FI Morning Grain Comments 06/22/20

PDF attached

 

Morning. 

 

Talk
of China shopping for US wheat over the weekend maybe limiting downside movement in US wheat futures.  US wheat harvest pressure is seen in the mix.  IKAR increased their view of the Russian wheat crop to 79.5 million tons from 78 million previously.  Corn
and soybeans are lower after rallying late last week.  Egypt bought 59,000 tons of soybean oil for Aug 10-30 delivery, at 10,925 Egyptian pounds ($675.63/ton).  It is estimated China bought up to 17 cargoes of soybeans last week. China crush margins remain
low but don’t discount China buying US soybeans as they remain cheaper than Brazil, at least for the 2020 positions. 

 

 

Weather
and Crop Progress

 

UNITED
STATES

• GFS
  model is not nearly as aggressive with ridge building over the Midwest during the early to middle part of next week as the European and Canadian Models; however rising heights do occur in the balance of next week that results in progressively drier biased
  conditions as the first week of July draws to a close
• Today’s
  GFS model run did not offer much change to rainfall in this first week of the outlook, although ha little less rain was suggested for parts of the lower Midwest and central Plains
• A
  little less rain in the upper Midwest was suggested for early next week and a little more in Michigan and immediate neighboring areas of Indiana, northeastern Illinois and Ohio
• These
  changes seem reversed and the 00z model run may have been better in suggesting more rain in the upper Midwest and less in the southern Great Lakes region
• Rain
  was reduced in the lower Midwest during mid-week next week
• The
  change was needed
• The
  GFS model run reduced rain in the southwestern Corn Belt and a part of the central Plains July 2-4 while a boost in rain was suggested from Michigan to Virginia and North Carolina
• The
  reduction was needed and some of the rainfall increase was overdone
• Rain
  was increased in the Delta and interior southeastern states July 2-4
• This
  was overdone as well
• Tropical
  cyclone advertised in the Gulf of Mexico July 5-6 was relocated from the northeastern Gulf of Mexico to the western Gulf of Mexico
• Rainfall
  was suppressed over the Midwest, Delta and central and southern Plains as the tropical cyclone approaches the western Gulf of Mexico coast
  
• Rain
  was reduced in the southeastern states, Midwest and central Plains and increased in the northwestern Plains and southwestern Canada Prairies as well as a part of the upper Midwest
• Some
  of these changes were needed, but they were all a byproduct of the relocated tropical cyclone and confidence in that tropical event is still very low raising potential for big changes in future model runs for days 11-15

 

The
bottom line continues to promote rain over this coming week in key U.S. crop areas with alternating periods of sunshine and seasonable temperatures. The environment will be very good for most coarse grain and oilseed production areas. Winter wheat areas will
not get so much rain that grain quality is compromised. Dryness in the high Plains is not expected to be relieved in a significant manner, but there will be opportunities for rain in both the southwestern Plains and the far northwestern Plains and the drier
areas of southeastern Canada’s Prairies. Week two of the forecast is expected to begin drying out and heating up as high pressure begins to build aloft and northward moving moisture from the Gulf of Mexico is reduced.

 

 

EUROPE

• Less
  rain in northwestern Europe is expected for a while this week as high pressure dominates the region
• Eastern
  Europe, including western Ukraine and areas north into Belarus and Poland, will receive periods of rain for a while this week
• Not
  much change was noted in the first week of the rainfall outlook, although rain was reduced in northern France and Belgium
• This
  reduction in rainfall was needed
• Rain
  was reduced for early next week in Ukraine, southwestern Russia and eastern Europe
• Some
  of this reduction was needed
• Rain
  was shifted out of the western CIS and southeastern Europe into the North and Baltic Sea regions July 2-4
• The
  reduction in rainfall was needed, but rain in the North and Baltic Sea region’s was considered too intense and too far to the east and south
• Rain
  was shifted out of northwestern Russia and into Scandinavia July 5-6
• The
  reduction in rain was needed, but the wetter bias in Scandinavia was incorrect as well
  

 

The
bottom line is for rain to fall in eastern Europe and the western CIS early to mid-week this week while western Europe is drying out. The late week and weekend will bring decreasing rainfall in eastern Europe and the western CIS while some rain develops in
northwestern Europe. After that, next week’s weather will be dominated by less rain in northeastern Europe and the northwestern Russia while rainfall occurs erratically in northwestern Europe and from the Balkan Countries into a part of the Black Sea region.

 

 

RUSSIA’S
NEW LANDS

• Cool
  weather is still expected this week across most of the production region
• Some
  rain is expected in the previously driest areas of the southeastern New Lands near the Kazakhstan border to offer some improvement to topsoil moisture
• No
  significant change in this first week of the outlook was suggested which includes much of the wetter bias noted above
• Some
  increase in rainfall was noted for the Ural Mountains region early next week
• This
  event was overdone
• Rain
  was increased July 5-6 in the Ural Mountains region
• This
  rain was overdone

 

The
bottom line offers relief to dryness near the Kazakhstan border during the next week to ten days as rain and cooler biased conditions evolve. Most of the New Lands will need some warmer weather after the first week of July so that crops can fully utilize the
rain that is expected in this first week to ten days.

 

 

CHINA

• China’s
  weather has trended wetter in the Yellow River Basin and North China Plain in the coming week of weather relative to that of Friday in the past couple of days
• The
  increase in rainfall is expected to verify and that will lead to the reduction of dryness in these areas
• Rain
  falls in most of China at one time or another during the coming week and the second week is wet biased in the Yangtze River Basin and parts of the interior southeast
• Northeast
  China continues to get a good mix of rain and sunshine throughout the two-week forecast period

 

The
bottom line is one of concern for too much rain in the Yangtze River Basin area while most other crop areas in eastern China will experience a relatively good mix of weather over the next two weeks. Some areas in interior south will also be a little too wet.
Flooding will be possible from Guangxi and eastern Guizhou through Hunan to Jiangsu and immediate neighboring areas over the next ten days. Some crop damage will be possible, although the greatest rainfall comes in waves. Amounts may reach the range of 5 to
12 inches over the 10 day period. Some flooding already occurred during the weekend in the lower Yangtze River Basin and the ground is saturated in much of east-central and interior southern parts of China leaving the door wide open for more flooding.

 

AUSTRALIA

               
A relatively good mix of rain and sunshine is expected over the next ten days for crop areas near the coast, but interior crops may have an ongoing need for greater rain. New South Wales crop conditions will be best along with Victoria and southeastern South
Australia. More rain will be needed in Queensland and interior parts of South Australia where soil moisture is still rated poorly and there is need for greater rain.

 

INDIA

           
A favorable pattern for crops and fieldwork will occur over the next ten days. Rain will expand from the east into central and northern parts of the nation this week. For the next ten days, the only areas of net drying will occur in the interior far west,
northwest and extreme southeast.  The bottom line is quite favorable for most crop and farming needs.

 

CANADA’S
PRAIRIES

               
Some opportunity for rain will evolve late this week and again from the late weekend into early next week for the drier areas to get some needed rain. A close watch on that distribution of rain is warranted. Drier weather will return in July making this rain
potential extremely important.

Source:
World Weather Inc. and FI

 

 

Bloomberg
Ag Calendar

SATURDAY,
June 20:

• Malaysia’s
  palm oil export data for June 1-20

MONDAY,
June 22:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  crop progress, conditions — soybeans, wheat, cotton, 4pm
• U.S.
  cold storage data – pork, beef, poultry, 3pm
• Malaysian
  Palm Oil Council online seminar on price trends
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• EARNINGS:
  Copersucar

TUESDAY,
June 23:

• China
  cotton, corn, wheat and sugar imports

WEDNESDAY,
June 24:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• U.S.
  poultry slaughter, 3pm

THURSDAY,
June 25:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• International
  Grains Council monthly report
• Port
  of Rouen data on French grain exports
• Malaysia’s
  palm oil export data for June 1-25
• USDA
  hogs and pigs inventory, red meat production, 3pm

FRIDAY,
June 26:

• 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Macros

 

 

Corn.

·        
Corn and soybeans are lower after rallying late last week.  US weather should remain favorable this week for the Corn Belt, but a ridge forecast for the second week could bring crop stress from heat and dryness. 

·        
China may soon authorize purchases of 5 million tons of US corn and 3 million tons of wheat.  We are uncertain if the trade is taking this seriously. 

 

Corn
Export Developments

• None
  reported

 

 

 

Soybean
complex.

• CBOT
  soybeans are lower after rain fell across key US growing regions over the weekend.  Not all areas saw rain. 
  

• Egypt
  bought 59,000 tons of soybean oil for Aug 10-30 delivery, at 10,925 Egyptian pounds ($675.63/ton).  They passed on sunflower oil, in part to rising prices.
  
• Ukrainian
  sunflower oil export prices rose by $20-23 per ton over the last week to bid $770-780 fob Black Sea ($750-760/ton basis August), according to APK-Inform.
• It
  is estimated China bought up to 17 cargoes of soybeans last week. China crush margins remain low but don’t discount China buying US soybeans as they remain cheaper than Brazil, at least for the 2020 positions. 
  
• Thailand
  proposed to ban paraquat and insecticide chlorpyrifos, weed killers, on June 1, jeopardizing imports of major agriculture commodities that affect Brazil and US trade.  Both the US and Brazil lodged complaints. 
  
• Rotterdam
  values this morning showed soybean oil were unchanged from this time previous session, rapeseed oil up 12 in the nearby, and soybean meal when imported from South America down 1-3 euros. 
  
• Offshore
  values this morning was leading CBOT soybean oil 22 point lower and meal $0.90 higher for the week). 
  

·        
China:

·        
China cash crush margins as of this morning, using our calculation, were 43 cents per bushel and compares to 40 cents a week ago and 65 cents around this time last year.

·        
ITS reported Malaysian 1-20 palm oil exports at 1.213 million tons, well up from 772,145 tons during the same period last month.  AmSpec 1.214 million tons, up 55 percent from 781,324 tons same period
last month.  

·        
Palm oil conference:

o  
James Fry – Brent crude oil seen recovering to around $50/barrel, up from current $42.5, which should support CPO palm oil prices. 

o  
Malaysian Palm Oil Council – 2020 palm oil to average 2,337MYR/ton, with range of 2,084-2,594/ton.

o  
MPOB  – 2020 Malaysian palm oil stocks to rise 14 percent to 2.30 million tons from 2019. 

o  
Oil World  – global palm production next season to increase 3.7MMT to 78.7 million tons. 

·        
Malaysia: 

 

Oilseeds
Export Developments

• Egypt
  bought 59,000 tons of soybean oil for Aug 10-30 delivery, at 10,925 Egyptian pounds ($675.63/ton). They passed on sunflower oil. 
  
• Syria
  will retender for 50,000 tons of soymeal and 50,000 tons of corn on June 24 for delivery within four months of contract.

 

BRL

Source:
Reuters and FI

 

Wheat

• Talk
  of China shopping for US wheat over the weekend maybe limiting downside movement in US wheat futures.  US wheat harvest pressure is seen in the mix. 
  
• IKAR
  increased their view of the Russian wheat crop to 79.5 million tons from 78 million previously. 
  
• Meanwhile
  Agritel looks for the Russian wheat crop to end up near 77.5 million tons. 
  
• Black
  Sea 12.5% protein wheat prices were seen at $202/ton fob, down $3.00 per ton from the previous week.  (SovEcon).  IKAR reported $199/ton for August, down $7.00/ton. 
  
• Paris
  December wheat was down 1.50 euros at 181.25 at the time this was written.
  

 

Export
Developments.

• Japan
  seeks 80,000 tons of feed wheat and 100,000 tons of feed barley on June 24 for arrival by November 26. 
  
• Ethiopia
  seeks 400,000 tons of wheat on July 10 for shipment within two months.    
  

 

Rice/Other

None reported