Morning Commentary 9/17/21

CBT Futures Ease Ahead of Season's 1st Big Midwest Weekend Harvest; Dalian Soymeal Futures Score Multi Month High; Dry Plains Forecast

6:30 CT CBT Prices: Nov soybeans are down 9.25 cents at $12.8675, Dec corn is down 1.50 cents at $5.28 with December Chi wheat unchanged at $7.13.

AgResource Morning Grain/Soy Comment & Analysis: Good Morning! Thursday’s correction and a pending active harvest weekend pressured CBT corn/soy futures overnight with wheat values more mixed. The volume of trade has been slow.

CBT open interest fell 4,243 contracts in Chi wheat, 6,314 contracts in corn and 1,249 contracts in soybeans. Thursday’s decline was more about long liquidation then the bears placing new short market bets.

US and European equity markets are little changed as investors are cautious heading into the end of the 3rd quarter with September a historically notorious difficult month for the bulls. The US and world economic outlooks are bright, but additional economic stimulus is needed in China to ignite new bullish inflationary concern. The US dollar and crude oil futures are slightly lower while gold sags awaiting fresh economic direction.

Cash corn bids for spot delivery remain exceptionally strong but are expected to weaken amid the advancing harvest. Council Bluffs Iowa is paying $.65 over with Minneapolis $.50 over and Central IL $.10-.40 over. The competition for the early harvested corn is keen to refill the cash pipeline. Midwest farmers are becoming more active in corn harvest as seed moisture falls .5% each day.

AgResource forecasts that 8-9% of the US corn crop will be harvested through Sunday with corn GD/EX condition ratings falling 1% while soybeans hold steady or decline 1%. The exceptionally dry/warm September weather has pushed crop maturity with considerable disease pressure causing crops to prematurely die. Early harvested corn yield data is especially disappointing for producers that did not apply fungicides this summer.   

In world ag futures trade overnight, Malaysian palmoil futures fell 73 ringgits to 4,367 RM/MT, while Paris December wheat futures were down €.50 at €248.25/MT. Dalian January corn fell $.03 to $9.64/Bu while December soymeal rallied by $8.30/MT to $578.70 – a new multi month high. Chinese hog producers have been active in covering forward soymeal needs over the past 2 days.

November Palmoil Futures Holding in Bullish Pennant Formation: 

Argentine farmers are starting to plant corn with a record crop being their hope. However, due to the ongoing developing La Nina, the IRI International  Weather Service places high odds in a developing drought for N Argentina and  S Brazil. With world exporter corn stock/use ratios at record lows, the world cannot afford the loss of any 2022 Argentine corn production.

Fresh news is lacking. For the week, Dec corn is up 11 cents, Nov soybeans is about unchanged with Dec wheat up 14 cents. The grains have outperformed soybeans on tightening exportable world wheat stocks and disappointing early Midwest corn yield data. China is active booking US soybeans for November/ December with Gulf/PNW elevations nearly sold out for October. End users have limited forward coverage and were hoping for a harvest break. Fridays are trend days and with an active Midwest harvest weekend ahead, early selling is expected. However, a steady/higher close would signify a trend change.

North American Weather Pattern Discussion: The primary US weather models agree and our confidence in the forecast stays high. The forecast models have been doing a fine job in their handling of the North American weather pattern.

The big change in the forecast is the ongoing arid weather conditions for the Plains over the next 2 weeks. There is a storm is positioned over Nebraska morning, but otherwise, the outlook holds limited rainfall for the entire Plains looking forward into October. The pure lack of rain will cause a struggle for winter wheat seeding/germination, while pushing ahead the harvest.

The Central US will hold in a warm/dry weather trend with summerlike high temperatures in the upper 70’s to the mid-90’s for another 5 days. There will be cooling back to near to below normal in the 6-10 day period for the Eastern US before the Western US Ridge rebuilds. Amid a strengthening La Nina, the Western US looks to hold in an arid weather trend well into October. The attached 10-day rain graphic is from the EU model. Notice the broad drying across the Plains and most of the SW Midwest.

The Atlantic tropics will be active with tropical storm systems to target the US East Coast in the next several weeks.

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