FI Morning Grain Comments 07/23/20

PDF attached

 

News
is light for this Thursday morning trade.  Look for a two-sided trade in soybean and corn.  USDA export sales for new crop corn and soybeans were very good. Meal sales were poor, soybean oil ok, and wheat topped expectations.  USD is higher and WTI lower. 
Malaysian palm was sharply higher and offshore values are leading CBOT products higher. Philippines bought 55,00 tons of feed wheat.  Grains are losing ground to the soybean complex.

 

 

 

Weather
and Crop Progress

UNITED
STATES

No
change in the general theme of weather was suggested today. A weak ridge of high pressure will build over the Midwest during the next few days and then breakdown as we move into next week. The ridge will then center itself over the western United States resulting
in a northwesterly flow pattern aloft that will bring weak weather disturbances periodically through the Midwest and northern Plains. These disturbances will continue to generate erratic rainfall across the Midwest periodically during the next two weeks and
some areas will get moderate rain while many other areas will not get very much and will have a tendency to slowly dry down. Showers and thunderstorms are still possible in many areas, but the majority of the precipitation will be light and with seasonably
warm temperatures prevailing evaporation will take much of the moisture away within a relatively short period of time.

 

Tropical
Depression Eight in the Gulf of Mexico will dominate the Gulf of Mexico over the next couple of days and will probably not be a great enough storm to have a big impact on air circulation over the central Gulf of Mexico Coast states. However, it will attempt
to reduce rainfall. Tropical Storm Gonzalo is also too small of a storm and too far away from North America to have any influence on the U.S. weather. However, some of the forecast models have suggested other tropical weather disturbances may evolve or move
into either the Gulf of Mexico or the southwestern Atlantic Ocean in the first week of August and these features may contribute to a decreasing influx of moisture into the heart of the Midwest for a little while which may help to contribute to a net drying
environment. That may leave the southwest U.S. monsoon flow as the primary source of moisture for Midwestern storms and rainfall during weeks 2 and 3 of the forecast. If the high pressure ridge stays out into the western U.S. for a while or even over the high
Plains region it may inhibit some of the monsoon moisture from getting into the Midwest as abundantly as desired and that too could limit rainfall.  World Weather, Inc. is not implying a hot, dry scenario for key Midwestern crop areas, but we do believe a
net drying environment may dominate a larger part of the production region as we move into weeks 2 and 3 for the reasons noted above.

 

EUROPE/BLACK
SEA REGION

• No
  general weather changes were noted across the European continent for the next ten days based on the latest model runs
• Portions
  of France will get some rain, but central and western parts of the nation will likely stay quite dry
• Some
  relief from dryness may impact a part of the U.K., Belgium, Netherland and Germany from a couple of waves of moisture one occurring this weekend and the other early to mid-week next week
• Eastern
  Ukraine and areas east into Kazakhstan and parts of Russia’s Southern Region will continue quite dry and warm through the next ten days

 

 

RUSSIA
NEW LANDS

• Rain
  is expected to fall in the Ural Mountains region over the next few days with some heavy rain possible between north-central Kazakhstan and the heart of the Ural Mountains
• Lighter
  and more sporadic rain will impact the remaining central New Lands while Siberia and other eastern New Lands’ crop areas will get some periodic rain
• Concern
  about the central New Lands dryness will continue
• World
  Weather, Inc. sees about 30% of the dry region getting some relief, but the remainder of the region will remain in need of greater rain

 

 

CHINA

• Additional
  heavy rain fell in Shandong and Henan Wednesday resulting in some new flooding in key grain and oilseed areas
• Rainfall
  of 5.00 to 10.00 inches occurred from southern Shaanxi and northeastern Sichuan to northern Jiangsu and southern Shandong with local totals of 12.00 to 19.76 inches; some crop damage might have resulted
• China’s
  weather will continue active over the next week with frequent rain expected in much of the nation
• The
  best environment for crops will be north of the Yellow River and throughout the northeastern provinces where a good mix of rain and sunshine is expected
• Some
  bouts of locally heavy rain will occur in east-central and southeastern China, but not broad-based area of severe flooding is expected
• Net
  drying may impact the Yangtze River Basin and interior southeastern parts of China during the first week of August

 

Crop
damage in Henan and Shandong has likely occurred, but it not nearly as widespread as that of the Yangtze River Basin earlier this month. Drier weather in east-central and southeastern China in the first week of August will be welcome, but much of the crop
damage in those areas cannot be reversed. Most of northern China will continue to experience favorable crop conditions; including some very important corn, soybean, spring wheat and sugarbeet production areas

 

 

AUSTRALIA

• No
  significant changes were suggested for the next ten days
• The
  nation’s greatest rain will occur Friday and Saturday in parts of New South Wales and southeastern Queensland and where some short term benefit will occur to some wheat, barley and canola areas
• Net
  drying is expected in many other areas for a while, although coastal showers are expected
• Some
  increase in shower activity will occur in southern Australia during the first days of August, but no general soaking is expected
• Victoria
  and southwestern Western Australia will be wettest

 

Winter
crop conditions will remain good, but there will be an ongoing need for more moisture especially in Queensland and South Australia where soil conditions are driest.

 

 

SOUTH
AMERICA

• No
  significant changes were noted overnight
• Argentina’s
  southern and eastern areas will get a little more rain today into Friday
• Far
  southern Brazil will be wettest over the next couple of week
• Drought
  will continue in Cordoba, Argentina

 

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

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

 

 

 

 

USDA
export sales
were near to above expectations for new-crop corn and soybean sales.  Old crop corn and soybeans were near the lower end of expectations.  Soybean meal sales were disappointing while soybean oil were ok.  Wheat sales topped expectations.  Sorghum sales were
77,200 tons, up slightly from the previous week.  Pork sales were 31,800 tons, down 17 percent from the previous week. 

 

 

 

Macros

US
Initial Jobless Claims Jul 18 1.416 Mln (est 1.300 Mln; prevR 1.307 Mln; prev 1.300 Mln)

-US
Continuing Claims Jul 11 16.197Mln (est 17.100 Mln; prevR 17.304 Mln; prev 17.338 Mln)

 

 

 

Corn.

• Corn
  futures are lower from a reversal in grain/soybean spreading. 
• USDA
  export sales for corn were good with new crop within expectations of 2.327 million tons.  2019-20 sales were below a Reuters trade range at 220,600 tons and crop-year sales are running 12 percent below the previous year. 
  
• There
  were no major changes to the US weather forecast. 

·        
China sold nearly 4 million tons of corn at auction at an average price of 2,017 yuan per ton. 

• Weekly
  ethanol production was down 23,000 barrels per day while a Bloomberg poll looked for weekly increase of 18,000.  Stocks decreased a large 807,000 while a poll expected an increase of 244,000 barrels.

 

Corn
Export Developments

• Syria
  seeks 50,000 tons of soybean meal and 50,000 tons of corn on Aug 25 for delivery within four months of contract signing.
  

 

 

Soybean
complex.

• Soybeans
  are higher on supportive offshore product values and reversal in grain/oilseed spreading.   China cash crush margins are higher. 
  
• Oil
  share was higher pre day opening but we expect that to soften during the day session. 
  
• We
  heard China bought at least one Q4 soybean cargo out of the Gulf over the past day. 
  
• Then
  USDA announced 132,000 tons of soybean sales to China for 2020-21.  

·        
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. 

·        
Rotterdam values this morning showed soybean oil for the August/September position was down 2 euros from this time previous session, rapeseed oil up 5 in the nearby, and soybean meal when imported from South America 3-5 euros
higher. 

• Offshore
  values this morning was leading CBOT soybean oil 26 higher and meal $2.10 higher.  
  

·        
China cash crush margins as of this morning, using our calculation, were 138 cents per bushel (131 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:
• 132,000
  metric tons of soybeans for delivery to China during the 2020/2021 marketing year.

 

Wheat

• US
  wheat futures were lower before the day opening on lack of fresh news and slightly higher USD. 
  

·        
Paris December wheat was down 0.50 at 184.50, at the time this was written.

 

Export
Developments.

• The
  Philippines bought 55,000 tons of feed wheat at about $222 to $224/ton c&f for Dec shipment.  Origin was optional.
  
• 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. 
• Jordan
  seeks 120,000 tons of wheat on July 29. 
• Syria
  looks to sell and export 100,000 tons of feed barley with offers by Sep 1. 
  

 

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.