Morning Comments September 21, 2021

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Corn and wheat are a touch lower this morning, while beans appear to be treading water. 

Evergrande and what it could mean if we were to see China let them fail was the focus of attention yesterday. Some folks are still fully in the camp that this is much ado about nothing, though it appears there is far more to this story than just real estate as an article released late yesterday indicates the company was also marketing 'financial products' to consumers.

At best I can see these financial products were simply used as a ploy to help continue to fund a failing property business and sound quite ponzi-esque. As mentioned yesterday, the silence from the Chinese government in all of this is deafening. And while some analysts still believe the government will step in, others are indicating a sharp turn by the Chinese government away from the capitalistic tendencies we have seen grow in the country over the last couple of decades, with a likely desire to punish some of the folks that have profited from it the most.

A lack of new developments in the debacle, in part because of the Chinese holiday, is letting outside markets breathe a sigh of relief with Dow Futures looking poised to open the day higher.

Export inspections yesterday remaining historically low for both corn and soybeans as we continue to get Gulf export terminals back online and refill the pipeline. Soybean inspections came in at 10 million bushels, while corn was 16 million. We will need to average 41 million bushels of soybeans each week with 48 million bushels of corn shipped to meet current USDA expectations.

Wheat exports were solid yet again with nearly 21 million bushels of wheat shipped for the week. Mexico was the biggest importer of our wheat last week taking nearly 20% of the wheat inspected. 

Crop progress released late in the day showed 10% of the nation's corn crop harvested, with 6% of the nation's bean crop taken off. Crop conditions for both crops appear to have improved, which is a head scratcher as much of the crop is maturing, but the numbers are what the numbers are.

Lots of talk about lower-than-expected yields floating around, though one well-followed analyst tasked with collecting yield reports from across the country was puzzled by the chatter, saying he hasn't had anything cross his desk that would indicate a much poorer-than-expected crop.

Of course, anyone involved in ag knows we tend to hear the bad yields the most as no one wants to jinx themselves by overestimating their crop too loudly before it is in the bin.

A well-followed meteorologist updating his South American weather forecast this morning indicated he expects a relatively normal start to the monsoon in Brazil. This week will remain incredibly hot and dry throughout much of the central part of the country, likely to grab headlines, but models tend to agree that rainfall will start and continue through October for much of the country. 

There are some indicators that La Nina could continue to strengthen, likely creating some pockets of dryness, which he feels at this point could again set up in Southern Brazil down into Argentina. These areas are where much of the heaviest rainfall has been falling the last couple of weeks, so concern remains relatively minimal, at least for now.

Looking ahead, it's possible we could catch a bit of a relief bounce as the more optimistic folks start to lift their heads-- this applying to outside markets as well. In grains though, it is likely that we could see continued harvest pressure on the markets as there is no obvious buyer and harvest weather looks to remain decent for at least the next two weeks.