Welcome back to the D&D AG MarketMIX newsletter! This newsletter is exclusively for you - our D&D customers and associates. Our goal is to provide you with a monthly summary of the Ag market reports to keep you updated on relevant, vital news that may impact your business.

USDA Cuts Corn and Soybean Yield Estimates Amid Drought

While drought conditions early in the growing season are weighing on yields, reduced demand and improved weather could help limit price rallies in the grain markets.

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In its latest World Agricultural Supply and Demand Estimates (WASDE) report, USDA lowered US corn yield forecasts to 175.1 bushels per acre, down from 177.5 bpa in July and just below consensus calls for 175.5 bpa. Soybean yield estimates were also adjusted downward to 50.9 bpa, compared to 52.0 in July, and under average pre-report forecasts of 51.3 bpa.

Corn Supply Outlook Remains Stable Despite Yield Concerns

Though yields are creating some concern in grain markets, the US corn supply remains in decent shape. Ending stocks for old- and new-crop corn topped expectations in Friday’s report, with larger acreage figures from June offsetting reductions in yield. The soybean supply side remains in question, with ending stocks coming in just below consensus calls, and this is inherently supporting protein pricing in the US.

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US Grain Demand Weakens as Exports and Industrial Use Decline, Soybean Demand Unchanged

At the same time, demand for US grain remains lethargic. Export estimates for the 2022-23 crop year were lowered for the fourth month in a row, and USDA reduced food and industrial demand by 25 million bushels. The demand side of the soybean balance sheet was relatively unchanged. Weekly export sales are stirring up some optimism, but sales remain below USDA projections.

China's Economic Woes Threaten US Grain Export Prospects

Economic trouble in China could also dent export opportunities in the months ahead. The country’s youth unemployment is at record highs, and its housing market is under strain as consumers pull back on spending. Analysts also say China is on the edge of deflation, which could pull its economy down further.

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US Dollar Strengthens Against Competitor Currencies, Reducing US Grain Export Competitiveness

Meanwhile, despite a recent credit downgrade, the US Dollar is gaining strength against competitor currencies, making it more expensive for international buyers looking to pick up US commodities.

Weather Conditions Remain Crucial for US & South American Grain Crops

Ahead of harvest, eyes will remain on weather conditions. Key-growing regions have received much-needed rainfall, easing drought conditions. Still, temperatures remain high, with several weeks of summer ahead.

South American weather also remains a watch factor as El Niño conditions set in. The pattern typically brings wetter weather to the continent and could bring much-needed relief to a parched Argentina.

Milk Markets Improve, But High Input Costs Squeeze Dairy Margins

Amid uncertainty in grain and feed markets, milk markets are improving. Still, higher input costs are keeping pressure on dairy producers. According to USDA’s Dairy Margin Coverage program, on-farm margins in June reached the lowest level since 2012. Profits could remain tight in July, though some estimates call for relief later in the year.

Jordan Miller: 419-692-3206

ext. 1043

Pat Kahle: 517-260-8295 or P[email protected]

Protect Your Downside

Given current market conditions, the Ever.Ag Feed Foundations Team recommends putting strategies in place to protect your downside. If you’re locking in high prices, consider buying inexpensive puts underneath. Please contact Jordan Miller or Pat Kahle who can direct your questions to the appropriate advisor to discuss specific strategies.

This monthly report is brought to you by Ever.Ag’s Feed Foundations Team. The risk of loss trading commodity futures and options can be substantial. Investors should carefully consider the inherent risks in light of their financial condition. The information contained herein has been obtained from sources to be reliable, however, no independent verification has been made. By law we must state the information contained herein is strictly the opinion of its author and not necessarily of Ever.Ag and is intended to be a solicitation. Past performance is not indicative of future results.

We appreciate and thank our sponsor partner in this report – CHR HANSEN

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