Overnight grain futures buck the radar rain.
With rains starting in Western Iowa, grain futures moved higher overnight, as concerns about heat and dryness are appearing in the 6-14 day forecast. Nearby rainfall is positive for South Dakota, Nebraska, Minnesota and Iowa but the hot longer-term model threatens crops, as current rain just satisfies current needs.
The elevated concern this week is the deepening Canadian Prairie drought and the devastation that is occurring to wheat, barley, canola and oat crops. Old prices are now targeting the all-time high of $5.03. Limited rainfall is in the forecast for the Canadian. Crops for the next 10-12 days which are occurring during the key reproductive period.
Overnight China’s Stats Bureau estimated that its 2021 wheat production will rise 2% to 134 MMTs. China’s total summer grain harvest was pegged at 145.8 MMTs, a 2.1% rise from 2020. China’s 2021 wheat planted area rose 1% which accounted for most of the production increase. Worry persists over wheat seed quality as rain has slowed the harvest through much of Central China.
Russia has harvested about 10% of its total wheat crop or 8.1 MMT’s. The average yield is 3.28 MTs/HA, or some 3% below last year. The Russian 2021 harvest is behind last year with wheat collected on just 2.5 Mil hectares. The lower-than-expected early wheat yield trend has analysts dropping their Russian wheat crop estimates. AgResource seeing the ’21 crop between 77-81 MMTs. Russian farmers are storing (not selling) recently harvested wheat. WASDE has the Russian wheat crop at a much too high 85 MMTs.
NOPA will be out with their June Crush report today. The average crush estimate is 160 Mil Bu with soyoil stocks pegged at 1,620 Mil pounds. A year ago the US crushed 167.3 Mil Bu with the May ’21 rate being 163.5 Mil Bu. Plant downtime and tepid export demand for meal eased the US June crush pace.
Egypt’s GASC is seeking world wheat in September, and it will likely secure Eastern European fob offers. Nearby world wheat import demand continues to rise. Seasonal lows have been forged or are in the making in world wheat markets.
The Western US high pressure Ridge will be pushed eastward by the monsoonal flow out of Mexico which will place the Ridge over Colorado in 5-6 days and then amplify it into the N Plains/W Midwest in the 8-14 day period. This will limit rainfall across the Canadian Prairies, the Dakotas and Minnesota. However, note that a storm system is pulling across S Dakota/ Nebraska this morning that should also produce rains of .25-1.25” across S Minnesota/Iowa. A cold front will push across Illinois and the E Midwest on Friday/Saturday before pushing all the way south into the S Plains/Delta. An extended N Plains and W Midwest dry period is forecast from Sunday through much of next week. Heat will be building from west to east across the Central US with mid 80’s to low 90’s widespread next week. The hottest day is July 24th when 100’s are forecast across the Dakotas with mid 90’s into Nebraska and Minnesota. The heat holds through the 11-15 day period which is worrisome to crop yield potential.
Tuesday’s cash markets were again lightly traded, but early sales in Texas and Kansas were steady to $1 higher from last week at $120. There is still more business to be done for the week, but the cash outlook is steady/higher. The beef market stayed in retreat. On Tuesday, the choice cutout was down $1.66 at $273.34 and the select value was $2.03 lower at $256.74. The choice cutout is now $67 off the high marked 7 weeks ago but could still fall another $20-25 by the end of the month.