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Market Trends Report – August & September 2022

US and the World

     It is that time of year when many people think the crop is made. For the most part in the United States corn pollination is in the rear-view mirror and August weather becomes a focal point for the soybean crop growing in the field. It has been an uneven summer for most of the corn belt, but poor areas are balanced out by above average areas. Generally speaking, the eastern corn belt has done better than the western corn belt although it is still considered average. Is the crop made? Well, it’s hard to say but the USDA chimed in on August 12th with the latest estimates.

     The USDA reduced US domestic corn production by 146 million bushels down to 14.35 billion bushels.  The USDA got to these estimates by pegging corn harvested acreage at 81.8 million acres, which was down 100,000 acres from earlier forecasts. The USDA yield estimate was reduced 1.6 bushels to 175.4 bushels per acre. Total corn ending stocks were reduced 82 million bushels from July coming in at 1.388 billion bushels.  The USDA kept the estimate status quo in Brazil and Argentina with 116 million metric tonnes and 53 million metric tonnes of corn respectively.

     On the soybean side of the ledger the USDA actually increased production slightly to 4.53 billion bushels. They increase the yield estimate to 51.5 bushels per acre, while at the same time lowering harvested acreage by 300,000 acres.  Old crop ending stocks were increase to 225 million bushels due to a lower export forecast. The new crop soybean ending stocks we’re increased to 245 million bushels, which was an increase of 15 million bushels. The wheat front was fairly quiet although the USDA did increase production globally by 8 million metric tonnes. This increase was attributed to higher production in Russia, Australia and China.

      On August 12th, corn, soybean and wheat futures were higher than the last Market Trends report.  September 2022 corn futures were at $6.39 a bushel.  The December 2022 corn futures was $6.42 bu.  The November 2022 soybean futures were at $14.54 a bushel.  The September 2022 Chicago wheat futures closed at $8.06 a bushel. The Minneapolis September 2022 wheat futures closed at $9.22 a bushel with the July 2023 contract closing at $9.35 a bushel.

     The nearby oil futures as of August 12th closed at $92.09/barrel down from the nearby futures recorded in the last Market Trends report of $94.70/barrel. The average price for US ethanol on August 12th in the US was $2.65 a US gallon, up from the $2.62 last month.

     The Canadian dollar noon rate on August 12th was .7823 US, versus the .7766 US reported here in the last Market Trends report. The Bank of Canadas lending rate increased to 2.5%.


     In Ontario it is the tale of who has rain and who has not, and, in many cases, this represents a difference between southwestern Ontario and eastern Ontario. Southwestern Ontario had long periods of dryness earlier in the growing season causing stunting on many cornfields. The general dryness also affected soybeans and even wheat to some extent. On the other hand, in eastern Ontario adequate rainfall has put many crop projections into record territory.  As we move ahead eastern Ontario will certainly be hoping for good rainfall to finish off the crop. In western Ontario the hope will be for good rainfall to at least give a decent soybean yield. In many cases corn yields will be way below average in some parts of southwestern Ontario.

     The wheat harvest is also coming to a conclusion with generally good yields and quality across the province. In eastern Ontario wheat yields were very good, in fact record, for many producers. As it is, we can expect much higher wheat acreage this fall as long as the weather cooperates.

     Ontario corn and soybeans export potential continues to be good as we head into the last part of 2022. Both corn and soybeans will be shipped to Europe with its varying degrees of requirement with genetic modification.   It is true that once Ontario corn and soybeans reach the high seas, cheap become synonymous with where it lands. However, in Ontario we have successfully differentiated ourselves to some extent into European markets with specific requirements such as Italy and the United Kingdom.  The hand to mouth Ukrainian export pace has also helped.

     Old crop corn basis levels are $1.45 to $1.66 over the September 2022 corn futures on August 12th across the province.  The new crop corn basis varied from $1.30 to $1.74 over the December 2022 corn futures.  The old crop basis levels for soybeans range from $4.50 cents to $5.17 over the November 2022 futures.  New crop soybeans basis levels range from $3.60-3.75 over the November 2022 futures.  Ontario SRW wheat prices are in the $9.25 range. With new crop higher at $9.80 bu.   On August 12th the US replacement price for corn was $9.00 /bushel.  You can access all these Ontario grain prices in the marketing section at

The Bottom Line

     Is the grain market resetting? Over the last few weeks and months, we have seen the grain market retreat from the big prices of early spring only to rebound into August in a much more conservative fashion. As it is, The US crop is growing in the field and according to USDA estimates won’t be a record but will still be very good.  The market needs the bull to be fed every day for it to go up. Do we trade sideways over the next few weeks until fresh news reaches a tangible point to move the market?

     The August USDA report did not really give us any bullish news even though the total corn output was cut back. It might be likely that the September report continues a yield cutback on the corn crop but it likely will be a small one. We would need the corn yield to go under 170 bushels per acre and the soybean yield to go below 45 bushels per acre to get a big bullish move in the short term. We would also need the US dollar to spiral lower. At the present time none of this seems to be in the offing.

     Having said that, both corn and soybeans might not be as bullish as they once were, but they are still bullish long-term. There is not a lot of room for error in the US corn production this year and for soybeans that is even less.  Cash basis values for soybeans are very strong and there are many analysts who think that the revised increase soybean ending stocks number by USDA is much less. The weather in the rest of August could certainly affect that further.

      Grain began moving again out of the ports of Ukraine after agreement brokered by Turkey.  Keep in mind but this is a good thing, but at the same time it is almost hand to mouth compared to the way it used to be and it is always subject to an abrupt change. The USDA actually increased Ukrainian corn exports by 3.5 million metric tonnes in the August 12th report, but this will surely depend on whether the grain keeps flowing. The war between Russia and Ukraine continues to get worse.

Commodity Specific Comments


     Is the corn crop made? Well, you could make an argument that is case even though it is hot and dry across much of the American cornbelt. December corn is currently in the $6.42 level as of August the 12th and will face stiff resistance at $6.50 and big support at $6.  At the moment, Brazilian corn is cheaper than US corn and everybody knows you have to feed the bull every day to get back to $7.

     On the global level the USDA did slash the European Union corn crop by 8 million metric tonnes. This is largely a reflection of the once in a century drought that is currently impacting Europe. The USDA also increased slightly the Russian and Ukrainian corn crops.  As we look ahead into September, we’ll need to watch to see if USDA further lowers the US corn crop.

     The December corn futures contract is currently priced 6 3/4 cents below the March contract which is considered a bearish indication a commercial demand for new crop corn. This is taking place despite new crop basis being fairly bullish. Seasonally, we know that corn prices tend to peak in early June and bottom in early October. The nearby December contract is at the 65th percentile of the past five-year price distribution range.


     Soybeans at $14.54 on the November futures are still a good news story. Yes, we still have the hot and dry story in August for soybeans and this is certainly impacting yield in some areas. However, we all know that a drought ends when it rains and even though that is not predicted, sometimes it happens. As it is, it’s hard to see soybeans going higher without a weather problem this month especially with a big Brazilian crop in the offing.

     It’s important to keep in mind that the USDA did actually increase soybean yield in the August 12th report even though they reduced harvested acreage by 300,000 acres. As it is, we can keep repeating the hot and dry narrative for soybean yields but at the same time if it rains that yield could easily go up in the USDA projections in September.  Producers need to be ready for any weather-related soybean scenario.

     The November soybean contract is currently priced 4 3/4 cents below the March which is a bearish indication of commercial demand for new crop soybeans. Seasonally, soybean prices tend to peak in early July and bottom in early October. The nearby November contract is currently in the 67th percentile of the past five-year price distribution range.


     Wheat prices have declined over the last six weeks and of course people are wondering where we go from here. Have we bottomed out in all the different wheat markets? The USDA actually lowered US exports as well as planted acreages of wheat.   It gets back to the old scenario that we plant or harvested wheat every month of the year in the world taking care of surpluses and shortages at the same time.  The opening up of Ukrainian grain movement is also weighing on this market even though it is more hand to mouth than it used to be in a pre-war situation.

     In Ontario the wheat harvest is over for the most part with very good yields and quality. It is the hope have many producers especially in southwestern Ontario that they get a lot better chance to plant wheat than they did the year previous. Rotation alone in southwestern Ontario should add to acres if we get the proper weather pushing it way above 1,000,000 acres this fall. Our Ontario wheat prices will continue to benefit from a Canadian dollar in the 77 and 78 cent US range.

The Bottom Line (cont.)

      The Canadian dollar continues to add stimulus to Ontario grain prices currently fluttering in the 78 cent US range. It is likely that the Bank of Canada continues to increase interest rates which often means that the loonie will move higher. However, the US dollar does not show any signs of weakness recently and this will prevent the Canadian dollar from moving higher. 

     Basis levels have been somewhat stable for Ontario grains this summer although recently old crop soybeans have moved to November futures and corn to September and December futures with corresponding movement in basis. In other words, if you were holding old crop corn or soybeans moving to those other months saw a reduced cash price, something that can happen in late August.  For instance, there was quite a sizable amount of “stranded corn” in this category, where end users were covered.  This is one reason why daily market intelligence is always key.   Good cash grain bids can disappear at this time of the year.  At the same time in September good old crop corn bids might do the opposite and suddenly appear.  It’s all part of our risk management equation.

     On the horizon are many things including the weather which will be so crucial over the next few weeks on finishing off the soybean crop. Hot and dry is predicted, which surely will be a negative going into the September USDA report. That report will surely refocus USDA yield estimates. Further out will have to keep in mind that our Brazilian friends could be planning on planting another record soybean acreage coming this fall. Early estimates have even predicted this crop to be up over 150 million metric tonnes, which is amazing to even contemplate. It might be too early to surmise at this time, but keep in mind that the production potential there for the upcoming coming season might be staggering.

     The challenge once again for Ontario farmers is to put all of these marketing factors together as they gauge their production fields. It has not been easy in many parts of western Ontario this summer as the dryness has taken a toll and late August rains will be welcome. However, there is much grain marketing opportunity ahead.  Have those standing grain marketing orders ready.  In this volatile grain marketing environment managing our price risk is so much more pronounced.