8/5/21

Morning Commentary 8/5/21

CBT Grains Rise on World Market Supplies/Argentine Strike; Central US Weather offers Rain for Lake States/Iowa; Markit Crop Estimates Today

6:30 CT CBT Prices: Nov soybeans are down 7.75 cents at $13.18, Dec corn is up 2.00 cents at $5.4875 with Sept Chi wheat up 5.00 cents a $7.2225.

AgResource Morning Grain/Soy Comment & AnalysisGood Morning! CBT futures are mixed in thin overnight volume. Corn and wheat have been the bullish leaders on their global supply focus while soybeans decline on the prospect for rain across the Lake States including Iowa. The volume of overnight CBT trade is dismal as traders await the August USDA crop report next Thursday.

Fresh world wheat demand with Turkey purchasing 325,000 MTs & Jordan holding a tender for 120,000 MTs and South Korea 135,000 MTs has boosted world wheat prices. Iran is said to be back in the market with this week’s export trade volumes rising. Any modest fall in the world wheat values entices new demand.

AgResource notes that non-US corn fob offers are also rising as Brazil’s Grain Export Association Anec forecast that Brazil will ship out just 17 MMTs of corn in 21/22, down 18 MMTs from last year, and down 11 MMTs below the July WASDE Brazilian corn export forecast. The Anec Brazilian corn export forecast is not a net trade total with Brazil to import an estimated 3.5-4.0 MMTs from Argentina. WASDE in the April forecast that Brazil would export 39.0 MMTs of corn, with the August Anec estimate being 22 MMTs lower or a huge 865 Mil Bu.

AgResource does not normally touch on the numerous Argentine trucker strikes. Argentine truckers are always seeking more pay or to be vaccinated against Covid. However, due to the Parana River being at a 77 year low in water volume, Argentine truckers have discovered a new “choke-point” for the grain industry and the government – Bahia Blanca - the downriver terminal that tops off vessels before departing across the Atlantic.

The truckers strike started Friday at the Bahia Blanca terminal which is said to have run out of stored corn/soybean inventory this morning. This means that ocean vessels that have loaded at 50-60% of capacify in Rosario can no longer top off at a cost that exceeds $1.40/Bu to head out into the Atlantic. This is bringing the Argentine corn export program to a halt with ships cueing up in the shallow waters of the lower Parana. The biggest impact will be on Argentine corn with traders closely monitoring the situation.

Russian interior wheat prices rose to record 16,000 rubles with one of the largest pig producing entities in Tambov, Russia paying 13,500/MT for Russian feed wheat as corn supplies dwindle. Russia’s new corn and sunflower crops are damaged by extreme heat/dryness. Short bought Russian exporters and feed producers are in a panic as the Russian farmers holds fast to supply, and crop estimates decline. The floating tax rate rises as Russian grain prices gain!

September Malaysian palmoil futures rallied fell 87 ringgits to 4,397 RM/MT. Paris Sept wheat futures are up €3.00/MT at €227.25. China’s Dalian Sept corn rallied $.075 to $10.28/Bu while Dalian Sept meal lost $1.50/MT to $548.90/MT.

World grain/soy prices are rising sharply with the US an island of supply with its values in retreat due to weather traders. At some point, CBT values reflect world grain shortages and large US demand. Use CBT breaks for purchases.  The CBT cannot decline into a world exporter shortage of grain. Markit (old Informa Group is rumored to be offering their US corn/soybean yield estimates today.

North American Weather Pattern Discussion: The forecast models agree, a below normal rainfall and above normal temperature pattern will grip the Plains and S Midwest while the Lake States including Iowa have several rain chances with totals of .25-1.25” in the next 10 days. The GFS/EU models are drier than the noon runs of yesterday, but still have needed rainfall for N Iowa/N Illinois.

The attached 10-day rainfall forecast is from the GFS model. Lite showers are possible each day across the Lake States thru the weekend. Accumulations reach .25-1.25” with locally heavier amounts. Wisconsin and N Illinois will be the favored areas to see rain totals of .5-2.00”. The Southern Midwest and the Plains will be short changed.

A warming trend starts today with high temps reaching the upper 80’s to the lower 100’s. This is a warm to hot 10-12 day period of weather with the toastiest  temps being across the Plains and the Upper Midwest. Crop maturity will be pushed to the detriment of yield.

The 11-15 day forecast features the same weather trends – above normal temperatures and below normal rainfall with the driest area being the Plains and the NW Midwest. High temps will hold in the mid 80’s to the lower 100’s.

Warm to hot Temperatures Forecast for the next 2 Weeks Across Plains/W Midwest:

Rainfall Difference from Yesterday's Midday Forecast: Drier Southern Midwest

10 Day Rainfall Forecast for the Central US; Good Rains for WI/N IL:

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