8/25/21

Morning Commentary 8/25/21

CBT Weaker on Spotty Showers Across Iowa/N Illinois and N Indiana on Correction of Tuesday's Rally; Stats Canada Report Key on Monday

6:30 CT CBT Prices: Nov soybeans are down 4.25 cents at $13.2775, Dec corn is down 2.25 cents at $5.4325, with December Chi wheat down 7.75 cents at $7.245.

AgResource Morning Grain/Soy Comment & Analysis: Good Morning! CBT futures are mixed to slightly lower following Tuesday’s strong rally. Lite to moderate rain fell across N Illinois with the radar showing showers across Southern Iowa this morning. The rain has produced modest pressure on the CBT.

It is late August, but weather still matters with E Midwest soil moisture in fast retreat. Producers claim that a meaningful finishing rain is needed across the E Midwest with crop maturity pushed by excessive heat. Highs in the upper 80’s to the mid 90’s were evident on Monday for the E Midwest.

Central US producers report that by mid-September, the 2021 US Central US row crop harvest will be starting. Corn cutting is underway in the Gulf States with yields reported to be below last year and their 5-year averages.

Preliminary CBT open interest on Tuesday fell 3,106 contracts in corn, 2,060 contracts in soybeans, and 1,374 contracts in wheat. Short covering was the feature of the CBT summer row crop rally.

Germany’s wheat crop was estimated by their government at 21.37 MMTs, a decline of 3.6% from last year due to adverse weather. A cold spring followed by a hot/dry summer and too much rain during harvest pulled wheat yields down.

As ARC Research reported last week, India will allow the importation of 1.2 MMTs of GMO soymeal to aid their livestock sectors after feed prices have nearly tripled in the past year. Once the 1.2 MMTs of soymeal are taken, its expected that another tranche of 1.2-1.5 MMTs will be allowed. India looks to become a significant importer of soymeal with this year’s soybean crop reduced on less monsoonal rainfall and excessive heat.

Tuesday’s equatorial ocean data confirms that La Nina has quickly developed across the Pacific which could be problematic for 2022 Argentine and Southern Brazilian corn/soybean production. This is the 2nd consecutive year of La Nina which historically produces drought across N Argentina and Southern Brazil. The world demands large South American harvests if its to avoid acute shortfalls in exporter stocks. Initially, La Nina may delay needed rain to allow the soybean seeding campaign to start across Northern Brazil.

Malaysian November palmoil futures closed 61 ringgits higher at 4,364 RM/MT. Paris December wheat is down €2.75 at €243.75/MT. Dalian Sept corn gained $.04 to $10.19/Bu while September soymeal rose $6.20/MT to $561.35.

Other fresh news is lacking, but interest for world wheat stays elevated with any correction sparking new demand. And the Stats Canada wheat crop estimate will be closely watched on Monday. ARC looks for cut in the Canadian wheat crop to 21-22 MMTs amid their deepening drought.

AgResource Research has been forecasting a late August secondary seasonal bottom as US export demand starts to build ahead of the harvest. World stock/ use ratios of the major exporters of corn/wheat are at record lows with soybeans at a 24-year low. The interest in US corn/soy/wheat supplies is building.  This no place to become bearish. Stats Canada should cut their crop estimates on Monday due to their dire drought.

North American Weather Pattern Discussion: The primary US weather models are in  agreement which raises our confidence in the forecast.  The big change in the forecast is the landfall of the next tropical storm being shifted eastward from Texas into Louisiana. There are 3 potential tropical storm systems in the Atlantic and all could develop into tropical storms. The best bet is a system located north of South America and it’s reaching the Gulf this weekend. All three storm systems must be monitored.

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. The 10-day rainfall graphic is from the EU model. Additional  showers/storms will occur across MN/WI and IA yet this week with rains of .5-1.50”.

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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