Turnaround Tuesday from the start of the night session for grains.
Grain futures are lower this morning, with soybeans sharply lower after yesterday's strong close found willing sellers with the soybean ratings higher rather than lower in the afternoon report. Corn crop condition ratings did fall 2% out of the GD/CS category, as expected, but soybeans had seen an increase of 2% to 60% GD/TX when a lower condition rating was anticipated. This brought in selling along with upcoming crop guesses for the August 12 crop report bringing in soybean liquidation and the breach of the 100-day moving average. StoneX will be out with their 2021 corn/soybean crop estimates this afternoon. StoneX tries to forecast crop yields at the end of the year, not what NASS will say in August. Based on that fact and their big estimate of a year ago, traders are concerned by the chance for near trendline US corn and soybean yields.
Despite the small lift in soybean ratings yesterday, overall corn/soybean crop ratings are well below last year and just below their 5-year averages, including the exceptionally wet year of 2019. Further reductions in ratings are likely next week, based on continued dry weather with temperatures rising after Thursday. Other than MN, WI and MI, the forecast just does not offer much meaningful rain. For crops that missed the weekend rain, the stress will be building while heat pushes maturity.
The NASS August farmer-based survey will not resolve the debate over 2021 US corn/soy yields. The NASS September field-based survey will accomplish that. However, it’s the massive decline in 2021 world grain/canola/sunseed production that sparks a US demand led bull market from September onward. End users hope for a bearish August WASDE report to make their long-term purchases. The current crop year of 2021 looks to find a repeat of last year, as the world will be looking to the US to replace supplies that have not been replenished with problem areas around the world.
An arid/warm weather pattern will hold across the Central US into August 13. Any meaningful rain that falls will be located over the Northern Lake States of Minnesota, Wisconsin, and Michigan. Weather conditions to the south and east of these states will be arid and warm. US crop conditions will decline amid the lack of moisture and the coming warmth that pushes crop maturity. Temperatures will be cooler than normal for the next 3-4 days before warming late week and on the weekend from west to east. Highs return to the upper 80’s to the upper 90’s from Thursday onward. The heat spreads eastward into the E Midwest on Sunday and early next week. With mid 80’s to mid 90’s commonplace for the entire Plains and Midwest in the 2nd week of the forecast. The rain that is slated to drop over the Northern Lake States is not until August 10-12th. The GFS and EU 11-15 day forecasts continue the drier trends into August 19. This is not the finish that US producers desired as La Nina quickly develops.
The cattle trade showed improvement yesterday, but it was lackluster. Cash cattle markets were quiet to start the week on limited demand. However, the beef market is quickly gaining, and feedlots will be looking to sell at least $1-2 higher this week. The early week outlook remains higher. Boxed beef values marked another day of strong gains on Monday. The choice value rose $2.54 to $281, and the select value was $4.19 higher at $263.38. A secondary high box beef prices look to occur by late August, ahead of the Labor Day holiday.