Morning Commentary 9/14/21

CBT Markets Higher Overnight; Canadian Yield Update Due This AM; Brazil Stays Dry

6:30 CT CBT Prices: Nov soybeans are up 4.25 cents at $12.89, Dec corn is up 2.00 cents at $5.1525 with December Chi wheat up 8.00 cents at $6.9825.

AgResource Morning Grain/Soy Comment & Analysis: Good Morning! Its Tuesday and CBT futures have turned around with corn, soybean and wheat futures posting overnight gains. Wheat has been the upside leader on a cut in the French wheat crop ahead of this morning’s Stats Canada crop production update for the end of August. Canadian wheat, canola and oat production is expected to decline to reflect the worsening of their drought during August.

Tropical Storm Nicholas has come ashore with gusts to 40 MPH and considerable rainfall. The storm is a slow mover who will lay day areas of 4-10” of rain and slow the restoration of electricity across portions of SE Louisiana. No additional structural damage is expected from Nicholas.

US and European stock markets are flat to slightly lower this morning as traders await August CPI – inflation data from the US. The data will have an impact on when the US Central Bank will start tapering its massive monthly bond purchase program. Ahead of the data, the US dollar is little changed while spot WTI crude oil futures reach $71.00, with gold down $4.50/oz at $1,790. ARC looks for the US CPI total to come in hot at 5.3-5.5% and for the coming 4th quarter of the year to produce greater interest in commodities.

US corn GD/EX ratings fell 1% to 58%, while soybeans held steady at 57%. 4% the US corn crop is harvested while 38% of the US soybean crop is dropping leaves. And 12% of the US winter wheat crop is planted. ARC looks for the US corn harvest to accelerate by the end of the week. Early corn yield data is disappointing, but its too early to decipher a trend. Producers report that corn stalk quality is exceptionally poor. CBT traders will closely follow combine yield reports in the weeks ahead.

The French Farm Ministry cut their wheat crop estimate to 36.06 MMTs, down nearly 700,000 MTs on the wet harvest weather. The smaller crop amid less than desired quality will further limit French milling wheat supplies. Modest upward adjustments were made to the French corn, barley and canola crops.

Malaysian November palmoil futures rallied 20 ringgits at 4,338 RM/MT. Paris December wheat is up €2.50 at €241.50/MT. Dalian January corn rose fell $.04 $9.72/Bu while December soymeal rallied by $3.10/MT to $567.80. Chinese crush margins are in the green which should produce ongoing US soybean purchases.

There is no indication that the rainy season is prepared to start across N and C Brazil over the next 2 weeks. The hot/dry weather will prevent early soybean seeding which will become a market worry in October.

The Australian weather forecast offers limited rainfall for key wheat areas into the end of September. South Australian soils are getting parched, and several private estimates of Aussie wheat production are starting to decline. 

Midwest harvested yield data and the coming September 30th Stocks report will drive CBT price direction. Stats Canada is out this morning with NOPA crush due Thursday. ARC’s view is that seasonal lows are being slowly carved out.

North American Weather Pattern Discussion: The primary US weather models agree and our confidence in the forecast is high. Nicholas came onshore late Monday as a strong tropical storm or a weak hurricane and has weakened over land.

Wind gusts are declining, but the storm’s slow forward movement will produce copious amounts of rain across SE Texas/Louisiana and S Mississippi with totals ranging from 3-10.00”. Flash flooding will be the result which will slow the restoration of NOLA infrastructure damaged by Ida.

The remainder of the Central US will hold in a warm/dry trend with summerlike high temperatures in the upper 70’s to the mid-90’s. The heat/dryness will push crop maturity. The attached 10-day rain graphic is from the GFS model. A Ridge of high pressure elongates and progresses east across the Central US producing much above normal temperatures. A few showers of .2-.8” will fall across Minnesota/Wisconsin on the weekend, but otherwise, rain totals will be limited. The Midwest harvest will become more active this weekend and next week as corn seed moisture falls to the upper teens to the lower 20%. The extended range forecast maintains a warm temperature pattern with limited rains for the Plains and W Midwest.

10-Day US Precip Forecast:

US Temps Stay in 80s, 90s This Week: 

10-Day South Am Precip Confined to far Southern Brazil:

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