At the time of this writing, the grains were trading mixed for the week with wheat on the defense while corn and soybeans were posting gains. Most of the direction was coming from the Aug. 23 Crop Progress report. The Crop Progress report will start to lose its influence once we get into September, as at that point traders will focus more on actual yield reports, but for now the report still holds a little weight.

The report was friendly corn as conditions once again dropped more than expected. The average estimate had corn conditions steady to up 1% from the previous week, but instead conditions dropped 2%. The surprise in the ratings had to be the 7% decline in the rating for Illinois. The rains over the weekend did little to help the crop in North Dakota as ratings dropped 4% to 16% good. The rest of the states saw conditions slip 1% to 2%, except for South Dakota which improved 1% to 25% good/excellent. This was the lowest crop rating for corn this year and the worst crop condition rating in nine years.

As far as crop development, 85% of the nation’s corn crop is in the dough stage versus 81% average, 41% is in the dent stage versus 38% average, and 4% is mature versus 4% average.

Soybean conditions were also expected to see a steady to 1% improvement last week but instead conditions dropped 1% to 56% good/excellent. Once again, the surprise came in the 4% decline in Illinois. Minnesota’s crop improved 2% to 31% good/excellent. North Dakota’s crop dropped 2% to 12% good and South Dakota improved 3% to 25% good/excellent. Soybean’s crop ratings were a little more erratic than corn, with some states seeing improvements (Iowa, Minnesota, South Dakota) while others showed small declines (Indiana, Nebraska, North Dakota).

Soybeans are 97% in bloom. Setting pods is estimated at 88% complete versus 87% average and dropping leaves was estimated at 3% versus 3% average.

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There was no crop condition rating for spring wheat in this report, but harvest progress was estimated at 77% complete versus 55% average. Barley harvest is estimated at 72% completed versus 63% average.

Pasture and range conditions were left unchanged, although the states we track showed big declines in their ratings. Illinois dropped 15% while Minnesota dropped 5% to 2% good. North Dakota improved 1% to 3% good and South Dakota’s pastures improved 1% to 5% good.

Topsoil moisture conditions did improve after last week’s rains, but not as much as expected. Nationwide conditions only increased 2% to 50% surplus to adequate. The big change came in Illinois which dropped 22% to 64% surplus to adequate. North Dakota did see an improvement of 16% to 25% surplus to adequate. Subsoil moisture saw the same sort of changes expected the nation as a whole saw subsoil ratings drop 1% to 49% surplus to adequate. The decline was due to a 17% drop in Illinois, which is now at 64% surplus to adequate. North Dakota and South Dakota improved 1% to 13% adequate while Minnesota improved 1% to 17% adequate.

For other North Dakota crops, durum’s crop rating improved 5% and harvest advanced to 57% complete. Canola conditions dropped 3% and harvested advanced to 23% complete. Sunflower conditions dropped 5%. Dry edible beans conditions improved 2% and harvest is at 1% complete.

Corn and soybeans continued to see support from export demand as China was in and bought soybeans while Mexico was in twice buying corn. On Aug. 23, Mexico bought 458,000 metric tons of corn and then the next day bought another 125,300 metric tons. China added to the buying spree as well, buying 132,000 of U.S. soybeans.

The bright spot in the grains is corn and soybean export demand. It appears that price has dropped enough to bring buyers out. Either that, or Brazil is really out of product and the U.S. is the only game in town. Brazil’s corn harvest is moving slowly as it is taking time to find a home for the poor-quality corn. As of Aug. 20, harvest of Brazil’s second corn crop was estimated at 80% versus 91% for the five-year average. To add the concerns for South America, long range forecasts predict the return of La Niña to South America, which would bring dry conditions.

The grains did get blindsided by another news article talking about biofuels. The unconfirmed report stated that EPA was looking at lowering the biofuels mandate to levels below 2020 to bring the mandated amount of product more in line with actual production. This article should not have resulted in such a hit to the energy sector, as it appears EPA wants to bring the mandate closer to actual real world production levels.

Dr. Michael Cordonnier, of, left his U.S. yield estimate unchanged for both corn and soybeans. His soybean yield is projected at 50 bushels per acre, right in line with USDA’s current estimate. His corn yield is at 175.5 bushels per acre, which is slightly higher than USDA’s 174.6 bushels per acre estimate.

Wheat struggled this week from expectations for an increase in U.S. winter wheat acres this fall. As of the Aug. 24 close, the base insurance price for winter wheat is at $7.13 versus $4.90 last year. This will attract winter wheat acres. Spring wheat is going to have to attract acres as the market attempts to build stocks back up as well. But that rally likely won’t come until spring. For spring wheat, the harvest price is estimated at $9.21 versus the base price of $6.53. The official harvest price will be released at the beginning of September.

Weather will continue to play a role in market direction. As of Aug. 24, the next seven to 10 day forecast has slightly below average temps for the Northern Plains. To top that off, rain is starting to become a little more frequent as there are three more chances this week. The six to 10 day forecast is showing below normal temps for North Dakota but above to much above normal temps for the rest of the major growing regions of the U.S. Precip is expected to be above to much above normal.

Stats Canada’s next report will be out on Aug. 30. The average trade estimates for Canada’s 2021 production are: All Wheat: 22.6 million metric tons versus 35.2 million metric tons last year and versus USDA’s 24 million metric ton estimate. Hard red spring wheat production is estimated at 15.9 million metric tons versus 25.8 million metric tons last year. Durum production is estimated at 4.1 million metric tons versus 6.6 million metric tons last year. Canola production is estimated at 14.1 million metric tons versus 18.7 million metric tons last year and versus USDA’s 16 million metric tons. Canola production of 14.1 million metric tons, if realized, would be a nine-year low.

Cattle were able to gap higher at the start of trading the last week of August with most of the support coming from a friendly August Cattle on Feed report. The report showed lower cattle in feedlots than expected and the lowest number on feed in four years. July’s Cold Storage report was also friendly. At the end of July there was 401.3 million pounds of beef in freezers, 9% less than last year and 12% lower than the five-year average. Reports have fourth quarter beef production dropping 1% from last year and at a three-year low. To add to the friendliness, slaughter weights continue to decline with steer weights 10 pounds lower than last year and heifers slaughter weights running 15 pounds lower than last year. Technically the bull run in the cattle market that started the end of October 2020 and is still going. But it might be starting to mature.

A record setting session in the S&P 500 and Nasdaq will continue to pull money out of the grains. The one concern traders have is the Jackson Hole meeting. The Federal Reserve is holding their Jackson Hole meeting virtually and traders are sitting on the edge of their seats to see what the Federal Reserve says about the quantitative easing program.

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