HARVEST PRESSURE

Written By Sebastian Frost

MARKET UPDATE

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Futures Prices Close


Overview

Grains pressured heavily across the board, as soybeans lead the way down for the second session in a row following Friday's weakness. Beans are now down over 40 cents the past two sessions, while corn made new lows. The wheat market was also down pretty hard today, but still managing to hold those lows from the reversal the day of the USDA report. The weakness across the board was mostly due to harvest pressure.

We had another sale of beans to China this morning. Not a huge sale, just 123k MT. But more business is always good.

We had some fairly good rains across the entire corn belt, aside from the Dakota's and Minnesota. These rains weren’t enough to slow harvest down as that begins to get rolling here.

Here is the past 7 days of precipitation.


Here is the next 7 days of precipitation forecast.


However, if we take a look at our current soil moisture situation, we still have a big problem.


US weather headlines are mainly in the review mirror from here. No rain is going to save this crop, and lack of rain isn’t going to do much damage.

The trades weather focus is starting to shift to South America.

Currently Brazil is facing some extreme heat and dryness, which is a problem as they just start to plant their soybeans.


Early yield reports showing things we already know. Areas that got rain aren’t in bad shape, while areas that didn’t have some pretty bad damage. So will we see a yields be what the USDA currently has, with corn at 173 and beans at 50? I highly doubt both of those numbers. When it's all said and done I think we are sub-170 on corn and closer to 48 or even lower on the beans. But we will have to wait until these combines start rolling more.

The funds are still heavily short corn. Now sitting short 134k contracts, the shortest they have been dating all the way back to August of 2020. The funds remain short wheat and long beans.

The bottom line here is that we don’t want this negative price action to scare us. We are simply in a time where we are going to see some harvest pressure. This will probably last another week or two. Once we get through harvest, we should see prices rally, especially if the crops aren’t there.

If you are worried about the downside, grabbing a cheap put and establishing a floor is never a terrible idea. Every operation has different needs. If you want to go over yours or have specific questions shoot us a call anytime at (605)295-3100.


River Level Situation
The current water levels in the Mississippi are lower than the lows we saw back in October 2022 that interrupted river traffic. Freight costs are high and will likely continue to be that way for a while.

Crop Progress & Harvest

(Released After Close)

Corn 🌽 

  • Matured: 54%

    • Last Week: 34%

    • Last Year: 38%

    • Average: 44%

  • Harvested: 9%

    • Trade: 10%

    • Last Week: 5%

    • Last Year: 7%

    • Average: 7%

  • Good to Excellent: 51%

    • Trade: 51%

    • Last Week: 52%

    • Last Year: 52%


Beans 🌱 

  • Dropping Leaves: 54%

    • Last Week: 31%

    • Last Year: 39%

    • Average: 43%

  • Harvested: 5%

    • Trade: 4%

    • Last Year: 3%

    • Average: 4%

  • Good to Excellent: 52%

    • Trade: 51%

    • Last Week: 52%

    • Last Year: 55%


Spring Wheat 🌾 

  • Harvested: 93%

    • Trade: 94%

    • Last Week: 87%

    • Last Year: 93%

    • Average: 93%


Winter Wheat 🌾 

  • Planted: 15%

    • Trade: 15%

    • Last Week: 7%

    • Last Year: 19%

    • Average: 16%

Today's Main Takeaways

Corn

Corn nearly a nickle lower here today, seeing some spillover weakness from wheat and beans amid some harvest pressure. Despite the minor losses, December corn futures did make new lows, breaking that recent double bottom.

Here is what the bears are looking at. We had the USDA lower yield to 173.8 but the USDA balance sheet remains burdensome at +2.2 billion bushels. They are arguing that demand is just simply not enough to combat the balance sheets.

At the same time, we have the dollar continuing it's rally, making multi-month highs. Then we also have the river level situation. As the Mississippi river levels remain very low and are making it so barges are unable to move large amounts of exports through the Gulf.

So what are the bulls looking at? For starters we have……

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IN THE REST OF TODAY’S UPDATE

  • What bulls are looking at in the corn market

  • Buy signal for corn here?

  • Short & long term outlooks

  • Risk management

  • Why bean yields might be surprisingly poor

  • Upside and downside in beans

  • Why the wheat situation is bullish long term

Sebastian Frost
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