FI Evening Grain Comments 06/29/20

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Calls: 
Corn steady, soybeans steady to 2 lower, Chicago & KC wheat to up 2 cents and MN up 3-5 cents. 

 

Corn,
wheat, and soybean oil made impressive gains today in part to a rally in the energy markets and short covering ahead of the USDA report.  There were rumors China bought US corn, but we could not verify this.  Hot and dry conditions are forecast for the US
WCB, which is supportive for corn. Soybeans ended slightly higher. Soybean meal ended $1.60-$2.00 lower.  China cash crush margins were weaker this morning.  China expanded their list of global meat plants for import to 15, including a beef plant in Canada
and pork plant in Denmark. Global wheat developments picked up.  StatsCan showed less than expected wheat, corn and soybean area.  Durum was higher than expected and canola near expectations.   

 

 

Weather
and Crop Progress

 

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:  U.S. weather conditions are still favorable, despite erratic rainfall during the weekend and erratic rainfall over the next two weeks. No seriously threatening weather is perceived right now, although less rain and
warm temperatures are expected as time moves along in the heart of the Midwest during July.

            Drying
in Western Europe will be closely monitored. France experienced some significant drying late last week and during the weekend and similar conditions were expected for a little while in Germany and parts of the U.K. Good crop weather will continue for coarse
grain and oilseeds in Eastern Europe

           
Net drying is also expected to expand from Russia’s Southern Region into eastern Ukraine which may be of some interest.

            Rainy
weather in China has not harmed most summer coarse grain and oilseed production potentials in the key production areas from east-central through northeastern parts of the nation, despite some recent flooding. Flooding has been more serious in lesser important
corn, soybean, groundnut and sorghum areas, but some damage has occurred in the Yangtze River Basin. Rapeseed production and quality has been hurt by this year’s wet weather.

            India’s
weather has been good so far this summer, but some flooding may evolve soon in a few central crop areas. Most crops should not be seriously harmed.

            Canola
in Australia is rated favorably, although more rain is needed in Western Australia and South Australia.

            Second
season corn maturation and harvesting should advance relatively well in Brazil, despite some rain in the southern production areas.

            Improving
rainfall in Mexico will be good for corn and sorghum planting and establishment.

            Canola
in Canada’s Prairies should improve with rain during the weekend and that which is coming this week.

            Overall,
weather is going to produce a mixed influence on market mentality today.

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Weather conditions during the weekend and that coming this week will improve for much of Canada’s Prairies. Badly needed rain is expected that will bolster soil moisture and improve production potentials

           
Wheat harvest weather in the U.S. Plains will be good over the next ten days and conditions in the Midwest will be fair to good. Some rain occasionally in the lower Midwest and areas southward into the Delta and Tennessee River Basin will hinder harvest activity
and could raise some crop quality issues.

            Western
Europe drier biased weather will expedite small grain development and maturation at the possible expense of some yield. Eastern Europe and the western CIS will remain plenty moist and some drying will be needed soon to promote grain maturation.

            Russia’s
spring wheat crop should be doing okay, but sunnier and warmer conditions would promote faster development and better yield potentials. Rain in southeastern parts of the New Lands this week will improve low soil moisture and support better future crop development.

            China’s
spring cereals are in favorable condition. Winter crops are maturing and being harvested with some concern about grain quality in the far south.

            Australia’s
winter cereals are establishing relatively well, but more rain is needed in Western and South Australia and in Queensland.

            South
Africa needs rain for its wheat crop especially in the east. Western Argentina remains too dry as well.

            Overall,
weather today will likely have a mixed influence on market mentality.

Source:
World Weather Inc. and FI

 

 

 

 

 

 

 

 

Bloomberg
Ag Calendar

MONDAY,
June 29:

• Canada
  Statcan data on seeded area for wheat, durum, canola, barley, soybeans, 8:30am
• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  crop progress, conditions — soybeans, wheat, cotton, 4pm
• Vietnam’s
  General Statistics data on coffee, rice, rubber exports
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• EARNINGS:
  Biosev

TUESDAY,
June 30:

• U.S.
  annual acreage planted – soybeans, wheat, cotton, corn
• USDA
  quarterly stocks of corn, wheat, barley, oat, sorghum and soybeans
• OECD
  annual agricultural policy monitoring and evaluation report
• U.S.
  agricultural prices paid, received, 3pm
• Malaysia’s
  palm oil export data for June 1-30

WEDNESDAY,
July 1:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• Brazil
  soybean exports
• Australia
  commodity index
• U.S.
  soybean crush, DDGS output, corn for ethanol, 3pm
• Holiday:
  Canada, Hong Kong

THURSDAY,
July 2:

• UN
  FAO world food price index, 4am
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports
• AB
  Foods trading update

FRIDAY,
July 3:

• U.S.
  Independence Day Holiday
• 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

Source:
Bloomberg and FI

 

 

 

 

 

 

 

GRAINS
INSPECTED AND/OR WEIGHED FOR EXPORT

                 
REPORTED IN WEEK ENDING JUN 25, 2020

                           
— METRIC TONS —

————————————————————————-

                                                  
CURRENT     PREVIOUS 

             ———–
WEEK ENDING ———-  MARKET YEAR  MARKET YEAR

 
GRAIN      06/25/2020  06/18/2020  06/27/2019    TO DATE     TO DATE  

 

BARLEY             
0           0           0          367        1,053 

CORN       
1,234,690   1,295,845     284,923   33,230,040   41,759,790 

FLAXSEED         
269          24           0          293           24 

MIXED              
0           0           0            0            0 

OATS               
0         100           0          300          299 

RYE                
0           0           0            0            0 

SORGHUM      
158,657     109,945      56,255    4,008,508    1,638,429 

SOYBEANS     
324,512     255,810     720,842   36,808,094   37,102,106 

SUNFLOWER          
0           0           0            0            0 

WHEAT        
515,359     686,036     696,142    2,000,953    1,984,089 

Total      
2,233,487   2,347,760   1,758,162   76,048,555   82,485,790 

————————————————————————-

CROP
MARKETING YEARS BEGIN JUNE 1 FOR WHEAT, RYE, OATS, BARLEY AND

FLAXSEED; 
SEPTEMBER 1 FOR CORN, SORGHUM, SOYBEANS AND SUNFLOWER SEEDS.

INCLUDES
WATERWAY SHIPMENTS TO CANADA.

 

USDA
inspections versus Reuters trade range                                            

Wheat      
515,359     versus  450000-650000           range

Corn         
1,234,690  versus  1000000-1300000       range

Soybeans  
324,512     versus  275000-550000           range

 

 

 

Macros

·        
Canadian Industrial Product Prices (M/M) May: 1.2% (est 2.7%; prev -2.3%)

·        
Canadian Building Permits (M/M) May: 20.2% (est 10.4%; prev -17.1%)

·        
Canadian Raw Materials Price Index (M/M) May: 16.4% (est 30.0%; prev -13.4%)

 

Corn.

·        
Corn futures surged on short covering after reaching a 6-week low, in part on a weather forecast calling for net drying across parts of the US western Corn Belt and major corn producing areas in
Europe.  There were rumors China bought US corn.  As much as 20 cargoes was noted.  Strength in US equity markets and energy futures added to the bullish undertone.  Locust swarms in Argentina that made an unusual migration int Corrientes could now threaten
Brazil and Uruguay crops. 

·        
Funds bought an estimated net 33,000 corn contracts on Monday. 

·        
US corn conditions increased one point to 73 percent from the previous week, this compares to 68 percent average.  The trade was looking for 73 percent.  4 percent of the crop is in the silking stage
versus 7 percent average. 

·        
USDA US corn export inspections as of June 25, 2020 were 1,234,690 tons, higher end of a range of trade expectations, below 1,295,845 tons previous week and compares to 284,923 tons year ago. Major
countries included Japan for 308,453 tons, Mexico for 288,698 tons, and Colombia for 158,693 tons.

• US
  coronavirus cases surged over the weekend.  Globally there are more than 500,000 deaths. 
  
• Parts
  of France and UK along with Western Europe may see crop stress this week with limited rainfall followed by very warm temperatures that occurred over the weekend. 
  
• Bloomberg:
  China’s imports of American goods in the first five months have reached about 19% of the total target for 2020 set in the phase one trade pact with the U.S. The Asian nation promised to purchase an additional $200 billion of U.S. goods and services in 2020
  and 2021 in the agreement signed on Jan 15.
• StatsCan
  reported the corn area at 1.440 million hectares, 6.3 percent below their April estimate and 3.7 percent below 2019.  The barley area was slightly above expectations at 3.036 million hectares and 4.2 percent above their April estimate. 
  
• October
  options started trading today. 
• China
  increased import duties on Australian barley and sorghum to 3% and 2%, respectively. 
  

 

Corn
Export Developments

• Late
  last week South Korea’s KOCOPIA group bought 60,000 tons of Brazilian corn at $189.97/ton c&f for arrival around October 15. 
  
• Late
  last week South Korea’s MFG bought corn at $184.22/ton, according to AgriCensus, for last half October arrival. 
  

 

 

 

Updated
6/25/20

September
corn is seen in a $3.10 and $3.45 range over the short term.  December lows could reach $2.90 if US weather cooperates. 

 

Soybean
complex.

• CBOT
  soybeans
  ended higher in part to higher corn, wheat and soybean oil. US energy markets traded higher, which supported soybean oil.  Short covering was noted. June 1 soybean stocks were seen down from a year ago but still second highest on record.  The trade expects
  USDA to report an increase in US soybean planted area when updated on Tuesday.  An upward revision to the US soybean area by 2 million acres or more could send November sharply lower.   Soybean oil ended 37-42 points higher. 
  US
  soybean oil basis across the ECB and WCB firmed about 50 to 75 points last week.  IL was thought to be at option. Gulf was unchanged at 250 over. 
  

·        
USDA US soybean export inspections as of June 25, 2020 were 324,512 tons, within a range of trade expectations, above 255,810 tons previous week and compares to 720,842 tons year ago. Major countries
included Egypt for 132,619 tons, Mexico for 65,364 tons, and Japan for 27,252 tons. China took only a small amount of soybeans. 

·        
US soybean conditions were rated 71 percent for the good and excellent categories, well up from 54 percent year ago and compares to 65 percent average.  The trade was looking for 70 percent.  14
percent of the crop was in the blooming stage, above 11 percent 5-year average. 

·        
There were no 24-hour announcements this morning. 

·        
Funds bought an estimated net 2,000 soybeans contracts on Monday, sold 2,000 meal and bought 4,000 soybean oil.  

• The
  US Ohio River Valley will see 1-3 inches of rain this week through Friday.  The Delta and southeastern region will remain wet.  Other parts of the upper Midwest and western Corn Belt may see restricted rainfall.  It should also remain dry across the central
  Great Plains.  The Northern Plains will see rain. 
• StatsCan
  reported the Canadian canola area at 8.409 million hectares, slightly above expectations and below 8.481 million for 2019.  The soybean area of 2.082 million hectares was nearly 100,000 below trade expectations. 
  
• Strategie
  Grains lowered their EU rapeseed crop at 16.54 million tons from 16.68 million. 
  

 

Oilseeds
Export Developments

• USDA
  seeks 7,230 tons of bulk crude degummed soybean oil for the Dominican Republic for Aug 17-27 shipment, on June 30. 
  
• Results
  awaited:  Syria will retender for 50,000 tons of soymeal and 50,000 tons of corn on June 24 for delivery within four months of contract.

 

 

 

 

 

Updated
6/25/20

• August
  soybeans are seen in a $8.50-$8.90 range, over the short term (ST).
• August
  soybean meal is seen in a $275 to $300 range.  (ST)
• August
  soybean oil range is seen in a 26.75 to 29.00 range over the medium term

 

Wheat

• US
  wheat futures traded higher led by Chicago with bull spreading. Short covering was a feature ahead of the USDA report.   Chicago wheat hit a none-month low on Friday. 
  

·        
Funds bought an estimated net 11,000 Chicago wheat contracts on Monday. 

·        
US winter wheat conditions were unchanged at 52 percent for the combined good and excellent categories and compares to 50 percent average.  The trade was looking for an  unchanged winter wheat rating. 
US winter wheat harvest progress advanced to 41 percent (trade 44 percent) from 29 percent week ago and compares to 41 percent 5-year average. 

·        
US spring wheat ratings fell hard again to 69 percent from 75 percent week earlier (trade was looking for unchanged) and compares to 75 percent year ago and 67 percent average.  US spring wheat headed
was 36 percent versus 45 percent 5-year average. 

·        
USDA US all-wheat export inspections as of June 25, 2020 were 515,359 tons, within a range of trade expectations, below 686,036 tons previous week and compares to 696,142 tons year ago. Major countries
included Philippines for 166,255 tons, Japan for 65,792 tons, and Indonesia for 58,200 tons.

• Restricted
  rainfall is expected over the next ten days from eastern Ukraine and Russia’s Southern region to western Kazakhstan.
  
• Paris
  December wheat was up 3.00 at 181.75 euros.
• Agritel
  looks for the Ukraine wheat crop to end up near 26.25 million tons, down 7.2 percent from year earlier. 
  
• SovEcon
  reported Russian 12.5% protein wheat was at $200.5 a ton FOB, down $1.5 from the previous week.  IKAR noted August wheat at $197 a ton, down $2.
• European
  weekly trade data is delayed due to technical issues. 
• StatsCan
  reported the all-wheat Canadian wheat area at 10.105 million hectares, nearly 100,000 below trade expectations and above 9.957 million for 2019. Durum was estimated at 2.302 million, 76,000 hectares above a Reuters trade guess. 
  
• U.S.
  Temperatures will be hot in the southern Plains for much of the next two weeks with frequent highs in the 90s to 106 degrees Fahrenheit. 
  

 

Export
Developments.

• South
  Korea’s MFG seeks 70,000 tons of feed wheat on June 30, according to Reuters, for arrival around November 30.
  
• Algeria
  seeks 50,000 tons of milling wheat, optional origin, on June 30 for Aug-Sep shipment, depending on origin. 
  
• Jordan
  seeks 120,000 tons of wheat on June 30 for Nov-Dec shipment. 
• Ethiopia
  seeks 400,000 tons of wheat on July 10 for shipment within two months.    
  

 

Rice/Other

• Locust
  swarms are impacting India’s sugarcane crop.

·        
US COTTON – 41 PCT CONDITION GOOD/EXCELLENT VS 40 PCT WK AGO (52 PCT YR AGO) -USDA

·        
US COTTON – 35 PCT SQUARING VS 27 PCT WK AGO (36 PCT 5-YR AVG) -USDA

·        
US COTTON – 9 PCT SETTING BOLLS VS 6 PCT WK AGO (7 PCT 5-YR AVG) -USDA

·        
US RICE – 14 PCT HEADED VS 9 PCT WK AGO (13 PCT 5-YR AVG) -USDA

·        
US RICE – 74 PCT CONDITION GOOD/EXCELLENT VS 73 PCT WK AGO (68 PCT YR AGO) -USDA

 

Updated 6/26/20

• Chicago September is seen in
  a $4.60-$4.90 range, over the short term.
• KC September$4.10 support; $4.00-$4.50
  range over the medium term. 
• MN September $4.85-$5.25 range
  over the medium term with bias to upside.