FI Evening Grain Comments 07/13/21

PDF Attached

 

Daily
estimate of funds will be updated Wednesday morning.

 

Weather

 

WORLD
WEATHER INC.

MOST
IMPORTANT WEATHER OF THE DAY

• Canada’s
  Prairies, North Dakota, parts of Montana and northern Minnesota are facing ten days of very stressful conditions

o  
Little to no rain and warm to eventually hot temperature are expected

o  
Crop stress is already at serious levels and the lack of rain and continued very warm to hot temperatures will accelerate crop yield losses for spring, wheat, canola, barley, lentils, and all other unirrigated early season crops

• Stress
  to corn, flax and soybeans is also expected to steadily raise
• Rain
  expected in South Dakota today into Wednesday will be welcome for a part of the state, but northern areas will not likely get much moisture

o  
Crop moisture stress will begin to increase after this event and it will prevail for ten days

• Unsettled
  weather will continue in the U.S. Midwest for the coming five days adding more rainfall to areas that have already been receiving some rain periodically

o  
Crop conditions will remain very good from southeastern Iowa and eastern Missouri to Ohio, Michigan, and Kentucky

• North
  America weather changes will begin this weekend and become pronounced during next week and on into late month.

o  
Warmer temperatures will impact the Great Plains and much of the Midwest, although excessive heat is unlikely in the eastern Midwest

• The
  warming will be most welcome to the wetter areas in the central and eastern Midwest and should stimulate additional aggressive crop development and good yield potentials

o  
Warmer weather in the western Corn Belt and upper Midwest will slowly decrease soil moisture and raise stress in the driest areas

• The
  greatest crop stress in the western Corn Belt is expected in the last ten days of July at which time soil moisture will be quickly depleted and concern over production will begin to rise
• Western
  U.S. Corn Belt and upper Midwest crop stress will peak in the last days of July and early August with the ridge of high pressure expected to retrograde to the west during mid- to late-August returning showers and somewhat cooler temperatures
• Warmer
  temperatures in the U.S. southern Plains next week will be ideal for cotton, sorghum and corn which have experienced some milder than usual conditions recently
• U.S.
  Delta and southeastern states will experience a good mix of weather for a while
• U.S.
  Southwest monsoonal precipitation is expected to occur favorably in Arizona, New Mexico, and areas north into the central Rocky Mountain region during the next two weeks
• California,
  Nevada, and the Pacific Northwest will remain dry and very warm to hot over the next couple of weeks
• Mexico
  drought continues to slowly shrink with frequent rain expected in western and southern parts of the nation

o  
Rain is needed in the northeast

• Western
  Russia will dry down for a while, but rain is expected in the second week of the outlook bringing timely relief to the drier bias
• Ukraine,
  Belarus, and Baltic States weather will be very good for crops over the next two weeks
• Welcome
  rain is expected in the western Balkan Countries late this week into next week

o  
The region has been too dry and warm in recent weeks stressing unirrigated crops from the eastern Adriatic Sea coast to Hungary and western Slovakia

• Too
  much rain is expected in eastern France, parts of Germany, Belgium, and southeastern Netherlands over the next week

o  
Rain totals of 2.00 to 6.00 inches with local totals over 7.00 inches will result in some flooding

• Net
  drying is expected in western France, the U.S. and parts of Scandinavia during the coming ten days

o  
Drying is also expected in Spain, Portugal, southern Italy and Greece, but these areas are typically dry during the summer

• China
  received more heavy rainfall Monday in Hebei, parts of Shandong and in neighboring areas of Inner Mongolia where 2.00 to more than 4.00 inches resulted and at least one location getting over 10.00 inches of rain

o  
Net drying occurred elsewhere in the nation

• Additional
  heavy rain is expected in the North China Plain resulting in some potential for crop damage in low lying areas
• Xinjiang
  weather will continue good for the next ten days

o  
Showers and thunderstorms will pop up near the mountains while most crop areas remain dry

o  
Temperatures will be warm with highs in the 80s and lower 90s northeast and in the 90s to slightly over 100 elsewhere

• India’s
  monsoon will distribute rainfall a little better across the nation, but resulting amounts will remain lighter than usual in many areas
  

o  
Crop development should advance relatively well, but greater rain will be needed to ensure water supply has been restored and deep subsoil moisture is replenished for crop and human use during the long dry season

o  
Sugarcane and other crops that are not irrigated could suffer from the lighter than usual precipitation if these conditions persist too long.

• West
  Africa rainfall from Ivory Coast and Ghana to Cameroon and Nigeria will be lighter than usual during the coming ten days, but timely rainfall will maintain favorable crop conditions

o  
Ivory Coast and Ghana will experience the least rainfall and have the greatest increase in rainfall needs over the next two weeks

• Erratic
  rainfall has been and will continue to fall from Uganda and Kenya into parts of Ethiopia

o  
A boost in precipitation is needed and is under way

• Ethiopia
  rainfall is expected to continue gradually improving this week and then it will decrease next week
  
• East-central
  Argentina rainfall will occur into mid-week benefiting some eastern and central wheat production areas, but dry weather will occur elsewhere through much of the next ten days
• Brazil
  will receive three waves of rain during the next ten days to two weeks. The precipitation will favor winter wheat, and be good for sugarcane, citrus and some coffee areas

o  
Temperatures will trend cooler in the second week of the outlook and some frost or freezes will impact far southern grain areas this weekend and early next week

• Australia
  weather will provide periodic rainfall and bouts of sunshine with seasonable temperatures through the next two weeks supporting winter crop establishment

o  
South Australia and northwestern Victoria are driest and have the greatest need for rain

• Some
  precipitation is expected, but more may be needed
• Southeastern
  Canada’s Ontario and Quebec crop areas have received some welcome rain recently improving soil moisture and supporting long term crop- development

o  
A good mix of weather is expected over the next two weeks

• North
  Africa has been and will continue to be mostly dry supporting late season winter crop harvesting
  
• Thailand,
  Cambodia and Vietnam started to receive needed rain last week and it continued through the weekend and into Monday

o  
A general improvement in crop conditions, soil moisture and eventually the water supply is expected

• Thailand,
  corn, rice, sugarcane and other crops were becoming stressed because of dryness recently. The same may have been occurring in some Cambodia and Vietnam locations. These areas are now getting enough rain to begin seeing improving crop conditions
• Indonesia
  and Malaysia rainfall is expected to be sufficient to maintain or improve soil moisture for all crops
• Philippines
  rainfall will slowly increase during the next two weeks which should be welcome initially
• South
  Africa will experience additional showers in the far west periodically over the coming week
  

o  
The moisture will be good for winter crops, but more moisture will be needed in Free State and other eastern wheat production areas

o  
Summer crop harvesting has advanced well this year and the planting of winter grains has also gone well, but there is need for moisture in eastern winter crop areas

• Nicaragua
  and Honduras have been and will continue receiving some welcome rain recently, but moisture deficits are continuing in some areas

o  
Nicaragua received significant rain during the weekend, but Honduras was mostly dry

o  
Additional improvement is needed and may come slowly

• Southern
  Oscillation Index is mostly neutral at +9.24 and the index is expected to continue rising for a few more days
• New
  Zealand weather during the coming week will be abundantly wet and then drier weather is expected next week

o  
Temperatures will be near to below average

Source:
World Weather Inc. 

 

Bloomberg
Ag Calendar

Wednesday,
July 14:

• EIA
  weekly U.S. ethanol inventories, production
• Brazil
  Unica cane crush, sugar production (tentative)
• Malaysia
  2Q cocoa grinding data (tentative)
• HOLIDAY:
  France

Thursday,
July 15:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• China
  2Q pork output and inventory levels
• Malaysia
  July 1-15 palm oil export data
• Malaysia
  crude palm oil export tax for August (tentative)
• Port
  of Rouen data on French grain exports
• Barry
  Callebaut 9-month key sales figures

Friday,
July 16:

• ICE
  Futures Europe weekly commitments of traders report (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
• Cocoa
  Association of Asia releases 2Q cocoa grinding data

Source:
Bloomberg and FI

 

Selected
China commodity imports

China
Jan-June crude oil imports down 3% at 261 mln tons

China
Jan-June soybean imports up 8.7% at 48.96 mln tons

China
Jan-June natural gas imports up 23.8% at 59.82 mln tons

China
Jan-June iron ore imports up 2.6% at 561 mln tons

China
Jan-June wheat imports up 60.1% at 5.37 mln tons

China
Jan-June corn imports up 318.5% at 15.3 mln tons

China’s
June iron ore imports lowest since May 2020

 

Macros

US
CPI (Y/Y) Jun: 5.4% (est 4.9%; prev 5.0%)

US
CPI Ex-Food, Energy (Y/Y) Jun: 4.5% (est 4.0%; prev 3.8%)

US
CPI (M/M) Jun: 0.9% (est 0.5%; prev 0.6%)

US
CPI Ex- Food, Energy (M/M) Jun: 0.9% (est 0.4%; prev 0.7%)

US
Real Avg Weekly Earnings (Y/Y) Jun: -1.4% (prevR -2.6%; prev -2.2%)

US
Real Avg Hourly Earnings (Y/Y) Jun: -1.7% (prevR -2.9%; prev -2.8%)

 

73
Counterparties Take $798.267 Bln At Fed’s Fixed-Rate Reverse Repo (prev $776.472 Bln, 70 Bidders)

 

Corn

• US
  corn
  ended higher despite an improvement in the US national corn rating.  But some states posted a good decline. IL was down 5, CO down 5, and NE off 5.  IA was up 4.  New was light. 
  
• Open
  interest headed into today for the July corn contract was 245 contracts and we saw a short squeeze in that position.  At one point during the trade July was up about 80 cents before pairing gains. 
  
• China
  imported 15.3 million tons of corn during the January through June period, 318% increases from a year earlier. 
  
• China
  imported 743,000 tons of meat in June, down 17% from the same month a year earlier.  January through June meat imports were 5.08 million tons.
• A
  Bloomberg poll looks for weekly US ethanol production to be down 8,000 barrels (1049-1075 range) from the previous week and stocks up 242,000 barrels to 21.391 million.
  

 

Export
developments.

• Jordan
  seeks 120,000 tons of feed barley on July 28 for Nov/Dec shipment. 

 

 

Updated
07/13/21

September
corn is seen is a$4.75-$6.25 range (up 25, unchanged from precious).

December
corn is seen in a $4.25-$6.00 range.

 

Soybeans

• CBOT
  soybeans rallied bias the August position (+10.50) to the upside.  Back months were up 1.50-2.25 cents.  There was talk China might be inquiring for soybeans off the PNW.  We also heard China was active buying Argentina soybean cargoes, about 4 this week and
  4 last week.  US soybeans appear to be competitive with Argentina during the OND timeframe. 
  
• Soybean
  oil traded sharply higher led by the August contract, appreciating 149 points and widening 32 points over the September position.  Traders are still waiting for a mandate recommendation by the EPA.  We thought this would have been released in June. 
  
• Soybean
  meal was lower on product spreading. 
• November
  Canadian canola gapped higher this morning but paired some gains on overbought conditions. Limits contract to $45/ton. 
  
• India
  imported 996,014 tons of vegetable oils during the month of June, down 20 percent from May and off 17 percent from June 2020.  November through June imports are running 5 percent higher than the same period a year earlier.  June palm oil imports were 587,467
  tons, down from 769,602 tons during May.  Palm imports since November were 5.149 million tons, up from 4.239 million during the same period year ago. 
  
• Brazil
  increased their mandatory biodiesel blend requirement to 12% from 10%, below the 2021 target of 13%.  About 70% of Brazil’s biodiesel is produced from soybean oil.  Brazil dropped the blend rate from 13% to 10% on April 9 to help ease high fuel prices. 
  
• Argentine
  producers sold 24.5 million tons of 2020-21 soybeans so far this season (up 831,300 tons from week earlier) through July 7, below 26.9 million tons year ago.  BA Grains Exchange has a 43.5-million-ton production this year, down from 49 million tons for 2019-20.
• China
  soybean imports in June rose 11.6% from May to 10.72 million tons, up from 9.61 million tons in May, third-highest on record, and were below 11.16 million tons year earlier.  In the first six months of 2021 China imported 48.96 million tons, up 8.7% from the
  same period a year earlier.
• We
  are hearing Canadian canola production between 17 and 19.5 million tons.  We are at 19.5MMT. USDA is at 20.2 million tons, up from 19 million in 2020-21.   
  
• European
  Union soybean imports so far this season (July 1) reached 289,111 tons by July 11, down from 555,679 tons by the same week in 2020-21.  EU rapeseed imports reached 120,692 tons, compared with 30,315 in 2020-21.  Soymeal imports were 304,751 tons vs. 576,192.

 

Source:
Reuters

 

 

Export
Developments

• South
  Korea’s Agro-Fisheries & Food Trade Corp. seeks around 7,600 tons of GMO-free soybeans on July 21 for arrival in South Korea between Aug. 20 and Oct. 20.

 

 

Updated
7/13/21

August
soybeans are seen in a $13.25-$15.25 range (up 50, up 25); November $11.75-$15.00

August
soybean meal – $330-$410; December $320-$425

August
soybean oil – 62-67 (up 200);
December 46-67 cent range

 

Wheat

• US
  wheat ended
  mixed with Chicago and KC lower on US harvesting pressure and MN higher on unfavorable US and Canadian spring wheat weather.  After the close Egypt announced they seek wheat for September 11-20 shipment. 
  September
  Minneapolis wheat hit a new contract high today. 
• September
  Paris wheat was up 3.50 at 202.50 euros. 
• Russia
  will harvest 124-126 million tons of grain this year according to the head of science at state weather forecaster Hydrometcentre. Winter wheat was expected between 55-57 million tons and spring wheat crop  22-24 million tons.
  
• Sovecon
  lowered its estimate of the Russia 2021 wheat crop by 2.3 million tons to 82.3 million tons due to lower-than-expected yields. 
  
• FranceAgriMer
  looks for French soft wheat exports and stocks in the 2021-22 season to rebound from last year.  Soft wheat exports outside the 27-country EU were forecast to reach 10.5 million tons in 2021-22, up 40% compared with 7.50 million in the previous season.  Soft
  wheat stocks were expected to reach 3.7 million tons, up nearly 39% from 2.7 million last season.
• EU
  soft wheat exports for the season that just started July 1 reached 199,274 tons by July 11, down from 485,459 tons by the same week in 2020-21.
• USDA’s
  344.6-million-bushel spring wheat estimate would be lowest since 1988, if realized. 
  
• A
  heat wave is sweeping across the far western US and parts of Canada this week, lasting through next week, further stressing crops.  We expect spring wheat rating west of the Dakota’s to deteriorate this week and possibly next week. 
  

 

 

Export
Developments. 

• Egypt
  seeks wheat for September 11-20 shipment. 
• Turkey’s
  TMO bought about 395,000 tons of milling wheat. 

Port Tons Protein Seller Price

Derince 25,000 tonnes 11.5% Dreyfus $254.80

Derince 25,000 tonnes 12.5% Orsett $256.80

Iskenderun 25,000 tonnes 11.5% Rolweg $263.40

Iskenderun 25,000 tonnes 11.5% Yayla $259.55

Mersin 50,000 tonnes 11.5% Viterra $265.40

Izmir 25,000 tonnes 11.5% Yayla $259.45

Izmir 25,000 tonnes 11.5% Agrozan $259.45

Bandırma 25,000 tonnes 11.5% Cargill $255.99

Bandırma 25,000 tonnes 11.5% GTCS $256.98

Tekirdag 25,000 tonnes 11.5% Sierentz $255.80

Tekirdag 25,000 tonnes 11.5% Orsett $256.80

Samsun 25,000 tonnes 11.5% Rolweg $253.88

Samsun 25,000 tonnes 11.5% Meke $254.88

Trabzon 20,000 tonnes 11.5% Prime $255.43

Karasu 25,000 tonnes 11.5% Bek $255.19

• Taiwan
  Flour Millers’ Association seeks 55,000 tons of million wheat from the United States on July 16 for shipment from the U.S. Pacific Northwest coast between Aug. 31 and Sept. 14.
  
• The
  Philippines rejected all offers in a tender for up to 200,000 tons of animal feed wheat due to high prices.  They were in for 150,000 tons of feed wheat and 50,000 tons of milling wheat with shipment from in September, October, and November.
• Japan’s
  AgMin seeks 118,911 tons of food-quality wheat from the United States and Canada.

• Japan
  seeks 80,000 tons of feed wheat and 100,000 tons of barley on July 14
• Iran’s
  GTC seeks 60,000 tons of milling wheat for August and September shipment on Wednesday, July 14.
• Bangladesh’s
  seeks 50,000 tons of milling wheat on July 15.
• Bangladesh’s
  seeks 50,000 tons of milling wheat on July 18.

• Ethiopia
  seeks 400,000 tons of wheat on July 19. 

• Pakistan’s
  TCP seeks 500,000 tons of wheat on July 27.  200,000 tons are for August shipment, and 300,000 tons are for September shipment.

 

Rice/Other

• South
  Korea seeks 91,216 tons of rice from China, the United States and Vietnam for arrival in South Korea between Oct. 31, 2021, and April 30, 2022. 
  
• Bangladesh
  seeks 50,000 tons of rice on July 18, not on the July.  They delayed it. 
  

 

Updated
7/12/21

September Chicago wheat is seen in a $5.90-$7.00 range

September KC wheat is seen in a $5.60-$6.70

September MN wheat is seen in a $7.75-$9.50