US Grain Markets Experience Seasonal Harvest Pressure

Strategic Insights -

This week marked the beginning of the harvest season, with signs of increasing pressure on US cash corn and soybean markets. Record-low temperatures in the northern Plains and upper Midwest triggered frost damage to slow-maturing crops, affecting the Dakotas, Minnesota, and Wisconsin. Despite a sharp increase in soybean receipts and interior basis values plummeting, grassroots soybean bids ended sharply lower on the week. Meanwhile, export sales of US soybeans dropped by 28%, and US processors reduced their soybean processing operations by over 10% in July.

Key Takeaways:

  • Initial signs of seasonal harvest pressure emerged in the US cash corn and soybean market, driving down farm-level prices by 3-4% and 2%, respectively.
  • Record-low temperatures in the northern Plains and upper Midwest triggered frost damage to slow-maturing crops, affecting the Dakotas, Minnesota, and Wisconsin.
  • Grassroots soybean bids ended sharply lower on the week, despite a sharp increase in soybean receipts, as interior basis values plummeted by 32 cents.
  • Export sales of US soybeans dipped 28% this week, while a monthly Census Bureau crush report showed US processors reduced their soybean processing operations by more than 10% in July.
  • A trend towards warm, wet weather and high corn yields from the southern half of the US spurred selling in the CBOT corn pit, with anecdotal reports of 250-bushel corn yields received from farmers making initial cuttings in southern Illinois.
  • Cash contracts for SRW wheat tumbled 10.5 cents, HRS wheat rose 3/4 cent, and HRW wheat slipped 2 cents, after the Canadian government forecast a 9% bigger wheat harvest, of 25.6 million metric tons, the largest crop since 2000.
  • Interior wheat basis strengthened by 1-3 cents, emboldened by continued delays in the harvest of US spring wheat, and increased export demand for some classes of US wheat.
  • A 54% jump in foreign shipments fueled a 7-cent rise in barge basis bids for SRW wheat at the Louisiana Gulf this week.

Statistics:

  • US cash corn prices down 3-4% on the week
  • Grassroots soybean bids ended sharply lower on the week
  • Export sales of US soybeans down 28% this week
  • US soybean processing operations reduced by over 10% in July
  • CBOT Sep futures declined by 11 cents
  • CBOT Sep futures met by an interior basis gain of 1.75 cents
  • Canada forecasts 25.6 million metric tons of wheat, a 9% bigger harvest than last year
  • Foreign shipments of SRW wheat rose 54% this week

Sources:

  • Dow Jones
  • COMTEX
  • USDA
  • US Department of Agriculture
  • Global Weather Services (GWS)
  • Gary Wulf; Dow Jones Newswires; 308-946-9854; gwulf@osterdowjones.com
  • COMTEX (http://www.comtexnews.com)