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August WASDE report upped soybean outlook but weather is still the main trade focus

Weather will continue to be the market focus, at least until the end of August, as ideal conditions will be needed for the soybean crop to reach its potential, Randy Martinson of Martinson Ag Risk Management told Don Wick of Red River Farm Network on the Agweek Market Wrap.

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The U.S. Department of Agriculture released their August Crop Production and World Agriculture Supply and Demand Estimates reports on Friday morning, and the agency is forecasting a record soybean crop. But even while that would help boost stocks of soybeans, within hours the trade was back to focusing on whether the weather will allow those kinds of yields.

Weather will continue to be the market focus, at least until the end of August, as ideal conditions will be needed for the soybean crop to reach its potential, Randy Martinson of Martinson Ag Risk Management told Don Wick of Red River Farm Network on the Agweek Market Wrap.

While the Friday reports were generally friendly to corn and wheat, with lowered yield expectations, it was bearish soybeans. Martinson said that pushed soybeans down for a moment on Friday, but it didn't take very long for beans to rebound and end up with small gains. But for soybeans to reach its potential, it's going to need some moisture in many growing areas, and given that, he was surprised USDA raised the yield forecast.

"A lot of areas need one more drink just to finish the soybean crop off," Martinson said.

The report also included a resurvey of acreage in North Dakota, South Dakota and Minnesota. Martinson was surprised USDA didn't decrease corn acres in North Dakota. The agency did cut 100,000 durum acres there and 200,000 soybean acres. The USDA cut 100,000 acres of corn in Minnesota and 100,000 acres of soybeans in South Dakota. Martinson also was surprised at the decrease in soybean acres in the Dakotas.

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The upcoming ProFarmer Tour will provide the market with some "boots on the ground" inspection of the corn and soybean crops, Martinson said.

Meanwhile, the reports showed that there is plenty of wheat and corn in the world. And even without Ukraine out of the market in recent months, the U.S. still hasn't gotten much in the way of export business, Martinson said.

Wick said a load of corn that was the first in months to leave Ukraine was rejected in Lebanon because the corn was out of condition.

"Is that an indication of what's still to come?" Wick asked, referencing the dozen or more boats still sitting in port in Ukraine waiting to be exported.

"I think it is," Martinson said. "Can you imagine a bunch of grain sitting in a boat, out on the water?"

He anticipates discounted product with quality problems due to water and humidity.

On the livestock market, Wick pointed out that while weather markets aren't usually part of the talk when cattle are discussed, but the last two seasons have been heavily influenced by weather. Droughts first in the Dakotas and now in the southern Plains have lead to liquidation and herd reduction, which has longterm implications for the cattle market.

Martinson said that's been helping the fat cattle market. More supply than anticipated is putting pressure on some markets in the shortterm, but by the fourth quarter of this year and first two quarters of next, the tight supplies are likely to drive up prices.

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Plus, improved economic conditions are helping consumers have more disposable income, which leads to more meat purchases.

With the August reports out of the way, weather will remain the focus for now, Martinson said. That will lessen by the end of August, when the crop will be made in one way or another, he said.

"The big thing now that we're going to be watching is — which I hate to say up here and for us in the north — but it's when will that first frost come," he said.

"Yeah everybody's hoping for a good long September, that's for sure," Wick said.

The Agweek Market Wrap is sponsored by Gateway Building Systems.

Jenny Schlecht is the editor of Agweek and Sugarbeet Grower Magazine. She lives on a farm and ranch near Medina, North Dakota, with her husband and two daughters. You can reach her at jschlecht@agweek.com or 701-595-0425.
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