Weekly Crop Commentary - 8/11/2023
Aug 11, 2023
Vice President, Grain Division
Good afternoon. All eyes this week have been focused on the USDA report today, it had a little bit for everyone. If you’re on the bullish side we did see some reduction in yields, which were already expected by the trade. If you’re on the bearish side, we did see some adjustments to the demand side of the equation also. All in all, it really did nothing to market action as the day has gone on.Demand for old crop bushels continues to be hot as end users need to extend coverage, and just in time shipments are fetching a nice premium. As far as new crop we are seeing a totally different market. Lack of demand has the market getting extremely soft, especially in the harvest timeframe. We were blessed with another 2-inch rain event this week, and that should be enough to get this crop finished up. Looks like the old adage is going to be true, you want dryness in late May and early June. The only flaw right now is that we are probably 2 weeks behind on development of the crop. Things can still go wrong if we have to deal with an early frost, but it's hard to base a marketing plan around that. As always have a great weekend and good luck to the kids that start back to school next week.
Director of Grain Purchasing
Markets saw an initial higher reaction from this afternoon’s WASDE report, but quickly stalled out finishing lower across the board. New crop corn saw a yield drop of 2.4 bpa to 175.1 and beans also came in lower at 50.9 bpa. Both were slightly lower than the average trade estimate. Despite the lower production numbers, we also saw cuts to demand, which kept a cap on any Friday excitement. Corn for feed dropped 25 mil bu, exports cut 50 mil bu, and other domestic usage was down 20 mil bu, still leaving us at a 15% stocks to use ratio. As for beans, there was a 25 mil bu cut to exports and a 10 mil bu increase to imports, lowering US carryout to 245 mil bu and dropping the stocks to use ratio to just below 6%.New crop pricing opportunities have pretty well passed us at this point with favorable weather and timely rains helping the crop recover from the early summer dryness. Overall, it’s been a quiet week, which I’m not going to complain about. We’ll take a little calm before the storm as harvest will be here before we know it. Hope you all have a great weekend!
Grain Merchandiser, Kenton (Region 1)
At noon we had the monthly USDA report. In this report corn and bean yields and production were lowered even though crop ratings have been improving because of recent precipitation. It was all anticipated, and as you know, the demand is still weak causing the market to settle quickly after the initial bullish reaction to the report. Weather continues to be favorable for the drought-stricken areas. As we move closer to Harvest, we will see the cash basis erode. If you have delayed price grain, keep a close eye on this or undelivered cash contracts, because the penalties will be high to roll with the wide spreads on undelivered grain.
Grain Merchandiser, Upper Sandusky (Region 2)
Good afternoon and happy Friday! Another report day has come and gone, I am sure others will touch on it so I will let them cover it! I’ll start off by saying that this week has been a very slow trading week. Not much news bullish or bearish. Weather reports have been mostly fine and rains have been as expected across the Midwest. There has not been too much global news outside of some flash sales this week, and there hasn't been too much news on the War in Ukraine either. No news is typically bad news for commodities, which is why we see new crop beans down 20¢ since last Friday.Locally everyone is finishing up spraying fungicide and crops have really turned the corner. Driving around the county, corn looks above average almost everywhere and in some spots looks phenomenal. A couple rains will be able to help fill the grain out nicely. Beans looked pretty good around the county as well. Couple spots could use some rain but overall it looks like an above average crop as well. Hope everyone has a great weekend!
Grain Operation Manager, Urbana (Region 3)
We are a third of the way through August, high school football starts next Friday and crop tours are starting to happen. I have seen more airplanes flying around my neighborhood as fungicide and other products are getting applied. I know some people tell me I am crazy but those guys are made up different.
The markets for the most part have been quiet this week. We got the latest and greatest from the USDA today. I am writing before the report, so if there are fireworks someone else is going to have to put that in their comments. Ohio County Journal did a crop tour this week (www.ocj.com) they found a very good crop around Ohio. When I have been out on my motorcycle, I would have to concur that the crop for the most part looks very good, yes they are some trouble spots and dry areas but overall this is an above average crop. I still think the corn crop is 10 days to 2 weeks later than normal and we will have to see if it can catch up over the next 6 weeks, the weather forecast looks like moderate temps and normal rainfall. By the way, we did receive 2 inches in the Urbana area this week, thank you Champaign county fair as it always rains during the fair.This my broken record time, old crop grain needs to be sold, the only thing that is going to happen over the next 45 days is that the basis is going to work against you. We are around a 1.00 a bushel difference between old and new crop at this point and it is not going to get any better. The consumers of corn and soybeans don’t want anything in their bins when new crop harvest starts, why would you want to carry old crop to new crop at a dollar more a bushel? Some of them are talking about some down time in the next few weeks so their demand may change. Yes, there may be some opportunities to get some old crop sold at nice pushes but as soon as the processor has what he thinks he needs to get to harvest that will disappear.
Grain Merchandiser, Marysville (Region 4)
Happy Friday! The nearby corn market was stagnant most of the week with only a 5¢ trading range until the USDA WASDE Report was released at noon today. As we head into the market close this afternoon, it appears we’ll finish out the week on a down note. Soybeans started the week down 31¢ on Monday and struggled to recover. Like corn, soybeans and wheat are also in the red, post-report this afternoon. The report was seen as overall neutral, but with lack of fresh fodder to feed the bulls, the bears are closing out the week.The WASDE did see lower corn and soybean yields, 175.1 and 50.9 respectively. However, reductions in the demand side of the table gave us carryout numbers that were relatively close to the average trade estimates. The crop conditions ratings continue to show improvements since the lows earlier in the growing season. For example, Illinois’ corn has more than doubled its lowest rating of 26% in June to 58% Good/Excellent this week. We might’ve had rough patches in this growing season, but I think we’re still looking at good-sized crops for the year. Have a great weekend!
Grain Merchandiser, Canfield (Region 5)
Good afternoon, the USDA August report is out and no huge surprises in it. Corn yield came in at 175.1 bu per acre and the bean yield came in at 50.9 bu per acre. US Carryouts for the 23-24 marketing year came in at 2.2 billion bushels of corn and 245 million bushels for beans. As we have talked about before, there is very little room for error in the bean balance sheet. The unknown right now in the bean balance sheet is how will our exports look for beans in the year ahead? Also what will the growing season look like in South America this winter. Those are questions that will take some time to answer. But for today the markets don’t have to do much to ration demand based on the numbers we have currently.Weather here in NE Ohio continues to look really good. We have been seeing very timely rains for the start of August as well as temps that are not much above normal to this point in time and we all know that August is the month that seems to determine what are bean yields are going to look like. Below is what the 6-10 day forecast maps look like. You see that both temperature’s & precipitation are near normal in our area as and over a big portion of the corn belt. Things are starting to shape up to looking like we could have a good fall harvest. Have great weekend!!!!!
Grain Merchandising Intern
Summer has flown by! This will be the final time I will be writing as the Grain Merchandising Intern. Today is my last day and I will be starting back at Ohio State very soon. I just want to thank all the Heritage Cooperative staff and customers for this amazing opportunity and a fantastic summer.
Markets have been quiet to say the least. The past 3 days December corn has seemly found a floor right around $4.95. I am writing pre WASDE today, so I would imagine we see some movement when that releases at noon. Experts are predicting little to no change in the corn yield. Everything points towards a similar average to last year's crop; the problem being that Brazilian estimates continue to climb. Without sufficient demand from China the carryout situation still looks bleak with no market relief in sight. Currently it seems even a weather scare would not be enough to make markets think twice before selling.Soybeans are an interesting case. I do not expect yield to change on the upcoming WASDE meaning that stocks will still remain somewhat tight. A weather event could send the bean market into a frenzy if yield gets downgraded by a couple points. Beans have taken a couple price hits the past few weeks currently trading at $13.40 (down from $14.25 since 7/31). Everything could change in a matter of hours if the market starts to sense shortage.