Central US Weather Pattern Turns Drier/Warmer; USDA June Crop Report Today - Bulls Wanting to Buy any Post Report Weakness; CONAB Too
6:30 AM CT CBT Prices: July soybeans are up 5.25 cents at $15.6775, July corn is up 3.25 cents at $6.94 and July Chi wheat is down 7.50 cents at $6.7475.
AgResource Morning Grain/Soy Comment & Analysis: Good Morning! CBT futures are mixed ahead of the USDA June Crop Report at 11 AM CT today. And traders are positioning vs their expectations of the report. Traders see wheat as slightly bearish while corn will be bullish and soy neutral. WASDE is expected to raise US corn exports and ethanol use and reduce end stocks by 100-200 Mil Bu both in old and new crop end stock forecasts. US soybean end stocks for both crop years are near the bare minimum of pipeline (120 Mil Bu) which is why November soybeans are trading at their highest price on record for the date. US wheat production is set to rise based on improved HRW wheat yields and WASDE not taking a knife to US spring wheat production until the July NASS survey.
Brazil’s CONAB will also release their data on corn and soybean crops this morning. CONAB/WASDE are expected to sharply cut their 2nd corn crop estimate due to a worsening drought across Central Brazil. AgResource Brazil now sees the 2021 total Brazilian corn crop at under 90 MMTs.
It was dry across the building drought areas of the Midwest/N Plains overnight with any rain being confined to the already wet states of the Gulf and Mid-South. Wednesday’s high temperatures ranged from 80s to the mid-90s.
It was another day of 90’s across the N Plains/Western US which is really taking a toll on crops according to producer sources. And even reflecting on North Dakota rainfall of Tuesday/Wednesday, ground reports of rainfall were far less than radar estimates. Most ground rainfall reports were less than 1.00” which will not produce any lasting crop yield assistance.
The EU/Canadian/GFS forecast models offer below to much below normal rainfall for the Central US with warm to hot temperatures into June 24th. Following a trend that extends backwards for months, the GFS model is the wettest while the EU the driest. The EU model has virtually no rain for a large swath of the Midwest and Plains over the next 10 days. Illinois/Indiana are included in this arid weather trend. The GFS has some rain, but totals range from .2-.8” and fall well below normal. The Canadian model is like the arid EU forecast.
And heat will be unrelenting under a semi static high-pressure Ridge that holds across the Intermountain West and sometimes extends east into the W Midwest/N Plains. The Central US is building an impressive string of 90-degree days that will pull weekly corn/soy/spring wheat crop ratings lower into July.
In international ag trade, August Malaysian palm oil futures fell 27 ringgits/MT to 3,844 ringgits. Paris wheat futures are down €1.00/MT at €211.50. September Dalian corn settled $.11/Bu higher at $10.72 while September DCE soymeal lost $1.80 higher at $560.50/MT.
The US and China held trade call overnight with both sides reporting progress. Specifics were not offered, but weekly dialog is a positive step.
The USDA June Report will not offer bearish catalyst with Central US weather threatening into late June. Any post report bearishness will be short lived amid weather forecasts that are crop/yield threatening into July. Use any modest corn/soybean break to add to market length.
North American Weather Pattern Discussion: The major weather models hold limited rainfall over the next 10-14 days which looks to place the Northern Plains and the W and N Midwest into one of the driest on record classifications in June. The extended range forecast can now look forward into June 25th and there is just no indication of a pattern change. For many Midwest and N Plains areas, this June is so far (including the forecast) drier than 2012 – the last major North American drought.
The 10-day precip map (below) is from the EU weather model. A broad area of dryness extends from California into Michigan and Kentucky and includes the key crop states of Iowa, Minnesota, Wisconsin, Michigan, Nebraska, Missouri, Kansas, and Illinois. The GFS model has reduced rainfall chances for the Dakotas with a passing cold front on Friday/Saturday to .1-.85” with coverage no better than 50%. Like the EU/Canadian models, the forecast is then arid thereafter. The forecast models are still playing with a tropical storm in the Gulf hat would push north into Louisiana and then slide slowly east.
Temperatures stay well above normal with highs in the N Plains and W Midwest ranging from the mid 80’s to the mid 90’s. This is a deeply concerning hot\dry weather pattern.
10 Day EU Rainfall Forecast into June 20th- Broad Areas of Dryness for the Western and Central US:
Canadian Model Slightly Wetter with a Renegade Rain Event for Iowa:
Extreme Heat to Maintain a hold across most of the Western US - Including the Plains and W Midwest:
Percent of Normal Precipitation into June 25th - Sharp falls in Soil Moisture Heading into July Corn Pollination: