- HEADLINES: Chicago wheat drops on higher dollar; Row crops steady/higher; Central US heat probable through early September.
- Chicago wheat futures are down 8-10 cents but otherwise US and global ag markets are steady to higher. Pro Farmer’s tour summary is awaited, but the bigger question is just how negative an impact will recent/coming Central US heat and dryness have on final pod and ear weights. Model forecasts have trended warmer overnight, with high temperatures in the 90s to resume across the Central Plains and western Midwest mid-week onward, and there is no indication that soaking rain returns to any area prior to September 8. There is no doubt soy output will be more impacted by late season weather, but even in dent measurable corn yield loss is possible. We note that concern is centred on areas of eastern NE, IA, MN, WI and northern IL, where negative soil moisture anomalies are present today. USDA estimated that very little subsoil moisture was present across the far N Plains, IA, NE, MN and Wi on Aug 20. There are four tropical disturbances present in the Atlantic, but none are forecast to provide moisture to the Plains or Midwest.
- US exporters sold 121,000 mt of soy to China. Egypt was in private talks to secure additional wheat overnight, but no purchase was made.
- Spot cash milling wheat in India rallied another $0.03/bu to $8.45 overnight. Nov Dalian corn in China has recovered 3% from last week’s low and Dalian corn’s premium to US Gulf origin remains perched above $150/mt. The US oat market continues to add premium amid fears Canadian production will drop below 2.6 million mt, vs. 5.2 million last year. Dec Chicago oats at midday sits at $4.99/bu, up $0.38 on the week . Recall oat planted area in Canada in 2023 fell to a new multi-decade low 2.5 million acres. There is a more bullish tone to foreign markets and to minor grain/oilseed markets.
- Volatility will stay present indefinitely. Supply issues are widespread, rain is needed in the US, Argentina, Australia, and India’s monsoon continues to fail in southern and western areas, but the US dollar remains supported above initial chart-based resistance. Federal Chairman Powell from Jackson Hole this morning acknowledged the sticky nature of inflation and that further hikes to benchmark lending rates were not off the table. More energy/food supply is needed, but rising interest rates act as a weight.
- Wheat, as is typical, has been hardest this week by strength in the dollar.
- The midday GFS weather forecast features a tropical storm making landfall in the eastern Gulf, and then traveling along the southeast coast next Wed-Fri. The Plains/Midwest forecast is consistent in calling for an extended period of little/no rainfall. High pressure ridging eases south and westward this weekend/early next week but resumes its position aloft the C Plains and Midwest in the 6-15 day period. This upper air pattern promotes the return of abnormal heat Sep 1-8. High readings of 95-100 will favour TX, OK, KS, NE, SD and western IA. Soil moisture continues throughout the next 10 days
- The risk that national soy yield declines to or below 50 bushels/acre and corn yield drops to 170-173 is elevated. Soy gains on corn in the long run amid the need for acreage in 2024, but it is becoming late in the season to be bearish of ag markets.
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