FI Morning Grain Comments 07/20/20

PDF attached

 

 

USDA
announced 132,000 tons of soybeans to China.  Taiwan seeks US wheat and Saudi Arabia bought barley.  Soybean oil is the feature this morning, ripping higher, from strength in global vegetable oil markets. 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weather
and Crop Progress

 

 

UNITED
STATES

• U.S.
  crop weather continues to be mostly good, but parts of Iowa have been too dry in the past couple of weeks along with portions of Ohio, eastern Indiana, central Illinois, central Missouri and in a number of other random locations
• The
  northern Delta has also been rather dry recently along with much of Texas and southwestern Oklahoma (excluding the Texas Panhandle
• Today’s
  GFS and European forecast model runs are agreeing that rain will concentrate on two areas this week; the first is from North Dakota to Wisconsin and upper Michigan  and the other will occur from Nebraska into southern Illinois and parts of far southern Indiana
  and immediate neighboring areas
• These
  areas get rainfall varying from 1.50 to more than 4.00 inches over the next ten days with areas in between these regions getting 0.50 to 1.50 inches
  
• Sufficient
  rain still occurs in a large enough part of the Midwest to support corn pollination and soybean development even though there will be some pockets of dryness
• Both
  models provide some relief to dryness in Iowa and Ohio and Indiana so that moisture stress is kept from getting so extreme that production cuts become a big concern
• Another
  period of warm and humid weather with restricted rainfall is expected briefly during the end of this week and over the weekend, but it will be followed by another cool front and another opportunity for rain early next week and then another brief bout of drier
  and warmer weather
• The
  environment will not be ideal, but supportive of summer crop development

 

The
overall bottom line remains generally favorable for key U.S. corn and soybean production areas in the Midwest. Rain in the Delta stays somewhat limited while the southeastern states experience a favorable mix of rain and sunshine. A tropical wave still moves
across the Gulf of Mexico this week bringing greater rain to southern Louisiana and the upper half of the Texas coast late this week before spreading some of that moisture into other parts of Texas. The GFS model run suggests some showers in West Texas from
this tropical wave during the weekend while the European model keeps the moisture too far to the south. The GFS solution is most likely and World Weather, Inc. anticipates at least some rain during the weekend from this event. Monsoonal moisture slowly increases
in the southern Rocky Mountain region as time moves along this month. Temperatures will be warmest during the Friday through Sunday period and again late next week, but sufficient cooling is expected after each event to provide some relief for crops.

 

 

EUROPE/BLACK
SEA

• A
  boost in rainfall was suggested this morning by the GFS model run this morning for much of western Europe
  
• Some
  of the increase in rainfall is expected to verify, although the European model has not bought into the potential for Rain in France, but has increased rain in parts of the U.S. and Germany
• Weather
  next week trends drier again in western Europe, although a few showers occur in the U.K. at times
  
• GFS
  model keeps eastern Ukraine and Russia’s Southern region relatively dry over the next ten days to two weeks while the European model has the driest conditions in southern Ukraine and parts of Russia’s Southern Region
• The
  GFS solution seems to be best
• Rain
  and thunderstorms are scattered in most other areas

 

The
bottom line does offer some short-term relief in western Europe with some showers in France, Germany, Belgium and the U.K. late this week and into the weekend. No general soaking is expected, but any moisture would be welcome. There will be need for more generalized
rainfall. Dryness in parts of southern and Eastern Ukraine into Kazakhstan and parts of Russia’s Southern Region will remain a concern for the next couple of weeks, despite any showers that evolve. Temperatures will be seasonable with a warmer than usual bias
in Spain, Portugal, southern France and parts of the southern Balkan Countries

 

 

RUSSIA
NEW LANDS

• Some
  rain is expected along with cooling temperatures in the New Lands this week
• Rainfall
  will be greatest in the Ural Mountains region and in West Siberia while rainfall elsewhere is expected to be more restricted

 

A
break from warm and dry weather is expected in the New Lands over the coming week to ten days with cooler temperatures and at least some rain. A part of the region east of the Ural Mountains will likely get some locally heavy rainfall as suggested by many
of the forecast models, but parts of the New Lands will be missed and a close watch on the precipitation distribution is warranted.

 

 

CHINA

• Additional
  torrential rain fell during the weekend with one location in southwestern Anhui getting almost 28.00 inches for the weekend
• Flooding
  is most serious in southern and central Anhui, southeastern Henan and a parts of Jiangsu, southeastern Sichuan, Guizhou and northwestern Hunan where rainfall of 5.00 to 10.00 inches was common over saturated soil
• Reports
  of serious flooding are surfacing along with implied comments of significant crop and property damage
• A
  good mix of rain and sunshine is expected in northern China over the next couple of weeks, although there will be some pockets of topsoil dryness that will need to be closely monitored
• Waves
  of heavy rain will continue in east-central and southeastern China over the next two weeks that may induce additional flooding at times, but the excessive rain should not be as great as it has been, but the region will still need to dry out

 

Most
of northern and far southern China’s weather will be favorable for crop development, but flooding in the Yangtze River Basin is serious and the damage to agriculture has been significant, but it may be a while to assess the extent of the loss.

 

INDIA

• Monsoonal
  rainfall is expected to impact most of the nation over the next two weeks
• Far
  western Rajasthan and neighboring southern Pakistan will be slow to get needed rain and those areas will need to be closely monitored
• Heavy
  rain and flooding is possible in parts of Madhya Pradesh and the Ganges River Basin
  

 

AUSTRALIA

• Rain
  is still expected Thursday and Friday in eastern parts of the nation with sufficient rainfall in northern and central New South Wales and southeastern Queensland to improve winter crop conditions
• Limited
  rainfall is expected elsewhere over the next ten days

 

South
America

• No
  significant change was noted from Sunday’s forecasts for rain in southern Argentina Tuesday through Thursday and for the same in southern Brazil late this week and into the weekend
  
• A
  second wave of rain was increased in far southern Brazil during the early part of next week
  

 

Source:
World Weather Inc. and FI

 

 

Bloomberg
Ag Calendar

MONDAY,
July 20:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  crop conditions of soybeans, corn, cotton; winter wheat progress, 4pm
• EU
  weekly grain, oilseed import and export data
• Malaysia’s
  palm oil export data for July 1-20
• Ivory
  Coast cocoa arrivals

TUESDAY,
July 21:

• USDA
  total milk production, 3pm
• New
  Zealand global dairy trade auction

WEDNESDAY,
July 22:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• U.S.
  cold storage – pork, beef, poultry, 3pm
• Thai
  Rice Exporters Association’s briefing on rice export outlook in 2H

THURSDAY,
July 23:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• China
  trade data, including cotton, corn, wheat and sugar imports
• International
  Grains Council monthly report
• Port
  of Rouen data on French grain exports
• USDA
  red meat production, 3pm
• HOLIDAY:
  Japan

FRIDAY,
July 24:

• 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
• U.S.
  Cattle on Feed, Poultry Slaughter, 3pm
• FranceAgriMer
  weekly update on crop conditions
• Brazil
  Unica cane crush, sugar production (tentative)
• HOLIDAY:
  Japan

SATURDAY,
July 25:

• AmSpec
  to release Malaysia’s palm oil export data for July 1-25
• China’s
  3rd batch of June trade data, incl. country breakdowns for energy and commodities
  (tentative)

 

Source:
Bloomberg and FI

 

 

 

 

CFTC
commitment of traders
reported again showed a large discrepancy in the corn position relative to trade estimates. 

 

 

 

 

 

Macros

 

 

 

 

Corn.

• Favorable
  weekend rains across the US corn belt is sending corn lower this morning. The upcoming week will include good rainfall coverage.  Temperatures for the US will be above normal but nonthreatening. 
  

·        
Resistance for December corn is seen near 3.48, support 3.3050.

·        
Safras & Mercado estimated the Brazilian corn production for the upcoming 2020-21 season (plantings starts September) at a record 116 million tons, up from their 2019-20 forecast of 107.3 million tons.  They see the planted area
at 19.66 million hectares, up 1 percent from 2019-20.  This comes as trade estimates for the upcoming soybean planted area to rise 2 to 3 percent. 

 

 

 

Corn
Export Developments

• Saudi
  Arabia bought 725,000 tons of barley at an average price of $211.43/ton. 

 

 

Soybean
complex.

• Soybeans
  are higher in large part to a strong rally in soybean oil.  Meal was lower early but has a chance to rally amid appreciation in soybeans and bottom picking. 
  
• USDA
  announced 2 new crop cargoes were sold to China.  

·        
Safras & Mercado, in their initial estimate, looks for Brazilian new-crop soybean planted area to rise 1.8 percent from 2019-20 and production to come in around a record 131.7 million tons, up 5.4% from their 2019-20 forecast. 
Meanwhile, StoneX estimated Brazil soybean planted area at over 38 million hectares (93.9 million acres).  Note USDA looks for 38.3 million hectares, and the Attaché at 38.5 million. 

·        
Rotterdam values this morning showed soybean oil for the August/September position was down 7-8 euros from this time previous session, rapeseed oil unchanged in the nearby, and soybean meal when imported from South America unchanged
to mixed. 

·        
China rapeseed oil futures reached a 7-year high. 

• Offshore
  values this morning was leading CBOT soybean oil 44 lower and meal $1.50 higher.  
  

·        
China cash crush margins as of this morning, using our calculation, were 129 cents per bushel and compares to 134 cents a week ago and 29 cents around this time last year.

 

 

 

Oilseeds
Export Developments

• Under
  the 24-hour announcement system, private exporters sold 132,000 tons of soybeans for delivery to China for 2020-21 delivery.             
  

 

Wheat

• Lower
  trade in US wheat on nonthreatening US weather.
• US
  harvest progress is nearly complete in Kansas and advancing nicely for the Dakotas and Nebraska. 
  

·        
Paris December wheat was down 1.25 at 185.00, at the time this was written.

 

Export
Developments.

• Taiwan
  seeks 98,230 tons of US wheat on Wednesday. 
• Jordan
  seeks 120,000 tons of wheat on July 21 for Sep-Nov shipment. 
• Japan
  in an SBS import tender seeks 80,000 tons of feed wheat and 100,000 tons of barley on July 22 for arrival by December 24.
  
• Awaited:
  Ethiopia postponed an import tender for 400,000 tons of wheat to July 20 from July 10. 
  
• Syria
  seeks 200,000 tons of milling wheat from Russia by July 28. 

 

Rice/Other

• None
  reported