Morning Commentary 6/30/21

CBT Corrects Recent Gains Ahead of Key NASS Crop Report; Brazilian Corn Freeze Losses Broaden Overnight; ADM Puts Out Soyoil Deliveries

6:30 AM CT CBT Prices: Nov soybeans are down 8.00 cents at $13.045, Dec corn is down 10.00 cents at $5.385 and Sept Chi wheat is down 4.25 cents at $6.42.

AgResource Morning Grain/Soy Comment & AnalysisGood Morning! It is the long-awaited USDA Crop Report Day with NASS to release their June Stocks/Seeding Report at 11 AM CT. The report promises to produce sharp CBT price moves based on the report’s unpredictability. It is also the end of the month and quarter. Traders will be watching to see of money managers add to their commodity exposure in early July?

Tuesday’s CBT open interest showed a decline of 37,072 contracts in corn, 7,240 contracts in soybeans, and 8,527 contracts in wheat. The liquidation of July futures is completed, and CBT open interest should show growth following today’s NASS June Crop Report.

Deliveries tendered against July futures were 427 contracts of soyoil, 9 contacts of oats, and 13 contracts of July soybeans. No soymeal, corn or wheat futures were tendered. ADM tendered the July soyoil futures.

World financial markets are widely mixed as traders await a speech from China’s Xi Jinping marking China’s 100th anniversary on the founding of communism. And OPEC will hold a ministerial meeting on Thursday. The US dollar is steady with WTI crude oil futures $1.01/barrel higher at $73.98.

Brazil endured another night of hard frost/freeze with low temps ranging from 25-36 degrees across Parana and MGDS. This was the 2nd night of a hard freeze and damage to developing corn was widespread. Private Brazilian traders estimate production losses of 3-4 MMTs, but Brazil’s big problem could be with lite test weight and potentially moldy corn as many farmers lack the drying equipment to handle freeze damaged corn that will not properly mature. The US will likely be the recipient of larger world corn trade following a dire Brazilian drought and now a rather dire frost/freeze event.

August Malaysian palmoil futures rose 32 ringgits to 3,692 RM/MT. September Paris wheat futures are down €.50 to €202.25. China’s September Dalian corn futures fell $.03/Bu to $10.39 while September soymeal rose $2.50/MT to $543.00/MT. China’s soybean crush margins are improving which could produce new demand for US soybeans if today’s report produces a bearish surprise.

The Central US weather forecast shows warming/dry weather for the N Plains and NC Midwest for the next week. This follows a weather trend that has persisted since May. Thursday’s weekly US Drought Monitor will show a deepening drought across the Plains/NC Midwest. The models do offer shower chances during August 8-9th for the Dakotas/Minnesota, but the models differ on rainfall locations and amounts. ARC Research leans to diminished rainfall totals as the storm is a fast mover. Rains should range from .25-1.25”.

June Final Rainfall in Terms of Percent of Normal;  Broad Soil Moisture Losses from the American West through E Iowa:

June Temperatures via Departure from Normal:  Record Heat across Western US and Northern US Plains:

Good Luck with the NASS June Reports today. AgResource doubts that NASS will report combined US corn/soy seedings of more than 183 Mil acres – the average trade guess. And if all the new acres are in the Dakotas, the report will be bullish. And recent cash pushes for old crop corn is not finding farm selling.

North American Weather Pattern Discussion: The primary weather models agree on the forecast for the next 7 days with differences in the position and amounts of rainfall with a storm system due for the North Central US after July 7th.

The GFS has the North Central system being farther east across N Minnesota with rains into S Minnesota and Wisconsin. The EU model has system including the Dakotas with needed rainfall. ARC’s forecast lean is that there will be considerable change in the positioning of the short wave and rain amounts in coming days. The system is fast-moving and rain totals are likely overdone.

Nonetheless, like the midday solution of yesterday, there will be shower chances for the N Plains and Minnesota during July 8-9h. Watch the coming daily forecasts for rainfall location/amount details.

The attached 10-day rainfall graphic is from the GFS model. A generally arid trend is forecast for the N Plains and NW Midwest. The Canadian Prairies are included in dry weather trend. A storm system forms in a weakening jet stream on July 8-10th along the US/Canadian border which looks to produce .25-1.25” of rain. Nebraska, Iowa, and the Northern Illinois are dry.

And the forecast indicates building heat for the Plains and the NC Midwest as a high-pressure Ridge expands east with highs in the 90’s to the lower 100’s. The heat persists into mid-July.

GFS 10 Day Rainfall Forecast; Showers for Northern Minnesota July 8th: 

The North American Precipitation Outlook in the 11-15 day Period

Cluster Model Forecast for North American Temperatures on Day 10:

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