Market analyst: Market chaos
A lot is happening this week.
The U.S. Department of Agriculture released their July report on Monday. There are also market indications that the corn and soybean crop is improving, and that South Dakota, Minnesota and Iowa have potential for a large rainfall.
We will see if that rain falls, as if it doesn't the forecast turns warmer and drier by mid-July as we move into August.
The seven-day forecast as of July 12 calls for more rain in the next week, especially in South Dakota, Minnesota and Iowa. That rain has started in southwest South Dakota and is expected to spread into the dry areas of South Dakota, Minnesota and Iowa — three critically dry states.
Rainfall will be critical to the market this coming week, and if it falls as forecast it will probably continue to pressure corn and soybean trade. However, spring wheat areas in North Dakota are expected to remain dry, and that could support spring wheat. Once this rain event moves through the corn belt, though, the forecast turns drier and warmer in the 8-14 day forecast for nearly all the Corn Belt, but especially in the northern Corn Belt and the West.
Crop progress for the week is mostly bearish, with corn conditions improving 1%, soybeans steady, and spring wheat areas steady at 16% good/excellent and barley improving 2%. Even pasture and rangeland conditions improved 3%.
Oats improved 1% and topsoil conditions improved 2%. Subsoil conditions improved 1% to 59%. The Pro Ag yield models improved significantly, with soybeans up 0.34 bushels per acre to 49.3 bushels (which is still below the 49.83 bushel trend).
Corn improved 2.66 bushels per acre to 178.12 bushels (now back above the 177 bushel trend). Overall, crops did improve last week, especially corn and soybeans where rain can help yield potential more. That could provide some pressure to corn and soybeans in the next few days, along with the forecast rainfall over the next five days.
USDA's July report updated numbers with the new June 30 acreage numbers. Corn was bearish with 75 million bushels more on carryout, which is 30 million bushels more than expected.
The soybean report did nothing to acres or yield, so there was no change there at 155 million bushel carryout.
Wheat, however, had a massive cut in UA ending stocks of 105 million bushels (15%), 64 million bushels larger than expected as spring wheat production was hacked significantly. This was quite bullish wheat, as world ending stocks were also cut 5.12 mmt to 291.68 mmt, mostly due to U.S. and Canada cuts.
Contrast that with a 1.94 mmt hike in soybeans to 94.49 mmt, and 1.77 mmt to 289.41mmt corn. So the report was quite bullish on wheat, but not necessarily on corn and soybeans.
Expect the market chaos to continue and probably get a whole lot worse.
Ray Grabanski can be reached at firstname.lastname@example.org