Mark's Market Talk

Jul 10, 2023

June 30, we saw the June USDA report that updated planted acres and it showed 2.1 million more corn acres and 4 million less bean acres. We traded those numbers for 4 days this past week, no trade on the 4th, and we ended the week with November beans down 25 cents and December corn steady. So, all you can do is scratch your head and ask what gives here? Weather is the big factor. The forecast has become wetter and cooler and that tells traders we will have crops. Never mind that the current crop conditions have been almost record low, or the fact that the drought map continues to show a wide part of the mid-west is still in a moderate drought or worse. But here are some things traders may be looking at. Today’s crop genetics are so much better at handling stress. They continue to surprise us by how much they can produce on less water and more heat. Our export sales are still running well below normal, especially for corn. Other parts of the world are selling grain below the US price, and it is showing up in the demand reports. Higher interest rates are holding some traders back and some are taking their normal commodity dollars and putting them into the money market and bonds where the returns have turned positive without the risk of margin calls and busted markets. It is not all doom and gloom. The USDA will release their July S&D report Wednesday. They will take the new acre numbers from last month and put a yield adjustment into the formula. There is some certainty that yields will be lowered from the original projected record yields they came out with early this spring. With the reduced bean acres, it will not take much of a reduction to have a positive impact. Corn will be a tougher call. We must add in the additional acres and that will temper the reduced yield they may put out. The demand side will need to be adjusted as we just are not getting the corn sales, we normally see this time of the year. Brazil is harvesting a very good second corn crop and it is currently priced well below the US. There are still a lot of factors that can and will impact our crop, both from the production side to the marketing side. It would be easy to crawl under a rock and hide till harvest, but a smarter plan is to stay informed and focus on trying to outguess the traders. Good luck!