Hope Builds for Mississippi River Reopening Later Today or on Saturday; Extreme Heat Ahead for SW Russian Wheat/Sunflowers; China' Sow Herd up 1.1%
6:30 AM CT CBT Prices: July soybeans are up 23.25 cents at $16.0725, July corn is up 7.00 cents at $6.82 while July Chi wheat is up 14.50 cents at $7.1875.
AgResource Morning Grain/Soy Comment & Analysis: Good Morning! CBOT grain markets slipped in opening evening trade, but then recovered as a late Thursday afternoon meeting of the US Coast Guard, Army Corps of engineers, and barge companies concluded. The meeting held out high hope that the Mississippi River will reopen in the next 24-48 hours after an initial engineering study concluded that the I-40 DeSoto bridge is stable without a load (traffic).
A follow up meeting is planned for 2 PM CT today with a second engineering study to be offered to help confirm the initial reopening recommendation. If the second study confirms that the bridge is stable, river traffic could return to normal as early as late this afternoon or on the weekend. Certain barges will initially be prioritized to pass such as gasoline to replenish areas hit by the Colonial pipeline shutdown and a shipment for the US Defense Department. Thereafter, other barges will be allowed to pass.
US Gulf exporters tell ARC that the several day river shutdown should not impact their export loadout operations as they pull from stored supply. Most of the on-river grain barges are filled with corn to fulfill China’s massive export program. July corn should rebound today on the reopening news.
CBT futures fell to sharp losses on Thursday due to the worry of a lengthy Mississippi River closure and slowing of US corn/soybean/wheat trade. At a 9- year price high in summer row crop futures, the fear of a slowing of demand and bottling of supplies in the interior produced mass liquidation. The key for today is whether the sold-out bulls will want their positions back?
Importantly, the sharp decline in CBT futures did not produce a break in Midwest cash basis bids. There were crushers willing to bid $.80-1.00 over to secure summer cash soybeans while summer corn bids held stout at $.35-.65 over. The cash market continued in its hunt for tightening old crop supply.
AgResource is told that end users used Thursday’s break to extend their forward coverage well into new crop. The break in corn allowed summer ethanol margins to return into the black while new crop margins are an incredible $.80/Bu. Domestic livestock feeders and importers were all buyers on the decline. This will make the demand rationing process more difficult in summer.
China reported that its sow herd gained 1.1% in April, which is up 23% from April of 2020, and 98% of the longer term 5-year average. China has suffered with local breakouts of ASF, but its building of bio secure facilities is ongoing which is helping to boost its pork production and pressure prices.
An early season intense Ridge of high pressure is forecast to form over SW Russia impacting wheat/sunflower production. The Ridge will breed 90-degree heat next week and add to rapidly drying soil moisture conditions. ARC’s sister weather firm - Climate Impact is targeting the Black Sea for a drought.
Thursday’s Miss River closure CBT break was deeper than expected, but it did produce a new buying opportunity into the unknow of the coming summer weather. The outlook for coming heat across the Central US will raise soil moisture needs. Our concern for the N Plains and the Upper Midwest stays elevated.
North American Weather Pattern Discussion: The EU/GFS and Canadian models are in good agreement. All keep heavy rainfall into May 25th confined to the S. Plains, the SW Midwest, and pockets of the Delta. This coming rain bodes well for HRW crop health improvement, but the lack of rainfall across the Northern Plains, PNW and Southern Canada produces drought intensification. Closer attention is also being paid to budding dryness across the Upper Great Lakes region and Iowa. Rising temps will accelerate the soil moisture loss here.
The big difference in the forecast is the coming heat. Temps look to reach the lower 90’s in 8-12 days across the N Plains and the NW Midwest. This heat will exacerbate soil moisture loss amid a high-pressure Ridge aloft. None of the Central US will be in a cool temperature pattern beyond the weekend. The above to much above normal temperature pattern will last into June (and beyond).
The attached graphic is from the GFS model and it offers the 10-day rainfall forecast. Notice that portions of the E Plains will endure excessive rain of 5-7.00” while other areas enjoy 1-3.50”. Limited rainfall is offered for the N Plains and the Upper Midwest with amounts of .25-.75”. The SE US also dries out.
N Plains/Canadian Prairies/ N Midwest Stay Arid; Soaking Rain Ahead for C Plains:
Drought to Deepen Across the N Plains and Upper Midwest:
Above Normal Temps Ahead with 90's for the Northern Plains May 21-25th:
Dry Weather Bites Winter Brazilian Corn Crop Across Brazil - Time Running out for Rains!
Brazilian Corn to Endure mid 80's to lower 90 degree Heat: