FI Morning Grain Comments 07/14/20

PDF attached

 

Morning.  

 

Funds
have been big sellers of corn over the last couple sessions of about 70,000 contracts.  Corn and soybeans conditions were down 2 and 3 points, respectively, which is providing some support in prices this morning.  Yesterday the lower trade prompted some import
business, including SK in for corn and Egypt for wheat.  Jordan is seeing offers for wheat. Offshore values are very strong this morning.  The GFS was wetter in the second week of the outlook in the lower parts of the Midwest. 

 

 

 

 

Weather
and Crop Progress

 

 

UNITED
STATES

• No
  general theme changes have occurred overnight, although the GFS is wetter in the second week of the outlook in the lower parts of the Midwest and that may not verify
• A
  tropical wave may be present in the Gulf of Mexico during the second week and if that happens there may be less rain in the lower Midwest, northern Delta and Tennessee River Basin
  
• Too
  much rain is being advertised by the GFS in the second week of the outlook and future model runs are likely to reduce this feature
• The
  first week of the outlook today continues to perpetuate rain for much of the Midwest and the bottom line will continue favorable for reproduction of early season crops

 

 

EUROPE/BLACK
SEA

• No
  general theme changes have occurred for western Europe overnight
• France
  the U.K. will continue to experience the least rainfall over the next ten days
• The
  GFS continues to suggest more rainfall for Ukraine than the European model while the Canadian model sides with the European solution
• The
  GFS is likely too wet for Ukraine, although all models are suggesting at least some scattered showers across a part of eastern Ukraine in this coming week; some showers also occur briefly in Russia’s Southern  Region and then net drying resumes
• Drier
  weather then occurs in the following week
• Portions
  of the lower Danube River Basin will continue to experience an erratic rainfall pattern during the coming ten days

 

 

RUSSIA
NEW LANDS

• Some
  increase in rainfall occurs in the July 24-28 period in the central New Lands on the latest GFS model run, but most models suggest the coming ten days will not provide a significant amount of moisture
  
• This
  remains a change over that of Monday’s forecasts when most models were predicting relief for the central New Lands
  
• The
  00z and 06z GFS model runs were still promoting rain in the central and western New Lands for Saturday into July 22 while the Canadian and European model runs are still restricting rainfall across the area
• World
  Weather, Inc. believes that some showers are going to impact the central and western New Lands briefly during the coming week, but conditions may dry back down a little later this month
• The
  GFS does not all for much returning drier and warmer biased conditions

 

A
close watch on the CIS New Lands is warranted due to model divergence. The odds favor some relief to the warm and dry weather of late, but how long the relief lasts remains to be seen. Crop conditions will improve during the coming weekend and next week as
the greatest rain impacts the region.

 

 

CHINA

• A
  little less rain was suggested for northeastern China on the latest GFS model run during the first week of the outlook; otherwise, there was not much change
• A
  little less rain was also suggested in northeastern China July 26-28
• Some
  shifting of the greatest rainfall in east-central China was noted in the July 22-28 period, but the bottom line does not change much

 

China’s
bottom line brings rain to most of the nation’s key crop areas east of Tibet throughout the next two weeks. Northern areas will see a good mix of rain and sunshine promoting good crop development. The same will be true for the southern coastal provinces while
the wettest conditions are expected in east-central areas including the Yangtze River Basin. Some local flooding will be possible in the Yangtze River Basin later this week, but the floods will not be as serious as those in the past few weeks. The second week
outlook will continue to perpetuate rain in the wettest areas, but daily amounts should be lighter and less threatening at times.

 

 

AUSTRALIA

• No
  significant changes to the outlook were noted overnight
• Rain
  will be most significant in Western Australia late this week; otherwise, showers will be mostly confined to coast areas for the next ten days

 

Crop
conditions are still rated favorably in much of the nation, although more moisture would be welcome in northern and eastern parts of Western Australia, throughout South Australia and in most of Queensland

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

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

 

 

 

Macros

US
CPI (M/M) Jun: 0.6% (exp 0.5%; prev -0.1%)

–        
CPI (Y/Y) Jun: 0.6% (exp 0.6%; prev 0.1%)

–        
CPI Ex Food And Energy (M/M) Jun: 0.2% (exp 0.1%; prev -0.1%)

–        
CPI Ex Food And Energy (Y/Y) Jun: 1.2% (exp 1.1%; prev 1.2%)

 

 

Corn.

• Corn
  is higher following USDA reporting a 2-point decline in crop conditions for the US.  Not only the WCB states saw declines but PA, MI and OH where down as well.
  
• The
  GFS is wetter in the second week of the outlook in the lower parts of the Midwest.
  
• Traders
  should monitor central Iowa, northern Indiana and Ohio, where those states are expected to get rain over the next couple of weeks. 
  
• Yesterday
  the funds sold an estimated net 33,000 contracts after selling 35,000 on Friday. 
  

·        
The USD was 6 lower by 6:48 am CT.  

 

Corn
Export Developments

• South
  Korea’s MFG bought 131,000 tons of corn, optional origin, at $188.99/ton C&F and $189.55/ton C&F, with arrival near the end of November and December, respectively. 
  
• Iran
  seeks 200,000 tons of corn and 200,000 tons of barley on Wednesday for Aug/Sep delivery. 
  

 

Soybean
complex.

·        
A drop in US soybean conditions by 3 points lifted prices higher overnight.  The products were also higher in part to a rally in Malaysian palm oil and higher SA soybean meal.  The IL soybean rating fell 4 points and OH was down
6.  NE dropped 3 points. 

·        
We heard China bought 4-6 soybean cargoes on Monday, majority out of the US for Q4 shipment. 

·        
The USDA Attaché estimated Brazil soybean production at a large 130 million tons.
https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Oilseeds%20and%20Products%20Update_Brasilia_Brazil_07-01-2020

·        
China June soybean imports reached 11.16 million tons versus 9.38 million in May and 6.51 million tons in June 2019. 

·        
China is on track to import 96-98 million tons of soybeans in 2019-20, up from 82.4 million tons in 2018-19 and 94.2 million in 2017-18. 

·        
Rotterdam values this morning showed soybean oil for the August/September position was up 8-9 euros from this time previous session, rapeseed oil up 2 in the nearby, and soybean meal when imported from South America 4-7 euros
lower. 

• Offshore
  values this morning was leading CBOT soybean oil 56 higher and meal $5.40 higher.  
  

·        
Malaysia: 

• China:

·        
China cash crush margins as of this morning, using our calculation, were 115 cents per bushel (97 previous) 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 higher on a  2-point decline in US spring wheat ratings and another downgrade to the Russian wheat crop.  With 68 percent of the US winter wheat harvested, selling pressure should ease.  Look for additional
USDA sales later this week if China decides to take advantage of the recent price break in KC wheat futures. 

·        
Yesterday the funds sold an estimated net 8,000 contracts. 

·        
SovEcon lowered their 2020 Russian wheat crop to 79.7 million tons from 80.8 million tons previous.  Low yields for the southern region were to blame.  Yesterday IKAR downgraded their 2020 Russian wheat crop by 1.5 million tons
to 76.5 million tons. 

·        
APK-Inform: Ukraine 2020 wheat crop forecast at 25.3 million tons from 24.5 million tons.  This is a bit suspiring as we heard another consultancy was indicating a downgrade to the Ukraine crop.

·        
Paris December wheat was down 0.75 at 187.25, at the time this was written.

 

Export
Developments.

·        
Lowest offer for Egypt seeking wheat is $211.90/ton fob for 60,000 tons of Russian wheat. 

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

·        
Japan seeks 125,957 tons of food wheat from the US, Canada, and/or Australia. 

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

 

Rice/Other

• None
  reported