After heat hit the Midwest, crop markets found themselves on an upswing to end the last full week of August. While forecasts remain dry, yield estimates are expected to drive much of the price action in the near future.
“A return to hot and dry weather now could impact yields in a bad way, but ideas are that much of the yield has been already made,” said Jack Scoville, market analyst with the Price Futures Group.
“The crops are reported to be in mostly good condition now but will need rain constantly to maintain the condition due to the lack of soil moisture from three months of drought.”
The Pro Farmer Tour recently released their estimates for the upcoming crop with variable conditions noted across the Corn Belt. Overall corn production was estimated at 14.96 billion bushels with an average national yield of 172 bushels per acre. Soybeans were estimated at a yield of 49.7 bushels per acre with total production at 4.11 billion bushels.
As more hot weather is forecast to open September, expect a weather premium to come back into the market, Scoville said.
“Temperatures are expected to be hot,” he said. “It’s thought that the top end of the yield potential is gone but severe damage has not been reported yet. It may be becoming possible in some areas.”
Demand will continue to be a key factor for price action in the coming weeks as soy demand is being “shut out” of the market due to low Brazilian basis levels. U.S. prices are starting to show signs of competitiveness, but Brazil’s strong crop has allowed them to make sales to China.
Corn has also been dealing with low demand, particularly from domestic sources.
“Domestic demand has been weak due to reduced cattle and other livestock production,” Scoville said.
