FI Morning Grain Comments 08/24/20

PDF attached

 

Morning. 

 

Higher
traded on a lower USD, higher WTI crude oil, and unfavorable US weather.  The tropical storm expected to impact the lower Delta will not favor rice harvesting progress.  Dryness and crop stress will continue to build across Iowa, northern Illinois, and northern
Indiana this week.  Argentina’s wheat crop remains under threat from poor weather conditions.  Pro Farmer’s corn yield came in below expectations. 

 

 

 

Weather
and Crop Progress

 

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:  U.S. weather over the next two weeks will become less threatening to late season crops, like soybeans. Some flooding rain from tropical cyclones will impact a few areas, but the greatest threat will likely occur outside
of key grain and oilseed production areas.

           
Southern Canada’s Prairies and the northwestern U.S. Plains will likely continue drier biased stressing some late season coarse grain and oilseed crops. Ontario and Quebec corn and soybeans are in good condition.

           
Not much change was noted for Europe during the weekend or for the coming ten days, but dryness will prevail in central and eastern Ukraine, the lower Danube River Basin and Russia’s Southern Region. Improving weather will occur in Russia’s New Lands protecting
some of the sunseed crop.

           
China weather will trend drier in some east-central areas, but a possible tropical cyclone in the northeastern provinces later this week could induce some flood and wind damage.

           
India’s excessive rain in northwestern peanut, sorghum and soybean production areas could damage some crops, but the losses should be low.

           
Australia is drying out in the west where canola will soon need some moisture. Canola elsewhere in the nation remains in favorable condition.

           
Brazil freezes late last week and into the weekend may have damaged some early corn, but there is plenty of time for replanting.

           
Overall, weather today will likely provide a mixed influence on market mentality with a slight bearish bias.

 

MARKET
WEATHER MENTALITY WHEAT AND OTHER SMALL GRAINS:  Dry weather in Canada’s southern Prairies and the northern U.S. Plains has helped small grain harvesting advance swiftly. Good harvest weather is also occurring in parts of Europe, but there will be some rain
induced disruption for some areas in the coming week.

           
Eastern Russia’s New Lands will dry down in the coming week to the benefit of crop maturation and harvesting after abundant rain fell recently.

           
Australia’s winter crops are still poised to perform well this spring during reproduction, but Queensland needs rain immediately to maintain that outlook. Western Australia is also drying out and will need some timely rain soon.

           
Eastern South Africa needs some rain and that which is coming this week may be a little too far east to benefit key production areas.

           
Argentina will experience some temporary relief from drought this week, but there is not much follow up moisture and that may leave some concern about the long term outlook for the nation’s small grains.

           
Greater rain may be needed in U.S. hard red winter wheat areas soon to support early planting in early September.

           
Overall, weather today will provide a mixed influence on market mentality.

 

MARKET
WEATHER MENTALITY FOR COTTON:  Tropical Storm Laura could bring some damaging wind and rain to western parts of the Delta, but if the storm takes the western track advertised today much of the storm’s fury will be spent to the west of key production areas.
Hurricane Marco is not likely to have serious impact on cotton areas in the lower Delta.

           
Rain will fall frequently in the southeastern U.S. and some drier weather will soon be needed to protect fiber quality. 

           
Worry over cotton in northern India will be rising especially after heavy rain fell in parts of Madhya Pradesh during the weekend and it will move into Gujarat and southern Rajasthan early this week. Far northern India, where cotton is in the open boll stage
of development, could be negatively impacted by rain expected next week.

           
China’s cotton conditions will remain mostly unchanged during the next two weeks. Africa’s cotton is also suspected of being in favorable condition with little change likely. Temperatures have been a little milder than usual in West Africa this summer.

           
Brazil’s late harvest has gone well with little change likely. Argentina’s drought could induce delays in early season planting, but there is still time for improved rainfall and soil moisture before planting begins.

           
Overall, weather today will likely bring on a bullish bias.

 

Source:
World Weather Inc. 

 

 

 

Bloomberg
Ag Calendar

MONDAY,
August 24:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  crop conditions for soybeans, corn, cotton; wheat harvesting progress, 4pm
• Monthly
  MARS bulletin on crop conditions in Europe
• EU
  weekly grain, oilseed import and export data
• Brazil
  Unica sugar production, cane crush (tentative)
• U.S.
  cold storage data for pork and beef, poultry slaughter, 3pm
• Ivory
  Coast cocoa arrivals
• EARNINGS:
  IOI Corp, FGV

TUESDAY,
August 25:

• China
  customs publishes country-wise soybean and pork import data
• Malaysia
  palm oil export data for August 1-25

WEDNESDAY,
August 26:

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

THURSDAY,
August 27:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• International
  Grains Council monthly report
• Port
  of Rouen data on French grain exports
• EARNINGS:
  Sime Darby Plantation

FRIDAY,
August 28:

• 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
• U.S.
  agricultural prices paid, received, 3pm

Source:
Bloomberg and FI

 

 

 

 

CFTC
Commitment of Traders Report

For
the week ending 8/18, it’s obvious the funds got behind corn and soybeans amid the derecho event, but what makes it more interesting is the change in open interest. 

 

 

 

 

 

 

 

 

Macros

 

 

Corn.

• US
  corn futures are higher Monday on unfavorable dry weather outlook for IA and northern IL.  September could trade above $3.35 this week if the two tropical storms fail to provide widespread rain across the US Midwest.  Rising Black Sea corn prices are supporting
  US corn futures. 
• USD
  was down 39 points as of around 7:08 AM CT. 
• China
  imported 4.57 million tons of corn from Jan-Jul, up 31 percent from a year ago.  At least 9.2 million tons is expected to be imported in 2020.  China’s July pork imports more than doubled to 430,000 tons from a year earlier. 
  

  US
corn conditions are expected to be down 1-3 points when updated on Monday.  Recall IA declined 10 points last week. 

• CFTC
  reported that corn specs cut net shorts by 61,636 to 132,622 contracts for the week ended August 18.
  
• Pro
  Farmer crop tour wrapped up and they issued final results of 177.5 bu/acre for corn on production of 14.82 billion bushels. 
  
• EPA
  reported that the US generated 1.17 billion D6 ethanol blending credits in July compared to 1.07 billion D6 credits in June.
  

 

Corn
Export Developments

• None
  reported

 

 

Soybean
complex.

• September
  soybeans are up 6.25 cents on unfavorable dry weather for the “I” states.  Soybean oil is up near multi-monthly highs despite a lower trade in palm oil.  Crude oil is higher.  The sharply lower trade in the USD is supporting soybean meal and soybeans. 
  
• September
  first notice day delivery is Monday. 
• China
  sold 65,224 tons of soybeans from reserves, 74 percent of what was offered, at 3059-yuan average price per ton. 
  
• We
  heard China bought 15-17 US soybean cargoes last week and only 3-5 cargoes from Brazil. 
  
• We
  look for US soybean conditions to decline 1-2 points.  Last week we saw IA soybean conditions fall 8 points (10 for corn) and expect a decline of 3-6 points this week from net drying bias western IA and additional data gathering from the derecho event. 
  
• China
  and the United States may hold trade electronic video talks over the next week to discuss the Phase 1 trade deal.
• EPA
  reported that the US generated 382 million D4 bio-diesel blending credits in July compared to 387 million D4 credits in June.
  
• Pro
  Farmer crop tour wrapped up and they issued final results of 52.5 bu/acre for soybeans on production of 4.3562 billion bushels. 
  
• CFTC
  reported that soybean specs bought a net 76,495 contracts to flip to a net long of 68,411 contracts for the week ended August 18.
  
• Rotterdam
  values this morning showed soybean oil for the Nov/Jan position was up 0.50-1.50 euros from this time previous session, rapeseed up 5 and soybean meal when imported from South America 1-4 euros lower.  
  

• Offshore
  values this morning was leading CBOT soybean oil 3 lower and meal $2.50
  higher. 
• China
  cash crush margins as of this morning, using our calculation, were 87 cents per bushel and compares to 116 cents a week ago and 85 cents around this time last year.
  

·        
Malaysian Palm oil: 

 

Oilseeds
Export Developments

• No
  USDA 24-hour sales were posted.
• 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.

 

 

Wheat

• US
  wheat futures
  are higher on Argentina crop concerns and a lower USD. 
• Russian
  wheat prices for 12.5 percent protein, Black Sea, were last $202 per ton, up $1.00 from the previous week, according to IKAR. 
  
• IKAR
  has an 82-million-ton Russian wheat production estimate, up from about 77.5 million tons predicted earlier this season. 
  
• CFTC
  reported that wheat specs cut net shorts by 7,623 to 25,766 contracts for the week ended August 18.
  

 

Export
Developments.

• 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.
• Japan
  seeks 80,000 tons of feed wheat and 100,000 tons of feed barley (SBS) on August 26 for November 30 loading. 
  
• 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.
• Results
  awaited: Pakistan seeks 1.5 million tons of wheat.  Lowest offer was $233.85/ton for 200,000 tons of milling wheat. 
  

 

Rice/Other

·        
None reported