Chicago Board of Trade Market News
Outlook
Daily changes in the weather forecast are likely to be the largest drivers of the corn and soybean markets over the next couple of weeks. Managed money is holding record short corn and soybean positions betting on record crop yields for both corn and soybeans in the U.S. this year and, at least so far, betting that demand increases are still “off in the future.” So far this year, that has been a winning position as corn has been in an extended downtrend since July 2023. December corn futures were above $5 per bushel when 2024 began and this week hit new lows just cents above $4 per bushel.
The weather models agree on the forecast for the next two weeks with warm to hot temperatures with below normal rainfall for the Plains, the Canadian Prairies, and the western portions of the Cornbelt. The coming heat will hasten crop maturity and shorten the time for ear fill. This usually results in lower test weight on the corn and a reduction in yield compared to what might occur if temperatures remained conducive to optimal crop development. In some areas with relatively low soil moisture, crop stress is likely to be seen very quickly.
The jet stream is displaced northward into Canada in the week 2 forecast with increasing amplitude of the west-central U.S. high pressure ridge. This suggests that the best chances of rain will be late next week as some Ridge-riding storm systems drop rain in the eastern Midwest, Tennessee Valey, and the gulf states, areas that already received quite a bit of rain when Hurricane Beryl moved through those areas. The southeastern U.S. could see regular daily rain with 10-day totals of 2 to 6 inches of rain and localized flooding.
Western Cornbelt and Plains will see high temperatures in the upper 80s into the mid to upper 90s by Friday and will hold at these elevated levels throughout next week. The heat becomes oppressive with highs pushing into the lower 100s across the Plains and western Cornbelt in the 10–15-day period. The high-pressure ridge holds across the north-central U.S. into at least August 8th. This hot/dry weather pattern will be most adverse to Plains and western Cornbelt crops that are pollinating and in the reproduction stage. The upcoming weather could shake the market into sharp shortcovering rallies as stress becomes more apparent.
Weather in Ukraine continues to feature limited rainfall and continued stress on the corn crop. Some private estimates of the 2024 Ukrainian corn crop have been cut recently by 5 million metric tons to 24.1 mmt. The Ukrainian ag ministry still expects output of 28.5 mmt down from a harvest of almost 30 mmt in 2023.
SovEcon has cut its estimate of the Russian corn crop by 8%, to 13.4 mmt from its June estimate of 14.6 mmt. The estimate was lowered due to hot weather which has caused significant damage, particularly in the southern parts of Russia. They say, “further reductions in the corn crop estimate cannot be ruled out.” The barley production forecast for Russia was increased to 19.3 mmt from 18.6 mmt.
On the demand front, private exporters reported sales of 133,000 mt of corn for delivery to Mexico during the 2024/25 marketing year. Corn and soybean export inspections were near the top of expectations and given total shipments to date, the pace of shipments for the remaining 7 weeks of the current marketing year should be very close to this week’s pace.