FI Morning Grain Comments 07/21/21

PDF attached

 

Good
morning. US Senate votes on the infrastructure bill today. 

 

Expect
a choppy trade today in commodity and equity markets.  USD is higher, WTI higher, equities mixed, and gold lower. 

 

US
soybeans turned higher after soybean oil paired some losses and corn strengthened. November Canadian canola is lower.  US wheat is mixed (CHI & KC higher, MN lower) with ongoing correction with Minneapolis spreads against Chicago and KC.  Overnight there was
talk of Chinese buyers seeking US hard red winter wheat for Sep/Oct.  Last week we saw a rare snap purchase by China of soft red winter wheat.  Thailand passed on wheat. 

 

A
ridge is likely July 24-30 which will lead to net drying in at least part of the western Corn Belt and in much of the Hard Red Winter Wheat Region and Northern Plains.  Some of the models have the ridge shifting at the end of the month south while other have
it shifting west.  Either way, weather disturbances moving along the northern part of the ridge could provide at least some temporary relief though to northern hard red winter wheat areas and in the eastern part of the Northern Plains. 

 

 

 

Weather

 

WORLD
WEATHER INC.

WORLD
WEATHER HIGHLIGHTS FOR WEDNESDAY, JULY 21, 2021

• Torrential
  rain fell in Henan, China Tuesday with one location reporting 30.71 inches of rain in 24 hours with much of that occurring over a single hour.
  
• Link
  To BBC News Story:   https://www.bbc.com/news/world-asia-china-57861067
  
• Flooding
  has been a frequent problem in China over the past few weeks and damage to crops and property has occurred.
  
• Typhoon
  In-Fa will produce torrential rain this weekend in Zhejiang, southern Jiangsu and southeastern Anhui, China causing more crop damage
• Another
  week of warm to hot temperatures and drying will impact the U.S. Plains and western Corn Belt as well as portions of Canada’s Prairies.
•  The
  environment will raise crop stress as the ground dries out over much of this region.
  
• A
  northwest wind flow pattern aloft is expected in eastern North America in August offering some showers and milder temperatures to the northern and eastern Midwest, but the Plains and portions of the southwestern Corn Belt will likely continue drying out.
  
• Europe
  will be trending wetter again this weekend through next week
• Two
  monsoon depressions will impact India over the next ten days improving soil moisture for many areas but inducing some floods as well. 
• Some
  welcome rain is predicted for Russia’s Southern Region and parts of Northwestern Kazakhstan over the next few days followed by a return of drier weather for a while
• Western
  Russia continues dry biased, despite recent showers and more rain is needed
• Some
  of the needed rain will come slowly over the next two weeks with next week wetter than this week and will provide the greatest potential for improvement
• Australia
  weather will be favorable for winter crops during much of the next two weeks, although greater rain is still going to be desired in Queensland and northern New South Wales
• Some
  rain will fall in southeastern Queensland Thursday
• South
  Africa winter crops will remain favorably rated in the west while rain continues needed in the east
• Ivory
  Coast and Ghana will continue drier biased for the next two weeks
• Much
  of Indonesia and western Malaysia weather will be drier than usual over the next ten days, but soil moisture will carry on favorable crop conditions
• No
  new crop damage occurred this morning in Brazil’s coffee, citrus, sugarcane, corn or wheat production areas
• Damage
  assessments from Monday and Tuesday’s morning frost and freezes will be ongoing into next week

Source:
World Weather Inc. 

 

Bloomberg
Ag Calendar

Wednesday,
July 21:

• EIA
  weekly U.S. ethanol inventories, production
• Malaysia
  July 1-20 palm oil export data
• HOLIDAY:
  India

Thursday,
July 22:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• USDA
  to release world supply-demand outlook for orange and its juice
• Port
  of Rouen data on French grain exports
• USDA
  total milk, red meat production
• U.S.
  cold storage data – pork, beef, poultry
• HOLIDAY:
  Japan

Friday,
July 23:

• 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
• U.S.
  cattle on feed, poultry slaughter, cattle inventory
• HOLIDAY:
  Japan

Source:
Bloomberg and FI

 

 

 

 

Macros

Canada
New Housing Price Index Jun: 0.6% (prev 1.4%)

US
Senate votes on the infrastructure bill today. 

 

Corn

• Corn
  is higher on US and China weather concerns, outweighing US biofuel policy headline noise.  There was a recent US bill introduced that seeks to eliminate ethanol mandates.  We have low confidence US ethanol mandates will be lowered or eliminated this year. 
  Voting on the Infrastructure bill starts today.  Note the US Senate goes on recess August 9 so if the infrastructure bill is completed by then, we may see an announcement from the White House on proposed biofuel mandates before then. 
  
• $5.88
  would fill a September corn gap. 
• It
  may take weeks to figure out the impact from the heavy rain across China on crops.  Zhengzhou, Henan, experienced heavy flooding earlier this week.  That province is a large producer of wheat as well.  Torrential rain fell in Henan, China Tuesday with one
  location reporting 30.7 inches of rain in 24 hours.   Some fear ASF will rapidly spread and hog farm damage could impact production over the short term.  Meanwhile, China corn futures fell to a November low of 2,509 yuan per ton on Tuesday before rebounding
  a touch on Wednesday.  China imports of corn from the US were an all-time high. 
  
• China
  will auction 23,488 tons of Ukrainian imported corn at an auction on July 23 in Shandong and Guangdong provinces.
• A
  Reuters exclusive suggested the White House delayed proposing biofuel mandates due to political concerns, according to two sources.  But we already know the
  proposal is past due and that the White House is working with industry professionals to draw up the proposal. Meanwhile the
  final say by the EPA is due out sometime in November or early January, before US budget passes. 
  
• Fastmarkets
  noted Argentina posted corn export licenses of 475,000 tons overnight, largest in a month. 
  
• US
  generated 1.27 billion ethanal RINs in June, versus 1.26 billion in May.
• The
  European Union granted imports licenses for 176,000 tons of corn imports, bringing cumulative 2020-21 imports to 461,000, 176 percent above same period year ago.
  
• A
  Bloomberg poll looks for weekly US ethanol production to be up 1,000 barrels (1035-1060 range) from the previous week and stocks up 243,000 barrels to 32.377 million.
  
• There
  is a US bill out there to repeal the ethanol mandate. 

https://www.feinstein.senate.gov/public/index.cfm/press-releases?ID=DE10D313-360D-47B0-9EEF-C4DE32999222

• Bloomberg
  survey for Cattle on Feed: On feed down 1% to 11.319 million, marketings up 2.2% and placements down 6%.  Reuters estimates are below.  
  

 

Export
developments.

• China
  plans to increase pork reserves on July 21 by buying from the domestic market. 
  
• Jordan
  seeks 120,000 tons of feed barley on July 28 for Nov/Dec shipment. 

 

 

 

Soybeans

• Soybean
  complex is higher on unfavorable US weather and strength in corn.  Soybean oil was down sharply earlier but paired about half of its losses before the electronic pause.  Soybean meal is higher on unwinding of SBO/meal spreads. 
  
• Malaysia
  is back from holiday and that market closed only 2 points lower.  Cash was off $7.50 to $1,015/ton. 
  
• AmSpec
  reported Malaysian palm oil exports for the July 1-20 period fell 7.9 percent to 863,586 tons from 937,135 tons shipped during June 1 – 20.  ITS reported a 6.6 percent decrease to 883,085 tons.  The EU was the top destination so far this month.  SGS reported
  869,542 tons, 9.6% lower. 
• Offshore
  values are leading SBO 23 points lower and meal $3.30 lower. 
• Rotterdam
  oils were unchanged to 15 euros lower and meal 2-4 euros higher. 
• November
  Canadian canola was down 15.80 at 893.30/ton as of 7:45 am CT. 
• Argentina
  producers sold an estimated 25.1 million tons of soybeans as of July 14, up 660,400 tons from the week before, and below 27.2 million tons from this time last year. 
  
• China
  cash crush margins were last positive 6 cents on our analysis (11 yesterday), up from negative 4 cents late last week. 
  
• Malaysian
  palm oil:  back
  from holiday

• China
  

• The
  European Union reported soybean import licenses since July 1 at 508,000 tons, below 809,000 tons a year ago.  European Union soybean meal import licenses are running at 554,000 tons so far for 2020-21, below 1.037 million tons a year ago.  EU palm oil import
  licenses are running at 180,000 tons for 2020-21, below 335,000 tons a year ago, or down 46 percent.
• US
  generated 428 million biodiesel RINs in June, versus 397 million in May.
  

 

Export
Developments

• South
  Korea’s Agro-Fisheries & Food Trade Corp. seeks around 7,600 tons of GMO-free soybeans on July 21 for arrival in South Korea between Aug. 20 and Oct. 20.

 

Wheat

• US
  wheat is mixed (Chi & KC higher, MN lower) with ongoing correction with Minneapolis spreads against Chicago and KC.  Overnight there was talk of Chinese buyers seeking US hard red winter wheat for Sep/Oct.  Last week we saw a rare snap purchase by China of
  soft red winter wheat.
• The
  US Plains will see another week of warm to hot temperatures and drying, as well as portions of Canada’s Prairies. A ridge is likely July 24-30 which will lead to net drying in at least part of the western Corn Belt and in much of the Hard Red Winter Wheat
  Region and Northern Plains.  Weather disturbances moving along the northern part of the ridge will likely provide at least some temporary relief though to northern hard red winter wheat areas and in the eastern part of the Northern Plains. 
  
• Europe
  will be trending wetter again this weekend through next week.  (WW)
• The
  Rhine river in southern Germany remains closed to shipping but will likely reopen soon from falling water levels.  The northern sectors are open. 
  
• USD
  is 13 points higher at the time this was written. 
• September
  Paris wheat was up 1.25 at 216.75 euros, December was up 0.50, as of 7:35 am CT. 
  
• The
  European Union granted export licenses for 83,000 tons of soft wheat exports, bringing cumulative 2020-21 soft wheat export commitments to 371,000, well down from 794,000 million tons committed at this time last year, a 53 percent decrease.  Imports are down
  5% from year ago at 80,000 tons.

 

USDA
Attaché: Canada Grain and Feed update
(wheat production same as USDA official)

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Update_Ottawa_Canada_07-15-2021.pdf

 

Export
Developments. 

• Thailand
  tendered for 138,000 tons of feed wheat and ended up passing on it.  Lowest price was thought to be $308/ton c&f for October shipment.  They were in for Oct-Dec shipment. 
  
• 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.  
• Mauritius seeks 6,000
  tons of white rice on July 27 for October through December shipment.