PDF attached

 

USDA
announced 7-8 soybean cargoes were sold to China and 3-4 cargoes to unknown.   Lower trade for soybeans while corn and wheat are higher.  China/US trade tensions are back in focus as the US ordered China to close its Houston consulate.  Pakistan bought 300k
wheat, Taiwan bought 98,230 tons of US wheat, Japan passed on feed wheat, and South Korea’s KFA passed on corn.  Jordan is back in for wheat.  GFS model still shows good rains over the next week for the majority of the central and upper Midwest.  Offshore
values are leading soybean meal and oil higher.  CBOT soybean oil registrations fell 170 to 2,786 lots.  USD was 26 lower this morning while WTI was down about $0.67.  South American corn basis is firm.  A Bloomberg poll looks for weekly US ethanol production
to be up 18,000 at 949,000 barrels (938-960 range) from the previous week and stocks to increase 244,000 barrels to 20.885 million. Russia’s Agriculture Ministry raised the estimate of wheat plantings by 1.2% to 29.1 million hectares.

 

 

 

Weather
and Crop Progress

UNITED
STATES

Good
model agreement is present today for the U.S. two-week outlook. Ridge building will occur late this week and into the weekend over the Plains and Midwest resulting in warmer temperatures, higher humidity and limited precipitation for a while. A cool airmass
will then come from Canada and break down the ridge and bring some relief from oppressive heat and humidity during the weekend . The relief will bring some rain initially and then cooler and drier air for a little while. Some of the models suggest a reinforcing
shot of cool air in the second week of the outlook with a little rain occurring as it moves through the Midwest. The monsoon flow will continue to feed some moisture into these weather systems and there will be some rain. The GFS Ensemble and is still the
preferred model for the second week of the outlook with a mean position over the high Plains region and weak northwesterly air flow aloft through the northern and eastern Midwest. This will continue to generate some periodic rain and keep temperatures from
being oppressively warm in weeks 2 and 3 of the outlook, but the rain amounts expected during that time will often be a little light resulting in some net drying.

 

Crop
conditions should stay mostly good except for a few pockets during the coming ten days. The drier bias in weeks 2 and 3 will not be absolute or widespread, but the combination of typical mid-summer warmth and erratic showers and thunderstorms will lead to
net drying in many areas and a close watch will be needed to catch the areas trending too dry before they become a problem. Corn and soybean development is still expected to advance normally over the next two weeks with the exception of a few areas that dry
out more than others.

 

EUROPE/BLACK
SEA

  • Not
    much change occurred in the first week of the outlook, although some showers were returned by the GFS model to eastern Ukraine early next week
  • Rain
    was increased in a part of central and eastern Europe for late next week
    • Some
      of the increase was needed
  • A
    boost in rain was noted for far western Russia, Belarus and the Baltic States August 1-3, but some of the rain was a little overdone
  • GFS
    reduced storminess moving into northwestern Europe August 4-5 removing much of the precipitation advertised previously
    • This
      change was needed

 

France
gets a little rain in the next two weeks, but amounts are still far too light to seriously ease long term dryness. Rain will be a little more significant this weekend into next week in parts of the U.K., Belgium, Netherlands and Germany where improved topsoil
moisture is expected for a little while. Net drying is also expected to continue from central and eastern Ukraine into Kazakhstan; including a part of Russia’s Southern Region during the next two weeks.

 

RUSSIA
NEW LANDS

  • Not
    much change was noted in the first ten days of the outlook today
    • Southwestern
      parts of the Ural Mountains region will get significant rain over the balance of this week while lighter showers occur in other Central New Lands’ locations during the weekend and next week
      • Partial
        relief from dryness is expected in some areas
  • The
    biggest change in the second week was increased rainfall over the Ural Mountain region August 1-3
    • Some
      of this increase was overdone

 

The
bottom line will bring some improved soil conditions to the Ural Mountains region in the central New Lands over the balance of this week with limited rainfall to the northeast. The combination of rain and cooler temperatures will improve sunseed and spring
wheat in a part of the driest region, but the greatest rainfall will not be uniform leaving need for additional rain in some areas. World Weather, Inc. is still anticipating the return of a high-pressure ridge to the region in August, but as long as significant
rain falls before that event crops will have an opportunity for improvement.

 

CHINA

  • Additional
    heavy rain fell Tuesday from southern Shaanxi through the heart of Henan and into northern Anhui where 2.50 to more than 8.00 inches resulted in some flooding
    • Henan
      is a very important agricultural province and flooding might have damage a few crops, but the impact should not have been nearly as serious there as it has been farther to the south in recent weeks
  • Tuesday’s
    heavy rain will shift to Shandong and northern Jiangsu today with similar amounts expected
  • Waves
    of locally heavy rain will then occur in the Yangtze River Basin through the balance of this week and the weekend
  • Most
    of the coming ten days will bring alternating periods of rain and sunshine to areas north of the Yellow River and throughout the northeastern provinces supporting mostly good crop development
    • Rain
      will be more frequent and more abundant in the remainder of China with local flooding periodically, but the worst of the flooding that has occurred this year should be over; crop conditions are unlikely to improve in the areas most impacted by this year’s
      floods, however
  • Northern
    China was advertised wetter in the August 1-5 period which will eliminate dryness that is present in a few areas today
    • Some
      of the heavier rainfall may have been exaggerated

 

AUSTRALIA

  • No
    bit changes were suggested through day ten
    • Rain
      will fall Friday and Saturday in New South Wales and southeastern Queensland with lingering showers into early next week
    • Most
      other areas will experience showers mostly near the coast with net drying in interior parts of the nation
  • 06z
    GFS model run reduced rain in Western Australia August 5-6
    • This
      change was needed, but the solution is still not correct

 

Australia’s
winter crops will remain in good shape and will be poised for a good start of more aggressive development in the early spring as long as timely rainfall continues. There is still a dryness concern for parts of Queensland and South Australia and many other
areas could dry down quickly if there is not some kind of routine occurrence of rainfall in August.

 

SOUTH
AMERICA

  • No
    changes were noted through the coming ten days
    • Cordoba
      will miss out on this week’s rain event that is under way now
    • Beneficial
      moisture will occur in Buenos Aires and parts of La Pampa and some welcome showers will occur in Entre Rios and Santa Fe by Friday
    • Net
      drying is expected this weekend through most of next week
  • The
    next best chance for rain will evolve August 3-5 and it is expected to favor southern parts of the nation one again with little opportunity for significant rain in Cordoba

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

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

 

 

 

 

 

 

Macros

Canadian
CPI NSA (M/M) Jun: 0.8% (exp 0.4%; prev 0.3%)

–        
CPI (Y/Y) Jun: 0.7% (exp 0.2%; prev -0.4%)

–        
CPI Core Median (Y/Y) Jun: 1.9% (exp 1.8%; prev 1.9%)

–        
CPI Core Common (Y/Y) Jun: 1.5% (exp 1.4%; prev 1.4%)

–        
CPI Core Trim (Y/Y) Jun: 1.8% (exp 1.6%; prev 1.7%) 

 

 

Corn.

·        
China plans to auction off another 10,000 tons of frozen pork on July 23. 

·        
China may auction off rice and wheat stocks to animal end users after corn prices appreciated 20 percent this year, according to a Reuters story.  Up to 10 million tons of rice may be sold during the program. 

 

Corn
Export Developments

 

 

Soybean
complex
.

  • Brazil’s
    July soybean exports are expected to reach 8.8 million tons based on shipping line-up data, up from 6 million tons in the same month a year ago, according to grain exporter association Anec.
  • Council
    of Palm Oil Producing Countries (CPOPC) warned a La Nina weather pattern bringing wetter-than-normal weather to Indonesia and Malaysia could also adversely affect crop production and harvesting (Reuters).  Indonesia’s 2020 crude palm oil production could end
    up 1-2 million tons below last year’s 44 million tons.  Malaysia is expected to drop 4.3% to 19 million tons. 
  • SGS:
    July 1-20 palm shipments fell 10.5 percent to 1.089MMT. 

·        
China plans to sell 61,100 tons of soybeans from reserves on Friday, according to Bloomberg.  Separately, 54,000 tons, we read via AgriCensus, will be included for auction consisting of 2017 and 2018 imported soybeans.  They noted
around 3 million tons could be auctioned. 

·        
Argentina grain exporters are objecting to China’s request to guarantee the grain imported is Covid-19 free.

·        
Rotterdam values this morning showed soybean oil for the August/September position was up 1-2 euros from this time previous session, rapeseed oil unchanged in the nearby, and soybean meal when imported from South America 1-3 euros
higher. 

·        
China cash crush margins as of this morning, using our calculation, were 131 cents per bushel (126 previous) 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 reported:
    • Export
      sales of 453,000 metric tons of soybeans for delivery to China. Of the total, 66,000 metric tons is for delivery during the 2019/2020 marketing year and 387,000 metric tons is for delivery during the 2020/2021 marketing year; and
    • Export
      sales of 262,000 metric tons of soybeans received in the reporting period for delivery to China during the 2020/2021 marketing year; and
    • Export
      sales of 211,300 metric tons of soybeans for delivery to unknown destinations during the 2020/2021 marketing year.

 

Wheat

·        
Paris December wheat was down 0.25 at 184.50, at the time this was written.

 

Export
Developments.

  • Taiwan
    bought 98,230 tons of US wheat for Sep/Oct shipment. 
  • Pakistan
    bought at least 300,000 tons of wheat from the Black Sea region at as low as $219.50/ton for Aug/Sep shipment. 
  • Syria
    looks to sell and export 100,000 tons of feed barley with offers by Sep 1. 
  • Japan
    in an SBS import tender passed on 80,000 tons of feed wheat and 100,000 tons of barley for arrival by December 24.
  • Jordan
    seeks 120,000 tons of wheat on July 29. 
  • Thailand
    passed on 192,600 tons of feed wheat and 98,000 tons of Australian feed barley.  Lowest offers were heard at $235/ton for wheat.  Shipment was for October-December shipment for wheat and December and February shipment for barley.   
  • Awaited:
    The Philippines seek 110,000 tons of feed wheat on July 22. 
  • Ethiopia
    postponed an import tender for 400,000 tons of wheat to July 24 from July 20. 
  • Syria
    seeks 200,000 tons of milling wheat from Russia by July 28. 

 

Rice/Other

·        
China may auction off rice and wheat stocks to animal end users after corn prices appreciated 20 percent this year, according to a Reuters story.  Up to 10 million tons of rice may be sold during the program. 

 

Terry Reilly

Senior Commodity Analyst – Grain and Oilseeds

Futures International │190 S LaSalle St., Suite 410│Chicago, IL  60603

W: 312.604.1366

treilly@futures-int.com

AIM: fi_treilly

ICE IM: 
treilly1

Skype: fi.treilly

 

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