FI Morning Grain Comments 07/13/20

PDF attached

 

Morning.  

 

Weather
is in focus again.  A less threatening outlook is sending prices lower.  Traders should monitor Chinese purchases.  24-hour sales were not announced this morning, but we heard China was active late last week for PNW soybeans.  China crush margins, on our paper,
have improved from the previous week.   Keep in mind US temperatures will remain hot this week, limiting losses, IMO. 

 

 

Weather
and Crop Progress

·        
US soybean conditions are expected to decline 1-2 and corn down 2-4.  Spring wheat could be down 1 and winter wheat will not be reported. 

·        
US winter wheat harvest progress is expected to be up 12 points to 68 percent vs. 54 LY and 66 average.

 

 

UNITED
STATES

• 06z
  GFS model was drier in the coming week over southern Michigan, parts of Ohio and Indiana relative to the previous model run while rain was increased somewhat in the southwestern Corn Belt
• Confidence
  in these changes verifying are low
• Too
  much rain is being advertised for the southwestern Corn Belt
• GFS
  increased rain in the lower Midwest, Delta and Tennessee River Basin during mid-week next week while decreasing rain in the central Midwest and in Canada’s Prairies
• This
  increase was overdone and some of the decreases were needed, although it is a little too dry in the central Midwest
  
• GFS
  reduced rain in the northern Plains July 23-25, but this was likely overdone
• GFS
  increased rainfall across the eastern Midwest, Tennessee River Basin and southeastern states July 26-27
• The
  increase was overdone
• GFS
  increased rain in western Nebraska July 26-27
• Some
  increase was needed, but the region now gets a little too much moisture
• The
  European and Canadian model runs are preferred over the GFS with more limited rain in the lower Midwest and especially the southwestern Corn Belt through day ten

 

Cool
air in Canada this week helps to bring on scattered showers and thunderstorms in many Midwestern locations, but the GFS model keeps too much cool air around for too long and does not build up the heights very quickly this weekend or next week. The European,
Canadian and GFS Ensemble models do a much better job in reducing the cool air quicker and limiting rainfall in the lower Midwest and especially the southwestern Corn Belt. It will not be surprising to see more rain removed from the outlook later this week
in the southwestern half of the Corn Belt in all of the models, but especially the GFS.

 

 

EUROPE/BLACK
SEA

• No
  general theme changes occurred during the weekend or overnight
• Limited
  rainfall is expected in France, the U.K., Belgium or western Germany for at least the next ten days; temperatures will not be excessively warm which will help to conserve soil moisture losses even though net drying is expected
• Rain
  will fall in eastern Ukraine and some Russia Southern Region locations early this week and then the region will be dry again for at least ten days
• Any
  rain will be welcome, but more will be needed to seriously change the dryness issues that remain in the region
• Scattered
  showers and thunderstorms will continue from Italy and the Balkan Countries beginning during mid-week this week and continuing through most of next week
• Rain
  is also advertised to be limited in far northwestern Russia and a part of the Baltic States and northeastern Belarus during the coming ten days
• Some
  of this dryness may be removed in future model runs

 

Concern
about crop moisture stress will remain in northwestern Europe, but some relief to dryness is possible in at least a portion of the Balkan Countries. Concern over southern and eastern Ukraine into Russia’s Southern region will continue, despite some showers
early this week.

 

 

RUSSIA
NEW LANDS

• No
  changes in the outlook relative to those of Sunday or last Friday
• Net
  drying will occur in the central New Lands early to mid-week this week followed by rain
  
• Rain
  will fall frequently late this week into next week along with a cooling trend
• Most
  other New Lands locations will experience a good mix of rain and sunshine over the next ten days

 

The
bottom line is improving for the central New Lands where very warm and dry conditions occurred for a while last week and during the weekend. Relief is expected to be most significant late this week into next week with most areas getting sufficient rain to
improve topsoil moisture and crop conditions. A few areas near the Kazakhstan border may continue a little dry.

 

 

CHINA

• Additional
  heavy rain occurred in east-central parts of the nation during the weekend with new flooding suspected
• A
  short-term break from the rain will occur today and Tuesday before it resumes in the Yangtze River Basin from Wednesday through the coming weekend with some lingering rain next week
• More
  flooding is anticipated, but it should not be as severe as that of recent past weeks
• A
  better mix of rain and sunshine is advertised for northern and far southeastern China during the next ten days
  
• There
  was a boost in rainfall noted in the northeastern provinces for early to mid-week next week
• The
  increase was needed

 

China’s
bottom line remains good for most crops from the Yellow River Basin through the northeastern provinces, but concern about frequent flooding and more crop damage will remain in the Yangtze River Basin.

 

 

AUSTRALIA

• Western
  Australia will get rain today and again late Wednesday into Friday
• The
  moisture boost will be welcome, and this outlook is consistent with that of Sunday
• Rain
  was increased in Queensland and northeastern New South Wales for mid-week next week
  
• This
  increase was overdone
• Rainfall
  after this week in the west should be mostly confined to coastal areas for at least the following week

 

Weekend
rainfall in eastern Australia was welcome and good for many winter crops. Western Australia’s rain for this week will be equally beneficial. More rain will still be needed in South Australia and Queensland, but soil and crop conditions are improving.

 

 

SOUTH
AMERICA

• Not
  much change was noted for the coming ten days
• The
  best opportunity for rain in wheat and barley areas will occur early to mid-week next week which is consistent with Sunday’s forecast
• Rainfall
  may range from 0.30 to 1.00 inch with local totals of more than 2.00 inches from Buenos Aires to eastern Cordoba, Santa Fe and Entre Rios

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

MONDAY,
July 13:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  crop progress, conditions — soybeans, wheat, cotton, 4pm
• United
  Nations food security report
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• Vietnam
  Customs monthly data on exports of coffee, rice and rubber
• Malaysia’s
  2Q cocoa grind data
• New
  Zealand food prices

TUESDAY,
July 14:

• China
  trade data, incl. soybeans, edible oil, rubber and meat & offal imports
• HOLIDAY:
  France

WEDNESDAY,
July 15:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• Brazil
  chicken, pork group ABPA’s press conference on output, exports
• International
  Sugar Organization’s online conference on Covid-19 impact on sugar and alcohol
• Malaysia’s
  palm oil export data for July 1-15

THURSDAY,
July 16:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports
• North
  America 2Q cocoa grindings
• European
  Cocoa Association 2Q grind data

FRIDAY,
July 17:

• 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
• Cocoa
  Association of Asia releases 2Q cocoa grind data

Source:
Bloomberg and FI

 

 

 

 

 

Corn.

• Corn
  traded lower on less threatening US weather.  Rain was a little better than expected over the weekend and the 7-day outlook looks wetter for the southwestern areas and upper Midwest.  
  
• Rain
  over the weekend for the US Midwest was greater than expected. 

·        
The USD was 14 lower by 7:45 am CT.  

 

Corn
Export Developments

• Iran
  seeks 200,000 tons of corn and 200,000 tons of barley on Wednesday for Aug/Sep delivery. 
  

 

Soybean
complex.

·        
Lack of fresh fundamental news and improving US weather forecast pressuring the soybean complex.  

·        
Argentina is back from holiday and offshore values didn’t reflect a steep decline in soybean oil prices when imported into Rotterdam, which we expected. 

·        
We look for corn and soybean conditions to decrease when reported later today. 

·        
We heard China bought 15-17 soybean cargoes last week. 

·        
China sold 66,652 tons of soybeans at auction, all that was offered on Monday. 

·        
Ukraine sunoil exports are up 10 percent for the 2019-20 season at 5.7 million tons.  Exports have slowed recently. 

·        
China canola hit a 3-1/2 year high. 

·        
Rotterdam values this morning showed soybean oil for the August/September position was down 1-2 euros from this time previous session, rapeseed oil down 9 in the nearby, and soybean meal when imported from South America 7-9 euros
lower. 

• Offshore
  values this morning was leading CBOT soybean oil 2 higher and meal $1.10 lower.   
  

·        
Malaysia: 

• China:

·        
China cash crush margins as of this morning, using our calculation, were 97 cents per bushel and compares to 89 cents a week ago and 41 cents around this time last year.

 

Oilseeds
Export Developments

• None
  reported

 

Wheat

·        
US wheat futures are lower following corn and soybeans. 

·        
IKAR downgraded their 2020 Russian wheat crop by 1.5 million tons to 76.5 million tons. 

·        
Russian grain exports for wheat, barley and corn are expected to improve during July from June according to SovEcon to 2.75 million tons, up from 550,000 tons in June. 

·        
Ukraine exports during the first 10 days of the month are running at 372,000 tons. 

·        
Paris December wheat was down 0.25 at 187.75, at the time this was written.

 

Export
Developments.

·        
Jordan seeks 120,000 tons of wheat, optional origin, on July 14. 

• Syria seeks 200,000
  tons of milling wheat from Russia by July 28. 

 

Rice/Other

• None
  reported