Morning Commentary 8/30/21

CBT Futures Mixed with Corn/Soy Weaker and Wheat Firmer; Statistics Canada is Out at 7:30 AM CT while GASC Seeking World Wheat

6:30 CT CBT Prices: Nov soybeans are down 2.00 cents at $13.2125, Dec corn is down 3.50 cents at $5.5025, with December Chi wheat up 5.50 cents at $7.38.

AgResource Morning Grain/Soy Comment & Analysis: Good Morning! CBT futures were higher in early overnight trade, but long liquidation of September futures ahead of 1st notice day on Tuesday pulled corn/soybeans lower. CBT values are currently mixed.

CBT open interest fell sharply ahead of 1st notice day with September option expiration being last Friday. Chicago wheat open interest was down 13,828 contracts, corn was off 31,309 contracts and soybean open interest was down 8,083 contracts. There were 15,893 contracts of September open interest left in Chicago wheat, 47,367 contracts left in September corn, and 10,367 contracts left in September soybeans. The overnight CBT break is largely due to September long liquidation which tugged new crop futures lower in tow.

Cash markets are carrying strong premiums for spot corn/soybean delivery of old crop before the onset of the new crop Midwest harvest. Gulf/Delta harvesting have been halted due to flooding produced by Ida. Domestic end users are surprised by their difficulty in finding old crop corn and soybeans at the tail end of summer. End users exclaim that cash feels tighter than the 1.1 Bil of corn and 160 Mil Bu of soybeans that are forecast by WASDE. This is something to remember heading ahead of the late September Stocks report.

Statistics Canada will be out with their August Crop estimates at 7:30 AM CT.  Traders expect the report to show a Canadian wheat crop of 22.6 MMTs, canola crop of 14.1 MMTs, and oat crop of 3.0 MMTs. The Statistics Canada August crop estimates are based on satellite imagery, not harvest data. Additional crop adjustments will be forthcoming. Most important will be Canadian wheat and canola crop sizes. However, with December Chi oats trading at just a 23 cent discount to December corn, the oat estimate will be of interest. ARC sees Canada taking record amounts of US corn in the 2021/22 crop year at 5-6 MMTs (196-235 Mil Bu) amid a dire shortage of feed/forage.

Egypt’s GASC is seeking world wheat for the last half of October shipment. The lowest offer was for Ukraine wheat at $304.25/MT. There were only 8 offers with Romanian wheat offered some $4/MT higher at $308.50 while Russian/French offers were higher in a range of $315-317.90. Egypt last secured world wheat several weeks ago at $294.99/MT.

Malaysian November palmoil futures closed 79 ringgits lower at 4,254 RM/MT. Paris December wheat is up €1.75 at €248.50/MT. Dalian January corn lost $.015 to $9.79/Bu while September soymeal rallied $5.10/MT to $561.85.

ARC looks for US corn and soybean crop condition ratings to hold steady or decline 1% in the GD/EX category today. The rain across the W Midwest will stabilize crops but falls in conditions are expected across the E Midwest.

A seasonal CBOT low being formed. Ahead of the start of harvest its unlikely that a strong rally can unfold until a disappointing yield trend is confirmed. Likewise, CBT breaks will uncover end user pricing amid US corn/soy being the cheapest in the world. ARC sees a demand led rally starting beyond September.

North American Weather Pattern Discussion: The primary US weather models agree on the 5-7 day forecast, but there are differences thereafter. Our forecast lean is to the EU model which offers a progressive weather pattern with a favorable mixture of rain/sunshine for the first half of September. Any extreme heat will be positioned over the Western US.

Ida has been downgraded to a tropical storm as it will churn northeast from SC Mississippi into Maine thru the next 5 days. Along its path heavy rains will drop with totals of 2-5.00” which could spark localized flooding. Areas of the US Plains/Midwest that are not in the path of Ida will be dry with any heat staying positioned across the S Plains. The heat will break across the Midwest with high temperatures returning to mid-70’s to the mid 80’s which is seasonal for this time of year. Rain chances return for the N Plains and the Midwest next weekend with rainfall totals of .4-1.50”. Wisconsin/Michigan will be dry as a front sags south across the Plains and the W Midwest. The extended range forecast offers a zonal flow with near to above normal rainfall and near normal temperatures. There is no evidence of a frost threat into September 12th.

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