FI Morning Grain Comments 07/16/20

PDF attached

 

Morning.  

 

A
combined 873,000 tons of old and new-crop soybean 24-hour sales were sold to China and unknown.

 

USDA
export sales showed new-crop corn sales below expectations despite the Chinese sale. China booked 768,300 tons of old crop corn and 600,000 tons new-crop.  Soybeans and meal were within expectations. Soybean oil on the lighter side.  Wheat exceeded expectations.
38,500 tons were recorded for pork and 72,700 tons for sorghum. 

 

Soybeans
and corn are higher again on follow through bullish sentiment over Chinese demand.  Chicago wheat is lower after reaching a 3-month high. China was said to be in for US wheat on Wednesday.  The first week of the GFS model was wetter for areas across Nebraska
through Iowa and Missouri to Ohio, Kentucky, Virginia and North Carolina, and wetter for Missouri and Delta for the July 23-25 period.  The northern half of the Canadian Prairies was wetter for the July 23-25 period.  We heard China bought 3-4 Q4 US soybean
cargoes.  Malaysian palm oil traded lower after a 4-session winning streak.  WTI crude is lower and USD higher.  Reuters: Argentina does not plan to increase grains export taxes – Agriculture Minister. China sold 4.026 million tons of corn out of reserves
at an average selling price of 1,950 yuan per ton.  32 million tons were sold at auction this season, not including Sinograin sales.  China’s pork production fell 4.7 percent in Q2 (April-June), a seventh consecutive of a decline, to 9.6 million tons, according
to Reuters. Saudi Arabia seeks 720,000 tons of barley on Friday.  South Korea’s KOCOPIA group bought 60,000 tons of corn from Brazil at $196.31/ton c&f for Sep 5-25 arrival.  South Korea’s KFA group passed on 69,000 tons of corn. Lowest price was said to be
$195.37/ton c&f for Nov 15 arrival.  South Korea’s FLC group bought 65,000 tons of corn, optional origin, at $184.74/ton c&f for Oct 10 arrival.  Russia’s Hydrometcentre warned unfavorable weather in the first half of July may downgrade grain harvest estimates. 
They still look for a large crop, equal to an average crop of recent years.  Strategie Grains lowered their EU soft wheat crop at 130.3MMT from 130.9MMT, 11.5 percent below 2019. 

 

 

 

 

Weather
and Crop Progress

 

US
CPC: Above normal precipitation favored for the northern Great Plains and upper Miss Valley.  Aug-Sep above normal temperatures. 

 

UNITED
STATES

• The
  first week of the 06z GFS model run was wetter in “portions” of the region from Nebraska through Iowa and Missouri to Ohio, Kentucky, Virginia and North Carolina
• Some
  of these increases were overdone
• GFS
  increased rain eastern Kansas and Missouri, the Delta and southeastern states July 23-25
• Some
  of the increase was overdone
• GFS
  increased rain in the northwest half of Canada’s Prairies July 23-25 while rain was reduced in the southeastern parts of the Prairies, northeastern North Dakota and from northern Minnesota to Upper Michigan
• Some
  of these changes were needed
• A
  small reduction in lower Midwest rainfall was suggested July 26-28 while rain was increased in the Delta and southeastern states
• Some
  of these changes were needed, but the lower Midwest may be a little dry
• Rain
  was increased from South Dakota to northwestern Wisconsin July 26-28 while reduced from the Dakotas to northern Minnesota
• Some
  of the change was needed; the previous GFS model run was too wet, but the placement of rain on this new model run looks a little questionable
• GFS
  reduced rain from Colorado to eastern South Dakota, Minnesota and Wisconsin July 29-30
• Some
  of this reduction was needed

 

The
general theme for the coming week remains about the same as that of Wednesday with rain likely in most of the Midwest at one time or another and sufficient rain will be present to support reproducing corn and flowering soybeans. Very few areas will be completely
missed by rain, but some areas will need greater amounts to fully restore soil moisture after recent drying. Temperatures will be quite warm across the Midwest this weekend and possibly again late next week and into the following weekend which may accelerate
drying. Pockets of dryness are expected during the next two weeks, but a widespread generalized problem with moisture shortages is unlikely. A close watch on the distribution of rain is warranted because some of the rain advertised seems a little overdone
and pockets of dryness at the end of this month could fester into a more stressful environment in August if rainfall becomes more limited in the southwestern Corn Belt and Delta as expected.

 

 

RUSSIA
NEW LANDS

• GFS
  model has backed off on some of the rainfall advertised for the New Lands during this coming week
• Some
  showers are expected, but some relief from dryness is expected in some areas, but the need for greater and more widespread rain will continue
• 06z
  GFS model run and the 00z European model run have increased rainfall in the central New Lands late next week and into the following weekend
• Some
  of this increase was a little overdone, but this forecast may be better than that advertised previously this week
  
• A
  few showers were also advertised for July 29-30 in a part of the central New Lands which was an increase over the previous model run forecast
• The
  increase may verify, but rain amounts will have to remain light

 

Today’s
forecast for the New Lands has improved over that of earlier this week with rising confidence. The strong ridge of high pressure and limited rainfall that has dominated this week will begin to break down this weekend, although today and Friday may again be
hot and dry. The breakdown of the ridge will be a gradual process and even though temperatures will become less oppressive during the weekend and early next week there will continue to be a warm bias and rainfall will be limited to scattered showers in only
a portion of the region. Greater “potential” relief may come along later next week and into the following weekend, although that period of time will need to be closely monitored due to the potential that the ridge might reassert itself on the region in future
model runs.

 

EUROPE/BLACK
SEA REGION

• Both
  the European and GFS model runs are suggesting a higher potential for rain in western Europe during the second weekend of the outlook
  
• The
  GFS is much wetter than the European model, but “some” relief to drying may occur in a “part” of France, the U.K. and neighboring areas at that time if the models are correct
• The
  only change noted by the GFS in this first week of the outlook was a small increase in eastern Ukraine rainfall early next week
  
• Some
  of this increase may be overdone; the European and Canadian models keep the region limited on rainfall through day ten
  
• Northwestern
  Europe will continue be drier biased through the coming week, despite a few showers briefly early next week that will have little impact on overall dryness in France, the U.K., Belgium or Germany

 

CHINA

• GFS
  model has returned heavier rainfall to the heart of the Northeast Provinces this weekend into Monday
• The
  advertised rainfall may be a little overdone with 2.00 to 5.00 inches of rain advertised from northeastern Hebei to northwestern Heilongjiang
• Little
  other change was noted over the next ten days with excessive rain still expected in the Yangtze River Basin during a part of this period with the GFS promoting some of this heavy rain as far northeast as Shandong; the European model has the greatest rain from
  northern Jiangsu to Sichuan and northern parts of Hunan

 

China’s
bottom line remains too wet for parts of the Yangtze River Basin and areas northeast into Jiangsu and possibly far southern Shandong over the next ten days. A better mix of weather is expected to the north, although some heavy rain is possible for a brief
period of time weekend and early next week. Far southeastern China may experience net drying for a while.

 

AUSTRALIA