It is getting to be that time of the year. We are in the middle of August and the weather is benign seemingly creating heaven for all these soybeans to be setting pods.  it seems every year that we hope for a hot and dry “Dome of Doom” to descend in some other region to boost our price prospects.  Not this year as mild temperatures across the American Midwest are setting up for even bigger crops that we could have ever imagined.

I know it gets frustrating because I’m starting to hear from many of you. It goes without saying that sometimes I get marketing questions come across my desk simply because I write about grain markets all the time. There is no question we are in some of the most bearish agricultural prices that we’ve seen in about 5 or 6 years. I will just say keep in mind that markets are fluid and change can happen quickly. However also keep in mind but sometimes we have years of this just looking back on our history. I don’t know the future.  I just try to measure all of these different marketing factors.

As I have said almost ad nauseam over the last several months the Canadian dollar fluttering just under $0.73 US continues to add cash stimulus to a very bearish grain futures market. For those of us who farm in Ontario and Quebec, that’s something that we can still count on.  As we move ahead, I can assure you we do not want a Canadian dollar in the 85 or $0.90 US range. I don’t think you could imagine cash prices with a negative basis under futures values at this time. That’s exactly what you would get with a much higher Canadian dollar.

This past week our friends at the USDA weighed in with their latest WASDE report.  Let’s just say it wasn’t very friendly to prices. What the USDA did was raise corn production and also boost up soybean production into record territory. US corn production will now come in at 15.147 billion bushels with an increase in yield pushed up to 183.1 bushels per acre. USDA actually decreased corn planted acreage down to 90.7 million acres and also lowered the projected harvest acreage down to 82.7 million acres.

You might remember last week when I continued to talk about “big supply.”   When you consider our carry in as well as a small bit of imports and production our total US supply is sitting now at 17.038 billion bushels of corn.  That is a mind-boggling number and when you consider total usage is at 14.905 billion bushels it again has my head spinning. Keep in mind that as an agricultural economics writer during my career I’ve written about these levels at about half of what they are now. Agricultural productivity is incredible.

The hard part of course is that prices have sunk continually in 2024. Non-commercial players have continually pushed the market down as they say no reason to go any other way. There is simply grain everywhere here on the North American continent.  December corn is currently at $3.97 a bushel. New crop corn values in Ontario for sale this fall Are approximately $5 a bushel.

We know that soybeans are the great liars, right? That was repeated this week by several farmers here in Ontario over social media pages. Well, USDA came up with a lot more soybeans in the August report. They are predicting a record soybean crop of 4.589 billion bushels which was above many analysts’ expectations. USDA also increased planted acreage by 1 million acres with a whopping yield average of 53.2 bushels per acre.   Of course, we know in this benign August with good weather we might even add to those totals. November futures are at $9.68 a bushel.  With prices the way they are, you would think that that would send some type of market signal to Brazil to not plant as many acres in a couple of months.

Will it get worse before it gets better or is it all onward and upward from here? Well, keep in mind that nobody knows that but also keep in mind that as prices have got cheaper demand is on fire. There is nothing like “cheap” in the commodity world to get demand moving. At a certain point and of course I have no idea when, but things will get tripped up and price will move back up. However, I wouldn’t expect that next week or next month.  This bearish grain story has not totally unfolded yet.

I am hearing from many friends who have European ties who continually tell me about the problems with wheat in Russia and in Western Europe.  I tell them there’s just too much grain around and that still doesn’t matter as of yet. However, keep in mind the geopolitical problem called the Russia Ukrainian war continues to evolve. This past week we even had Ukraine invade Russian territory and take positions there. I’m no military strategist, but that new reality adds volatility for grain production in that region long term.

So, as we move ahead into late August and September, what to do?   Hey, we might even see a tinge of colour in our soybeans soon. 2024 has certainly been a tough market year.  No Black Swans yet, but fresh market news would really be welcome.