FI Evening Grain Comments 08//03/20

PDF attached

 

Calls
–

Soybeans:  
Down 2-4

Soybean
meal:  Steady to $1.50 lower

Soybean
oil:  10-20 points higher

Corn: 
unchanged to 2 lower

Chicago
wheat:  1-3 lower

KC
wheat:  2-4 lower

Minn
wheat:  3-5 lower

 

We
updated our price trading ranges

 

US
soybean crop ratings increased one point (trade looking for unchanged) to 73.  Corn was unchanged, as expected.  Spring wheat conditions increased 3 points to 73 (trade was unch.).  US wheat harvesting progress fell below trade expectations.  This morning
USDA reported 260,000 tons of soybeans to unknown. 

 

Weather
and Crop Progress

 

 

 

 

 

 

7
Day Precipitation Outlook

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:  U.S. weather is expected to be mostly favorable as it should continue to be in India and China.

            Net
drying will occur in parts of Canada’s Prairies for a while this week into next week which may stress a few crops like those of the northwestern Plains. Crop conditions are improving in Mexico and still look good for Australia with significant rain coming
soon to that nation.

            Early
season corn planting will advance quickly in Brazil, but rain is needed to improve soil moisture for emergence and establishment. Dryness and some excessive heat will be a concern for summer coarse grain and oilseed crops in parts of western and southeastern
Europe as well as eastern Ukraine into Russia’s Southern Region. Dryness will also continue in some of the sunseed areas of Russia’s eastern New Lands.

            Some
concern over net drying will also continue in oil palm production areas of Indonesia.

            Overall,
weather today will likely produce a mixed influence on market mentality with a bearish bias remaining.

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Most of the damage done to this year’s spring cereals has already been done and no further change of great significance is expected unless the harvest season turns wet.  Some lower production is expected from Russia and Europe
due to dryness in the New Lands and in various areas in northwestern and far southeastern Europe. China’s spring wheat has performed well. Australia’s winter crops will benefit greatly from rain coming over the next two weeks and some ongoing dryness in Canada’s
Prairies may further stress late filling crops. Argentina drought will not change over the next two weeks.

            Overall,
weather today will likely leave a neutral to slightly bullish bias to market mentality.

 

Bloomberg
Ag Calendar

MONDAY,
August 3:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• International
  Cotton Advisory Committee updates global outlook
• ABAG,
  Brazil’s agri-business association, hosts annual conference
• U.S.
  crop conditions for soybeans, corn, cotton; wheat harvesting progress, 4pm
• USDA
  soybean crush, 3pm
• U.S.
  DDGS production, corn for ethanol, 3pm
• Malaysia
  palm oil export data for July 1-31 from AmSpec, SGS
• Honduras,
  Costa Rica coffee exports for July
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• HOLIDAY:
  Canada

TUESDAY,
August 4:

• U.S.
  Purdue Agriculture Sentiment
• New
  Zealand global dairy trade auction
• Australia
  commodity index

WEDNESDAY,
August 5:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• China’s
  CNGOIC to release supply-demand reports on corn, soybeans
• French
  Agriculture ministry’s 2020 grain estimates
• Malaysia’s
  palm oil export data for August 1-5
• New
  Zealand Commodity Price

THURSDAY,
August 6:

• FAO
  World Food Price Index
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports

FRIDAY,
August 7:

• China’s
  foreign trade data for July, including imports of soybeans and meat
• 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

 

 

 

 

USDA
inspections versus Reuters trade range                                            

Wheat            
500,110           versus  450000-675000           range

Corn               
716,127           versus  700000-1150000         range

Soybeans        
551,543           versus  375000-700000           range

 

 

 

Reuters
headlines for selected Brazil exports:

·        
BRAZIL JULY SOYBEAN EXPORTS TOTAL 10.37 MILLION T VERSUS 7.44 MILLION T IN SAME MONTH YEAR AGO – GOVERNMENT DATA

·        
BRAZIL JULY CORN EXPORTS TOTAL 4.15 MILLION TNS VERSUS 5.9 MILLION TNS IN SAME MONTH YEAR AGO – GOVERNMENT DATA

·        
BRAZIL JULY SUGAR EXPORTS TOTAL 3.48 MILLION TNS VERSUS 1.82 MILLION TNS IN SAME MONTH YEAR AGO – GOVERNMENT DATA

·        
BRAZIL JULY COFFEE EXPORTS TOTAL 167,800 TNS VERSUS 175,000 TNS IN THE SAME MONTH A YEAR AGO – GOVERNMENT DATA

·        
BRAZIL JULY BEEF EXPORTS TOTAL 169,200 TNS VERSUS 133,200 TNS IN THE SAME MONTH A YEAR AGO – GOVERNMENT DATA

·        
BRAZIL JULY CHICKEN EXPORTS TOTAL 337,500 TNS VERSUS 371,800 TNS IN THE SAME MONTH A YEAR AGO – GOVERNMENT DATA

·        
BRAZIL JULY PORK EXPORTS TOTAL 90,200 TNS VERSUS 61,480 TNS IN THE SAME MONTH A YEAR AGO – GOVERNMENT DATA

 

(Reuters)
– U.S.
manufacturing activity
accelerated to its highest level in nearly 1-1/2 years in July as orders increased despite a resurgence in new COVID-19 infections, which is raising fears about the sustainability of a budding economic recovery.

 

Corn.

• Corn
  futures ended 1.50 cents higher basis Sep and Dec was up the same amount.  The Sep-Dec spread remains wide at 11 cents, Dec premium. 
  
• Technical
  buying was noted after prices hit a one-month low on Friday despite a higher USD. 
  
• StoneX:
  US corn yield and production: 182.4/15.320 billion; soybeans: 54.2/4.496 billion
  
• US
  corn conditions were unchanged at 72% G/E, at trade expectations, and compare to 57% a year ago.  Corn dough 39% vs 22% last week, and 20% a year ago.  Corn silking 92% vs 82% last week, and 72% a year ago. 
  

• US
  end users were active in buying US corn but from what we understand, its only in the front months as the CBOT corn carry is wide. 
  
• US
  export business is slow. 
• USDA
  US corn export inspections as of July 30, 2020 were 716,127 tons, within a range of trade expectations, below 840,796 tons previous week and compares to 645,822 tons year ago. Major countries included Japan for 324,900 tons, Mexico for 228,658 tons, and Colombia
  for 86,284 tons.
• Australia
  reported an outbreak of H7N7 bird flu at a free-range egg farm in the state of Victoria.

 

US
corn usage for ethanol production rebounded to 379 million bushels for June versus 300 million in May and 245 million in April.  Year ago, corn use was 456 million.  Sorghum use fell to a multi-month low of 2.3 million. 

 

 

Corn
Export Developments

• None
  reported

 

From
Trade News Service:

 

 

Updated
8/3/20

• September
  corn is seen in a $3.00 and $3.25 range.  December lows could reach $2.95 (Updated 8/3).  The US is staring down at a large crop. 
  

 

Soybean
complex.

·        
Soybeans
traded much of the day higher following sharply higher soybean oil.  September soybeans were up for the third consecutive day.  August was unchanged, September 2.75 cents higher and November up 3.75 cents. 

·        
September soybean oil rallied 75 points to 31.22, highest values since February 24. 
We think September SBO has a good chance to trade up into the 32.00-32.50 area. 
Palm oil prices in Malaysia and China were sharply higher on Monday from robust July Malaysian palm oil shipments.  Late last week EIA reported a large increase in US soybean oil for biodiesel use which is helping CBOT SBO.  Product spreading pressured
US soybean meal.  Sep meal was down $1.90. 

·        
Offers for US Q3 soybean oil are drying up, in part to good biodiesel demand and September crush downtime.  We are hearing Q4 is tight but Q1 is available.  Argentina Aug was last 470 over and Brazil
fob 550 over. 

·        
June U.S. soybean crush fell for a third straight month to 177.3 million bushels.  Soybean oil stocks at 2.271 billion pounds are lowest since December, 72 million below an average trade guess. 
See below. 

• StoneX:
  US corn yield and production: 182.4/15.320 billion; soybeans: 54.2/4.496 billion
  
• US
  soybean conditions were reported at 73% G/E vs 72% last week, and 54% a year ago.  Trade was looking for unchanged.  Soybeans blooming 85% G/E vs 76% last week, and 68% a year ago. 
  

·        
USDA announced additional sales for unknown destination(s).  It might be for Europe or Mexico as we didn’t hear of any Chinese buying over the weekend. 

·        
US weather remains ideal but warmer temperatures return this week for the US Midwest and rains will be less frequent. 

• USDA
  US soybean export inspections as of July 30, 2020 were 551,543 tons, within a range of trade expectations, above 504,645 tons previous week and compares to 1,032,874 tons year ago. Major countries included Egypt for 87,811 tons, Indonesia for 83,715 tons,
  and China Main for 71,977 tons.
• US
  truck soybean meal basis fell by $2 at Claypool, Indiana.  Spot Gulf meal was up $2 to $3/ton at $10/$16 over. 
  

·        
China sold 56,958 tons of imported soybeans from reserves at an average price of 3,153 yuan per ton. 

·        
Ukraine sunflower oil was last $790-$805 per ton fob (Sep) Black Sea, according to APK-Inform, up about $25 per ton from the previous week. 

·        
Strategie Grains:  EU rapeseed crop estimated at 16.79 million tons, up from 16.54 previous, and down from 17.12 forecast for 2019. 

·        
The European Union imported 1.37 million tons of soybean imports during the July 1 and August 2 period, 6 percent below the same period year ago. EU rapeseed imports reached 90,415 tons, down 68%.

·        
China bought about 20 to 25 cargoes of soybeans last week, mostly of Brazilian origin. 

·        
Palm oil: After one day holiday, palm appreciated about 2 percent on good July exports. 

·        
AmSpec: Malaysian palm oil exports for the month of July were up 6.8 percent to 1.740 million tons from 1.629 million tons for June. 

 

The
US June crush was reported at 177.3 million bushels, 0.6 bushel below a Bloomberg trade guess below 179.5 million for May 2020, and well above 157.6 million for June 2019.  But on a daily adjusted basis, the crush was 5.91 million bushels per day, up from
5.79 million during the month of May.  The largest surprise was soybean oil stocks.  At the end of June, they fell to 2.271 billion pounds from 2.447 billion in May, 72 million pounds below the average trade guess, and smallest since December.  Note the soybean
oil yield was 11.48, up from 11.46 for May.  Soybean meal stocks of 462,000 short tons are down from 498,000 previous month. 

 

 

Oilseeds
Export Developments

• The
  CCC seeks 5,780 to 7,230 tons of bulk degummed soybean oil for the Dominica Republic on August 4 for October 12-22 shipment. 
  
• Under
  the 24-hour announcement system, private exporters sold 260,000 tons of soybeans to unknown, 8,000 for 2019-20 and 252,000 tons for 2020-21 shipment. 
  

 

September
CBOT soybean oil and oil share plus Oct crush

 

 

 

 

 

Source:
Reuters and FI

 

Updated
8/3/20

• September
  soybeans are seen in a $8.65-$9.05 range.
• September
  soybean meal is seen in a $280 to $295 range. 
• September
  soybean oil range is seen in a 29.00 to 32.50 range.

 

Wheat

• US
  wheat futures
  traded lower on harvest pressure, an upward revision in Russia’s wheat crop and nonthreatening US weather.  Some of the dry areas of Canada saw rain over the weekend.  Net drying is expected to continue from southern Alberta and southwestern and south-central
  Saskatchewan into central Saskatchewan during much of the next two weeks.  EU wheat traded at a 1-month low. 
  
• Australia’s
  winter crops will benefit greatly from rain coming over the next two weeks.
  
• US
  spring wheat harvesting progress is slowly picking up.  It advanced 4 points to 5 percent and compares to 2 percent a year ago.  The trade was looking for 8 percent. 
  
• Spring
  wheat conditions increased 3 points to 73% and compare to 70% last week, and 73% a year ago.  This was a surprise.  The trade was looking for unchanged. 
  
• Winter
  wheat harvest was reported at 85%, below 89% trade estimate, and compares to 81% last week and 80% a year ago. 
  
• USDA
  US all-wheat export inspections as of July 30, 2020 were 500,110 tons, within a range of trade expectations, below 544,010 tons previous week and compares to 416,177 tons year ago. Major countries included Philippines for 102,832 tons, Japan for 91,201 tons,
  and Indonesia for 57,749 tons.
• EU
  soft wheat exports as of July 1 reached 635,453 tons by Aug. 2, 68% below the same period a year ago.  EU 2020-21 barley exports had reached 254,305 tons, down 60% from 2019-20. 
  
• Paris
  December wheat was down 2.00 euros at 180.75, a new one-month low.  
• Ukraine
  harvested about 48 percent of the projected planted area or 27 million tons.  72 percent of the wheat crop had been collected. 
  
• Ukraine
  feed wheat increased $3/ton week of week to about $209-$212/ton 12.5% protein, according to APK-Inform.  
  
• IKAR:
  12.5% Russian wheat down $3.00 per ton to $207 fob.  SovEcon $209/ton. 
• IKAR
  increased their estimate for the 2020-21 Russian wheat crop to 79.5MMT from 78 million previously.  Bloomberg noted IKAR cited “extremely high” yields in central and Volga areas.
• Pakistan
  plans to import 1.5 million tons of wheat, largest in more than a decade.  Locusts and other events cut production. 
  

 

Export
Developments.

• Japan
  seeks 80,000 tons of feed wheat and 100,000 tons of barley on Aug 5 for arrival by end of Jan. 
  
• Syria
  looks to sell and export 100,000 tons of feed barley with offers by Sep 1. 
  

 

Rice/Other

• Cotton
  45% G/E vs 49% last week, and 54% a year ago
• Sorghum
  55% G/E vs 53% last week, and 68% a year ago

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

 

Updated
8/3/20

• Chicago September is seen in
  a $5.00-$5.40 range.
• KC September; $4.30-$4.55 range. 
  
• MN September $4.95-$5.40 range.