Investors eye August soybean weather, analyst says
A lot is happening this week.
Investors are reacting to the July USDA report Monday, and also indications that the corn and soybean crop is improving as well as the biggest potential rainfall forecast of the summer in South Dakota, Minnesota, and Iowa.
We will see if that rain falls. If it doesn’t, the forecast then turns warmer and drier by mid-July, as we move into August.
The next seven-day forecast today calls for more rain in the next week, especially in those three states. That rain has started in far southwest South Dakota, and is expected to spread over the next 24 hours into the dry areas of South Dakota, Minnesota, and Iowa – three critically dry states. This rainfall the next three days will be critical to the market this week; it falls as forecast, it will probably continue to pressure corn and soybean trade. However, HRS wheat areas in North Dakota are expected to remain dry, and that could support HRS wheat.
Once this rain event moves through the Corn Belt, though, the forecast turns drier and warmer in the eight- to 14-day forecast for nearly all the Corn Belt, but especially in the northern and western Corn Belt.
Crop progress, yesterday, can be thought of as mostly bearish, with corn conditions improving 1%, soybeans steady, and HRS wheat areas steady at 16% G/E, and barley improving 2%. Even pasture/rangeland conditions improved 3%, oats +1%, and topsoil conditions improved 2% (to 61%), and subsoil conditions improving 1% (to 59%). The Pro Ag yield models improved significantly, with soybeans up 0.34 bu/acre to 49.3 bu (still below 49.83 trend). Corn improved 2.66 bu/acre to 178.12 (now back above 177 trend). So, the crop did improve last week, especially corn and soybeans where rain can help yield potential more. That could provide some pressure to corn/soys in the next few days, along with the forecast rainfall over the next five days.
USDA’s July report updated numbers with the new June 30 acreage numbers (bearish corn with 75 mb more carryout – 30 mb more than expected). The soy report did nothing to acres or yield, so there was no change there at 155 mb carryout.
Wheat, however, had a massive cut in U.S. ending stocks of 105 mb (15%), 64 mb larger than expected as HRS wheat production was hacked significantly. This was quite bullish wheat, as world ending stocks were also cut 5.12 mmt to 291.68, mostly due to U.S. and Canada cuts. Contrast that with a 1.94-mmt hike in soys to 94.49 mmt, and 1.77 mmt to 289.41 mmt corn. So, the report was quite bullish wheat, but not necessarily corn and soys.
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