FI Morning Grain Comments 08/26/20

PDF attached

 

Morning. 

 

Tropical
storm Laura was upgraded to be a catastrophic Category 4 hurricane.  Laura will touch land late Wednesday/early Thursday, impacting US Gulf shipments and creating localized  flooding which will threaten the lower Delta/SW unharvested crops.

 

Much
of the soybean complex is higher.  Bloomberg reported China may purchase about 40 million tons of US soybeans in 2020, a calendar year record.  That would be about 25% more than in 2017 and 10% greater than the record set in 2016.  We heard China bought at
least 6 cargoes of US beans out of the US Gulf and PNW for shipment between October and November.  Products are finding limited upside as offshore values this morning were leading CBOT soybean oil 36 lower and meal $1.60 lower. 

 

Grains
are lower on technical selling.  Corn open interest was down 42,800 on Tuesday.  Yesterday the funds bought an estimated net 30,000 contracts.  A Bloomberg poll looks for weekly US ethanol production to be down 2,000 at 924,000 barrels (900-940 range) from
the previous week and stocks to decrease 126,000 barrels to 20.144 million. Turkey bought about 390,000 tons of red milling wheat.  Japan received no offers for 80,000 tons of feed wheat and 100,000 tons of feed barley (SBS) for November 30 loading.  The tropical
storm ready to slam the US Gulf will not be good for unharvested crops. 

 

 

 

Weather
and Crop Progress

 

 

 

 

 

Source:
World Weather Inc. 

 

Bloomberg
Ag Calendar

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

 

 

 

 

Macros

US
Durable Goods Orders Jul P: 11.2% (est 4.7%; prevR 7.7%; prev 7.6%)

 

 

Corn.

• December
  corn futures are lower this morning on technical selling.   Corn open interest was down 42,800 on Tuesday.  Yesterday the funds bought an estimated net 30,000 contracts. 
  
• December
  corn appears it could fill the $3.4550-$3.4800 gap before moving back high on US crop production concerns. 
  
• Tropical
  storm Laura was upgraded to be a catastrophic Category 4 hurricane.  Laura will touch land late Wednesday/early Thursday, impacting US Gulf shipments and creating localized  flooding which will threaten the lower Delta/SW unharvested crops.
  
• USD
  was up 29 points and WTI crude down 17 cents as of around 7:50 AM CT. 
• The
  EU lowered their corn import tariff to 0.26 euros ($0.31) per ton, from 5.48 euros previously. 
  
• A
  Bloomberg poll looks for weekly US ethanol production to be down 2,000 at 924,000 barrels (900-940 range) from the previous week and stocks to decrease 126,000 barrels to 20.144 million.
  
• A
  Reuters poll for South Africa’s corn production came in at 15.386 million tons for 2019-20, down from 15.545 estimated by the CEC in July.  That includes 8.954MMT white and 6.432 million tons of yellow. 
  
• China
  plans to auction off 10,000 tons of pork from reserves on August 28.  More than 500,000 tons had been sold so far this year. 
  

 

Corn
Export Developments

• Tunisia
  may have bought 75,000 tons of barley for Sep-Oct shipment.  The barley was believed to have been bought in three 25,000-ton consignments at $206.67 a ton c&f, $208.17 a ton c&f and $209.17 a ton c&f. 
  

 

 

Soybean
complex.

• CBOT
  November soybeans are trading at their highest level since March on strong US export demand and crop loss concerns for IA and now lower Delta.  Gains for the products are limited from a lower lead in offshore values. 
  
• Bloomberg
  reported China may purchase about 40 million tons of US soybeans in 2020, a calendar year record.  That would be about 25% more than in 2017 and 10% greater than the record set in 2016.
  
• A
  quick look at USDA outstanding sales and shipments plus two weeks of 24-hour sales suggests China committed at least 22 million tons for 2020, and that does not include sales to “unknown.”  We believe the US will see shipping logistical problems if China were
  to import the full 40 million tons of soybeans during 2020 as shipments to date are a fraction of that amount.   
  
• We
  heard China bought at least 6 cargoes of US soybeans out of the US Gulf and PNW for shipment between October and November. 
  

• Offshore
  values this morning were leading CBOT soybean oil 36 lower and meal $1.60
  lower. 
• Rotterdam
  soybean oil values were slightly lower, rapeseed oil down about 2 euros in the benchmark position, and Rotterdam meal unchanged to 1 euro lower from this time yesterday morning. 
  
• China
  cash crush margins as of this morning, using our calculation, were 87 cents per bushel (96 previous) and compares to 116 cents a week ago and 85 cents around this time last year.
  

• Malaysian
  palm oil rebounded by 30MYR, following strength in soybean oil.

 

• SGS
  reported August 1-25 palm exports at 1.158 million tons, down 16 percent from previous month.  Note they reported shipments for the 1-20 period down 18 percent. 
  
• Argentina:
  Biofuels Annual  – FAS

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Biofuels%20Annual_Buenos%20Aires_Argentina_07-27-2020

 

Oilseeds
Export Developments

• Under
  the 24-hour reporting system, private exporters reported to the U.S. Department of Agriculture export sales of 400,000 tons of soybeans for delivery to China during the 2020/2021 marketing year.
• Results
  awaited: Algeria seeks 30,000 tons of soybean meal for shipment by September 25, optional origin. 
  
• Results
  awaited: 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 lower on technical selling and lack of fresh US export developments.  Outside the US, major exporters have been busy supplying wheat to traditional buyers.  Prices over the short term should be limited to the downside from EU crop prospect
  concerns and potential delays to US winter wheat plantings. 
• Late
  yesterday models indicated hurricane Laura changed paths and the wheat planting areas in the Plains may miss out needed rain. Crop planting starts in a couple weeks.  See cone model in the weather section. 
  
• The
  Rosario Grains Exchange announced about 800,000 hectares of Argentina’s wheat production area was affected by the recent frost events.  This represent about half of the 1.6 million hectare planted area. 
  
• Agritel
  looks for French wheat exports to decline 40 percent in 2020-21 to 13 million tons (20.9 year earlier) due to a short soft wheat production of 29.2 million tons, down from 2019 output of 39.5 million tons.   The 29.2-million-ton estimate is unchanged from
  their previous estimate. 
• Paris
  December wheat was down 1.00 euros at 183.25. 

 

Export
Developments.

• Turkey
  bought about 390,000 tons of red milling wheat with lowest price at $209/ton c&f and 110,000 tons of durum wheat with lowest price at $322.49/ton c&f.   The lowest price for barley was $192 c&f.
  
• 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.
• 3
  offers presented: Jordan seeks 120,000 tons of wheat for October through December shipment. 
  
• Japan
  received no offers for 80,000 tons of feed wheat and 100,000 tons of feed barley (SBS) for November 30 loading. 
  
• Yesterday
  Egypt bought 530,000 tons of Russian wheat, with 230,000 tons for October 11-20 shipment and 300,000 tons for October 21-31 shipment.  They paid $213.00-$213.33/ton fob plus $13.84 to $15.35 for freight.  They last paid around $222-223/ton second week of August. 
  
• Japan
  seeks 100,952 tons of food wheat this week. 

• Taiwan
  seeks 100,645 tons of US wheat on Aug 27 for Oct/Nov shipment. 
• 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

·        
The tropical storm ready to slam the US Gulf will not be good for unharvested rice.  17 percent of the US rice crop had been harvested as of Sunday.