Good morning.
Classic turn-around-Tuesday action so far to start the second trading day of the week, as the ag markets are mostly lower, and the equities are mostly higher. Yesterday likely saw some panic trading through the day, with lows made in stock index futures probably being downside benchmarks for the week. For corn and soybeans, markets remain mostly a product of weather, with yesterday afternoon’s crop progress update continuing to show record or near-record yield potential. But, as money flows shift, and funds begin to explore new ways to make profits, grain and soy markets are some of the most under-valued relative to other physical commodities; this leaves rally potential in the markets once the looming supply situation is digested. Corn futures this morning are 3-4 cents lower, soybean futures are 17-18 cents lower, and the Chicago wheat market is down 2-3 cents. Products are mixed, soybean meal is trading unchanged to a dollar/ton higher, and soybean oil is down around 120 points. Sep oil made new contract lows at 39.85 overnight. Outside markets are firm, crude oil futures are trading 10 cents/bbl higher, the Dow Jones index is up 250 points, and the US$ index is up 45 points. The S&P500 is up 50 points, and the NASDAQ is up 150 points.
Yesterday afternoon’s crop progress report showed as of Sunday, August 4th, 67% of the US corn crop was rated g/ex, while 68% of the soybean crop was rated g/ex. Corn conditions were down 1% from last week, while soybean conditions were up 1%.
At the state level, biggest weekly increases in corn were seen in North Dakota (+8%), Illinois (+5%), and Kentucky (+4%). North Carolina (+3%) and Tennessee (+2%) were the only other states with increases.
Biggest declines in corn ratings were seen in Pennsylvania (-26%) and Texas (-8%). Kansas, South Dakota and Michigan all saw 5% declines, while Nebraska was down 4% and Ohio was down just 2%. Wisconsin saw a 1% decline.
In soybeans, states with the biggest weekly increases in conditions were North Dakota (+10%), Mississippi (+4%), and Tennessee (+4%). Illinois and Minnesota were both up 3%, while Arkansas and Kentucky were both up 2%. Only a handful of states saw declines, with South Dakota (-4%) and Kansas (-3%) leading the way.
Corn silking reached 88%, up from 77% last week, and the amount of crop in the dough stage reached 46%, compared to 30% last week. The firs update for the amount of corn dented showed 7%, compared to the five-year average of 5%.
Soybean blooming reached 86%, up from 77% last week, and the amount of crop setting pods reached 59%, up from 44% last week. Both figures are slightly ahead of their respective five-year averages.
For wheat, winter wheat harvest has reached 88%, up from 82% last week, while spring harvest was seen at 6% complete, up 5% from last week. Spring wheat conditions were unchanged at 74% g/ex.
Brazil’s safrinha corn harvest has nearly completed according to several private groups in the country. Estimates range from the upper 80’s to low 90’s % complete, which generally compares to around 60% from the year prior.
Staying in Brazil, the USDA’s ag attaché in the country on Monday estimated the 2024/25 corn crop at 127 mmt’s, and estimated exports in the season at 46 mmt’s. The export figure is seen lower year/year due to increased demand for ethanol.
Ukrainian Ag firm UkrAgroConsult lowered their estimate of the country’s corn crop to 26 mmt’s, down 1.4 mmt’s from their previous estimate. The group also estimated exports could fall as much as 30% due to production losses caused by hot and dry weather.
Stock index futures are recovering this morning following Monday’s lashing; notably, Japan’s Nikkei index was up nearly 10% on Tuesday, after declining by more than 12% the day prior.
Investors are now asking the question if yesterday’s explosion was the end of the ‘carry-trade unwind’ that started last week, or if this is the beginning of a more drawn out financial down period. As the yen remains undervalued, traders are rather weary of the first option being the case.
The calls for an emergency rate cut by the US Federal Reserve had mostly subsided by Monday afternoon, though investors and economists still see a more than 50% chance at a 0.5 basis point cut in the September meeting. This will be one of the bigger financial stories over the next few weeks, and likely stays near the top of the headlines.
In the latest Middle East update, five US soldiers were injured in a missile attack on a military base in Iraq on Monday. As of this morning, it was unclear whether this attack was part of the retaliation advertised by Iran over the killing of the leader of Hamas; Iran blames the US for supporting Israel.
Weather forecasts are mostly unchanged for the rest of the week from yesterday’s runs for the Midwest. Areas in the northern Corn Belt picked up rains of 0.1-2″ in the last 24 hours, with some locally heavier amounts seen in parts of MN. Otherwise, moisture from tropical storm Debby impacted areas of FL/GA/SC, with totals seen anywhere from 0.5-10″.
Models continue to be in poor agreement on rainfall amounts for the rest of this week, with the EU being far wetter in the northern Plains than the GFS model. Both are in agreement on moisture from Debby impacting the east coast, and also on rains for the southern part of Ontario.
Heat continues to be pushed mostly into TX and OK over the next 48 hours, with triple digit highs confined mostly to these areas by Thursday. The rest of the Midwest sees more average to below average temps into the first part of next week.
Week-two forecasts from both models, as well as the CPC, have trended drier in the southeast, but wetter in the north/northwestern part of the country. This will need monitoring and will continue to fluctuate due to tropical storm activity in the Atlantic.
Have a great day.
Grain Comments: 08-06-2024
Good morning.
Classic turn-around-Tuesday action so far to start the second trading day of the week, as the ag markets are mostly lower, and the equities are mostly higher. Yesterday likely saw some panic trading through the day, with lows made in stock index futures probably being downside benchmarks for the week. For corn and soybeans, markets remain mostly a product of weather, with yesterday afternoon’s crop progress update continuing to show record or near-record yield potential. But, as money flows shift, and funds begin to explore new ways to make profits, grain and soy markets are some of the most under-valued relative to other physical commodities; this leaves rally potential in the markets once the looming supply situation is digested. Corn futures this morning are 3-4 cents lower, soybean futures are 17-18 cents lower, and the Chicago wheat market is down 2-3 cents. Products are mixed, soybean meal is trading unchanged to a dollar/ton higher, and soybean oil is down around 120 points. Sep oil made new contract lows at 39.85 overnight. Outside markets are firm, crude oil futures are trading 10 cents/bbl higher, the Dow Jones index is up 250 points, and the US$ index is up 45 points. The S&P500 is up 50 points, and the NASDAQ is up 150 points.
Yesterday afternoon’s crop progress report showed as of Sunday, August 4th, 67% of the US corn crop was rated g/ex, while 68% of the soybean crop was rated g/ex. Corn conditions were down 1% from last week, while soybean conditions were up 1%.
At the state level, biggest weekly increases in corn were seen in North Dakota (+8%), Illinois (+5%), and Kentucky (+4%). North Carolina (+3%) and Tennessee (+2%) were the only other states with increases.
Biggest declines in corn ratings were seen in Pennsylvania (-26%) and Texas (-8%). Kansas, South Dakota and Michigan all saw 5% declines, while Nebraska was down 4% and Ohio was down just 2%. Wisconsin saw a 1% decline.
In soybeans, states with the biggest weekly increases in conditions were North Dakota (+10%), Mississippi (+4%), and Tennessee (+4%). Illinois and Minnesota were both up 3%, while Arkansas and Kentucky were both up 2%. Only a handful of states saw declines, with South Dakota (-4%) and Kansas (-3%) leading the way.
Corn silking reached 88%, up from 77% last week, and the amount of crop in the dough stage reached 46%, compared to 30% last week. The firs update for the amount of corn dented showed 7%, compared to the five-year average of 5%.
Soybean blooming reached 86%, up from 77% last week, and the amount of crop setting pods reached 59%, up from 44% last week. Both figures are slightly ahead of their respective five-year averages.
For wheat, winter wheat harvest has reached 88%, up from 82% last week, while spring harvest was seen at 6% complete, up 5% from last week. Spring wheat conditions were unchanged at 74% g/ex.
Brazil’s safrinha corn harvest has nearly completed according to several private groups in the country. Estimates range from the upper 80’s to low 90’s % complete, which generally compares to around 60% from the year prior.
Staying in Brazil, the USDA’s ag attaché in the country on Monday estimated the 2024/25 corn crop at 127 mmt’s, and estimated exports in the season at 46 mmt’s. The export figure is seen lower year/year due to increased demand for ethanol.
Ukrainian Ag firm UkrAgroConsult lowered their estimate of the country’s corn crop to 26 mmt’s, down 1.4 mmt’s from their previous estimate. The group also estimated exports could fall as much as 30% due to production losses caused by hot and dry weather.
Stock index futures are recovering this morning following Monday’s lashing; notably, Japan’s Nikkei index was up nearly 10% on Tuesday, after declining by more than 12% the day prior.
Investors are now asking the question if yesterday’s explosion was the end of the ‘carry-trade unwind’ that started last week, or if this is the beginning of a more drawn out financial down period. As the yen remains undervalued, traders are rather weary of the first option being the case.
The calls for an emergency rate cut by the US Federal Reserve had mostly subsided by Monday afternoon, though investors and economists still see a more than 50% chance at a 0.5 basis point cut in the September meeting. This will be one of the bigger financial stories over the next few weeks, and likely stays near the top of the headlines.
In the latest Middle East update, five US soldiers were injured in a missile attack on a military base in Iraq on Monday. As of this morning, it was unclear whether this attack was part of the retaliation advertised by Iran over the killing of the leader of Hamas; Iran blames the US for supporting Israel.
Weather forecasts are mostly unchanged for the rest of the week from yesterday’s runs for the Midwest. Areas in the northern Corn Belt picked up rains of 0.1-2″ in the last 24 hours, with some locally heavier amounts seen in parts of MN. Otherwise, moisture from tropical storm Debby impacted areas of FL/GA/SC, with totals seen anywhere from 0.5-10″.
Models continue to be in poor agreement on rainfall amounts for the rest of this week, with the EU being far wetter in the northern Plains than the GFS model. Both are in agreement on moisture from Debby impacting the east coast, and also on rains for the southern part of Ontario.
Heat continues to be pushed mostly into TX and OK over the next 48 hours, with triple digit highs confined mostly to these areas by Thursday. The rest of the Midwest sees more average to below average temps into the first part of next week.
Week-two forecasts from both models, as well as the CPC, have trended drier in the southeast, but wetter in the north/northwestern part of the country. This will need monitoring and will continue to fluctuate due to tropical storm activity in the Atlantic.
Have a great day.
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