The tour projected Iowa’s corn yield at 192.79 bushels per acre (bpa), well above the 2023 tour average of 182.80 bpa for the largest U.S. corn state and above the tour’s three-year average of 185.79 bpa.

But in Minnesota, the fourth-largest corn producer, the tour projected yield at 164.90 bpa, far below last year’s estimate of 181.34 bpa and the three-year average of 183.06.

The four-day tour, which began on Monday, projected above-average corn yields for six of the seven Corn Belt states surveyed.

The outlook for bumper harvests comes as grain and oilseed futures prices have slipped to nearly four-year lows amid ample global supplies.

In Iowa and much of the Midwest, crops benefited from near-ideal weather.

“Generally we’ve seen good growing conditions, and it shows,” said Brian Grete, Pro Farmer editor and leader of the tour’s eastern leg. “An early frost would be the one thing that could derail it.”

Minnesota was an exception. “The corn crop is going to struggle to make the finish line. They have seen too much excess rainfall this season, which has washed away the fertilizer,” said Scott German, a North Dakota farmer who was on the tour.

Yet Minnesota’s soybeans fared better.

The tour, which does not project soybean yields, estimated the number of soybean pods in a 3-ft by 3-ft (91-cm by 91-cm) square in Minnesota at an average of 1,036.59 pods, above last year’s average of 985.00 pods and close to the three-year average of 1,037.70 pods.

For Iowa, the No. 2 soy producer after Illinois, the tour estimated the average number of soybean pods in a 3-ft by 3-ft (91-cm by 91-cm) square at 1,312.31, above last year’s tour average of 1,190.41 pods and the three-year average of 1,194.21 pods.

This month, the U.S. Department of Agriculture forecast a record U.S. soybean crop and the third largest corn crop.

In addition to Iowa and Minnesota, the four-day tour this week scouted fields in South Dakota, Nebraska, Illinois, Indiana and Ohio.

The editors of Pro Farmer, a newsletter, will release their own estimate of U.S. corn and soybean production on Friday.

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He noted the Corn Belt didn’t quite get the heat in July and so far in August that had been forecast and with rain to come he said, “everything is just ideal.”

“Anyone catching some rain from this point on to the end of the month, that’s going to be beneficial to corn and soybeans,” Capinegro added.

In turn, that played into the recent downward trend for soybeans and corn futures at the Chicago Board of Trade. The broker said the increases both commodities had on Aug. 14 were most likely a ‘dead cat bounce’ and the declines would soon resume.

Capinegro said the August supply and demand report from the U.S. Department of Agriculture pegged soybean ending stocks for 2024/25 at 560 million bushels, up from July’s estimate of 435 million.

“We’re in the camp that’s going to go to 600 million just because they’re overstating exports,” he stated, which would be well above the 2023/24 carryover of 345 million bushels.

However, Capinegro theorized the USDA could be factoring in an assumption that soybean prices are going to fall further and in turn that would generate greater exports.

He also suggested that soybean futures could feel more pressure should Brazil’s next crop get off to a good start. He said it’s likely there will be more soybean acres planted in Brazil for 2024/25, but not to any great extent.

The broker noted the Pro Farmer crop tour is set to begin Aug. 19, with the trade keeping an eye on the results.

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The November contract hit a low of C$565.50 per tonne during the week, before oversold sentiment came forward and profit-taking helped take values off that chart support.

If prices drop below the weekly low “that opens the door for (a move to) the 2018 to 2020 price ranges… which is not that long ago,” said Jamie Wilton, Commodity Futures Specialist with RJ O’Brien in Winnipeg.

The nearby canola futures held within a relatively sideways trading range during that timeframe of about C$430 to C$540 per tonne, and Wilton said it was still much too early to say that the lows were in for canola at current price levels.

He added that pressure was coming from the favourable state of the U.S. soybeans, with the bottom of the market often found just ahead of harvest. Looking forward, Wilton expected the market would be paying close attention to how yields come in at harvest time to see how the reality matches up with the predictions.

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He even planted soybeans in one of his fields for a second straight year, breaking the traditional soy-corn-soy rotation for field management. He and many other farmers are hoping to just minimize losses.

Planting more soy at a time of sputtering demand from importers and domestic processors will only serve to drive prices lower, further swell historically large global supplies and erode U.S. farm incomes already poised for the steepest annual drop ever in dollar terms.

But Midwest farmers’ other main options – seeding more corn or leaving fields fallow – could have resulted in even wider losses.

“There’s a better chance of making money with soybeans than there is for corn right now,” Tuttle said. “But if we have another bigger crop, prices are going to go lower and that’s not going to bode well for the farmer.”

In March, the U.S. Department of Agriculture forecast farmers would plant 86.5 million acres of soybeans nationwide this spring, the fifth most ever. Some analysts expect soybean acres to increase by another million acres or more as heavy rains close the window on corn planting.

In nearby Princeton, Illinois, Evan Hultine also increased soy plantings and scaled back corn. High production costs due in part to a jump in interest rates looked likely to erode most or all of his corn returns, while soybeans remained marginally profitable, he said.

The farm’s profits will likely be the thinnest in at least five years, Hultine said.

In an annual early season crop budget estimate, University of Illinois agricultural economists projected negative average farmer returns in the state for both crops, though losses would be smaller for soybeans.

Unprofitable crops

In northern Illinois, farmers could lose $140 (C$192) per acre on average for corn and $30 (C$41) an acre for soybeans with autumn delivery prices of $4.50 and $11.50 a bushel, respectively, the analysis showed. Actual returns vary significantly from farm to farm, however, depending on factors like crop yields, the timing of grain sales and whether farmers own or rent their land.

Fertilizer costs are down from highs last year, but crop prices are also down, while land costs remain elevated and borrowing rates for operating loans and equipment have jumped, likely forcing farmers to cut expenses, the economists said.

When looking to cut costs, farmers often favor planting soybeans rather than corn because they require less fertilizer and pesticides and seed costs tend to be lower.

High interest rates have been a particularly painful expense recently.

“If you’re borrowing $700 an acre to put a corn crop in at seven per cent to eight per cent, you’re talking about some real dollars there just on the price of money. You can put a bean crop in a lot cheaper. Your interest cost per acre might be half,” Tuttle said.

More soy, less corn

An early-spring forecast from the USDA projected soy plantings would expand by 3.5 per cent this year while corn plantings were expected to shrink 4.9 per cent.

The expansion is expected to swell the U.S. soy stockpile next season by more than 30 per cent to the highest in five years and the sixth highest level on record as demand from the domestic and export markets is not keeping pace with rising production, according to the USDA.

Now, rain-saturated fields in some areas could clip corn acres and even further expand seedings of soybeans, which, unlike corn, can be planted well into June without significant risk to yields.

Cash prices offered for the next corn and soybean harvest have improved from earlier this spring in Spencer, Iowa, where Brent Swart has been struggling to plant the last of his corn acres due to overly wet weather. But neither crop pencils a profit at current prices.

Nearly a foot of rain over the past month, seven inches more than normal, has left his fields too soggy for field work. Swart estimates his remaining corn fields may not be in shape to plant until after his planting deadline date of June 1, when crop insurance benefits begin to drop with each day.

Swart’s best option in some of his fields may be to file an insurance claim saying he was prevented from planting due to waterlogged soils. Soybean prices remain some 40 cents a bushel under his estimated cost of production, he said.

“If you switch to soybeans, you’re potentially looking at a loss. If you prevent plant, you’re looking at more of a breakeven scenario,” Swart said.

Only farmers with severe weather issues will be able to file for insurance, however.

Weather delays and a favorable price versus corn could boost soy plantings by 500,000 to 1 million acres above the USDA’s latest forecast for 86.5 million, said Tanner Ehmke, lead economist for grains and oilseeds at CoBank.

“The signal from the marketplace to the farmer right now is that, if you have a doubt about your acreage, send those acres to soybeans,” he said.

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If the estimate is realized, it would be down from the 189.3 million bushels crushed in May but up from the 174.1 million bushels processed in June 2022. It would also be the smallest monthly crush since September, USDA data showed.

Crush estimates ranged from 173.5 million bushels to 177.0 million bushels, with a median of 175.6 million bushels.

The USDA is due to release its monthly fats and oils report at 2 p.m. CDT (1900 GMT) on Tuesday, August 1.

U.S. soyoil stocks as of June 30 were estimated to have thinned to 2.207 billion pounds, based on the average of estimates from five analysts.

If realized, the oil stocks would be down from the 2.386 billion pounds at the end of May and below stocks totaling 2.316 billion pounds at the end of June 2022.

Estimates ranged from 2.175 billion to 2.245 billion pounds, with a median of 2.200 billion pounds.

Members of the National Oilseed Processors Association (NOPA), accounting for about 95% of U.S. soybean crushings, processed 165.023 million bushels of soybeans last month, a nine-month low. The total was down from the 177.915 million bushels processed by NOPA members in May but up slightly from the 164.677 million bushels crushed by NOPA members in June 2022.

Soyoil supplies held by NOPA members as of June dipped to a seven-month low of 1.690 billion pounds, a nearly 10% drop from the prior month.

–Reporting for Reuters by Karl Plume in Chicago.

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Despite those increases, corn and soybean futures on the Chicago Board of Trade (CBOT) didn’t react as anticipated.

“We’re getting a friendly reaction to bearish numbers,” Greg McBride of Allendale Inc. at McHenry, Ill. said. “It definitely gave us a little bit of bounce after the report came out.”

In its world agricultural supply and demand estimates (WASDE) released Wednesday, USDA pegged the country’s corn yields to rise by three bushels per acre to a record 181.5 bu./ac. A good chunk of the increase is to come from record yields in Minnesota and South Dakota, as well as higher yields in Illinois, Indiana, Iowa, Missouri, Nebraska and Ohio.

Soybean yields are to increase from 49.8 bu./ac. in the July report to 53.3. The average market projection was yields to rise to 51.2 bu./ac. Meanwhile all wheat yields nudged up 0.4 bu./ac. to 50.1, virtually same as the average trade guess.

For corn production, this means an increase of 1.85 per cent from USDA’s July estimates to 15.278 billion bushels, on the same 92 million planted acres called for last month. Exports are projected to rise almost 3.5 per cent to 2.225 billion bushels. The carryout is expected to jump by nearly 4.1 per cent to 2.756 billion bushels.

The latest WASDE also maintained soybean planted acres at 83.8 million with production rising just over seven per cent from July to 4.425 billion bushels. Bean exports are forecast to increase 3.66 per cent. The carryout is set to leap 43.53 per cent, from 425 million bushels in the July estimates to August’s call for 610 million.

Wheat production is to bump up by slightly more than one per cent from July to 1.84 billion bushels due to increases in hard red spring wheat and durum. Exports are to rise also by a little more than one per cent to 2.086 billion bushels. USDA has called for a 1.8 per cent decline in the all wheat carryout of 925 million bushels.

“You got increased demand for feed for both soybeans and corn that’s starting to get everybody a little bit excited. Maybe this Chinese demand is going to continue to grow and follow through on that Phase One deal,” McBride said.

“There’s still pressure that could come into this market as we start to digest these numbers,” he cautioned, adding this could be a good time for producers to sell.

USDA noted the report didn’t account for recent damage from derecho winds that damaged crops in Illinois and Iowa.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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However, industry sources said it was unlikely to lead to a flood of additional U.S. soybean imports into Europe.

U.S. President Donald Trump agreed in July not to impose tariffs on EU car imports while the two sides explored ways to boost trade including a possible deal to remove tariffs on non-auto industrial goods and to boost EU imports of U.S. soybeans and liquefied natural gas.

The Commission said in a statement the recognition of U.S. soybeans for use in biofuels was valid until July 1, 2021, but could extend beyond that date as long as they met sustainability criteria set in new EU rules in the 2021-2030 period.

“Today’s decision is new proof that the European Union is delivering on our commitments,” a Commission spokesman said.

Currently, the United States exports soybeans to the EU for animal feed but the soybean oil byproduct has to be shipped back because Europe does not allow it to be used for fuel. The new rule would change that.

“So, on its face, it does nothing to increase soybean exports in the EU,” a U.S.-based lobbyist for the biodiesel industry said. “It just helps European farmers capture the full value and saves U.S. farmers shipping costs.”

One U.S. Congressional staffer described the move as more the removal of a trade barrier.

EU biofuel producers used an estimated 400,000 tonnes of soybean oil for biofuel production in 2018 against some 5.9 million tonnes of rapeseed oil, the main feedstock, according to Claus Keller of German commodity analysts FO Licht.

“I think the EU move will be positive for U.S. soybean sales prospects to the EU but it will not open a floodgate,” he said, adding that sales would be influenced by U.S.-China trade talks and on the future for Argentine biodiesel, which faces duties in the United States and could face measures in Europe.

The Commission, which negotiates trade deals for the 28-nation EU, has said the July agreement led to a 112 per cent rise in U.S. soybean imports in the second half of 2018.

The U.S. is Europe’s main supplier, with a 75 per cent share of EU soybean imports.

The increase has been driven by a slide in the U.S. soybean price, which slid after China imposed higher tariffs on U.S. beans in its trade row with Washington, rather than because of any concerted action by the EU, analysts said.

The EU imports about 14 million tonnes of soybeans per year as feed for animals.

— Reporting for Reuters by Philip Blenkinsop in Brussels, Michael Hogan in Hamburg, Jarrett Renshaw in Philadelphia and Humeyra Pamuk in Washington.

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While U.S. soybeans are the most significant of the crops included so far in the tit-for-tat battle of proposed tariffs, it seems apparent other crops could soon follow.

Carl Potts, executive director of the Saskatchewan Pulse Growers, said Canada’s pulse exporters will be ready for increased business it if comes.

“As prices for soybean meal and other feed ingredients rise, then that could increase the price at which companies are willing to pay for peas,” he said.

China is currently the second biggest importer of Canadian peas, with an enhanced focus on yellow varieties.

Fifteen years ago the amount the Chinese took in was rather small, at around 15,000 tonnes a year, Potts said, but in the last few years that figure has grown to over a million.

“We think there’s significant opportunity for continued growth.”

China fractionates peas into fibre as well as starch for noodles, Potts said. As well, it has recently improved the process for drawing out protein.

“The global demand for plant protein is helping drive it,” he said.

With India already having placed penalties on Canadian peas, he said China may be looking to buy more anyway.

“China will be opportunistic, I think, and the prices might be more attractive to them,” he said.

According to the latest data from the Prairie Ag Hotwire; prices for Canadian yellow peas in Western Canada have fallen $1.75 per bushel over the past year. They are now locked in a range of $5.80-$7.

China won’t buy enough to supplant India as the No. 1 importer, Potts said, but the potential for larger sales is still there.

The increased attention comes at an opportune time, he said, as new production facilities across the Prairies will increase capacity significantly.

“We think that works out to about 600,000 tonnes of new incremental demand and processing capacity here on the Prairies. That’s not insignificant by any stretch.”

— Dave Sims writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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While no sanctions are yet in place, the back-and-forth sabre-rattling between the two countries now includes proposed Chinese tariffs on U.S. soybeans, which weighed heavily on the Chicago Board of Trade futures as China is a major buyer of U.S. beans.

“I suspect there is plenty of bluster, but the issue will eventually settle down,” said analyst Mike Jubinville of ProFarmer Canada.

In the meantime, the prospect of tariffs on soybeans “could actually be an aid to canola,” hesaid, pointing to the possibility that China could end up buying more canola from Canada.

The Vancouver cash basis has moved from about $40 per tonne above the futures, loaded on the boat, to around $60 per tonne over the past day, according to Jubinville.

“I think China is doing some anticipatory buying as a precaution,” he said, noting that port prices for soybeans in Brazil were also seeing a jump.

“This is providing some underlying support for canola futures.”

In the bigger picture, if China buys fewer soybeans from the U.S., it will still buy them from somewhere else. If Brazil is then selling more beans to China, that means it has less to sell to Europe or elsewhere, which in turn opens the door for the U.S. to go other places.

“It’s not that we’ll trade less soybeans out of the U.S., it’s just trading the dance partners,” said Jubinville.

While the China/U.S. dispute may yet blow over and the volume of grain traded will remain the same, it will create increased volatility in the marketplace, he said.

While Canada could see more demand, the pipeline is limited and canola is still facing its own logistics issues.

“The garden hose to the West Coast is only so big.”

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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The speed with which the trade struggle between Washington and Beijing is ratcheting up — the Chinese government took less than 11 hours to respond with its own measures — led to a sharp selloff in global stock markets and commodities.

Investors are wondering whether one of the worst trade disputes in many years could now turn into a full-scale trade war between the world’s two economic superpowers.

“The assumption was China would not respond too aggressively and avoid escalating tensions. China’s response is a surprise for some people,” said Julian Evans-Pritchard, senior China economist at Capital Economics, noting that neither side had yet called for enforcement of the tariffs.

“It’s more of a game of brinkmanship, making it clear what the cost would be, in the hopes that both sides can come to agreement and none of these tariffs will come into force,” he said.

Beijing’s latest list of 25 per cent additional tariffs on U.S. goods covers 106 items with a trade value matching the $50 billion targeted on Washington’s list, China’s commerce and finance ministries said. The effective date depends on when the U.S. action takes effect.

Unlike Washington’s list, which was filled with many obscure industrial items, China’s list strikes at signature U.S. exports, including soybeans, frozen beef, cotton and other key agricultural commodities produced in states from Iowa to Texas that voted for Donald Trump in the 2016 presidential election.

“This is a real game changer and moves the trade dispute away from symbolism to measures which would really hurt U.S agricultural exports,” said Commerzbank commodities analyst Carsten Fritsch.

China’s tariff list covers aircraft that would likely include older models like Boeing’s workhorse 737 narrowbody jet, but not newer models like the 737 MAX or its larger planes. A Beijing-based spokesman for Boeing declined to comment.

Beijing’s announcement triggered heavy selling in global financial markets, with U.S. stock futures sliding 1.5 per cent and U.S. soybean futures plunging nearly five per cent and on track for their biggest fall since July 2016. The dollar briefly extended early losses, while China’s yuan skidded in offshore trade.

Rapid response

Hours earlier, the U.S. government had unveiled a detailed breakdown of some 1,300 Chinese industrial, transport and medical goods that could be subject to 25 per cent duties, ranging from light-emitting diodes to machine parts.

The U.S. move, broadly flagged last month, is aimed at forcing Beijing to address what Washington says is deeply entrenched theft of U.S. intellectual property and forced technology transfer from U.S. companies to Chinese competitors, charges Chinese officials deny.

Foreign ministry spokesman Geng Shuang said China had shown sincerity in wanting to resolve the dispute through negotiations.

“But the best opportunities for resolving the issues through dialogue and negotiations have been repeatedly missed by the U.S. side,” he told a regular briefing on Wednesday.

The tariff list from the office of U.S. Trade Representative Robert Lighthizer followed China’s imposition of tariffs on $3 billion worth of U.S. fruits, nuts, pork and wine to protest new U.S. steel and aluminum tariffs imposed last month by Trump (all figures US$).

Publication of Washington’s list starts a public comment and consultation period expected to last around two months.

Will consumers pay?

Many consumer electronics products such as cellphones made by Apple Inc. and laptops made by Dell were excluded, as were footwear and clothing, drawing a sigh of relief from retailers who had feared higher costs for U.S. consumers.

A U.S. industry source said the list was somewhat unexpected in that it largely exempts major consumer-grade technology products, one of China’s major export categories to the U.S.

“The tech industry will feel like overall it dodged a bullet,” the source said, but added that traditional industrial goods manufacturers, along with pharmaceuticals and medical device firms, could suffer.

Many U.S. business groups support Trump’s efforts to stop the theft of U.S. intellectual property, but have questioned whether tariffs are the right approach. They warn that disruptions to supply chains that rely on Chinese components will ultimately raise costs for consumers.

“Tariffs are one proposed response, but they are likely to create new challenges in the form of significant added costs for manufacturers and American consumers,” National Association of Manufacturers president Jay Timmons said in a statement.

Algorithm shields U.S. consumers

USTR developed the tariff targets using a computer algorithm designed to choose products that would inflict maximum pain on Chinese exporters, but limit damage to U.S. consumers.

A USTR official said the list got an initial scrub by removing products identified as likely to cause disruptions to the U.S. economy and those that needed to be excluded for legal reasons.

“The remaining products were ranked according to the likely impact on U.S. consumers, based on available trade data involving alternative country sources for each product,” the official, who spoke on condition of anonymity, told Reuters.

The tariff list targeted products that benefit from China’s industrial policies, including its “Made in China 2025” program, which aims to replace advanced technology imports with domestic products in strategic industries, such as advanced information technology, robotics, and pharmaceuticals.

Such policies coerce U.S. companies into transferring their technology and intellectual property to Chinese enterprises and “bolster China’s stated intention of seizing economic leadership in advanced technology as set forth in its industrial plans,” USTR said.

Many products in those segments appear on the list, including antibiotics and industrial robots and aircraft parts.

USTR did include some key consumer products from China, including flat-panel television sets and motor vehicles, both electric and gasoline-powered with engines of three litres or less.

A Reuters analysis that compared listed products with 2017 Census Bureau import data showed $3.9 billion in flat-panel television imports, and $1.4 billion in vehicle imports from China.

Among vehicles likely to be hit with tariffs is General Motors’ Buick Envision sport-utility vehicle, which is assembled in China and sold in the U.S. Volvo, owned by China’s Geely Motors, also exports Chinese-built vehicles to the U.S.

More than 200 products on the list saw no U.S. imports last year, including large aircraft and communication satellites, while some categories were highly unlikely to ever be imported, such as China-made “mortars” and “grenade launchers.”

USTR has scheduled a May 15 public hearing on the tariffs, which were announced as the result of an investigation under Section 301 of the 1974 U.S. Trade Act.

China ran a $375 billion goods trade surplus with the U.S. in 2017, a figure that Trump has demanded be cut by $100 billion.

— Reporting for Reuters by David Lawder, Jason Lange, Ginger Gibson, Steve Holland, and David Chance in Washington; Michael Martina, Cheng Fang, Ryan Woo, Ben Blanchard, Tony Munroe, Cate Cadell, Philip Wen and Dominique Patton in Beijing and Engen Tham in Shanghai; additional reporting by Brenda Goh in Shanghai, Stella Qiu in Beijing, Tom Miles in Geneva and Michael Hogan in Hamburg.

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