FI Grain Comment Update 07/24/20 + Monday estimates, China cash, Spread update, and US basis

PDF attached

 

 

The
soybean complex was under pressure (meal turning higher) while grains are getting a boost on Chinese demand optimism.  We are seeing end of week selling in the soybean complex despite sharply higher Malaysian palm oil overnight and 24-hour sales.  The trade
maybe getting too comfortable to the daily 24-hour reporting system, in our opinion.  USDA announced 133,000 tons of soybean meal to the Philippines and 252,000 tons of soybeans to unknown. Crop progress and inspections estimates are below. 

 

Nearby spreads		CT	12:11 PM
			Chng
SQ/U	6.25/6.5		0.75
SQ/X	5.75/6		-0.50
SU/X	-0.5/-0.25		-1.25
SMQ/U	-2.7/-2.6		0.00
SMQ/Z	-8.2/-8.1		-0.70
SMU/Z	-5.5/-5.4		-0.70
BOQ/U	-0.13/-0.12		0.01
BOQ/Z	-0.57/-0.56		0.00
BOU/Z	-0.44/-0.43		0.00
CU/Z	-9/-8.75		-1.25
CU/H	-19.75/-19.5		-2.25
WU/Z	-5.75/-5.5		-0.25
KWU/Z	-10.75/-10.5		0.25
MWU/Z	-13.25/-13		0.25

 

 

Weather
and Crop Progress

 

7
Day Precipitation Outlook

 

NOT
MANY CHANGES OVERNIGHT

 

• Hurricane
  Douglas was a major hurricane this morning located 1010 miles east southeast of Hilo, Hawaii moving west northwesterly at 18 mph and producing maximum sustained wind speeds of 130 mph
• Hurricane
  force wind is occurring out 30 miles from the storm center while tropical storm force wind was occurring out 90 miles
• Douglas
  will continue to move toward the Hawaiian Islands and will  impact the region this weekend with some damaging wind, heavy rain and flooding
• The
  storm’s current path takes the system north of the Big Island of Hawaii Saturday night into Sunday as a weakening hurricane
• The
  storm will move very near to or directly across Maui and have impacts on Lanai and Molokai as well as some of the smaller islands nearby as a tropical storm
• The
  storm’s small size will help limit the extent of damage, but there is a strong potential that the storm will move across some of the central Islands causing some damage
  
• Kauai
  and some of the neighboring islands will not be seriously impacted by the storm, although some high wind speeds and heavy rain is expected
  

 

• Tropical
  Storm Gonzalo  may become a hurricane before reaching the southern Windward islands Saturday
• At
  0800 EDT, the storm was 580 miles east of the southern Windward Islands moving westerly at 15 mph and producing maximum sustained wind speeds of 60 mph
• The
  storm will pass through the southern Windward Islands Saturday and move into the eastern Caribbean Sea where it will remain through Monday morning – the storm may weaken or possibly dissipate as it moves toward Central America

 

• Tropical
  Storm Hanna was located 285 miles east of Corpus Christi, Texas at 27.1 north, 92.8 west moving west northwesterly at 9 mph and producing maximum sustained wind speeds of 40 mph
• Hanna
  will likely move inland near Corpus Christi, Texas Saturday
• The
  storm will bring heavy rain to portions of southern Texas and could raise some crop quality issues to open boll cotton in southern Texas
  
• Flooding
  is expected along the lower Texas coast where 3.00 to 8.00 inches and local totals over 10.00 inches will be possible
• The
  storm will ultimately end up in northeastern Mexico early next week

 

• Southwestern
  and some central Canada Prairies crop areas will experience a steady drying trend and warm temperatures over the next week to ten days
  
• Crop
  moisture stress will be on the rise
• Late
  season canola and flax might be impacted with lower yields
• Early
  season crops will likely be far enough advanced to no be seriously impacted; this includes spring cereals

 

• China’s
  weather is expected to improve during the next two weeks with no more widespread excessive rain events expected
• Some
  localized areas of heavy rain will be possible with local flooding, but most of the nation’s damaging weather is over and an assessment of the losses will be made as flood water recedes
  
• Recent
  flooding in China has damaged many crops, but assessing the losses has not yet been done because flooding is still under way in many areas

 

• Northern
  China crops are in mostly good condition, although some flooding recently occurred in Henan and Shandong that might have induced some damage in low-lying areas

 

• Xinjiang,
  China continues cooler than usual and degree day accumulations are falling below average
• Weather
  conditions will remain unsettled and a little cooler biased for a while
• Showers
  will stay near the mountains
• Northeastern
  Xinjiang cotton areas will see daily highs in the upper 70s and 80s for a while and lows in the 50s and 60s
• Other
  cotton areas in the province will see daily highs in the middle 80s through the middle 90s with lows in the 60s
• Warming
  is needed, but not likely for the next ten days

 

• India’s
  monsoon continues to perform mostly very well, but recent rain has become lighter than usual
• Rainfall
  in the central and north has been a little light recently and greater rain is needed especially in Rajasthan
• August
  will be a better month for rainfall in the far northwest
• Total
  rainfall this summer is expected to be slightly greater than usual, but some of that is predicated upon developing La Nina conditions in late August and September
• Rain
  has been well enough distributed in recent weeks to support very good crop conditions in most of the nation

 

• Southern
  Pakistan has not had much rain so far this summer, but improved rainfall is expected next month

 

• Mainland
  areas of Southeast Asia have been getting enough rain to support crops, but the monsoon has been lackluster recently and greater rain is needed to begin improving long term soil moisture and water supply
• Portions
  of western Thailand and Vietnam have been reporting the lightest rainfall relative to normal and a boost in rain is needed
  
• The
  erratic rainfall is expected to continue for a little while longer, but August should bring greater precipitation

 

• Philippines,
  Indonesia and Malaysia rainfall has also been a little erratic recently, but like the mainland areas of Southeast Asia crop conditions are mostly rated well with little immediate change likely
• Eastern
  Australia will receive rain today and Saturday in New South Wales and southeastern Queensland to improve topsoil moisture and support establishing winter crops
• Lingering
  showers are expected into early next week
• Other
  areas in Australia will see little rain over the next ten days except near the coasts, but winter crops have stablished relatively well this year
• Rain
  is still needed in South Australia and more will be needed in Queensland, but the outlook leading into spring is still looking much better than that of the past couple of years

 

• Argentina
  has received some welcome rain in parts of Buenos Aires and La Pampa over the past two days improving wheat conditions
• Cordoba
  is unlikely to get much rain of significance and it produces 20-23% of the total wheat crop
• Cordoba
  has been quite dry since the planting season began and a cut in production has already occurred and more will be possible if dryness prevails much longer
• Other
  crop areas in Argentina have had timely rainfall to support wheat and barley, although this week’s rain was a little disappointing in parts of Santa Fe which has also been experiencing some dryness
• Drier
  weather will be returning to Argentina this weekend and it may last ten days leaving the dry areas without much hope for change

 

• Southern
  Brazil’s soil conditions and weather will continue plenty moist for a while
• Winter
  crop conditions are mostly good in Rio Grande do Sul and areas north into Parana, but Sao Paulo and a few other areas have been quite dry recently
• Summer
  crop harvest progress has been good
• Conditions
  for early season corn planting are looking favorable, but timely rain will need to continue in August to ensure early crops are successful

 

• Harvest
  weather in center west and center south Brazil for Safrinha crops has been and will continue to be good

 

• U.S.
  weather is expected to remain favorable over the next ten days, despite an erratic distribution of rain
• No
  extreme heat is expected
• Showers
  will continue periodically
• The
  second week of the outlook will trend a little drier, but the models are likely to fall back into a classic mid-summer weather pattern of periodic showers and thunderstorms and warm temperatures in weeks 2 and 3
• This
  pattern usually leads to net drying which is not unusual for August
• Pockets
  of dryness will evolve and some new crop stress will be possible, but much of this is going to occur in August and not in this next ten days – no widespread serious moisture shortage is expected through the second week of August
• Corn
  pollination and early season soybean blooming will continue to advance well in this environment

 

• West
  Texas received some scattered showers and thunderstorms this week with a few more expected today and possibly into the weekend before drier weather evolves for a little while
• Some
  additional shower activity is possible late next week and into the following weekend, but it may be less significant than that of this week
• Most
  of the daily rainfall expected through the weekend and that which occurs late next week will be erratic and not great enough to seriously change soil moisture, but it will help put a little moisture in the air and supplement some irrigation
• Many
  areas will still be dry
• No
  extreme heat is expected for at least the next ten days
• Daily
  highs in the 90s will occur often with a few readings near 100 during the weekend and through mid-week next week

 

• U.S.
  Delta is one of the drier areas in the U.S. crop region with central parts of the region driest
• Showers
  will occur periodically over the next couple of weeks resulting in some relief in the driest areas, but more rain may still be needed

 

• U.S.
  southeastern states are seeing enough rain to maintain mostly good crop conditions, but very warm temperatures are accelerating drying rates between rain events
• Daily
  highs in the 90s will prevail for the next week temperatures will be warmest next week

 

• Far
  northwestern U.S. Plains will struggle for big soakings of rain over the next couple of weeks and net drying is expected
• Temperatures
  will also be quite warm at times

 

• U.S.
  Pacific Northwest rainfall will be minimal over the next two weeks

 

• California
  and the Great Basin will be dry and warm for a while

 

• Drying
  will continue from portions of central and eastern Ukraine through a part of Russia’s Southern Region to Kazakhstan
• Dryness
  has been eased recently in northeastern Ukraine and a little more rain may fall next week after a period of drying

 

• France
  remains too dry and parts of the United Kingdom, Belgium, Netherlands and northwestern Germany also need rain
• These
  areas will not get much moisture, but there will be a few showers coming up briefly this weekend and next week
  
• Germany,
  the U.K., Belgium and Netherlands may get enough rain for temporary crop improvements in a few areas next week

 

• Portions
  of the southernmost Balkan Countries in southeastern Europe need greater rain to improve dryland crops
  
• Scattered
  showers will occur during the coming week to ten days
• No
  rain is expected in the southern Balkans or from eastern Ukraine into western Kazakhstan

 

• Ontario
  and Quebec, Canada have some pockets of dryness, but most crops in the two provinces are still developing relatively well
• Any
  missed rain could lead to greater crop stress and a close watch on the situation is warranted

 

• South
  Africa weather over the next couple of weeks will include limited rainfall and temperatures will trend a little warmer over time.
  

 

• West-central
  Africa will receive periods of rain over the next couple of weeks maintaining a favorable environment for coffee, cocoa, cotton, rice and sugarcane
• Greater
  rain is needed in Ivory Coast and Ghana where rainfall so far this month has been notably lighter than usual

 

• Russia’s
  New Lands will receive some cooler temperatures and scattered showers during the coming week to ten days resulting in better soil and crop conditions after recent dry and warm weather
• Not
  all areas will get adequate relief and will need additional rain
• About
  30% of the spring wheat and sunseed areas will get relief
• All
  other areas will need significant rain

 

• Northeastern
  Mexico will continue very dry and warm to hot over the next two weeks
• Scattered
  showers and thunderstorms are likely elsewhere with rainfall mostly near to above average
  
• Improving
  soil moisture in many areas will lead to better crop development potential

 

• Central
  America rainfall will be well mixed over the next ten days with rain falling in most areas, although amounts may be a little lighter than usual in Honduras
  

 

• New
  Zealand rainfall over the next couple of weeks will be erratic and most often light with temperatures being near to below average
  

 

• Southern
  Oscillation Index was +4.18 this morning and the index will rise additionally this week

 

 

Bloomberg
Ag Calendar

FRIDAY,
July 24:

• 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
• U.S.
  Cattle on Feed, Poultry Slaughter, 3pm
• FranceAgriMer
  weekly update on crop conditions
• Brazil
  Unica cane crush, sugar production (tentative)
• HOLIDAY:
  Japan

SATURDAY,
July 25:

• AmSpec
  to release Malaysia’s palm oil export data for July 1-25
• China’s
  3rd batch of June trade data, incl. country breakdowns for energy and commodities (tentative)

MONDAY,
July 27:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  crop conditions for soybeans, corn, cotton; winter wheat progress, 4pm
• MARS
  crop bulletin – monthly report on crop conditions in Europe
• International
  Sugar Organization webinar on China’s market
• EU
  weekly grain, oilseed import and export data
• Indonesia
  palm oil export tax for August to be announced sometime during the week
• Ivory
  Coast cocoa arrivals
• HOLIDAY:
  Thailand

TUESDAY,
July 28:

• EARNINGS:
  Minerva
• HOLIDAY:
  Thailand

WEDNESDAY,
July 29:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• Vietnam’s
  General Statistics Office releases data on exports of coffee, rice and rubber

THURSDAY,
July 30:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports
• The
  Australian Grains Industry Conference (online event)
• Poland
  to publish grain harvest estimates

FRIDAY,
July 31:

• 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
• Malaysia’s
  palm oil export data for July 1-31 (tentative)
• U.S.
  agricultural prices paid, received, 3pm
• HOLIDAY:
  Singapore, Indonesia, Malaysia

Source:
Bloomberg and FI

 

 

Macros

 

 

Corn.

• Corn
  futures were mixed by midday.  Higher wheat is limiting losses. 
• Much
  of the trade has been chattering about China TRQs this week, wondering if the government will step in and buy more than the 7.2 maximum volume for 2020. 
  

 

Corn
Export Developments

• Syria
  seeks 50,000 tons of soybean meal and 50,000 tons of corn on Aug 25 for delivery within four months of contract signing.
  

 

 

 

Soybean
complex.

• Soybeans
  are higher on additional USDA sales and improvement in China crush margins.   
  
• Then
  USDA announced 252,000 tons of soybean sales to unknow and 133,000 tons of soybean meal for the Philippines.   
  

·        
China sold 35,117 tons of imported soybeans from reserves on Friday. 

·        
Rotterdam values this morning showed soybean oil for the August/September position was down 1-2 euros from this time previous session, rapeseed oil down 5 in the nearby, and soybean meal when imported from South America 3-7 euros
higher. 

• Offshore
  values this morning was leading CBOT soybean oil 43 higher and meal $0.20 higher.  
  

·        
China cash crush margins as of this morning, using our calculation, were 147 cents per bushel (138 previous) and compares to 134 cents a week ago and 29 cents around this time last year.

 

 

Oilseeds
Export Developments

• Then
  USDA announced 252,000 tons of soybean sales to unknow and 133,000 tons of soybean meal for the Philippines.   
  

 

Wheat

• US
  wheat futures were up sharply on follow through bullish sentiment from IGC’s outlook for tighter global supplies and talk of China import interest for US wheat. 
  
• News
  was light. 
• Paris
  December wheat was up 1.50 at 186.25.

 

Export
Developments.

• Awaited:
  Ethiopia postponed an import tender for 400,000 tons of wheat to July 24 from July 20. 
  
• Syria
  seeks 200,000 tons of milling wheat from Russia by July 28. 
• Jordan
  seeks 120,000 tons of wheat on July 29. 
• Syria
  looks to sell and export 100,000 tons of feed barley with offers by Sep 1. 
  

 

Rice/Other

·        
None reported