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Market Trend Report for July & August

US and World

We are hitting the home stretch for U.S. crops.  In past years mid-June to early July is often the time for pricing crops.  In fact, weather post July 4th and into mid-July is critical for the corn pollination period and often serves as a benchmark for the US corn crop.  Although weather had been hot and dry earlier, a wetter forecast did creep back into the complex on July 15th, followed by a dryer forecast into August. With COVID19 giving this market a unique character, market prices were already low during this critical pricing period.  This has put prices at the mercy of the weather, which has been variable at best.  As we move ahead, weather is critical now for corn and will be into August for soybean yield.

On July 10th the USDA released their latest WASDE report.  Corn acreage was maintained at 92 million acres with a yield of 178.5 bushels per acre. These figures from the June 30th report, means 995 million less corn bushels based on the lower acreage figure.  Total U.S. corn production is set to come in at 15 billion bushels. Corn ending stocks were pegged at 2.648 billion bushels down from the 3.23l billion bushels from the June report. Corn exports were 2.15 billion bushels, feed and residual demand was down to 5.85 billion bushels from 6.05 bbu in June. Ethanol demand was projected at 5.2 billion bushels.

In soybeans, U.S. ending stocks are forecast to increase to 425 million bushels, based on the higher production from the June report. On the old crop side of the ledger, ending stocks were increased by 35 million bushels to 620 million bushels. Total soybean production was set to come in at 4.135 billion bushels, based on a yield of 49.8 bushels per acre.  The USDA raised old crop wheat ending stocks 61 million bushels to 1.04 billion bushels. Total wheat production was lowered 53 million bushels to 1.824 billion bushels.  USDA forecast global ending stocks at 314.84 MMT.  It sounds like a big number and it is, but keep in mind 51% of that is in China and 10% is in India.

On July 18th, wheat and soybean futures were higher than the last Market Trends report. Corn futures were lower.  September 2020 corn futures were at $3.33 a bushel.  The September 2020 soybean futures were at $8.98 a bushel.  The July 2020 Chicago wheat futures closed at $5.34 a bushel. The Minneapolis September 2020 wheat futures closed at $5.12 a bushel with the September 2021 contract closing at $5.64 a bushel.

The nearby oil futures as of July 17th closed at $40.59/barrel up from the nearby futures of recorded in the last Market Trends report of $40.32/barrel. The average price for US ethanol on July 17th in the US was $1.58 a US gallon up from the $1.57 recorded in the last Market Trends report.

The Canadian dollar noon rate on July 17th was .7367 US, slightly lower than the .7372 US reported here in the last Market Trends report. The Bank of Canadas lending rate remained at 0.25%.


In Ontario wheat harvest is progressing throughout the province.  Having started in Essex County near and around Canada Day, it has slowly progressed west and north with very good yields and quality.  However, it is not across the board as some areas that experienced drought have not been so lucky.  As is, harvest continues amid thundershowers which always can hinder harvest in an Ontario summer.

Wheat prices are always in flux at harvest time in Ontario, but flat prices around $7 have been in the mix partly because of the recent run up in Chicago SRW futures.  Of course, nobody knows what the future holds, but it was a bit of a gift after SRW Chicago futures bottomed out last month.

Basis levels for corn and soybeans have not changed significantly since the last Market Trends report.  With the Canadian dollar being maintained near the .7367 US level, this adds a level of stimulus to Ontario cash grain prices per usual.  However, as we move ahead, things might change as we go into August.  Much of this will depend on weather in Ontario and Quebec. 

Old crop corn basis levels are $1.40 to $1.55 over the September 2020 corn futures on July 17th across the province.  The new crop corn basis varied from $0.94 to $1.40 over the December 2020 corn futures.  The old crop basis levels for soybeans range from $2.70 cents to $2.88 over the August 2020 futures.  New crop soybeans range from $2.59-$2.69 over the November 2020 futures level.  On July 4th the US replacement price for corn was $5.33/bushel.  Cash wheat prices are in harvest flux and must be checked daily.   You can access all of these Ontario grain in the marketing section at

The Bottom Line

It’s now all about the weather.  The USDA has done what it could counting the acres and yield, but weather factors now and into August will help define just how big this crop is.  In the past we’ve had higher rated crops, but if rain chances are fulfilled over the next two weeks for much of the corn belt, a crop of 15 billion bushels plus is still in the cards.  As is, with Covid in our back pocket, corn demand is the lowest in six year with the lowest export demand in seven years.

Wheat has provided a bit more of a bright flash in this bearish market environment.  As we all know, wheat acreage has been going down in the US, but not all wheat classes are created equal.  There is mostly SRW wheat grown in Ontario.  On July 10th, USDA set SRW wheat 2020/21 ending stocks at 103 million bushels.  USDA is expecting 280 million bushels of production of SRW this year, but total use is set for 292 million bushels.  As is, it will lead to the lowest surplus of SRW wheat supplies since 2007/08, when prices peaked above $11 and finished near the $6 mark. 

The peak in SRW wheat pricing this season came earlier in January when the nearby contract came near the $6 level.  This level has served as firm resistance over the past five years and likely will continue to.  Keep in mind, SRW wheat does present some bullish illusions compared to corn, but it’s in a volatile trading environment.  Spec trade action can lead to violent futures moves.   There might be all kind of “wheat” in the world, but the different classes of wheat have unique supply and demand scenarios and will trade accordingly.

Soybeans continue to dance with $9 in the nearby contract.  China has been buying both American soybeans, partially because Brazil soybean supply are priced higher for September and there is a thrust to meet phase 1 agreements with the United States.  However, rumours are just that and they continue in the market for more and more sales.  Soybeans have benefited by a five-month high in Malaysian palm oil in harmony with soybean oil reaching a four-month high. Needless to say, we’re going into August, and these rain amounts will certainly determine US yield and affect futures.   

Commodity Specific Comments


Corn had its biggest export buy in the week of July 17th since 1994 as China bought corn.  However, the market didn’t seem to care as it knows ending stocks are still onerous. Argentina and Brazil remain stiff competition in corn on the world stage. 

Also, the traditional pricing window is closing on corn as pollination is in full swing in the United States.  There have not been very big windows to price corn over the last two years and this might be the last kick at the can for 2020.  The pricing window might be closing as pollination gets finished in the US. 

The September 2020 December 2020 corn futures spread is as of July 18th is -.0675 cents/bushel, which is considered sideways.  Seasonally, corn prices tend to go down from here into October.  The nearby spot contract is currently in the 20th percentile of the last five-year distribution range. 


Soybeans have held in there over the last few weeks, despite more acres from the June 2020 USDA report.  Prices have even moved back toward the 50% retracement levels, where they were earlier.  As we move into August, this is where the weather will determine how well beans do.  Daily market intelligence on the weather side will help determine soybean market direction.

China is buying American soybeans, and this remains a very good thing from where we came from.  US soybean are now the cheapest in the world and China will surely be coming back for more as the Phase 1 agreements are still not met. 

The August 2020 September 2020 soybean futures spread as of July 18th is currently $.0575 cents which is considered sideways.  Seasonally, soybean prices tend to peak in July and trend lower into October.  The nearby spot soybean contract is in the 25th percentile of the past five-year price distribution range. 


The SRW wheat market has been ascendant over the last few weeks, partly attributed to the hot weather and partly attributed to the funds being caught short.  At the same time, wheat harvest in Europe and Russia was coming up a little shorter than expected and SRW got quite a bounce.  Despite the constant oversupply of wheat in the world, there is a different supply and demand scenario for the different classes.  This July, SRW Chicago wheat supplies are tight.

This has helped Ontario wheat prices significantly from the lower levels we saw in mid-June.  Of course, nobody knows the road ahead with regard to flat Ontario cash price or futures, the market has provided some room to be rewarded.  Harvest continues in SW Ontario and will be moving east and north as the crop matures.

The Bottom Line (cont.)

The Canadian dollar continues to cooperate with Ontario farmers who’d like to see it stay low, providing farmers with flat price opportunities.  New Bank of Canada governor Tiff Macklem announced last week the bank was keeping interest rates at 0.25%, which, again, tells us the dollar isn’t going anywhere fast.  It’s also a continuing stimulus to Canadian agriculture.  Keep in mind, even though that doesn’t seem likely to change in the next few weeks, it will change radically at some point.  It will be part of sharpening our marketing management into the future. 

It goes without saying that we’re all tired of Covid19 and the restrictions it has put on us as individuals and our farms.  However, it not going away fast and in fact coronavirus cases are still surging worldwide, which continue to affect our markets. Ethanol demand has made quite a comeback from its dive into lockdown, but it may be boomeranging if lockdowns increase based on the Covid19 numbers which are increasing in the southern American states. 

Weather forecasts in the next few weeks will be telling for grain futures prices.  This goes without saying.  Benign weather during corn pollination period is good.  Rain in August is good for soybeans.  We are here now and the marketing window maybe closing for corn, but it’s wide open for soybeans at this critical time.  Calibrating your marketing expectations might be in order as well as refining market price expectations.  As it is, the US crop looks good now, and we need to be prepared if that expectation continues.  Seasonality tells us, corn and soybean prices tend to trade down into October after any possible summer fireworks.

There is a myriad of other geopolitical factors, along with COVID19 that can affect our futures market.  The China US uneasy relationship continues even with renewed Chinese buying of agricultural commodities.  The USDA raised 2019/20 Brazilian soybean production to 126 MMT and left Argentinian production at 50 MMT.  There will be more of the same as we farm locally, but we’re always thinking globally.  Keep abreast of the changing wheat market as harvest continues.  Have those standing marketing orders ready.  There will be many marketing opportunities ahead.