Closing Market Comments August 4, 2022

Today’s Prices

Grain markets finished higher to sharply higher today as weather is starting to look more threatening next week combined with rumors of China sniffing around for U.S. beans.

Grain Market News

High Temperatures

ON Tuesday we seen 100s up into western Iowa, southeast South Dakota and the heat did back off yesterday with the 100s in Missouri, Kansas, and then south into Texas.

Texas, Oklahoma, southern Kansas, Missouri, and Arkansas has been brutalized by heat and dryness this summer.

The heart of the belt saw temperatures mostly in the upper 80s and low 90s with a few mid and upper 90s in eastern Nebraska yesterday.

7-Day Observed Precipitation

Heat and dryness are expected to rebuild next week in the western belt and into the plains.

The areas that are highlighted have not seen much rain over the last week and those are the areas that will very quickly see crop stress develop if the forecast is correct calling for hotter, dryer weather.

Iowa and Nebraska are somewhat the epicenter of this latest weather threat.

Current Conditions

Midday today was mostly in the upper 70s and low to mid 80s, we will see mostly 80s and a few low 90s today but not excessively hot as front pushed through overnight.

The frontal boundary is through the eastern belt down into the delta leaving most of the central, western, and northwestern belt dry in today’s radar.

7-Day Precipitation Forecast

The forecast does call for some rains from eastern South Dakota, northern Iowa, Minnesota into Wisconsin.

Those rains would be very beneficial for South Dakota, southern Minnesota, and northern Iowa if they do happen.

Unfortunately, central southern Iowa, Nebraska, Kansas, into Missouri, and portions of Illinois look to see very little rain over the next week.

Again, temperatures expected to heat up.

Temperature Outlook

The 6–10-day shows that heat in the central and western belt with the most significant heat in the northern Plains.

The heat hangs on into the second week of the forecast going through August 17th, again with the western belt and the plains seeing the most significant heat.

Today’s forecast is also dryer for almost the entire US corn and bean belt all the way out past the middle of August and that helps generate some of the buying and sharply higher prices today.

Grain Market News

Cropland

One week from tomorrow we will get USDA’s August crop report and it appears that analysts will be looking for a slightly lower yield.

One of the items we can look at is the vegetation health index and this compared to a year ago.

It shows that most of the western belt into the plains is well below the year ago with their vegetation health and the eastern belt also lower than last year when it comes to vegetation health.

The areas that have improved are in the northern plains which suffered severe drought last year but is much better this year.

Also, some isolated areas in Iowa, Missouri, Wisconsin, and Minnesota are looking better currently.

This indicates that this year’s yield will struggle to match last year levels.  

World Soybean Basis

Its worth noting that following Brazil’s harvest, February through June, they were typically equal to or cheaper than U.S. soybeans.

But the basis in Brazil has been rallying sharply and has exploded to the upside over the past couple of weeks.

This leaves Brazilian basis well above the U.S. basis, U.S. now the cheapest in the world and this should result in much better export sales now through the fall and Winter and likely into the early 2023.

U.S. export sales have been very slow over the past couple of months, but we expect them to ramp up significantly moving forward.

Corn: Weekly Export Sales

Export sales you can see outside of 1 week in mid-June that was very good, corn sales have been disappointing May-July.

That’s due to Brazil being extremely cheap and most of the world business going to South America in either Brazil or Argentina.

As we mentioned Brazil’s bean basis exploded to the upside and Argentina exploding to the upside over the last 3-4 weeks.

This should cause our export sales to increase significantly.

Soybeans: Weekly Export Sales

Soybean export sales net negative 11 so basically a zero.

That’s been the case with zero or a net negative in the last 5 of the past 6 weeks.

U.S. export sale of soybeans should ramp up dramatically beginning in August, in fact there was rumors of China sniffing around in the marketplace today.

We expect big sales to be announced now through early 2023.

September Corn Chart

Corn prices up sharply today, the extremely choppy trade that we have experienced over the last couple of months is continuing.

Up sharp last week, down sharp Monday and Tuesday, and now rallying sharply again.

After falling back earlier this week the corn market came back to test the 10- and 20-day moving average and we bounced off nicely.

That would put 6.23-6.36 as the next target if we can get friendly weather or bullish weather news in tomorrow’s trade.

September Soybean Chart

Soybean prices also extremely volatile over the past couple of months with big moves up and big moves down.

Last week we were up sharply, early this week down sharply, and now a big move to the upside nearly a 50 cent higher move today.

That has the charts looking better after we found support at the 10- and 20-day moving averages.

If we get friendly news tomorrow or into next week the upside target on bullish weather would be in the 14.38-14.89 range.

September KC Wheat Chart

Wheat prices still in a consolidating mode near the lower end of the range that has been in place for about the last month and a half.

The good news is the market continues to find support at the 8.14 -8.24 level.

The bad news is we have been unable to break out to the upside in a big way.

We are trading right at the 10- and 20-day moving averages an if we get some friendly news and if we break above the resistance levels it may signal that next move towards the $10 level.

Questions or Comments