Jul 28
/
Luiz Fernando G. Roque
North American soybean and corn crops: conditions, weather and funds positions
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• Soybean crop show improved conditions, while corn crop worsen in the last week
• Weather remains a key factor for August, and the next two weeks could bring some speculation
• Speculative funds maintain short positions in soybean and corn, despite last week's reduction
Soybean crop conditions improve in the US; corn crop worsen, but remain at very satisfactory levels
The United States Department of Agriculture (USDA) weekly update on the conditions of US soybean and corn crops indicated an improvement in soybean conditions and a worsening in corn conditions in the week between July 22 and 27.
Despite the worsening in corn, the levels of good or excellent conditions remain the best since the 2016/17 season, indicating excellent development so far.
Regarding soybeans, according to the USDA, by July 27, 70% of crops were in good or excellent condition, an improvement of 2 percentage points on the previous week (68%). Crops continue to be in a better situation than at the same time last year, when the percentage of crops in good or excellent condition was 67%.
US Soybeans - Crop Conditions - in %
US Soybeans - Crop Conditions - in %
Source: USDA, Hedgepoint
US Soybeans - Crop Conditions - Top 10 States and US - in %
US Soybeans - Crop Conditions - Top 10 States and US - in %
Source: USDA, Hedgepoint
Regarding corn, according to the USDA as of July 27, 73% of crops were in good or excellent condition, 1 percentage point down on the previous week (74%). Despite the deterioration, the current rates are still well above those recorded in the same period last year (68%). In addition, the current percentage remains the best since the 2016/17 season.
US Corn - Crop Conditions - in %
US Corn - Crop Conditions - in %
Source: USDA, Hedgepoint
US Corn - Crop Conditions - Top 10 States and US - in %
US Corn - Crop Conditions - Top 10 States and US - in %
Source: USDA, Hedgepoint
When we look at the Normalized Difference Vegetation Index (NDVI) for the US Midwest, we see that current levels point to excellent plant density regarding the previous crop and the average of the last 25 years, also indicating good crop development so far.
US - NDVI - Midwest - in points
US - NDVI - Midwest - in points
Source: LSEG, Hedgepoint
Weather forecasts for the next two weeks
Weather forecasts for the next two weeks
The weather maps now point to a period of some moisture over much of the producing belt between July 28 and August 3. Despite this, parts of some important producing states are expected to receive little or no moisture during the period, which could lead to a less favorable environment for plant development.
Accumulated Precipitation Forecast - July 28 to August 3 - in mm
Source: NOAA
In the period between August 4 and 10, humidity should continue to affect most of the producing belt, but with little rain forecast for the Dakotas and the south of the belt.
Accumulated Precipitation Forecast - August 4 to August 10 - in mm
Source: NOAA
It is important to remember that August is a decisive month for the development of the soybean crop in the United States, and regular moisture is necessary for a good progression of the grain filling stage. Attention must be redoubled in the coming weeks, and we may see an increase in volatility in Chicago.
The rainfall forecast for the whole of August points to near-normal rainfall in practically the entire producing belt, with no signs of "pockets of drought" in any major producing state.
Precipitation Anomaly Forecast - August - in inches
Source: Tropicaltidbits
As far as the temperature forecast is concerned, the map for August also indicates temperatures within the normal range in most of the producing belt, which tends to be favorable for crops.
Temperature Anomaly Forecast - August - in ºC
Source: Tropicaltidbits
In general, weather conditions continue to point to favorable weather in the North American producing belt in the coming weeks, with no major apparent risks for the final development of the soybean and corn crops.
Funds positions
Faced with positive weather and possible full crops in the US, speculative funds continue to be net short on soybeans and corn in the US.
In soybean, between July 16 and 22, the funds even reduced their short positions by around 22,000 contracts, but continue with a net short position of around 67,000 contracts, which indicates some weakness for Chicago.
CFTC - Soybeans - Speculative Fund Position - in thousand lots
Source: CFTC
In the corn side, funds continue to bet on the sell side of the market, maintaining their net short positions since mid-April. Even with a reduction of approximately 1,500 contracts between July 16 and 22, the net short position remains at around 264,000 contracts, close to the minimum of the last five years (which also indicates weakness for Chicago).
CFTC - Corn - Speculative Fund Position - in thousand lots
Source: CFTC
Market Intelligence - Grains and Oilseeds
Written by Luiz F. Roque
Luiz.Roque@hedgepointglobal.com
Written by Luiz F. Roque
Luiz.Roque@hedgepointglobal.com
www.hedgepointglobal.com
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This page has been prepared by Hedgepoint Schweiz AG and its affiliates (“Hedgepoint”) solely for informational and instructional purposes, without the purpose of instituting obligations or commitments to third parties, nor is it intended to promote an offer, or solicitation of an offer of sale or purchase relating to any securities, commodities interests or investment products. Hedgepoint and its associates expressly disclaim any use of the information contained herein that directly or indirectly result in damages or damages of any kind. Information is obtained from sources which we believe to be reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. The trading of commodities interests such as futures, options, and swaps involves substantial risk of loss and may not be suitable for all investors. You should carefully consider wither such trading is suitable for you in light of your financial condition. Past performance is not necessarily indicative of future results. Customers should rely on their own independent judgement and/or advisors before entering in any transaction.Hedgepoint does not provide legal, tax or accounting advice and you are responsible for seeking any such advice separately.Hedgepoint Schweiz AG is organized, incorporated, and existing under the laws of Switzerland, is filiated to ARIF, the Association Romande des Intermédiaires Financiers, which is a FINMA-authorized Self-Regulatory Organization. Hedgepoint Commodities LLC is organized, incorporated, and existing under the laws of the USA, and is authorized and regulated by the Commodity Futures Trading Commission (CFTC) and a member of the National Futures Association (NFA) to act as an Introducing Broker and Commodity Trading Advisor. HedgePoint Global Markets Limited is Regulated by the Dubai Financial Services Authority. The content is directed at Professional Clients and not Retail Clients. Hedgepoint Global Markets PTE. Ltd is organized, incorporated, and existing under the laws of Singapore, exempted from obtaining a financial services license as per the Second Schedule of the Securities and Futures (Licensing and Conduct of Business) Act, by the Monetary Authority of Singapore (MAS). Hedgepoint Global Markets DTVM Ltda. is authorized and regulated in Brazil by the Central Bank of Brazil (BCB) and the Brazilian Securities Commission (CVM). Hedgepoint Serviços Ltda. is organized, incorporated, and existing under the laws of Brazil. Hedgepoint Global Markets S.A. is organized, incorporated, and existing under the laws of Uruguay. In case of questions not resolved by the first instance of customer contact (client.services@Hedgepointglobal.com), please contact internal ombudsman channel (ombudsman@hedgepointglobal.com – global or ouvidoria@hedgepointglobal.com – Brazil only) or call 0800-8788408 (Brazil only).Integrity, ethics, and transparency are values that guide our culture. To further strengthen our practices, Hedgepoint has a whistleblower channel for employees and third-parties by e-mail ethicline@hedgepointglobal.com or forms Ethic Line – Hedgepoint Global Markets.Security note: All contacts with customers and partners are conducted exclusively through our domain @hedgepointglobal.com. Do not accept any information, bills, statements or requests from different domains and pay special attention to any variations in letters or spelling, as they may indicate a fraudulent situation.“HedgePoint” and the “HedgePoint” logo are marks for the exclusive use of HedgePoint and/or its affiliates. Use or reproduction is prohibited, unless expressly authorized by HedgePoint. Furthermore, the use of any other marks in this document has been authorized for identification purposes only. It does not, therefore, imply any rights of HedgePoint in these marks or imply endorsement, association or seal by the owners of these marks with HedgePoint or its affiliates.