Morning Commentary 8/17/21

CBT Bounces on NASS Corn/Soy Condition Fall; Pro Farmer Tour Finds Better Than Expected Yields in S Dakota; China Secures US Soy on Dips

6:30 CT CBT Prices: Nov soybeans are up 5.75 cents at $13.74, Dec corn is up 1.50 cents at $5.7025 with Sept Chi wheat down 8.00 cents at $7.525.

AgResource Morning Grain/Soy Comment & AnalysisGood Morning! The overnight CBT trading session has been mixed with corn/soybeans trading firmer while wheat futures sag on profit taking amid the concern that a short-term price peak has been scored in Black Sea values. Overnight trading volumes are modest which indicates that new speculative interest has not returned. ARC maintains that rallies and breaks will struggle short term, but that tightening cash supplies will produce a longer-term CBT bull market.

NASS indicated that US corn/soybean condition ratings fell last week with 57% (down 3%) of the US soybean and 62% (down 2%) of the US corn crop is rated GD/EX. The US spring wheat condition rating held steady at 11% GD/EX with 63% of the crop rated poor/very poor (up 2%).

 73% of the US corn crop is in dough with 22% in dent, while 81% of the US soybean crop is setting pods, and 58% of the US spring wheat harvest is completed. Warm/dry Central US weather is pushing row crop maturity.

The Pro Farmer Crop Tour found record corn yield potential in Ohio while South Dakota corn yield prospects were better than expected. The PF Ohio corn yield was a record 185 BPA, up 18 BPA from last year and the 3-year average.

The South Dakota state corn yield was calculated at 151.5 BPA, down 27.7 BPA from last year and down 19 BPA from the 3-year average. NASS had pegged the South Dakota corn yield at 133.0 BPA last week.

Ohio soybean pod counts were 1,195 pods in a 3 X 3’ square, which is up slightly from last year and the 3-year average of 1,055 pods. In South Dakota, the pod counts were 997 pods vs 1,251 in 2020 and a 3-year average of 1,036. The surprise was that South Dakota pod counts were better than expected relative to the drought. The NASS August South Dakota yield was 49.0 BPA compared to 50 BPA last year while Ohio was 58 BPA, 4 BPA more than 2020.

Global equity markets sank as Covid-19 cases rose for the 8 consecutive week with New Zealand locking down with its 1st positive case in months. China regulators continue to stamp down on its tech industry which pushed Asian equity markets to their lowest close of the year. The US dollar rallied on safe-haven demand as crude oil futures continued their decline on risk off.

Malaysian October palmoil futures closed 48 ringgits lower at 4,516 RM/MT. Paris September wheat is down €3.75 at €247.75/MT. Dalian Sept corn lost $.075 to $10.235/Bu while September soymeal gained $.25/MT to $565.25. China is said to have bought another 3-4 cargoes of US soybeans for October on Monday.

South Korea’s NOFI secured 138,000 MTs of South American corn overnight with shipment in early October. US fob corn is slowly becoming competitive.

Sharp CBT breaks will uncover end user pricing below $5.60 in December corn and $13.50 November soybeans. Importers and end users see no reason to chase rallies with the US soy/corn harvest ahead in September. China’s zero tolerance to Covid-19 at port is causing increasing levels of congestion.  Amid speculators and end users that are being cautious, rallies must be cash led by tightening supplies amid improving export demand. China is showing interest in securing US soybeans on CBT weakness.

North American Weather Pattern Discussion: The GFS/EU weather models agree which raises our confidence in the 10-day forecast.

Fred is located across Georgia and is heading north to far Western Tennessee with soaking rainfall. The storm then heads north to the NE US producing rain of .5-2.00” along its way. The Central US is dry with near to above normal temperatures across the Lake States. Highs range from the mid 80’s to the mid 90’s across the N & C Plains and into the N Midwest. The warmest period of the forecast is the next 2-3 days before cooler temperatures push southward from Canada. N Plains high temps decline to the 70’s to the lower 80’s, the coolest readings in weeks.

The 10-day rainfall graphic is from the GFS forecast model. Rainfall returns to the N Plains and the Midwest starting on the weekend. A slow-moving front pushes south and east from the Dakotas which includes rainfall for Minnesota/Iowa of .4-1.50” thru early next week. The system produces needed rain for IL\IN next week.

The extended 10-14 day forecast returns heat/dryness to the N Plains and the W Midwest with just a few lite showers into Sept 1st. A dry/warm finish of the N Plains and W Midwest growing season is forecast.

European Forecast Model with 10 Day Rainfall Outlay; Better Rains Coming for Upper Midwest and N Plains:

GFS Model Similar and the Forecast Models are back in Alignment: 

11-15 Day European Model Forecast Calls for Return of Western US Ridge and Drier Midwest Profile: 

2 Week Temperature Anomaly; Warmest Temps in the next 4-5 Days, then Much Cooler:

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