FI Morning Grain Comments 06/30/20

PDF attached

 

Morning.

 

US
weather outlook is largely unchanged.  Talk of dryness after 4^th of July for the US Midwest may support prices. 
Corn
futures are higher despite a one-point increase in US crop conditions. Follow through short covering is likely. 
CBOT
corn open interest was down 51,078 contracts on Monday.  Funds
bought an estimated net 33,000 corn contracts on Monday.  Yesterday
there was talk China bought up to 20 cargoes of US soybeans over the past week. 
CBOT
soybeans were higher early this morning led by bull spreading, meal slightly higher and soybean oil mixed despite sharply lower Malaysian palm oil (down 44 points).  China futures ended slightly higher.  BRL was firmer at 5.4034 and USD was up 15 points as
of 6:31 am CT.  Heavy deliveries were posted against the July soybean oil contract of 2,402 contracts with customer JP Morgan stopping 2,052.  ADM Investor Services issued 1,017 lots.  US wheat futures were lower for Chicago and KC and higher for MN, in part
to deliveries against the CBOT Chicago contract (nearly spreads weaker), and results from the weekly USDA crop progress report. 
South
Korea’s MFG bought about 60,000 tons of feed wheat at $216.05/ton C&F for arrival around November 30.  Thailand seeks 236,800 tons of feed wheat on July 1 for Aug-Jan 2021 shipment. (3 consignments). 

 

 

 

Weather
and Crop Progress

 

 

 

 

 

 

 

 

 

 

UNITED
STATES

• No
  general theme changes were noted over the next two weeks
• First
  week rainfall will be most significant in the northern Plains and from Missouri and western Illinois into the Delta and southeastern states with most of that occurring in the next couple of days except in the southeastern states where rainfall will occur most
  days
• Week
  two weather will be dominated by a warm temperature regime and scattered showers and of light intensity
  
• Northern
  portions of the Plains and upper Midwest will be wettest and net drying is expected in many other areas, despite some shower activity periodically

 

Drying
in the next ten days will be most significant in parts of the eastern Midwest and in the southwestern corner of the Corn Belt. Rain in the northern Plains and Canada’s Prairies will be good for crops in those areas and perhaps in the upper Midwest as well.
Rain will otherwise be greatest in the Delta and southeastern states leaving most areas in between in a net drying mode, despite scattered showers periodically over the next couple of weeks.

 

EUROPE/BLACK
SEA

• No
  general theme changes were noted over the coming ten days
• France,
  Spain and Portugal will be driest with a few areas in Germany and the U.K. expected to dry down as well
• Greatest
  rain will occur from eastern Europe into western Russia
• Net
  drying is expected from eastern Ukraine through Russia’s Southern Region and in a part of the middle Volga River Basin into Kazakhstan

 

Crop
stress will be rising in France and some neighboring unirrigated areas during the coming ten days. Drying and crop stress will also be significant from eastern Ukraine into Russia’s Southern Region and Kazakhstan. Good winter grain harvest conditions are likely,
but dryness will be stressful to unirrigated summer crops in these drier areas. Good crop weather is expected from eastern Europe into western Russia. There is some concern over small grain quality and harvest delays in the Balkan Countries.

 

RUSSIA
NEW LANDS

• No
  significant changes were noted in the latest computer weather forecast model runs
• Scattered
  showers will occur in the New Lands, although rainfall in southern parts of the Ural Mountains region will be limited and dryness may be allowed to prevail in that region.
  
• Some
  beneficial moisture will occur in the eastern New Lands where dryness near the Kazakhstan border may be eased

 

A
mostly favorable crop weather environment is expected over the next ten days to two weeks. Sufficient rain will fall to support many crops, although there will be some ongoing concern about areas near the Kazakhstan border in the southern Ural Mountains region
where rainfall will be most limited and temperatures warmest at times.

 

CHINA

• No
  serious theme changes were noted overnight
• Most
  of China will receive rain over the next two weeks and some of it will be heavy enough for local flooding
• Much
  of the widespread flooding of late will be ending
• Some
  reduction in rainfall was noted for next week in a part of the Northeast Provinces, but rain will falls abundantly during the coming two weeks

 

China
will continue to recover from recent serious flooding and it may take a while for soil conditions in the Yangtze River Basin and some southern parts of the nation to get back to normal after copious amounts of rain this spring and early summer. Additional
pockets of heavy rain are expected and that will induce more localized flooding from time to time. The best crop conditions will be in northern China during the next ten days where a better mix of rain and sunshine is expected.

 

AUSTRALIA

• No
  major changes occurred in the first ten days of the outlook
• Some
  increase in rainfall was suggested for Western Australia July 10-14
• The
  European model run suggested greater rain in Western Australia during the middle part of next week
• Limited
  rainfall occurs in eastern Australia away from coastal areas during much of the coming ten days

 

Winter
crop conditions will not change much in the coming ten days, although if greater rain occurs in Western Australia there might be some additional improvement in a part of that state’s wheat, barley and canola. Greater rain is still needed in northern and eastern
crop areas in Western Australia, in interior parts of South Australia and across Queensland, although very few key crop areas are critically dry.

 

INDIA

No
significant change was noted in today’s outlook relative to that of Monday

 

SOUTH
AMERICA

Not
much change was noted overnight

• Southern
  Brazil and southeastern Paraguay get most of the rain over the next couple of weeks, although some periodic rain will also impact a part of Buenos Aires

 

Western
Argentina crop areas will continue too dry while wheat and barley in other parts of the nation become better established. Southern Brazil rainfall may keep some wheat areas vulnerable to wet weather disease and flooding. Safrinha corn harvesting will advance
well in the lack of rainfall for many areas. Coffee, sugarcane and citrus harvesting will also advance favorably. A little rain might benefit Safrinha cotton in Mato Grosso, but very little is expected and it is quickly becoming too late for that.

Source:
World Weather Inc. and FI

 

 

Bloomberg
Ag Calendar

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

 

 

 

 

 

 

 

USDA
inspections versus Reuters trade range                                                    

Wheat         
515,359         versus   450000-650000  range

Corn             
1,234,690     versus   1000000-1300000             range

Soybeans   
324,512         versus   275000-550000  range

 

 

Macros

 

 

Corn.

·        
Corn futures are higher despite a one-point increase in US crop conditions. Follow through short covering is likely.  CBOT corn open interest was down 51,078 contracts on Monday. 
Funds
bought an estimated net 33,000 corn contracts on Monday.  Yesterday there was talk China bought up to 20 cargoes of US soybeans over the past week. 

·        
US corn conditions increased one point to 73 percent from the previous week, this compares to 68 percent average.  The trade was looking for 73 percent.  4 percent of the crop is in the silking stage versus 7 percent average. 

·        
USDA US corn export inspections as of June 25, 2020 were 1,234,690 tons, higher end of a range of trade expectations, below 1,295,845 tons previous week and compares to 284,923 tons year ago. Major countries included Japan for
308,453 tons, Mexico for 288,698 tons, and Colombia for 158,693 tons.

·        
China looks to sell another 4 million tons of corn from reserves on Thursday.  China corn prices remain near a 5-year high. 

·        
Soybean and Corn Advisory increased his outlook for Brazilian corn for 2019-20 to 98 million tons from 96 million previously. 

• China
  increased import duties on Australian barley and sorghum to 3% and 2%, respectively. 
  
• 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.
  
• Locust
  swarms in Argentina that made an unusual migration int Corrientes could now threaten Brazil and Uruguay crops. 
  

 

Corn
Export Developments

• None
  reported. 

 

 

 

 

Soybean
complex.

·        
CBOT soybeans were
higher early this morning led by bull spreading, meal slightly higher and soybean oil mixed despite sharply lower Malaysian palm oil (down 44 points).  China futures ended slightly higher.  BRL was firmer at 5.4034 and USD was up 15 points as of 6:31 am CT. 

• Heavy
  deliveries were posted against the July soybean oil contract of 2,402 contracts with customer JP Morgan stopping 2,052.  ADM Investor Services issued 1,017 lots. 
  

·        
CBOT soybean open interest was down 7,907 contracts on Monday. 

·        
US soybean conditions were rated 71 percent for the good and excellent categories, up one point from the previous week, well up from 54 percent year ago and compares to 65 percent average.  The trade was looking for 70 percent. 
14 percent of the crop was in the blooming stage, above 11 percent 5-year average. 

·        
June 1 soybean stocks were seen down from a year ago but still second highest on record.  The trade expects USDA to report an increase in US soybean planted area when updated on Tuesday.  An upward revision to the US soybean area
by 2 million acres or more could send November sharply lower.   USDA

·        
US soybean export inspections as of June 25, 2020 were 324,512 tons, within a range of trade expectations, above 255,810 tons previous week and compares to 720,842 tons year ago. Major countries included Egypt for 132,619 tons,
Mexico for 65,364 tons, and Japan for 27,252 tons. China took only a small amount of soybeans. 

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

• 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. 
• Rotterdam
  values this morning showed soybean oil for the August/September position was unchanged from this time previous session, rapeseed oil up 6 in the nearby, and soybean meal when imported from South America unchanged to 1-2 euros lower. 
  
• Offshore
  values this morning was leading CBOT soybean oil 42 points lower and meal $1.30 higher. 
  
• China:

·        
China cash crush margins as of this morning, using our calculation, were 38 cents per bushel (35 previous) and compares to 47 cents a week ago and 50 cents around this time last year.

·        
AmSpec: Malaysian June exports for palm oil were 1.629MMT, up 28.7 percent mom.  ITS: up 29 percent to 1.622MMT. 

·        
Malaysia: 
Down
for the 5^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 were lower for Chicago and KC and higher for MN, in part to deliveries against the CBOT Chicago contract (nearly spreads weaker), and results from the weekly USDA crop progress report. 
Funds
bought an estimated net 11,000 Chicago wheat contracts on Monday. 

·        
US winter wheat conditions were unchanged at 52 percent for the combined good and excellent categories and compares to 50 percent average.  The trade was looking for an  unchanged winter wheat rating.  US winter wheat harvest
progress advanced to 41 percent (trade 44 percent) from 29 percent week ago and compares to 41 percent 5-year average. 

·        
US spring wheat ratings fell hard again to 69 percent from 75 percent week earlier (trade was looking for unchanged) and compares to 75 percent year ago and 67 percent average.  US spring wheat headed was 36 percent versus 45
percent 5-year average. 

·        
USDA US all-wheat export inspections as of June 25, 2020 were 515,359 tons, within a range of trade expectations, below 686,036 tons previous week and compares to 696,142 tons year ago. Major countries included Philippines for
166,255 tons, Japan for 65,792 tons, and Indonesia for 58,200 tons.

• Paris
  December wheat was down 0.50 at 181.25 at the time this was written.
• European
  weekly trade data is delayed due to technical issues. 
• 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. 
  
• Restricted
  rainfall is expected over the next ten days from eastern Ukraine and Russia’s Southern region to western Kazakhstan.
  

 

Export
Developments.

• South
  Korea’s MFG bought about 60,000 tons of feed wheat at $216.05/ton C&F for arrival around November 30. 
  
• 3
  offers received: Jordan seeks 120,000 tons of wheat on June 30 for Nov-Dec shipment. 
  
• Thailand
  seeks 236,800 tons of feed wheat on July 1 for Aug-Jan 2021 shipment. (3 consignments). 
  
• Results
  awaited: Algeria seeks 50,000 tons of milling wheat, optional origin, on June 30 for Aug-Sep shipment, depending on origin. 
  
• 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.
  

·        
US COTTON – 41 PCT CONDITION GOOD/EXCELLENT VS 40 PCT WK AGO (52 PCT YR AGO) -USDA

·        
US COTTON – 35 PCT SQUARING VS 27 PCT WK AGO (36 PCT 5-YR AVG) -USDA

·        
US COTTON – 9 PCT SETTING BOLLS VS 6 PCT WK AGO (7 PCT 5-YR AVG) -USDA

·        
US RICE – 14 PCT HEADED VS 9 PCT WK AGO (13 PCT 5-YR AVG) -USDA

·        
US RICE – 74 PCT CONDITION GOOD/EXCELLENT VS 73 PCT WK AGO (68 PCT YR AGO) -USDA

 

 

Nearby Chicago and Paris Wheat quarterly