FI Morning Grain Comments 06/29/20

PDF attached

 

Morning.

Lower
soybeans, higher corn and mixed wheat. Hot and dry conditions are forecast for the US WCB.  China cash crush margins are weaker this morning and the BRL is softer by about 2.4 percent to 5.4840 BRL/USD.  China expanded their list of global meat plants for
import to 15, including a beef plant in Canada and pork plant in Denmark. Algeria and South Korea are in for wheat.  StatsCan showed less than expected wheat, corn and soybean area.  Durum was higher than expected and canola near expectations.   

 

Restricted
rainfall is expected over the next ten days from eastern Ukraine and Russia’s Southern region to western Kazakhstan. U.S. Temperatures will be hot in the southern Plains for much of the next two weeks with frequent highs in the 90s to 106 degrees Fahrenheit. 
The US Ohio River Valley will see 1-3 inches of rain this week through Friday.  The Delta and southeastern region will remain wet.  Other parts of the upper Midwest and western Corn Belt may see restricted rainfall.  It should also remain dry across the central
Great Plains.  The Northern Plains will see rain. 

 

 

 

 

Weather
and Crop Progress

 

 

 

 

 

UNITED
STATES

• No
  general theme changes were noted this morning in the latest GFS model run
• Rain
  intensity was increased in northwestern Illinois, eastern Iowa and southwestern Wisconsin Tuesday
• Rain
  was also shifted west out of Manitoba and into eastern Saskatchewan today and Tuesday
• Rain
  intensity was reduced in the northern Plains, upper Midwest and eastern Canada’s Prairies during mid-week next week
• Some
  of this change was needed
• Rain
  was increased near the Gulf of Mexico coast from Louisiana to southern Georgia and northern Florida July 6-8
• The
  reduction was needed
• Rain
  was reduced from the central Plains into the heart of the Midwest July 9-11
• Some
  of the reduction was needed
• Rain
  was increased in the west-central high Plains and across parts of the lower Midwest, Delta and Tennessee River Basin
• Some
  of the rain boost was needed, but parts of the region were too wet

 

The
morning GFS model run raised the potential for some cooling after July 11 across the northern Plains and Midwest resulting in some opportunity for rainfall as well as lower temperatures. If the model were to verify the change would be welcome and beneficial.
However, the European model does not suggest much of a break from the warm and dry bias.  As you may recall, World Weather, Inc.’s Trend Model has been suggesting July would be drier and warmer than usual at least into the third week and the trend advertised
in most of the models through mid-month certainly are trending in that direction.

 

EUROPE/BLACK
SEA

• No
  major trend changes were noted over the coming week
• France
  will be among the driest areas in the continent for the coming week with crop moisture stress on the rise in unirrigated crop areas
• Timely
  rain occurs in many other areas, although warm temperatures will limit the benefit of some rain in Germany, the U.K., Belgium and Netherlands whereas eastern Europe rainfall will be more beneficial and significant
• GFS
  model reduced rain in northwestern Europe during mid-week next week and in eastern Europe as well
• Rain
  was removed from the area extending north from the Balkan Countries into Belarus and the Baltic States July 9-11
  
• Some
  of this reduction was needed
• Rain
  intensity was also reduced in the eastern southeastern Balkans July 12-13 and in northwestern Russia while it was increased in northwestern Europe
• Some
  of these changes were needed

 

France
will certainly be closely monitored along with a few neighboring areas in the U.K., Germany, Belgium and Netherlands during the next couple of weeks. A part of this region will become too dry. Actually, Some of this region is already too dry and additional
drying is going to worsen crop stress for sunseed, corn, sugarbeets and other crops while racing winter grains and oilseeds to maturation and harvesting. Eastern Europe crop conditions will remain very good with timely rain and sunshine along with warm temperatures
supporting aggressive crop development.

 

RUSSIA
NEW LANDS

• Little
  change was noted across the region in the first week of today’s GFS model run
• Rain
  was reduced in a part of the eastern New Lands, but the reduction was needed
• Rain
  was increased during the middle part of next week through the following weekend in the New Lands
• Some
  of the increase might have been overdone, but timely precipitation should occur at that time
• Some
  reduction in rainfall was noted in the eastern New Lands July 12-13
• The
  reduction was needed

 

A
mostly favorable environment is advertised for crops in the New Lands during the next two weeks. However, dryness is still present in areas near the Kazakhstan border and the advertised boost in precipitation has yet to occur in this region and if sufficient
relief does not come along in the next couple of weeks there may be more potential for crop moisture stress and lower yield potentials if a period of dry and warm weather evolves later in July. For now, though, production potentials for spring wheat and sunseed
remain good.

 

CHINA

• No
  significant changes were noted overnight through the next ten days to two weeks
• Most
  of eastern China will receive rain and amounts will be excessive in the Yangtze River Basin where more horrific flooding may result, but rainfall farther to the north in key grain and oilseed areas will be better mixed with periods of sunshine and crop development
  will advance favorably

 

China
bottom line remains a concern for rice, and other crops produced from the Yangtze River Basin southwest into Yunnan and Guangxi where flooding is expected to continue periodically over the next ten days and some of the expected rainfall will be extremely great.
The moisture will occur over saturated ground and in areas already subjected to recent flooding resulting in a potentially bigger flood. However, crop conditions north of the region including the most important grain, oilseed and cotton areas east of Tibet
will be more favorable and supportive of normal crop development.

 

AUSTRALIA

• Very
  little change was noted in the two-week outlook, although rain was increased for this coming weekend in far southwestern corner of the nation

 

Winter
crop establishment will continue to advance, although greater moisture is still needed in Queensland, northern and eastern crop areas in Western Australia and in interior South Australia. There is plenty of time for improvement before spring crop moisture
demand starts to rise in late August.

 

SOUTH
AMERICA

• No
  changes were noted overnight
• Rain
  will be limited in Argentina except early this week when significant rain occurs in central and eastern Buenos Aires
• 06z
  GFS model run was wetter in western Mato Grosso for mid- to late-week next week, but the increase was overdone
• Some
  of this increase was also suggested for Bolivia and Mato Grosso do Sul – all of which was overdone

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

MONDAY,
June 29:

• Canada
  Statcan data on seeded area for wheat, durum, canola, barley, soybeans, 8:30am
• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  crop progress, conditions — soybeans, wheat, cotton, 4pm
• Vietnam’s
  General Statistics data on coffee, rice, rubber exports
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• EARNINGS:
  Biosev

TUESDAY,
June 30:

• U.S.
  annual acreage planted – soybeans, wheat, cotton, corn
• USDA
  quarterly stocks of corn, wheat, barley, oat, sorghum and soybeans
• OECD
  annual agricultural policy monitoring and evaluation report
• U.S.
  agricultural prices paid, received, 3pm
• Malaysia’s
  palm oil export data for June 1-30

WEDNESDAY,
July 1:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• Brazil
  soybean exports
• Australia
  commodity index
• U.S.
  soybean crush, DDGS output, corn for ethanol, 3pm
• Holiday:
  Canada, Hong Kong

THURSDAY,
July 2:

• UN
  FAO world food price index, 4am
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports
• AB
  Foods trading update

FRIDAY,
July 3:

• U.S.
  Independence Day Holiday
• 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

 

 

 

 

 

CFTC
COT
showed no surprises this week.  Managed money and traditional funds were more long than expected in soybeans, corn and meal. 

 

 

 

 

 

 

 

 

 

 

Source:
Reuters and FI

 

Macros

Canadian
Industrial Product Prices (M/M) May: 1.2% (est 2.7%; prev -2.3%)

Canadian
Building Permits (M/M) May: 20.2% (est 10.4%; prev -17.1%)

Canadian
Raw Materials Price Index (M/M) May: 16.4% (est 30.0%; prev -13.4%)

 

 

Corn.

·        
Corn futures are rebounding from a 6-week low on a weather forecast calling for net drying across parts of the US western Corn Belt and major corn producing areas in Europe.  USD was lower and US stocks higher.

• US
  coronavirus cases surged over the weekend.  Globally there are more than 500,000 deaths. 
  
• CBOT
  corn open interest fell 27,365 contracts.  Registrations were unchanged. 
• October
  options started trading today. 
• Parts
  of France and UK along with Western Europe may see crop stress this week with limited rainfall followed by very warm temperatures that occurred over the weekend. 
  
• Bloomberg:
  China’s imports of American goods in the first five months have reached about 19% of the total target for 2020 set in the phase one trade pact with the U.S. The Asian nation promised to purchase an additional $200 billion of U.S. goods and services in 2020
  and 2021 in the agreement signed on Jan 15.
• StatsCan
  reported the corn area at 1.440 million hectares, 6.3 percent below their April estimate and 3.7 percent below 2019.  The barley area was slightly above expectations at 3.036 million hectares and 4.2 percent above their April estimate. 
  

 

Corn
Export Developments

• Late
  last week South Korea’s KOCOPIA group bought 60,000 tons of Brazilian corn at $189.97/ton c&f for arrival around October 15. 
  
• Late
  last week South Korea’s MFG bought corn at $184.22/ton, according to AgriCensus, for last half October arrival. 
  

 

Soybean
complex.

• CBOT
  soybeans are
  mixed, meal slightly higher July lower) and soybean oil lower (led by palm oil). 
  
• BRL
  is much weaker this morning, by about 2.4 percent to 5.4840 BRL/USD. 
• CBOT
  soybean open interest fell 21,938 contracts.  Registrations were unchanged for soybeans, meal and oil. 
  
• The
  trade expects USDA to report an increase in US soybean planted area when updated on Tuesday.  A two million acre plus change to planted area should influence November soybean price movement, negatively, on Tuesday, and keep the July/November soybean spread
  inverted through delivery period. 
• The
  US Ohio River Valley will see 1-3 inches of rain this week through Friday.  The Delta and southeastern region will remain wet.  Other parts of the upper Midwest and western Corn Belt may see restricted rainfall.  It should also remain dry across the central
  Great Plains.  The Northern Plains will see rain. 
• US
  soybean oil basis across the ECB and WCB firmed about 50 to 75 points last week.  IL was thought to be at option. Gulf was unchanged at 250 over. 
  
• StatsCan
  reported the Canadian canola area at 8.409 million hectares, slightly above expectations and below 8.481 million for 2019.  The soybean area of 2.082 million hectares was nearly 100,000 below trade expectations. 
  
• Strategie
  Grains lowered their EU rapeseed crop at 16.54 million tons from 16.68 million. 
  
• Rotterdam
  values this morning showed soybean oil for the August/September position was down 6-7 euros from this time previous session, rapeseed oil down 1 in the nearby, and soybean meal when imported from South America unchanged to 2 euros lower. 
  
• Offshore
  values this morning was leading CBOT soybean oil 23 points higher and meal $1.60 higher. 
  
• China
  is back from a 2-day holiday:

·        
China cash crush margins as of this morning, using our calculation, were 35 cents per bushel and compares to 47 cents a week ago and 50 cents around this time last year.

·        
Malaysia: 
Down
for the 4^th session

 

Oilseeds
Export Developments

• USDA
  seeks 7,230 tons of bulk crude degummed soybean oil for the Dominican Republic for Aug 17-27 shipment, on June 30. 
  
• 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

• US
  wheat futures are struggling to find ground, but Chicago was higher at the electronic close, mixed in KC and mixed for MN.  On Friday we saw fresh contract lows bias September positions for all three markets. An increase in global import tenders is supportive. 
  
• StatsCan
  reported the all-wheat Canadian wheat area at 10.105 million hectares, nearly 100,000 below trade expectations and above 9.957 million for 2019. Durum was estimated at 2.302 million, 76,000 hectares above a Reuters trade guess. 
  
• Paris
  December wheat was up 0.25 at 179.00 at the time this was written.
• Restricted
  rainfall is expected over the next ten days from eastern Ukraine and Russia’s Southern region to western Kazakhstan.
  
• U.S.
  Temperatures will be hot in the southern Plains for much of the next two weeks with frequent highs in the 90s to 106 degrees Fahrenheit. 
  

 

 

Export
Developments.

• South
  Korea’s MFG seeks 70,000 tons of feed wheat on June 30, according to Reuters, for arrival around November 30.
  
• Algeria
  seeks 50,000 tons of milling wheat, optional origin, on June 30 for Aug-Sep shipment, depending on origin. 
  
• Jordan
  seeks 120,000 tons of wheat on June 30 for Nov-Dec shipment. 
• Ethiopia
  seeks 400,000 tons of wheat on July 10 for shipment within two months.    
  

 

Rice/Other

• Locust swarms are impacting India’s sugarcane crop.