Morning Commentary 8/24/21

CBT Futures Recover as the NASS Weekly Crop Conditions Restart Debate on 2021 US Corn/Soy Yields; Limited 10 Day Rains for E Midwest

6:30 CT CBT Prices: Nov soybeans are up 11.75 cents at $13.045, Dec corn is up 2.50 cents at $5.38 with December hi wheat down 6.75 cents at $7.2675.

AgResource Morning Grain/Soy Comment & AnalysisGood Morning! CBT futures are mixed with corn/soybean futures higher on sliding US crop condition ratings (and yield potential) while wheat values correct and follow Paris futures lower. ARC looks for a two-sided trading session, with a mostly firmer close.

Preliminary CBT open interest showed a 2600 contract fall in corn, an 851 contract decline in soybeans, and a 2,651 contract drop in Chicago wheat on Monday. The decline suggests ongoing net long speculative liquidation.

The NASS Weekly Crop Condition and Progress report showed a 2% decline in US corn GD/EX ratings to 60% and a 1% drop in soybeans to 56%. The condition declines were worst than trade expectations with the biggest drops in the E Midwest where record yields were supposed to offset the drought losses of the west.  16% of the US soybean and 14% of the US corn crops were rated poor or very poor which is well above last year and the 5-year average. No condition ratings were offered on spring wheat with 23% of the crop left to harvest.

9% of the N Dakota soybean crop is dropping leaves, 14% of S Dakota and 3% of Minnesota which argues that the coming rain will not produce much yield benefit. Crop maturity has been pushed by extreme heat and acute dryness.

The weekly NASS report showed an ongoing fall of soil moisture across the E Midwest following weeks of limited rain. The lack of rain is taking the top end off record E Midwest corn/soybean yields. Nearly 50% of the Illinois soil moisture is short or very short which historically has shown that in mid-August, its difficult to produce record corn/soy yields. Its rain for the E Midwest corn/soy crops that is now important as crops rush to maturity. Indiana crop conditions will fall next week without rain this week.

 Traders are discussing the potential whether the 2021 US corn yield could slide below last year’s 172 BPA and whether the soybean yield will surpass last year’s 50.2 BPA amid crop ratings will be far lower at the end of August. The US soybean condition rating is the worst in 7 years - even below 2019!

ARC Research expects varied harvest yield reports with farmers telling us that they will be patient sellers following last year’s marketing mistake. US farmers sold too much crop at harvest last year as soybeans reached $10.00.

Malaysian November palmoil futures closed 16 ringgits lower at 4,300 RM/MT. Paris December wheat is down €2.75 at €243.75/MT. Dalian Sept corn gained $.08 to $10.15/Bu while September soymeal rose $2.40/MT to $555.15.

It has been extremely hot/dry across W Russian grain areas and their corn/sunseed crops are in sharp decline. And as important, farmers are fretting about the lack of soil moisture to start planting winter wheat in mid-September. Russian wheat and flour prices are at record highs this AM.

It’s the home stretch in the ‘21 US growing season with weather becoming less important in September. A secondary CBT seasonal price low is due by the end of August. US and world crop potentials are in decline amid adverse weather.

North American Weather Pattern Discussion: The primary US weather models are in good agreement which raises our confidence in the forecast.

 A southward sliding jet stream and diminished blocking across W Canada and the PNw will produce a series of storm systems across the Canadian Prairies, North Dakota, Minnesota, and Wisconsin. The rains come too late to aid crops in Canada, but they could add to soybean seed size across the Lake States.

Limited rainfall is offered for Illinois, Kansas, Indiana, and Ohio as soil moisture is in fast retreat. Nearly 50% of the soil moisture in IL short or very short while Indiana crop conditions will decline next week without a meaningful rain. The dryness is taking the top end off record yield potential.

Central Indiana crops are starting to be drought stressed with less than 15% of normal rainfall for the past 40 days.

The 10-day rainfall graphic is from the EU model. Additional episodes of showers/storms will occur across North Dakota, Minnesota, and Wisconsin this week with rain totals of 1-3.00”.

Near to above normal temperatures will  push US corn/soybean crop maturity with highs ranging from the mid 80’s to the lower 90’s for the next 5-7 days.

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