Grain Comments: 07.19.24

Good morning. Happy Friday. Prices are in the green across the CBOT to start the last day of the week. While corn futures have so far held Monday’s lows this week, they’ve been unable to rally very far away from either. The market has priced in a fair amount of the bearish information surrounding the potentially large US crop, with further short-term downside risk probably limited until these assumptions are either confirmed or denied. If confirmed, especially on the soybean side, record yields combined with record low export demand likely leads to a further drop in flat price. Corn futures are 1-2 cents higher this morning, soybean futures are up 2-7 cents, and the Chicago wheat market is up 6-9 cents. Products are higher, soybean meal is up $1-2/ton, and soybean oil is up 60-70 points. Outside markets are mixed/lower, crude oil futures are down 20-30 cents/bbl, the Dow Jones index is down 60 points, and the US$ index is up 15 points. On the lows today, the Dow was nearly 800 points off yesterday’s all-time highs. The S&P500 is unchanged, and the NASDAQ is up 20 points.

Today’s Reports: July Cattle on Feed; CFTC Commitment of Traders

• New data to the marketplace will be mostly limited to after the close on Friday, as both the cattle on feed report for July, as well as the weekly CFTC commitment of traders report, will be released after 2pm central time this afternoon.

• The weekly crop report form the Buenos Aires Grain Exchange showed corn harvest in Argentina had reached 79.2% complete, up from 70.2% complete last week. Production was held steady at 46.5 mmt’s.

• Report also showed winter wheat planting in Argentina had reached 95% complete, compared with 92.9% complete last week. The exchange still sees planted area at 6.3 mil hectares.

• The International Grains Council (IGC) estimates world grain stocks at the end of the 2024/25 season at 586 mil tons, up from their June estimate of 582 mil tons. The figure would still be a 10-year low.

• According to French ag consultancy FranceAgriMer, just 14% of the French soft wheat crop had been harvested as of July 15th. This is the slowest pace since 2021. The group notes excessive rainfall this year slowed both planting and harvesting, which has caused the delays.

• A German farmers association said they expect total grain harvest in the country this year to come in well below 42 mil tons, also citing persistent and excessive rainfall across the growing regions.

• Brazil has announced it is suspending exports of chicken, eggs and other poultry-based products from the southern state of Rio Grande do Sul following an outbreak of Newcastle virus on a commercial farm. Brazil is the number one poultry exporter in the world.

• Barge shipments down the Mississippi River in the week ending July 13th were seen at just 278k tons, down 36.7% from the previous week. Corn shipments were down 29% at 179k tons, and soybean shipments were down 53% at 69k tons.

• Locks on the upper Mississippi have been closed most of the month of July due to flooding, which has impacted barge movement. The USDA says shipping companies will have to scramble to catch up to the backlog of freight, while it could also take several weeks for river logistics to return to normal.

• Yesterday’s drought monitor update showed improvement over the past week, as the amount of corn area in D1-D4 drought dropped from 7% to 5%, and the amount of soybean area in D1-D4 drought dropped from 8% to 5%. Most noted improvement was seen across IL and IN.

• Friday morning saw a global computer systems failure, which effected a plethora of industries including airlines, banking, and the London Stock Exchange. A widely used cybersecurity program (CrowdStrike) crashed and Microsoft separately reported problems with its cloud services.

• A mostly quiet day was had weather-wise on Thursday, with again just the South and the Southeast receiving rainfall. Heaviest totals of 2-3″ were seen in eastern Texas/Louisiana, as well as North Carolina.

• Models continue to be in good agreement on the coming forecast; weekend rains will be mostly limited to the western Corn Belt, where both the EU and the GFS models see 0.5-2.5″ for areas of NE/IA/MN/SD through Monday morning.

• The pattern then looks to continue into next week, with just scattered showers seen for the majority of the Corn Belt. The South/Southeast continue in a wetter bias, while the northwestern corner of country stays mostly dry.

• Forecasts for week-two are fluctuating, and have diverged further this morning; the EU stays with the recent pattern of wet in the Southeast, while the GFS has been trending drier in the Southeast, and wetter in the central part of the country. The CPC (climate prediction center) is in agreement with the EU model.

Temps continue to be below average for most of the eastern half of the country, while the West stays hot into the end of next week. Longer range models are starting to see a chance at cooler air coming into the Northwest into the first week of August, but confidence this far out is low