Market Analysis

Ahead of the USDA’s 2020 crop report on August 12, the trade chatter has been mixed about this year’s corn and soybean prospects. The satellite firms are optimistic about the vegetative look while others are cautious about this year’s reduced rainfall. Spring dryness in the N. Plains has expanded into other WCB states while normal to above rainfall has occurred in ECB and SE. However, the USDA’s G/E crop ratings have dropped by 10 points to 62% in corn and 7% to 60% in beans since May. Both are 5% below each crop’s 5- year average rating. Over the past 60 days, a major portion of the Central US has received only 25-70% of its normal rainfall - a troubling situation. Our early August C. IL crop tour revealed strong green corn & many clean bean field. However, excessive mid-summer rains created drown-out areas & uneven stands in 25-35% of the beans. 2021’s IL ear numbers improved, but the ear kernel length declined prompting a 202 bu IL yield for August.

For the 2nd year, the USDA’s August crop estimates are based on a producer survey & enhanced satellite crop views vs previous years’ enumerator plant counts, a producer yield survey & satellite views. Utilizing my tour data, rainfall & this year’s shift of 3.2 million more harvested acres in NW Corn Belt vs the rest of the Midwest puts our August US yield at 176 & a 14.873 billion crop. With US exports slowing, corn’s 20/21 ending stocks could rise 50 million bu to 1.132 billion. However, 2nd crop Brazilian crop problems (freezes recently) could cut Brazil’s corn output by 7-8 mmt & a 150 million export jump could drop new-crop US stocks to 1.065 billion.

Our IL crop tour revealed many clean fields, but some weather damage & crop height issues. Overall, a US August yield of 50 bu is our outlook & a 4.335 billion crop. Old-crop US crush could drop 20 million while beans’ new crop demand may be sliced 50 million from higher 2022 S AM crops.

A smaller spring wheat crop from reduced harvested acres & yield will counter a higher US winter crop resulting in 1.725 billion output (-21 million bu). Lower Russian & Canadian crops could up exports but expect 654 million 2022 stocks.

What’s Ahead

 Despite the NW Corn Belt’s ongoing drought, quiet export activity has left US corn & soybean markets sluggish as buyers await the upcoming August USDA crop report. Given this year’s tight old crop stocks, this year’s August US weather remains highly important, particularly for pod-filling soybeans. Crop issues in the Black Sea, Canada & Brazil remain important. Hold new-crop US sales at 20-25%.