AgResource Daily Farm Marketing Advice for Thursday: 1/ Corn Producers: Sell the first 25% of estimated 2019 corn production at $4.24 basis Dec 19 futures.
The CBOT continues to add weather premium based on disappointing rainfall for the Plains and the W Midwest amid this week’s extreme heat. The summer row crops (corn/soy) are the upside leaders as traders and producers ponder further yield reductions. ARC notes per prior research, we argue that the starting point to reduce US corn and soybean yield is 165 BPA on corn and 46.8 BPA in soybeans based on 12-17% conservative yield reductions in the N Plains. The drought in the Dakotas has been dire and it appears to be spreading south and east. This week’s drought monitor reflects this migration and the risk to US summer row crop yields. Unfortunately, the primary weather models maintain the same North American weather pattern with dryness to become more pronounced over the Plains/W Midwest.
The CBOT is taking a measured approach to adding weather premium to grain prices that should persist into the weekend.
US export sales for the week ending July 13th were; 24.6 Mil Bu of wheat, 18.4 Mil Bu of old crop corn, and 15.0 Mil Bu of old crop soybeans and 55.9 Mil Bu of new crop. We mention the large 2018/19 US soybean sales were related to last week’s signing of framed soybean sales contracts by Chinese crushers. The sales caused a catch up with the US sales pace of prior years.
For their respective crop years to date, the US has sold 346.1 Mil Bu of wheat (up 6 Mil Bu or 1%), 2,214 Mil Bu of corn (up 314 Mil Bu or 16.5%), and 2,218 Mil Bu of soybeans (up 309 Mil Bu or 14% from last year). There is a record large 247 Mil Bu of soybeans that look to be shipped yet in the 2016/17 crop year. The old crop US soybean shipping pace is likely to be robust, but at least 100 Mil Bu of these sales will be rolled forward to new crop. The point is that Chinese demand for world oilseeds remains stout!
NOAA long-lead forecasts released this AM call for generally above normal temperatures for much of the US with much above normal temps painted in for the N Plains for August. Any above normal rains are placed in the SW US with near normal rains elsewhere. The warmth should continue to push crop maturity.
The warmth is maintained into September which argues for an extended growing season for Central US crops with tropical activity to produce above normal rains across the TX/LA/AR. An active monsoonal flow persists in the SW US with equal chances for normal rainfall across the remainder of the US. The drought in the N Plains is forecast to slowly push south and east.
CBOT brokers report that funds have bought 10,000 contracts of corn, 7,000 contracts of soybeans, while being flat in wheat. In soy products, funds have bought 3,100 soymeal and 900 contracts of soyoil. US farm selling of cash corn and soybeans has been far less today – than on recent rally efforts.
Midday GFS Weather Model Update: The GFS is slightly drier than the overnight run with just a few isolated showers for E IA for the next 7 days. The rest of the Plains, W Midwest and the W Delta are largely dry with seasonal warmth. Shower chances will be focused on; MN, IL, WI, MI and IN/OH. Rains here is estimated in range of .25-2.50”. The mean position of a high pressure Ridge retreats to the Intermountain West(Sunday) and slowly progresses eastward into July 28th. Heat rebuilds northward through the Midwest with highs ranging from the upper 80’s to the lower 100’s. By early August, the Ridge holds across the Central US with a strong jet stream flowing zonally across S Canada. There is no pattern change indicated on this run of the GFS.
AgResource Market Comment: Its too hot and too dry in the Plains and W Midwest. The market will not lay down until good rains fall across W IA. US corn/soy conditions will fall another 1-3% on Monday.
