FI Morning Grain Comments 07/12/21

PDF attached

 

Good
morning.

 

USDA
report day.  Soybean and corn prices this morning appear to be stabilizing as some parts of the WCB missed out on rain over the weekend.  Canadian canola is up 45 expanded limits, and this is lending support to global vegetable oil prices and US soybeans. 
The Malaysian palm oil S&D data overnight was neutral, IMO.  We don’t expect USDA to lower the US corn yield later this morning.  Crop conditions are expected to improve when updated this afternoon. 

 

Weather
for the US Great Plains was about expected over the weekend.  Parts of NE, eastern KS and CO saw decent rain.  Rain fell across most of the Midwest, but precipitation was less than expected in northeastern Iowa, northwestern Illinois and in a few Minnesota
locations.  Rain early this week will favor the southern Great Plains and central through eastern Midwest.  The west central Midwest will see more rain this week.  Month to date rain deficits is still seen for Minnesota, most of Wisconsin, northeastern Iowa,
central and northeastern Illinois, northern Indiana, southern Michigan and in eastern North Dakota.  Expect the far western US to heat up in the coming week.  Canada Prairies weather will continue stressful for the next ten days to two weeks. 

 

 

 

 

Weather

 

WORLD
WEATHER INC.

WORLD
WEATHER HIGHLIGHTS FOR JULY 12, 2021

• Dryness
  concerns remain in Canada’s Prairies, the northern U.S. Plains and far northwestern Corn Belt because of restricted rain, warm temperatures and already dry soil.
  
• The
  pattern is unchanging for the next couple of weeks, although next week is expected to become hotter.
  
• Some
  of the heat and dryness will reach into the western Corn Belt next week, but that should not expand moisture stress very quickly because of recent rain, but if the pattern prevails into late July stress will begin the expand a little to the southeast.
  
• Western
  Russia will dry down for a while, but it is Russia’s Southern Region, lower Volga River Basin and western Kazakhstan that will experience the greatest dryness and most persistent warm weather for a while.
  
• Northwestern
  India is expected trend wetter this week along with areas from Maharashtra to Andhra Pradesh.
  
• China
  will continue to see frequent rain with some flooding possible in the North China Plains
• Southeastern
  Europe’s dryness will be eased. 
• Australia
  will experience a good mix of weather, although greater rain is needed in South Australia and northwestern Victoria
• Not
  much is going on in South America
• No
  threatening cold in coffee, citrus or sugarcane areas
• Rain
  will remain limited in western and Argentina where there is need for at least a little moisture
• Recent
  rain has eased dryness in “parts” of mainland Southeast Asia
• Ghana
  and Ivory Coast will be drying down for the next couple of weeks
• Nicaragua
  received some significant rain during the weekend, and more is needed to completely restore soil moisture
  
• Mexico’s
  drought is easing, but greater rain is needed in the northeast

Source:
World Weather, Inc.

 

Bloomberg
Ag Calendar

Monday,
July 12:

• USDA’s
  monthly World Agricultural Supply and Demand Estimates (WASDE) report, noon
• China
  farm ministry’s monthly supply-demand report (CASDE)
• USDA
  export inspections – corn, soybeans, wheat, 11am
• U.S.
  crop conditions – corn, cotton, soybeans, wheat, 4pm
• French
  agriculture ministry’s crop plantings and production estimates
• FAO
  State of Food Security and Nutrition in the World 2021 report
• Malaysian
  Palm Oil Board’s end-June stockpiles, output and production data
• Malaysia
  July 1-10 palm oil export data from SGS
• Ivory
  Coast cocoa arrivals

Tuesday,
July 13:

• China
  customs to publish 1H trade data, including imports of soy, edible oils, meat and rubber
• FranceAgriMer
  monthly grains report
• European
  Cocoa Association to release quarterly cocoa processing figures
• EU
  weekly grain, oilseed import and export data
• Brazil’s
  June Coffee Exports
• New
  Zealand Food Prices

Wednesday,
July 14:

• EIA
  weekly U.S. ethanol inventories, production
• Brazil
  Unica cane crush, sugar production (tentative)
• Malaysia
  2Q cocoa grinding data (tentative)
• HOLIDAY:
  France

Thursday,
July 15:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• China
  2Q pork output and inventory levels
• Malaysia
  July 1-15 palm oil export data
• Malaysia
  crude palm oil export tax for August (tentative)
• Port
  of Rouen data on French grain exports
• Barry
  Callebaut 9-month key sales figures

Friday,
July 16:

• ICE
  Futures Europe weekly commitments of traders report (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
• Cocoa
  Association of Asia releases 2Q cocoa grinding data

Source:
Bloomberg and FI

 

 

 

 

 

 

Reuters
estimates for USDA

 

 

 

 

 

 

 

 

 

 

 

 

Macros

 

Corn

• US
  corn
  is higher as some of the WCB missed out on rain over the weekend.  Most areas month to date have seen good rain and overall, we look for the national corn condition to improve which brings us to question if USDA will downward adjust their July corn yield later
  this morning.  Our bias is for unchanged which could inflate stocks relative to the trade average.  News is light.    I do not expect any major surprises in S&D changes but keep an eye on Brazil corn production and possible downward adjustments to Chinese
  corn demand.  We expect the trade to resume trading weather models post USDA report.
• China
  plans to add 10.85 million tons of grain storage in effort to increase reserves.  They currently have more than 650 million tons of grain storage capacity.  The Global Times noted Sinograin will start building 120 storage facility projects located in 18 provincial
  administrations this year. 

 

Export
developments.

• South
  Korea’s MFG bought 69,000 tons of corn and 65,000 tons of feed wheat on Friday at $289.50/ton and $287.49/ton, respectively, for shipment sometime between August and early October. 
  
• Separately
  SK’s MFG rejected offers for 140,000 tons of corn.  Lowest price was believed to be $293.38/ton for arrival in November. 
  
• South
  Korea’s NOFI bought 68,000 tons of corn at 237.39 cents over the Dec contract for Oct/Nov arrival. 
  
• South
  Korea’s KFA passed on 69,000 tons of corn for November arrival.  Lowest price was believed to be $298.40/ton. 
  
• Jordan
  seeks 120,000 tons of feed barley on July 28 for Nov/Dec shipment. 
• Turkey
  bought about 440,000 tons of feed barley for shipment between July 29 and August 16. 
  

 

Soybeans

• CBOT
  soybeans and soybean oil are higher while meal continues to lose footing.  CBOT crush margins, beaten down last week, are seeing a modest rebound.  China crush margins are slowly improving but that country continues to remain absent from floating import tenders. 
  China vegetable oil futures were firm overnight.  The MPOB palm oil data was viewed as neutral.  Malaysian palm oil shipment data for early July for was about expected. 
  
• Canada
  canola is trading its expanded limit of 45/ton.  This is lending support to US soybeans. 
  The
  contract highs in canola are lending support to global vegetable oil prices. 
  
• Malaysian
  palm oil fell 29 points and cash was unchanged at $995/ton. 
• AmSpec
  Agri Malaysia reported palm exports for July 1 – 10 rose 2.1 percent to 410,915 tons from 402,520 tons shipped during June 1 – 10.  ITS reported at 3.9% increase to 418,145 tons. 
  
• China
  soybean futures were 0.4% higher and meal unchanged.  Palm oil increased 2.5% and soybean oil was up 1.7%. 
  
• Offshore
  values are leading SBO 22 points higher and meal $1.00 higher. 
• Rotterdam
  rapeseed and soybean oil prices were 25-45 euros higher and meal 3-5 euros lower.
  
• China:
  

• Malaysian
  palm oil:  

 

June
Malaysia’s palm oil stocks reached a 9-month high of 1.614 million tons, but still below trade expectations.  Palm oil production increased 2.2% to 1.61 million tons from May, less than expected.  Exports were above an average trade guess at 1.419 million
tons and up 11.8% from May.  Imports were higher than expected.  Implied domestic consumption fell 38% from last month. 

 

 

 

Export
Developments

• None
  reported

 

Wheat

• US
  wheat is
  mixed to lower after parts of the central Great Plains saw rain over the weekend.  Higher corn might be limiting losses for Chicago.  Minneapolis wheat is firm on weather models calling for additional net drying across the Canadian Prairies.  Look for a choppy
  trade headed into the USDA report.
• Our
  bias is for USDA to report a US other spring and durum production well below trade expectations. 
  
• September
  Paris wheat was up 0.75 euro at 198/ton. 
• Ukraine’s
  grain exports were 575,000 tons so far in 2021-22 (July 1 start), down from 719,000 tons in the same period in 2020-21.

 

Export
Developments. 

• Saudi
  Arabia’s SAGO bought 505,000 tons of wheat, split between hard wheat 12.5 percent protein and soft wheat 11% protein, for October shipment.  This was more than expected.  Average price was $287/ton. 
  
• Japan
  seeks 80,000 tons of feed wheat and 100,000 tons of barley on July 14. 
• Bangladesh’s
  seeks 50,000 tons of milling wheat on July 15.
• Bangladesh’s
  seeks 50,000 tons of milling wheat on July 18.

• Ethiopia
  seeks 400,000 tons of wheat on July 19. 

• Pakistan’s
  TCP seeks 500,000 tons of wheat on July 27.  200,000 tons are for August shipment, and 300,000 tons are for September shipment.

 

Rice/Other

• South Korea seeks 91,216 tons of rice from China, the United
  States and Vietnam for arrival in South Korea between Oct. 31, 2021, and April 30, 2022. 
  
• Bangladesh seeks 50,000 tons of rice on July 18, not on the
  July.  They delayed it.