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In making grain marketing decisions, we must constantly compromise. This is tough to do, but if you are married or have a significant other, you should be used to it. For guys, grain marketing compromises are much easier than the compromises that you are used to.
In this edition:
Market Actions: Insights on marketing actions to consider.
Harvest Headlines: Global events impacting the markets keep exerting dual pressures – some pushing prices up and some pushing prices down.
Farm Bills Supplemental Coverage: Supplement coverage options will be impacted by the pending farm bills that are circulating through the House of Representatives and Senate.
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
The markets did not present any major calls to action on August 21, 2024.
U.S. farmers are expected to use the lowest amount of fertilizer this fall in years. This reduction is driven by a forecasted decrease in U.S. corn acreage for 2025 and weaker demand, which will gradually push fertilizer prices down. However, in the short term, prices remain high due to tight global supply conditions.
With the possibility of historically low prices for corn, soybeans, and wheat in the coming months, farmers may opt for crop rotation, leading to a potential reduction in acreage. This could result in more land being diverted to the Conservation Reserve Program (CRP), solar farms, and ongoing urban development in the U.S.
As we approach 2025, corn's prospects appear slightly more favorable compared to soybeans, but this improvement is contingent on a boost in demand.
Prices continued to hover at very low levels.
8-21 2pm (CT) Prices
Harvest Headlines
Corn volumes saw a modest increase on August 20 (2024) as the grains market rebounded from recent lows, with optimism building ahead of the 2024/25 corn and soybean marketing season. Despite this, December corn futures appear steady around the $4 per bushel level. Any rallies this week are likely to be capped as the Pro Farmer tour reports solid yields across the major production states.
On the second day of the 2024 Pro Farmer Crop Tour, Indiana corn yields were reported at an average of 187.5 bushels per acre, an increase from last year's 180.9 bpa and above the three-year average of 184.1 bpa. Soybean pod counts in Indiana also rose to 1,409, compared to 1,310 last year and a three-year average of 1,239. Meanwhile, the western portion of the tour observed Nebraska corn yields at 173.25 bpa, higher than last year's 167.2 bpa and the three-year average of 169.4 bpa. Soybean pod counts in Nebraska reached an average of 1,172 in a 3-by-3 foot area, up from 1,160 last year and above the three-year average of 1,150 pods.
SovEcon adjusted their 2024 Russian wheat production forecast upward, increasing it from 82.9 to 83.3 million metric tons. However, their overall grain production estimate was revised downward, dropping from 130.5 to 128.4 million metric tons.
Crop conditions are deteriorating due to intensifying drought in eastern Ukraine and southwestern Russia. This is something to keep an eye on.
The Buenos Aires Grains Exchange estimated 2024/25 corn planting area at 6.3 million hectares (15.6 million acres), representing a 17% decrease from the previous season. This reduction is driven by concerns over profitability and weather, but the primary factor is the ongoing fear that the leafhopper infestation that affected last year’s crop may persist in the upcoming cycle.
Farm Bills Supplemental Coverage
Current public versions of both the House and Senate farm bills increase the subsidy and coverage levels for SCO (Supplemental Coverage Option) insurance. Here are the highlights of how SCO might be impacted by the bills:
Current versions of House and Senate farm bills propose increasing subsidy and coverage levels for Supplemental Coverage Option (SCO) insurance.
SCO can only be purchased for acres in Price Loss Coverage (PLC) program, not for Agricultural Risk Coverage (ARC) program, due to concerns about payment overlap.
Analysis of 2015-2022 crop data shows little correlation between SCO payments and ARC-County (ARC-CO) or PLC payments for various crops.
Questions remain about the rationale behind allowing SCO for PLC acres but not for ARC acres.
Tying insurance to specific commodity programs raises policy questions about payment limits and disaster assistance.
The restriction on using SCO for ARC acres may be more about favoring PLC than providing additional insurance options for farmers.
Extended Commentary
As we navigate the complex world of grain marketing, the need for compromise is ever-present. Like in personal relationships, finding the right balance in your marketing decisions is crucial. The current market landscape continues to be influenced by a mix of global events, supply concerns, and upcoming legislative changes, all of which exert dual pressures on prices.
In the short term, the markets have remained relatively stable, with no significant shifts in direction. However, the forecasted decrease in U.S. corn acreage for 2025 and a reduction in fertilizer use could influence future pricing dynamics. While fertilizer prices are expected to drop gradually, they remain high due to tight global supply conditions.
The recent Pro Farmer Crop Tour has provided insights worth considering as you plan your next steps. Reports from Indiana and Nebraska indicate better-than-expected corn yields and strong soybean pod counts, which could support prices. However, the ongoing drought in eastern Ukraine and southwestern Russia reminds us that global supply disruptions can quickly change the market outlook.
As we look ahead to the 2025 season, corn’s prospects appear slightly more favorable than soybeans, but much will depend on a boost in demand. The potential for historically low corn, soybeans, and wheat prices in the coming months may prompt farmers to consider crop rotation or even divert land to alternative uses such as the Conservation Reserve Program (CRP) or solar farms.
On the legislative front, the proposed increases in subsidy and coverage levels for SCO (Supplemental Coverage Option) insurance in the pending farm bills could offer additional risk management tools. However, the ongoing debate over why SCO is available for PLC but not ARC acres raises important policy questions that must be addressed.
As always, staying informed and being prepared to adapt to changing conditions will be vital to making the most of the opportunities. The market may not offer clear calls to action, but staying vigilant and ready to compromise when necessary can position you for success in these uncertain times.
