FI Morning Grain Comments 08/28/20

PDF attached

 

Morning. 

 

US
export developments slowed late this week as futures prices are up a good amount week over week.  Today is position day.  USD is under major pressure this morning.  Look for meal/oil correction today if general agriculture prices correct.  We look for US corn
conditions to decline 3 points, soybeans down 2, and spring wheat unchanged, when updated on Monday.  BA Grain Exchange warned Argentina wheat yields could fall as much as 50 percent in the northern and central crop areas from frost, dryness, and insects. 

 

FND
Delivery estimates:

Oil
1500-2500

Meal
150-300

Beans
0-25

Corn
0

Wheat
0-75

 

 

 

Weather
and Crop Progress

 

 

 

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

            A
poor rain distribution in the western Corn Belt will maintain downward pressure on soybean yield potentials. Showers in other parts of the Midwest may offer at least some temporary relief, but a general soaking is unlikely for a while. Cooler temperatures
will be extremely helpful in slowing the decline in crop conditions, but without significant rain the decline in yield will continue for the driest 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, but right now crop maturation is the priority and dry conditions are best for that. Ontario and Quebec corn and
soybeans are in good condition as they are in parts of the eastern Dakotas and western Minnesota.

            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 and that will be a welcome change. Typhoon Bavi brought significant rain to Northeast China Wednesday and Thursday. Northeastern China needs to dry down and should do so for a while, but another tropical
cyclone may impact the region late next week raising more concern over excessive moisture.

            India’s
excessive rain in northwestern peanut, sorghum and soybean production areas earlier this week may have damaged some crops, but the losses should be low. Weather conditions are now improving. Another wave of less intensive rain will impact the same areas this
weekend and Monday returning some flood conditions, but improved weather is expected thereafter.

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

            Brazil
corn planting and replanting conditions will be very good over the next ten days as dry weather prevails. Argentina rainfall in the northeast next week may improve some pre-planting soil moisture for corn and sunseed, but much more rain is needed throughout
the nation.

            Harvest
weather in Europe will be good in the dry areas and slow in other areas. Dryness in eastern Ukraine, eastern Bulgaria, Romania and Russia’s Southern Region has reduced production for this year.

            Overall,
weather today will likely continue to provide bullish bias, but its influence will begin to soften with the onset of cooler temperatures, but rain is still needed and crops will remain stressed until significant rain falls.

Source:
World Weather Inc. 

 

Bloomberg
Ag Calendar

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

MONDAY,
AUG. 31:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  crop conditions for soybeans, corn, cotton; wheat harvesting progress, 4pm
• Statcan
  data for Canada wheat, barley, soy, canola and durum production
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• Holiday:
  U.K., Malaysia

TUESDAY,
SEPT. 1:

• Australia
  commodity index
• U.S.
  Purdue agriculture sentiment
• USDA
  soybean crush, 3pm
• U.S.
  corn for ethanol, DDGS production, 3pm
• FO
  Licht’s virtual Sugar and Ethanol Conference, Sao Paulo (Sept. 1-3)
• Cotton
  outlook update by International Cotton Advisory Committee in Washington
• New
  Zealand global dairy trade auction
• Honduras,
  Costa Rica coffee exports
• Malaysia
  palm oil export data for August 1-31

WEDNESDAY,
SEPT. 2:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• UkrAgroConsult’s
  Black Sea Grain Conference in Kyiv (Sept. 2-3)
• Russia’s
  Agriculture Ministry holds annual conference to discuss production and the industry
• HOLIDAY:
  Vietnam

THURSDAY,
SEPT. 3:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• FAO
  World Food Price Index
• Port
  of Rouen data on French grain exports
• New
  Zealand commodity price

FRIDAY,
SEPT. 4:

• 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
• CNGOIC’s
  monthly supply-demand report on Chinese feed grains and oilseeds
• FranceAgriMer
  weekly update on crop conditions
• Statcan’s
  data on Canada wheat, barley, soy, canola and durum stocks
• HOLIDAY:
  Thailand

Source:
Bloomberg and FI

 

 

 

 

 

 

Macros

US
Personal Income Jul: 0.4% (est -0.3%; prevR -1.0%; prevR -1.1%)

US
Personal Spending Jul: 1.9% (est 1.6%; prevR 6.2%; prev 5.6%)

US
Real Personal Spending Jul: 1.6% (est 1.3%; prevR 5.7%; prev 5.2%)

US
Wholesale Inventories (M/M) Jul P: -0.1% (est -0.9%; prevR -1.3%; prev -1.4%)

US
Retail Inventories (M/M) Jul: 1.2% (est -1.1%; prevR -2.7%; prev -2.6%)

US
Advance Goods Trade Balance Jul: -79.3B (est -72B; prevR -71B)

US
PCE Core Deflator (Y/Y) Jul: 1.3% (est 1.2%; prevR1.1%; prev 0.9%)

US
PCE Core Deflator (M/M) Jul: 0.3% (est 0.5%; prevR 0.3%; prev 0.2%)

US
PCE Deflator (M/M) Jul: 0.3% (est 0.4%; prevR 0.5%; prev 0.4%)

US
PCE Deflator (Y/Y) Jul: 1.0% (est 1.0%; prevR 0.9%; prev 0.8%)

Canadian
Quarterly GDP Annualized Q2: -38.7% (est -39.6%; prev -8.2%)

Canadian
GDP (M/M) Jun: 6.5% (est 5.8%; prevR 4.8%; prevR 4.5%)

Canadian
GDP (Y/Y) Jun: -7.8% (est -9.0%; prev -13.8%)

 

 

Corn.

• December
  corn futures are lower
  at the electronic pause on profit taking but USDA’s sale announcement and lower USD may create a two-sided trade.
  
• French
  crop ratings were unchanged for the week ending August 24 at 62 percent. 
  
• China
  said the import ban of Australian beef was unrelated to political issues. 
  
• Results
  awaited: 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

• Under
  the 24-hour USDA reporting system, US exporters sold 324,032 tons of corn to unknown for 2020-21. 
  

 

Soybean
complex.

• CBOT
  November soybeans were up 5.50 cents overnight on Chinese buying of US soybeans and US crop concerns along with persistent dryness in Argentina ahead of seeding season that starts in a couple weeks.  We think there is a possibility of a two-sided trade given
  end of month and week profit taking and the fact the funds bought an estimated 45,000 contracts over the past three days.  Soybean oil is giving up ground over meal on profit taking. Offshore values for the week indicate values for SBO are overvalued relative
  to meal. 
• China
  slowed soybean purchases late in the work week. 
• Argentina
  grain inspectors will delay a strike set to start today after the government stepped in. 
  

• Offshore
  values this morning were leading CBOT soybean oil 8 lower (72 lower for the week) and meal $0.40
  lower (4.20 higher for the week). 
• Rotterdam
  soybean oil values were 20 euros higher, rapeseed oil up about 8 euros in the benchmark position, and Rotterdam meal up 2-4 euros from this time yesterday morning. 
  
• Results
  awaited:  China’s Sinograin will offer 98,831 tons of domestic soybeans on August 28.  China’s Sinograin sold 51% of the 98,807 tons of soybeans offered at auction earlier this week. 
  
• Indonesia
  will leave its palm oil export tax unchanged at zero percent next month. 
• China
  cash crush margins as of this morning, using our calculation, were 90 cents per bushel (91 previous) and compares to 116 cents a week ago and 85 cents around this time last year.
  

• Malaysian
  palm oil:

 

 

Oilseeds
Export Developments

• Results
  awaited: Algeria seeks 30,000 tons of soybean meal for shipment by September 25, optional origin. 
  

 

Wheat

• US
  wheat futures are mostly lower despite a lower USDA.  Crop concerns are limiting losses. 
  
• Germany’s
  farm AgMin looks for wheat production to fall 5.1 percent to 21.88 million tons due to a 9.1 percent decrease in the area.  In general, the crop is in good shape. 
  
• The
  European Commission lowered its 2020-21 forecast for all cereals for the EU.  Soft wheat production was projected at 113.5 million tons, down from the 116.6 million estimated a month ago. 
  
• Russian
  wheat exports so far this season are running 12 percent lower from year ago. 
  
• Paris
  December wheat was unchanged at 186.75 euros (5-week high). 

 

 

 

Export
Developments.

• After
  picking up 60,000 tons of wheat this week, Jordan issued another import tender for 120,0,00 tons of wheat set to close Sep 2. 
  
• 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

·        
Look for rice conditions to decline on Monday after storm Laura flattened rice across the lower US.