Check our advice monitor at ProFarmer.com for updates to our marketing plan.
Grain markets ended a topsy-turvy July on a down note as forecasts for widespread rains across key corn and soybean growing areas in the Midwest appeared to scupper a summer rally.
Here are three things to watch next week:
Rainfall totals: Weather will be at the top of the list when it comes to markets to kick off next week. Namely, traders will be watching what actually happened in terms of precipitation, particularly across the Dakotas, Nebraska, northwest Iowa and Minnesota. Significant disappointment in rainfall totals could spark a reaction. Crop condition ratings for corn and soybeans as of Sunday are likely to show little movement, maybe shifting up or down a point, said Pro Farmer crop consultant Michael Cordonnier. USDA will release the Crop Progress report Monday afternoon. Updated forecasts will be watched for affirmation of cooler, wetter weather ahead.
World Weather Inc. said that while some areas benefited greatly from Friday rains, some didn’t do that well, including much of northwestern Iowa and will need to see some follow-up precipitation. Otherwise, it’s been a relatively beneficial event, particularly for eastern South Dakota, southern Minnesota and parts of eastern Nebraska.
- “Follow-up rain will be extremely important for all of the western Corn Belt in the coming two weeks, especially in areas that were either missed or received sporadic light rainfall overnight,” the forecaster said in an update.
Black Sea: Headlines out of the Black Sea will likely continue to feed volatility in the wheat market, with potential spillovers. Wheat futures saw a down week and were under pressure Friday, but Russia and Ukraine have shown little sign of letting up on attacks on shipping and ports, which has raised concerns about grain flows from the Black Sea. Russia’s Union of Grain Exporters and Producers told Reuters that what it called Ukraine’s “systematic attacks,” which began in July, could soon lead to a “complete blockage of export corridors in the Black Sea basin. Reuters noted that Ukraine’s largest farming union, UAC, has also warned in recent weeks that Russian strikes on shipping near the southern port of Odesa were impacting the country’s exports in the key harvest period and could affect global food supplies. The union says Ukraine’s capacity to export grain through the Black Sea has dropped by a third due to Russian drone and missile attacks.
Farm bill: Senate Agriculture Committee Chairman John Boozman has set Aug. 6 for a markup of the upper chamber’s farm bill proposal. Senate Republicans plan to include language that would permanently allow year-round sales of the E15 gasoline blend. According to Politico, the E15 language is a scaled-down version of the standalone bill passed by the House in May, which narrowed exemptions for some small refiners – a provision that’s seen as a sticking point for some Republican senators. The report said Senate Agriculture Committee Chairman John Boozman, an Arkansas Republican, is set to schedule a markup of the bill for Aug. 6. Boozman, an Arkansas Republican, said negotiations with Senate Democrats over a possible one- to two-year delay to requirements that states share food-aid costs under the Supplemental Nutrition Assistance Program are continuing, Agri-Pulse reported, in a bid to remove a potential hurdle to Senate passage.
This week in a nutshell: A larger-than-expected drop in condition ratings lifted both corn and soybeans early in the week, but was quickly forgotten as weather forecasts pointed to timely precipitation, including areas that have seen significant dryness. Soybeans led the way lower on favorable weather heading into the crucial August growing period, while lackluster China demand also weighed. Wheat futures also felt pressure but were insulated by the continued escalation of fighting between Russia and Ukraine, which has threatened export flows out of the Black Sea region. Cattle futures signaled they may have bottomed after USDA announced plans to reopen the southern border to Mexican imports, while lean hog futures hit a three-week low alongside signs a cash rally is stalling out.
September soft red winter wheat gained 50 cents in July, a gain of 8.5%. Corn rose 5.8% on the month, with soybeans up 5%.
U.N. warns that strong El Nino on the way: The United Nations weather agency on Friday warned that a strong El Nino is set to intensify in August and is likely to boost above-normal temperatures globally and significantly shift rainfall patterns, Reuters reported. The agency, the World Meteorological Organization, said it would intensify its mobilization of information and support services to help countries anticipate and minimize the impact of El Nino.
Opening idled refineries: The White House has had discussions with a wide range of potential suitors to reopen shuttered petroleum refineries from the Virgin Islands to California amid rising anxieties over higher fuel prices, Politico reported, citing three industry executives familiar with the talks. National Energy Dominance Council officials confirmed they have fielded inquiries from potential investors, and the industry sources said the NEDC connected those investors to relevant agencies to discuss how the government could help facilitate investments, the report said. The discussions have progressed to the point where council officials have consulted with the U.S. Environmental Protection Agency on regulatory requirements for reopening mothballed facilities.
Plans for rival oil benchmark scrapped: Abu Dhabi is overhauling the way it sells its oil, backing away from a plan to establish its own global crude benchmark to rival Brent after the Iran war exposed flaws in the fledgling market, the Financial Times reported Friday afternoon. Adnoc, the emirate’s national oil company, said that it would stop selling its flagship grade of crude, Murban, on an open market and would instead revert to a previous system of quotas whose price is linked to benchmarks assessed in Dubai. The report noted that five years ago, the capital of the United Arab Emirates caused a stir by announcing that Murban crude would be priced through a futures contract on a new exchange, ICE Futures Abu Dhabi.
Oil’s July surge: Oil futures rose sharply in July, with U.S. benchmark West Texas Intermediate futures up 22% on the month to end Friday at $84.67 a barrel, while September Brent rose 24% to $90.12 a barrel. Renewed fighting between the U.S. and Iran saw crude climb after falling back toward prewar levels last month on peace hopes. Diesel futures led big gains for the energy complex, boosted by the renewed Middle East strife as well as a Russian ban on exports as a result of damage to refineries from Ukrainian drone attacks. New York ultra-low sulfur diesel futures jumped nearly 33% on the month.