FI Morning Grain Comments 07/06/20

PDF attached

 

Morning.  
Weather, China demand and fund positions are the key drivers for the higher CBOT prices.  Heat is expected across the Midwest for the balance of the week.  A high-pressure ridge will follow bias WCB and lower Midwest during the second week of the forecast. 
We look for crop conditions to inch lower for corn and soybeans.  SW conditions are projected to decline 2 points while winter wheat may stay stable. 

 

 

 

 

Weather
and Crop Progress

UNITED
STATES

• No
  general theme changes were noted overnight, but concern is rising over missed areas of rain in this first week of the outlook and then drier and warmer weather in the second week that will exacerbate the dryness left over from this first week of precipitation
• Portions
  of Missouri, Illinois, Michigan and northwestern Indiana may experience the greatest drying in this first week of the outlook
• Showers
  in these areas will not be sufficient to counter evaporation, although there will be some light rain briefly
• Week
  two will have a more broad-based lack of rain and warmer temperature regime for much of the Midwest bringing down soil moisture in many areas with those areas listed above that miss this first week’s rain suffering most from dryness in the second week
• Concern
  about limited northward moving moisture from the Gulf of Mexico remains over the two weeks
• World
  Weather, Inc. believes the mean ridge position will be over the Plains during weeks  2, 3 and 4 which will support some northwesterly flow aloft across the northern and eastern Midwest at times offering a little rainfall as well
• The
  rainfall will be below average in many areas because of restricted Gulf of Mexico moisture at times
• Totally
  dry weather is unlikely, but eventually the driest areas will be in the southwestern Corn Belt; including Nebraska, southwestern Iowa, Missouri, Kansas, southwestern Illinois and possibly the northern Delta
• Temperatures
  will be above average most of the next three weeks with the warmest conditions expected early this week and again from the late weekend through much of next week. Western Corn Belt areas will be warmest in weeks 3 and 4
• Early
  reproducing corn will perform well, late reproducing corn will be stressed and some of the driest areas could whittle down yields somewhat
  
• Soybeans
  may be more at risk of dryness later this summer than corn

 

EUROPE/BLACK
SEA

• Concern
  over net drying continues in France, southern parts of the United Kingdom, Belgium, portions of Germany and parts of both Poland and Czech Republic
• Seasonable
  drying will also occur in Spain and Portugal
• Scattered
  showers and thunderstorms elsewhere in Europe will be welcome, but the precipitation may become less frequent and less significant over time
• Eastern
  Ukraine through Russia’s Southern Region to parts of western Kazakhstan will be drying out over the next ten days

 

RUSSIA
NEW LANDS

• Limited
  rainfall is still advertised for the heart of the Russian New Lands region where net drying is expected and warming will evolve
• Soil
  moisture will slowly decrease during the next ten days and a close watch on the region east of the Ural Mountains and west of West Siberia is warranted

 

CHINA

• Additional
  excessive rainfall is expected in the Yangtze River Basin through mid-week this week and then some drier weather will gradually evolve
• Rain
  is expected in most other areas in China at one time or another with a good mix of rain and sunshine expected for many areas
• A
  period of net drying may evolve in parts of Heilongjiang and if that occurs for a while in this coming ten days it would prove to be beneficial after frequent rain in recent weeks
• Southern
  coastal provinces of China may experience some net drying as well during the coming ten days, although a few showers and thunderstorms are expected

 

INDIA

• India’s
  weather still looks very good over the next ten days to two weeks
• Northwestern
  areas will be driest this week, but some rain is expected to reach into the region
  
• Brief
  periods of excessive rain will occur along the west coast, but should not get very far inland
• Greater
  rain is expected in Gujarat this week
• Flooding
  rain is most likely in eastern parts of the nation, including the far Eastern States, Bangladesh and the lower Ganges River Basin
• Far
  southern India’s rainfall will be more erratic than that in many other areas of the nation and the same will be true for the inter western parts of Maharashtra
• Temperatures
  will continue hot in northwestern India and neighboring areas of Pakistan where rainfall will be most limited and sunshine most abundant

 

AUSTRALIA

• Rain
  is expected in New South Wales and Queensland Thursday into Saturday with sufficient amounts expected to benefit establishing winter wheat, barley and canola
• Moisture
  totals of 0.10 to 0.60 inch with a few amounts over 1.00 inch expected
• The
  greater amounts will likely be mostly in New South Wales to the immediate west of the Great Dividing Range
• Rain
  will also fall this week periodically near the southern coast of the nation and in much of Victoria
• A
  boost in rainfall will still be needed in South Australia and many interior northern and eastern Western Australia locations and more rain may still be desired in Queensland after this week’s showers
• Western
  Australia will experience greater rainfall late this coming weekend into early next week that will benefit winter crops

 

SOUTH
AMERICA

• Rain
  over the next ten days will be greatest from southern Paraguay into Rio Grande do Sul, Santa Catarina and far southern Parana where some local flooding is possible as multiple inches of rain occur
  
• More
  limited rain is expected in northeastern Argentina and areas from western Mato Grosso do Sul into northern Parana
• Coastal
  showers will also occur in the remainder of eastern Brazil throughout the next ten days
• Net
  drying is expected elsewhere over the next ten days
• Southern
  Argentina was advertised wetter in the July 17-19 period
• The
  increase may have been overdone on the 06z model run

 

 

 

 

 

Bloomberg
Ag Calendar

 

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

 

 

 

 

Macros

 

 

Corn.

·        
CBOT corn is higher led by bull spreading despite new-crop US crop concerns. China interest for US corn is supportive.

·        
Funds remain very short with managed money estimated net short 216,000 contracts. 

 

Corn
Export Developments

• Under
  the 24-hour announcement system, US exporters sold 202,000 tons of corn to China for 2020-21 delivery. 
  

 

Soybean
complex.

·        
CBOT soybeans, meal and oil are all higher on US weather concerns.  News is light.  Bear spreading a feature.   Global vegetable oil markets are firmer.  Egypt on Wednesday seeks 30,000 tons of soybean oil and 10,000 of sunflower
oil for September 1-20 arrival. 

• Rotterdam
  values this morning showed soybean oil for the August/September position was up 12.50 from this time previous session, rapeseed oil unchanged in the nearby, and soybean meal when imported from South America 2-8 euros higher. 
  
• Offshore
  values this morning was leading CBOT soybean oil 82 higher and meal $4.20 higher.   
  
• China:

·        
China cash crush margins as of this morning, using our calculation, were 83 cents per bushel and compares to 63 cents a week ago and 47 cents around this time last year.

·        
Malaysia: 

 

 

Oilseeds
Export Developments

• Under
  the 24-hour announcement system, US exporters sold 264,000 tons of soybeans to China for 2019-20 delivery. 
  
• Egypt
  on Wednesday seeks 30,000 tons of soybean oil and 10,000 of sunflower oil for September 1-20 arrival. 
  

 

Wheat

·        
Wheat was higher early this morning following corn and soybeans. 

·        
Russian wheat prices were down $3.00 from the previous week to around $197.00 to 197.50 per ton.

·        
Russia plans to make their grain export quota permanent in October.  35 million tons of wheat exports is expected. 

·        
SovEcon downgraded their estimate for the Russian wheat crop to 80.9 million tons from 82.7 previously. 

• Paris
  December wheat was down 0.50 at 183.75 at the time this was written.

 

 

Export
Developments.

• Jordan
  seeks 120,000 tons of wheat for November and December shipment on July 7. 
  
• Japan
  seeks 80,000 tons of feed wheat and 100,000 tons of barley on Wednesday, July 8, for arrival by December 24. 
  
• Ethiopia
  seeks 400,000 tons of wheat on July 10 for shipment within two months.    
  
• Syria seeks 200,000 tons of milling wheat from Russia by July 28. 
  

 

Rice/Other

• None reported