Weekly Market Recap


Temperatures continue to run below average for August. The northern areas have seen temps drop in to the 40s and 50s a couple times. Most growers would like to see more heat. More important than the cool temps has been the lack of rain in many areas. The drought monitor continues to expand and now Iowa is a big concern as it is the key state for both soybean and corn production. Most of the state has seen below normal rains.  Crop insurance is an item that could see some revisions in the next farm bill. A possible proposal would be for producers to buy higher levels of coverage. This is likely to be a highly contested change. 


Crop conditions declined for corn for the 5th straight week.  The good/excellent rating of 60% is still right in line with the 5 year average. The decline in conditions got the market thinking that yields in the August WASDE may be lower than what the market was expecting.  The WASDE blindsided the market posting a corn yield of only 169.5 bpa.  The market was looking for a 165 yield.  This kept ending stocks at a very comfortable 2.273 billion bushels and the caused the futures market to sell off. 


China imported an all-time record amount of soybeans in the month of July at 10.08 million tons. This broke the previous record by a half million tons.  In the 10 months so far of the current marketing year, China has imported a new monthly record in 7 of the 10 months.  They are on pace to exceed the USDA guess for soybean imports. The WASDE report was a shocker as the USDA increased the soybean yield by 1.4 bpa to 49.4 bpa.  This caught the market by complete surprise and priced quickly dropped by 30 cents.  Because of the increased yield, ending stocks also grew to 475 million bushels.  The USDA also increased exports to 2.225 billion bushels which is an all-time record. 


The Russian wheat crop looks to be on the rise.  SovEcon increased wheat production by 5 million tons to 77.9 million. The USDA is in line with that number and they also increase wheat production in the Ukraine and Kazakhstan by 2.5 and 1 million tons respectively.  World wheat stocks grew on the latest WASDE by 4 million tons. The WASDE report was a big surprise for corn and beans but not for wheat.  A small downward adjustment to yield was expected.


Dressed steer weights came in at an average of 897 lbs., up significantly from 868 lbs. the week before.  Seasonally, beef prices generally trend higher in the first few weeks of August but with a burdensome supply this year, gains in the futures markets could be limited. Additionally, we could see an increase in cattle weights as feed becomes less expensive. Packer margins are currently at $64/head which is down from last week’s $87/head.


Compliance remains an issue with OPEC and non-OPEC countries on the production agreements. Robust production and exports from OPEC members Libya and Nigeria is seen as bearish. Tropical storm Franklin does not appear to threaten much for oil and gas infrastructure in the Gulf.  AAA’s daily fuel gauge report shows the average price of regular gasoline at $2.360, up from $2.334 last week and compared to $2.127 a year ago.  Trading volumes continue to be robust. WTI aggregated volume marked a 27th day above 1 million lots yesterday, the longest streak above 1 million lots/day since records being in 1995.