That popular trio of crop condition, demand and transportation remains at the top of the page for crop and market watchers as we plant our feet firmly into September.
The big question now is how does the crop finish as hot temperatures threaten to dominate in early September, said Don Roose, market analyst with U.S. Commodities in Des Moines.
Traders are watching hot, dry weather in the western Corn Belt and west of the Mississippi. The heat continues to push the crop to maturity at a rapid rate at the expense of pod and kernel fill, he said.
“I remind people we don’t sell kernels, we sell weight,” he said.
People will be watching the crop condition report on Tuesday with expectations that conditions will decline again. But how much will the decline be? In the last report, conditions didn’t deteriorate as much as expected, Roose said.
At this point, some are expecting average corn yields to be under 170 bushels-per-acre for corn and 48-49 bushels-per-acre for soybeans, said Jack Scoville, market analyst with the Price Futures Group.
It’s not just the dry weather in the U.S. people are watching, it’s the weather around the world.
As drought continues in Canada, “oats have been on a run,” said Roose of the march upward for oat prices last week.
Markets will also be watching early harvest as some farmers start as soon as possible to take advantage of premiums, Roose said.
On the export side, there’s hope that China continues buying U.S. soybeans at the rate it has been lately, and hope for better corn demand, Scoville said.
Transportation is another factor as dry weather lowers water levels on the Mississippi, forcing barges to travel less full. That lowers the basis and raises shipping costs, Roose said.
“Costs of barge freight in St. Louis are up 42% vs. last year and up 85% from the 3-year average,” said Phyllis Nystrom of CHS Hedging commenting on how low water levels on the Mississippi have pushed freight costs higher.
The lower water levels also affect the Panama Canal, forcing barges to travel lighter in that area, leading to higher freight rates for ocean transport, Roose said.