- HEADLINES: Cash market soars as old crop supplies run thin and Ida to slow early Delta corn harvest; September options to expire/Stats Canada Monday.
- Midday Chicago is dull/slightly lower with any volume attributed to September forward spreading, September option expiration, and first notice day positioning. Someone offered 800 contracts of the November/September soybean spread in a 4-minute period that pummelled the spread/flat price. Only when the US$ declined following Fed Chairman’s Powell speech did Chicago recover. We suspect that someone needed to roll a long hedge forward out of September soybean futures into new crop, but the speed and size of their actions hit the entire Chicago complex. We look for a mixed close into the weekend.
- Stats Canada is out Monday morning (drought losses) and traders want to see if weekly US good/excellent corn/soybean crop condition ratings increase following this week’s rain across the Northern Plains and the NW Midwest. Traders are expecting that US NASS weekly good/excellent ratings will increase 1-2%.
- We believe that the heat/dryness in the east will more than offset the gains in the NW Midwest, but NASS will be arbiter of this week’s weather on the crop. Getting past Monday’s crop data and first notice day will set the market to engage in yield and new crop demand discussions more actively. September 1 marks the end of the 2020/21 crop year for summer row crops.
- Spot cash corn/soybean markets are on fire. Cash corn is said to have traded as high as $1.90-2.20 over to East Coast Feed compounders while Central Illinois corn is bid $1.00-1.20 over. The strength of the spot cash corn/ soybean market is incredible with the S Midwest harvest to start in a few weeks. The extreme cash basis bids suggest that US minimum pipeline stocks are larger than the 1,100 million bu of corn or 155 million bu of soybeans that the USDA has plugged in for the 2020/21 crop year on September 1 (Wednesday). It is rare that old crop cash basis bids rally into the September Chicago expiration. Fort Dodge, Iowa is bidding $1.20 over for September delivery corn with Marshall, Minnesota bidding 70 cents over. New crop basis bids are firm as short bought end users and importers can no longer wait for supply.
- The restocking of the cash corn/soybean pipeline will take at least 2 weeks of active Central US harvest. The pipeline restocking will diminish harvest pressure and the impact on Chicago. US farmers advise that they will not make the same mistake as last year in selling their crop too cheaply at harvest. Most are planning to store as much corn/soybeans as their on-farm storage system allows. A 2021 corn/soy harvest glut is not expected.
- Chicago brokers estimate that managed money has sold 3,400 contracts of corn, 7,200 contracts of soybeans, and 3,500 contracts of wheat. In the products, funds have sold 3,000 contracts of soyoil and 1,200 contracts of soymeal. Funds have been on the sell side of Chicago for most of the morning.
- The GFS weather forecast is slightly further east with Ida’s landfall occurring to the west of NOLA (New Orleans and Louisiana). This means that the strong tropical winds and the storm surge will impact the port. Ida will make landfall late Sunday or early Monday. Flooding rains and 100 MPH wind is the risk to unharvested crops in LA/MS/AL. The storm slowly pushes NE across the Tennessee Valley and exits via New York late next week. In the wake of Ida, rainfall totals of 2-6.00″ are expected. Temperatures are warm to hot through the weekend with highs in the mid 80′s to the mid 90′s with cooling next week. Ida is likely to come ashore as a category 3 or 4 hurricane.
- There are a lot of balls in the air including Sept option expiration, first notice day against September futures, US crop conditions following this week’s rain, Stats Canada and the coming Sept NASS crop report. Fed Chairman Powell said that its bond buying taper could start in 2021 and that there is no rush to raise interest rates. The US$ declined on the news which placed a bid under commodities. As the importance of summer weather fades, it is back to demand and actual corn/soybean yield trends.