Morning Commentary 7/30/21

CBT Sags on South Dakota Rain and Month End Profit Taking; China Soymeal Trade Stays Large; Brazilian Wheat Damage on the Cold/Snows

6:30 CT CBT Prices: Nov soybeans are down 14.00 cents at $13.6375, Dec corn is down 5.25 cents at $5.5125 with Sept Chi wheat down 5.00 cents at $7.00.

AgResource Morning Grain/Soy Comment & AnalysisGood Morning! CBT futures were weaker overnight as traders bank profits ahead of the weekend as the radar shows rain falling across Central South Dakota. The weekend is forecast produce showers across S and W Iowa, E Nebraska, and Missouri. The coming rain and cooler temperatures is sparking the CBT selling into the end of July.   

 AgResource Research doubts that selling will become aggressive with US corn/ soybean crop conditions to decline on Monday by 2-3% in the GD/EX category and 60-65% of the Central US to remain dry for the next 10 days.

 US corn/soybean yield potential is in decline with the commercial trade no longer expecting that the US will be able to achieve trend yield potential. July ended up being much hotter/drier than what was expected, with last half of July extreme heat stressful for crops west of the Mississippi River. And agronomists doubt that Illinois will score record corn/soy yields on late June/July widespread water damage.

Illinois corn yields must surpass their record of 210 BPA for the US to produce a national yield of 177.5-179.5 BPA. The E Midwest corn crop potential is high, but agronomists do not see it as being record large.

ARC Research fears that with unfavorable August weather, the US corn yield could slide to 164-174 BPA. The problem is that the 2021/22 US corn balance sheet cannot withstand a US corn yield less than 175 BPA without the need for acute demand rationing. The US corn yield loss can reach 15% during the fill period or which is a massive 27 BPA using a trend yield of 179.5 BPA!

Brazilian farmers are in disbelief on the cold/snow that befell S Brazilian crops on Thursday. It was another frigid morning today and the Brazilian wheat crop has been damaged in the late boot stage. Yield loss assessments are being made, but the concern is high that any reproducing wheat and maturing corn was lost. AgResource Brazil fears a ‘21 Brazilian corn crop that is below 85 MMTs.

September Malaysian palmoil futures fell 36 ringgits to 4,547 RM/MT on pre weekend profit taking. Paris Sept wheat futures are down €1.25/MT at €219.50 while Dalian Sept corn closed $.01 higher at $10.09/Bu while Sept meal gained $6.10/MT to $557.10/MT. This weeks China cash meal trade has been the largest in the year which will expand crush rates during August/September. China has a massive number of US new crop soybeans left to secure.

There were 6 soymeal and 1 soyoil futures tendered for delivery against August CBT futures. CBOT open interest rose 3,374 contracts in corn and 3,796 contracts in wheat, while falling 4,247 contracts in soybeans on Thursday.

This is no place to be selling a break with extreme heat forecast to return to the Central US in early August. A choppy back and forth trade is expected today with massive loss of world grain production to spark a US demand led bull market by late summer.

North American Weather Pattern Discussion: The forecast models agree and are consistent with prior day runs. In fact, the consistency of the forecast has been solid in recent days. However, there continues to be uncertainty beyond 10 days in terms of Central US rainfall totals/placement, but the heat will come roaring back into the Central US beyond August 8th. This heat will push corn and soybean maturity to the detriment of yield.

A Ridge-riding storm system is pulling across South Dakota and producing estimated rainfall of .2-.9”. The storm is forecast to weaken into the later morning hours, but rains are part of a front that will drop across the Plains/W Midwest this weekend. Iowa, Missouri, and NW Nebraska are favored with rains of .25-1.25”. The attached 10-day rainfall map is from the EU model. Next week is largely dry before some rains return to the E Midwest in the following weekend. 60-65% of the Central US holds in an arid weather pattern including S Canada into Aug 10TH.

The Ridge/heat comes roaring back in the 9-14 day period with highs in the 90’s to lower 100’s once again. The High Pressure Ridge amplifies north and produces another spate of extreme heat with arid weather conditions for the Plains/W Midwest.

60-65% of the Midwest to Hold in a Dry Trend Next 10 Days; Growing Yield Concern

The 2 Week Temperature Pattern Shows Heat Holding Across the NC US/Canadian Prairies: 

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