This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at [email protected] or 843-540-4540.

The Administration said that August 1st is the final deadline for trade deals. They promise there will not be another extension of tariff relief. And they really mean it this time. Over the weekend Trump announced a trade deal with the EU. Both sides are touting it as a big victory but it is more of a framework rather than a final agreement. As such, there was nothing in it that has been released so far that gets the grain markets excited. We now have deals (or frameworks) completed with the UK, EU, Japan and Vietnam. There are still a lot of important ones for agriculture that are not on the list of completed ones yet. The US and Chinese delegations started meeting today in Sweden. Comments from the US side sound designed to lower expectations for a major breakthrough. Many analysts are hypothesizing that they are both buying time and setting things up to have a big headline catching meeting between Trump and the Chinese president Xi Jinping sometime in the fall at the earliest. If progress is made and we see some Chinese bean purchases, the market will react positively. China’s absence as a buyer of new crop beans has been very conspicuous and each day that goes by makes the market more and more nervous. The rumor was they were buying South American origin beans at a premium which if true does not signal good faith between the two. We need steps in the right direction. We also need progress with Canada who is (or was) a huge buyer of US ethanol and Mexico who was our biggest buyer of corn. Mexico will probably not need as much corn in the next year due to the recovery of domestic production, but they are still a top buyer. We have made progress on trade with several partners, but not much progress with the most important ones for ag and the market is reflecting that.

There is extreme heat over much of the country and several regions in the eastern corn belt have set new records for night time temps. Parts of the western corn belt have had enough rain to help mitigate the heat and some parts have had enough to be considered excessive. It is going to take something absolutely catastrophic and unexpected to see a below trend yield, but early in the growing season the market was pricing in higher and higher yields. I think we are taking off the top end of some of those guesses now. I still think it is unlikely we have seen the lows already but you can make a case that we might be close to them. We will get USDA’s first update on yields on the August report which comes out on August 12th. USDA will rely primarily on the farmer surveys and the satellite data will play more of a supportive role. They will use the satellite data to arrive at condition assessments to supplement the survey data they collect. The month of August also brings the start of Crop Tour season. The ProFarmer Crop Tour is scheduled soon after the USDA August report on Aug 18-21st. 

Condition ratings this week came in at 73% good/excellent for corn. That is only a 1 point decline from last week and was as expected. It compares to 68% last year. Analysts expected soybean conditions to also drop a point but they improved 2 points from last week to 70% good/excellent. That compares to 67% last year.

The market will be watching for more trade deal specifics, biofuel policies and weather trends for directional cues. Trade volumes continue to be low and at this point in the growing season, any day we are not going lower is a good thing for the bulls. Seasonals start to turn more positive when we get into August and September.