FI Morning Grain Comments 07/27/20

PDF attached

 

USDA
announced 250,371 tons of soybeans to Mexico and 132,000 tons of soybeans to China. USD was down 67 earlier this morning, and gold up a strong amount.  US weather looks very good over the next 10 days with no excessive high-pressure ridge and no prolonged
periods of hot temperatures.  Malaysian palm futures traded sharply lower on Monday apparently on forecasts for higher palm oil production and profit taking.  China corn futures (one point up 4.3% overnight) reached a record high on tight supplies even after
record reserves auction volumes.  We didn’t see any major global tender business over the weekend.  Argentina’s export licenses were very good at the end of last week at 570,000.  It’s hard to source corn out of Brazil.  Some weather concerns for the Black
Sea persistent dryness may continue to gain attention this week.  IKAR increased their production forecast for Russia’s wheat crop to 78 million tons from 76.5 million previous, in part to an upward revision to the government’s planted area estimate.
The government pegged the area for harvesting at 29.4 million hectares, the most since at least 1990 and up about 5% from a year earlier. 

 

 

Weather
and Crop Progress

 

 

7
Day Precipitation Outlook

 

 

UNITED
STATES

No
dominating ridge of high pressure, no excessive warmth and periods of rain are expected over the next ten days. However, the northern Midwest from the Dakotas to Michigan and portions of northern and central Iowa may not get much rain in the next week to ten
days and net drying is expected. For those areas in Iowa that continue to be missed by rain events the outlook is not good for crops continuing to struggle in dryness. Net drying in other northern Midwest locations might eventually raise some crop stress,
but no area is expected to become desperate for rain except those in Iowa as noted above. The lower parts of the Midwest northern Delta and Tennessee River Basin will be wettest in this coming week. 

 

The
bottom line remains favorable for most of the Midwest except for northwest and central Iowa and a few immediate neighboring areas were dryness is most serious. Some areas in the eastern Midwest are certainly drying out and will need significant rain soon,
but the dryness is not as great as that in northwestern Iowa. In the meantime, the northwestern U.S. Plains and Canada’s central and southwestern Prairies will experience net drying that may stress a few immature crops and speed other crops toward fully maturation
a little prematurely.

 

EUROPE/BLACK
SEA

No
major theme changes occurred during the weekend

• Some
  rain fell briefly across the United Kingdom, far northern France, Belgium, Netherlands and in a few Germany locations during the weekend, but relief from dryness did not occur in the heart of France or in many other areas east into central Germany and parts
  of Poland
• The
  outlook leaves northwestern Europe in a drier bias for the next ten days with France staying the driest region
• Any
  showers that occur in the North Sea region will be brief and light
• Dryness
  will also continue in the southern Balkan Countries and from southern and eastern Ukraine into Kazakhstan and Russia’s Southern Region
  
• This
  is the same weather pattern that was promoted late last week for the coming ten days

 

The
bottom line continues to promote crop stress in most of the drier areas noted above. The most serious stress is likely in the southern Balkans region and from eastern Ukraine into western Kazakhstan as well as in France. Favorable crop conditions will prevail
elsewhere.

 

 

RUSSIA
NEW LANDS

No
general theme changes occurred since Friday

• Russia’s
  New Lands will see some rain in the coming week to ten days, but the precipitation will not be evenly distributed leaving some areas in need of greater rainfall while others get some relief
• The
  GFS model runs continue to suggest more beneficial rainfall than the other models
• Scattered
  showers are expected, but the resulting rainfall will be a little too erratic and light for a general improvement except in the southwestern half of the Ural Mountains region
• No
  excessive heat is expected and that alone will provide some benefit to crops

 

 

CHINA

No
change in the general theme of weather was noted since Friday

• A
  good mix of rain and sunshine will occur in northern China over the next two weeks
  
• Most
  of the widespread heavy rain events are over, but pockets of heavy rain will still be possible
• Weekend
  flooding was mostly confined to Sichuan

 

The
bottom line should be good for northern crop areas where a mix of rain and sunshine will occur over the next two weeks support crop development. Flooding in east-central China will continue to recede and cleanup efforts will begin. Assessments of damage from
recent flooding will be slow to be completed and even slower coming out of China.

 

 

AUSTRALIA

Not
much changed during the weekend

• Heavy
  rain and flooding occurred in urban areas east of the Great Dividing Range during the weekend causing some property and infrastructure damage
• Weekend
  rainfall in key crop areas in eastern and north-central New South Wales and southeastern Queensland was welcome and good for crops
  
• The
  only other rainfall for a while will be in coastal areas with southwestern Western Australia wettest
• Any
  showers that occur elsewhere will be brief and light having little impact on crop conditions

 

Winter
crop conditions are mostly good, but greater rain is needed in South Australia and Queensland to induce the best winter crop establishment prior to spring growth and reproduction. Crops elsewhere will come into spring in good shape as long as timely rain continues

 

 

SOUTH
AMERICA

No
significant changes were noted during the weekend

• Argentina’s
  driest wheat areas in Cordoba and Santa Fe will not have much opportunity for rain and concern over production from those areas will continue – especially Cordoba
• Rain
  in Brazil will be limited to coastal areas and in the far south over the next ten days

 

Bloomberg
Ag Calendar

MONDAY,
July 27:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  crop conditions for soybeans, corn, cotton; winter wheat progress, 4pm
• MARS
  crop bulletin – monthly report on crop conditions in Europe
• International
  Sugar Organization webinar on China’s market
• EU
  weekly grain, oilseed import and export data
• Indonesia
  palm oil export tax for August to be announced sometime during the week
• Ivory
  Coast cocoa arrivals
• HOLIDAY:
  Thailand

TUESDAY,
July 28:

• EARNINGS:
  Minerva
• HOLIDAY:
  Thailand

WEDNESDAY,
July 29:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• Vietnam’s
  General Statistics Office releases data on exports of coffee, rice and rubber

THURSDAY,
July 30:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports
• The
  Australian Grains Industry Conference (online event)
• Poland
  to publish grain harvest estimates

FRIDAY,
July 31:

• 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
• FranceAgriMer
  weekly update on crop conditions
• Malaysia’s
  palm oil export data for July 1-31 (tentative)
• U.S.
  agricultural prices paid, received, 3pm
• HOLIDAY:
  Singapore, Indonesia, Malaysia

Source:
Bloomberg and FI

 

 

 

 

 

 

Macros

 

Corn.

• Corn
  futures were moderately lower by the electronic pause.   
• USD
  was down 67 as of 7:43 am CT. 
• Weekend
  rains were very good for the northern US Great Plains.  Traders are looking for an improvement in corn and soybean ratings this afternoon.
  
• China
  corn futures (one point up 4.3% overnight) reached a record high on tight supplies even after record reserves auction volumes.  We didn’t see any major global tender business over the weekend. 
  
• Argentina’s
  export licenses were very good at the end of last week at 570,000.  It’s hard to source corn out of Brazil. 
  

 

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 in part to technical buying and stronger soybean meal.  Product spreading and strong Chinese corn futures are supporting soybean meal. Malaysian palm futures traded sharply lower on Monday apparently on forecasts
for higher palm oil production and profit taking. 

• Then
  USDA announced 132,000 tons of soybean sales to China and 250,371 tons of soybeans to Mexico, both for 2020-21.   
  

·        
US weather looks very good over the next 10 days with no excessive high-pressure ridge and no prolonged periods of hot temperatures. 

·        
Bunge cancelled 33 soybean oil receipts. 

·        
China bought 10.51 million tons of soybeans solely from Brazil last month, a 91 percent increase from 5.5MMT a year ago for June.  Total June imports were 11.16 million tons.  The surge in Brazil exports to China have cut into
available stocks and shifted business to the US.  267,553 tons were imported by China from the US in June. 

·        
Rotterdam values this morning showed soybean oil for the August/September position was down 6-7 euros from this time previous session, rapeseed oil down 3 in the nearby, and soybean meal when imported from South America 1-4 euros
higher. 

• ITS:
  July Malaysian palm exports +4.6% MOM to 1.455MMT.  AmSpec: +1.6% to 1.4MMT. 
  
• Offshore
  values this morning was leading CBOT soybean oil 19 lower and meal $3.10 higher.  
  

·        
China cash crush margins as of this morning, using our calculation, were 1.66 cents per bushel and compares to 147 cents a week ago and 41 cents around this time last year.

 

 

 

 

 

Oilseeds
Export Developments

• Then
  USDA announced 132,000 tons of soybean sales to China and 250,371 tons of soybeans to Mexico, both for 2020-21.   
  

 

Wheat

• US
  wheat futures were lower
  from IKAR upward revision to Russia’s wheat crop and good weekend rains across the northern US Great Plains. 
  
• News
  was light. 
• Some
  weather concerns for the Black Sea persistent dryness may continue to gain attention this week.  IKAR increased their production forecast for Russia’s wheat crop to 78 million tons from 76.5 million previous, in part to an upward revision to the government’s
  planted area estimate. The government pegged the area for harvesting at 29.4 million hectares, the most since at least 1990 and up about 5% from a year earlier. 
  
• Expect
  more analysts to increase their view of the Russian wheat crop, assuming yields unchanged. 
  
• Paris
  December wheat was down 1.75 at 184.75.
• Agritel
  sees the French soft wheat crop at 29.22 million tons, down 26 percent from 2019. 
  

 

Export
Developments.

• 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

·        
None reported