8/12/21

Morning Commentary 8/12/2021

Good Luck with USDA/FSA Reports Today; Tropical Storm Fred Causing Extended Weather Model Uncertainty; World Financial Markets Pause

6:30 CT CBT Prices: Nov soybeans are down 4.75 cents at $13.3525, Dec corn is unchanged at $5.5925 with Sept Chi wheat is unchanged at $7.27.

AgResource Morning Grain/Soy Comment & AnalysisGood Morning! Its USDA/FSA report day with NASS/WASDE out at 11 AM CT and FSA out at 12 Noon CT with key reports. FSA’s website says that it will release its program participation data at 12 Noon CT – which is an hour earlier than last year.

The NASS/FSA reports deepen the debate on US corn/soybean yields and 2021 US seeded/harvested acres. FSA data does not correlate very well with final NASS estimates until the October report, but in recent years, traders/analysts have tried to use the FSA data argue for higher or lower 2021 planted acres.

And this is only the 3rd year that NASS did not head to the fields in August. Today’s August NASS yield/crop estimates are based on a blend of farmer survey responses and satellite imagery. Its September when actual NASS field survey data is reported. This makes the September report far more important to the market in gauging final 2021 US corn/soy yields.

Yet, August USDA crop reports always produce considerable market volatility amid their importance and being a first pass at yield. AgResource’s Research lean is to a positive corn yield estimate with soybeans posing considerable uncertainty due to its crop yield being influenced by August weather.

Last year, the US corn yield dropped 9 BPA from August into the final due to the warm/dry finish. AgResource would highlight that today is just the start of statistical yield debate from NASS/USDA – the debate persists into October.

The path of Tropical Storm Fred is unchanged overnight with landfall either as a weak hurricane or a tropical storm near Apalachicola, Florida. The forecast for the Central US is arid with near to above normal temperatures for the next week with Fred causing uncertainty in the 8-14 day forecast period. The models are leaning to some rain for the Plains and the W Midwest, but the models differ on the exact locations/amounts. The Canadian model is the driest with the European model the wettest. Amid the uncertainty in the extended range, ARC advises clients to place their attention on the 7-day forecast.

US and world financial markets are mixed with European stocks hitting the pause button after less robust earnings reports. Crude oil futures are lower after International Energy Agency cut its forecast for global demand and predicted oil surpluses in 2022. And China offered its 5-year plan which called for greater business regulation/scrutiny. The US dollar was little changed. Following 9 straight days of European stock market gains, a correction is likely heading into the weekend.   

China continues to show an appetite for US soybeans. Malaysian September palmoil futures closed 58 ringgits lower at 4,570 RM/MT. Paris September wheat is up €.25 at €236.75/MT while Dalian September corn rallied $.085 to $10.22/Bu while September soymeal fell $5.25/MT to $553.25.

Good Luck with the USDA August Report today. The market will react to US crop yields, but it’s the world supply/stocks that are important into early 2022.  

North American Weather Pattern Discussion: The GFS/EU weather models are in only fair agreement. Tropical storm Fred causes the forecast models fits following its landfall across the Florida Panhandle on Sunday/Monday. The path of Fred is like yesterday morning’s, it’s just that the storm is forecast to be weaker and come inland as a tropical storm, not a weak hurricane.

A generally dry Central US weather pattern will prevail for the next 7-8 days with ill-defined rains in the 9-15 day period. Showers will finish up today across the E Midwest with a lengthy period of dry/sunny/warm weather noted for the next week. 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. The warmth will push crop maturity.

The forecast following the next week is uncertain amid the speed/direction of Fred across the Eastern US Seaboard. Soaking rain is indicated across the Eastern US mid next week with a de-amplification of the Western US Ridge allowing for ill-defined rains across the Plains. Continued above normal temperatures are forecast into late August which will push crop maturity.

10 Day Rainfall Forecast from the EU Model; Better Rains for the Plains by August 20th: 

Rainfall Change in European Model vs Noon Yesterday:

Above Normal Temperature Pattern To Prevail Across Plains and Upper Midwest:

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