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Corn takes lead role on production concerns and increased demand

The Sept. 6 session had corn as the main driver, posting solid gains on production concerns and expectations for increased demand. Wheat was a follower to corn, but Minneapolis wheat faded its gains due to harvest pressure. Soybeans were under pressure throughout the session due to expectations for record production.

Corn .jpg
Corn in South Dakota.
Agweek file photo
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Editor's note: Catch Randy Martinson every Friday after markets close on the Agweek Market Wrap at agweek.com. Be sure to look up Martinson Ag at Big Iron Sept 13, 14, and 15. Martinson Ag will be in Building K, booth 34.

The last week of August closed out with the grains ending mixed. Wheat posted modest losses while corn ended with small gains. On the flip side, soybeans took a big hit. Production concerns continues to drive the corn and soybean complex while wheat is seeing harvest pressure as well as from improving weather forecasts for the southern Plains. Soybeans are also seeing pressure from reports of more lockdowns in China. Reports have over 300 million Chinese residents in either partial or complete lockdown due to another surge in COVID.

The grains started September under pressure, and that pressure just seemed to build, throughout the first few days. Heavy fund selling was also evident as traders took profits ahead of the long Labor Day weekend. Traders were also evening up positions. Seasonal pressure was the trifecta as harvest season is just right around the corner (for some) and seasonally corn and soybeans drift lower until early October due to harvest pressure.

A sharply higher U.S. dollar, lower outside markets, demand concerns, and more China lockdowns all added fuel to the fire. The U.S. dollar traded to levels not seen in over 20 years. This of course makes U.S. products more expensive. To that point, U.S. ag exports are expected to decline in 2023. The U.S. has the potential to see a negative trade balance in ag products in 2023, the third time in 57 years.

Demand concerns continue to mount as although we are able to see daily export sales above 100,000 metric tons, the public is not getting the true picture of demand, and that is causing some concern in the market. Hopefully USDA can get that report up and running by Sept. 15. The last week of August and first few days of September did see strong soybean exports as China and an unknown destination combined to buy over 827,000 metric tons of U.S. soybeans.


The first week of September started mixed with wheat and corn higher while soybeans traded with losses. Wheat was posting double digit gains as it appeared traders were starting to price in world production concerns. Traders are starting to wonder just how many acres of wheat will be seeded in Ukraine this fall. Early estimates are looking for only 50% of the normal acreage due to lack of funds and as well as from war concerns.

Corn was the only market to hold onto early overnight gains. Early support came from production concerns as hot and dry conditions continue to put questions on the potential size of the U.S. corn crop. Demand concerns added strength as it appears China and Europe will both have to increase corn imports to meet demand. Additional support came from reports that French corn crop rating dropped 2% to now be rated at 45% good/excellent.

Soybeans continue to struggle due to estimates calling for the U.S. to harvest the largest soybeans crop on record, followed by a potential monster soybean crop in South America.

The weather service estimated June and July at the sixth driest of the Midwest in 42 years and put the western Corn Belt at the third driest. The summer's Midwest temps were the seventh hottest in 42 years. The dry conditions in the Midwest are expanding as 50% of the region is now in some state of drought

The Sept. 6 session had corn as the main driver, posting solid gains on production concerns and expectations for increased demand. Wheat was a follower to corn, but Minneapolis wheat faded its gains due to harvest pressure. Soybeans were under pressure throughout the session due to expectations for record production. Soybeans were also pressured by the news that Argentina is offering their producers attractive offers to get them to start selling soybeans. Argentina’s producers have held onto a much larger portion of their old crop soybeans due to inflation (their currency is worthless, but soybeans have value to trade), and the government is now giving producers incentives to sell the crop.

The Crop Progress report on Sept. 6 was negative to the grains as it came out better than expected. Corn and soybean conditions were expected to decline slightly over the past week, but instead conditions were left unchanged. Spring wheat harvest was not as advanced as expected, but weather forecasts are expected to be warm and dry, which should help harvest progress advance.

USDA stated they will be reviewing planted and harvested acreage in the September report this year, instead of waiting for the October report. The report said they will be making any adjustments at that time as well. One could expect corn acreage will decrease while soybean acreage increases.

A private analyst group is estimating corn’s yield at 173.2 bushels/acre versus 176 bushels/acre last month. This puts their production estimate at 14.168 billion bushels versus 14.417 billion bushels last month. The group is estimating soybeans yield at 51.8 bushels/acre versus 51.3 bushels/acre last month. This puts production at 4.515 billion bushels versus 4.49 billion bushels last month. IHS joined the list of analysts releasing their new yield estimates ahead of next week’s USDA report. They have put the corn yield at 171.6 bushels/acre and the soybean yield at 51.3 bushels/acre.


Wheat was able to post solid gains during the first week of September with support coming from comments from Putin on the disparity of Ukraine’s wheat shipments. Putin is disgusted that the wheat that has left Ukraine has gone to Europe and not to the starving countries that the agreement intended. The agreement expires in 30 days and could see revisions, which has traders thinking the new terms will be more restrictive.

Stats Canada released their July 31 stocks estimate on Sept. 7. Stats Canada put all wheat stocks at 3.67 million metric tons versus expectations of 3.9 million metric tons. This is a 38% decline year over year. Spring wheat stocks were estimate at 3.11 million metric tons, a decline of 40% year over year. Durum stocks were estimated at 565,000 metric tons, a 31% decline year over year. Canola stocks were estimated at 874,600 metric tons, 51% lower than the same time last year, lower than the trade expected, and the lowest level for July 31 since 2013.

Cattle posted small gains to close out August. Support came from expectations that beef demand would be strong for the Labor Day weekend. Tight supplies added support. Slaughter weights have declined, which added support as it shows that feedlots are current. Strong prices for feedlot replacements continues to help give feeder cattle support. If the economy can hold together, cattle should remain firm, but if the economy starts to falter any more than it has, cattle will selloff.

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What to read next
Randy Martinson of Martinson Ag Risk Management and Randy Koenen of Red River Farm Network discussed how the Grain Stocks report from USDA pushed corn and wheat higher but was generally bearish for soybeans on this week's Agweek Market Wrap.
The heavy lockdown in China and global recession concerns are the biggest issues facing U.S. ag right now. U.S. exports are already showing slow demand and are running sharply below expected levels. If this trend continues, the decline in exports will result in increasing U.S. stocks, which could increase stocks enough to push the U.S. grains lower.
Amid escalation of war and ongoing tensions between Russia and Ukraine, the wheat market took off this week, Randy Martinson of Martinson Ag Risk Management told Carah Hart of Red River Farm Network on the Agweek Market Wrap.
Speculation of escalating war between Russia and Ukraine and Russia not allowing further exports out of Ukraine at the end of the month played a roll in the markets this week, as did early harvest results.