FI Evening Grain Comments 0/14/20

PDF Attached

 

USDA
reported another 2 cargoes of soybeans to China. 

 

 

Weather
and Crop Progress

WEATHER
TO WATCH THIS WEEKEND

• The
  Tropics and Subtropics should be closely monitored
• We
  are quickly moving into the a more favored period for tropical cyclone development; the most favored period for storm development will occur next week through the end of this month
• Tropical
  Storm Josephine will not be a threat to the United States
• It
  remains several hundred miles east southeast of the northern Leeward Islands today and it will pass to the northeast of the Antilles and Bahamas this weekend and early next week
• The
  system will weaken late Saturday into early next week and may dissipate well east of the U.S.
  
• A
  pair of mid-latitude low pressure centers moving off the middle U.S. Atlantic Coast will have potential for development into tropical or subtropical cyclones
  
• The
  first low pressure system comes off the North Carolina coast today and the second comes off the Delmarva Peninsula Sunday
  
• A
  trough of low pressure expected to be over the southeastern U.S. next week may breed a low pressure center just off the central or northeastern Gulf of Mexico Coast during the middle to latter part of next week and that system will need to be closely monitored
  for development as well
• The
  favorable tropical cyclone formation potential will shift farther to the east into the Atlantic Ocean in the week of August 24
• A
  monsoon low pressure center in the northern Bay of Bengal may attempt to develop a little more before move from the upper east coast of India to Rajasthan and Gujarat next week
  
• This
  system could produce excessive rain a part of eastern and central India next week
• A
  second monsoon low may evolve late next week and into the week of Aug. 24 producing additional excessive rainfall
• India’s
  potential for flooding in central parts of the nation will increase greatly next week and through the following weekend due to the monsoon lows noted above
  
• The
  greatest rain will be falling a week from now and into the week of Aug. 24
• Madhya
  Pradesh, Chhattisgarh and southern Rajasthan may be most at risk of flood damage, but it is too soon to get any more details
• U.S.
  outlook continues to trend drier for the second half of this month and possibly extending into early September
  
• Most
  forecast models have toned down the rainfall outlook for the Midwest and Great Plains over the past couple of days
  
• The
  GFS is still wettest and probably too wet
• Net
  drying is expected in the heart of the Midwest and in much of the Great Plains with parts of the Delta also expecting only a restricted amount of rain as time moves along
• The
  wettest areas in the U.S over the next ten days will be in the southeastern states from Virginia to Florida where frequent rain is expected and moderate to some locally heavy amounts expected
• The
  far northern parts of the Midwest will also experience some significant rain periodically
• The
  environment is not unusual for late summer and still fits in with what is considered mostly normal summer weather; however, with the active tropical season to influence North America soon the drying bias may fester for “some” areas long enough to raise a little
  late season soybean and sorghum stress especially in the areas that are already a little dry
• Milder
  temperatures during the next couple of weeks will slow some of the drying, but it is still the middle of summer and “normal” usually promotes net drying
• The
  U.S. weather pattern dominating through the end of August may prevail into September as well with a few “brief” interludes of somewhat warmer and a little wetter conditions
• West
  Texas was hot again Thursday with highest temperatures of 100 to 112 from southern Oklahoma and southern parts of the Texas Panhandle southward into Mexico
• West
  Texas will get some showers and thunderstorms periodically during the coming week, but they will be brief and light failing to soak the region and failing to change soil or crop conditions by much
• Sufficient
  moisture will be present late this weekend into next week to help keep temperatures from becoming excessively hot
• Highest
  temperatures into Saturday will range from 95 to 108 degrees Fahrenheit
• Temperatures
  will not be quite as warm late in the coming weekend or next week due to some higher relative humidity and a few showers
  
• High
  temperatures may slip to the upper 80s and 90s

 

• U.S.
  northwestern Plains and southwestern Canada’s Prairies will not receive much rain for the next ten days favoring harvest progress for early season crops, but stressing some of the late season crops

 

• Eastern
  Saskatchewan and western Manitoba received some needed rain Thursday and overnight to ease dryness and benefit some of the region’s corn, soybeans, flax and late season canola
• Rain
  totals reached 1.00 to 2.00 inches in southwestern Manitoba and to 1.18 inches in southeastern Manitoba while up to 0.62 inch occurred elsewhere
• Rain
  will fall additionally in southeastern Manitoba today and early Saturday and then drier weather is expected for a while

 

• Western
  and northern Alberta and far northwestern Saskatchewan remain favorably moist while much of central, west-central, southwestern and south-central Saskatchewan along with southern Alberta remains too dry
• Dryness
  in the central and southwestern Prairies is promoting early season crop maturation and harvest progress, but rain is needed in some areas for late season crops
• The
  lack of moisture during the next ten days to two weeks will likely leave late season crops stressed
• Far
  western U.S. weather will be mostly dry and warm during the next ten days as the monsoon flow remains sporadic and light
• Ontario
  and Quebec weather is mostly good with alternating periods of rain and sunshine over the next two weeks
• Recent
  rain bolstered topsoil moisture and removed concern over dryness
• Some
  net drying is expected especially in Ontario
• Argentina
  remains too dry and concern remains for its wheat and barley production potential
• Cordoba
  remains driest with parts of Santa Fe, La Pampa and northwestern Buenos Aires drying out recently
• The
  trend will not change much until Aug. 25 and after that period there may be “some” rain to ease dryness in parts of Buenos Aires and immediate neighboring areas
• Cordoba
  is unlikely to see significant rain for the next two weeks
• World
  Weather, Inc. is looking for a little better opportunity for some rain in September in the driest areas
• China’s
  Yangtze River Basin is drying out
• The
  drying trend will continue for the next week and then some showers will begin to pop up periodically into the end of this month
• China
  reported locally heavy rain in central and northeastern Sichuan and from Shandong to Heilongjiang Thursday
• Amounts
  varied from 1.00 to 2.75 inches often with local totals of 3.00 to more than 5.00 inches
• Local
  flooding resulted
• One
  location in southeastern Liaoning reported 13.14 inches of rain
• Some
  heavy rain also fell along the Guangdong coast and in southern Guangxi where flooding also occurred
• Rainfall
  elsewhere in eastern China was more erratic and light while temperatures were warm
• China’s
  weather will continue to provide net drying in the Yangtze River Basin over the next two weeks while alternating periods of rain and sunshine occur elsewhere
• Some
  localized areas of flooding will continue in the north and in central Sichuan for a while
• Damage
  to crops is not very likely
• Some
  locally heavy rain and local flooding is still possible in northern parts of the nation periodically in the next two weeks, but no new crop damage is expected
• Xinjiang,
  China weather Thursday was mostly warm and dry, although a few showers produced up to 0.30 inch of moisture near the mountains
• Highest
  temperatures were in the 80s northeast and the lower to middle 90s elsewhere
• The
  region will not likely see much change in weather over the next seven to ten days

 

• Russia’s
  New Lands have either received significant rain recently or going to be receiving it in this coming week
• Spring
  wheat and sunseed crop improvements have occurred recently and will continue, although some of the coming improvement is occurring a little late
  
• There
  is a little concern over late season wheat and sunseed quality for the early maturing crops, but the weather could improve prior to a serious problem evolving
• Reports
  of lower corn production have been received from Ukraine
• Dryness
  in Ukraine and Russia’s Southern Region has been serious in recent weeks and all unirrigated summer crop yields are likely down
  
• Eastern
  and southern Ukraine and most of Russia’s Southern region away from Krasnodar and Georgia has been too dry for many weeks
• Relief
  from dryness is unlikely for at least another week to ten days, but some rain may come later this month
• The
  moisture will arrive too late, however.
• Relief
  from drought in France, Germany, Belgium, the U.K.  and Netherlands is under way and will last into next week
  
• Rain
  Thursday varied from 0.30 to 0.50 inch with coverage of 60% favoring the western and far southeastern parts of the nation
• Additional
  rain is expected in France and areas to the east and north over the next several days
• Improving
  soil moisture will be great for future winter crop seeding, but may only stop the recent declines in summer crop condition and yield
•  A
  reversal in the production potential losses in France is highly unlikely, but the rain will stop the decline
• West-central
  Africa dryness in Ivory Coast, Ghana and neighboring areas is not unusual for this time of year, but the dryness started early and has festered long enough to be of some concern to rice, sugarcane, coffee and cocoa
• Seasonal
  rains are expected to return, albeit a little slower than usual
• Once
  the seasonal rains resume they may become heavy in late September and October
• More
  frequent and more abundant rain is expected in mainland areas of Southeast Asia during the coming ten days
• The
  moisture boost will be good for rice, sugarcane, coffee and a host of other crops
• Flooding
  rain is expected in western and southern Myanmar over the next couple of weeks
• Rain
  continues erratic in Sumatra, Java and parts of Borneo in Indonesia and Malaysia
• Temperatures
  have been ebbing warmer than usual as well
• Rainfall
  will continue erratic and light for a while in these areas, but some slowly increasing rainfall is expected through most of next week
• Philippines
  rain recently  has been bolstering soil moisture in many areas from western Luzon Island southward to northern Mindanao
• Recent
  rainfall has been supportive of crops and little change will occur over the next ten days
• South
  Africa rain will continue periodically in the southwest over the next week, but most of it will be near the coast and it will not be frequent enough to seriously bolster topsoil moisture for long term crop use
• Eastern
  winter wheat and barley areas still need a general rain to support dryland crops which represent 8% of the total crop in the region
• Temperatures
  will be cooler than usual
• Australia
  rainfall will impact most winter crop areas during the next ten days
• However,
  much of the resulting rain will be light and there will be some ongoing need for greater rain in Queensland and South Australia
• The
  bottom line remains a very good outlook for the nation’s winter crops, although there will still need follow up rain to fix long term moisture deficits in Queensland as well as South Australia

 

• Southern
  Brazil will receive rain today through August 20 and it will be good for some winter wheat, corn planting and early corn establishment
• Most
  of the precipitation will fall in Rio Grande do Sul, Santa Catarina, Parana, Paraguay and southern Mato Grosso do Sul leaving areas to the north drier biased; including Sao Paulo and a few locations in southern Minas Gerais and Rio Grande do Sul
• However,
  flooding is expected in Parana and southern Mato Grosso do Sul which may raise the potential for wheat damage especially in Parana
  
• Dry
  weather is expected elsewhere in Brazil except coastal areas from Espirito Santo to Bahia where rain is expected periodically
• Mexico
  precipitation in the coming week to ten days will be greatest in western and southern parts of the nation benefiting many corn, sorghum and dry bean production areas
• Coffee,
  citrus, sugarcane and many fruit and vegetable crops will also benefit
• Northeastern
  Mexico will be mostly dry
• Some
  of the region is still drought stricken
• Central
  America rainfall will increase this week and continue plentiful next week
• New
  Zealand rainfall will be below average for a few more days and then trend above normal in parts of the nation next week into August 27
  
• Southern
  Oscillation Index was +4.52 this morning and it will continue positive into next week

Source:
World Weather Inc. 

 

 

7
Day Precipitation Outlook

 

Bloomberg
Ag Calendar

SATURDAY,
August 15:

• Malaysia
  palm oil export data for Aug 1-15 from AmSpec

MONDAY,
August 17:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  crop conditions for soybeans, corn, cotton; wheat harvesting progress, 4pm
• U.S.
  monthly green coffee stockpile data from Green Coffee Association
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• HOLIDAY:
  Indonesia

TUESDAY,
August 18:

• New
  Zealand global dairy trade auction

WEDNESDAY,
August 19:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• ISO
  online conference on Sugar and Health
• USDA
  total milk production

THURSDAY,
August 20:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Brazil
  Conab sugar, cane and ethanol production
• Port
  of Rouen data on French grain exports
• China
  International Cereals and Oils Industry Summit
• USDA
  red meat production, 3pm
• HOLIDAY:
  Malaysia
• EARNINGS:
  Cherkizovo

FRIDAY,
August 21:

• 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
• FranceAgriMer
  weekly update on crop conditions
• China
  International Cereals and Oils Industry Summit, day 2
• Malaysia
  palm oil export data for August 1-20
• U.S.
  cattle on feed, 3pm

Source:
Bloomberg and FI

 

 

 

Commitment
of Traders

-No
major surprises

 

 

 

 

 

 

Macros

US
Retail Sales Advance (M/M) Jul: 1.2% (est 2.1%; prevR 8.4%; prev 7.5%)

US
Retail Sales Ex Auto (M/M) Jul: 1.9% (est 1.3%; prevR 8.3%; prev 7.3%)

US
Retail Sales Ex Auto, Gas Jul: 1.5% (est 1.0%; prevR 7.7%; prev 6.7%)

US
Retail Sales Control Group Jul: 1.4% (est 0.8%; prevR 6.0%; prev 5.6%)

US
Nonfarm Productivity Q2 P: 7.3% (est 1.5%; prevR -0.3%; prev -0.9%)

US
Unit Labour Costs Q2 P: 12.2% (est 6.9%; prevR 9.8%; prev 5.1%)

 

Corn.

• CBOT
  corn ended 0.25 to 1 cent lower in the 4 front month contracts and mixed in the back months.  Friday marked the first day this week that corn traded lower. 
  Light
  profit taking was the main reason for the lower trade.  Losses were limited on a drier US weather forecast with western IA in focus, and acreage loss from the storm earlier this week. 
  The
  US will not be totally dry.  The Midday weather models conformed a wetter outlook for NE and some ECB corn producing states.  Another reason corn futures paired losses by the end of the day is the fact EU countries are losing corn production due to dry weather. 
  France reported a large decline in ratings from the previous week.  We could see the EU importing corn from the America’s later this year to meet animal unit consumption requirements if EU feed wheat supplies start to erode.  EU milling wheat export commitments
  are healthy.  For alternative feedgrains, EU end users have been competing with exporters amid large increase in barley shipments to China. 
  
• More
  and more analysts are coming out with corn crop damage reduction estimates for production.  The mid-point is around 200 million bushels of corn lost from the derecho storm that occurred on Monday.   We look for a large drop in US corn conditions when updated
  on Monday. 
• Reuters
  put out a story that painted a bleak picture of the devastation.  The Iowa Soybean Association mentioned 37.7 million acres of farmland across the Midwest, including 14 million acres for IA, was impacted by the Monday storm, citing USDA.  USDA said 8.18 million
  acres of corn and 5.64 million acres of soybeans in Iowa, was affected.  Crop holders of these areas in IA represent about 6 billion USD of product/infrastructure.  The story by Reuters that ran today indicates the derecho caused more damage than we initially
  thought.  Previously we thought 1.0 million corn harvested acres would be affected, but now have to rethink that figure. 
  
• The
  US and China postponed their Phase One talks that was set to start on Saturday. 
  
• France’s
  corn crop rating tanked from the previous week.  As of Aug 10, it fell to 65 percent from 74 percent!  This is still above 60 percent a year ago. 
  
• There
  has been a lot of talk about the unusually low US FSA crop insurance acreage reported after the close on report day but we would not read into this.  October FSA numbers will be the month to take a hard look to revisit the planted area. 
  

 

Ethanol
Production Profits during the COVID Pandemic

https://farmdocdaily.illinois.edu/2020/08/ethanol-production-profits-during-the-covid-pandemic.html?utm_source=farmdoc+daily+and+Farm+Policy+News+Updates&utm_campaign=97c4980232-FDD_RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_2caf2f9764-97c4980232-173649469

 

Corn
Export Developments

·        
None reported

 

Updated
8/13/20

• September
  corn is seen in a $3.10 and $3.35 range.  December $3.00-$3.50 range. 

 

Soybean
complex.

• Soybeans
  traded lower along with the products on light profit taking. Downside was limited from Chinese buying this week ahead of the US/China trade talks, which are now postponed.  They were to start Saturday.  SA and US Gulf cash prices for soybeans were down on
  Friday, led by a steep decline in Brazil fob ($393-$394/ton; dn about $8). 
  
• The
  trade should see China trade data sometime over the weekend. 
• USDA
  announced 2 cargoes of soybeans to China, 8^th straight day of 24-hour sales. 
  
• We
  heard China bought up to 4-5 US Q4 soybean cargoes out of the Gulf Thursday, and one PNW over the Nov.  China still needs at least 7 million tons of Q4 coverage, and 4-6 million tons for January through FH Feb. 
  
• China
  sold all 63,652 tons of imported soybeans from stockpiles at average 3126 yuan per ton. 
  
• India
  imported 824,078 tons of palm oil during July, highest in ten months and 1.4 percent higher than a year earlier.  July soybean oil imports were up 52 percent from a year ago to 484,525 tons.  Strong vegetable oil imports by India are expected to slow in the
  coming months on high import duties and prospects for a decent size domestic oilseed production. 
  

• China
  cash crush margins as of this morning, using our calculation, were 136 cents per bushel (123 previous), and compares to 132 cents a week ago and 81 cents around this time last year.
  

 

Oilseeds
Export Developments

·        
Update: Iran bought 130,000 tons of South American soybean meal this week but passed on corn. 

·        
Under the 24-hour USDA export sales reporting system, private exporters reported 126,000 tons of soybeans to China for 2020-21. 

 

 

 

Updated
8/13/20

• September
  soybeans are seen in a $8.70-$9.15 range.  November $8.60-$9.25.  
• September
  soybean meal is seen in a $285 to $310 range.  December $285-$320.   
• September
  soybean oil range is seen in a 30.00 to 32.50 range.  December 29.75-33.00 range.  
  

 

Wheat

• While
  corn and soybeans were the stars for bull traders on Thursday, Friday was the day for wheat.  US wheat futures
  rallied
  a good amount during the morning session but paired some of the gains by afternoon trading.  They closed mixed with Chicago higher, KC mixed, and MN higher.  Global import demand picked up late in the week with several major importers looking for high quality
  product.  Turkey announced during the trade that they are looking for a large amount of red milling wheat and durum wheat.  Argentina remains too dry and the forecast calls for limited precipitation.  Recall the Rosario Grains Exchange reduced their production
  estimate for Argentina from 19 million tons to 18 million tons.   
• Ukraine
  2020-21 grain exports fell 23 percent to 4.19 tons so far this year.  1.64MMT corn and 1.64MMT wheat.  Both are lower than last year. 
  
• Australia’s
  Grain Industry Association GIWA expects Western Australia wheat crop up 63 percent from 2019 to 8.89 million tons. 
  
• Iraq
  will donate 13,300 tons of wheat to Lebanon.
• The
  MGEX was bought by MIH (Miami International Holdings) and the deal is expected to be complete by the end of the year.    
  
• Paris
  December wheat was up 1.75 euros at 180.25, just over a 1-week high. 

 

US
Wheat Associates

“The
HRW harvest moved close to 90% complete this week with very good crop quality. The SRW harvest is complete with final quality results still to come. With close to half the SW crop in the bin, protein, moisture and test weights are looking very good. HRS harvest
advanced and northern durum harvest started this week. Heat and dryness brought down official condition and yield potential ratings but will push crop maturity and harvest this week.”

https://www.uswheat.org/wp-content/uploads/2020/08/HR_2020-8-14.pdf

 

Export
Developments.

• Turkey
  seeks 390,000 tons of red milling wheat and 110,000 tons of durum wheat on August 25.   They also seeks feed barley. 
  
• Red
  wheat shipment period is between Sep 4 and Oct 10
• Durum
  shipment period is between Sept. 15 and Oct. 10.
• Feed
  barley shipment period is between Sept. 11 and Sept. 25.
• Pakistan
  bought 60,000 tons of wheat from the Black Sea at $227/ton c&f.  Details were lacking. 
  
• Pakistan
  seeks 1.5 million tons of wheat on August 18. 
• Syria
  looks to sell and export 100,000 tons of feed barley with offers by Sep 1. 
  
• Syria
  seeks 200,000 tons of soft wheat from EU/Russia on Sept. 9 and 200,000 tons of wheat from Russia on Sept. 14.

 

Rice/Other

·        
Mauritius seeks 6,000 tons of white rice on August 17 for October through December delivery. 

·        
South Korea’s Agro-Fisheries & Food Trade Corp. seeks 60,556 tons of rice from Vietnam and other origins, on Aug. 19, for arrival in South Korea between Dec. 31, 2020, and February 28, 2021.

 

 

Updated
8/12/20

• Chicago
  September is seen in a $4.70-$5.15 range. December $4.80-$5.30. 
• KC
  September; $4.00-$4.40 range. December $4.10-$4.45.  
• MN
  September $4.75-$5.05 range.  December $4.95-$5.25.