Morning Commentary 9/2/21

CBT Nears Bottom as Market Discounts Gulf Nearby Export Losses; Hope that September Sales Will be Pushed Forward; Wheat Demand Strong

6:30 CT CBT Prices: Nov soybeans are down 1.75 cents at $12.76, Dec corn is down 2.25 cents at $5.2025 with December Chi wheat unchanged at $7.1425.

AgResource Morning Grain/Soy Comment & Analysis: Good Morning! Gulf export concern continues to pressure CBT values with Reuters reporting that Gulf exports of US grain may be stalled for weeks as power is only slowly restored and the Mississippi River needs to be cleared of grounded barges and vessels from the wrath of Hurricane Ida. CBT futures have been in decline for the past 3 days as damage assessments reflected the pure force and impact of Ida.

Cargill is reporting damage to its Westwego facility which is on top if structural damage they reported to their Reserve facility. Bunge is still assessing their facilities for structural damage.  In 2005, Hurricane Katrina also produced considerable damage that required several weeks to have US Gulf grain export business restarted.

AgResource is hopeful that US grain will start to flow from the Gulf in several weeks as power is restored and river cleanup operations are completed. US grain export demand will be pushed backwards in time, not canceled as importers seek to execute sales contracts. Some exporters like CHS are diverting their cargoes to other facilities like the PNW. Yet, the coming weekly US export inspections and sales data will show the impact of Ida with FOB/CIF offers unavailable from the Gulf in recent days.

However, AgResource sees no reason to alter our 2021/22 US corn/soybean or wheat export estimates due to the Ida. The loss of exports for the next few weeks will be fulfilled at other ports and completed over time. The 2021/22 crop year for US corn/soy is just starting. As damage assessments are completed, Gulf exporters will return with FOB/CIF offers.  AgResource’s view is that the recent pounding of the CBT is reaching near a bottom. Crops that are less impacted by the Gulf Ida damage (exports) are wheat/soyoil. Watch both for signs of a bottom in each in the coming days.

Malaysian November palmoil futures rose 66 ringgits at 4,243 RM/MT on end user demand. Paris December wheat is down €.50 at €242.25/MT. Dalian January corn rose $.04 to $9.79/Bu while September soymeal fell $1.50/MT to $560.55.

World wheat demand is robust with Turkey tendering, Iran is said to be considering a follow up tender and Russia likely to raise its export tax by $5/MT/week. Rumors abound that the Russian Gov’t may further slow their wheat export pace due to record high interior wheat/flour prices.

US Gulf exporters endured Ida’s body blow and CBT futures fell as facilities were damaged. Yet, a global grain shortage looks to rally values into 2022. A longer term bottom should be close at hand in CBT and US cash grain markets.

North American Weather Pattern Discussion: The primary US weather models agree and our confidence in the forecast is high.

Heavy rainfall associated with the remains of Ida produced widespread flooding across the NE US including New York City which called for an emergency amid the widespread flooding. Ida’s remains will exit the US later this morning and head out into the Atlantic.

A progressive weather pattern is indicated for the US with a high pressure Ridge to hold across the Western US for a few days before pushing eastward and expanding into the Central US. This will produce an above normal Plains and Western US temperature pattern with more limited rainfall chances. 

The 10-day rainfall map is from the GFS model which offers diminished rainfall for the Central US into mid-September. A storm system is pushing across the Plains which will dissipate later today. The Midwest will hold in a mostly dry weather flow.

There is no evidence of any frost risk for Central US crops into September 15th, with the S Midwest corn/soybean harvest to get underway in a few weeks. The warm/ dry flow will push crop maturity, while enough rain falls for wheat seed germination.

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