FI Evening Grain Comments 09/01/20

PDF Attached

 

 

September
7 (Monday) US holiday trading schedule in excel format

https://bit.ly/3jBe9kw

 

Wheat
led the rally in all three major commodities.  Soybean meal ended lower and soybean oil higher. 

 

Weather

 

 

MOST
IMPORTANT WEATHER AROUND THE WORLD

• Super
  Typhoon Maysak will bring horrific rain and wind to South Korea Wednesday and heavy rain and flooding from North Korea into northeastern China; Wednesday into Friday will be stormiest
  
• Tropical
  Storm 11W has formed south of Japan and promises to become another very strong typhoon that may threaten western Japan late this weekend into early next week
• The
  remnants of this storm may also impact northeastern China
• A
  tropical depression may evolve this week in the Caribbean Sea and move toward Central America
• Tropical
  Depression Fifteen evolved off the lower east U.S. coast and was 100 miles southeast of Cape Hatteras early this morning moving east northeasterly overt the next couple of days taking the storm away from North America with very little intensification expected
• Dryness
  remains in portions of the western and central U.S. Corn Belt with only partial relief expected this week
• Argentina’s
  rainfall this week will not occur in the driest wheat areas, but some improved topsoil moisture will occur in the northeastern corn and sunseed areas
  
• Entre
  Rios, Corrientes and parts of Santa Fe will be wettest over the next couple of days
• Heavy
  rain will diminish in northwestern Mexico over the next couple of days; Wet weather will continue in the west and south parts of the nation through the next ten days
• Some
  increased rainfall may occur in eastern Mexico late this week and into the weekend as the tropical wave from the Caribbean begins to influence the region
• Dryness
  remains in Queensland, Australia and that may harm winter crop reproduction in the next two weeks
• India’s
  monsoon will begin to withdraw next week
• Rain
  in northern India over the next several days will raise more concern over open boll cotton quality, but the moisture will be good for future winter crop use
• Heavy
  rain Gujarat, India and Sindh, Pakistan has ended, and these areas will dry out over the next week
• Ivory
  Coast and Ghana rainfall will slowly increase in the next two weeks; some beneficial rain occurred in Ivory Coast coffee and cocoa areas during the weekend
• France
  and parts of Germany are going to remain dry biased for the next ten days
• Drought
  will prevail in central and eastern Ukraine into Bulgaria and from eastern Ukraine into Russia’s Southern Region and western Kazakhstan
• Frost
  and freezes will evolve in parts of Canada’s Prairies  during the weekend with some frost in the northernmost U.S. Plains and uppermost Midwest near the Canada border early next week; confidence in the U.S. frost is rising with Sep. 6-8 to be coldest and a
  few light freezes cannot be ruled out
• South
  Korea will be seriously damaged by Typhoon Maysak Wednesday with some damage in North Korea expected too
• Australia’s
  rainfall during the next week will be mostly concentrated on the south and lower east and lower west coasts leaving interior crop areas in a drying trend
• South
  Africa rainfall may increase briefly this week to offer a little moisture for eastern wheat and barley production areas; more rain will be needed
• Brazil
  weather will remain wettest from southeastern Parana into Rio Grande do Sul and Uruguay during the coming week; the moisture will be good for winter crops
• Ontario
  and Quebec will experience a good mix of rain and sunshine over the next two weeks; some drying will be needed thereafter to induce better crop maturation and harvest conditions
• Central
  America rainfall will be frequent and significant
• Central
  through northeastern Europe will be wettest this week with periods of rain continuing to maintain moisture abundance and a good environment for crop development
• Southeast
  Europe will be dry biased over the coming ten days to two weeks
• Areas
  from central and eastern Ukraine to central and eastern Bulgaria will see very little rainfall and temperatures will be warmer than usual
• Crop
  stress will continue high in this region with a further decline in summer crop yields and quality
  
• Faster
  than usual crop maturation and harvest progress is expected this year as long as rainfall stays limited
• Russia’s
  northeastern New Lands will continue to experience some brief periods of drizzle and light rain over the coming week to ten days
  
• Most
  of the precipitation will be very light, but there is some concern over unharvested small grain and sunseed quality
• Dry
  and warm weather is needed to induce the best maturation and harvest conditions
• A
  favorable mix of weather will occur over the next ten days in other western CIS locations, but net drying will continue in central and eastern Ukraine, Russia’s Southern Region and western Kazakhstan
• Temperatures
  will be very warm to hot in this region as well
• Tropical
  Wave in eastern tropical Atlantic Ocean will likely move to the central Atlantic without a threat to land.
  
• Interior
  east-central China will experience net drying this week and weekend while showers and thunderstorms slowly return to the southern provinces where some locally heavy rain is possible
• Xinjiang
  China will continue to experience alternating periods of mild and warm weather with a few showers northeast
  
• Warm
  and dry weather is desirable to help speed cotton and other crops toward maturity after a slightly cooler than usual summer
• Freezing
  temperatures in southeastern eastern Australia this morning had no lasting impact on crops

 

• Indonesia
  rainfall continues erratic
• Central
  and southern Sumatra has been steadily drying recently and needs significant rain
• Java
  is also quite dry, but some of that dryness is seasonal
• Rainfall
  over the next ten days will continue erratic, but at least some rain will fall in each production area at one time or another
• Rain
  is needed most in parts of Sumatra and western Java
• Southern
  Oscillation Index was +9.74 today and it will continue positive with the recent rise slowly leveling off for a while

Source:
World Weather Inc. 

 

Bloomberg
Ag Calendar

TUESDAY,
SEPT. 1:

• Australia
  commodity index
• U.S.
  Purdue agriculture sentiment
• USDA
  soybean crush, 3pm
• U.S.
  corn for ethanol, DDGS production, 3pm
• FO
  Licht’s virtual Sugar and Ethanol Conference, Sao Paulo (Sept. 1-3)
• Cotton
  outlook update by International Cotton Advisory Committee in Washington
• New
  Zealand global dairy trade auction
• Honduras,
  Costa Rica coffee exports
• Malaysia
  palm oil export data for August 1-31

WEDNESDAY,
SEPT. 2:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• UkrAgroConsult’s
  Black Sea Grain Conference in Kyiv (Sept. 2-3)
• Russia’s
  Agriculture Ministry holds annual conference to discuss production and the industry
• HOLIDAY:
  Vietnam

THURSDAY,
SEPT. 3:

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

FRIDAY,
SEPT. 4:

• 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
• CNGOIC’s
  monthly supply-demand report on Chinese feed grains and oilseeds
• FranceAgriMer
  weekly update on crop conditions
• Statcan’s
  data on Canada wheat, barley, soy, canola and durum stocks
• HOLIDAY:
  Thailand

Source:
Bloomberg and FI

 

Macros

Brent
Crude Oil Seen Averaging $42.75/Barrel In 2020 (Versus $41.50 In July Poll) – RTRS Poll

US
Crude Oil Seen Averaging $38.82/Barrel In 2020 (Versus $37.51 In July Poll)

 

Corn.

• December
  corn futures finished 0.25 cent higher at $3.58/bu.  Earlier December
  corn futures hit a one-week low from a less than expected drop in US crop ratings.  The two-sided trade was in part to a lower USDA and higher wheat.  Overbought conditions limited gains and the December failed to test its 200-day moving average as it did
  yesterday, a bearish indicator for the short term, in our opinion.  The December corn and November soybean spread sits at 2.67, highest since in more than a week.  We think if the trade fails to extend short covering (managed money now about 47,000 net short),
  and extend long positions in soybeans, the SX/CZ could widen back to 2.70-2.75 area sometime in September. 
  
• Funds
  bought an estimate net 1,000 corn.  
• Toledo,
  OH, CBOT deliverable soybean and corn stocks are at zero.  
• APK-Inform
  estimated Ukraine’s corn crop could fall 8 percent to 35.1 million tons.  Exports are seen at 28.5MMT, down 3 percent from 2019-20.
  
• Brazil
  failed to renew their zero-tariff ethanol import quota that will be a blow to US ethanol exporters.  It will revert to 20% starting today.  Later in the day a Reuters story noted they are relooking into temporary quota for tariff-free ethanol imports. 
  
• Brazil
  exported 6.48 million tons of corn during the month of August, up from 7.3 million tons a year ago. 
  
• Indonesia
  plans to cull 4.4 million chickens by September 13 to support depressed egg prices.
  
• A
  Bloomberg poll looks for weekly US ethanol production to be unchanged at 931,000 barrels (918-945 range) from the previous week and stocks to increase 239,000 barrels to 20.648 million.
• USDA
  NASS reported the July corn for ethanol grind at 424 million bushels, well above a Bloomberg trade guess of 408 million bushels, higher than 379 million for June and 451 million during July 2019. 
  

 

 

Corn
Export Developments

• Under
  the 24-hour reporting system, private exporters sold 596,000 tons of corn to China, identical to yesterday’s announcement. 
  

 

 

 

 

Updated
8/27/20

• December
  is seen in a $3.40-$3.85 range. 

 

Soybean
complex.

• CBOT
  November soybeans saw follow through selling at the day session open but turned higher on US weather concerns and additional 24-hour soybean sales to unknown.  Soybean meal traded the day lower and soybean oil higher.  Offshore values were favoring soybean
  oil over soybean meal.  November soybeans finished 1.25 cents higher (bear spreading), October meal $1.70 lower and October soybean oil 3 points higher.  There was talk some Brazilian importers were checking on US prices. 
  
• Funds
  bought an estimated net 1,000 soybean contracts, sold 2,000 soybean meal, and bought 1,000 soybean oil. 
  

• Brazil
  exported 6.2 million tons of soybeans during the month of August, up from 5 million tons a year ago. 
  
• Brazil’s
  2020-21 soybean crop is seen unchanged by StoneX from their previous estimate at 132.6 million tons with a planted area of 38 million tons. 
  
• Anec
  estimated 2020 Brazil soybean exports at 82 million tons and corn between 31 and 33 million tons. 
  
• Manitoba,
  Canada, was only 7 percent harvested for canola compared to 47 percent for the 3-year average.  Dry bean and canola desiccation or swathing is occurring in much of the Eastern, Central and Southwest regions, according to a weekly AgMin report. 
  
• Ukraine’s
  deputy minister projected sunflower production down 8.5 percent to 14 million tons from 15.3 million in 2019.  
  APK-Inform
  reported earlier that Ukrainian sunflower oil export prices appreciated by $15-$25 per ton over the past week.  Ukraine started harvesting sunflowers around mid-August. 
  
• An
  increase in rain forecast for later this week for the WCB will be too late to boost crop conditions. 
  
• U.S.
  Delta will receive additional rain this week keeping producers out of the fields while drier weather will occur in the Midwest and Delta late this week. 
  

• AmSpec
  reported August palm exports fell 15.1 percent from the previous month to 1.476MMT from 1.740MMT.  ITS reported a 13.1 percent decline to 1.491 million tons.   
  
• Indonesia’s
  2020 palm production was seen at 46.02 million tons, a sharp decline from 47.11MMT in 2019.  Exports were projected to fall 18 percent from 2019, according to GAPKI. 
  
• After
  a one-day holiday, Malaysian palm oil traded higher and was near a 7-monthg high. 
  
• USDA
  Nass reported the July crush at 184.5 million bushels, 1.5 million above a Reuters trade guess and above 179.4 million above July 2019.  End of July soybean oil stocks came in at 2.124 billion pounds, 7 million below an average trade guess, below 2.271 billion
  from previous month and above 2.040 billion year earlier.  The soybean oil yield was 11.50 pounds per bushel, up from 11.48 for June. 
  

 

 

Oilseeds
Export Developments

• Under
  the 24-hour reporting system, private exporters sold 132,000 tons of soybeans to unknown. 
  
• Results
  awaited: Algeria seeks 30,000 tons of soybean meal for shipment by September 25, optional origin. 
  

 

Oilseeds
Export Developments

• Egypt’s
  GASC seeks local soybean and sunflower oil on September 3 for November 1-25 delivery. 
  

 

Updated
8/27/20

• November
  soybeans are seen in a $9.25-$10.00 range.  
• December
  soybean meal is seen in a $290-$325 range.   
• December
  soybean oil is seen in a 32.50-35.00 range.  

 

Wheat

• Wheat
  traded two-sided on lack of direction earlier but fund buying (new month) lifted prices sharply higher.  Bull spreading was a feature.  Chicago December settled higher by 11.75 cents, December KC up 10.25 cents and December Minneapolis 6.75 cents higher. 
  During the session Chicago December reached its highest level since April 20. 
  
• The
  lower USD attracted some inflation hedging.  Short covering KC wheat was noted.   South Korea’s MFG passed on feed wheat overnight. 
  Japan
  seeks 106,937 tons of food wheat later this week for arrival by December 31.  There were Rumors China bought HRW wheat out of the PNW.  Late last week U.S. Wheat Associates said, “that a grain variety yielded “stellar’ flour for noodles and pizza dough at
  a test bakery in China.” (Bloomberg)
• Wheat
  futures are vulnerable for volatile moves to the upside and downside as volume is lower than what could be seen in soybeans and corn. 
  
• US
  Great Plains remains too dry ahead of winter wheat plantings.  Argentina’s rainfall this week will not occur in the driest wheat areas.  More than a million acres of wheat in Argentina could be affected by drought.  Dryness remains in Queensland, Australia. 
  
• Funds
  bought an estimated net 11,000 contracts. 
• China
  suspended barley imports from Australia’s CBH group, the country’s largest exporter. 
  
• Paris
  December wheat was up 2.00 at 187.50 euros tracking gains in the US markets. 
  

 

Export
Developments.

• South
  Korea MFG passed
  on
  70,000 tons of feed wheat for late Dec and/or early Jan shipment.  Lowest
  offer was believed to be $249.80 a ton c&f. 
• Japan
  seeks 106,937 tons of food wheat later this week for arrival by December 31.
  

• Results
  awaited: Syria
  looks to sell and export 100,000 tons of feed barley with offers by Sep 1. 
  
• Algeria
  seeks wheat on Sep 2 for October shipment. 
• Jordan
  issued another import tender for 120,0,00 tons of wheat set to close Sep 2. 
  
• 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

·        
South Korea bought 60,556 tons of rice for Dec 31-Feb 28 delivery from Vietnam and India. 

·        
US rice traded higher on US crop concerns

 

Updated
8/31/20

• December
  Chicago is seen in a $5.30-$5.75 range. 
• December
  KC $4.50-$5.60.  
• December
  MN $5.25-$5.70.