Drought concerns linger and hoist grain markets
Wheat prices decrease due to increased production estimates out of Russia and hot dry conditions, while corn and soybeans increase with support from weather forecasts projecting hot dry conditions.
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Posted 8/25/2023, 10:30:59 AM
agweek.com
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The recent heat wave may contribute to increased volatility in commodity markets, particularly affecting soybeans which are in the reproductive stage and could lead to higher prices, while corn is expected to require deeper yield reductions to see significant price increases, and wheat prices are expected to continue struggling.
Grain prices continued to decline amid frustrations in the grain markets, with corn and soybean contracts moving lower while wheat prices rose; the heatwave's impact on crops may affect future progress.
Soybeans and meal are firm, while wheat and corn are trading lower due to a lack of market-moving news and lower than expected wheat sales.
Extreme heat and drought have caused damage to soybeans and corn crops, leading to lower yield and production estimates by Pro Farmer and potential higher prices in the future.
The farmers' crop outlook remains uncertain as they are unsure of the damage caused by previous dry conditions and the upcoming heat, leading to low corn prices and high soybean prices; farmers are advised to be cautious in selling beans and consider taking advantage of early shipment premiums. Additionally, it is recommended to finish fall fertilizer purchases and potentially start purchasing for spring. The USDA may lower their yield estimate due to abnormal weather patterns, and once the harvest is complete, the market will have a clearer picture of the crop's size, potentially leading to price fluctuations.
Global prices for staple foodstuffs have reached a two-year low in August, driven by declines in dairy products, vegetable oils, meat, and cereals, while sugar and rice prices have increased due to export restrictions and extreme weather conditions.
Analysts expect the upcoming U.S. Department of Agriculture (USDA) estimates to show smaller corn and soybean crops due to falling yield prospects caused by dry and hot weather conditions.
Chicago wheat traded close to a 14-week low due to an abundance of supplies from Russia and a lack of demand, while corn prices eased and soybeans ticked higher as traders await updated crop estimates from the US government.
Dry weather and unfavorable growing conditions in Iowa and Illinois have led to reduced yield expectations for soybeans and corn, with the latest dry spell preventing maximization of yields and causing some crops to shut down.
Russia's bumper wheat harvest, coupled with the disruption of Ukraine's food exports due to the Kremlin's war, has cemented Russia's position as the leading exporter of wheat and has resulted in the lowest wheat prices in almost three years. Despite Russia's efforts to raise prices to benefit its own farmers and generate more tax revenues, the supply glut has depressed prices and made Russia the "price maker" in the market.
Soybean prices are slightly higher at midday, with soybean meal and soybean oil futures also making gains, while Canadian Canola prices are down; the weekly Crop Progress report shows progress in soybean harvest and a drop in soybean conditions, and Brazil's soybean planting lags behind last season's pace.