AG MARKET UPDATE: AUGUST 12 – 31
Corn has been the story of the grain complex since the August 12th WASDE, and it hasn’t been a quiet one. December corn has rallied roughly 70 cents since that report, punching through $5 for the first time since 2023 and touching contract highs. The August WASDE itself was modestly bullish, with NASS leaning more heavily on satellite and administrative data alongside its survey, trimming new-crop ending stocks to 1.653 billion bushels even as harvested acres were raised. The real fuel for the rally came a week later, when the Pro Farmer Crop Tour pegged the national corn yield at just 173.2 bushels per acre, well below the USDA’s 180.7 figure and about 10 bushels off trend. Funds piled in behind the number, pushing managed money’s net long position to its largest since April 2022, with outright long positions close to record. Weekly crop condition ratings have backed up the tour’s findings, with the good-to-excellent rating slipping to 57% as of August 23rd, while ratings go down the closer we get to harvest at these levels a record crop seems highly unlikely. Export demand has stayed a bright spot through all of this, with cumulative shipments running 26% ahead of last year’s pace and a steady stream of flash sales to Mexico. The market has room to run further if the September 11th WASDE confirms a lower yield, but the size of the current fund position also leaves it vulnerable to a sharp give-back if weather turns more favorable into fill or funds start booking profits. If you haven’t looked at pricing some new crop bushels at these levels, now is a good time to have that conversation with your merchandiser.
Soybeans have been the quieter half of the row-crop rally, caught between a bearish crop tour number and relentless Chinese demand. The August WASDE actually raised the national yield estimate to 53 bushels per acre and left ending stocks at a comfortable 320 million bushels, but the Pro Farmer Crop Tour turned more cautious on beans, projecting a crop of 4.572 billion bushels on a 53.3 bushel yield, a number the trade read as modestly bearish relative to corn’s tightening story. What has kept beans supported is demand: China has been buying almost daily since mid-August, with a single week’s net sales reaching 2.48 million metric tons, up 44% from the week before, as Beijing works toward the 25-million-metric-ton annual purchase commitment struck at May’s Trump-Xi summit in Beijing. A follow-up meeting between the two leaders is anticipated in September and remains a watch item for a fresh round of buying. Crush margins have stayed historically strong and continue to underpin the nearby contracts even as the funds have leaned more heavily into corn. With China’s buying pace this consistent, beans have a demand story that’s hard to ignore even if the yield picture isn’t as bullish as corn’s.
Wheat has been the biggest percentage mover in the complex, and the Black Sea is once again the reason why. Ukraine struck Russian export terminals at Novorossiysk with drones on August 12th, and the disruption has lingered, with SovEcon projecting Russian wheat exports for the month at just 3-3.4 million tonnes, well below the five-year August average of 5 million. Reports late in the period that Russia-Ukraine peace talks have hit a dead end, with Russia said to be preparing to escalate attacks, have kept a fresh war premium in the market. Domestically, the spring wheat crop has taken on its own stress story, with USDA estimating 80% of spring wheat acres in drought as of August 25th, up sharply from just 13% a year ago. Chicago SRW and Kansas City HRW have both pushed to fresh multi-week highs as a result, with September SRW trading near $6.82 and HRW above $7.50 late in the period. For now, wheat is trading headlines out of the Black Sea as much as it’s trading fundamentals, so any real progress toward a ceasefire could pull the premium back out just as quickly as it came in.
Equity Markets
Equity markets have had a choppier stretch since the S&P 500 notched a fresh record close above 7,800 in mid-August on cooler-than-expected CPI and PPI data. Since then, renewed direct exchanges between the U.S. and Iran, including strikes on Iranian positions on Larak Island over the weekend and reported Iranian retaliation against a U.S. base in Jordan, have kept traders on edge, and the S&P 500 has spent the back half of the period essentially treading water within half a percent of its levels from three weeks ago. Rising long-end bond yields have added to the uncertainty, with the 30-year Treasury yield touching a 19-year high. The AI trade has remained the market’s ballast through the volatility, with strong earnings from names tied to artificial intelligence infrastructure and cybersecurity continuing to draw buyers even as more macro-sensitive and consumer names have been hit hard on disappointing results.
Energy Markets
Crude oil has been the swing factor behind a lot of the volatility across both stocks and grains this period. Prices pushed toward $85 per barrel in mid-August as the Trump administration signaled it was in no rush to resolve the standoff with Iran, then reversed sharply, falling more than 5% over the following week as the U.S. pivoted toward a sanctions-based pressure campaign rather than further military action. That calm didn’t last, as fresh U.S. strikes on Iranian targets late in the period reignited the geopolitical premium.
Other News
– The Pro Farmer Crop Tour wrapped up the week of August 17th, pegging the national corn crop at 15.344 billion bushels on a 173.2 bushel yield and the soybean crop at 4.572 billion bushels on a 53.3 bushel yield.
– Cotton has ridden the broader commodity rally to contract highs, with December cotton settling at a contract-high close late in the period as chart-based buying accelerated alongside the grain complex.
– The next USDA WASDE report is scheduled for September 11th.
Drought Monitor
Here is the most recent drought monitor.
Contact an Ag Specialist Today
Whether you’re a producer, end-user, commercial operator, RCM AG Services helps protect revenues and control costs through its suite of hedging tools and network of buyers/sellers — Contact Ag Specialist Brady Lawrence today at 312-858-4049 or blawrence@rcmam.com.