FI Evening Grain Comments 07/20/22

PDF Attached does not include daily estimate of funds. Export sales estimates attached and below.

 

USDA
announced 136,000 tons of soybeans sold to China for 2022-23 delivery. Over the past couple days, there was chatter Sinograin and Cofco were interested in Feb/Mar US soybeans. Looks like some of that was confirmed.

 

The
US weather forecast was unchanged from yesterday but yesterday the 6-10 day did increase some rain for the Midwest. Hot and dry conditions continue through the week for much of the Midwest US and western US. Results are awaited for Egypt in for wheat. 15 firms
are participating. Look for a weather (forecast changes) market for the rest of the week.

 

Weather

 

World
Weather Inc.

WEATHER
TO WATCH AROUND THE WORLD

• Europe
  temperatures have cooled notably today relative to those of Tuesday when record heat occurred in the United Kingdom
• Extreme
  highs to 104 degrees Fahrenheit occurred in a couple of locations
• This
  week’s excessive heat in northwestern Europe has caused human illness and death due to the lack of air conditioning
  
• Crops
  and livestock were also seriously stressed
• Europe
  is not done with excessive heat and dryness, but it will become more confined to southern parts of the continent
• Southeastern
  Europe will see multiple days of 90-degree heat with extremes over 100 Fahrenheit periodically. Some heat will also impact southern France, Italy and the Iberian Peninsula
• Crop
  stress is expected in unirrigated areas especially from Hungary into the lower Danube River Basin where soil moisture is already very short
• Some
  of the dryness and crop stress will slowly expand into neighboring areas of Ukraine
• Northern
  and some central parts of Europe will experience waves of showers and a few thunderstorms during the next ten days, although resulting rainfall will be light
• The
  combined impact of periodic light rain and seasonably warm temperatures should support better crop development, although greater rain will still be desired
• Russia’s
  Southern Region will experience periods of light rain and drizzle over the balance of this week and into the weekend
• The
  moisture is going to vary greatly with some areas getting 0.20 to 0.60 inch while others get 1.00 to 2.00 inches
• All
  of the precipitation will be welcome with recent moisture stress in the region to be relieved
  
• Temperatures
  will be cooler than usual during the next week and that will help conserve the moisture that falls and give crops a chance to improvement after recent dryness
  
• Additional
  record setting heat occurred in the southern U.S. Plains Tuesday with extreme temperatures of 110 to 116 degrees Fahrenheit noted  in Oklahoma and Texas
• Stress
  to livestock, humans and crops of all kinds has already been a problem in the region in recent weeks, but the extremes of Tuesday were even more serious
• Southern
  U.S. Plains will continue excessively warm to hot through the next ten days, although extreme temperatures will not be as hot as they were Tuesday again for a while
• Additional
  heat and dryness will continue in the southern Plains, southwestern Corn Belt and northern Delta through the weekend
• Some
  of the heat will bubble up from the southern Plains into the central Plains as far north as South Dakota again later this week and into Saturday before finally abating for a week to ten days
• Most
  of the U.S. Midwest soil moisture is still rated favorably, but recent heat and dryness has depleted topsoil moisture from portions of western Iowa, southern Minnesota, eastern South Dakota, eastern Nebraska and from eastern Kansas into central Missouri and
  a part of the northern Delta
• Each
  of these drier biased areas will experience crop stress into Saturday, but relief is expected thereafter
• U.S.
  weather pattern changes will bring cooling and a good chance for rain to the northern and central Plains and southwestern Corn Belt as well as the northern Delta beginning late this weekend and continuing through the following week
• The
  precipitation will come in waves with not all areas being impacted at the same time
• Some
  areas will require more rain than others, but crop conditions should improve with the onset of significant rainfall
• World
  Weather, Inc. believes the break from heat and dryness in the Plains and western Corn Belt will last about ten days beginning late this coming weekend and extending into the early days of August
• After
  that, though, there will be some potential for drier and warmer conditions to resume
• Northern
  and eastern U.S. Midwest weather will continue favorable over the next two weeks with timely rainfall expected to support crop development as has been the case through most of the growing season.
  
• Drought
  in the western United States will be intensified during the latter part of July because of a ridge of high pressure expected in the region and resulting hot and dry conditions
• U.S.
  southeastern states will continue to experience a favorable mix of weather for a little while longer, but may dry down next week and into the following weekend
• Texas
  cotton, corn and sorghum crops will remain seriously stressed by the lack of rain and very warm to hot temperatures for at least another five to seven days
• Some
  showers and thunderstorms will be possible briefly in the middle to latter part of next week offering some short term relief from heat and dryness
• Argentina
  rain potentials remain good for next week as two waves of moisture come into wheat production areas
  
• The
  rain will bolster topsoil moisture for better germination, emergence and establishment, although follow up rain will be imperative
  
• Canada’s
  Prairies weather will turn the remainder of this week and into next week, although some showers will occur periodically
• Temperatures
  will be near to normal with restricted rainfall
• Crop
  development should advance relatively well in most areas, but timely rain will soon be needed once again
  
• Southeastern
  Canada crop conditions are rated favorably with little change likely for a while
• 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 is expected for a while – at least not in that region.
  
• Many
  corn, sorghum, citrus, sugarcane and dry bean crops are being negatively impacted in Mexico along with various other fruit and vegetable crops
• Mexico
  rain will be most abundant in the west and southern parts of the nation
• India’s
  monsoon is expected to continue performing favorably with widespread rain across most of the nation during the next couple of weeks
• Central
  and some northern parts of the nation may be a little too wet at times resulting in some flooding
• Sufficient
  breaks in the rain are expected to prevent a major flood from occurring
• South
  America temperatures over the next week will be near to above average with some cooling likely in Argentina and southern Brazil during the middle to latter part of next week
• Brazil
  rainfall will be minimal except in Atlantic coastal areas and in far southern Brazil
• Rainfall
  will be light and some areas will experience net drying
• Drying
  in other areas of Brazil will be great for Safrinha crop harvesting
• Most
  of China’s crop region east of Tibet will get rain at one time or another during the next two weeks and all of it will be good for summer crop development
• The
  greatest rainfall may occur in east-central parts of the nation and in Liaoning, Jilin and Heilongjiang
  
• Southeastern
  China is expected to continue drying out through the next ten days and perhaps longer
• Temperatures
  will continue near to above normal
• 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
• Tropical
  Storm Estelle was located well west of Mexico in the eastern Pacific Ocean moving west northwesterly away from land
• The
  storm poses no threat to North America
• There
  were no other organized tropical cyclones in the world today, although a new disturbance is expected to evolve in the eastern Pacific later in this coming week
  
• Sumatra,
  Indonesia rainfall remained restricted Tuesday, although locally heavy rain fell in central parts of the island
  
• Below
  average precipitation has occurred in many areas from northern and central Sumatra into northwestern Borneo in recent weeks and greater rain is needed
• Some
  increase in rain is expected this week, but amounts may continue lighter than usual in many areas
  
• Precipitation
  will become more widespread next week
• All
  other Southeast Asian nations will experience an abundance of rainfall during the next few weeks resulting in some flooding in the Philippines and the Maritime provinces
• Recent
  rain has improved soil moisture in parts of Thailand after a drier than usual bias earlier this season
• Australia
  weather in the coming ten days will be favorable for most winter crops
• Central
  Queensland will get some rain today and Thursday, although it will be quite variable
  
• Rain
  totals may range from 0.30 to 1.25 inches and locally more
• Western
  Australia will get most of the significant rain this week outside of central Queensland
• Southeastern
  parts of the nation will be driest this week, but rain will impact many areas next week
  
• South
  Korea rice areas are still dealing with a serious drought, despite some rain that fell recently.
  
• Some
  additional rain is expected over the next couple of weeks and it should gradually be enough to ease dryness and crop stress, but production will be down
• East-central
  Africa rainfall will be greatest in central and western Ethiopia and lightest in parts of Uganda.
  
• Tanzania
  is normally 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 and there is some potential for flooding
• Flooding
  is also possible in Guinea, Sierra Leone and southern Mali over the next couple weeks
  
• Mali
  has been drier than usual over the past 30 days and rain would benefit cotton – at least for a while
• South
  Africa’s crop moisture situation is favorable for winter crop establishment, although some additional rain might be welcome
• Restricted
  rainfall is expected for a while, but the crop is rated better than usual
• 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 +10.27 and it will continue to move lower this week
• New
  Zealand weather is expected to be well mixed over the next ten days
• Temperatures
  are expected to be a little cooler than usual
• Rainfall
  will become lighter than usual over the next seven days.
  

Source:
World Weather INC

 

Bloomberg
Ag Calendar

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

 

 

 

 

Macros

US
Existing Home Sales Change Jun: 5.12M (est 5.35M; prev 5.41M) 

–
Existing Home Sales (M/M): -5.4% (est -1.1%; prev -3.4%) 

–
Median Home Price (Y/Y) (USD): 416.0K or +13.4% (prev 407.6K Or +14.8%)

 

US
MBA Mortgage Applications: -6.3% (prev -1.7%) – Mortgage demand was lowest in 22 years.

 

US
DoE Crude Oil Inventories (W/W) 15-Jul: -0.445M (est +2.000M; prev +3.254M)

–
Distillate Inventories: -1.295M (est +1.600M; prev +2.668M)

–
Cushing OK Crude: +1.143M (prev +0.316M)

–
Gasoline Inventories: +3.498M (est +1.000M; prev +5.825M)

–
Refinery Utilization: -1.2% (est 0.5%; prev 0.4%)

EIA:
US Crude Stocks In SPR Fell In Latest Week To Lowest Since July 1985

U.S.
Crude Output Fell 100,000 Barrels Per Day Last Week To 11.9 Million BPD – EIA

U.S.
Crude Output Falls For Second Week In A Row For First Time Since Late January

 

Canadian
CPI (Y/Y) Jun: 8.1% (est 8.4%; prev 7.7%)

Canadian
CPI NSA (M/M) Jun: 0.7% (est 0.9%; prev 1.4%)

Canadian
CPI BoC Core (Y/Y) Jun: 6.2% (est 8.4%; prev 6.1%)

Canadian
CPI BoC Core (M/M) Jun: 0.3% (prev 0.8%)

Canadian
CPI Core- Common (Y/Y) Jun: 4.6% (est 4.2%; prev 3.9%)

Canadian
CPI Core- Median (Y/Y) Jun: 4.9% (est 5.1%; prev 4.9%)

Canadian
CPI Core- Trim (Y/Y) Jun: 4.9% (est 5.6%; prev 5.4%)

Canadian
Industrial Product Price (M/M) Jun: -1.1% (est -0.5%; prev 1.7%)

Canadian
Raw Materials Price Index (M/M) Jun: -0.1% (prev 2.5%)

Canada
Home Price Index Up 1.3% In June From May – Teranet

 

Corn

·        
CBOT corn
ended lower on talk of rain over the 6-10 period, weaker WTI crude oil, higher USD and lower soybeans (spreading). Losses were limited from a rebound in US ethanol production and declined in ethanol stocks.

·        
Other news was light.

·        
Traders are waiting for a Ukraine Black Sea grain shipment agreement.

·        
China’s end of June sow herd increased 2% from the previous month to 42.77 million head from 41.92 million reported at the end of May, but down 6.3% from a year ago. The USDA Broiler Report showed eggs set in the US up 1 percent
from a year ago and chicks placed up 2 percent. Cumulative placements from the week ending January 8, 2022, through July 16, 2022, for the United States were 5.25 billion. Cumulative placements were up slightly from the same period a year earlier.

 

EIA
weekly ethanol update

·        
The US weekly EIA ethanol data was viewed positive for US corn futures and neutral for US ethanol futures.

·        
Weekly US ethanol production increased 29,000 barrels from the previous week to 1034 thousand barrels per day (bbl). This was the first increase in five weeks and largest weekly increase since the week ending May 27, 2022.

·        
Ethanol stocks decreased 53,000 barrels to 22.553 million. 

·        
For comparison, A Bloomberg poll looked for weekly US ethanol production to increase 9,000 barrels from the previous week and stocks to decrease 99,000 barrels.

·        
US ethanol production of 1034 thousand barrels per day is about 0.6% above from about the same time a year ago, but 2% below a month ago.

·        
Over the past 4 weeks, production changes averaged down 5,000 and stocks up 13,000. 

·        
Early September 2021 to date (nearly 46 weeks) US ethanol production is running 6.8% above the same period a year ago.

·        
Padd2 production was 973,000 barrels, up 29,000 from a week earlier. Padd1 was down 1,000 and Padd3 up 3,000.

·        
There were no ethanol imports reported this week.

·        
Ethanol stocks of 23.553 million barrels are up 4.6% from a year ago and 3.5% above the last previous 4-week average.  The record for ethanol stocks was 24.281 million barrels set on 3/9/18.

·        
Days of inventory of 22.8 compares to 22.0 a month ago and 20.6 during comparable period a year ago.

·        
Weekly ending stocks of total gasoline were up 3.5 million barrels to 228.4 million barrels, highest since April 29.

·        
Gasoline product supplied (demand) was 8.521 million barrels, up 459,000 barrels from the previous week. US gasoline demand over the previous four week was down around 8 percent from a year earlier.

·        
The net blender input of fuel ethanol was unchanged from the previous week at 887,000 bpd, below its 4-week average of 901,000 bpd, and well down the pre-pandemic levels (July 2019 average 945,000 bpd).

·        
Net production of finished reformulated and conventional motor gasoline with ethanol, decreased 26,000 to 8.688 million barrels, and the ethanol blend was 91.1 percent of the net production of all finished motor gasoline, up from
90.3 percent for the previous week.

·        
Our US 2021‐22 corn for ethanol use is unchanged at 5.411 billion bushels. USDA is at 5.375. For 2022‐23, we look for 5.400 billion bushels, 25 above USDA.

 

US
DoE Crude Oil Inventories (W/W) 15-Jul: -0.445M (est +2.000M; prev +3.254M)

–
Distillate Inventories: -1.295M (est +1.600M; prev +2.668M)

–
Cushing OK Crude: +1.143M (prev +0.316M)

–
Gasoline Inventories: +3.498M (est +1.000M; prev +5.825M)

–
Refinery Utilization: -1.2% (est 0.5%; prev 0.4%)

EIA:
US Crude Stocks In SPR Fell In Latest Week To Lowest Since July 1985

U.S.
Crude Output Fell 100,000 Barrels Per Day Last Week To 11.9 Million BPD – EIA

U.S.
Crude Output Falls For Second Week In A Row For First Time Since Late January

 

 

 

 

U
of I: Nitrogen Fertilizer Outlook for 2023 Decisions

Schnitkey,
G., K. Swanson, N. Paulson, C. Zulauf, J. Coppess and J. Baltz. “Nitrogen Fertilizer Outlook for 2023 Decisions.” farmdoc daily (12):106,  Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, July 19, 2022.

https://farmdocdaily.illinois.edu/2022/07/nitrogen-fertilizer-outlook-for-2023-decisions.html

 

Export
developments.

·        
None reported

 

 

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 soybean complex traded most of the day lower on talk of an increase in rainfall for the Midwest during the 6-10 period. Soybeans and soybean oil finished sharply lower while bull spreading in meal lifted August and September
to close higher. Overall weather conditions will remain hot and dry through the end of the month. Demand for spot meal is strong for both domestic use and exports. Soybean oil was under pressure in part to lower crude oil.

·        
USDA announced 136,000 tons of soybeans sold to China for 2022-23 delivery. Over the past couple days, there was chatter Sinograin and Cofco were interested in Feb/Mar US soybeans. Looks like some of that was confirmed.

·        
The last USDA 24-H sale to China was June 1.

·        
We heard China bought 8-12 cargoes of US new crop soybeans leading us to wonder if additional sales will be announced before the end of the week.

·        
The breakdown of China soybean imports during the month of June showed 7.24 million tons originated from Brazil, down from 10.48 million tons year earlier, out of the total 8.25 million tons imported (23 percent below year ago).
China took only 773,114 tons from the US. January through June imports from Brazil were 27.71 MMT (26.13 MMT year earlier) and imports from the US 17.54 MMT (21.57 MMT year earlier).

·        
US soybean meal cash prices declined in selected US locations and was down big for the US Gulf. IL Dec fell $2 to +50/NA Q and Gulf was down $12/$15 to +33/45 Q.

·        
Cargo surveyor SGS reported month to date July 15 Malaysian palm exports at 570,050 tons, 22,373 tons below the same period a month ago or down 3.8%, and 112,376 tons below the same period a year ago or down 16.5%.  Cargo surveyor
AmSpec reported Malaysian July 1-15 palm exports at 646,853 tons, compared to 659,768 tons a month ago. Cargo surveyor ITS reported Malaysian palm exports at 667,509 tons, 9.6 percent below 738,368 tons from the same period a month ago.

 

Export
Developments

·        
Under the 24-hour system, USDA announced 136,000 tons of soybeans sold to China for 2022-23 delivery. Over the past couple days, there was chatter Sinograin and Cofco were interested in Feb/Mar US soybeans. Looks like some of
that was confirmed.

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

 

 

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 and Paris wheat futures started higher on strong global demand and hot temperatures across Europe threatening related spring crop production, but ended well off session highs for Paris, Chicago and KC (front months). MN ended
lower from recent rains across the northern Great Plains.

·        
Today we saw a choppy trade and expect that to continue for the next two trading days. 

·        
Egypt is in for wheat. Egypt
is in talks with 15 companies for wheat. GASC said the traders were offering around $403/ton c&f.
Yesterday
Egypt lowered their wheat protein level for US wheat for their import tender to 10.5% from previous 11.5% (acceptable down to 11%).

·        
Paris wheat was up 2.25 euros at 340.00 euros.

·        
Germany’s 2022 winter barley crop was estimated at 9 million tons by the association of German farmers DBV, up from 8.8 million tons from last year.

·        
Water levels again declined for the Rhine in Germany, reducing cargo vessel loads.  Some vessels can only hull up to 30 to 50% of capacity. 

·        
Manitoba, Canada, saw heavy rain and high humidity last week, according to their weekly crop report. Wheat conditions crop in southern areas were rated mostly good-to-excellent and canola widely varied.

 

Day
4-5 precipitation outlook

 

Export
Developments.

·        
Egypt is in talks with 15 companies for wheat. GASC said the traders were offering around $403/ton c&f.

·        
Bangladesh bought 50,000 tons of wheat (July 5 tender) at $448.38/ton CIF liner out. 

·        
Jordan passed on 120,000 tons of feed barley for Dec and/or Jan shipment.

·        
Jordan seeks 120,000 tons of wheat on July 26 for November and/or December shipment.

·        
Pakistan seeks 200,000 tons of wheat on July 25 for September 1-16 shipment. They may be in for 300,000 tons.

 

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