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The ever-changing forecast leads to an about-face in the markets

Volatility is alive and well in the commodities. Technically the grains dropped to a very strong support level. If they break the support lines, we could be seeing an interesting August.

Corn in western Cass County, North Dakota, on Monday, Aug. 8, 2022.
Jeff Beach / Agweek
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Editor's note: Catch Randy Martinson every Friday after markets close on the Agweek Market Wrap at agweek.com.

Talk about an about face. The last week of July had the grains pushing higher with a couple contracts (August soybeans and December corn) scoring weekly gains not seen in almost 20 years, only to see most of those gains removed in August. Volatility is alive and well in the commodities.

The week of Aug. 8 started on the rocks as all of the grains were under heavy selling pressure. The extremely hot temps that were expected to dominate the Plains and Corn Belt were not realized and that had traders removing weather premium. On top of that, ships started to depart the Black Sea region as exports out of Ukraine have resumed. Turkey reported the first boat of grain leaving Ukraine went smoothly and instead of the goal of moving only one ship out of the port per day, they expect to be able to move three ships per day.

But in true fashion, the market pulled too much premium out of the market too fast and, also as usual, weather forecasts changed.

Technically the grains dropped to a very strong support level. If they break the support lines, we could be seeing an interesting August. But with the current weather forecasts still calling for much above temps and below normal precip for the western Corn Belt, one would expect some weather premium to remain. Tie that with the potential for planted acreage to decrease in the August Crop Production report and you have a market that should not be removing 100% of its uncertainty premium.


The grains opened the week mixed and proceeded to chop around for most of Monday, Aug. 8. The Aug. 6 six-to-10-day forecast was bullish grains as it brought intense heat back into the western Corn Belt. Weekend rains were also disappointing for Iowa as most of the state, along with South Dakota, Nebraska and Kansas, missed out. But the Aug. 7 updated six-to-10-day forecast took the intense heat out of the forecast which pressured the grains late in the overnight.

Traders are keeping an eye on China as well. China continues to place sanctions on Taiwan for allowing Rep. Nancy Pelosi to visit. Not only did China flex its military muscle over the country with maneuvers, but China also placed a number of trade restrictions on Taiwan, halting a large number of imports from Taiwan.

Position squaring ahead of the August Crop Production report will also be a main feature in this week’s trade. USDA was faced with the opportunity to shake the market up if they made adjustments Friday, including to acreage. Will USDA find enough of a variance from their March intentions estimate to reissue planted acreage numbers for North Dakota, South Dakota, and Minnesota? We expect USDA will further reduce spring wheat and corn acreage and increase soybean and other late season crop acreage due to the late spring. Most of northern Minnesota, northern South Dakota and North Dakota was delayed until late May to start planting and field conditions weren’t good until the last week of May or first week of June. This report — due out on Aug. 12 after the deadline for this column — also is USDA’s first opportunity to make yield adjustments to the crop. It might be too early for USDA to do that this year.

But the wild card this week was not weather, or Ukraine exports, it was the Aug. 8 Crop Progress report which showed a much lower than expected crop ratings for all three crops. The report helped support the idea that yields could see a slight decline in the Crop Production report, though we don't anticipate that in this report.

The Crop Progress report put winter wheat harvest at 86% completed versus 82% last week and 91% average and versus expectations of 89%. Harvest progress has been slower than expected all year. Spring wheat harvest is estimated at 9% versus 0% last week and 19% average. This was as expected. But what was not expected was spring wheat’s crop condition rating dropping 6% to 64% good/excellent. This was 6% lower than expected. Every state saw declines with Idaho dropping 2%, Minnesota 8%, Montana5%, North Dakota 6%, and for the second week in a row South Dakota dropped 9%.

Corn was 90% in silk versus 80% last week and 93% average. Six percent of the nation’s corn crop is mature versus 9% average. Corn’s crop rating also declined more than expected. The report put conditions at 58% good/excellent, down 3% from the previous week and 2% lower than expected by the trade. It continues to be an east vs west scenario as the eastern states continue to show slight improvements due to cooler and wetter conditions. The western states continue to decline due to hot dry conditions. The states that declined were Iowa-3%, Minnesota -1%, Nebraska -4%, North Dakota -7%, and South Dakota -6%. In the eastern Corn Belt Illinois, Indiana, and Ohio saw improvements of 1% to 3%.

Soybeans are 89% in bloom and 61% setting pods. That still leaves over a third of the nation’s soybean crop vulnerable to the hot and dry forecasts. And obviously the recent hot dry conditions were not good for the soybean crop as conditions declined 1% (as expected). But again, the states that saw declining conditions were in the western Corn Belt while the eastern states improved. The declining states were Iowa -2%, Minnesota -3%, Nebraska-3%, North Dakota -4%, and South Dakota -5%.

Weather is starting to lose its importance as the crop moves through critical crop development stage. About a third of the corn is still vulnerable and close to half of the soybeans, but weather forecasts are already starting to show change is on its way. The short-term and long-term-forecasts are showing cooler temps for the central and eastern Corn Belt. The northern Plains are also expected to see more moderate temps. But the western Corn Belt is still expected to bake over the next five days as temps are forecast to be in the upper 90s for Nebraska, South Dakota, Kansas, western Iowa, and Missouri. This will likely result in another solid decline in crop ratings in Monday’s Crop Progress report.


Bull spreading is once again being seen in the soybeans complex. This is usually a sign of demand and there were rumors of China buying. Those rumors were confirmed as China was in and bought soybeans from the U.S. this week, as well as corn. Prices have dropped enough to encourage buying as exports sales were reported Monday, Tuesday, and Wednesday, with China, Italy and an unknown destination buying corn and soybeans.

The market also saw position squaring ahead of Friday’s Crop Progress report.

Cattle were able to close the first week of August with small gains. A decent cash trade and forecasts for adverse weather were expected to continue to negatively impact cattle feedlot performance. But Aug. 5's bullish jobs report added strength. The report showed a much larger than expected job growth for the previous week, which is friendly for the economy. Light support also spilled over from the October lean hog contracts, which traded to a new contract high. The deferred feeder cattle contracts also traded to new contract highs. An improving economy and expectations for good product movement ahead of the Labor Day weekend added support. This is a good time to lock in a floor on your spring calves. Producers should look at using puts or the Livestock Risk Protection program to establish a floor.

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What to read next
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.