The grain markets are trying to rebound some after being down sharply following last weeks USDA supply and demand numbers for July. The biggest issue with the grain markets right now is that there is just a big supply that is being carried over from last year to buffer this year’s crop being smaller. That being said the USDA did not adjust the corn or soybean yields lower in the July report which most everyone feels they will need to do so in upcoming reports. There has been enough issues around where the crops are just not anywhere near what we had the last few years as far as yield potential. The weather will continue to be watched as we go forward. The western grain belt continues to see abnormally dry to drought conditions while the eastern belt if fairing much better with precipitation. Some area have seen too much rain and have crop losses due to flooding with Southeastern WI being one of the areas hit hard. The city of Burlington had some areas without power for 3-4 days due to the floods.
Weekly export inspections were strong in corn at 43.7 million bushel, they need to average 37.1 per week to reach this years goal. Soybeans were at 10.5 million bushel, need to average 23.7 million; while wheat was at 21.3 million bushel, needs to average 18.5 million.
The funds bought corn, soybeans and wheat last week and are now showing a long position in corn wheat and soybeans after holding a large short position just a few weeks ago. China’s economy was reported at growing 6.9% for the second quarter which was above estimates offering some support to commodities in general.
Overall thought the market will be watching the weather forecasts and the crop ratings. Tonight’s crop progress report is expected to see a steady at best crop rating for corn and soybeans. While others are praying for rain; Locally here were in Wisconsin we are hoping for some dry weather to complete winter wheat harvest. The reports from the first harvested bushels are that it is a little low in test weight but toxin levels are really low to zero so that is good news so far.
The NOAA 7-day precip outlook suggests heavyrains for Northern IA, Southern MN and Wisconsin to include portions of Northern IL and OH. The same areas are receiving rains while the dry areas of the corn belt continue to miss out. Iowa has a large section in the central and northwest area that is showing significant signs of drought. These issues will continue to be monitored and have everyone guessing on where the crop will end up.
As quickly as these weather rallies start they can go away even quicker. It is important to have sell targets in place and sell as the market price is moving. There are also several different types of strategies to protect the floor while leaving the upside open. Please take a look at these opportunities in your marketing plan.
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