07/16/2021

Brazil’s late-planted Safrinha corn crop suffered notable damage – primarily in Mato Grosso do Sul – in early July. Another risk returns next Monday and Tuesday morning, when readings will drop very close to the freezing level. The risk this time appears to be greatest in Parana, where some corn is still vulnerable due to late planting. Brazil’s total corn crop was estimated at 87.9 mmt on July 1st, just as the freeze was occurring, leaving more downside risk to their estimate. Unconfirmed cash sources within Brazil are reporting their biggest export washouts in five years to redirect corn to the domestic market where bids are strong. USDA currently has Brazil production at 93.0 mmt, with exports at 28.0 mmt. The risk is that exports fall well-below 20 mmt. Brazil exported 35 mmt the previous year. Those lost exports are expected to shift global business to Argentina, Ukraine and to the United States. Ironically, half of Ukraine’s corn belt is facing a degree of moisture stress currently, while U.S. crop concerns are also well documented. Hot, dry conditions are returning to the northwestern quarter of the belt over the next couple of weeks, with rain chances significantly diminished. This has money flowing back into the grain and oilseed complex again, with fund managers also justifying the move with the current escalated inflation sentiment. 
Minneapolis spring wheat led the way higher for the Ags this week, with recent data showing significant deterioration of the spring wheat and durum crops on both sides of the border. Problems with the U.S. crop are well documented, but reports are not emerging that three-fourths of the Canadian prairie crop belt is in similar condition. Other support comes from recent adverse weather resulting in lower production estimates for Russia. This has shifted sentiment in the wheat market this year, with the market now believing it needs to price winter wheat out to the feed bunk to preserve supplies. Soybeans have the tightest balance sheet among the summer row crops, with temperatures in the western areas of the Ag belt heating up ahead of the critical pod set and pod fill stages of development. The combination of higher wheat and higher soybean prices provides a lift for the corn market. The protein sector is also well supported, with the exception of feeder cattle demand, which is lower due to higher feed costs.

Despite delays due to rain and humidity, HRW harvest is 38% complete in sampled states with 266 samples in the lab for testing at U.S. Wheat Associates. The HRS crop continues to mature at a faster than normal pace as the region struggles with prolonged drought. USDA estimates winter wheat production at 1.36 billion bushels (37.2 mmt), an increase of 16% from last year and up 4% from June; spring wheat production is estimated at 345 million bushels (9.4 mmt), a 41% decrease from 2020.
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As this is sent out trucks are rolling through the scales for harvest and we are getting to see many of you. Thank you for your business and crops. Stay safe!