It has been a tough week in the markets. The weekly export report came out this morning was impressive but it was widely expected since it reflected the record flash sales announced last week. The drought in western Iowa is growing more severe, but rain is forecast over the next two weeks that will provide some relief. The eastern belt has already gotten a lot of moisture to help alleviate the dryness concerns from earlier. Weather is non threatening and the yield estimates are creeping higher. FC Stone came out with their yield estimate this week. They had corn at 182.4 compared to USDAs last estimate of 178.5 and beans at 54.2 compared to USDA at 49.8. If realized, these yields more than offset all that China has bought so far. Everyone expects USDA to raise yields next week, but few expect an increase as large as FC Stone released. The US and China are meeting next week to talk about how progress is going on the Phase 1 commitments.
We have to stretch to find something positive in the markets right now. One thing we do see is the weakening of the US dollar. The dollar was trending lower through the entire month of July. The reason it has not had much of an effect so far is that the currencies that our Ag commodities compete with (like Brazil and Russia) were also weak over that period. It is the other developed economies that were gaining strength against ours. A weak dollar is needed to help a recovery in the commodities but it needs some other things to go in our favor too.
Corn
Drought conditions in Iowa are getting worse (see drought monitor below) but rain is forecast and so the market is quick to dismiss it (for now). Overall conditions across the country are good. It is not weather that is going to save this market. We need demand. I do not see much hope for corn through this month. I hope we can put the lows in early and hold the $3 support level.
Soybeans
Soybeans are not bouncing against the lows from earlier this year yet. They are keeping support due to world demand which continues to strengthen. We have also had decent domestic demand. There is still some weather risk in soybeans but it is shrinking each day as we have a very good rated crop compared to historical ratings. China has not made the record purchases in soybeans as they have in corn but continue to make purchases every couple days.
I would like to sell closer to $9, but if you have not sold any soybeans for new crop it would not be a bad idea to get some sales on now. Soybeans have traded in a much tighter range than corn over the last two weeks and they could break out either direction.
Wheat
Wheat has resumed its roll as the ugly commodity. Weather abated in Argentina and yields in Russia are a little better than feared. Soft wheat still has the most strength of any of the classes, but we are struggling to hold $5 level. Old crop bushels shipped need to be priced on any positive day. New crop continue to work orders around $5.50.
Cotton
Cotton has almost perfectly mirrored the Shanghai composite index (Chinese stock market). Exports were not impressive this week. All the dryland cotton in Texas was zeroed out already but the irrigated was able to hold on long enough to take advantage of the pattern turning wetter later in the season. The Delta and Georgia have a good crop. There is not going to be a huge production disaster in the US. We need demand. $0.65 is a good place to be cleaning up old crop if there is any left with new crop right around the corner. New crop is still supported by the LDP.
Forecast Precipitation
