Skip to content

Market Trends Report – June & July 2023

US and the World

      Warm and dry conditions with the added component of smoke have inundated parts of the American corn belt over the last few weeks. In fact, increased drought conditions are making farmers nervous across this region as crops need rain badly. It is that time of year again when seasonality tells us that we should be at the top of our game with regard to crop prices. However, the market has continually been nonresponsive to the recent dry weather setting up the scenario of where we go from here. In this very important segment of the crop marketing year the USDA is chiming in with their latest WASDE report.

     Amid this dry spell the USDA released their latest WASDE report on June 9th.  The USDA kept all the major production numbers the same for both corn and soybeans in the June 9th report.   Production is still set to come in at 15.265 billion bushels planted on 92 million acres with the record yield of 181.5 bushels per acre.  The major change for corn in the June report came in the lowering of old crop corn exports by 50 million bushels to 1.725 billion bushels. This had the effect of raising old crop ending stocks to 1.452 billion bushels, which was up 35 million bushels from the May report.  USDA also estimated Brazilian corn production at 132 MMT, up 2 MMT from its May report.

      On the soybean side our numbers are still the same looking at soybean production at 4.51 billion bushels on a planted acreage of 87.5 million acres with a yield of 52 bushels per acre. Old crop domestic ending stocks are set at 230 million bushels with the new crop stocks set at 350 million bushels, 15 million bushels higher than the May estimate. The USDA also raised the Brazilian 2022/23 soybean crop to 156 MMTs.  The Argentinian soybean crop was estimated at 25 MMT.  USDA estimated record world wheat production of 29.40 billion bushels.

      On June 9th, soybean and wheat futures were lower than the last Market Trends report.   Corn futures were higher.  July 2023 corn futures were at $6.04 a bushel.  The December 2023 corn futures contracts sits at $5.30/bu.  The August 2023 soybean futures were at $12.96 a bushel. The November 2023 soybean futures stood at $12.04.  The May 2023 Chicago wheat futures closed at $6.30 a bushel. The Minneapolis May 23 wheat futures closed at $8.15 a bushel with the Sept 2023 contract closing at $8.17 a bushel.

     The nearby oil futures as of June 9th closed at $70.17/barrel up from the nearby futures recorded in the last Market Trends report of $70.04/barrel. The average price for US ethanol in the US was $2.53 a US gallon, up from the $2.38 last month.

     The Canadian dollar noon rate on June 9th, 2023, was .7496 US, up versus as the .7374 US reported here in the last Market Trends report. The Bank of Canadas lending rate was increased to 4.75%.


     If hot and dry is a thing how about hot dry and smoky?  With wildfires out of control in Quebec and northern Ontario farm fields across the province were inundated with Smokey weather after much of the crop was planted. As of June 9th, most of Ontario outside of the Far East is in quite a severe drought. This was a double-edged sword as it led to great planting conditions in May, but we did run out of moisture in many parts of the province. With rain being predicted for the weekend of June 11th it would be welcome as crops are suffering.

     We should have record crops this year in Ontario, but of course it is way too early to even surmise that especially in the drought like conditions that we find ourselves in. This possibility though will reflect on basis levels going forward. If the rains come and things look good in the first part of July merchandisers can be relatively assured that there will be good crops this fall. Cash bids for new crop corn and soybeans should reflect that.  Ontario wheat prices are reflecting it now, as the huge harvest is coming into view.

     This is being partially recognized in the lower corn basis values that are being offered currently in Ontario for corn versus last month. It reflects the abundant amounts of old crop corn left in the province to move as well as a slight increase in the Canadian dollar over May.  There is also that apparent big Ontario corn crop coming. Soybeans on the other hand have actually seen a basis increase from May.  This might be partially because of the increased soybean futures values from a few weeks ago.

     Old crop corn basis levels are $.75 to $1.00 over the July 2023 corn futures on June 9th across the province.  The new crop corn basis varied from $.90 to $1.20 over the December 2023 corn futures.  The old crop basis levels for soybeans range from $4.70 cents to $4.83 over the August 2023 futures.  New crop soybeans basis levels range from $2.75-$3.15 over the November 2023 futures.  Ontario SRW wheat prices are in the $7.12 range.   On June 9th the US replacement price for corn was $8.23/bushel.  You can access all these Ontario grain prices in the marketing section at

The Bottom Line

      We are getting into the nitty gritty of exactly where grain prices go from here. For instance, how much weather premium can be built into the market based on the lack of rain and how much can disappear very quickly when those rains come. We are now in mid to late June where all of that matters and once we head into July the trading algorithms which measure rain automatically across the region and will surely dial in that the crop is made.  It’s a weather market for now.

      It is an uncomfortable truth that demand for our grain has not been as robust as we would like not forecasted to make the USDA projections. It is a reflection of when orders aren’t there, but it is also a reflection of the competition that comes from Brazil. We all know that they are the preferred supplier of China for soybeans, but increasingly they are hurting the American farmers when it comes to corn. Their record corn production and cheap prices this year reflect that.

     It is likely that old crop pricing is over for many of us and in retrospect selling off the combine last fall was the thing to do. Keep in mind, that is unusual, but it just shows how difficult it can be to judge where the markets will go. On the new crop side, we have lost about $0.60 a bushel on corn since January 1st and $2 a bushel on soybeans since January 1st.  A bit of sober reality tells us that the seasonality of higher prices in mid-June does not always happen and 2023 is one of those years.

     There is still lots of geopolitical risk in this world, but it’s pretty obvious that the trading algorithms have it dialed in.  For instance, in the black sea the Russia Ukraine hot war is getting hotter.  However, it is not having the effect on grain prices that it did a year ago February when the war started. Russia is selling lots of cheap wheat and until there is a major production disruption there it is likely to continue. As we move on, we cannot negate a Black Swan coming out of this region.

Commodity Specific Comments


     Are corn prices set to go downhill or sideways into October? It almost feels that way now but of course you could also make the argument we are at the knifepoint for weather. Forecasters this weekend are talking for a wetter and cooler forecast which should be a game changer for the US and Ontario crops.  Markets will react accordingly to the precipitation forecasts.

     Keep in mind that the USDA has a lot more numbers coming in at the end of the month that the algorithms will certainly have it dialed in. It also should be noted that the USDA increased Ukrainian corn production in their last report by 2.5 MMT.  Keep in mind what a flyer that is in a country that is at war.  These numbers at the best of times are vague and must be considered carefully.

     The December corn contract is currently priced 9 and 3/4 cents below the March 2024 corn contract which is considered a bearish indication of new crop demand. Seasonally we know that corn prices tend to peak in early June and bottom out in early October. The new crop futures contract which is December has slipped into the 47th percentile of the past five-year price distribution range.


     The weather scenario is not playing out the same way in the soybean market as usually it takes some weather event later on in August to affect soybean yields. Over the last week or so soybeans have actually risen in price partly reflecting the higher soybean oil market.

     There was some interesting news last week that the European Biofuels Association was complaining that China’s biodiesel exports may have come from a cheaper feedstock that don’t meet Europe’s renewable standards. This could lead to greater interest in American biofuels from Europeans boosting long term American demand.  As it is, the demand for American biodiesel is a huge stimulus for soybean cash prices in the United States.

     The November soybean contract is currently priced 7 1/2 cents below the March 2024 contract which is considered a bearish indication of commercial demand. Seasonally we know the story as prices tend to peak in early July and bottom out in early October.  The new crop futures contract of November is settled in at the 51st percentile of the past five-year price distribution range.


     The USDA predicted record global wheat production something that we have become accustomed to. However, with a Dam being bombed in Ukraine and the calamity caused afterwards you would think that the wheat market would show some concern regarding Black Sea grain activity.  However, it has not, and this is somewhat surprising as the funds are short wheat, and it seemingly wouldn’t take much to get them to cover their shorts. Clearly, the algorithms don’t have that dialed in as of yet.  As it is, the USDA actually raised winter wheat production in the United States. 

      The big record Ontario wheat crop continues on its journey toward harvest with dry weather certainly impacting the crop. Over the past few weeks producers have been deciding whether to spray fungicide in a weather environment where fusarium is unlikely. However, rain predicted for the weekend of June 11th will probably save yield to some extent for what is expected to be a very big harvest. As it is, cash wheat prices in some cases are less than half of what they were last year.

The Bottom Line (cont.)

     The Bank of Canada raised their interest rate by 25 basis points on June the 8th reflecting changing Canadian economic condition.  The bank was specifically referring to strong demand for both goods and services, tight job market and signs of a rebound in the housing market, which were aiding inflationary pressures in the Canadian economy. In other words, there was a little bit more excess capacity in the Canadian economy than they expected and therefore we got the 25-point basis rise.  This may have helped the Canadian dollar almost reached the 75 cent US level on June 8th.

     Keep in mind that this still is adding great stimulus to Ontario cash grain prices. Even though the Canadian dollar is an inverse reflection of the American dollar value, what the bank of Canada does makes an impact. Future interest rate increases will likely be bullish for the Canadian dollar and bearish for Ontario grain prices. What’s important to recognize is we have been in the 75 cent level US for quite some time now and it shouldn’t be taken for granted.  In a grain futures price environment, which has been declining any move by the Canadian dollar back into the 80s cent US level will represent a significant decline in Ontario grain cash prices.  The hard part is determining when that might happen.

     As we look ahead, the USDA will help define where this market might be going on June 30th when they release some actual planted numbers. This report is always a very big one as the algorithms will be very interested and how much corn actually did get planted, how many soybeans etc. etc. We also need to keep abreast of the USDA crop condition reports going forward as this dry weather has had an impact on the early growing crops. As we keep moving into summer these markets will be more weather derivative markets than anything else.

   The challenge for Ontario grain producers is to continue to measure their risk as well as all the other marketing factors that might impact Ontario grain prices going into summer and fall. What is traditionally been the best time to market grain did not happen in 2023. Instead of lamenting on this fact, we need to re calibrate and to reengage with our marketing plans to do the best job possible. Standing market orders will remain extremely important while the crop is growing in the field. Daily market intelligence will remain key. There will be many marketing opportunities ahead.