FI Morning Grain Comments 07/21/20

PDF attached

 

USDA
announced another 5 cargoes of soybeans sold to China and unknow and 207,880 tons of corn (old and new) for unknown.  Lower trade led by soybeans this morning on bearish US crop progress.  US corn and spring wheat crop conditions were unchanged.  Soybean conditions
increased one point. Offshore values are pointing towards a lower trade in SBO and SBM.  Malaysia palm traded 20 MRY lower after hitting fresh 5-month highs overnight.  SA soybean oil cash prices were said to be down 10-15 USD from Friday into Monday, according
to one source.  Corn is lower good weather.  South Korea’s NOFI group bought wheat and corn.  US wheat prices are higher on global demand. Egypt is in for wheat.  The Philippines seek 110,000 tons of feed wheat.  Jordan saw two participants for 120k wheat. 
Ethiopia postponed their import tender.  Taiwan seeks US wheat. USD lower this morning while WTI was up more than $1.30.  The euro climbed to its highest in more than four months against the dollar. 

 

 

 

Weather
and Crop Progress

 

 

UNITED
STATES

• Not
  significant changes to the general theme of weather has evolved on recent forecast model runs
• The
  environment will continue sufficiently moist to support most summer crop development in the Midwest with a few exceptions
• Portions
  of the Delta will continue to dry down and parts of the southern and northwestern Plains will experience similar conditions
• Monsoon
  moisture will continue to stream into the southern Rocky Mountain region adding a moisture source for crop areas during the next few weeks
• The
  second week of the outlook still brings some ridge building to the middle of the nation, but an active jet stream prevails with some cool air periodically in Canada and warm air in the U.S. along with plenty of humidity around resulting in favorable support
  of some periodic rainfall
• Pockets
  of drying in the key corn and soybean production areas will continue, but the worst areas of dryness may remain small in size for the next couple of weeks
  
• Sufficient
  subsoil moisture will carry many crops during periods of more limited rainfall except in the areas that have been driest for the longest periods of time
• Rain
  is needed most in a part of northwestern and central Iowa and in random locations in central Illinois, east-central Indiana and quite a few areas in Ohio
  
• The
  Delta also needs greater rain
• Despite
  the stressful environment for some of these drier areas most of the nation’s crop of corn and soybeans is evolving favorably
• West
  Texas rainfall is expected to be briefly enhanced by a tropical wave that will push into the region this weekend after bringing some rain to the Louisiana and upper Texas coast and the Texas Blacklands; the moisture will be greatly diminished by the time it
  gets to West Texas, but sufficient amounts of rain will remain to support at least “some” increased rainfall briefly before drier and warmer weather resumes.
  

 

EUROPE/BLACK
SEA

• No
  significant change was suggested in this first week of the outlook
• Western
  Europe will continue to receive restricted rainfall while central and northeastern Europe remains wettest along with the western CIS
• 06z
  GFS model run brings significant rain to the North and Baltic Sea regions in the last days of July and first days of August
• The
  increase may have been a little overdone today, but some increase is expected
• GFS
  shifted rain from southeastern Ukraine to northeastern Ukraine this weekend
• The
  change was needed
• GFS
  added a little rain to central and northeastern Ukraine July 31-Aug 2
• Some
  of the increase was expected

 

The
bottom line does not bring much change to the European Continent in this first week of the outlook and if rain evolves in the following week as advertised there would be some relief to dryness in parts of northwestern Europe while conditions elsewhere are
mostly status quo. The lack of rain in this first week of the outlook in France and neighboring areas will maintain a stressful environment for summer crops even though there is not much heat. In the meantime, limited rain is still advertised from eastern
and southern Ukraine into Russia’s Southern Region raising concern about long term soybean, corn and sunseed production in unirrigated areas.

 

RUSSIA
NEW LANDS

• GFS
  models overnight reduced rain in the northern and eastern New Lands during this first week of the outlook
• Some
  of the reduction was needed and was consistent with other forecast models
• The
  second week of the outlook is still offering scattered showers throughout much of the New Lands, but rainfall is minimal near the Kazakhstan border where it is already drier than usual

 

The
bottom line offers only partial relief to the dryness situation in the central New Lands. Rain is going to occur in the Ural Mountains region during the balance of this week with sufficient rain in some areas to dramatically increase soil moisture. However,
many other New Lands’ locations will not get much rain until next week and at that time the rain is expected to be light and somewhat sporadic, although most areas get at least some moisture. The environment should provide some relief to moisture stress for
sunseed and spring wheat, although it is questionable how much relief will occur in areas nearest to Kazakhstan.

 

CHINA

• No
  change was suggested in the first week of the outlook
• Rain
  was reduced in east-central and southeastern China for mid-week next week into the following weekend
• Some
  of the reduction was needed; scattered showers and thunderstorms still occur in many areas
• Some
  increase in rainfall was suggested for the northeastern provinces in the early days of August
• Some
  of the increase may have been overdone
• Drier
  weather is now being advertised for the Yangtze River Basin beginning July 31 and lasting through August 4

 

A
good mix of weather is expected in northern China over the next two weeks with most areas getting alternating periods of rain and sunshine. There will be some areas of net drying, however, and those pockets will be closely monitored in the most important corn
and soybean production areas in the northeast for a while. In the meantime, additional rain will impact the Yangtze River Basin over the coming week to ten days, but the last days of July and early August may be drier and there will be no one in China complaining
about that change for a while. Localized areas of flooding will still continue until the drier days of late July and August arrive.

 

AUSTRALIA

• Rain
  Thursday and Friday was increased in southeastern Queensland and reduced in central New South Wales while increased east of the Great Dividing Range in New South Wales
  
• Some
  of these changes were needed
• Rainfall
  in the second week of the outlook is quite restricted in much of the nation
• The
  nation is advertised to be too dry and a change in the outlook will likely evolve in future model runs

 

Rain
in New South Wales and Queensland Thursday into Friday will be welcome and good for crops. Greater rain will still be needed in Queensland and South Australia

 

SOUTH
AMERICA

• No
  significant changes were noted overnight

 

Source:
World Weather Inc. and FI

 

 

Bloomberg
Ag Calendar

TUESDAY,
July 21:

• USDA
  total milk production, 3pm
• New
  Zealand global dairy trade auction

WEDNESDAY,
July 22:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• U.S.
  cold storage – pork, beef, poultry, 3pm
• Thai
  Rice Exporters Association’s briefing on rice export outlook in 2H

THURSDAY,
July 23:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• China
  trade data, including cotton, corn, wheat and sugar imports
• International
  Grains Council monthly report
• Port
  of Rouen data on French grain exports
• USDA
  red meat production, 3pm
• HOLIDAY:
  Japan

FRIDAY,
July 24:

• ICE
  Futures Europe weekly commitments of traders report, 1:30pm (6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• U.S.
  Cattle on Feed, Poultry Slaughter, 3pm
• FranceAgriMer
  weekly update on crop conditions
• Brazil
  Unica cane crush, sugar production (tentative)
• HOLIDAY:
  Japan

SATURDAY,
July 25:

• AmSpec
  to release Malaysia’s palm oil export data for July 1-25
• China’s
  3rd batch of June trade data, incl. country breakdowns for energy and commodities
  (tentative)

Source:
Bloomberg and FI

 

USDA
inspections versus Reuters trade range                                                    

Wheat         
500,607         versus   450000-700000  range

Corn             
1,149,353     versus   650000-1100000                range

Soybeans   
452,811         versus   375000-600000  range

 

 

 

 

 

 

Macros

·        
Chicago Fed National Activity Index Jun 4.11 (est 4.00; prevR 3.50; prev 2.61)

·        
Philadelphia Fed Non-Manufacturing Regional Business Activity Index Jul 0.7 (prev -3.6)

·        
Canadian Retail Sales (M/M) May 18.7% (est 20.0%; prev -26.4%)

-Canadian
Retail Sales Ex. Auto (M/M) May 10.6% (est 11.9%; prev -22.0%)

·        
Canada New Housing Price Index (M/M) Jun 0.1% (est 0.1%; prev 0.1%)

 

 

Corn.

• Corn
  is lower on lack of China corn sales announcements since July 10, good crop ratings, and good weather for the US.  The upcoming week will include good rainfall coverage.  Temperatures for the US will be above normal but nonthreatening. 
  
• USD
  lower this morning while WTI was up more than $1.30.  Yesterday the euro climbed to its highest in more than four months against the dollar. 
  
• Yesterday
  the funds sold an estimated net 14,000 contracts. 
• BB:
  Ukraine 2020-21 Corn Crop Estimate Raised 5.6% to 38m Tons: UAC
• BB:
  Mexico’s 2020-21 Corn Output, Imports Seen Rising, USDA FAS Says
• 69
  percent of the US corn crop was rated in the combined good and excellent categories, unchanged from the previous week and compares to 57 percent year ago and 68 average. Traders were looking for a one-point decline to the US corn G/E conditions.  We are using
  a 177.5 yield and 14.914-billion-bushel crop, 86 million below USDA July. 
  

·        
December corn support is seen near 3.3050.

 

Corn
Export Developments

• Under
  the 24-hour announcement system, private exporters sold 207,880 tons of corn for delivery to unknown destinations. Of the total, 25,400 metric tons is for delivery during the 2019/2020 marketing year and 182,480 metric tons is for delivery during the 2020/2021
  marketing year.

• South
  Korea’s NOFI group were seeking 207,000 tons of corn and 70,000 tons of wheat.  Reuters reported they bought 65,000 tons of corn ($190.93/ton fob) and 60,000 tons of feed wheat ($232.90/ton fob). 
  
• Yesterday
  it was reported Iran’s SLAL bought 200,000 tons of corn and 350,000 tons of soybean meal for August and September shipment.
  

 

 

Soybean
complex.

• Lower
  trade led by soybeans this morning on bearish US crop progress.  US soybean conditions increased one point. Offshore values are pointing towards a lower trade in SBO and SBM.  Malaysia palm traded 20 MRY lower after hitting fresh 5-month highs overnight. 
  SA soybean oil cash prices were said to be down $2-13/ton USD from Friday into Monday, according to one source. 
  

• USDA
  announced 5 new crop cargoes were sold to China.  
• Soybean
  meal demand across the US may slow later this week and again next week as hot temperatures limit the amount of feed needed by livestock and poultry units. 
  
• 69
  percent of the US soybean crop was rated in the combined good and excellent categories, up one point from the previous week and compares to 54 percent year ago and 64 average. Traders were looking for a one-point decline in the US G/E soybean conditions. 
  25 percent of the US soybean crop was setting pods, up from 21 percent average.  64 percent was blooming, above 57 percent average. 
  

·        
China plans to sell 61,100 tons of soybeans from reserves on Friday. 

·        
Rotterdam values this morning showed soybean oil for the August/September position was down 7-8 euros from this time previous session, rapeseed oil down 10 in the nearby, and soybean meal when imported from South America unchanged
to mixed. 

• Offshore
  values this morning was leading CBOT soybean oil 29 lower and meal $1.10 lower.  
  

·        
China cash crush margins as of this morning, using our calculation, were 126 cents per bushel (129 previous) and compares to 134 cents a week ago and 29 cents around this time last year.

 

 

 

 

Oilseeds
Export Developments

• Under
  the 24-hour announcement system, private exporters sold:
• 126,000
  tons of soybeans for delivery to China during the 2020/2021 marketing year;
• 180,000
  tons of soybeans for delivery to unknown destinations during the 2020/2021 marketing year.

 

Wheat

• US
  wheat prices were higher this morning on good global demand.  Egypt is in for wheat. 
  
• USD
  was 11 points lower this morning.  Yesterday the euro climbed to its highest in more than four months against the dollar. 
  

• Egypt’s
  lowest offer for wheat was $208.98 a ton for 60,000 tons of Ukrainian.
• Yesterday
  the funds sold an estimate net 10,000 Chicago wheat contracts. 
• 68
  percent of the US spring wheat crop was rated in the combined good and excellent categories, unchanged from the previous week and compares to 76 percent year ago and 66 average. Traders were looking for the US spring wheat crop rating to remain unchanged. 
  
• US
  winter wheat harvest progress was reported at 74 percent complete versus 68 percent last week and 75 percent average.  A Reuters trade guess for the winter wheat harvest progress was 79% complete.
  
• US
  harvest progress in Kansas was 97 percent complete.  Nebraska was running above average at 79 percent and South Dakota was a third complete.   
  
• Ukraine
  grain stocks were a tight 5.53 million tons as of July 1 (9.2MMT year earlier) in part to 1.81 million tons held for wheat. 
  

·        
Paris December wheat was up 0.50 at 184.00, at the time this was written.

 

Export
Developments.

• Egypt
  seeks wheat for August 21-31 shipment.  Lowest offer was $208.98/ton fob for Ukraine wheat.  They last paid $226.75 for two Russian cargoes on July 13. 
  
• South
  Korea’s NOFI group were seeking 207,000 tons of corn and 70,000 tons of wheat.  Reuters reported they bought 65,000 tons of corn ($190.93/ton fob) and 60,000 tons of feed wheat ($232.90/ton fob). 
  
• Two
  participants: Jordan seeks 120,000 tons of wheat on July 21 for Sep-Nov shipment. 
  
• The
  Philippines seek 110,000 tons of feed wheat on July 22. 
• Taiwan
  seeks 98,230 tons of US wheat on Wednesday. 
• Japan
  in an SBS import tender seeks 80,000 tons of feed wheat and 100,000 tons of barley on July 22 for arrival by December 24.
  
• Ethiopia
  postponed an import tender for 400,000 tons of wheat to July 24 from July 20. 
  
• Syria
  seeks 200,000 tons of milling wheat from Russia by July 28. 

 

Rice/Other

• None
  reported