Next week’s crop condition report could weigh heavily on grain markets

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Drought conditions, world trade, war and August data reports are all weighing on grain markets in the first week of August.

Randy Martinson, president of Martinson Ag Risk Management, offered his thoughts on how those factors are at work this week and what’s to come as he spoke with Don Wick of the Red River Farm Network on Friday, Aug. 7, during the Agweek Market Wrap.

Wick brought up the much anticipated August Crop Production report expected Aug. 12. That will be the USDA’s first look at in-field surveys, actual observations of potential yield for corn and soybeans.

Martinson said eyes will also be watching private estimates such as StoneX numbers, because they were nearly spot on for yield estimates last year. StoneX has a slightly higher estimate than USDA’s projections. That seems to be keeping corn prices at bay at the moment.

“It’ll be interesting to see where it comes in,” Martinson said. “But it certainly will set the tone for what we’re going to see for corn and beans moving forward.”

Wick mentioned that the latest Drought Monitor report shows expanded drought conditions. That comes as beans are being made across the upper Midwest.

While the northern Plains saw some showers in the last week, it does not seem to have made much impact on the drought reports. The Corn Belt has seen some improvements, however, and even more rain is expected in the coming week, Martinson said.

China’s aggressive soybean purchases, potentially 10-15 more cargos, were highlighted this week.

“So they are buying what they said they’re going to,” Martinson said. “Hope that maybe they buy a little bit more, especially if we have that little better yield than what some are looking for in the crop production report next week.”

Wick heard from Under Secretary of US Agriculture for Trade and Foreign Agricultural Affairs Luke Lindberg during a visit at Farmfest this week. He said Lindberg was optimistic of China fulfilling its buying commitments in U.S. agricultural goods. Martinson said it would be great to see China come back to buying more corn from the U.S. He added that the European Union is likely going to need to up its imports of U.S. grains as they are suffering from drought.

“The crop is, in France, is now rated like 31% good to excellent, down from 34 last week. It’s the smallest crop since 1980 for that region,” Martinson said. “So the expectation is that they’re going to have to import corn, and will it come from the U.S.? Because we’ve got the GMO corn that the European Union doesn’t like to buy.”

The two mentioned continued tensions in the Black Sea as well as the Strait of Hormuz that continue to impact world trade.

The cattle market saw some strength, which could be attributed to buying prior to the Labor Day weekend. It’s the final push of the barbecue season to help hold up beef prices.

“Fourth of July demand was a little less than we anticipated, and everybody’s hoping we can get it back for the Labor Day weekend,” Martinson said. “It’s the last big holiday for the summer, you know, for the barbecue season.”

Looking ahead, Martinson said eyes will continue to be on the weather as well as next week’s USDA reports. Forecasts are going to make a difference as the crop hits the home stretch. Cooler and wetter is the current trend for large portions of the Corn Belt.

(The Agweek Market Wrap is sponsored by Gateway Building Systems.)]]>