AgResource Daily Farm Marketing Advice for Tuesday: 1/ Corn Producers: Sell the first 15% of estimated 2019 corn production at $4.24 basis Dec 2019 corn futures. This is our 1st sale of 2019 corn crop.
6:30 AM CDT CBOT Prices: Nov soybeans are up 15.0 cents at $10.125, Dec corn is up 11.5 cents at $3.995 with Sept Chi wheat up 9.75 cents at $5.1525.
Good Morning! Markets are sharply higher this AM, in fairly active volume, as weather excitement returns and as US crop conditions erode. Corn, soybean and spring wheat crops across the Plains – and now W Midwest – are laboring under severe drought conditions, and recall normally condition ratings erode seasonally through the end of summer. Our work suggests that NASS will lower US corn and soybean yields some 2-4% in its August report unless this trend is reversed – which appears unlikely given current 10-day forecasts.
The GFS model this morning is in better agreement with its EU counterpart, and so is much drier across the Midwest in the 6-10 day period. The forecast is also warmer and drier across the whole of IA through the weekend, as meaningful precip in the short term has been shifted a bit northward into E SD, MN and WI. Should the AM forecasts verify, very little rain will fall across IA and IL through the next 10 days. As of Sunday, corn was 63% silking in IL and 39% silking in IA. A critical time lies ahead.
High temps in the 90s will progress eastwards into late week, and by Wed/Thurs will be widespread across MO & IA. And there’s no sign that heat abates across KS, NE and the Dakotas in the next two weeks. ARC has mentioned that as soil moisture is drawn down, there are better that odds that heat is sustained and a major rain event is needed to alter this trend by early/mid-August.
Note also that a similar pattern is offered to the Canadian Prairies, very little rain is forecast across the Australian wheat belt, and 30-day precip in Northern China rests at 30-60% of normal.
Otherwise, outside markets are also a bit supportive. The US dollar is trading sharply yet again, and has found new 10-month lows this morning. Currencies in Brazil, Russia, Australia and Canada are a bit higher, which on the margin will slow producer sales there. AgResource Brasil indicates corn farmers especially are willing to hold corn surpluses until late year, and investment into storage capacity has been noticeable.
Spot crude is up $.50/barrel at $46.50. EU milling wheat is up €1.50-1.75/MT. Malaysian palm oil futures overnight fell 25 ringgits.
Market-moving data in the next few weeks will be limited crop ratings and export sales, which will be competing for market direction – export sales will be at best rather ho-hum, further declines in crop conditions moving forward will be important as the begin to correlate much more strongly with actual yields. Funds are net long corn, soy and wheat futures, but they’ve been much longer before. Our work maintains that until crop size is better known – via the Aug/Sep reports – downside risk is limited. Await a test of recent highs to extend cash sales.
