans. The results were sort of predictable. First, we traded corn lower, with soybeans going along for the ride. Then, we traded soybeans higher and dragged corn along.
Next, we traded weather, with most areas being a little to very much too dry, and with hot temperatures for a few days. One farmer on the call said his heat index got up to 110 to 116 degrees. Prices bounced higher with the idea of decreased production in both corn and soybeans.
Then, last week, we traded the war, with the previous Russian announcement that they would no longer let Ukrainian-origin grain ship out of Odessa. They followed that up by sending missiles into the grain facilities so that they couldn’t ship grain from some export facilities even if the Russians would allow them.
Finally, last week we traded the war to start, but then quickly turned lower July 25 with what was termed “profit taking.” We made a bull run in corn near the resistance at $5.82 December futures July 24, but stopped at $5.72 1/4.
By the middle of the week, it looked like we might not be able to hold support at $5.42. In fact, by July 28, we had seen the low of $5.24 1/2. It got worse coming into the day session July 31. By the morning break, we were down another 14 1/2 cents, at $5.15. We closed the day session at $5.13. That is almost 70 cents down in just a few days. We had recovered a penny or so in the night session July 31 as this was being written.
Soybeans did a little better than corn the last 10 days. That would likely be because of the soybean acreage cut, and the fact that, last week we were fighting off the heat over much of the Midwest. The market and all the farmers know that August is the month that makes the soybeans. Now that the weather has moderated, we have hope for holding the prices a little higher.
Early last week, the soybeans got close to the contract high of $14.48, trading $14.35 at the high July 24. Then, we went down again, just like with the corn. The July 28 close was at $13.82 1/2.
This was followed by reports of a return to moderate weather, and in the day session July 31, November soybean futures lost 50-3/4 cents. The close was $13.31 3/4, still well above the chart support at $12.75, but worrying.
When the night session started July 31, we had bounced almost a dime, at $13.41 1/2. The market was helped some with some surprise soybean sales, especially to China. We still lag the pace of exports needed to finish out the projections from USDA for the year, however.
The fundamental factor that is watched a lot this time of year is the Crop Condition, part of USDA’s Crop Progress report we get each Monday during the day.
North Dakota, of all places, is leading the big-producing states with 72% rated good and 7% rated excellent, for a total of 79%. Ohio follows, with a 68% total. The 18 principle states that the report is based on came in rated 57% good and excellent, the same as last year. The average is 61%, so we are gaining on the average of a couple of weeks ago.
One of the callers, from Iowa, had corn that was in dough, and he related some early counts. Iowa is actually at 19% dough, nearly double the 11% average. An Illinois farmers said that he had farmers telling him they feared they would have 50-bpa corn two weeks ago. Now, they have recovered and made so much progress that they are thinking of 150 bpa. That is a long way from the 220 they might expect in a good year, but it is a very real relief.
With the rains of the last few days, the soybeans are getting a good start into that magical August. Some farmers say the soybeans are great, some say they are too short. I suspect that they will mostly be better than anyone thought a couple of weeks ago. That would mean that we have to get some sales done on any real recovery from the mess that was today’s market.
That gets us to wheat, the commodity most affected by the Ukraine war, since that country is a significant exporter of wheat. December Chicago futures touched $7.90 1/4 July 25 before retreating. This was fairly amazing, given that just back on July 13, we got down to $6.411/2.
By July 28, we had crashed back to $7.11 3/4, as the market lost interest in the Ukraine exports, I guess. We are now trading up a nickel, at over $6.96, after a day session July 31 that lost over 36 cents, and an evening session that was up four cents.
Other wheat news has the winter wheat harvest lagging a little, at 80%, mostly because of the recent rains that were beneficial for the other grains. The average for this date is 83%. The spring wheat was hurt early by drought, and is still in poor condition, with 42% good and excellent, seven less than just last week. The normal condition is 70%.
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