After coming off the 22nd wettest and 20th warmest July in the 125 years on record, U.S. grain farmers were hit by something I’m guessing many had never hear of: Derecho (pronounced deh-REY-cho).

These straight-line winds extending across a significant portion of Iowa and other pockets of the Central grain belt had initial estimated crop loss reaching 35 to 500 million bu. State and federal agencies had estimated 13 million acres (8 million corn and 5 million bean)impacted in Iowa alone, with 40 to 60 million bu. of damaged grain storage that may not be repaired by harvest.

The trade continues to debate the true damage from Derecho. USDA announced late last week it will resurvey harvested acreage across Iowa with plans to release updates to current estimates in the Sept. 11 report.

This sudden weather challenge, combined with what has been almost daily announcements of new corn and bean sales to China, helped support prices. Even so, today we are still on track for a big corn and bean crop adding to our already large carryout of both commodities.

Other factors in play

Though not a direct impact on ag commodity prices today, these factors could eventually influence commodity prices. Some other outside influences to the market include:

In all cases, we should question and review all sources rather than assume any one source is flawless and unbiased in its reporting. It’s an election year and the abundance of news sources and opinions will add confusion and uncertainty, which could promote volatility -- and opportunity.

So, what’s the take home message? Be prudent and cautious in managing through these times. Make sure your marketing plan is based on risk mitigation rather than emotions. Agriculture is still seeing relatively low volatility. That provides affordable and efficient pricing of both 2020 and 2021 risk-mitigating exchange-traded tools for agriculture.        

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