Ag traders shift focus to weather, upcoming reports
By RHIANNON BRANCH
FarmWeek
Crop markets are focused on weather following a lackluster world agricultural supply and demand report from USDA.
The June 11 report estimated a 3-million-bushel increase in old-crop corn carryout but otherwise left old and new-crop estimates the same for corn and soybeans.
“That was expected because in June, it’s too early to adjust yields and they’re still using the March acreage numbers,” Chip Nellinger, president of Blue Reef Agri Marketing in Morton, told FarmWeek.
Expectations for a historically small U.S. wheat crop remain as harvest begins. USDA lowered the new-crop production estimate to 1.54 billion bushels, down from the May estimate of 1.56 million. The current yield estimate of 46.8 bushels per acre would be an 11-year low.
“The U.S. wheat crop could end up arguably the worst in history,” Nellinger said. “But world wheat carryout at 275 million metric tons is still pretty ample, so unfortunately there’s enough wheat in the world that the poor crop is cushioned a little bit.”
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Negative market reactions for corn and soybeans were likely driven by higher-than-expected upward revisions to South American production and the weather forecast.
“When it’s June and there’s rain on the radar, it’s hard for the grain markets to do anything but go lower in that environment,” Nellinger said.
Weather and crop conditions will be front and center for markets moving forward, as current carryout estimates assume trend line yields in the U.S. of 183 bushels per acre for corn and 53 bushels per acre for soybeans.
“Demand is still really strong in both corn and beans, especially if we get some Chinese business, so there’s no margin for error on yields shrinking really even below trend line. The bar is very high this year,” Nellinger said. “There’s still plenty of upside potential here if the weather goes backward and starts trending hotter and drier than what we’ve seen so far in June.”
USDA rated 67% of corn and 64% of soybeans in good to excellent condition statewide June 8.
Markets are also anticipating USDA’s June acreage report and quarterly grain stocks report set to be released June 30.
“By then we’ll have a little better feel for what the first half of July weather is shaping up to be like and that June 30 report really is going to be a potential market mover from both the acreage and stock standpoint,” Nellinger said.
The influence of the war in Iran on energy prices, especially oil, continues to translate to crop markets as well.
“That bodes well for both ethanol and renewable diesel demand, so I don’t think we’ve heard the end of that story yet from a grain perspective,” Nellinger said.
This story was distributed through a cooperative project between Illinois Farm Bureau and the Illinois Press Association. For more food and farming news, visit FarmWeekNow.com.
