6/25/21

Morning Commentary 6/25/21

CBT Mixed as Market Debates the Impact of Weather; China has Purchased Additional US Soybeans; N Plains and Canadian Dryness Persists

 ^:30 AM CT CBT Prices: July soybeans are up 5.00 cents at $13.7625, July corn is unchanged at $6.5325, and July Chi wheat is up 2.50 cents at $6.535.

AgResource Morning Grain/Soy Comment & AnalysisGood Morning! CBT grain futures are mixed to mostly higher following Thursday’s impressive midday recovery. Corn/soy futures held key longer-term chart-based support and bounced. Rumors that China booked another 5-7 cargoes of US soybeans and talk China had fresh interest in US new crop corn were supporting fundamentals. And the northern half of Iowa missed the rains and held in a deepening drought.

As it should, Minneapolis wheat is the upside price leader overnight amid a deepening N Plains drought with Western Canadian small grain crops to also suffer from the coming heat/dryness. US spring wheat, oat and barley crops are suffering from a lack of rain with near to above normal temperatures forecast for another 10 days. The markets will try to parse out the crop losses in the N Plains, Minnesota and Canadian Prairies against the benefit offered by Midwest rainfall and cool/cloudy weather conditions. The charts below itemize rainfall as a percent of normal and temperatures from June 1st to July 9th.

 Thursday’s CBOT open interest totals showed a decline of 19,750 contracts in corn and 7,789 contracts in wheat, and a 1,190 contract gain in soybeans.

The US and world equity markets are ready to close out their best week since April on a Biden Infrastructure win with no new taxes which may pass Congress in July. Debate on the Bill looks to occur in early July.

The Buenos Aires Commodity Exchange indicated that Argentina’s soybean harvest has concluded with their estimate holding at 43.5 MMTs. This was 10% lower than the prior year, but in line with USDA/WASDE.

China’s hog futures market rallied over 5% today and closed the week strongly with reports that farmers have nearly completed selling their overweight hogs. The rally will help return margins to China’s hog producers and should aid soybean crush margins that have been constrained by falling pork prices.

The average US trade estimate for Wednesday’s NASS seeding estimates is 93.8 Mil acres of corn (up 2.7 Mil acres from March Intentions), 89.0 Mil acres of soybeans (up 1.7 Mil acres), with US spring wheat at 11.4 Mil acres.

The average US trade estimates of June 1st corn stocks is 4,144 Mil Bu, soybeans 787 Mil Bu with wheat at 859 Mil Bu. NASS will release their June Stocks and Seeding Report on Wednesday at 11 CT.

AgResource will take the under’s on US corn seeding at 93.0 Mil acre with a June corn stocks total that is just above 4,000 Mil Bu.

 In non-US world agricultural futures trade, August Malaysian palmoil futures closed 109 ringgits higher at 3,601 RM/MT. September Paris wheat futures are down €.50/MT at €204.00. China’s September Dalian corn futures fell $.01/Bu to $10.29 while September soymeal fell $.60/MT to $529.40/MT.

 The Central US weather forecast hold additional heavy rainfall for Missouri, Illinois, the eastern half of Iowa, Indiana and Michigan. Unfortunately, arid weather conditions prevail across the N Plains and Minnesota.

 Weather and supply are the talk, but below the market is record large US corn demand and fresh China interest in US soybeans. We look for a mixed CBT close as traders await rains for Northern Iowa and next week's key USDA report.

North American Weather Pattern Discussion: The overnight forecast models are slightly wetter than their midday solutions of yesterday and consistent that heavy rain will drop across the Central/Eastern Midwest over the next 5 days.

Already heavy rain has pounded Illinois, Indiana and Missouri with totals of .3-3.50” from embedded T storms. Missed was the northern half of Iowa which will be closely monitored this weekend in terms of rainfall. And limited rain is forecast for the N Plains and Minnesota, where the drought will deepen.

The attached 10-day rainfall graphic is from the European model. Note the flooding rainfall of 4-6.00” that is forecast for Illinois, Michigan and Indiana through Tuesday. The rain and cool temperatures will benefit crops where localized flooding does not occur.

The North American Ridge/Trough pattern will only slowly progress east over the next 10 days. The Midwest front will sag southward into the Delta/S Plains as the NW Midwest and N Plains enter a new length arid weather trend. A historic Western North American high-pressure Ridge will fan record heat over the PNW and W Canada with numerous days of triple digit high temps. Slowly, this important Ridge will shift eastward during early July.

Change in 1o Day Rainfall Amounts from 12z Thursday: Less Rain for N Plains and Minnesota - Better Chances N Iowa:

European Model 10 Day Rainfall Totals - Flooding 5-7.00" Rains for IL/IN

Record Heat for NW US and W Canada; Temps in the 100's for Many Days

GFS Overnight Adds Considerable Rain to the Central Plains; Drier SE US: 

GFS Expansive With Rainfall into MO/IL and W IN with 5-8.00" Totals

11-15 Day Rainfall Anomaly with Dry Weather for North Central US

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