Summer market hodgepodge


  • Larger harvest projections plus recent good weather in the U.S. hasn’t helped the original expectation of smaller yields
  • Trade expects StatsCan to report decreased wheat production for 2017, but maybe a small boost to canola over last year

Technical indicators for most of the major grain and oilseed futures markets display oversold conditions, but managed money speculative fund traders reduced net long positions and, in some cases, built a net short.

For the week ended Aug. 15, the drop in speculative optimism, or increase in pessimism, for Chicago grain and oilseed futures was the largest since late March.

U.S. crop conditions

On Aug. 10, the United States Department of Agriculture pegged corn yield at 169.5 bushels per acre and 49.4 bushels per acre for soybeans, both of which were comfortably higher than the highest pre-report analyst guess.

The U.S. spring wheat harvest estimate also came in above expectations despite the summer drought troubles, and this made for bearish conditions across all ag futures markets since the report’s release.

Canadian all-wheat output is likely to decline 17 per cent from last year to 26.2 million tonnes

Favourable weather

In addition to the larger harvest projections, recent favourable U.S. weather hasn’t helped the original analyst narrative of smaller yields. Although rains have not been plentiful in all places that need it, August has been cooler so far and that has kept crop worries at bay for speculators.

In the days since the report’s release, both Chicago Board of Trade corn and wheat futures made new lows for the year. Large supplies and good weather prospects kept speculators as sellers of grain.

U.S. soybeans

The USDA's forecast for a record soybean crop may get even bigger as rains and moderate temperatures across key growing areas shepherd the crop through early stages of its important development period. The recent stretch of good weather in major production states like Iowa and Illinois means improved ratings for the soybean crop, reinforcing the bearish tone the government's outlook put on the market earlier this month.

Private sector U.S. crop surveys this week could provide for some short covering. Results will start coming in from the highly-followed Farm Journal U.S. Midwest Crop Tour earlier this week, which will either support or dispute the USDA’s optimistic forecast for corn and soybean yields.

Crop scouts will pull hundreds of corn and soybean samples in top-producing U.S. states. If their observations suggest USDA’s estimates are too high, it might be supportive to grain and oilseed futures. But if scouts find big yields, the futures market may struggle further.

StatsCan production report preview

Hot, dry summer weather across the southern Canadian Prairies is likely to shrink the wheat harvest, but canola output looks more promising, according to a Reuters survey of 17 traders and analysts.

Statistics Canada will issue its first production estimates of the year on Aug. 31, based on a farmer survey. StatsCan surveyed farmers from July 19 through Aug. 1.

Using an average of pre-report release trade estimates, Canadian all-wheat output is likely to decline 17 per cent from last year to 26.2 million tonnes, the smallest crop in six years. Canola production may edge one per cent higher from last year to a record 18.6 million tonnes, driven mostly by this year’s 12 per cent acreage expansion.

The Canadian Prairies received an unusually varied patchwork of weather this growing season, including soggy weather in parts of northern Alberta and Saskatchewan and a favourable combination of heat and timely rains in other areas such as most of Manitoba.

Bottom line

Weather, both in Canada and the U.S., continues to dominate crop conditions and market variabilities. Crop sizes continue to see fluctuations as the weather changes.

Mike Jubinville of Pro Farmer Canada offers information on commodity markets and marketing strategies. Call 204-654-4290 or visit to find out more about his services.