Morning Commentary 8/11/21

Malaysian Palmoil Futures Rocket Upwards Pull Soyoil/Soybeans Higher Overnight; US July Inflation Data due Today; Central US Weather Drier

6:30 CT CBT Prices: Nov soybeans are up 14.00 cents at $13.5075, Dec corn is up 5.00 cents at $5.5825 with Sept Chi wheat down 6.00 cents a $7.21.

AgResource Morning Grain/Soy Comment & AnalysisGood Morning! CBT futures are mixed with summer row crop values rising while wheat prices slide on pre report profit taking. Today is the last full trading session before Wednesday’s all important USDA August crop report. Pre report positioning is expected which could produce a choppy trading session.

Malaysian palmoil futures soared overnight to new records with the spot September futures closing 7.4% higher at 4,511 ringgits/MT, a gain of 311 ringgits, the largest since January of 2009. The massive rally was sparked by the monthly Malaysian Palmoil Board Inventory Report which pegged end of July stocks at just 1.52 MMTs. Such stocks were down 7.3% from June with production down 5.2%. July palmoil exports were little changed at 1.41 MMTs. Seasonally, this is the time of the year that palmoil stocks are replenished, but strong world demand and the poor harvest has caused supply/stock shortfalls. The seasonal decline in production starts in October, and Malaysian palmoil stocks could sit close to record lows. This will underpin palmoil prices and all world vegoil values heading into early 2022.

New Contract Highs in September Palmoil Futures:

Black Sea wheat futures are strongly rising with Dec futures at $303.75/MT. December Black Sea wheat is forecasting an export price of $8.25/Bu fob – the highest in years. Russian all wheat crop estimates continue to decline with private Russian analysts now discussing a crop size of 75-77 MMTs due to sliding spring wheat yields. ARC Research maintains a final Russian wheat crop in a range of 73-77 MMTs with harvest near 60%. The USDA is expected to cut their Russian wheat crop estimate tomorrow to 79-81 MMTs.

A non-binding Senate Amendment was passed late Tuesday 99-0 that called for preserving the current tax rules for transferring farms/businesses and the full benefit of stepped-up asset valuation when assets are acquired from a decedent. The Bill was pushed by Senate Republicans to force Democrats to go on the record in protecting the current tax benefits for US farmers.

In world financial markets, US inflation data will be released today which should help direct Central Bank Policy. July inflation should moderate from May/June, but still hold at a stronger than desired 3.5-4.5%. US equity futures are mixed with European stocks holding near record highs.

Paris Sept wheat futures are up €1.50/MT at €236.00. China’s Dalian Sept corn fell $.04 to $10.10/Bu while Dalian Sept meal held steady at $555.35/MT. China is showing interest for US soybeans, and their purchase pace would likely increase on any post report fall in November soybean futures.

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 tomorrow. The CBT is starting to sense the tightening world supply of wheat, corn, and vegoils. US export demand for soybeans/corn will be strengthening in the weeks ahead. AgResource’s market bias is bullish.

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 forecast uncertainty rests with tropical storm Fred and whether the storm will become a hurricane and make landfall across the Florida Panhandle on Sunday. Thereafter, Fred will be a slow mover across the Southeast US and produce flooding rains. And will Fred alter the Central US weather pattern?

A generally dry Central US weather pattern will prevail for the next 10 days with ill-defined rains in the 11-15 day period. A few showers will dot the E Midwest in the next 36 hours before a lengthy period of dry/sunny/warm weather returns. Heat will persist across the Plains and the W Midwest with high temps ranging from the upper 80’s to the lower 100’s. The E Midwest is warm with high temps ranging from the upper 80’s to the lower 90’s, but no real extreme heat is offered. The warmth pushes crop maturity.

Tropical storm Fred is forecast to become a weak hurricane over the Eastern Gulf this weekend and make landfall in the Eastern Florida Panhandle. The storm is then a slow mover over the SE US producing 2-5” of rainfall. The hurricane will pull the Jet south which could boost N Plains rainfall beyond August 22nd.

Above to Much Above Normal Temps to Push Crop Maturity into August 26th:

EU Model 10 Day Rainfall Forecast into August 21st:

EU Model 10 Day Rainfall Forecast Change from Midday Tuesday:

GFS 10 Day Rainfall Forecast; Widespread Dryness for the Plains:

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