Morning Commentary 8/26/21

Fresh News Lacking Causes CBT to Drift; US Weekly Export Sales and Monday's Stats Canada Crop Estimates in Focus; Hurricane in the Gulf

6:30 CT CBT Prices: Nov soybeans are down 4.00 cents at $13.2875, Dec corn is down 3.25 cents at $5.485, with December Chi wheat up 7.00 cents at $7.325.

AgResource Morning Grain/Soy Comment & Analysis: Good Morning! CBT values are mixed amid a lack of fresh news with row crop futures slightly lower while wheat is slightly higher. The market lacks fresh news and is seeking direction on US corn/soybean yields and future export potential. The USDA will release their weekly export sales report this morning.

Preliminary CBT open interest on Wednesday showed corn rising 169 contracts, while falling 2,197 contracts in soybeans, and 796 contracts in wheat. Short covering was the feature of the CBT summer row crop rally.

US and world financial markets are edging lower as Fed Chairman Powell prepares for his Jackson Hole speech on Friday. The key question will be whether Powell provides any more clues as to when the Central Bank will start to taper US bond purchases. Will it be late in 2022 or sometime in 2023?

The US dollar firmed on the speculation of the Fed’s tapering while crude oil corrected its 3-day rally. Given the ongoing uncertainty surrounding Covid heading into the cooler season, ARC expects that Chairman Powell will be vague on the timing on the start of tapering. Traders will be watching for news on Friday to kickstart new financial market trends.

South Korea booked 135,000 MTs of optional corn with the US included as a source. This was the 1st time in months that US corn could again be flowing to South Korea which confirmed the US’s newfound competitiveness.

Belarus has banned grain exports for 6 months following a weather reduced harvest of only 6.2 MMTs. The ban applies to wheat, rye, corn, and other small grains. Belarus is a small world grain exporter during times of surplus.

Malaysian November palmoil futures closed 28 ringgits higher at 4,392 RM/MT. Paris December wheat is up €2.00 at €246.00/MT. Dalian Sept corn gained $.01 to $10.20/Bu while September soymeal fell $1.20/MT to $560.15.

Other fresh news is lacking, but interest for world wheat stays elevated. And the Stats Canada wheat crop estimates will be closely watched on Monday following their dire summer drought.

It is always US ear/pod weights that are a big determinate to yield and that data won’t be known for a few more weeks as the S Midwest harvest starts. Midwest crops are quickly maturing according to producers with most commercial firms trimming their yield estimates due to the recent heat/dryness.

The one fundamental that is different than a year ago is the bull market in world wheat on tightening supplies. China continues to secure US soybeans on a near daily basis, just at levels below a year ago. ARC’s view stays bullish.

North American Weather Pattern Discussion: The primary US weather models agree which keeps our confidence high in the forecast.  A hurricane is expected to strike the Gulf Coast States of Louisiana/ Mississippi late Sunday or early Monday. One of the models has a major hurricane while others have it as a category 1 or 2. Either way, flooding rains and strong gusty winds will cause problems for unharvested crops along the Gulf Coast. Louisiana rainfall is estimated in a range of 4-10.00” with the path of heavy rain carving thru the Tennessee Valley before exiting the US via Virginia. This storm needs to be closely followed as there is a 90% chance of development by the weekend.

The attached 10 day rainfall forecast is from the EU model. A series of storm systems will ride a southward sliding jet stream across the Canadian Prairies, North Dakota, Minnesota, and Wisconsin.

Rain totals here will range from 1-3.00” and add to soybean seed size across the Lake States. Some of that moisture leaks into N Illinois and N Indiana.

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 5-6 days.

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