FI Morning Grain Comments 08/19/20

Aug 19, 2020







PDF attached

 

Morning. 

 

USDA-132k
soybean were sold to China. Malaysian palm futures were up 26MYR and cash rose $12.00/ton.  China vegetable oil prices were up 0.6-0.8% while soybean in China were down 23 CNY.  Offshore values are favoring a higher trade in oil and meal.  The soybean complex
is mostly higher led by soybean oil, with September reaching its highest level since February 14.  Corn is lower after
 Pro
Farmer for the second day reported very good pod counts and corn yields.  IA will be surveyed on Thursday.  US wheat is higher following strength in EU wheat and Algeria’s purchase of about 560,000 tons of milling wheat.  Results are awaited on Pakistan in
for wheat.  Japan seeks milling and feed wheat.  President Trump postponed the trade talks with China, but we are under the opinion they will be revisited.  A Bloomberg poll looks for weekly US ethanol production to be up 1,000 at 919,000 barrels (898-945
range) from the previous week and stocks to decrease 444,000 barrels to 19.706 million.  We look for a very large new-crop export sales figure for soybeans at between 2.6 to 3.1 million tons.  If figures fall short for soybeans, then we speculate some of the
sales last week were recorded in the previous week report.  Funds are still short over 100k corn so don’t discount a two-sided trade if soybeans rally today. 

 

 

 

Weather
and Crop Progress

UNITED
STATES

  • The
    tropics continue to become more lively and that is influencing the forecast models
    • The
      GFS model continues to bounce around like normal with Tuesday’s wetter forecasts giving way to a drier bias today which is much more likely to verify
    • Limited
      rainfall in the heart of the Midwest is still expected for a while because of the trough of low pressure that is going to be anchored over the southeastern states for a while and the tropical activity that is increasing
  • Tropical
    wave number one in the eastern Caribbean Sea is still expected to move across the Yucatan Peninsula as a tropical depression of weak tropical storm this weekend and then into northeastern Mexico south of the Texas border early next week
  • Tropical
    wave number two will move over or very near to the Greater Antilles which will interfere with the storm’s organization and intensification keeping it somewhat weak, but it will become a tropical depression or weak tropical storm as it moves from the northern
    Leeward Islands Friday and Saturday through Hispaniola and Cuba during the weekend and then to the eastern Gulf of Mexico early next week
    • If
      this system slows its forward speed as it comes into the Gulf of Mexico (as expected) it will strengthen into a better developed tropical cyclone and landfall might occur between New Orleans, Louisiana and Crestview, Florida during the middle part of next
      week
      • This
        tropical wave needs to be most closely monitored because of its low confidence longer range outlook for its intensity and land falling potential
  • Precipitation
    will occur frequently and most significantly in the southeastern U.S. during the coming ten days while moisture in the Midwest, Great Plains and far western U.S. is more limited and net drying is expected for many areas
  • Rain
    will impact the northernmost Midwest and from the Ohio River Valley southeast to the Tennessee River Valley and southeastern states most often in the next ten days with net drying expected in most other Midwestern locations and throughout much of the Great
    Plains

 

EUROPE/BLACK
SEA

Little
change overnight

  • Good
    model agreement was noted overnight
  • Scattered
    showers and thunderstorms will occur in many areas of Europe during the next ten days
  • Rainfall
    will be most frequent and significant in the United Kingdom, Scandinavia and from the Alps to Belarus, western Ukraine, Serbia and northwestern Bulgaria
    • Sufficient
      rain in these areas will support good ongoing crop development
  • Net
    drying will continue from eastern and southern Ukraine to southeastern Romania and eastern Bulgaria over the coming ten days as well as in Russia’s Southern Region
  • Temperatures
    will be near to above average throughout the continent

 

RUSSIA
NEW LANDS

Rain
is still expected in most of the Russian New Lands during the coming week. Sufficient amounts will occur to bolster soil moisture in those areas that have been drier biased in recent weeks

  • Some
    increased soil moisture has already occurred in the past week
  • A
    little too much rain may impact a part of the central New Lands where the ground is already plenty moist
    • This
      region could fall vulnerable to some crop quality declines if the wet weather prevails too long
  • Temperatures
    will be seasonable to slightly cooler biased in the New Lands
  • “Some”
    needed drying will occur in the last days of August and early September, although not in all areas

 

CHINA

Alternating
periods of rain and sunshine will occur over the next ten days to two weeks

  • All
    areas will receive rain at one time or another and many will receive sufficient amounts to maintain moisture abundance in crop areas
    • The
      precipitation may begin to threaten some of the early season maturation and harvesting, but the bulk of corn, soybeans, groundnuts, cotton, rice and sorghum will continue to develop well
    • Concern
      over spring wheat quality may rise until dry weather evolves

 

AUSTRALIA

A
more restricted rainfall pattern is still advertised over the next week to ten days in interior crop areas

  • Rain
    will fall in coastal areas frequently enough to maintain good soil conditions for winter crop development
    • Victoria
      will be wettest
  • Queensland
    and South Australia still need significant rain
    • Early
      season reproduction of winter crops begins soon in Queensland and crops there need greater rain
  • Temperatures
    will be seasonable except in the southeast where readings will be cooler than usual

 

SOUTH
AMERICA

Rain
chances are improving for a brief bout of rain in the middle to latter part of next week

  • Argentina’s
    drought will continue without change over the next week
  • There
    is potential for rain during the middle to latter part of next week in a portion of Argentina
    • No
      general soaking is expected, but a short period of relief from recent dryness is possible
    • Much
      more rain will be needed
  • Interior
    southern Brazil will receive additional rain periodically over the next couple of weeks
    • Early
      season corn planting and establishment will advance well following this week’s rain
  • Temperatures
    will be well below average in southern Brazil, Paraguay, Uruguay and eastern Argentina
    • Frost
      and freezes will impact parts of Rio Grande do Sul and Santa Catarina with some frost possible in Parana
      • A
        close watch on temperatures will be warranted since some of the wheat crop is reproducing or approaching the process

 

INDIA

Concern
continues over the potential for flooding in the second half of this week and into the weekend with less concern about more than local flooding next week

  • Areas
    from Madhya Pradesh to southern Rajasthan and parts of Gujarat will be subjected to the greatest rain
  • Some
    flooding is also expected Bangladesh and India’s far Eastern States

Source:
World Weather Inc. 

 

 

 

 

 

Bloomberg
Ag Calendar

WEDNESDAY,
August 19:

  • EIA
    U.S. weekly ethanol inventories, production, 10:30am
  • ISO
    online conference on Sugar and Health
  • USDA
    total milk production

THURSDAY,
August 20:

  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
  • Brazil
    Conab sugar, cane and ethanol production
  • Port
    of Rouen data on French grain exports
  • China
    International Cereals and Oils Industry Summit
  • USDA
    red meat production, 3pm
  • HOLIDAY:
    Malaysia
  • EARNINGS:
    Cherkizovo

FRIDAY,
August 21:

  • 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
  • China
    International Cereals and Oils Industry Summit, day 2
  • Malaysia
    palm oil export data for August 1-20
  • U.S.
    cattle on feed, 3pm

Source:
Bloomberg and FI

 

Macros

Canadian
CPI NSA (M/M) Jul: 0.0% (exp 0.4%; prev 0.8%)

–        
CPI (Y/Y) Jul: 0.1% (exp 0.6%; prev 0.7%)

–        
CPI Core Median (Y/Y) Jul: 1.9% (exp 2.0%; prev 1.9%) 

–        
CPI Core Common (Y/Y) Jul: 1.3% (exp 1.6%; prev 1.5%)

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

Canadian
Wholesale Trade Sales (M/M) Jun: 18.5% (exp 10.5%; prev 5.7%)

 

 

Corn.

 

Corn
Export Developments

 

 

Soybean
complex.

·        
Palm oil:  Aug 1-20 export data due out Thursday.  Lagging SGS 1-15 Aug exports of palm were 20 percent below same period month earlier at 664,392 tons. 

·        
Indonesia is look at increasing palm export tariffs to keep domestic prices of palm oil cheap enough to promote their biodiesel expansion initiative of 30 percent blend rate.  That rate may increase
to 40 percent sometime in 2021. 

 

Oilseeds
Export Developments

 

Wheat

 

Export
Developments.

  • Algeria
    bought about 560,000 tons of milling wheat for Sep and or Oct shipment at around $231-$232/ton. 
  • Results
    awaited: Pakistan seeks 1.5 million tons of wheat. 
  • Jordan
    received three offers for 120,000 tons of wheat. 
  • Japan
    seeks 117,063 tons of milling wheat on August 20. 
  • Japan
    is also in for 80,000 tons of feed wheat and 100,000 tons of feed barley (SBS) on August 26 for November 30 loading. 
  • Turkey
    seeks 390,000 tons of red milling wheat and 110,000 tons of durum wheat on August 25.   They also seeks feed barley. 
    • Red
      wheat shipment period is between Sep 4 and Oct 10
    • Durum
      shipment period is between Sept. 15 and Oct. 10.
    • Feed
      barley shipment period is between Sept. 11 and Sept. 25.
  • Syria
    looks to sell and export 100,000 tons of feed barley with offers by Sep 1. 
  • Syria
    seeks 200,000 tons of soft wheat from EU/Russia on Sept. 9 and 200,000 tons of wheat from Russia on Sept. 14.

 

Rice/Other

·        
Results awaited: South Korea’s Agro-Fisheries & Food Trade Corp. seeks 60,556 tons of rice from Vietnam and other origins, on Aug. 19, for arrival in South Korea between Dec. 31,
2020, and February 28, 2021.

 

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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