Hot and Dry?? Soybean and Spring Wheat Crops at Risk

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Following what is expected to be another 5 days of cooler temperatures, heat is slated to return to the US Corn Belt this weekend. Temperatures are then expected to run above-normal through the 15-day period. The precipitation forecast for the next 10 days is largely dry. This morning's Euro model offers almost no rain for the entire region this week. The 5-10 day forecast offers some limited rain for parts of Iowa and Minnesota, leaving the majority of US corn and soybean areas dry. The extended GFS offers rainfall for the eastern Corn Belt during the first week of August but still leaves much of the west dry. See maps below.

Fund traders continue to hold a massive net short position in the corn market. CFTC released weekly Commitment of Traders data on Friday. During the week ending July 16, "the funds" were net buyers of 4k contracts of corn. The net short of 353k contracts of corn is the second largest on record, behind last week's all-time high. Funds were net sellers of 20k contracts of soybeans. The net short of 183k contracts of soybeans is the largest on record. Funds were net sellers of 4k contracts of SRW wheat on the week. See Fund Tracker charts below.

Agricultural groups are requesting that domestic feedstocks be required in the 45Z guidelines. Last week, the groups sent a letter to the US Treasury Secretary, urging that feedstocks be produced domestically in order to qualify for the 45Z tax credits. The requirement would benefit US farmers, and it would also increase the environmental benefits of the 45Z tax credit by providing a feedstock with a lower carbon score. Additionally, the letter stated that many farmers are unable to implement the climate-smart agriculture methods outlined in the SAF guidance. The groups would like the requirements to vary based on differing capabilities and conditions for farmers across the US. Those included in the letter are the National Farmers Union, the American Farm Bureau Federation, the National Corn Growers Association, and the American Soybean Association. A copy of the letter can be found HERE.

USDA reported a flash sale of soybean cake and meal on Friday. US exporters sold 105,000mt of soybean cake and meal to unknown destinations for delivery during the 2024/2025 marketing year. On Thursday, an identical sale was made; the combined sales totaled 210,000mt of soybean cake and meal.

Friday's Cattle on Feed report was viewed as neutral to somewhat positive for the cattle market. Cattle on feed as of July 1 were reported at 101% of year-ago levels, which was in line with the pre-report trade estimate. Placements in June were reported at 93% of year-ago levels, lower than the pre-report trade estimate of 97%. Marketings last month came in at 91% of year-ago levels, slightly lower than expectations. The report is considered neutral to slightly friendly as the cattle on feed number came in as expected and placements were lower than anticipated.