Morning Commentary 6/29/21

US Crop Ratings Fail To Improve Following C & E Midwest Rain; Frost/Freeze in Southern Brazil/Argentina; N Plains/NW Midwest Heats Up/Dry

AgResource Farm Marketing Advice for Tuesday: 1/ No new advice.

6:30 AM CT CBT Prices: July soybeans are down 1.00 cent at $13.56, July corn is down 2.00 cents at $6.735, and July Chi wheat is down 2.50 cents at $6.435.

AgResource Morning Grain/Soy Comment & AnalysisGood Morning! CBT futures opened higher as weekly NASS US corn/soybean crop ratings were steady to slightly lower (expected to be steady/higher following last week’s rain), but the looming NASS Stocks/Seeding Report produced profit taking in expanding volume trade. A mixed to slightly higher market is expected today as money managers position for the June 30th Stocks/Seeding Report.

Monday’s CBT open interest showed a decline of 28,173 contracts in corn, 21,712 contracts in soybeans, and 6,834 contracts in wheat. Soymeal open interest fell to just 386,939 contracts open, the lowest since 2009. Traders are exiting positions ahead of July’s 1st notice day and the USDA reports.

World financial markets are widely mixed as the Delta Covid variant closes half of Australia, while the end of the 2nd quarter looms, and risk managers reduce their market exposure to lock down profits. Crude oil futures are weaker as OPEC meets to decide on future supplies and production, while the US dollar posts modest gains. Jittery financial markets are expected while China celebrates 100 years of communist rule.

Southern Brazil and Argentina endured widespread frost/freezes overnight. Upper 20’s to lower 30’s low temps were widespread across Parana and RGDS in Brazil. The chill even reached into MGDS where lows in the 30’s were commonplace. USDA’s FAS reduced their estimate of the 2021 Brazilian total corn crop to 94 MMTs (down 4.5 MMTs from WASDE) late Monday citing the drought. However, the new frost/freeze could topple this estimate even more. The cold chill will solidify a total 2021 Brazilian corn harvest of 90 MMTs or less, there by boosting 2021/22 US corn exports by 200-350 Mil Bu. Another night of frost/freezing temps is forecast for tonight.

NASS reported that 64% of the US corn crop is rated GD/EX, down 1% from the week prior with 60% of the US soybean crop rated GD/EX which was steady. Crops declined in their ratings in the arid north and west, while rains provided a boost to crops in the E and N Midwest. The coming 10-14 days of warm to hot temps and limited rainfall look to pressure ratings in the Monday’s to come.

US spring wheat ratings at just 20% GD/EX were the worst in 33 years while 48% of the crop has headed and any rain will be modest while temps warm. 43% of US pastures were rated poor or very poor which is raising forage costs. The pasture ratings were the worst looking backwards to 1988.

August Malaysian palmoil futures rose 70 ringgits to 3,660 RM/MT. September Paris wheat futures are unchanged at €203.00. China’s September Dalian corn futures rose $.11/Bu to $10.42 while September soymeal fell $7.50/MT to $540.50/MT. China’s soybean crush margins are showing dramatic improvement.

The Central US weather forecast shows warming/dry weather for the N Plains and NC Midwest. Unless NASS reports offer bearish surprises, the risk in the market is smaller supplies and higher prices. ARC stays bullish on breaks.

North American Weather Pattern Discussion: The 3 primary weather patterns agree on building heat with dryness prevailing across the N Plains and the NW Midwest over the next 2 weeks. The May/FH June weather pattern is returning. A strong high-pressure Ridge will hold across NW Canada and the NW US and slowly progress eastward. This Ridge has produced record heat for the Pacific Northwest – with 90’s and lower 100’s returning to the N Plains and NW Midwest in the 6-10 day period. The combination of heat/dryness is likely to maintain crop stress across the Dakotas, Minnesota, Nebraska, Kansas, and Iowa.

Dry weather will prevail from Iowa north and west. The attached 10-day rainfall graphic is from the European model which reflects a lack of rain over the Western and North Central US. The Canadian Prairies are included in this arid trend.

Above normal rain will drop on the southern 1/3 of the US including Texas and the Gulf States. Totals here are estimated in a range of 1-3.00” with locally heavier amounts due to a slow-moving front.

The forecast models argue for building heat for the Plains and the North Central Midwest from a high-pressure Ridge that slowly marches east into July 10th. Highs in the 90’s to lower 100’s become commonplace.

Limited Rainfall for N Plains, Western US, Canadian Prairies: 

EU Model Drier Overnight for Iowa and Upper Midwest: 

Heat Builds from West to East in the Next 10-14 Days: 

11-15 Day Forecast Calls for Stuck Weather Pattern into mid July; Ridge Spreads East:

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