Corn and soybeans were lower early Wednesday with wheat higher. Cattle were mixed, with hogs lower.
Corn, Soybeans Lower on Weather
Corn and soybeans were lower on Tuesday and to start Wednesday removing weather premium.
Randy Martinson with Martinson Ag says rains fell the last 24 hours in dry areas of Western Iowa and there is more rain in the forecast for most of the Corn Belt in the extended.
“Forecast called for up to five to seven inches of rain for the next week to 10 days for a majority of the Corn Belt. That certainly will alleviate a lot of their moisture stress that they’ve been under. Temperatures are also moderating. And we’re even seeing some moderate temperatures up here in the Northern Plains. So all of that is coming in to bring that pressure into the corn and the soybeans.”
Private Yield Estimates
This comes as private yield and production estimates are being released ahead of the Aug. 12 WASDE.
StoneX was the first to released their projections which are partially based on survey results from producers. Corn yield came in at 184.8 bu. per acres, above the 183 bu. trend line yield from USDA.
That was pressuring corn and Martinson says there are a number of funds and index fund trader that look at their own models using NDVI or crop condition ratings, which are showing a potentially larger yield than USDA is projecting.
“And I think that’s got the market a little bit jumpy as well. It’s hard to believe that when you look at crop ratings where they’re at that we could see a bigger yield than last year, especially with the trouble spots that we’re seeing in the Northern Plains and the Western Corn Belt,” he says.
Western Corn Belt Drag on Yield
That’s because North Dakota is at only 37% good to excellent rating on corn, South Dakota is at 50% and Nebraska is at 54%.
Meanwhile, StoneX pegs North Dakota’s corn yield at 143 bu., South Dakota at 163 bu. and Nebraska at 190 bu.
So how do you get a big yield when you don’t have the Western Corn Belt helping to pull this year?
Martinson says, “That’s a good question. And that’s been kind of the case. We’ve been seeing North Dakota, South Dakota, Minnesota, and Nebraska as the states that have been kind of pulling down the crop condition ratings for corn and we continue to see that.”
And he thinks those crop ratings will continue to be poor moving forward. “Because we’re not expected to get as much rain or no rain actually in the 10-day forecast. And our temperatures are expected to moderate, but we’re still going to be up in the mid to upper 80s. So I still look for some stress to come on. crop and it’s still going to pull down the potential yield. And right now I would say that we’d be lucky if we could get a 130 to 133 yield for the state of North Dakota at this point.”
Still Iowa sets at 80% good to excellent corn rating and that’s where the trade focus is.
Soybeans Benefit From Rains
Soybeans will actually benefit more from this week’s rains and those in the forecast.
StoneX estimates U.S. soybean yield at 53 bu. per acre which aligns with USDA perfectly at trend line.
Martinson says that is more doable because, soybeans have a little more opportunity to heal and improve yield.
Pre-WASDE Positioning
As more and more private estimates are released the market is starting to position ahead of the Aug. 12 WASDE report.
“This is going to be USDA’s first look at infield surveys for yield and their first adjustment to the corn and soybean production. So we’re going to see a lot of estimates coming out between now and when the report gets released,” he adds.
Corn and Soybeans Testing Critical Support
Corn is testing key chart support on Wednesday.
“We’re at our previous low right now in today’s lows that was hit, which kind of lines up with some pretty strong support lines. So we break through those levels. I think then we look at the next level down, which, you know, probably would take us down into a $4.50, $4.45 area,” he explains.
Soybeans were just a little bit above major support and if that’s taken out, Martinson says the market could plummet quite a ways.
Demand for Grains Supportive
As prices for corn and soybean fall the market should be well supported as it uncovers demand according to Martinson.
Flash sales total almost 28 million bushels of soybeans to China and unknown this week. Mexico came in for 4.7 million bushels of corn this morning.
“I think a lot of them are thinking that the soybean demand is expected because China said they’re going to buy X amount of bushels of soybeans. So I think they’re just kind of subtracting that tally off of what they said they were going to buy.”
Martinson says the market was not anticipating the flash sale of corn to Mexico so that is encouraging.
“I think the bigger question with corn demand going to Mexico is how many cattle start crossing the border into the U.S. once the borders start opening. And I think that’ll be more of a determining factor of what our export demand is going to be for corn,” he says.
June Census figures put exports for corn at a record 312 million bushels and the total is now at 3.4 billion. So USDA may have to raise exports in the August WASDE.
And he looks for more exports of corn due to the EU drought.
Wheat Pops Chasing War Headlines
The wheat market was higher early Wednesday divorcing from row crops and chasing war headlines.
“War continues to be a big part of it is, you know, we’re kind of looking at three different levels, you know, where the issues, the Red Sea, the Black Sea, and then, of course, the Strait of Hormuz. And as those headlines go, the market seems to go, especially in the wheat side. Today, we’re seeing a little bit of push in the wheat because of some concerns about vessels being attacked in the Red Sea, potential for the Strait of Hormuz having a deal done, but that’s not quite completely written in stone yet either.”
So there is still some war premium helping support the market.
Plus, with Ukraine and Russia, that war just continues to escalate and there’s big shipping problems as far as the Black Sea is concerned.
Ukraine’s farm minister says there are no alternatives to Black Sea export ports for grain shipments.
Cattle Test Chart Resistance
Cattle futures saw a strong close on Tuesday with the nearby contracts getting above the 200-day moving averages but the deferreds are still trying to get over that hurdle.
Can the market continue to get above those areas?
Martinson says he’s a little nervous about cattle.
“I mean, technically, I think we need to see it continue to push. You know, the cash continues to be above the futures. We still have those fundamental issues. We’ll see at the end of August, you know, when the border opens, how many cattle start coming across and that might adjust the deferred feeder cattle contracts, but we’re starting to see a little bit of concern with domestic demand.”
Martinson is hopeful for better demand and boxed beef prices heading into Labor Day and USDA school lunch program buying and that will be needed to push cash higher but after that demand could struggle.
Plus, he says open interest in the futures is also declining which is negative to the market.
Lean Hogs Fall
Lean hog futures were lower early Wednesday as the lean hog index and cutouts were both lower on the close Tuesday.
The market is also seeing seasonal selling pressure.
