- In light of late news coming in overnight we have added the following to our usual weekly summary (below).
- Clearly price action in CBOT markets has centred upon weather concerns, and it seems that the latest forecasts are in pretty good agreement that higher temperatures are scheduled into the end of the month, possibly the highest of the season to date. Whilst these temperatures will no doubt stress growing crops in the Midwest, which missed out on this week’s rain, many other areas (Plains, Delta and much of IN, OH and KY) have sufficient soil moisture to endure the heat. The key Midwest region where under 50% of average rain has fallen since late July is the area causing concern.
- We are advised that late summer heat events, such as are forecast, rarely last long and more normal temperatures and rainfall should follow on into early September.
- The Pro Farmer Crop Tour results were published late Friday, and the key points include their estimate of soybean yield at 41.8 bu/acre. History shows us that their estimates correlate closely with the USDA’s NASS September number but less closely with final yield. To that end we have to ask how much value the figures hold. Markets closed with strong gains on the news and the weather premium now built into prices is considerably higher than in previous weeks.
- The Tour estimated corn yield at 154.1 bu/acre, almost exactly in line with the latest USDA number; however they estimated acreage 1.8 million acres below the USDA and consequently overall yield at 13.46 billion bu, which is 303 million bu under the latest USDA number. Corn prices rose but to a lesser degree than in the soybean complex, and we believe the uplift was more in sympathy with soy than on corn fundamentals.
- Wheat prices rose slightly in line with gains in corn and fund activity was believed to be adding marginally to long positions. US soft red wheat is priced well above both French and Black Sea, and with the prospect of the bumper Canadian crop we find it difficult to see much more in the way of upside in US levels.
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