Here is the link to this week’s market conversation with Luis Vieira of ConnectedFarmer.com that took place on Friday, July 26, 2024.

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Luis & I discussed the past week’s US market reactions which saw some early week strength on concerns about oversold nature of the corn and soybean markets when the weekly commitment of traders’ report was released over the weekend. 

The NWS forecast of above normal heat returning to the Midwest by late week likely added to CBOT’s market recovery. However, a bout of profit-taking & technical liquidation hit the grains and soybean markets on Friday ahead of the weekend.

The forecast of the extreme heat in the western third of US (west of Denver) moving into the Plains and the Midwest by late week was likely the biggest reason for the US corn and bean prices to have upward basis this week.  Limited rains in the weather outlook and the oversold technical condition of the Chicago lead to a firmer corn & bean tone to the CBOT markets for much of the week.   

Concerns about European and Black Seas wheat (WEAT) crops along with some reports of reduced Argentine seedings provided some price recovery to bread grain in the past week.  However, this week’s US spring wheat crop tour across it’s major producing state of N Dakota from Tuesday to Thursday curtailed prices after last week’s post-harvest strength. On Tuesday’s first day, the crop tour projected a 52.5 bu vs 48.5 last year.  On second day, their field average was 53.5 and their final tour average 54.5 bu vs last year’s 47.5 bu tour yields.  Some disease and scab issues were observed and it will likely be another 3-4 weeks before their harvest begins so things could change. But the USDA’s July ND wheat yield was already projected at 56 bu last week so the tour’s estimate was below the USDA forecast even if its record tour yield.

Despite some good rains across E Iowa and Illinois the past month, areas of IN, Ohio, Mid-south and W Iowa crop conditions will need additional moisture for good yields. Planting dates and temperature influence corn’s development so timing of dryness & heat during pollination can impact its yield significantly. These factors are important to soybeans during August. For the bulk of Midwest, the crop’s temperature and moisture conditions were crucial to the plants’ flowering, podding and seed development with some plants even shedding pods if the plants don’t perceive even moisture is available to produce viable seeds. Some northern bean development remains modestly behind their 5-year average, but nothing too dramatic overall.  Some ability to wait for rains exists, but timely August rains are needed for a strong central US soybean crop each year. In many areas of the Midwest, particularly in west, corn is completed before soybeans are planted each year.   

This isn’t the case in Illinois and particularly the central portion of the state around Bloomington where our annual crop will occur again next weekend.    Over the last 5-7 years, many central IL producers have decided to plant a sizable portion of their soybeans even before they complete their corn seedings.  This should make this trip more informative about Illinois 2024’s soybeans prospects than normal.

This crop tour isn’t as extensive as the Pro Farmer tour since it only looks at 6-7 counties that surround Bloomington IL. However, looking at the crop prospects from this same highly productive area since 2012. This one day tour doesn’t look at all the crop districts of IL or look at other states. However, it’s a good snapshot of the crop potential of a very important area of IL to make output comparisons to other recent years. These field reports are also useful in yield ideas for other central US states based on their crop conditions vs IL. One note, I saw in a publication is that recent Illinois rains may have increased corn disease problems which will be checked this coming weekend.  

This week’s Friday setback seems to a combination of profit-taking ahead of the weekend and some technical stop loss selling that activated some new-short sales.  Given the general forecast of heat for the coming week and the limited rainfall, crop production uncertainty seems likely to continue. It should be good time to be out in the fields to get a sense of C Illinois corn potential.  Hopefully, there will be enough soybean development to project some pod counts. Specific bean yields aren’t likely.

After being oversold, the trapdoor opened up & hit prices sharply on technicals. The general traders aren’t strongly negative at the current levels. However, another widespread rain system across the Midwest would be very negative.  This isn’t in the NWS’s August forecast for the Midwest. 

Trade concerns were raised this week.  Talk of China building larger grain & soybeans reserves and ideas of limited Chinese US purchases if a new Trump Administration occurred have circulated. This might be a possibility, but this Trump factor has only been around 1-2 months & Bidens exit has changed this narrative. Despite no specific recent Chinese bean sales, the recent sizable unknown US 2024/25 bean sales suggests that Beijing has likely been involved with these buys. Another S American report circulated that Argentine producers weren’t happy with the 2024/25 corn prices being so unprofitable because of high input prices. They suggested a 30% cut in new-crop plantings. This would be disastrous for the new Argentine government that gets most of its tax revenues from export tariffs. 

There are many concerns circulating in the markets which can influence prices over the 2-3 weeks. 

Seasonally, wheat usually has a post-harvest price rally before a dip during the fall corn (CORN) & bean (SOYB) harvest. Potential to $6.00 area, basis Sept Chicago, still seems to exist ahead of US fall harvest to move 25% of 2024 supplies. The possibility of corn price rally from a weather scare still seems possible, given the extreme heat in the western US.  Given the current strong Sept basis, use the $4.15-25 area to finish 2023/24 sales because a big 2023/24 carryover. In soybeans, weather over the next month will impact 2024 bean price during both the US and Chinese flowering & podding. Old crop prices are now priced under November.  Use the $10.70-80 area to finalized 2023/24 sales,  Hold new crop corn and bean sales at this time.

Our upcoming Central IL crop tour in this coming weekend. Good looking bean and corn crops are expected from the road.  However, what will the samples say about 2024/25 US corn and soybean output

Here is the link to the video:  https://youtu.be/YhwtGa4vt1Y

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