8/10/21

Morning Commentary 8/10/21

Corn Lower on US Condition Rating Jump; Soybeans/Wheat Firmer on Demand and Rising World Prices; USDA Positioning for Thursday

6:30 CT CBT Prices: Nov soybeans are up 7.25 cents at $13.37, Dec corn is down 5.50 cents at $5.4825 with Sept Chi wheat up 2.00 cents a $7.1325.

AgResource Morning Grain/Soy Comment & AnalysisGood Morning! CBT futures are mixed with corn futures weaker on the unexpected rise in US corn crop conditions with soy/wheat higher. The USDA August report looms on Thursday, but rising world wheat prices along with fresh China interest for US soybeans is underpinning both markets. The volume of CBT trade is average with traders to adjust positions ahead of Thursday’s USDA report.

NASS raised GD/EX corn conditions by 2% to 64% on Monday. The weekly US corn condition gain was entirely due to a 11% rise in IL GD/EX conditions and a 6% gain in Missouri. States in the N Plains and the W Midwest that endured hot/ dry weather saw their ratings hold steady or decline only marginally. This week’s GD/EX corn ratings were 9% less than last year, and just above the 5-year average. NASS held its soybean crop rating steady at 60% vs last week. The rise in the US corn ratings pressure CBT corn futures overnight. 

Soy futures rallied on the talk and prospect of Chinese demand for US supply and the ongoing talk that India may allow 1.5 MMTs of GMO meal to be imported. India normally crushes/utilizes its own soybean crop for livestock feed but rising domestic feed prices and spot shortages has sparked the import rumor.

China has shown new interest for US soybeans and are short bought on future US shipments. Traders remember last September/October when China was an active daily buyer which ran CBT soybean futures from $9-11.00. ARC estimates that China has a massive 28-32 MMTs of US soybeans to book from the US into 2022.  

Russian wheat prices keep rising amid tight fisted farmer holding on a lower harvest. Fob Russian wheat offers have rallied to $273-277/MT while it is nearly impossible to uncover a Russian corn offer for export. Traders wonder what price the Russian farmer will sell cash wheat, and most surmise that its near or above $300/MT. The rise in Black Sea wheat offers is likely to place a bid under US wheat futures regardless of the USDA August crop report. 

In world financial markets, European stocks are trading at a record high with crude oil futures in recovery on the bet that the global GDP recovery will remain intact despite the Delta Covid variant. Gold is steady with bitcoin back above $46,000 on an expanding risk appetite.

September Malaysian palmoil futures was closed today for a national holiday. Paris Sept wheat futures are up €.50/MT at €229.75. China’s Dalian Sept corn fell $.07 to $10.14/Bu while Dalian Sept meal rallied $2.75/MT to $555.35/MT.

Morocco is tendering for 363,000 MTs of US durum wheat with South Korea booking 135,100 MTs from the US/Australia/Canada.

NASS US corn/soybean yield estimates are always important, but it’s the size of the Russian wheat, Brazilian corn and all Canadian crops that will be closely watched on Thursday. And will NASS adjust down US corn harvested acres with considerable silage production noted across the Dakotas on a shortage of hay? Demand led bull markets are in the offing, its just a question of timing.

North American Weather Pattern Discussion: The GFS/EU weather models are in good agreement which raises our confidence on the 10 day forecast. The only real uncertainty rests with several tropical storm systems and their impact on downstream US weather. For now, Florida and the SE US look to be targeted with any tropical storm activity.

The forecast features like weather conditions that have prevailed for most of the summer – drier/warmer than normal conditions for the Plains and W Midwest with near normal rain and modestly warmer temperatures for the E Midwest.

The 10-day rainfall graphic is from the EU model. The best chance of rain is in the next 24-36 hours from E Iowa eastward as afternoon storm systems form in unstable air aloft. A cold front pulls eastward on Wednesday and leaves areas west of the Mississippi dry with warming temperatures. High temps hold in the upper 80’s to the lower 100’s as a high pressure Ridge builds from west to east.

A tropical storm system is forecast to pull thru Hispaniola with S Florida being targeted on Saturday. The storm then heads north/northwest into the SE US. The tropical system will keep the Central US in a warmer/drier flow.

Above to Much Above Normal Temps for the Plains and W Midwest Next 2 Weeks: 

EU Model Rainfall Next 10 Days - Same Pattern of Summer Holds.

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