Missed some grain market news this week? Here is all the news you need to help you make your marketing decisions.

Ag Marketing IQ

Storage is a cornerstone of most farmers’ marketing plans. The need to avoid pricing grain at harvest, often when markets are weak, helped create the futures industry in the 19th century. And it’s why farmers and merchandisers built enough bins and bunkers across the U.S. to hold more than 25 billion bushels of crops. But effective marketing doesn’t mean just filling up your on-farm facilities, if any, or sending the rest to town for a warehouse receipt. Tailoring storage decisions to suit both your market and farm’s individual characteristics can help avoid turning a bin from a profit center to a money pit. Here are some keys to consider when crafting your plan.

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. 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 the 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.

The global meat sector will be valued at $1.5 trillion by the year 2022.  If a new niche industry like cell-cultured meat could carve out just 5% of that market, that would represent a $75 billion industry and a major disruption to the current market. That means that alternative meat could be a huge industry.  That is what major investors are counting on. They have made significant progress on reducing the cost of this meat.  In 2013, it cost $1.2 million per lb.  Today it is below $50 per lb. and is expected to drop to $10 per lb. by next year. 

Black swans can come in the form of weather events. This August alone has brought three major, unexpected weather events which has turned the soybean outlook from bearish to potentially bullish. The market has priced in the August heat, and trade is assuming U.S. soybean yield around 52-53 bushels per acre on a national average. 

The fundamentals driving agricultural markets have shifted in the last two weeks. A recent crop tour identified more drought stress than most anticipated, dry weather has continued in the western corn belt -- but the biggest factor has been demand. Chinese purchases of U.S. corn and soybeans have continued to exceed most trader expectations and have created a dynamic shift from asking “when will they start” to “when will they stop?“  As of this writing (including daily announcements) China has bought 7.143 million metric tons (mmt) of U.S. corn and 13.2 mmt of beans for new crop delivery.

Crops

Corn quality saw a five-point decline in this week's Crop Progress report, moving from 69% rated in good-to-excellent condition a week ago down to 64%. Soybean quality ratings moved from 72% in good-to-excellent last week down to 69% through Sunday. The 2019/20 winter wheat harvest is inching toward completion, moving from 93% a week ago to 97% through Sunday. This year’s spring wheat harvest is moving more sluggishly than it has in recent years, with nearly half of the crop (49%) harvested through Sunday.

Iowa, the nation’s top corn producer and the hardest-hit region in the derecho wind storm’s path, saw a 9% drop in weekly quality ratings to 50% good to excellent in this week's Crop Progress report. Iowa’s corn ratings have deteriorated by 19% in the weeks following the derecho as dry conditions in western regions of the state continue to suffer heat stress amid drought conditions. “75% of our corn is flat from the wind storm,” a Central Iowa Farm Futures reader shared in Feedback From the Field. “Not sure what the quality of the corn will be at harvest if we can even get it off the ground at harvest.”

Exports

USDA’s latest grain export inspection report, out Monday morning and covering the week through August 20, held mixed but mostly positive news. Soybeans and wheat moved higher, with each crop landing on the higher end of trade estimates. But corn took a moderate step lower, landing on the lower end of analyst expectations.

USDA’s latest weekly export sales report, out Thursday morning and covering the week through August 20, showed strong sales for corn, soybeans and wheat. Corn climbed to the high end of analyst expectations, wheat surpassed trade guesses, and soybeans maintained a healthy pace established earlier this summer.

This has been an active week for export sales, with sales reported on four days. On Friday, unknown took 12.8 million bushels of corn. On Thursday, unknown took 5.5 million bushels of corn and China took 29.4 million bushels. On Wednesday, China took 14.7 million bushels of soybeans. On Tuesday, China took 16 million bushels of corn, Japan took 3.9 million bushels of corn, China took 7.5 million bushels of soybeans and unknown took 5.2 million bushels of soybeans.

Podcast

Earlier this month, USDA predicted unprecedented yield potential for U.S. grains, including a nationwide average 181.8 bushels per acre for corn and 53.3 bpa for soybeans – the largest on record, if realized. But that potential was immediately put into doubt on the heels of a deadly Midwestern storm that tore across as much as 37 million acres, followed by two weeks of widespread hot and dry weather across much of the Corn Belt. We take a closer look at what all has been happening in the latest Midweek Markets podcast.

Recaps

Corn futures prices edged lower this morning on technical selling after strong demand from China yesterday. Regardless, corn prices are on pace to end the week 5% higher. Concerns over crop quality conditions in the dry Midwest ahead of rains from Hurricane Laura compounded with strong export demand from China, sending prices in the soy complex higher this morning. Wheat prices are mostly higher this morning after stronger than expected export data was released yesterday. Reduced 2020 production estimates from the European Union also supported strengthening prices in the wheat complex overnight.

Export optimism and weather woes kept corn and soybean prices in the green Friday. Corn finished today’s session with modest gains, while soybeans climbed more than1.5% higher, rising steadily throughout the day and closing with double-digit gains for the second straight day. Wheat prices were mixed but mostly lower, in contrast, on a round of profit-taking and light technical selling.