Ag Market Insights is dedicated to bringing you timely information to help you consistently get the most money for your crops. Our team painstakingly goes through mountains of information and data and distills insights into a format that you can consume in a few minutes.
In this edition:
Market Actions: Insights on marketing actions to consider. No big movements, but there is strong reason to believe that corn, soybean, and wheat prices should be going up soon.
Harvest Headlines: Like in previous days, we have some news that should help inch prices forward, but there are also some events working to hold prices down.
Weather: Starting to see some impact on supply. There are seven states starting to be impacted by drought.
The information provided in this newsletter is for informational purposes only and should not be considered financial advice. We recommend consulting with a commodities broker and financial advisor before making any commodities decisions.
Market Actions
US Soybeans are trading at a 60-cent discount to Brazil. US soybeans are the cheapest in the world. This is a good indicator that US soybean prices will rise soon.
No large soybean orders from China are official yet, but the scuttlebutt amongst the major trading desks is that large orders from China should be coming in soon. This will put upward pressure on US soybean prices.
Wheat rally gets close to the 20-day average. We have been getting close to getting past it, which would mark a significant turning point. Keep an eye on the 20-day average for wheat.
Due to volatility, a lot of experts are recommending selling all 2023 bushels, most of 2024, and even 50-75% of 2025 bushels. If you are selling far ahead, you might want to look at some put options as well as the money strike prices.
Harvest Headlines
Corn and soybean crop conditions remained steady, with 67% and 68% of the crops rated as good or excellent, respectively. These figures are well ahead of the levels from last year and the 5-year average. Crop progress metrics for both crops are generally in line with or slightly ahead of historical comparisons.
Corn basis bids were steady to mixed across the central U.S. on Tuesday after trending as much as 7 cents higher at an Illinois river terminal and as much as 4 cents lower at an Iowa river terminal.
The Buenos Aires Grain Exchange expects to see a 17% drop in Argentina corn area for the 2024/25 crop at 15.5 million acres.
Soybean basis bids were steady to soft after trending 5 to 16 points lower across four Midwestern locations on Tuesday.
Chinese soybean imports in July totaled 9.85 MMT, with 9.12 MMT originating from Brazil and 475,392 MT from the US.
Oversold conditions and global weather and production issues drove wheat higher again.
The winter wheat harvest progressed, rising from 93% to 96% complete this week. This is up from 95% at this time last year and the 5-year average.
The spring wheat harvest advanced from 18% to 31% complete, as expected. However, this remains behind the 35% level seen last year and the 36% 5-year average.
Spring wheat crop condition ratings improved by one percentage point to 73% good or excellent. This is up from 38% last year and the 5-year average of 61%.
The US$ has a short-term target of $100 as we near a U.S. Fed September rate cut on September 19, 2024. Long-term target for 2025 is 90 cents, and a lot will depend on the U.S. presidency come year-end.
Weather
Global weather patterns are exerting neutral to bullish pressures on the prices of corn, soybeans, and wheat. There are no major areas of note, but a number of spots experiencing drought are popping up around the globe. These spots should have some impact on supply and should work to help move crop prices up.
Several states are starting to experience significant drought impacts.
Colorado, Kansas, North Dakota, South Dakota, Tennessee, and Texas.
Extended Commentary
As we move further into the harvest season, the market gradually improves. While the upward movement in crop prices has been slow, the indicators suggest that better days may be around the corner. U.S. soybeans, currently trading at a significant discount compared to Brazil, are well-positioned for a price increase, especially with potential large orders from China. Similarly, the wheat market is showing promising signs as it approaches the 20-day moving average, a critical threshold that, if surpassed, could mark a key turning point.
The steady crop conditions for corn and soybeans, with ratings well above last year and the five-year average, further reinforce the notion that the market is stabilizing. However, volatility remains a factor, and many experts recommend selling a portion of your future bushels while exploring options to manage risk.
Weather conditions are also beginning to play a more significant role in shaping market dynamics. Drought impacts in several key states, including Colorado, Kansas, and Texas, will likely exert upward pressure on prices as supply concerns mount. Global weather patterns contribute to this, with several regions facing droughts that could tighten supply and support price increases.
While the market remains mixed, the trends show gradual price improvements for corn, soybeans, and wheat. Staying informed and ready to act as these developments unfold is essential. The next few weeks will be crucial in determining how these factors play out, and we’ll continue to monitor them closely to provide you with the most up-to-date insights.
