Morning Commentary 8/13/21

CBT Rises on Post Report International Buying; Paris Sept Wheat Futures to New Rally Highs; Pro Farmer Crop To Help Confirm NASS Yields

6:30 CT CBT Prices: Nov soybeans are up 13.75 cents at $13.35475, Dec corn is up 4.25 cents at $5.7725 with Sept Chi wheat up 14.00 cents at $7.675.

AgResource Morning Grain/Soy Comment & AnalysisGood Morning! The USDA August crop report has passed, and the international markets are trying to sort out value. Opening weakness found end users willing to start taking forward coverage. E Midwest corn/soybean crops were record large, but they were not big enough to offset the drought losses in the Plains/W Midwest.

The US was the world’s hope for hefty harvests that would help hold down feed/wheat flour/vegoil prices. The USDA reflected corn/soybean yields/crop sizes that were near or above last year, they just were not within the expectations of the bears. CBT price ranges have shifted upwards.

The USDA August Crop Report has confirmed the seasonal lows were scored following the July 4th US holiday as December corn futures fell to $5.07 and November soybeans tested $13.00. ARC Research doubts that December corn will be able to fall below support at $5.40-5.50 or November soybeans too far below $13.00 amid expanding US demand. End users and importers will use breaks to add to their forward coverage amid less than certain weather prospects for South American crops due to the quickening arrival of La Nina. Brazilian and Argentine farmers are becoming increasingly worried about their acute drought.

AgResource also doubts that strong CBT rallies will be able to be sustained amid less robust Chinese demand (vs last year). There is talk this morning that China may have secured a modest amount of US corn (200-300,000 MTs) while they continue to peck away at US soybeans for October/November. No widespread Chinese buying is noted with end users cautious about running prices sharply higher and spurring the wrath of Chinse politicians. December corn will find selling on rallies to $5.90-6.00 and November soybeans above $14.00. One needs to be careful about chasing CBT rallies.

The Pro Farmer Crop Tour starts next week to confirm or deny the NASS yield estimates. Since the tour will spend considerable time in the E Midwest, we expect that yield reports will be high and offer the CBT some pause ahead of harvest. It’s the NASS September crop estimate that is the benchmark in terms of actual 2021 US corn/soybean yield ideas.

Finally, the FSA data argues that NASS could find an extra 500,000-1.0 Mil acres of planted corn in the October report when all the FSA program acre are tallied. US farmers likely seeded more corn that what NASS indicated in June.

Malaysian September palmoil futures closed 40 ringgits higher at 4,610 RM/MT. Paris September wheat is up a hefty €9.00 at €254.75/MT while Dalian Sept corn rallied $.06 to $10.28/Bu while September soymeal was unchanged at $553.25.

September Paris Wheat Daily Price Chart; New Contract Highs:

Monthly Paris Wheat Chart; Key Resistance at $260-280/MT; Look to Take Profits on Wheat on Further Rally

Russia set the export tax at $30.40/MT for wheat shipped August 18-24. The Russian fob wheat price has been rising, and the fall in the tax of $.60/MT makes little sense. Russian farmers are still not selling harvested wheat.

A demand bull market is ahead with increasing focus on South American weather. ARC maintains a view of CBT price corrections. Don’t chase rallies.

North American Weather Pattern Discussion: The GFS/EU weather models are back in good agreement. The path for tropical storm Fred is amazingly static with the storm to make landfall around Apalachicola Florida in the early hours of Monday. The storm is not forecast to reach hurricane status and is currently located over NE Cuba.

A generally dry Central US weather pattern will prevail for the next 6-7 days with ill-defined Plains and W Midwest rains in the 8-14 day period. Showers have pushed southward along a front which will produce rain from E Kansas into Virginia thru the weekend. Rain totals are estimated at .5-2.00” with locally heavier amounts. The Midwest and the N Plains stay dry into mid next week with showers in the 7-10 day period. The rain is desperately needed in the N Plains.

Heat will persist across the Plains and the W Midwest with high temps ranging from the upper 80’s to the lower 100’s for another 3-4 days with cooler temps thereafter. The E Midwest is warm with high temps ranging from the 80’s to the lower 90’s. A cooler 9-14 day forecast is offered for Aug 25-29th. Better rain is suggested in the 10-15 day period but our confidence in these rains staying low.

Above Normal Temps Next 5-7 Days with Cooling Trend Noted for last week of August:

Net Change in EU Model Rainfall vs 12 Hours Ago:

EU Model 10 Day Rainfall Forecast; Rain Chances Improve for the N and C Plains Next Week:

GFS 10 Day Rainfall Forecast; Similar to the EU model:

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