FI Evening Grain Comments 07/15/22

PDF Attached

 

EXPORT
SALE RETRACTION (FAS-ESR-068-22)

The
daily export sale announced by FAS this morning is withdrawn based on updated information received from the exporter. FAS-ESR-068-22 had reported the sale of 133,000 metric tons of corn for delivery to China during the 2022/2023 marketing year.

https://www.fas.usda.gov/newsroom/export-sales-china-17

 

Oil
share rebounded with sharply higher soybean oil and lower meal. We think that was technical. Soybeans ended mixed with old crop on the defensive. US weather was mostly unchanged and there will be some rain for the Midwest for the week ending July 24^th.
Corn was mostly higher, but gains were limited from lower Chicago wheat. The weakness in wheat reflected good rain over the past week for Canada and US spring areas, along with harvesting pressure in France. 

 

Indonesia
on Saturday announced they will remove all palm export levies until August 31 and set the max palm oil export tax of $240/ton from September 1 when the reference price is above $1,500 per ton.

 

 

 

 

Weather

 

 

World
Weather Inc.

WEATHER
TO WATCH AROUND THE WORLD

• No
  significant theme changes were noted around the world overnight
• Much
  of Europe continues drying out and this trend will last for the next ten days with temperatures hot in much of the west through the weekend and eventually spreading into central parts of the continent next week
  
• Heat
  and dryness will prevail through all next week, despite a few showers
• Extreme
  highs in the 80s and 90s will be common across the continent this weekend into next week while western areas see some extremes of 96 to 108 degree readings across France and to 113 in Spain
• Germany
  could eventually see a couple of extreme temperatures near 100 as well
• Crop
  and livestock stress will threaten production for grains, oilseeds, milk, fruits and vegetables as well as result in lower animal weight gains
• Cooling
  fuel demand will be quite strong
• Far
  northeastern Europe will receive most of the significant rainfall in the continent over the next ten days
• Europe
  weather Thursday was mostly dry and heating up in the west
• Rain
  did fall from Czech Republic through southern Poland to northwestern Ukraine and part of Belarus with amounts to 0.68 inch
• All
  other areas were dry
• Highest
  temperatures were in the 90s to near 100 in central and southern France and southwestern Germany as well as northwestern Italy
• Spain
  was hottest with widespread upper 90- and lower 100 degree readings and an extreme of 111 Fahrenheit in southern parts of the nation
• Highest
  temperatures in northern France, southern U.K. and the remainder of Germany were in the upper 70s and 80s.
  
• Russia’s
  Southern Region will experience some periodic showers over the next ten days supporting “some” improvement for crop and field conditions after recent drying, but much more rain will be needed.
  
• The
  bulk of Russia’s Southern Region has low soil moisture and is experiencing some crop moisture stress
• Most
  other areas in Russia, northern Ukraine, Belarus and the Baltic States will see rain routinely during the next couple of weeks resulting in moisture abundance
• U.S.
  weather has not changed much overnight
• Net
  drying occurred in most of the nation’s crop areas, although some showers occurred near the Gulf of Mexico coast
• Hot
  and dry weather is expected from South Dakota to Texas as well as portions of the northern Delta, Missouri and southwestern Iowa
• High
  temperatures will be in the 90s to 108 degrees Fahrenheit frequently in the next week to ten days from South Dakota to Texas and in the upper 80s and 90s from southern Minnesota through Missouri and the northern Delta
• A
  few extremes near 100 will occur as far east as the Missouri River
• Rainfall
  will be minimal in most of these areas, although some weekend rain is possible in a part of Missouri and Sunday into Monday for the northern Delta
• Crop
  moisture and heat stress will be greatest in the  Plains states, but there will also be some milder heat and dryness from southwestern Iowa and eastern Kansas through the northern Delta; including most of Missouri
  
• Crop
  stress will also present a threat to yields especially late season crops
• Cotton,
  corn and sorghum in the southern Plains has already lost production potential and more losses are likely
• Timely
  rainfall will impact other areas in the northern and eastern U.S. Midwest through the next ten days and that should help support favorable corn and soybean development
• A
  few pockets of dryness will prevail and must be watched for possible expansion later in the summer
• Lower
  U.S. Delta and southeastern states weather will be most favorable for crop development during the next two weeks
• U.S.
  Pacific Northwest will be dry and very warm to hot at times over the next ten days
• No
  precipitation fell Thursday and highest temperatures reached over 100 degrees in a part of the Snake River region
• Most
  other afternoon temperatures were in the upper 80s and 90s Fahrenheit
• Stress
  to crops and livestock has been widespread, and no relief is expected
• No
  drought relief in most of the far western U.S. until late autumn at the earliest
• Canada’s
  southern Prairies will experience net drying conditions during much of the coming week to ten days
• However,
  a weather disturbance moving east out of southern Alberta Sunday into Monday will produce significant rain in a relatively narrow band relieving some of the dryness
• Rain
  totals of 050 to 2.50 inches will be possible
• Parts
  of Ontario, Canada need rain while Quebec crops continue to develop favorably with timely rainfall and warmer than usual temperatures
  
• Drought
  in northeastern Mexico and the southern U.S. Plains is unlikely to change in the next two weeks
  
• Most
  likely the only way drought will break in these areas will be from a tropical cyclone and none are expected for a while – at least not in that region.
  
• Mexico
  rain will be most abundant in the west and southern parts of the nation
• Argentina
  rainfall will continue restricted during the next ten days except in east-central and northeastern parts of the nation where rain is expected periodically
• The
  driest areas will be in central and southern Buenos Aires, La Pampa and southern Cordoba where little to no rain is expected for a while
• South
  America temperatures over the next week will be near to below average in northern and eastern Argentina while above normal in central and northern crop areas of Brazil
• Brazil
  rainfall will be minimal except in Atlantic coastal areas and from the southernmost parts of Mato Grosso do Sul and Parana into Rio Grande do Sul and Paraguay during the next ten days
• Some
  of the advertised rain will be heavy from Uruguay into Rio Grande do Sul where 1.00 to 3.00 inches and local totals over 4.00 inches are expected
  
• Good
  drying conditions are likely elsewhere supporting Safrinha crop maturation and harvest progress
• India’s
  monsoon will continue to perform aggressively over the next two weeks with widespread rain of significance expected along the west coast and from Odisha and northeastern Andhra Pradesh to Maharashtra, Madhya Pradesh, Gujarat and Rajasthan
• Only
  far southern and some east-central India locations will receive lighter than usual precipitation
• Uttar
  Pradesh, Jharkhand and Bihar have been driest recently and need significant rain
• Uttar
  Pradesh should get rain in the second half of next week
• Summer
  crop development will advance well, although flooding has been a problem for a few central production areas and replanting may be necessary
• China
  rainfall is expected to be periodic and often abundant in east-central and some northeastern crop areas while the interior southeast is drier biased
• Excessive
  rain events should not occur as often as they have been, but the nation will continue very wet and would benefit from some drying
• Recent
  drier and warmer weather in east-central China has helped to improve crop and soil conditions
• Parts
  of China need sunnier weather to induce better drying conditions after recent excessive rainfall. Crop damage has occurred in various areas in recent weeks because of too much moisture and serious flooding.
• China’s
  Xinjiang province continues to experience relatively good weather
• A
  few showers and thunderstorms are expected, but most of the region will be dry with temperatures varying greatly over the week to ten days
• Sumatra,
  Indonesia will continue receiving lighter than usual rainfall over the coming week, although there will be sufficient amounts to support most crop needs
• Greater
  rain is expected in the July 21-27 period
• All
  other Southeast Asian nations will experience an abundance of rainfall during the next few weeks resulting in some flooding
  
• Southern
  Australia will get periodic rainfall southern wheat, barley and canola production areas through the next ten days
• Winter
  crops are establishing well
• South
  Australia needs greater and more frequent rain
• South
  Korea rice areas are still dealing with a serious drought, despite some rain that fell recently.
  
• Some
  rain is expected over the next couple of weeks and it should gradually be enough to ease dryness and crop stress
• East-central
  Africa rainfall will be greatest in central and western Ethiopia and lightest in parts of Uganda.
  
• Tanzania
  is normal dry at this time of year and it should be that way for the next few of weeks
• Some
  areas in Kenya are expected to trend wetter in the next ten days
• West-central
  Africa rainfall has been and will continue sufficient to support coffee, cocoa, sugarcane, rice and cotton development normally
• Some
  greater rain would still be welcome in the drier areas of Ivory Coast
• Cotton
  areas are expecting much greater rainfall in the next couple of weeks
• South
  Africa’s crop moisture situation is favorable for winter crop emergence, although some additional rain might be welcome
• Restricted
  rainfall is expected for a while
• Central
  America rainfall will continue to be abundant to excessive and drying is needed
• Rain
  in the Greater Antilles will occur periodically, but no excessive amounts are likely
• Today’s
  Southern Oscillation Index was +14.11 and it will move erratically lower during the coming week
• New
  Zealand weather is expected to be well mixed over the next ten days
• Temperatures
  are expected to be a little milder than usual
• Rain
  will be heavy in this first week of the outlook in western portions of South Island and below average elsewhere
• Late
  July rainfall will increase again in North Island and northern portions of South island

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Monday,
July 18:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• US
  crop conditions for spring and winter wheat, corn, soybeans and cotton, 4pm
• China’s
  second batch of June trade data, including corn, pork and wheat imports
• HOLIDAY:
  Japan

Tuesday,
July 19:

• EU
  weekly grain, oilseed import and export data
• New
  Zealand global dairy trade auction

Wednesday,
July 20:

• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• China’s
  third batch of June trade data, including soy, corn and pork imports by country
• Malaysia’s
  July 1-20 palm oil export data

Thursday,
July 21:

• International
  Grains Council releases monthly report
• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• USDA
  total milk and red meat production, 3pm

Friday,
July 22:

• 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
• FranceAgriMer
  weekly update on crop conditions
• US
  cattle inventory; cold storage data for beef, pork and poultry, 3pm

Source:
Bloomberg and FI

 

 

 

CFTC
Commitment of Traders

The
funds sold more than expected corn and soybeans than expected. The Chicago wheat position was near flat and now thought to be net short 6,400 contracts, futures only, as of Friday. The report is seen neutral for prices.

 

 

 

 

 

 

 

 

Reuters
Table

 

SUPPLEMENTAL     
Non-Comm               Indexes                  Comm

   
                    Net        Chg        Net        Chg        Net        Chg

Corn               
66,874     -6,575    391,553    -14,046   -407,081     13,767

Soybeans           
30,653     -2,911    156,331    -13,852   -154,078     11,536

Soyoil   
             450     -5,855     92,017     -4,614    -95,629     11,686

CBOT
wheat         -48,176       -739    121,520     -7,919    -64,462      9,063

KCBT
wheat          -5,518     -2,537     49,713     -3,050    -41,488      5,079

 

FUTURES
+ OPTS     Managed                 Swaps              Producer

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
151,174    -21,693    262,817     -7,152   -411,514     17,200

Soybeans           
95,711     -9,337    100,057     -4,999   -157,180     11,147

Soymeal            
68,290      2,513     80,735     -1,393   -189,924     -5,648

Soyoil             
18,877     -6,052     76,951     -3,222   -105,576     11,228

CBOT
wheat          -6,444     -6,402     62,319        821    -51,080      7,658

KCBT
wheat          16,387     -5,650     26,161        383    -35,360      4,167

MGEX
wheat           2,654     -2,477      1,233        568     -5,324      1,110

                
———- ———- ———- ———- ———- ———-

Total
wheat         12,597    -14,529     89,713      1,772    -91,764     12,935

Live
cattle         18,080      3,782     59,636     -1,654    -95,402     -3,492

Feeder
cattle       -5,809      1,722      3,401       -244      5,895       -652

Lean
hogs           39,934     11,450     49,694     -2,851    -77,775     -8,746

                     Other            
NonReport                  Open

                       
Net        Chg        Net        Chg   Interest        Chg

Corn               
48,869      4,791    -51,346      6,854  1,906,814     52,306

Soybeans           
-5,683     -2,038    -32,907      5,226    790,441    -15,400

Soymeal            
19,213      1,520     21,686      3,009    440,090      5,054

Soyoil              
6,586       -738      3,163     -1,217    427,432     13,408

CBOT
wheat           4,087     -1,674     -8,883       -404    398,172     11,096

KCBT
wheat          -4,482        592     -2,706        508    172,630      1,792

MGEX
wheat           2,678        521     -1,241        277     63,187     -2,511

                
———- ———- ———- ———- ———- ———-

Total
wheat          2,283       -561    -12,830        381    633,989     10,377

Live
cattle         20,279        633     -2,592        732    330,868    -10,617

Feeder
cattle          608       -560     -4,096       -266     52,496     -1,845

Lean
hogs             -809        271    -11,045       -124    256,385      4,840

 

 

Macros

US
Univ. Of Michigan Sentiment Jul P: 51.1 (est 50.0; prev 50.0)

–
Current Conditions: 57.1 (est 53.7; prev 53.8)

–
Expectations: 47.3 (est 47.0; prev 47.5)

–
1-Year Inflation: 5.2% (est 5.3%; prev 5.3%)

–
5-10 Year Inflation: 2.8% (est 3.0%; prev 3.1%)

US
Capacity Utilization (M/M) Jun: 80.0% (est 80.8%; prevR 80.3%)

US
Manufacturing (SIC) Production (M/M) Jun: -0.5% (est -0.1%; prevR -0.5%)

Labor
Forecast Predicts 9.6% Increase In Demand For Temporary Workers For Q3 2022

95
Counterparties Take $2.154 Tln At Fed Reverse Repo Op (prev $2.207 Tln, 97 Bids)  

 

Corn

·        
CBOT corn
ended mostly higher on Friday in large part to US weather concerns, but gains were trimmed from lower Chicago and KC wheat.  

·        
Funds were net even in corn.

·        
Overall fundamentals have not changed.

·        
Hot and dry US weather expected next week could limit downside risk in corn.

 

Export
developments.

·        
EXPORT SALE RETRACTION (FAS-ESR-068-22)   The daily export sale announced by FAS this morning is withdrawn based on updated information received from the exporter. FAS-ESR-068-22 had reported the sale of 133,000 metric tons of
corn for delivery to China during the 2022/2023 marketing year.

 

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

·        
The US soybean complex was mixed. Soybeans ended 5.75 cents lower for August, September was down 0.25 and November up 1.25 cents.

·        
Funds were even in soybeans, sold 5,000 meal and bought 6,000 soybeans oil.

·        
Brazil’s 2022-23 was estimated to increase 2.6% to a record, and production could end up at 151.5 million tons, also a record, according to Safras & Mercado.  The growth in soybean area is expected to slow over the long term if
producers plant more corn amid potential exports to China.

·        
China soybean reserve sales of imported soybeans were small again, a signal soybean procurements might be slow for the short term.

·        
Ridging across the US is expected to restrict rain through June 28, but some rain is in the forecast for next week.

·        
Indonesia on Saturday announced they will remove all palm export levies until August 31 and set the max palm oil export tax of $240/ton from September 1 when the reference price is above $1,500 per ton.
Earlier
this week we heard some palm oil in storage tanks were degrading in quality.  End of May Indonesia palm stocks increased 18.5% from the previous month to 7.23 million tons.

·        
Indonesia exported only 678,000 tons of palm oil in May, down 77 percent from May 2021. But during this period, the export ban was in place to May 23 (started April 28).

·        
ITS: Malaysian 1-15 July palm oil exports were 518,520 tons, down 13.7 percent from same period month ago. AmSpec reported a 5.6 percent decrease to 499,964 tons. 

·        
Malaysia September palm was down 14 percent
for the week.

 

NOPA
was released early Friday morning and crush came in near trade expectations. Soybean oil stocks were 63 million pounds above trade expectations at 1.767 billion pounds (we were at 1.740 billion).  We are thinking of shaving 50 million pounds off 2021-22 US
soybean oil demand, most for biofuel feedstock. 

 

 

Export
Developments

·        
USDA seeks 2,230 tons of vegetable oils for export on July 17 for Aug 16-Sep 15 shipment.

·        
China sold less than 15,000 ton of soybeans out of reserves Friday, from little more than 500,000 tons offered. 

·        
China looks to sell a half a million tons of soybeans out of reserves on July 22.

 

December
oil share rebounded

Source:
Reuters and FI

 

 

Updated
7/14/22

Soybeans
– August $13.90-$16.00

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

Soybean
meal – August $400-$485

Soybean
oil – August 56.00-62.00

 

Wheat

·        
US wheat futures ended mostly lower (MN mixed) on follow through selling as US spring wheat areas received rain and Canadian Prairie crop conditions stabilized.  France soft wheat harvest pressure added to the negative undertone.
Argentina crop prospects are deteriorating though. The five major global suppliers of exportable wheat is still expected to end up at multi year lows, for stocks to use, by the end of the crop season.

·        
Chicago wheat is priced at pre-war levels. For the week Chicago was down 114.75 cents, a 12.9% decline.

·        
We revised our September and December price ranges (below).

·        
Funds sold an estimated net 7,000 Chicago wheat contracts. 

·        
France collected 50 percent of this year’s soft wheat crop through July 11, up from 14 percent week earlier and compares to 3 percent year ago. 64% of soft wheat was in good or excellent condition, up from 63% the previous week
but down from 76% last year, according to FranceAgriMer.

·        
Paris wheat was down 16 euros at 325.50, near its contract low. 

·        
Buenos Aires Grains Exchange estimated the Argentina wheat crop at 17.7 million tons, down from previous 18.5 million tons. It mirrors another slash this week to the crop. Argentina’s Rosario Grains Exchange lowered their wheat
production estimate to 17.7 million tons from previous 18.5 million. The expected area shrank due to dryness.

·        
Russia issued proposals to help Ukraine Black Sea exports and apparently, they are supported by negotiators.  A deal might be reached next week.  Ukraine looks forward to signing a deal, according to a senior Ukraine official
talking with Reuters.

·        
Meanwhile, Russia has increased military operations in Ukraine.  Missiles hit the northeastern town of Chuhuiv in Kharkiv region.

·        
Asian wheat importers were searching around for Black Sea and EU wheat cargoes late in the week, perhaps after the decline in prices. 

 

US
Wheat Associates

“The
HRW harvest is 43% complete in sampled states with 300 samples in the lab for testing. The SRW harvest is winding down and currently grades U.S. #1 SRW. Conditions for the PNW SW crop remain very good and test cutting has begun in the drier areas of Oregon
and Washington. The HRS and Northern durum crops are advancing steadily in good condition.”

 

 

Export
Developments.

·        
The Philippines bought 40,000 tons of feed wheat for October 10 through November 10 shipment.

·        
Another group in the Philippines bought 110,000 tons of feed wheat, at $376.50 c&f for Q4 shipment.

·        
Pakistan seeks 300,000 tons of wheat, set to close July 18 for Aug 1-25 shipment.

·        
Jordan seeks 120,000 tons of wheat on July 19 for possible shipment sometime in November and/or December.

 

Rice/Other

·        
None reported

 

Updated
7/16/22

Chicago
– September $7.50 to $9.00 range, December $7.00-$11.00

KC
– September $7.85 to $10.25 range, December $8.00-$12.00

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