News center
Laden with advanced manufacturing equipment.

Drought concerns linger and hoist grain markets

Aug 23, 2023

Editor's note: Catch Randy Martinson every Friday after markets close on the Agweek Market Wrap at

The third week of August wrapped up in a mixed fashion with wheat ending lower while corn and soybeans pushed higher and closed with decent gains. Wheat struggled throughout the week due to increased production estimates out of Russia as well as from weather forecasts calling for hot dry conditions. That should help push spring wheat harvest as well as help advance planting activity in the Southern Plains. What is surprising, wheat ignored the headlines on the war as Russia and Ukraine staged drone attacks against each other.

Tuesday’s session had the grains lower across the board with most of the selling tied to Monday’s Crop Progress report. The report showed better crop ratings than expected.

Soybean’s direction changed midweek with most the strength coming from weather forecasts calling for hot dry conditions for the major growing regions of the U.S. for the next week to 10 days, and potentially for the rest of the month of August.

The strength from Wednesday spilled over to help the grains push higher the rest of the week, giving corn and soybeans a higher weekly close while the three-week exchanges trimmed their losses in half. Soybean oil has been the bright market due to the NOPA crush report. Soybean crush remains strong and so does soybean oil. Rumors China was back in buying U.S. soybeans for fall delivery added support.


Wheat also saw some support from drought concerns for Argentina and Australia. Those gains were kept in check from APK Inform’s increase in Ukraine grain production, now estimated at 53.1 million metric tons versus 48.9 million metric tons previously.

Thursday’s Drought Monitor backed up the recent Crop Progress report. The area in drought continues to decrease for corn and soybeans but increase for spring wheat.

Thursday’s report now has 42% of the nation’s corn crop in some stage of drought, down 7% from last week. Soybeans are showing 38% of the crop in some stage of drought, down 5% from last week. But spring wheat now has 54% of its crop in some stage of drought, up 2% from last week.

With the recent decline in market prices in the U.S. and increase in the Real in Brazil , U.S. corn has once again become more competitive in the export market.

Reports have India looking to import between 3 to 4 million metric tons or possibly as high as 8 to 9 million metric tons of wheat this year in an attempt to lower domestic prices. The wheat would likely be Russian but would take wheat out of the export market.

Friday’s strong performance spilled over to help the grains push higher overnight Sunday. Chicago wheat, corn and soybeans all gapped higher on the overnight session while Minneapolis and Kansas City wheat struggled. Minneapolis remained on the defense the entire session and the best it could trade to was steady.

The direction of corn and soybeans was also due to the start of the Pro Farmer Crop Tour, which kicked off Monday morning. It will be interesting to see if the drive by evaluation holds up to the infield surveys that will be conducted this week.

Minneapolis wheat stated the fourth week of August lower while all of the other grains gapped higher. The winter wheat exchanges were the first to fade their gains due to hot dry conditions which are expected to advance harvest activity as well as get the planting season started.


Corn gapped higher with most of the early support coming from weather forecasts calling for hot dry conditions to dominate the major growing regions of the U.S. over the next 10 days, with little to no rain expected. Although corn is virtually past its critical crop development stage many are still thinking the heat could impact yield potential.

Corn started to fade once wheat turned lower and proceeded to fall apart once the Pro Farmer results hit the airwave. An export sale of 112,000 metric tons of corn to Mexico wasn’t even enough to help support corn. By the time the dust settled, corn had put in a daily key reversal (higher high than previous day, lower low than previous day, and lower close than previous day) which is negative corn.

Soybeans also gapped higher and proceeded to extend session gains early. The hot dry forecasts were the main driver as traders expected the forecasted heat dome to impact soybeans yields. But like the other grains, soybeans could not hold all of their gains and faded lower with the other grains. An export sale of 159,000 metric tons of U.S. soybeans to an unknown destination helped hold soybeans firm.

Overnight cooler heads prevailed, with help from a friendly Crop Progress report that showed lower-than-expected ratings. The negative close from Monday did pressure the grains early as most opened lower but managed to firm and post gains by Tuesday morning.

Most of the support from Monday’s Crop Progress report came from declining crop conditions instead of improving like traders expected, which means last week’s improving weather conditions were still not enough to help improve the crop.

The report put corn crop rating at 58% good/excellent, down 1% from last week versus expectations for steady conditions. The surprise came in Indiana which saw conditions decline 1%, Missouri was down 3%, North Dakota down 3%, Ohio down 4%, and South Dakota down 4%.

Soybeans crop rating was left unchanged at 59% good/excellent, 1% below expectations. The states showing declines were Illinois down 5%, North Dakota down 3%, and South Dakota down 3%.

The biggest surprise came in spring wheat. Spring wheat conditions dropped 4% to 38% good/excellent, 4% lower than expected by the trade and the lowest rating for the year. The states that showed declines in ratings were Idaho down 10%, Montana down 11%, North Dakota down 3%, and Washington down 2%. The only state that improved was Minnesota, which was up 9%.


Cattle lost ground the third week of August with live cattle dropping $2.00 to $2.50 while feeder cattle slipped $2.00 to $3.00 lower. Selling was also tied to a lower cash trade as well as from domestic demand concerns as the average consumer continues to shy away from high priced beef in favor of cheaper protein sources. Light activity was also focused on position squaring ahead of Friday’s Cattle on Feed report.

USDA’s August Cattle on Feed report was friendly as on feed came in as expected, placements were below expectations and marketing were as expected. Estimates are:

“The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results.”