FI Morning Grain Comments 07/07/20

PDF attached

 

Morning.  

 

Pure
GFS model looks a little wetter for the heart of the Midwest.  World Weather, Inc. expects a favorable distribution of rain in this first week of the outlook.  IMO, the 7-day does not look all that bad for east of IA.  US crop conditions fell for corn and
were unchanged for soybeans, but overall remain ok.  Chicago & KC wheat is lower on harvest pressure, but MN saw some support overnight from a cut to the French wheat crop. 

 

 

 

Weather
and Crop Progress

UNITED
STATES

• 06z
  GFS model reduced rain in the eastern Midwest during the first week of the outlook
  
• Some
  reduction was needed
• Overnight
  models have brought a little more rainfall to the Midwest during the second week of the outlook relative to that of Monday
• Some
  of this increase was needed and some was overdone
• GFS
  Ensemble is still the preferred model for the upper air wind flow pattern for the second week of the outlook
• This
  model continues to advertise a progressive ridge of high pressure through the end of this week that moves from west to east across the nation
• The
  model develops a more significant ridge over the Rocky Mountains and high Plains region this weekend while digging a deeper trough of low pressure over the eastern U.S. and focusing rainfall on the southeastern states while a few showers move northwest to
  southeast through the Midwest along a frontal system
• The
  model keeps the base of the ridge over the southern Plains and southern Rocky Mountain region during the first part of next week while the top of the ridge gets pushed to the east from the northern Plains to the Great Lakes region
• Ridge
  broadens out late next week with the base of the ridge becoming centered on Missouri, Arkansas, eastern Oklahoma and southeastern Kansas July 16; the top of the ridge flattens out late next week
• A
  high latitudinal zonal (west to east) wind flow pattern aloft evolves for a brief period late next week and into the following weekend keeping rain mostly in the north while lower parts of the Midwest see less rain and warm to hot temperatures – briefly
• Ridge
  axis then shifts to the high Plains region July 20-23 offering a weak northwesterly flow across the Midwest that will produce some showers in the northern and eastern most parts of the region leaving the southwest to dry out most significantly.
  

 

Overall,
World Weather, Inc. expects a favorable distribution of rain in this first week of the outlook, although the rain amounts will be highly variable and sometimes too light to counter evaporation while other areas might get a fair amount of rain. The second week
of the outlook will likely be drier than usual in the lower Midwest while some showers occur across the northern Midwest and temperatures will be warmer than usual. Temperatures in this first week of the outlook will briefly cool down during the end of this
week through the weekend and then warming during the early to middle part of next week. The warmest conditions should occur during the middle to latter part of next week through the following weekend with daily highs back into the range of upper 80s and lower
to the middle 90s. That will be the next warmest period after these next three days. Rainfall over the next several days will help to slow drying across the Midwest with some areas experiencing a temporary boost in precipitation. A faster decline in soil moisture
will come with the drier and warmer weather mid- to late-week next week into the second weekend of the outlook.

 

 

EUROPE/BLACK
SEA

• Not
  much change was noted through day 10 in Europe
• France,
  southern parts of the U.K., portions of Germany, Belgium, northwestern Czech Republic and a few areas in Poland will experience net drying and ongoing crop moisture stress
• Rain
  develops in a part of western Europe July 18-22, although the precipitation is a little erratic and sometimes light
• GFS
  06z model run produces rain in eastern Ukraine and neighboring areas of southwestern Russia Sunday through Wednesday of next week with 1.00 to 3.00 inches and local totals over 4.00 inches
  
• The
  increase was overdone, but some increase in rain might evolve briefly during that period
• Some
  additional showers were suggested for eastern Ukraine July 20-22
• Some
  of this increase is possible

 

Overall,
the general theme for Europe and the Black Sea region today looks good. There should be a chance for rain in western Europe July 18-22, although it may not be as well distributed as producers would like. Some increase in rainfall may occur in parts of eastern
Ukraine and Russia’s Southern region briefly next week, but it will not be nearly as much as advertised this morning. The relief would likely be temporary.

 

 

RUSSIA
NEW LANDS

• Drier
  biased conditions remain over the central New Lands in today’s GFS model runs
  
• This
  change occurred last evening and has held since then
• The
  model runs Monday morning were definitely too wet for the region and these drier biased forecasts are more correct for the coming week
• Rain
  was increased in the central New Lands July 16-21
• This
  increase was overdone, although some scattered showers will be possible the high pressure ridge briefly breaks down

 

Overall,
today’s forecast is better than that of Monday. Net drying will occur in the heart of the New Lands during this coming week and then a brief bout of rain is expected July 16-20 before more ridge building occurs and net drying resumes. The rainfall is not likely
to be very great and it would not be surprising to see future model runs reduce the precipitation.

 

 

CHINA

• Excessive
  rain occurred again overnight in southern Anhui with 12.28 inches resulting in the same area that had reported over 84 inches of rain since June 1
• Flooding
  in southern Anhui and southern Jiangsu likely continued quite seriously
• European
  and GFS model runs today continue to advertise additional heavy rainfall over the next few days with more expected next week
• Not
  much other change was noted for the two week outlook in other areas which means a good mix of rain and sunshine will occur in northern and far southern China

 

 

AUSTRALIA

• Very
  little change occurred for the first week of the outlook
• Rain
  will fall in Victoria, New South Wales and Queensland Wednesday and Thursday with 0.05 to 0.60 inch and a few greater amounts
• Western
  Australia will get a little boost in rainfall early to mid-week next week
• The
  second week outlook does not generate much organized rain, but some sporadic showers occur periodically mostly in coastal areas

 

 

Bloomberg
Ag Calendar

TUESDAY,
July 7:

• U.S.
  Purdue Agriculture Sentiment, 9:30am
• New
  Zealand global dairy trade auction

WEDNESDAY,
July 8:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• Brazil’s
  crop agency Conab releases data on area, output and yield of corn, soybeans
• China’s
  CNGOIC releases monthly report on supply and demand of soy and corn
• FranceAgriMer
  monthly crop report

THURSDAY,
July 9:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports
• Brazil’s
  Unica may release cane crush, sugar production during the week (tentative)
• EARNINGS:
  Suedzucker, Barry Callebaut, Agrana
• HOLIDAY:
  Argentina

FRIDAY,
July 10:

• USDA’s
  monthly World Agricultural Supply and Demand (Wasde) report, noon
• China
  farm ministry’s CASDE monthly crop supply- demand report
• Malaysian
  Palm Oil Board’s data on reserves, exports and production in June
• 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
• Malaysia’s
  palm oil export data for July 1-10
• Cherkizovo
  trading update
• HOLIDAY:
  Singapore (election day), Argentina

 

Source:
Bloomberg and FI

 

 

 

 

 

 

 

CFTC
Commitment of Traders

 

 

Macros

 

 

Corn.

• Lower
  trade in corn despite the drop in US crop ratings.  Some rain is seen this week across Midwestern states that are not fairing that well for crop conditions.  Funds as of 6/30 were about 30,000 contracts more long than expected. 
  

·        
The USD is higher. 

·        
Brazil’s Mata Grosso IMEA department looks for the state corn crop to end up near 33.27 million tons, slightly higher than last month.  

·        
10 percent of the US corn crop is in the silking stage, below 16 percent average.  Texas was at 64 percent, one of the areas where the most intense heat is expected for the US this week.  NE was at 27 percent.  IL 10 percent (28
average). 

·        
US corn conditions were 71% G/E vs 73% last week, and 57% a year ago.  IA, MN, SD, TN, and PA are seeing the best conditions. 

·        
USDA US corn export inspections as of July 02, 2020 were 962,445 tons, below a range of trade expectations, below 1,241,038 tons previous week and compares to 721,419 tons year ago. Major countries included Mexico for 310,110
tons, Japan for 286,904 tons, and Colombia for 109,787 tons.

·        
USDA Attaché estimates 2020-21 China production at 250 million tons, 10 million less than USDA official. While total consumption is 278 million tons, above USDA official of 276 million (271 for 2019-20). 
https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Update_Beijing_China%20-%20Peoples%20Republic%20of_06-28-2020

 

Corn
Export Developments

• None
  reported

 

Soybean
complex.

·        
CBOT soybeans are lower in part to sharply lower lead by outside product markets, higher USD, lower outlook for 2020-21 China soybean imports (link below) and lower corn.   

·        
US soybean conditions were 71% G/E vs 71% last week, and 53% a year ago.  IA and MN conditions are in great shape. IL and IN were 63 and 62 percent, respectively. 

·        
Soybeans blooming 31% G/E vs 14% last week, and 8% a year ago.

·        
India vegetable oil imports during June were 1.16 million tons, above 707,000 tons in May.  November-June imports are down 15 percent from year earlier.  June imports signal a recovery in stocks. 

·        
Rotterdam values this morning showed soybean oil for the August/September position was up down about 1 euro from this time previous session, rapeseed oil down 4 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 70 lower and meal $2.70 lower.   
  
• China:

·        
China cash crush margins as of this morning, using our calculation, were 86 cents per bushel (83 previous) and compares to 63 cents a week ago and 47 cents around this time last year.

·        
USDA Attaché updated their soybean complex S&D’s. 2020-21 soybean imports 91 versus 96 USDA official. 

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Oilseeds%20and%20Products%20Update_Beijing_China%20-%20Peoples%20Republic%20of_07-01-2020

Malaysia: 

·        
USDA US soybean export inspections as of July 02, 2020 were 521,638 tons, above a range of trade expectations, above 333,662 tons previous week and compares to 761,845 tons year ago. Major countries included Mexico for 154,557
tons, China Main for 136,614 tons, and Indonesia for 72,169 tons.

 

Oilseeds
Export Developments

• Egypt
  on Wednesday seeks 30,000 tons of soybean oil and 10,000 of sunflower oil for September 1-20 arrival.  A couple weeks ago Egypt bought 59,000 tons of soybean oil and passed on sunflower oil. 
  

 

Wheat

·        
Chicago and KC wheat  lower on harvest pressure while KC and MN saw little support overnight from a cut to the French wheat production. 

·        
Egypt seeks wheat for August 8-18 shipment. The lowest offer was $205 per ton FOB for 55,000 tons of Russian.

·        
French farm ministry estimated the soft wheat production down 21% this year at 31.31 million tons versus  39.55 million in 2019, second smallest French soft wheat crop since 2004.  The area is lowest since at least 2003 at 4.41
million hectares. 

·        
ProAgro Ukraine wheat production estimate:  26.07 from 26.65MMT. 

·        
US spring wheat conditions were 70% G/E vs 69% last week, and 78% a year ago.

·        
US winter wheat conditions were 51% G/E vs 52% last week, and 64% a year ago. This should be the last week for US winter wheat conditions. 

·        
US winter wheat harvest 56% vs 41% last week, and 42% a year ago.

·        
USDA US all-wheat export inspections as of July 02, 2020 were 326,448 tons, below a range of trade expectations, below 515,359 tons previous week and compares to 628,053 tons year ago. Major countries included Mexico for 91,012
tons, China T for 48,300 tons, and Venezuela for 20,000 tons.

• Paris
  December wheat was up 0.25 at 184.25 at the time this was written.

 

Export
Developments.

·        
Egypt seeks wheat for August 8-18 shipment. The lowest offer was $205 per ton FOB for 55,000 tons of Russian. 
They
last bought wheat on June 17 that included Ukraine, Russia and Romanian origin at $216.23 to $219.20 per ton. 

• 4
  offers: 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