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Did we just see the summer high in grain prices?

Ag Marketing IQ: Here’s a breakdown of four important market factors to monitor in coming weeks.

Naomi Blohm, senior market adviser

June 29, 2023

5 Min Read
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After a fantastic run up in prices, forecasts for rain brought the recent grain market rally to a screaming halt. Prices retreated lower as quickly as they initially rallied. Was that the “summer high” for grain prices? Here and gone in the blink of an eye?

In the coming weeks, there will be a plethora of information thrown at the grain markets which could potentially allow for another rally or price plunge. Here is a breakdown of four important factors to monitor in the coming weeks which will impact grain market price movement.

Quarterly Stocks and Planted Acreage reports

On Friday, June 30 the USDA will release pertinent information regarding old crop supplies of grain in the United States, along with the final estimate of planted acres in the United States. Traders will eagerly be waiting for these numbers as balance sheets can start to be built with more confidence regarding current supplies of grain in the U.S. and future supplies.

Currently the USDA is suggesting that the acres of corn planted this spring were at 92 million acres, up from 88.6 last year. Soybean planted acres are currently pegged at 87.5 million acres, the exact same number as last year.

Old crop corn and soybean basis is still historically considered “strong” due to tight supplies. The United States has been dealing with tight grain supplies since the late 2020 demand rally followed by global supply hiccups in 2021 and 2022 due to the Ukraine-Russia war and imperfect weather.

This Quarterly Stocks report will help shed light on remaining supplies of old crop grain stored in farm storage, and grain stored in commercial storage.

Friday's stocks report will be interesting as the March 1 soybean stocks estimate was well below trade expectations and viewed as friendly. However, in the following monthly WASDE reports, we never saw the USDA account for the lower ending stocks of soybeans that the Quarterly Stocks report had suggested. Instead, the USDA chose not to tweak the balance sheet much, kicking the can down the road. Smaller than expected Quarterly Stocks numbers would imply either a smaller crop in 2022 and/or stronger than expected demand and would imply a much tighter old crop balance sheet.

Fourth of July holiday schedule

The Quarterly Stocks and Acreage Report wraps up trade for the month of June. When the calendar flips to July, there will be grain trade as normal on Sunday evening, July 2, followed by regular trade hours on Monday, July 3.

There will be no overnight grain trade on Monday night, July 3 and the markets will be closed on Tuesday, July 4 for both the day and evening session. The market will not re-open until Wednesday morning, July 5 at 8:30 a.m. central.

Often, due to holiday trade and hours, there can be additional market volatility due to weather forecasts and holiday trade mentality.

July 12 USDA WASDE report

With the cornerstone set with final planted acres from the June 30 acreage report, trade will eagerly be looking at how the USDA will adjust yield on the report. Will the USDA adjust yield? Traditionally, USDA is slow to react to any big yield adjustments, but with the drought conditions that portions of the Midwest have dealt with in June, perhaps they will make a mild adjustment.

Looking back at history, USDA has not changed the corn yield estimate from the June to the July report since 2016. However, back in the drought of 2012, between June and July USDA lowered the U.S. corn yield 20 bushels per acre!

In addition to yield estimates, trade will also be monitoring demand with trade primarily expecting USDA to lower demand for grain exports.

Weather and satellite imagery

Preliminary reports from clients and others in the industry suggest extremely variable yields across the Midwest this year thanks to spotty rain showers for many locations. What does feel apparent is that this year’s harvest will likely not produce a national record yield for either corn or soybeans. Will it even be trendline is also coming into question.

Each weather forecast will be scrutinized from now through August with the fancy satellite images procuring their yield guesstimates starting in Mid-July. There is a lot on the line. Depending on yield numbers this year, U.S. grain prices may continue to lag lower for the remainder of 2023 if the perception is that a near-record crop could still be possible. Or, if yields are perceived as substantially less than trendline, due to a droughty start to the U.S. growing season, grain prices could hold firm for months to come.

The missing pieces of the puzzle will be placed soon enough. These are the four main price components to monitor for now.

Reach Naomi Blohm at 800-334-9779, on Twitter: @naomiblohm, and at [email protected].

Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.

The opinions of the author are not necessarily those of Farm Futures or Farm Progress. 

About the Author(s)

Naomi Blohm

senior market adviser, Total Farm Marketing by Stewart Peterson

Naomi specializes at helping farmers understand how to manage cash marketing needs and understand the importance of managing basis, delivery point considerations, cash flow needs and storage capacity. She earned her Bachelor of Arts in Political Science with a minor in Agriculture Business at the University of Wisconsin in Platteville. She has a Master of Science in Adult Education with an emphasis in Ag Economics from the UW-Platteville and a Master Certificate in Global Education, from the UW-Oshkosh.

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