Nate Bruce, Farm Business Management Specialist, nsbruce@udel.edu
Corn prices continued their downtrend in the month of August with futures trading in the $0.10 – $0.30 range throughout the month. December corn is now sitting below $4.00 per bushel. Corn carryover looms over any bullish market reversals occurring to prices in the near future. Corn stocks to use ratio is currently approaching levels reminiscent of the years following the 2012-2013 commodity price boom. This time period experienced 5-7 years of low corn prices. Increases in corn prices that occurred as a result of Covid and the Ukraine / Russia are eerily similar to this time period. Corn prices haven’t yet appeared to have reach a bottom. The real question at this point is where is the bottom and when will demand increase due to low prices? Soybean prices have also declined during the month of August, with futures trading in the $0.10 – $0.80 range throughout the month. Both the monthly USDA report and Pro Farmer Tour were bearish on soybeans. The US dollar did fall recently after the Federal Reserve announced the US will cut rates. This may have an impact on soybean exports but when is uncertain. Wheat prices also slid during the month of August with futures trading in the $0.10 – $0.50 range. Cheap Black Sea wheat is hitting the export market, driving down wheat prices.
The Pro Farmer Tour occurred last week across the Midwest. There were high expectations for both the corn and soybeans crops prior to the tour considering ample weather conditions throughout the growing season thus far. The Pro Farmer Tour found a spectacular soybean crop and a decent corn crop. The tour estimated the US corn crop to be 14.979 billion bushels with an average yield of 181.1 per acre. This is slightly lower than the USDA estimate. More on this in the next paragraph. The tour estimated the US soybean crop to be 4.740 billion bushels with an average yield of 54.9 bushels per acre. This estimate is higher than USDA’s estimates below and is a sign there is going to be a spectacular soybean crop nationally this year. This is bearish news for soybean prices.
The August USDA (World Agriculture Supply and Demand Estimates) WASDE report was published on August 12th. USDA dropped acres planted from 91.5 million to 90.7 million from the July estimate. Area harvested also decreased from 83.4 million acres to 82.7 million acres. Projected yield per acre increased from the July estimate from 181 bushels per acre to 183.1 bushels per acre. This estimate is 2 bushels higher than what was estimated on the pro farmer tour. Beginning stocks, food seed and industrial demand, and ending stocks all decreased from the July report. Ending stocks decreased from 2,097 million bushels to 2,073 million bushels. Production and exports increased from the July estimates. Imports, feed, and ethanol demand all remained unchanged from the previous estimate. Production increased due to USDA increasing the estimated yield per acre. The farm season average price decreased from $4.30 per bushel to $4.20 per bushel. The August USDA WASDE was bearish on soybeans. The estimated soybean acres planted increased from the July estimate from 86.1 million acres to 87.1 million acres. Area harvested increased from 85.3 million acres to 86.3 million acres. The estimated yield harvested per acre increased from 52 bushels per acre to 53.2 bushels per acre. The USDA estimate is 1.7 bushels lower than the estimate given by the Pro Farmer Tour. Beginning stocks, imports, crushings, and seed demand all remained unchanged from the July report. Production, exports, residual demand, and ending stocks all increased from the July estimates. Ending stocks increased by a significant 28.73% from 435 million bushels to 560 million bushels. The farm season average price fell from $11.10 per bushel to $10.80 per bushel. The August WASDE made slight revisions to the wheat estimates in the July report. Estimated wheat acres planted decreased from 47.2 million acres to 46.3 million acres. Estimated acres harvested also decreased, from 38.8 million acres to 37.9 million acres. Yield harvested per acre increased from 51.8 bushels to 52.2 bushels. Beginning stocks, imports, seed demand, feed and residual demand, and exports all remained unchanged from the July report. Production, and ending stocks decreased from the July report. Food demand increased slightly from the July report. Ending stocks decreased from 856 million bushels to 828 million bushels. The average farm season price remained unchanged from the July estimate at $5.70 per bushel. The next USDA WASDE report will be released on September 12th at noon eastern time. Potential revisions from the Pro Farmer Tour could very well be in this USDA WASDE report.
Brazil is currently experiencing a devastating drought, impacting water levels in key waterways vital to barge traffic. The country’s grain export capacity has been severely impacted and has increased export costs. In addition, Brazil’s currency has recently risen against the US dollar. With low soybean prices and logistical issues, there has been some discussion of less Brazilian soybean acres for the 2024-2025 crop year. If the drought persists, soybean prices and other commodities that Brazil exports could see an increase considering the countries shares of export markets. China committed to purchase US soybeans in July, however soybean purchases from Brazil still outpace US soybeans. Wheat harvest is underway in the European Union but has come up short from expectations thus far. The European Union is one of the world’s largest wheat exporting areas. A reduction in output could reaffirm Russia’s stranglehold over the international wheat market.
Corn Futures
Soybean Futures
Wheat Futures
