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CBOT Prices Moving Higher After Crop Condition Report

New Argentina biodiesel law may increase exports

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Corn VIA PIXABAY mar 2021

US Crop Conditions Report

  • The corn crop was rated in 65% good to excellent condition as of July 18, unchanged from a week earlier.

  • The average estimate was that the corn crop condition would improve by 1%.

  • 56% of the corn crop is silking compared to 26% last week and 52% average.

  • Soybeans conditions were rated 60% good to excellent, up from 59% a week earlier and in line with the average trade estimate.

  • Spring wheat crop ratings fell 5 points to just 11% good to excellent, the worst for this point of the crop year since 1988 at 7%.

  • Winter wheat harvest was 73% complete, slightly above expectations and in line with a year ago.

  • Cotton condition ratings improved to 60% good to excellent from 56% last week, and are above 47% seen last year.

FBN’s Take On What It Means: The most recent USDA forecast was for a record corn harvest this season, although its likely large yields will be needed in the eastern Corn Belt and South to offset drought-hit crop losses in the north and northwest regions. Tightening grain supplies in the US and poor weather in Brazil have left little room in the supply/demand balance for further crop problems. We expect prices will continue to be supported as the markets add premium on continued production risk.


New Argentina Biodiesel Law May Increase Exports

  • Argentina has passed a law allowing a decrease in the amount of soy-based biofuel to be blended into domestic diesel fuel.

  • The measure foresees a minimum use of biodiesel of 5%, which could drop to 3%, in diesel for sale to the public, from the previous 10%.

  • With the blend at 10%, Argentina has consumed about 1 million tonnes of biodiesel annually.

  • Argentina exported 5.36 million tonnes of soyoil last year, mostly to India, along with China and Bangladesh.

  • With another 500,000 tonnes available, Argentina’s soyoil exports will likely rise and weigh on international prices.

  • Argentine soyoil averaged $1,191 per tonne last month versus $1,233 in Brazil and $1,608 in the US.

FBN’s Take On What It Means: The US crop condition ratings again slipped this week, approaching the 1988 crop ratings. All key-producing spring wheat states are reporting conditions below the bottom of the 15-year range. Already USDA printed a small crop but that will likely be reduced in subsequent reports given that weather has remained dry and hot. There will be a shortage of high-protein spring wheat this crop year.

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