Grain markets this morning are mostly in the green, factoring in some drier conditions in the Midwest, after a sell-down day yesterday.
“Over the years, I’ve learned that a confident person doesn’t concentrate or focus on their weaknesses – they maximize their strengths.” – Joyce Meyer (American author)
Grain Markets Home in on August Crop Tour Season
Grain markets this morning are mostly in the green, factoring in some drier conditions in the Midwest, after a sell-off day yesterday. More specifically, corn prices on the front-month September and new-crop December 2020 contracts posted new contract lows. On the bullish side of things though, as of the end of July, about 1/3 of Iowa is in a moderate or severe drought. However, all of Iowa’s surrounding states – most of Illinois, Nebraska, Minnesota, and Missouri – have received adequate moisture thus far. While the photo below is from last week, we’ll get an updated report from the U.S. Drought Monitor tomorrow morning.
Speaking of updates, the latest news out of Beirut, Lebanon regarding the big explosion there yesterday suggests that it was old fertilizer – ammonium nitrate – that caught fire and caused the huge explosion.  As the Port of Beirut is basically inaccessible now because of the damage caused by the explosion, it’s estimated that the country only has about one month worth of grain supplies left.  As reported by Allendale Lebanon isn’t a huge grain trade player: they consume just 1.35 MMT of wheat annually, but do import about 1.2 MMT of that.  However, with COVID-19, they’re having some major economy and currency issues and so it looks like another humanitarian crisis could be brewing in this Middle Eastern country.
Grain Markets and Crop Tours
As we flip the calendar into August, crop tours seem to take over our social media and ag media newsfeeds. And because of the various reporting methods and locations, grain markets can be a bit volatile during this time. As it stands today though, the U.S. corn and soybean crops look pretty solid, with the USDA saying in this week’s crop progress report that they’re good-to-excellent ratings are 72% and 73% respectively.  With crop ratings this high, most analysts are expecting the USDA to raise their average yield estimates in their next WASDE report, published in a week on August 12th, 2020.
While grain markets always consider what the USDA says, as mentioned, crop tours tend to get a lot of the spotlight in August. I saw one publication note that, with these crop tours, “farmers will gain access to high-quality yield estimates that can help leverage marketing decisions.” Quite frankly, the only marketing decision I’m making in August is, if it looks like I have a big crop, I’m maybe looking to sell a few more loads off the combine (or rather, on Combyne – list your new crop deal to get those extra bushels moved, or empty out the bins that still aren’t yet spoken for).
A recent FarmLink crop tour across Western Canada and as usual, we’ve got a lot of average, some really good, and some really bad.  For the former, southern Alberta finally got the rains it needed and crops are looking pretty solid just as combines are starting to roll. Conversely, Alberta’s Peace region and anything north or east of Edmonton isn’t looking too great (I’ve heard that as much as 200,000 acres could be a write-off in this area). Saskatchewan and Manitoba also look good, albeit it’s a bit too wet in some parts of the latter, and a bit too dry in some parts of the former.
The August crop tour season wouldn’t be complete though without he ProFarmer crop tour, which starts on August 17th and will last 4 days.  Obviously, with COVID-19 on everyone’s brain and newsfeeds, there will be less scouts and gathering restrictions, but the same routes will be run, just the data set collected won’t be as large.  Will grain markets consider the smaller data set as a bad thing?
To be honest (and this may be an unpopular opinion), I don’t think participants of grain markets care too much about crop tours anymore. With satellite imagery and other data reporting functions, there is already a lot known about Harvest 2020 months before the combines even start to roll and even before the crop tour participants trudge through fields. While it might help determine a bushel here or there, let’s be honest, by the middle of August, crop yield potential is fairly known. Otherwise, why do grain markets historically pull back, the closer we get to harvest? Granted, this year, there’s more trade issues to contend with, including the competition, namely Brazil’s record soybean harvest forecasted for 2020 (and that I mentioned last Friday).
To repeat myself though, you really shouldn’t be making marketing decisions in August unless you’ve got extra bushels to deal with or need to empty out a bin. If that’s the case, set some expectations and showcase your listed grain deal(s) to either the entire Combyne Marketplace or, just select people (i.e. “My Canola Buyers”) using the “Groups” feature in the My Connections tab.
No grain markets futures data is included in today’s Breakfast Brief but you can review them here at your convenience.
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