FI Evening Grain Comments 07/12/22

PDF Attached

 

WTI
crude oil and related products were a concern for most US commodity markets, along with a higher USD. USDA revealed little changes to US and world demand, although some respects should be noted to lower US soybean crush. Fundamentals and world economic outlooks
have not changed. We remain concerned over global recession.

 

Full
USDA versus estimate tabled attached

 

 

 

Weather

WORLD
WEATHER HIGHLIGHTS FOR JULY 12, 2022

•            
U.S. Weather is still a little tenuous with erratic rainfall expected and areas of net drying

•            
Soil moisture is still rated favorably in many Midwestern areas, but not in Missouri, parts of Kansas, portions of Indiana and a few other areas

•            
U.S. Delta crop areas are too dry in the north

•            
U.S. west-central and southern Plains are still in a serious drought with little change likely

•            
Hot weather and limited rain will impact the central and southern Great Plains over the next two weeks with the hottest conditions coming later this week and during most of next week with daily highs over 100 degrees Fahrenheit

•            
Western U.S. Corn Belt will be most at risk of expanding heat and dryness next week with Missouri, Kansas, Nebraska, southwestern Iowa and South Dakota expecting hot temperatures and little to no rain

•            
Pockets of eastern Midwest dryness will persist over the next couple of weeks, but rain is expected from the eastern Dakotas through southern Minnesota to parts of Ohio and northern Indiana later this week

•            
Texas drought will continue serious for cotton, corn and sorghum areas through the end of this month

•            
Argentina wheat areas may get a few showers later this week, but drought busting rain is not expected

•            
Western Europe will continue dry for ten days and temperatures will rise above normal stressing all crops and livestock, but especially unirrigated coarse grain and oilseed crops

•            
Favorable weather is expected in most other areas

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Wednesday,
July 13:

• China’s
  first batch of June trade data, incl. soybean, edible oil, rubber and meat imports
• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• France
  AgriMer monthly grains outlook
• New
  Zealand food prices
• HOLIDAY:
  Thailand

Thursday,
July 14:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• HOLIDAY:
  France

Friday,
July 15:

• 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
• China’s
  1H pork output and hog inventory
• Malaysia’s
  July 1-15 palm oil export data
• FranceAgriMer
  weekly update on crop conditions
• The
  Cocoa Association of Asia releases 2Q cocoa grind data

Source:
Bloomberg and FI

 

Macros

96
Counterparties Take $2.146 Tln At Fed Reverse Repo Op (prev $2.164 Tln, 96 Bids)

IMF
Cuts US 2022 GDP Growth Forecast To 2.3% VS June Est. 2.9%

Raises
2022 US Jobless-Rate Est. To 3.7% VS 3.2% In June

Cuts
US GDP, Raises Jobless Forecasts On Inflation Risks

 

Corn

·        
CBOT corn trended lower ahead of the USDA report and dropped thereafter after US producers realized we are in for a large crop. I except state yields to exceed USDA next month.

·        
In this month’s China S&D update, the ministry made no changes to last month’s estimates on corn production, consumption or imports.

·        
With US demand decreasing, look for prices to trend lower for the remainder of the summer.

 

Export
developments.

·        
South Korea’s MFG bought 68,000 tons of corn at $3333.75/ton c&f from either South Africa or South America for arrival around November 14. 

 

Bloomberg
est.

 

 

Updated
7/1/22

September
corn is seen in a $5.50 and $7.50 range

December
corn is seen in a wide $5.00-$8.00 range

 

Soybeans

·        
CBOT soybean complex was lower in a risk off early trading session ahead of the USDA report & post report. US crush was revised down 10 mil bu, a sign demand destruction is real.

·        
US crop conditions will decline next week but that’s normal for this time of year.

·        
AmSpec reported July 1-10 palm oil exports fell 15.2 percent to 308,290 tons from 363,732 tons from month earlier.

·        
Malaysia confirmed a 7-month pivot with stocks reported at high levels. Expect global veg oil prices to drop over the near term on flooding global supply and rush of Indo palm exports.

 

Export
Developments

·        
China looks to sell a half a million tons of soybeans out of reserves on July 15.

 

 

 

Updated
7/8/22

Soybeans
– August $13.90-$16.00

Soybeans
– November is seen in a wide $12.75-$16.50 range

Soybean
meal – August $360-$440

Soybean
oil – August 57.00-64.00

 

Wheat

·        
US wheat futures were lower on widespread commodity selling. The upside in the USD is very concerning and we don’t see a one off export development for wheat other than routine business going forward. Look for Russia to take NA
bus. away.

·        
European weather remains a large concern for the west and southwestern areas with no rain relief seen over the next seven days.

·        
France sees their wheat crop down 7 percent from last year, with soft at 32.9 million tons, and down nearly 6 percent below average. That could yield a 15 percent drop in exports, if I’m correct. 

 

 

Export
Developments.

·        
Taiwan seeks 44,725 tons of wheat from the US on July 13 for Aug 31-Sep 14 shipment.

·        
Jordan AgMin seeks 120,000 tons of wheat.

·        
Japan seeks 70,000 tons of feed wheat and 40,000 tons of barley on July 13 for arrival by December 22.

·        
Jordan seeks 120,000 tons of barley on July 14 for Nov/Dec shipment. They bought 60,000 tons on July 6.

·        
Pakistan issued a new import tender for 300,000 tons of wheat, set to close July 18 for Aug 1-25 shipment.

 

Rice/Other

·        
(Bloomberg) — World 2022-23 cotton production seen 776,000 bales lower than USDA’s previous estimate, according to the avg in a Bloomberg survey of ten analysts.

Estimates
range from 119m to 122m bales

World
ending stocks seen down 321,000 bales to 82.45m bales

US
production seen 471,000 bales lower, and US ending stocks seen 31,000 bales lower

 

Updated
7/1/22

Chicago – September $7.75
to $9.50 range, December $8.00-$11.00

KC – September $8.00 to
$10.50 range, December $8.50-$12.00

MN – September $8.50‐$11.00, December $8.00-$12.50