FI Morning Grain Comments 06/24/20

PDF attached

 

Morning. 
US
weather will remain good.  GFS is wetter than the European models. WCB will remain on the drier side over the next 7 days.  It was heard of that China bought another 2 US cargoes of soybeans, both out of the Gulf for Q4 shipment, and one Brazilian cargo for
Sep/Oct. Soybeans and corn and wheat are higher despite rising concerns over the recent spike in US Covid-19 cases.  Anec sees Brazil June soybean exports at 12.6 million tons.  Weaker Malaysian palm (down 30MYR) is weighing on SBO.  Lock closers for repairs
along the IL will start July 1 and we are hearing corn is starting to flow out of the Great Lakes destined for the EU.  US wheat was struggling to trade higher. Harvest pressure was winter wheat was in focus.  Japan received no offers for feed wheat or barley. 
China sold another 4MMT of corn out of auction. 

 

 

 

Weather
and Crop Progress

UNITED
STATES

• Rain
  was increased in Montana and western North Dakota early next week and from Minnesota to Wisconsin Sunday into Tuesday
• Some
  of these increases was needed
• Rain
  was increased in Missouri and southwestern Illinois early next week while it was reduced in Tennessee and neighboring areas
• Some
  of this increase was overdone
• Rain
  was reduced in central and eastern Manitoba early next week
• Some
  of the reduction was needed
• Rain
  was reduced from Illinois to Minnesota late next week
• Some
  of the reduction was needed
• Rain
  was increased in Montana and western North Dakota late next week
• Some
  of the increase was needed
• Rain
  was increased in the Atlantic coast states and reduced in Alabama
• The
  increase in rainfall was a little overdone
• Rain
  was increased in the southeastern states and reduced in the Delta July 4-6 as a tropical cyclone moves inland into the southeastern states
  
• Confidence
  in this tropical cyclone outlook is very low
• Rain
  was reduced in the northwestern Corn Belt July 4-6
• The
  reduction was needed
• Rain
  was reduced in the eastern Midwest July 4-6
• The
  change is a byproduct of the tropical cyclone in the southeastern states making confidence in this change low

 

The
bottom line to today’s outlook remains not very threatening from a Midwest, Delta and southeastern U.S. crop development and rainfall perspective. The GFS is still generating too much rain, but at the same time the drier European model is not exactly offering
much reason for concern over crop conditions in the next couple of weeks either outside of a pocket or two . Net drying in the west-central central and southern Plains maintains reason for concern because of ongoing drought conditions and potential for that
situation to be perpetuated. The western U.S. dryness, however, will only reinforce a mean ridge position to the west of the Midwest limiting the potential for persistent excessive heat and dryness over key corn and soybean production areas in the long-term
outlook. Monsoonal rainfall will evolve in the southwestern states in late July and that could have some influence on weather, but not before then. The presence of a high-pressure ridge aloft over the Midwest for a while next week is still viewed as a temporary
event with the ridge relocating to the west in the high Plains region during the second week of July.

 

EUROPE/BLACK
SEA

• No
  significant changes were noted in the first week of the outlook
• Rain
  was reduced in Europe late next week
• The
  reduction was needed
• Rain
  was also increased in much of Europe July 4-6
• Some
  increase was needed, but a little too much rain was advertised
• Rain
  was reduced in the Balkan Countries July 7-8
• The
  change was needed
• A
  few showers will returned to northern Europe and northwestern parts of the CIS July 7-8
  
• This
  change was needed

 

The
bottom line remains favorable for most of the European continent, despite some variation from one model run to another over the distribution of rain. World Weather, Inc. believes the European and Canadian models are probably more correct than the GFS in the
sense of limiting rainfall in western Europe for a while and in limiting some of the rain in northwestern Russia. The European model has a little more rain in Russia’s Southern Region and eastern Ukraine that seems unlikely to expect, although some showers
may drift into those areas briefly in the coming ten days. A big change in soil or crop conditions does not seem very likely for those eastern Black Sea locations. For the most part the situation in Europe and the Black Sea region is not expected to change
much in the next ten days. Keep an eye on northwestern Europe and northwestern Russia, however, for signs of some drying.

 

RUSSIA
NEW LANDS

• No
  significant changes were noted in the first week of the outlook
• Some
  increase in northern New Lands rain was suggested for late next week
• Some
  of the increase was logical
• Showers
  were also increased July 4-6 in western and northern parts of the New Lands
• Some
  of this was overdone
• Rain
  was increased in the northeastern New Lands July 7-8
• Some
  of this may have been overdone as well

 

The
bottom line is a little drier for areas near the Kazakhstan border today versus that of other recent days in the second week of the forecast. If that change verifies it will add pressure for rain to reach into those drier areas in this first week of the outlook
as has been advertised consistently in recent days. Drier weather in the second week of the outlook in the southeastern New Lands would not have much impact on crops or production potential as long as this first week was favorably moist. Most other areas will
likely continue to experience mostly good crop development potential.

 

CHINA

• No
  significant changes were noted in the first week of the outlook
• Rain
  was increased in far northeastern and east-central China by the GFS model run for late next week
• The
  increase was needed after the previous model run was a little too dry
• GFS
  was much drier for the North China Plain July 4-6
• Some
  drying was needed, but the model run may have taken away too much moisture
• GFS
  increased rain intensity in the Yangtze River Basin July 4-6
• Some
  of the increase was overdone
• GFS
  increased rainfall near and immediately north of the Yangtze River July 7-8
• Some
  increase was needed

 

The
bottom line for China remains one of frequent rain for much of the nation, but especially in the Yangtze River Basin and immediate neighboring areas during much of the next two weeks. A better mix of rain and sunshine will occur in the northeastern provinces
and across the Yellow River Basin. Overall, crop conditions should stay good across most of the north, but a little questionable in the south half of the nation where an ongoing battle with excessive moisture will prevail.

 

AUSTRALIA

• Not
  much change of significance was noted in the first ten days of the outlook
• Brief
  periods of light rain occur in many areas, but the precipitation should be erratic and light leaving need for greater rain in Queensland, interior South Australia and some northern and eastern parts of Western Australia

 

INDIA

• No
  significant theme changes were noted for the first ten days of today’s outlook

 

Rain
will continue to expand across the nation with only the northwest to remain dry biased through the next two weeks. Dryness in the northwest is not unusual for this time of year.

 

SOUTH
AMERICA

• No
  significant change was noted with rain concentrating on southern Brazil and southern Paraguay over the next two weeks
• Some
  areas will become too wet and flooding is possible

Source:
World Weather Inc. and FI

 

 

Bloomberg
Ag Calendar

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 futures are trading mixed. Light short covering was seen earlier after prices reached a three-week low yesterday. 

·        
Funds sold an estimated net 13,000 corn contracts on Tuesday after selling 13,000 on Monday. 

·        
Lock closers for repairs along the IL will start July 1. 
US
corn is starting to flow out of the Great Lakes region. Some of it was thought to be bound for the UK.  Yesterday bids for corn and soybeans fell at Morris, Illinois ahead of lock closures set to begin on July 1.

·        
Note CBOT corn registrations stand at zero, in part to country basis. 

• China
  sold another 4MMT of corn out of auction at an average price of 1,871 yuan per ton (nearly 20MMT total).  Yesterday
  China’s
  Sinograin sold 1.1MMT of corn out of auction (1.7MMT total so far this season). 
  
• India
  will allow imports of 500,000 tons of corn this year at 15% import tax, below the normal 60% import tax.

·        
50 percent of a Reuters poll posted on Twitter thinks a US yield of 180 bu/acre is possible. 

•  (Bloomberg)
  — The halting of a British pork plant’s sales to China after just a few workers contracted coronavirus highlights the risk that more facilities around the world could see exports disrupted. Meanwhile, China’s pork imports in May dropped from a record, while
  beef shipments decreased to the lowest in at least six months after the coronavirus hurt domestic demand.
• A
  Bloomberg poll looks for weekly US ethanol production to be up 32,000 at 811,000 barrels (837-921 range) from the previous week and stocks to decrease 14,000 barrels to 21.332 million.

 

Corn
Export Developments

• None
  reported

 

 

 

 

Soybean
complex.

• CBOT
  soybeans are
  moderately lower in the nearby contracts on favorable US weather bias ECB and higher soybean meal. The GFS model is wetter than the European models. WCB will remain on the drier side over the next 7 days.  There are rising concerns over the recent spike in
  US Covid-19 cases. 
• Weaker
  Malaysian palm (down 30MYR) is weighing on SBO. 
• China
  bought another 2 US cargoes of soybeans, both out of the Gulf for Q4 shipment, and one Brazilian cargo for Sep/Oct.
  
• Anec
  sees Brazil June soybean exports at 12.6 million tons. 
• Soybean
  open interest fell 13,431 contracts on Tuesday.
• China’s
  Sinograin sold  all of the 6,977 tons of soybean oil offered at auction and 48% of 15,640 tons rapeseed oil offered. Sinograin sold all the 32,613 tons of soybeans offered on Tuesday (total sales – 140,700 tons)

·        
Funds sold an estimated net 4,000 soybeans contracts on Tuesday, sold 1,000 meal and sold 2,000 soybean oil.  

• Rotterdam
  values this morning showed soybean oil for the August/September position unchanged from this time previous session, rapeseed oil down 4 in the nearby, and soybean meal when imported from South America unchanged to 5 euros lower. 
  
• Offshore
  values this morning was leading CBOT soybean oil 3 point higher and meal $1.60 lower. 
  

·        
China:

·        
China cash crush margins as of this morning, using our calculation, were 47 cents per bushel (48 previous) and compares to 40 cents a week ago and 65 cents around this time last year.

·        
SGS: Malaysian palm exports 1-20 June period up 50 percent at 1.217MMT. 

·        
Malaysia: 

 

Oilseeds
Export Developments

• Results
  awaited:  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.

 

Wheat

• With
  short covering in focus, US wheat futures were struggling to stay in positive territory on harvest pressure and higher USD.  Japan received no offers for feed wheat or barley. 
  

·        
Funds bought an estimated net 1,000 Chicago wheat contracts on Tuesday. 

• Paris
  December wheat was up 0.50 euros at 180.25 at the time this was written.
  
• USDA
  FAS sees the Philippines 2020-21 wheat imports at 7 million tons from 7.2MMT a year earlier.
• Brazil
  granted a tariff-import exemption for 450,000 tons of wheat effective from July 1 to Nov. 17 but will not be allowed until 85% of the current tariff quota of 750,000 tons is filled,
  

 

Export
Developments.

• Japan
  in its SBS import tender received no offers for feed wheat or barley for arrival by November 26. 
  

·        
Japan seeks 101,243 tons of food wheat later this week. 

• Ethiopia
  seeks 400,000 tons of wheat on July 10 for shipment within two months.    
  

 

Rice/Other

• South Korea bought 79,105 tons of rice from China for January through March arrival.
  

    TONNES(M/T) GRAIN TYPE    PRICE($/T)  ARRIVAL/PORT

        20,000  Brown Short   $857.00     Jan 31,2021/Gunsan

        20,000  Brown Short   $859.00     Jan 31,2021/Ulsan

        20,000  Brown Short   $858.00     March 31,2021/Donghae

        19,105  Brown Short   $857.70     March 31,2021/Mokpo