Overnight grain trade reacts to less than expected drop in crop ratings.
The overnight trade reacted to yesterday’s small decline in crop ratings after closing soybeans above $14.00 for the first time since July 27. Losses in corn were mitigated, while soybeans dipped back below 14.00 overnight.
Crop Progress showed corn conditions 56% G/E vs 58% last week and 54% last year. IL was +3%, NE -6%, and IA -6% week over week. Soybean conditions were 58% G/E vs 59% last week and 57% last year. IL was +3%, NE -6%, and IA -6% week over week.
The amount of corn in dent rose to 51%, while 88% of the crop has reached the dough stage. 9% is mature. 91% of the soybean crop setting pods with only 5% left of the crop dropping leaves. The impact of the extreme heat and dryness from August 15 onward will have an impact on yield potential.
This morning’s Stats Canada report showed an All Wheat production number of 29.472 MMTs compared to an estimate of 30.4. Canola was put at 17.561 MMTs, while the estimate was 17.4. Oats were 2.429 MMTs against an estimate of 2.7.
It was reported that several India-based exporters said parboiled rice buyers have postponed shipping 500K MT after the government levied a 20% export duty. World rice prices have pushed upwards as India, the world’s largest exporter, has now banned and placed a duty on a total of 12 MMTs of rice. It’s also anticipated that India will eventually lower their wheat import duty to 0% and take large quantities of Russian wheat.
Monday’s reflection of crop ratings may be too high given the widespread reports of the crop quickly drying and even some sudden death syndrome being reported in some beans. The current break in price will look to be corrective in nature, with the 2003 similarities for soybeans too ominous to ignore. Soybean prices look to be the strong leg of the grain trade, with corn and wheat followers on any upward track in price.
The primary forecast models stayed in agreement, looking for an extended period of hot and dry weather over the Central US starting this weekend. The below to much below normal trend in rainfall now looks to last into the middle of September. This will push crop maturity, reducing yields. No meaningful rain pattern is indicated as a high-pressure Ridge grips the area. The four-week period from August 15 to mid-September will be one of the warmest and driest on record.
Live and feeder cattle futures enjoyed a sharply higher trade on Monday, with a firm outlook offered for early trade today. The cash feeder Index pushed $2.24 higher to start the week, reaching a new all-time high of $247.83. Next week’s slaughter will be shortened due to the Labor Day holiday, with feedlots looking for steady to higher prices this week on tight supplies and recent heat stress.
Last week’s COT report showed that funds liquidated 7300 contracts of longs while hedgers covered 9700 contracts of short positions. Index funds had liquidated as the cash market stalled out, but hedgers are mainly reluctant to maintain coverage at deflated levels. Deferred futures are just under record highs, with feedlots anticipating better pricing for hedging.