Weekly Crop Commentary - 8/19/2022
Aug 19, 2022
Ed Nienaber
Vice President, Grain Division
The grain markets continue to work towards new crop values as harvest has begun in the Southeast. Local basis levels continue to fade as demand is working to bridge the gap while farmer’s bushels continue to flow out of grain bins to market. Concerns about inflation and feds looking to increase interest rates again next month, have sent buyers out of most commodity pits. The weekly crop conditions continue to run right around 60% good to excellent on both corn and beans. The Pro Farmer tour begins Monday in Ohio so the market will be paying close attention to those results. Hopefully, they get wet on their tour as some of our origination area could use a good soaking. Additional crop surveys will be released in the coming weeks with StoneX predictions on September 1. USDA will release its findings on Monday, September 12, with a crop production update and supply/demand report. Please continue to be safe and have a great week.
Wes Bahan
Director of Grain Purchasing
Good afternoon. Summer is in the rearview mirror as the kids started back to school this week. This was one of the fastest summers I can remember, and tonight is the kickoff of the high school football season. Time is flying for sure. Well, in this week’s crop condition update, we saw Ohio corn fall back one percentage point while soybeans improved three points. The Pro Farmer crop tour begins on Monday, so it will be interesting to see what they see. To put things into perspective, we are 21 percentage points lower than this week a year ago, and the USDA only has the Ohio corn crop three bushels lower than last year. The same can be questioned on the soybean side as we are 14 points lower than last year, but the USDA has Ohio at one half bushel higher on yield. This weekend’s forecasted rain will play a big part in the determination. Bean basis for the week has remained steady as the export market continues to be leading the way and preventing the domestic market from further weakness. Corn, on the other hand, has continued its slide lower. Harvest in the South continues to gain momentum and the real lack of demand in the export market seems to be the key factor. As we have all stated in earlier publications, if you have unpriced old crop grain, you are risking a lot of basis exposure as we get closer to ample new crop bushels coming to market. We saw the Inflation Reduction Act signed this week. There appear to be a lot of dollars made available to the renewable fuels industry, and this will spur some buying interest from the funds at some point. As always, thanks, and have a great weekend.
Lou Baughman
Grain Merchandiser, Kenton (Region 1)
This week feels like fall. The first high school football game is tonight. The season is changing, and the markets are showing it with the sliding of basis.
Kenton is moving dirt for the new bin construction to start next month. There is a lot going on right now. They should finish the concrete for one of the new scales next week. The scale is scheduled to be here in October. For now, we have a temporary, above-ground scale. Please use caution when driving on the temporary scale and for your safety, be sure to sure to drive off the scale before exiting your vehicle.
Lisa Warne
Grain Origination, Mechanicsburg (Region 3)
Good afternoon! We saw some hard selloffs early in the week due to rain in the Western Corn Belt and carryover bearishness due to higher soybean yield projections from last week’s USDA report. While traders anticipated lower soybean yields, USDA came out with a higher average U.S. yield of 51.9 bushels per acre with six states expecting record average yields, including Ohio. Also on Monday, China announced a cut in interest rates to stir their economy, sparking widespread selling across the markets. Monday evening’s crop condition ratings declined again, but not as much as anticipated, so the selloffs continued Tuesday. The market recovered some in the last half of the week and we are mixed here at midday Friday.
Local basis has continued to decline as we have been relaying it would. Cash basis will maintain this pattern until it converges with our fall bids. In the two weeks since I have last written, cash corn basis has faded 30 cents and soybeans 15 cents. If you have old crop that needs to be sold this year, the basis trend will not be in your favor. Also, if you still have corn and soybeans on delayed price, you have less than two weeks before the new crop year’s charges will go into effect. Have a great weekend and we’ll chat next week!
Steve Bricher
Grain Operation Manager, Urbana (Region 3)
Another week of summer is gone, kids are heading back to school, and we are having a dry August.
We have not seen a good rain in Champaign County in a couple of weeks and it is starting to show in the soybeans. I have noticed the gravel hills are starting to look a little rough. There is rain in the forecast for the weekend so let’s hope we see much-needed rain.
The markets have taken a beating the last week or so. The USDA did not give us any big surprises last Friday so the path of least resistance right now seems lower as the market believes we will have enough today to get us to next year’s harvest. We all know this can change in a second but that is where we are today.
It is not that prices are bad. We are better than we were a year ago, but we are not looking at the same crop we were this time last year either. If you have old crop corn or soybeans, time is not going to do you any favors as we head toward harvest. Basis will continue to weaken over the next month as harvest approaches.
Pro Farmer does their annual tour next week and we will start to see results from what they find early next week.
Ralph Wince
Grain Merchandiser, Canfield (Region 5)
Good afternoon, I hope everyone’s week is going well. Grain markets have been choppy this week. There has not been a lot of fresh news. Next week we will see Pro Farmer produce numbers throughout the week. The market will be looking for direction based on those numbers. The one thing that the tour will not factor in will be the kernel size of corn. They will assume a normal seed size when calculating yields. There has been talk that the seed size could be as much as 5% smaller and that translates to a smaller yield. We won’t know that though, until the combines start rolling later this year. One story that I would like to mention this week is one that has been flying under the radar. The European Union is battling a bad drought this year and some of the resources that I follow think that the U.S. has a pretty good chance of exporting corn to the EU this winter. That could make a difference on our export picture going forward. Lastly, Ukraine is still having plenty of issues, from shipping their old crop to having concerns about where to put this year’s crops, and how to generate enough money to plant next year’s crops. Again, we are not hearing much right now but there are still concerns over there. I hope you all have a wonderful weekend.
Vice President, Grain Division
The grain markets continue to work towards new crop values as harvest has begun in the Southeast. Local basis levels continue to fade as demand is working to bridge the gap while farmer’s bushels continue to flow out of grain bins to market. Concerns about inflation and feds looking to increase interest rates again next month, have sent buyers out of most commodity pits. The weekly crop conditions continue to run right around 60% good to excellent on both corn and beans. The Pro Farmer tour begins Monday in Ohio so the market will be paying close attention to those results. Hopefully, they get wet on their tour as some of our origination area could use a good soaking. Additional crop surveys will be released in the coming weeks with StoneX predictions on September 1. USDA will release its findings on Monday, September 12, with a crop production update and supply/demand report. Please continue to be safe and have a great week.
Wes Bahan
Director of Grain Purchasing
Good afternoon. Summer is in the rearview mirror as the kids started back to school this week. This was one of the fastest summers I can remember, and tonight is the kickoff of the high school football season. Time is flying for sure. Well, in this week’s crop condition update, we saw Ohio corn fall back one percentage point while soybeans improved three points. The Pro Farmer crop tour begins on Monday, so it will be interesting to see what they see. To put things into perspective, we are 21 percentage points lower than this week a year ago, and the USDA only has the Ohio corn crop three bushels lower than last year. The same can be questioned on the soybean side as we are 14 points lower than last year, but the USDA has Ohio at one half bushel higher on yield. This weekend’s forecasted rain will play a big part in the determination. Bean basis for the week has remained steady as the export market continues to be leading the way and preventing the domestic market from further weakness. Corn, on the other hand, has continued its slide lower. Harvest in the South continues to gain momentum and the real lack of demand in the export market seems to be the key factor. As we have all stated in earlier publications, if you have unpriced old crop grain, you are risking a lot of basis exposure as we get closer to ample new crop bushels coming to market. We saw the Inflation Reduction Act signed this week. There appear to be a lot of dollars made available to the renewable fuels industry, and this will spur some buying interest from the funds at some point. As always, thanks, and have a great weekend.
Lou Baughman
Grain Merchandiser, Kenton (Region 1)
This week feels like fall. The first high school football game is tonight. The season is changing, and the markets are showing it with the sliding of basis.
Kenton is moving dirt for the new bin construction to start next month. There is a lot going on right now. They should finish the concrete for one of the new scales next week. The scale is scheduled to be here in October. For now, we have a temporary, above-ground scale. Please use caution when driving on the temporary scale and for your safety, be sure to sure to drive off the scale before exiting your vehicle.
Lisa Warne
Grain Origination, Mechanicsburg (Region 3)
Good afternoon! We saw some hard selloffs early in the week due to rain in the Western Corn Belt and carryover bearishness due to higher soybean yield projections from last week’s USDA report. While traders anticipated lower soybean yields, USDA came out with a higher average U.S. yield of 51.9 bushels per acre with six states expecting record average yields, including Ohio. Also on Monday, China announced a cut in interest rates to stir their economy, sparking widespread selling across the markets. Monday evening’s crop condition ratings declined again, but not as much as anticipated, so the selloffs continued Tuesday. The market recovered some in the last half of the week and we are mixed here at midday Friday.
Local basis has continued to decline as we have been relaying it would. Cash basis will maintain this pattern until it converges with our fall bids. In the two weeks since I have last written, cash corn basis has faded 30 cents and soybeans 15 cents. If you have old crop that needs to be sold this year, the basis trend will not be in your favor. Also, if you still have corn and soybeans on delayed price, you have less than two weeks before the new crop year’s charges will go into effect. Have a great weekend and we’ll chat next week!
Steve Bricher
Grain Operation Manager, Urbana (Region 3)
Another week of summer is gone, kids are heading back to school, and we are having a dry August.
We have not seen a good rain in Champaign County in a couple of weeks and it is starting to show in the soybeans. I have noticed the gravel hills are starting to look a little rough. There is rain in the forecast for the weekend so let’s hope we see much-needed rain.
The markets have taken a beating the last week or so. The USDA did not give us any big surprises last Friday so the path of least resistance right now seems lower as the market believes we will have enough today to get us to next year’s harvest. We all know this can change in a second but that is where we are today.
It is not that prices are bad. We are better than we were a year ago, but we are not looking at the same crop we were this time last year either. If you have old crop corn or soybeans, time is not going to do you any favors as we head toward harvest. Basis will continue to weaken over the next month as harvest approaches.
Pro Farmer does their annual tour next week and we will start to see results from what they find early next week.
Ralph Wince
Grain Merchandiser, Canfield (Region 5)
Good afternoon, I hope everyone’s week is going well. Grain markets have been choppy this week. There has not been a lot of fresh news. Next week we will see Pro Farmer produce numbers throughout the week. The market will be looking for direction based on those numbers. The one thing that the tour will not factor in will be the kernel size of corn. They will assume a normal seed size when calculating yields. There has been talk that the seed size could be as much as 5% smaller and that translates to a smaller yield. We won’t know that though, until the combines start rolling later this year. One story that I would like to mention this week is one that has been flying under the radar. The European Union is battling a bad drought this year and some of the resources that I follow think that the U.S. has a pretty good chance of exporting corn to the EU this winter. That could make a difference on our export picture going forward. Lastly, Ukraine is still having plenty of issues, from shipping their old crop to having concerns about where to put this year’s crops, and how to generate enough money to plant next year’s crops. Again, we are not hearing much right now but there are still concerns over there. I hope you all have a wonderful weekend.