Grain markets saw lots of volatility last week, but despite some strong buying on Friday, it ended the week in the red. Dry areas receiving some rain and strong weekly U.S. export sales for corn and soybeans weighed heavy on the complex, despite indications from the USDA of worsening crop potential. The market was also feeling some malaise following suggestions from the Ukrainian Ministry of Agriculture that the country will export up to 4 MMT of grain through rail, boat, and road, albeit I and remain somewhat skeptical of this figure being achieved (unless things really ramp up over the next week!).

On southern side of the 49th parallel, U.S. corn rated good-to-excellent of 57% is the lowest for this time of the growing season since 2012. Last week’s ratings including a 9-point drop in South Dakota corn and a 7-point fall in Iowa to 66%; most people I talked to last week were shocked to hear that Iowa’s G/E corn rating was at 80% level just 3 weeks ago. Accordingly, the USDA’s forecast in their August WASDE that Iowa producers would produce a new record average state yield seems a bit far-fetched today. That’s why this week’s Pro Farmer crop tour will likely keep the volatility theme intact for grain markets as scouts will gather corn ear/kernel and soybean pod counts from over 2,000 fields across Ohio, Indiana, Illinois, Iowa, Nebraska, South Dakota, and Minnesota. Early expectations are that western Corn Belt numbers will be worse than the likes of Illinois, Indiana, and Ohio, and so the biggest question to be answered this week is if the really good fields will completely offset the bad.

Staying in the crop tour theme, my friends at Argus Media and LeftField Commodity Research recently drove through Western Canada in a couple cars, with each travelling over 2,000 kilometres in five days and final tallies were the result of random counts and conversations with farmers. When everything was added up, they’re estimating an average spring wheat yield of 53.3 bu/ac and an average canola yield of 41 bu/ac. Compare this to the five-year average of 38 bu/ac and last year’s yield of 25 bu/ac for canola, and spring wheat’s 49.3 bu/ac five-year average and last year’s 36.3 bu/ac in the drought. From a production standpoint, Argus Media is estimating 28.4 MMT of non-durum wheat, which would be just above Agriculture Canada’s forecast from July of 28.2 MMT. Mark your calendars as next Monday, on August 29th, we’ll get the first model-based production estimates from Statistics Canada.

While we’ll get the production numbers next week from StatsCan, quality obviously won’t be known for a lot of the Canadian Harvest 2022 until combines get rolling. With the later planting dates in eastern Saskatchewan and most of Manitoba, a late harvest is likely in the cards for many in the area, which puts quality at risk as cooler and/or wetter weather shows up in September. That said, in crop reports across the Canadian Prairies this past week, crop conditions were reported as mostly good, with harvest operations behind normal in Saskatchewan and Manitoba, and above-average yields in Alberta.

For the Wildrose province, farmers elected to significantly reduce canola and barley acres this year in favour of wheat, which could impact feed barley prices. While values for the staple feedstuffs across Alberta have fallen dramatically to now sit below where they were at a year ago, we are possibly starting to see some leveling out of prices. Going forward feed grain prices will largely be influenced by not just the quality available in Western Canada, but also the quantity and the lower likelihood of U.S. corn coming across the border (AAFC is estimating Canadian corn imports will drop by 50% year-over-year to 2.2 MMT in the 2022/23 crop year).

Make sure to tune into next week’s Wheat Market Insider as we’ll be covering how the market’s interpreted this week’s crop tours, updates to Agriculture Canada’s supply and demand tables, as well as the aforementioned yield and production estimates from Statistics Canada.

To growth,

Brennan Turner

Founder | Combyne Ag