FI Morning Grain Comments 08/15/22

PDF attached

 

Good
morning.

 

US
weather and macro headlines are in focus this morning. CBOT grains and soybean complex are lower. Palm oil futures sank overnight, pressuring soybean oil. WTI crude oil is down more than $4.75 and the USD is up nearly 47 points. Cotton futures are up limit.
US equities are pointing towards a lower open. Today the trade will see USDA export inspections, NOPA crush, and USDA crop progress. Don’t ignore EU weather as net drying continues to threaten late summer crop maturity.

 

China
lowered interest rates, a surprise move

https://www.bloomberg.com/news/articles/2022-08-15/china-central-bank-unexpectedly-cuts-key-rate-to-boost-growth#xj4y7vzkg

Bloomberg
article on China housing

https://www.scmp.com/business/china-business/article/3188781/fifty-million-empty-flats-threaten-plunge-chinas-troubled

 

Weather
model projections improved for the US Midwest. Some rain relief is seen for the WCB for the upcoming week. Parts of the central Great Plains will remain dry. US temperatures will be warmer than normal for the central US. Other areas will see normal to cooler
than normal temperatures, good for crop development.

 

 

 

 

Weather

7-day
future precipitation, more rain seen for the WCB

 

World
Weather Inc.

 

 

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Monday,
Aug. 15:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• US
  crop conditions for wheat, corn, soybeans and cotton; wheat harvesting, 4pm
• Malaysia’s
  Aug 1-15 palm oil export data
• HOLIDAY:
  Argentina, France, India, Bangladesh

Tuesday,
Aug. 16:

• New
  Zealand global dairy trade auction
• EU
  weekly grain, oilseed import and export data

Wednesday,
Aug. 17:

• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• HOLIDAY:
  Indonesia

Thursday,
Aug. 18:

• China’s
  second batch of July trade data, including corn, pork and wheat imports
• International
  Grains Council report
• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am

Friday,
Aug. 19:

• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• FranceAgriMer
  weekly update on crop conditions
• Brazil’s
  Conab releases sugar, cane and ethanol output data
• US
  cattle on feed, 3pm
• EARNINGS:
  Deere

Saturday,
Aug. 20: 

• China’s
  third batch of July trade data, including soy, corn and pork imports by country
• AmSpec
  to release Malaysia’s Aug. 1-20 palm oil export data

Source:
Bloomberg and FI

 

 

 

 

 

 

USDA
FSA crop acreage data

https://www.fsa.usda.gov/news-room/efoia/electronic-reading-room/frequently-requested-information/crop-acreage-data/index

 

CFTC
Commitment of Traders

Not
much in the way of actual vs. estimate deviations for the week ending Tuesday, August 9. Funds were still short Chicago wheat (and are going home Friday), something to watch as they can easily add long positions.

 

 

Macros

US
Empire Manufacturing Aug: -31.3 (est 5, prev 11.1)

Canada
Manufacturing Sales M/M Jun: -0.8% (est -0.7%, prevR -1.1%)

Canada
Wholesale Trade Sales M/M Jun: 0.1% (est 0.5%, prevR 0.9%)

Canada
Existing Home Sales M/M Jul: -5.3% (est -8.2%, prev -5.6%)

 

The
US Reconciliation Package Goes will head to the White House this week. The tax, climate and drug price agenda has been of great debate between the two major parties and could end up very costly for the middle income US tax class over the long term but reduce
the federal budget deficit. This is the first time in 34 years that the US has significantly addressed the climate situation.

 

Corn

·        
Corn futures are lower on negative macro headlines and improving US weather conditions for selected dry areas of the western Corn Belt for the US. Losses should be limited as the EU is baking from their from their fourth summer
heat wave.

·        
Some note the weakness this morning in prices from USDA’s report, but we think traders are past that and focused on current crop conditions.

·        
USD is higher and WTI is lower by nearly $4.80.

·        
Germany announced they will give energy products a top priority to Rhine River shipments, backburning ag products.

·        
Ukraine grain shipments are increasing, and we learned a small amount of wheat was included in the sailing logs. Nearly 60 ships from 14 countries were thought to be blocked as of Saturday in Ukraine ports. Only about half million
tons of grains and oilseed/product has been shipped since the safe passage agreement.

·        
The Buenos Aires grains exchange estimated Argentina producers collected 90 percent of their corn crop and maintained production at 49 million tons.

·        
(Reuters) – Chinese officials are planning a possible trip by Xi Jinping to Southeast Asia in November for what could be the leader’s first foreign trip since the COVID-19 pandemic and include a meeting with U.S. President Joe
Biden, the Wall Street Journal reported on Friday.

 

Export
developments.

·        
None reported

 

Soybeans

·        
Soybeans are lower on negative macro headlines and sharply lower soybean oil amid softer energy markets and 6 percent decline in Malaysian palm oil. Soybean meal is gaining on SBO. Deliveries were posted for meal and oil Friday
night. August futures are now off the board. With September OI for soybeans relatively low, look for traders to focus on November/January and Nov/Mar spreads.

·        
Argentina is on holiday today.

·        
AmSpec reported Malaysian Aug 1-15 palm oil exports were 490,375 tons, down 1.9% from 499,964 tons from the same period during July. SGS reported exports at 533,050 tons, a 2.8 percent increase from the same period month earlier.

·        
Malaysia October palm oil was 282 MYR lower to 4125/ton, and cash was down $50 at $1,030.00/ton.

·        
China soybean futures were down 0.8 percent, meal 0.3% lower, soybean oil down 0.1%, and palm 0.5% higher.

·        
Rotterdam vegetable oils were
mixed earlier, and meal 2-5 euros lower for the positions we follow, from this time Friday morning.

·        
Offshore values were leading SBO 131 points lower earlier this morning and meal $9.70 short ton lower.

·        
There is some chatter China may restrict imports from Australia, but bottom line if China needs to feed their people, they will buy it. Australia’s exports of raw and finished goods exports are dependent on China (35-40 percent),
so we think a larger trade spat may be avoided.

·        
A Reuters trade guess for NOPA calls for the July crush to end up near 171.5 million bushels. If realized, that would be up 0.8% from June on a daily adjusted basis and well up (10.6%) from 155.1 million bushels a year ago. Stocks
are projected at 1.713 billion pounds, a 10-month low if realized, down from 1.767 billion at the end of June and up from 1.617 billion a year ago.

 

 

Export
Developments

·        
Egypt seeks local vegetable oils on August 16, 3,000 tons of soyoil and 1,000 tons of sunflower oil are sought for arrival Oct. 1-25 and/or Nov. 1-20, 2022.

·        
The CCC seeks 4350 tons of vegetable oil for use in export programs on Aug 16 for Sep 9-oct 15 shipment, October for plants at ports.

 

 

Wheat

·        
US wheat futures are
lower on lower energy markets, higher USD, and slowing global export developments.

·        
Paris September wheat was down 3.50 euros at 335.25 euros as of 8:00 am CT.

·        
Russia harvested 78 million tons of grain by August 12, above the previous year pace of 75 million tons. 130 million tons could be collected, up from 121.4 million tons year ago.

·        
The Buenos Aires grains exchange estimated Argentina producers planted 6.1 million hectares of wheat, down from 6.7 million for 2021-22. Some beneficial rain over the last couple weeks slowed some southern producers to add acres. 

 

 

Export
Developments.

·        
Saudi Arabia’s SAGO bought 180,000 tons of wheat from domestic SALIC for arrival between October 2022 and February 2023.

·        
Jordan seeks 120,000 tons of barley on August 17 for LH Dec through LH Feb shipment.

·        
Japan’s AgMin seeks 70,000 tons of feed wheat and 40,000 tons of feed barley on August 19 for arrival by January 26, 2023.

 

Rice/Other

·        
Cottom is up limit