backBack to All Insights

Pre-WASDE Comments

Jul 9, 2020

Agronomy, Crop Management, Grain, Market Update, Soybean, Technology

To say that we have a lot going on in the markets is an understatement. We have heat domes, Chinese purchases of corn and soybeans (maybe even wheat?) and concerns on crops in the Black Sea region. Given all this action, we wanted to cover at least the basics and talk about the WASDE report (TOMORROW AT 11AM) and the current weather outlook as we see it.

CORN

Given the major change in corn acres the balance sheet, 2020/21 is set up to show a smaller carry-out than the June WASDE print. They should adopt both a higher carry-in due to the higher than expected stocks number last week and take their HUGE feed and residual lower for the 2020/21 campaign. All things equal expect something around a 2.25-billion-bushel carry-out for 19/20 and a 2.6 to 2.8-billion-bushel carry-out for the 20/21 marketing year.

It would be false hope to think that the USDA is going to adjust the yield any lower on this report with Monday’s G/E rating at 71, higher than the 18-year average of 67 and higher than 2019, 2017 and 2015 as far as recent years. For those calling for a 2012 style market – note we 31 points good/excellent better than this time in 2012. The crop was already gone at this point then and futures were $7.30 on July 9th of 2012. THIS IS NOT 2012.

There is a lot of debate between the GFS American weather models and the ECM Euro weather models. I know where my allegiances lie and going to trade the Red, White, and Blue. It is going to be close, but it is possible we get most of the pollination in the US this week when temps are not blast furnace hot, but we will keep monitoring the situation. With ideal planting conditions across most of the corn belt this spring, much of the crop went in at the same time. This puts most of the crop at risk at the same time as well.

SOYBEANS

Expect a quiet report on the soybean section of the WASDE. We didn’t get any surprises as far as stocks from the report last week and the export pace seems to be alright. We could see a modest revision lower as the old crop book gets moved to new crop, but I don’t really expect that on this report. Expect carry-out to stay steady at 575-600 million bushels.

So far, we are seeing some tea leaves that would suggest we might have better than expected exports into China with strong buying (of both corn and soybeans). I do not expect any changes from the USDA on this report.

WEATHER UPDATE

GFS has decent amount of precipitation in Days 1-7 and temps are moderate for the next 5 days. Temps do increase to well above normal for the entire belt in days 6-15 but the GFS continues to call for somewhat consistent precipitation events for the next 2 weeks.

Current Map

Temps still elevated especially in the back end of the model:

Current Map

Grain Team – Aaron, Connor, Dallas, Hank, Jenna, Joel, and Kevin