Morning Commentary 9/7/21

CBT Recovers on Strong Chinese Trade Data, Hope that Several US Gulf Exporters Get Back Business this Week; Near Record Aussie Wheat Crop

6:30 CT CBT Prices: Nov soybeans are up 7.75 cents at $12.9975, Dec corn is up .50 of a cent at $5.245 with December Chi wheat up 2.50 cents at $7.2875.

AgResource Morning Grain/Soy Comment & Analysis: Good Morning! CBT futures were mostly firmer overnight in lite volume following a 3-day US holiday weekend. Rumored Chinese pricing of CBT soybean futures as FOB/CIF bids are unavailable at the Gulf underpinned the complex while wheat/corn followed.

Trade volume was restricted as participants await fresh news on the return of US Gulf export capacity while the highly important USDA September crop report looms on Friday. It is a key week for the CBT markets.

The US Mississippi River channel was cleared for export over the holiday weekend, but several US exporters are awaiting electricity for the final determination of equipment status to resume loading. It is hoped that electrical power can be restored this week. But weekly US export sales and inspection data are going to be woefully low on Ida’s shut down of the Gulf for at least several weeks. The only good news is that history shows that export demand is pushed backwards in time, normally not canceled as importers await their supply. It is hoped that Gulf FOB/CIF offers will return this week. Yet, Cargill Reserve will require months to come back online with its loadout capacity shifted to others due to structural damage.

ABARES lifted their 2021 Australian wheat production forecast by 17% to a near record 32.6 MMTs, just behind the record set last year at 33.3 MMTs based on favorable rains in July/August. Australia is the world’s 4th largest wheat exporter, but September/October rainfall will determine the final size of the crop. Unfortunately, the coming forecast is arid with rising temperatures. Better rain will be required in late Sept/October during wheat reproduction.

China reported record exports in August with a trade surplus of $58.35 Bil. China’s August exports surpassed last year by 23.1% with imports up 33.1%. The results argue for a stronger Chinese economic outlook.

China imported 9.49 MMTs of all origin soybeans, just below last year’s record at 9.60 MMTs. For 2021, China has taken 67.1 MMTs of soybeans, up 2.6% from last year. China has imported 7.50 MMTs of vegoils in 2021, up 15% from last year. Yet, China August meat imports fell to 760,000 MTs, down 11.2%.

Russia’s statistical agency – Rosstat did not raise it’s all wheat seeding estimate as the ag minister claimed by 1 Mil HA and left it unchanged at 28 Mil hectares – the same as in July. Corn seedings fell slightly to under 3 Mil HA. Current yield data point to a Russian 2021 all wheat crop of 70.5-72 MMTs.

Malaysian November palmoil futures rose 61 ringgits at 4,392 RM/MT. Paris December wheat is down €.50 at €241.75/MT. Dalian January corn fell $.12 to $9.72/Bu while December soymeal rose $1.55/MT to $560.50.

September looks warm with below normal rainfall across the Plains/Midwest with just a few showers across the Lake States of WI/MI into September 15th. 

 The average September 2021 trade corn yield estimate is 175.8 and 50.4 BPA on soybeans. A choppy week is ahead as trader’s adjust risk for the USDA report.

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

A Ridge of high pressure holds across the West Central US which will block meaningful rainfall from reaching into the Plains, Delta, or the Midwest in the next 10 days. There will be a few showers during September 16-17th around the Lake States, but confidence in the rain this far out is low. Otherwise, this is a very warm/dry weather pattern will cause a further draw in soil moisture levels. The 10-day rainfall map is from the EU model.

There is no evidence of any frost risk for Central US crops into Sept 22nd, with the S Midwest corn/soybean harvest to get underway in a few weeks. The warm/dry flow will push crop maturity.

A disturbance in the Gulf of Mexico is not expected to develop into a tropical storm. The system will produce heavy rainfall for the AL/FL coastlines later this week. The recovery effort in NOLA is not expected to be impacted with dry weather forecast for the next week.

La Nina continues to develop in the equatorial Pacific which will maintain an arid weather pattern for the Western US heading into October.

10 Day EU Weather Model Rainfall Forecast: 

Much Above Normal Temps for Western half of the US into September 22nd:

Rainy Season Shows no Sign of Starting for N and NC Brazil: 

High Pressure Ridge Aloft Produces Warm to Hot Temperatures across NC Brazil:

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