Improving conditions and Ukraine exports move markets

There was a combination of items that helped give the grains strength to close out the month of July. Early strength was due to weather forecasts calling for extreme heat for the Corn Belt for the first half of August. Concerns about grain movement out of Ukraine added strength.

Green heads of spring wheat are in focus and out of focus.
On-time planting and timely rains have created high potential for solid yields for spring wheat crops in central North Dakota. Photo taken July 21, 2022, in Wilton, North Dakota.
Jenny Schlecht / Agweek
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The last week of July had the grains posting close to record gains for the week. August soybeans rallied over $2.02, which was the highest weekly gain in soybeans in almost 20 years.

There was a combination of items that helped give the grains strength to close out the month of July. Early strength was due to weather forecasts calling for extreme heat for the Corn Belt for the first half of August.

Concerns about grain movement out of Ukraine added strength as although a parallel agreement has been reached, one with Russia, Turkey, and the United Nations, and the other with Ukraine, Turkey and the UN, Russia seems to want to sabotage the agreement. Reports had Russia firing missiles at Ukraine ports hours after the agreements were signed.

The agreement will allow loaded ships to finally leave Ukraine ports as there are 17 ships loaded and ready to leave Ukraine. These are boats that were loaded last fall and that have been stuck in port since the war broke out. Reports have one cargo of corn leaving the port of Odessa, on its way to Turkey for inspection. Now it is likely the remaining loaded ships will leave their respective ports, but the concern is whether new ships will take the risk to enter the ports. Lloyds of London has agreed to insure boats willing to try and move the product, but the premium is steep at 5% the value of the ship. Reports have Cargill not willing to take the risk as they will not participate in the exports out of Ukraine citing that it would be took risking for employees.


The last week of July closed with Minneapolis wheat posting 35 cent gains while Chicago wheat gained 49 cents and Kansas City was up 54 cents. Corn managed to end the week 52 to 56 cents higher, but it was soybeans that really shined with August posting gains of $2.02 while November picked up $1.53. The products were also sharply higher as soybean meal gained close to $64 and soybean oil closed $8.28 higher.

That strength also helped July end on a better note. For the month Minneapolis wheat dropped 85 cents, Chicago wheat slipped 76 cents lower, and Kansas City wheat was 80 cents lower. Corn ended steady in the December contract. Soybeans added 76 cents in the August contract but only 10 cents in November.

The market volatility continued into the first week of August as the grains gapped higher Sunday night, with support coming from the return of hot and dry conditions and disappointing rains over the weekend. But once again, selling stepped in for the grains and pulled the markets into the red.

Wheat continued to see pressure from the Wheat Quality Tour, which estimated North Dakota’s wheat crop at or near record levels. Maybe there is a record crop potential out there, but conditions will have to remain ideal for that to be realized, and so far, this year, nothing has been perfect. Time will tell on how the spring wheat crop is as combines have started to roll. Yield reports we have been getting do not come close to record yield levels, but closer to average.

The main driver continues to be weather. The six-to-10-day forecast is calling for much above normal temps for the Corn Belt for the first two weeks of August. But as the event drew closer, the two main forecast models were in disagreement on moisture. The GFS model was calling for little to no rain for a majority of the Corn Belt while the European model was calling from generous rains in the one-to-five day and for increased chances for rain in the six-to-10-day forecast. Temps were even expected to moderate in the eight-to-14-day time frame. Well, it appears that the European model was correct as rain have blessed parts of the Corn Belt in the short term.

Both models pulled the intense heat out of the forecast as now the western Corn Belt is only expected to see much above normal temps. It is likely southern Minnesota, South Dakota, western Iowa, Nebraska, and Kansas will see yield declines, but it is not expected to be as intense.

The grains had insult added to injury Aug. 1 with the negative Crop Progress report. The report continues to show slow crop development but steady to improving ratings. Winter wheat harvest continues to lag behind expected pace estimates. Harvest is at 82% completed versus 85% average and versus expectations for 84%.

Spring wheat conditions seem to be trying to catch up to the finding from the recent Wheat Quality Tour. Spring wheat conditions improved 2% to 70% good/excellent, 3% above expectations. Minnesota improved by 10% while South Dakota dropped by 9%. North Dakota improved 2% to 80% good/excellent.


As of the night of July 31, 80% of the nation’s corn was in silk versus 85% average. Corn’s crop condition rating was left unchanged at 61% good/excellent. Conditions were all over the board but in general the central and eastern Corn Belt saw improvement while the western Corn Belt did not. Surprisingly, North Dakota’s crop improved 5% to 79% good/excellent.

Also as of that night, 44% of the nation’s soybean crop was setting pods versus 51% average. The soybean condition rating improved 1% to 60% good/excellent, 2% better than expected by the trade. Minnesota improved by 4% while the states around them remain steady to lower. Illinois’ rating improved by 7%, which was also a surprise to most. The rest of the states saw minor changes.

The Aug. 2 session was not encouraging as all of the grains opened lower, tried to recover, but then dropped like a rock to finish the session on the lower end of the trading range. Tuesday was a plain and simple risk off session. Selling pressure was tied to Monday’s better than expected crop condition ratings, reports of grains moving through the ports in Ukraine, and surprisingly from concerns about Speaker Pelosi’s visit to Taiwan.

Technically Tuesday’s performance put the grains in a vulnerable spot. The grains need to stage a recovery soon to try and pull out of the spiral, but if that doesn’t occur, look for the grains to once again test their recent lows.

The grains are still showing concerns about Pelosi’s visit to Taiwan. China is not very happy about the visit and has promised retaliation. This will likely put further strains on the U.S./China relationship, and it has soybean traders on the defense thinking that China will start to cancel more U.S. soybean purchases.

Dr Cordonnier thinks the U.S. yield potential has been affected by the heat. So much so that he lowered his U.S. corn yield projection to 174 bushels per acre, versus USDA’s 177 bushels per acre. He also lowered the U.S. soybean yield to 50.5 bushels per acre versus USDA’s 51.5 bushels per acre.

In other news, reports have Canada looking to cut emissions from fertilizer use by 30% by 2030. That will mean a reduction in use of fertilizer. Canadian ag producers, as expected, are very concerned.

The market is also getting ready for USDA’s August Crop Production report. The report will not only update supply and demand numbers for the major crops, as USDA is also expected to come with updated planted acreage estimates from North Dakota, South Dakota, and Minnesota. Usually when USDA is forced to resurvey for late planting, acres decline.


Cattle struggled the last week of July. Live cattle posted small losses due to an untested cash market while feeder cattle retreated due to the higher cost of feed. That trend changed once the calendar flipped to August. Cattle have been able to push higher so far with support coming from expectations for a stabilizing economy as well as from weather forecasts calling for the western Corn Belt and Southern Plains to see intense heat, which will slow down feedlot performance and lower slaughter weights. Feeder cattle continue to see support from strong demand as calf prices out in the country continue to surge. Feeder cattle have been able to push back to the upper end of their trading ranges and right now are at a level that producers should be consider hedging.

“The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results.”

Opinion by Randy Martinson
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