FI Mid-Session Grain Comments 07/17/20 + Funds, China Cash, and Monday USDA Estimates

PDF attached

 

Happy
80^th birthday mom!

 

Funds
were active Thursday in all three commodities.  Friday, we find more South Korean buying and USDA soybean sales announcements.  Soybean oil finding support on a possible US biodiesel relief package and rising SA vegetable cash prices.  This is supporting soybeans.

 

 

 

Weather
and Crop Progress

 

 

UNITED
STATES

• Today’s
  GFS model runs bring a tropical wave through the Gulf of Mexico next week that may or may not turn into a tropical cyclone, but its mere presence in the Gulf will help limit Gulf of Mexico moisture from streaming into the U.S. Midwest. That will not stop rain
  from falling, but it will help to make the greater rain a little more localized
• All
  of the models are presenting rain to portions of the Midwest over the coming week and some of it is advertised to be heavy with portions of Iowa included
• The
  European model suggests a part of southern Minnesota and northern Iowa along with eastern South Dakota may be missed by rain again
• Precipitation
  in parts of Michigan, northeastern Indiana and northern Ohio is advertised to be light by the European model, as well
• GFS
  moisture is being painted with a broad brush once again and caution is advised to not be surprised a week from now when the precipitation has not been as uniform as the GFS suggests
• Texas
  may benefit from the possible tropical cyclone next week with landfall at the end of next week
  
• Some
  of this moisture is poised to reach West Texas and that could help to generate some much needed moisture in many parts of Texas and also help keep the temperatures down too
• GFS
  week two rainfall scattered erratically across key U.S. crop areas with some areas getting more rain than others, but the potential for rain periodically remains
  
• GFS
  suggests improved monsoon flow will occur through the Rocky Mountains to the northern Plains as the month draws to a close
• This
  was increased on the 06z model run relative to the previous model run

 

The
bottom line is still hard to get very excited about problems in key U.S. crop areas during the next two weeks. However, keep a close eye on the distribution of rainfall because some areas may be missed by some of the rain a little more often than others. No
widespread dryness problem is expected through the end of this month and corn pollination will likely complete relatively well. Soybeans will also move into August in mostly good shape, but there will be some pockets of dryness that will have to be closely
monitored.

 

 

EUROPE/BLACK
SEA

• 06z
  GFS model run reduced some of the rain advertised for late next week and into the following weekend in northwestern Europe
• Some
  of the reduction of rainfall was needed
• The
  model run still suggests some improved opportunity for showers in the second week of the outlook as we discussed last evening
• The
  rain that falls will not be a drought buster, but could offer a little relief for the U.K. and a few areas in France and Germany
• Both
  the European and Canadian model runs only allow rain into the U.K. and leave France,  Belgium and Germany out of the rain through day ten
• Most
  of the precipitation should occur in days 10-14, but it will not be a general soaking

 

 

RUSSIA
NEW LANDS

• No
  theme changes were made overnight
• A
  gradual breakdown of the high pressure ridge over the New Lands is expected next week and the showers and thunderstorms expected will be erratic and light initially, but may improve over time
• Partial
  relief is expected, but no generalized heavy rain event is expected and several areas will continue in need of greater rain after the second week has come to an end

 

CHINA

• Flooding
  rain is expected through the weekend from southeastern Sichuan, Guizhou northern Hunan to Jiangsu and far southern and eastern most Shandong
• Rain
  totals of 4.00 to 12.00 inches and locally more will result; a few amounts to 15.00 inches will not be out of the realm of possibilities
• Some
  heavy rain is also expected in North Korea and a few immediate neighboring areas of Liaoning and southern Jilin
• Improved
  weather is expected in east-central China next week with flood water receding
  
• Greater
  rain was suggested for northeastern China from Hebei to Heilongjiang during the July 27-30 period
• Some
  of the rainfall was overdone

 

The
bottom line is a good mix of rain and sunshine for northern and far southern China over the next ten days, but this weekend’s excessive rain event will raise the potential for some crop damage in east-central parts of the nation; including southeastern Henan,
Jiangsu, northern Anhui and possible far southern Shandong. Improving weather will occur after the first part of next week for the flood ravaged areas.

 

 

AUSTRALIA

• Beneficial
  rain fell in Western Australia overnight with some of the previously driest areas in the north and east part of the wheat, barley and canola production region getting some of the greater rainfall
• Crops
  will respond well
• Otherwise,
  the forecast has not changed for this coming week. Some rain is expected in southeastern Queensland late next week; otherwise, showers will be mostly confined to coastal areas in the next seven days
• Rain
  is still advertised in New South Wales and southeastern Queensland during the second weekend of the outlook, although the intensity of that event has been reduced over that of Thursday
• Not
  much other change was noted

 

 

SOUTH
AMERICA

• No
  theme changes were noted, but the latest GFS model run maintains that most of the rain late this weekend into early next week will be in Buenos Aires and La Pampa, limiting the amount of relief that will occur in Cordoba or Santa Fe. That will leave the downward
  pressure on wheat production potentials in Cordoba and Santa Fe and there will be no other precipitation opportunities through the end of this month.
  
• The
  moisture will be great for Buenos Aires wheat which may be about 44% of the total crop
• Rain
  has to fall soon to stop the decline in production potentials

 

 

SOUTHEAST
ASIA

Recent
comments in the marketplace about recent excessive rainfall in Indonesia causing a threat to the oil palm crop are untrue.  Flooding may be temporarily causing some transportation issues, but the crop has been unaffected and will not be affected

• Indonesia,
  like many other areas in southern Asia will be experiencing greater rainfall later this year as La Nina evolves, but most of the recent heavy rain has little to do with that phenomenon

 

Source:
World Weather Inc. and FI

 

 

Bloomberg
Ag Calendar

FRIDAY,
July 17:

• 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
• Cocoa
  Association of Asia releases 2Q cocoa grind data

MONDAY,
July 20:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  crop conditions of soybeans, corn, cotton; winter wheat progress, 4pm
• EU
  weekly grain, oilseed import and export data
• Malaysia’s
  palm oil export data for July 1-20
• Ivory
  Coast cocoa arrivals

TUESDAY,
July 21:

• USDA
  total milk production, 3pm
• New
  Zealand global dairy trade auction

WEDNESDAY,
July 22:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• U.S.
  cold storage – pork, beef, poultry, 3pm
• Thai
  Rice Exporters Association’s briefing on rice export outlook in 2H

THURSDAY,
July 23:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• China
  trade data, including cotton, corn, wheat and sugar imports
• International
  Grains Council monthly report
• Port
  of Rouen data on French grain exports
• USDA
  red meat production, 3pm
• HOLIDAY:
  Japan

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)

 

Source:
Bloomberg and FI

 

 

 

 

 

Macros

 

 

 

 

Corn.

• Corn
  traded higher on Friday on ongoing technical buying after bearish sentiment stalled mid-week. 
  
• Resistance
  for December corn is seen near 3.44, support 3.23.
• The
  US generated 1.07 billion D6 ethanol blending credits in June, up from 841 million in May. 
  

 

Corn
Export Developments

• South
  Korea’s MFG group bought 138,000 tons of corn from SA at $188.70/ton c&f for Oct/early Nov shipment. 
  
• Results
  awaited: Saudi Arabia seeks 720,000 tons of barley on Friday. 

 

 

Soybean
complex.

• Soybeans
  are higher from China buying and higher soybean oil.    
• One
  reason for the higher trade in soybean oil is the possible reintroduction in biodiesel aid to be introduced in the next US coronavirus relief package.  Reuters: “Grassley and his Iowa colleague, Senator Joni Ernst, hope to include a subsidy for feedstock for
  the ethanol industry in the bill. Farmers and producers of the corn-based fuel were hit hard during the coronavirus pandemic as government-imposed lockdowns sank demand for gasoline.”
• USDA
  announced 2 new crop cargoes were sold to unknown.
• Asian
  vegetable oil producers are looking to work with the EU over demands and compliance over food production.  Palm oil has been under fire amid deforestation. 
  

·        
The US generated 387 million biodiesel blending credits in June, up from 370 million in May.  The increase in credits was seen supportive. 

·        
Rotterdam values this morning showed soybean oil for the August/September position was up 6-7 euros from this time previous session, rapeseed oil up 5 in the nearby, and soybean meal when imported from South America up 1-4 euros
higher. 

• Offshore
  values this morning was leading CBOT soybean oil 15 higher and meal $0.50 higher.  
  

·        
China cash crush margins as of this morning, using our calculation, were 135 cents per bushel (125 previous) and compares to 89 cents a week ago and 41 cents around this time last year.

 

·        
StoneX estimated Brazil soybean planted area at over 38 million hectares (93.9 million acres).  For 2019-20, Brazil planted around 37 million hectares (91 million acres) of soybeans.  We agree with StoneX.  Note USDA looks for
38.3 million hectares, and the Attaché at 38.5 million. 

 

Oilseeds
Export Developments

• Under
  the 24-hour announcement system, private exporters sold 126,000 tons of soybeans for delivery to unknown for 2020-21 delivery.         
  

 

Wheat

• Chicago
  wheat was trading lower by mid-session on follow through profit taking.  News was light. 
  
• France
  was nearly 50 percent complete on harvesting as of early this week.

·        
Paris December wheat was down 0.75 at 186.50, at the time this was written.

• Argentina
  is nearing completion on their wheat harvest.  They should be done over the next two weeks. 
  

 

 

Export
Developments.

• Jordan
  seeks 120,000 tons of wheat on July 21 for Sep-Nov shipment. 
• Japan
  in an SBS import tender seeks 80,000 tons of feed wheat and 100,000 tons of barley on July 22 for arrival by December 24.
  
• Ethiopia
  postponed an import tender for 400,000 tons of wheat to July 20 from July 10. 
  
• Syria
  seeks 200,000 tons of milling wheat from Russia by July 28. 

 

Rice/Other

• None
  reported