FI Evening Grain Comments 07/07/21

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Choppy
trade today in part to uncertainty over US weather and volatile outside commodity & bond markets.  Morning weather models were mostly unchanged with some areas showing a slight improvement.  Midwest was unchanged.  1-7 day looks like rains were shifted south
for the upper central US.  There is talk the US Midwest may trend drier during last half July. 

 

Weather

1-7
DAY

 

 

WORLD
WEATHER INC.

MOST
IMPORTANT WEATHER OF THE DAY

• Despite
  the rumors, U.S. Midwest weather will remain mostly good in the central and east for the next ten days and probably for the next two weeks
• Warming
  and less rain is expected in the western Corn Belt during the second week of the forecast, July 15-22

o  
The greatest warmth during that period will be in the Great Plains where highs in the 90s and over 100 will be possible

o  
The stage may be setting up for a surge of warmer weather for the western Corn Belt in the last ten days of this month, but if that occurs it would be temporary with the ridge shifting back to the west soon after that period

• Sufficient
  soil moisture and precipitation is expected to carry on normal crop development in the central and eastern U.S. Midwest corn and soybean production areas for much of July

o  
Western Corn Belt will need to be closely monitored for a new period of net drying in the middle to latter part of this month

• The
  northern Plains, upper Midwest and southern Canada Prairies will be the most persistent dry region – despite some rain in this first week of the outlook
• Unsettled
  weather through Friday of this week in southern Canada’s Prairies, the northern Plains and a part of the northwestern Corn Belt should bring some rain, but only temporary relief is expected

o  
Greater rain will be needed to induce a more lasting improvement in soil moisture

o  
Week two weather, July 15-22, will be trending drier and warmer once again which will reverse the improving trend from this first week of the outlook

• Some
  greater rain is possible in the northern and far western Prairies during the period
• Southern
  U.S. Plains weather is expected to steadily improve over the next week to ten days

o  
Less frequent and less significant rain is expected in West Texas where warmer temperatures and sunshine will help to stimulate aggressive crop development after recent rain of significance

• Tropical
  Storm Elsa will move into northern Florida this morning and will trek to the northeast through southeastern Georgia, the Carolinas and eastern Virginia later today through Friday before following the upper Atlantic Coast to Nova Scotia and Newfoundland, Canada
  this weekend

o  
The storm will produce some strong wind, heavy rain and flooding, but the impact on agriculture is expected to be low

o  
No other tropical cyclones or disturbances are likely in the Gulf of Mexico, Caribbean Sea or Atlantic Ocean through the next week and maybe ten days

• Drought
  will continue in the U.S. Pacific Northwest where no rain is expected and very warm to hot temperatures are likely for another ten days – at least
• Southwest
  U.S. monsoon rainfall is expected to increase in the coming week to ten days in Arizona, New Mexico, Colorado and southern Utah
• Mexico
  rainfall will be greatest in the west, central and north, but no the northeast
  

o  
Crop and soil moisture will slowly improve

• Additional
  rain is expected in Alberta and portions of Saskatchewan, Canada through Friday and then in the western and northern Prairies next week supporting better crop development in each of those areas
• Rain
  is expected to fall significantly in northern parts of Kazakhstan and some neighboring areas of Russia’s New Lands

o  
Temporary improvements to spring wheat, sunseed and other crops will result

• Interior
  western Russia, including the Volga Basin, will receive very little rain over the coming week

o  
Dry conditions will also impact eastern portions of Russia’s Southern Region and in far western Kazakhstan

o  
Temperatures will be warmer than usual this week which will accelerate the region’s drying trend and raising the potential for some crop stress

• Brazil
  and Argentina precipitation Tuesday was minimal
• Argentina
  will receive some rain periodically over the coming ten days which should benefit winter wheat and barley establishment

o  
The precipitation will be greatest in the July 15-22 period

• Brazil
  will be dry this week and will receive rain in the far south during mid- to late-week next week ahead of cooler temperatures
• Brazil
  grain, sugarcane, coffee and citrus areas are not vulnerable to any threatening cold temperatures for at least the next ten days.
  
• Europe
  will experience periodic rain from France and the U.K. to Scandinavia, Poland, Austria and northern Italy during the coming ten days

o  
Net drying is expected in portions of the interior Balkans region

• Some
  welcome rain will fall in a few of the drier areas of the Balkan Counties periodically over the next two weeks, but the greatest rain is likely at full week away
• China
  remains plenty wet if not a little too wet in some areas

o  
Tuesday’s rainfall was greatest from far eastern Sichuan to northern Jiangsu with 1.00 to more than 5.00 inches resulting

• Net
  drying occurred in many other areas, although showers occurred near the south coast and the Northeast Provinces
• All
  of China will continue to receive frequent rainfall over the next two weeks raising the need for drying in many areas.
  

o  
Additional flooding is expected

o  
Rain amounts this week will be lighter than usual in Hunan, southeastern Guizhou, Guangxi, Guangdong and Fujian raising the need for rain soon

• Week
  two precipitation is advertised to be much greater once again in these provinces providing timely relief from dryness
• Xinjiang,
  China weather Tuesday was dry and seasonably warm to hot

o  
Highest temperatures were in the 90s to near 100 Fahrenheit

• Low
  temperatures were in the 60s and lower 70s
• Xinjiang
  weather will continue good for the next few days, but some thunderstorms are expected late this week and especially during the weekend in northeastern parts of the region

o  
Seasonably warm temperatures will continue all of this week

• Northern
  India will be dry through the end of this workweek and then rain will develop during the weekend and continue to expand across the north next week

o  
The rain will be extremely important to the north where it has been quite dry recently.

o  
Temperatures will be warm in the north and seasonable in the south.

• Tropical
  Depression 07W formed during the weekend in the Philippines Sea moved into Fujian China early today producing some heavy rain in the province and neighboring areas
• A
  tropical depression in the East China Sea will move into northeastern Vietnam late today and Thursday

o  
Heavy rain will result, but the storm will not have time to become a significant tropical cyclone producing damaging wind or serious flooding

• Southeast
  Canada corn, soybean and wheat conditions have improved greatly in recent weeks
  

o  
A more erratic and lighter rainfall bias is expected over the next ten days and temperatures will be seasonably cool maintaining good crop development potential

• North
  Africa has been and will continue to be mostly dry supporting late season winter crop harvesting
  
• Australia
  weather will continue well mixed over the next two weeks supporting improved winter crop establishment

o  
Rain is needed in northwestern Victoria and South Australia

• Thailand,
  Cambodia and Vietnam will experience greater rain this week

o  
A general improvement in crop conditions, soil moisture and eventually the water supply is expected

• Thailand,
  corn, rice, sugarcane and other crops were becoming stressed because of dryness recently. The same may be occurring in some Cambodia and Vietnam locations
• Indonesia
  and Malaysia rainfall is expected to be sufficient to maintain or improve soil moisture for all crops
• Philippines
  rainfall will be lighter and more sporadic than usual during the coming week to ten days
  
• West
  Africa rainfall from Ivory Coast and Ghana to Cameroon and Nigeria will be lighter than usual during the coming ten days, but timely rainfall will maintain favorable crop conditions

o  
Ivory Coast and Ghana will experience the least rainfall and have the greatest increase in rainfall needs over the next two weeks

• Erratic
  rainfall has been and will continue to fall from Uganda and Kenya into parts of Ethiopia

o  
A boost in precipitation is needed and expected

• Ethiopia
  rainfall is expected to gradually improve while a boost in precipitation will continue needed in other areas
• South
  Africa will experience additional showers in the far west periodically this week
  

o  
The moisture will be good for winter crops, but more moisture will be needed in Free State and other eastern wheat production areas

o  
Summer crop harvesting has advanced well this year and the planting of winter grains has also gone well, but there is need for moisture in eastern winter crop areas

• Nicaragua
  and Honduras have been and will continue to receive some welcome rain recently, but moisture deficits are continuing in some areas

o  
Additional improvement is needed and may come slowly

• Southern
  Oscillation Index is mostly neutral at +5.65 and the index is expected to continue rising for a few more days
• New
  Zealand rainfall during the coming week to ten days will be erratic and lighter than usual in South Island and wetter biased in North Island

Source:
World Weather, Inc.

 

Bloomberg
Ag Calendar

Thursday,
July 8:

• Brazil’s
  Conab releases data on yield, area and output of corn and soybeans
• FAO
  World Food Price Index
• EIA
  weekly U.S. ethanol inventories, production
• Brazil
  Coffee Council Conference, Sao Paulo
• Port
  of Rouen data on French grain exports
• EARNINGS:
  Suedzucker, Agrana

Friday,
July 9:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am

• ICE
  Futures Europe weekly commitments of traders report (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

 

 

Macros

US
JOLTS Job Openings May: 9209K (est 9325K; prev R 9193K)

65
Counterparties Take $785.72 Bln At Fed’s Fixed-Rate Reverse Repo (prev $772.581Bln, 66 Bidders)

EIA
US Crude Output To Fall 210,000 BPD To 11.10 Mln BPD In 2021 (Vs Fall Of 230K BPD Forecast Last Month)

–
US Petroleum Demand To Rise 1.04 Mln BPD To 20.68 Mln BPD In 2022 (Vs Rise Of 1 Mln BPD Previously Forecast)

–
US Petroleum Demand To Rise 1.52 Mln BPD To 19.64 Mln BPD In 2021 (Vs Rise Of 1.49 Mln BPD Previously Forecast)

–
US Crude Output To Rise 750K BPD To 11.85 Mln BPD In 2022 (Vs Rise Of 710K BPD Forecast Last Month)- Eia

 

*FOMC
Minutes: Fed Officials Continued to Debate Launching Standing Repo Facility

*FOMC
Minutes: Standing Repo Facility Drew Favorable Response From Officials

*FOMC
Minutes: Officials Tied Upside Inflation Surprise to Supply Related Issues

*FOMC
Minutes: Most Officials Expected Inflation Jump to Subside

*FOMC
Minutes: ‘Various’ Officials Expected Taper Conditions to Be Meet Earlier Than Expected

*FOMC
Minutes: Several Fed Officials Wanted Taper of MBS Buying Before Treasurys

 

Corn

• US
  corn futures
  traded the day session mostly lower in the non-expiring months in part to stabilizing US corn conditions (unchanged from previous week).  Soybean/corn spreading was noted.  South Korea passed on corn.  Some analysts think China peaked on buying corn from the
  US and Ukraine.  But later we heard there might be China interest for new-crop corn at around $5.25 December corn futures (6 cents away from that point).  There was a good amount of December corn option interest today (mostly sell flow). 
  
• Conab
  is due out Thursday morning. A Bloomberg survey calls for 136.84 million tons for 2020-21 Brazil soybean production, up about 1MMT from the previous month and corn at 89.36 million, down 7MMT from June.  If realized, soybean production would be 12 million
  tons above year ago and corn down 13.2 million tons from 2020-21. 
• US
  RIN prices have eased to around $1.44 (ethanol) from 1.54 this time last week. 
  
• DTN: 
  Philippine pork imports rose six times from a year ago in April and May after the government cut import tariffs and increased allowed overseas purchases to stabilize supply and prices. 
  
• The
  latest crop ratings did prompt us to slightly lower our US spring, durum, corn and soybean crop yields.  For the next report, USDA will release initial surveyed spring and durum production.  August is the first survey for soybeans and corn, so we don’t see
  USDA adjusting soy & corn yields in the July report, but adjust production based on the new harvested area. 
  

 

Export
developments.

• Jordan
  bought 60,000 tons of feed barley at $271.95/ton c&f for Nov/Dec 2021 shipment. 
  
• South
  Korea’s NOFI passed on 138,000 tons of corn and bought 65,000 tons of feed wheat at $286.39/ton c&f for arrival in November. 
  
• Turkey
  seeks 440,000 tons of feed barley on July 12 for shipment between July 29 and August 16. 
  
• China
  plans to auction more than 130,000 tons of imported corn from the United States and Ukraine on July 9 (Sinograin).  123,954 US & 6,340 Ukraine. 
  

 

 

 

Updated
07/01/21

September
corn is seen is a$4.50-$6.25 range.

December
corn is seen in a $4.25-$6.00 range.

 

Soybeans

• The
  US soybean complex traded in a wide two-sided range.  Canola,
  soybeans and spring wheat bounced higher during the day session.  Some might be looking at the longer-term weather models hinting a drier forecast for last half July for the Midwest. 
  Technical
  buying and spreading against corn/wheat could have had some upward price influence for soybeans. There was talk the selling yesterday was overdone.  Note some of the far western areas of the US Corn Belt missed out of rain from early Tuesday into Wednesday. 
  
• November
  canola was up $19.50 to $790.90 per ton, and the November-January spread traded 3,617 times. 
  
• Argentina
  port workers went on strike again slowing loadings and shipments of key agriculture commodities.  They are looking for higher salaries.  Not all areas of Rosario were affected. 
  
• Abiove
  estimated 2021 Brazil soybean exports at 86.7 million tons, up from 85.7 million previously.  Stocks were lowered 1 million to 4.16 million and crush unchanged at 46.5 million tons.  The group warned a 10 percent biodiesel mix could result in producers planting
  less soybeans next season.  They like to see it at 13%. 
• We
  think at current prices levels, Brazil producers are in the position to expand the planted area by 4-5%. 
  
• Conab
  is due out Thursday morning. A Bloomberg survey calls for 136.84 million tons for 2020-21 Brazil soybean production, up about 1MMT from the previous month and corn at 89.36 million, down 7MMT from June.  If realized, soybean production would be 12 million
  tons above year ago and corn down 13.2 million tons from 2020-21. 
• Yesterday
  it was reported Brazil June soybean exports fell to 11.112 million tons from 12.741 tons year earlier, and down about 26 percent from May, as China slows imports.  Normally nearly three fourths of Brazil’s June soybean exports head to China, but last month
  they accounted to 64 percent. 
• Malaysian
  Palm Oil Association’s (MPOA’s) projected a 1.6% monthly rise in June palm production. This compares to a Reuters survey looking for a 7% increase, a supportive feature. 
  

 

 

Export
Developments

• None
  reported

 

Updated
6/30/21

August
soybeans are seen in a $12.75-$15.00 range; November $11.75-$15.00

August
soybean meal – $330-$410; December $320-$425

August
soybean oil – 60-66; December 46-67 cent range

 

Wheat

• US
  wheat traded two-sided as well.  US spring wheat was higher from a more than expected drop in US crop conditions and mixed forecasts for the far northern Great Plains and parts of the Canadian Prairies.  Chicago wheat ended lower and KC unchanged to higher. 
  MN wheat was 5.75-14.75 cents higher. 
• North
  Dakota wheat association mentioned some of the spring wheat crop could be abandoned and/or cut for hay.  Yesterday’s crop conditions declined for the Dakota’s last week (2-3 points). 
  
• Montana
  spring crop conditions fell 14 points.  USDA declared another 10 Montana counties under drought emergency, bringing the total to 26 out of the 56 in all. 
  
• Agritel
  sees the Russia wheat crop at 82.3 million tons, down 3 percent from last year, and up from their previous forecast of 78.1 million tons. 
  
• The
  association of German farmers reported Germany will harvest about 22.82 million tons of winter wheat in 2021, up 5% on the year.  Rapeseed was expected to increase 6 percent to around 3.71 million tons. 
  
• December
  Paris milling wheat settled 1.75 euros higher, or 0.9%, at 201.75 euros ($238.02) a ton.  Some traders noted buying after wheat hovered around the 200 level. 
  
• The
  Euro hit a 3-month low against the USD earlier.

 

Export
Developments. 

• Algeria
  seeks 50,000 tons of milling wheat on July 8 for July shipment, valid until July 9.
  
• Thailand
  saw offers for 230,700 tons of animal feed wheat ($285-$287) for Aug-Sep shipment.
  
• South
  Korea’s MFG bought 65,000 tons of feed wheat at $286.86/ton for Sep 20-Oct 10 shipment. 
  
• Japan
  seeks 80,000 tons of feed wheat and 100,000 tons of barley on July 14. 
• Japan’s
  AgMin seeks 108,175 tons of food-quality wheat from the United States, Canada and Australia in a regular tender.

• Bangladesh’s
  seeks 50,000 tons of milling wheat on July 15.
• Bangladesh’s
  seeks 50,000 tons of milling wheat on July 18.

• Ethiopia
  seeks 400,000 tons of wheat on July 19. 

 

Rice/Other

• Bangladesh
  seeks 50,000 tons of rice from India.
  Separately…

• Bangladesh
  seeks 50,000 tons of rice on July 12. 

 

Updated
6/30/21

September
Chicago wheat is seen in a $5.90-$7.00 range

September
KC wheat is seen in a $5.60-$6.70

September
MN wheat is seen in a $7.50-$9.00