FI Evening Grain Comments 07/24/21

PDF Attached

 

USDA
announced 100,000 tons of soybeans were sold to Mexico for 2021-22 delivery under the 24-hour announcement system. 

 

 

 

 

Weather

Weather
looks wetter for the late weekend into early next week for the Plains.  The Midwest will see erratic rains through Tuesday. 

 

BA
Grains Exchange

 

7-day
(wetter than that of Friday)

 

WORLD
WEATHER INC.

MOST
IMPORTANT WEATHER OF THE DAY

• U.S.
  weather seems to be heavily debated these days – mostly because of recent model forecasts of abundant rain
• Today’s
  forecast models seem to be shaking off some of the wetter biases of late, but there is still too much rain suggested for the western Corn Belt
• World
  Weather, Inc. has made no changes to its late summer outlook since February and we see no need for a change here
• The
  Plains and western Corn Belt will see net drying in August, despite a northwesterly flow pattern aloft in parts of the Midwest
• The
  pattern will leave the northern Plains drier biased and allow the central Plains to dry down and heat up
• Some
  of the drier and warmer biased weather in the Plains will creep into the western Corn Belt as well – especially the southwestern parts of the region
• Eastern
  Midwest crop areas will see milder than usual weather in August with the second half of the month cooler than usual for some areas
• Scattered
  showers and thunderstorms will occur frequently in the northern and eastern Midwest, but rainfall in western Minnesota and the Dakotas will be limited and often lighter than usual
• No
  change in Canada Prairies drought status is expected over the next two weeks
• Rain
  fell Thursday in central and northeastern Alberta with rainfall to 0.60 inch
• A
  few thunderstorms in east-central Saskatchewan crop areas also occurred with Indian Head reporting 1.34 inches, but that was and enigma and not representative of what occurred in most crop areas which was insignificant rainfall and very warm temperatures
• Rain
  will return to northern and western Alberta next week and temperatures will be milder there than anywhere else
• Above
  normal temperatures will continue in the central and southern Prairies
• Crop
  stress and falling yield potentials will also continue
• Typhoon
  In-Fa will pound Zhejiang, China with torrential rain, flooding and strong wind speeds this weekend
• Damage
  to crops and property are expected
• Remnants
  of the storm may move northeast into a part of the Korean Peninsula and northeastern China, but only after much impact on Zhejiang
• Flooding
  in Hebei and Henan from this week’s record setting rainfall will continue into next week, but the situation will slowly improve
• Crop
  and property damage assessments will begin as the flood water abates
• Losses
  are suspected of being tremendous
• India
  will receive heavy rain from two monsoon low pressure centers; one today through this weekend and the other in the following weekend
• Significant
  moisture improvements are likely in Gujarat and southern Rajasthan where it has been quite dry in recent weeks
• Flooding
  is expected in Madhya Pradesh and some neighboring areas in association with these two monsoon lows.
  
• Pakistan,
  far northwestern Rajasthan, India and the southern portions of India from southern Maharashtra to Tamil Nadu and parts of Andhra Pradesh will not receive much rain and net drying is expected to continue for a while
• Unirrigated
  crop stress is expected
• India
  rainfall Thursday began to increase in Madhya Pradesh and northeastern Maharashtra as well as northeastern Telangana where rainfall of 2.00 to nearly 4.00 inches resulted
• Heavy
  rain also fell in Goa where 8.14 inches resulted
• Rain
  elsewhere was more limited with net drying from Gujarat to Punjab and Haryana and throughout Pakistan
• Europe
  weather will begin trending wetter again today in the west and then spreading eastward this weekend into next week
• A
  brief break from frequent rain this week helped improve crop maturation and harvest conditions in small grain and unharvested winter rapeseed production areas
• Some
  concern over returning crop quality declines are expected because of the returning rain
• Periodic
  rain will continue into the first week of August maintaining some concern for the situation
• Limited
  rainfall from eastern Ukraine through the middle and lower Volga River Basin during the next ten days and warm temperatures will raise some concern over crop development in unirrigated areas because of already dry conditions in parts of this region
• Recent
  rain in Russia’s Southern Region and northwestern Kazakhstan has provided a short term bout of relief, but it was not enough, and more rain will be required over the next few weeks
• A
  drier than usual bias is expected to resume in this area after some lingering rain occurs today
• Ivory
  Coast and Ghana rainfall will be restricted over the next couple of weeks
• Seasonal
  rainfall should return normally in September, but August rainfall will be lighter than usual
• Other
  areas in West Africa will see a better distribution of rain
• East-central
  Africa rainfall will continue favorable for coffee and cocoa, although some areas in Uganda and Kenya may receive less than usual rainfall
• Ethiopia
  rainfall is expected to continue improving after a slow start to the rainy season
• Southern
  Oscillation Index has reached back about +14.80 and it is expected to remain strongly positive during the coming week while slowly leveling off after a strong rising trend since June 22 when the index  was -3.36
• Typhoon
  In-Fa is still expected to bring torrential rain, flooding and damaging wind to Zhejiang, China this weekend
• Rainfall
  of 10.00 to 20.00 inches will result in serious flooding with a potential impact on rice and many other crops
  
• China
  weather improved Thursday, although one of the areas that reported more than 40.00 inches of rain during the past week received nearly 4.00 inches of additional rain
  
• Many
  other areas in China trended drier
• Temperatures
  were seasonable with a warmer than usual bias in the northeast
• Unusually
  cool weather has occurred this week in western Xinjiang, China where three days of upper 60- and 70-degree highs occurred instead of readings in the 90s to near 100
• Rain
  also fell frequently during mid-week
• Northeastern
  Xinjiang weather improved greatly this week with a strong warming trend after a prolonged period of cool weather
• Degree
  day accumulations in Xinjiang are behind normal which may lead to higher potential for frost and freeze damage this autumn if cold weather comes too soon
• U.S.
  Midwest soil moisture is still rated favorably in many key crop areas, but parts of the west are drying down
• Texas
  crops will benefit from drier and warm biased weather over the next two weeks
• Degree
  day accumulations in West Texas are a little below average and the warming trend will prove favorable for cotton, corn, sorghum and other crops
• Excellent
  harvest weather is expected in South Texas over the coming ten days
• U.S.
  Delta and southeastern states will experience a good mix of weather during the next two week supporting normal crop development
• The
  Delta needs to dry down will be successful with that over time
• Southeast
  Canada corn, soybean and wheat production areas are seeing a very good mix of weather this summer and production potentials are high for all three crops
• Wheat
  harvesting is under way
• U.S.
  Far west will continue quite dry, although not as hot as in recent weeks
• Monsoon
  moisture in the southern Rocky Mountain region and Arizona will be frequent and significant enough to improve soil moisture and induce a little runoff
• Crop
  conditions will steadily improve in Arizona because of expected rainfall
• Brazil
  will see some periodic rain in the south Monday through Friday of next week favoring wheat development and improving topsoil moisture for use in the early corn planting season which is approaching next month
• Argentina
  weather will be mostly dry over the next ten days
• Showers
  will occur brief in the east this weekend
• Some
  winter wheat would welcome rain especially in the west, but crop  conditions are much better than last year at this time
• Crops
  are mostly semi-dormant right now
• No
  meaningful precipitation fell during the weekend
• Southeast
  Asia rainfall recently and that which is expected in the next two weeks will continue somewhat erratic
  
• Laos,
  Cambodia and northern Philippines will see the greatest rainfall
• Southern
  Sumatra and Java, Indonesia may experience less than usual rainfall for a while
• Thailand
  will also experience less than usual rainfall in pockets, although there has been some beneficial moisture recently
• Australia
  weather this month has been ideal for improving winter wheat, barley and canola establishment in much of the nation
• Some
  additional rain is still needed in South Australia, northwestern Victoria and from western New South Wales to Queensland
• South
  Africa has been cold during the past week with waves of rain in the southwest
• Weekend
  rainfall was still cool, but rain ended in many areas
• The
  moisture has been good for future wheat development
• Dryness
  remains in some of the unirrigated eastern wheat production areas
• Some
  warming is expected over the coming week, but the precipitation anomalies will prevail
• Mexico
  weather has improved with increased rainfall in the south and west parts of the nation
• Drought
  conditions are waning, and crops are performing better
• Dryness
  remains in Chihuahua and northeastern parts of the nation
• Weather
  over the next ten days will offer some relief, but more rain will be needed in the drier areas
• Central
  America rainfall has been plentiful and will remain that way except in Honduras where recent rainfall has been lighter and more sporadic than usual
• Nicaragua
  has received frequent bouts of rain this month easing long term dryness, but more may be needed in some locations
• New
  Zealand rainfall during the coming week will be near to above normal in western portions of South Island while near to below average in most other areas
• Temperatures
  will be seasonable

Source:
World Weather Inc. 

 

Bloomberg
Ag Calendar

Friday,
July 23:

• 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
• U.S.
  cattle on feed, poultry slaughter, cattle inventory
• HOLIDAY:
  Japan

Monday,
July 26:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• U.S.
  crop conditions – corn, cotton, soybeans, wheat, 4pm
• MARS
  monthly EU crop conditions report
• Malaysia
  July 1-25 palm oil export data (tentative)
• UN
  Food Systems Pre-Summit in Rome
• Ivory
  Coast cocoa arrivals
• HOLIDAY:
  Thailand

Tuesday,
July 27:

• EU
  weekly grain, oilseed import and export data
• UN
  Food Systems Pre-Summit in Rome
• EARNINGS:
  ADM

Wednesday,
July 28:

• EIA
  weekly U.S. ethanol inventories, production
• Brazil
  Unica cane crush, sugar production (tentative)
• UN
  Food Systems Pre-Summit in Rome
• HOLIDAY:
  Thailand
• EARNINGS:
  Bunge, Pilgrim’s Pride

Thursday,
July 29:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• International
  Grains Council monthly report
• Port
  of Rouen data on French grain exports

Friday,
July 30:

• 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
• U.S.
  agricultural prices paid, received

Source:
Bloomberg and FI

 

 

Commitment
of Traders

 

 

 

 

 

Macros

US
Markit Manufacturing PMI Jul P: 63.1 (est 62.0; prev 62.1)

–
Markit Services PMI: 59.8 (est 64.5; prev 64.6)

–
Markit Composite PMI: 59.7 (prev 63.7)

Canadian
Retail Sales (M/M) May: -2.1% (est -3.0%; prev -5.7%)

Canadian
Retail Sales Ex-Auto (M/M) May: -2.0% (est -1.5%; prev -7.2%)

 

Corn

• Corn
  prices traded sharply lower on profit taking ahead of the weekend.  Some noted the 11-15 day US weather maps calling for a wetter bias for the Corn Belt.  Weather outlook also looks wetter for the late weekend into early next week for the Plains.  The Midwest
  will see erratic rains through Tuesday. 
• The
  Saturday 1-7 day precipitation map appeared wetter than that of Friday. 
• The
  September corn contract traded through a couple key MA’s, included the 100-day at $5.5350.  Major support is seen at $5.00, but we think it will be hard for that contract to trade below $5.20 as US inventories are seen tight. 
  
• Look
  for private US trade supply estimates to trickle out next week. 
• Funds
  sold an estimated net 18,000 corn contracts. 
• A
  Reuters exclusive noted Argentina grain shipping has to be cut by 25 percent due to severely low water levels.  About 80 percent of Argentina’s Parana river carries farm goods.  Water levels are at their lowest level in 77 years.  Some estimate up to 40 percent
  of what would be normally shipper later this year could be deterred if conditions fail to improve.  This comes after Brazil experienced serious drought during the second half of the 2020-21 growing season.  Rain is badly needed ahead of 2021 planting season
  for Brazil that starts in October. 
• China
  sold 8,207 tons of imported GMO corn at auction, only 4% of what was offered. 
  
• Ukraine
  grain exports so far this season were 1.7 million tons, up 49 percent from the previous period last season (crop year starts June 1).  Corn exports were double at 824,000 tons, and most of that volume likely headed to China.
  

 

Cattle
on Feed

Placements
were less than expected.  Animal units should be monitored later this year as they are already declining.  Fed cattle was a little better than expected.  Cattle on feed was near expectations. 

 

 

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

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

 

Soybeans

• The
  soybean complex ended the week in a choppy trade.  Soybeans and meal were lower while soybean oil traded higher in part to a rally in Malaysian palm oil and Argentina transportation problems.    
  
• November
  soybeans ended 10.50 cents lower, near its 20-day MA of $13.5450.  Next level of support is seen at $13.26, its 100-day MA. 
  
• Funds
  sold an estimated net 8,000 soybeans, 6,000 soybean meal and 1,000 soybean oil. 
  
• November
  Canadian canola was up 2.10 at $883.40/ton. 

• Malaysia
  will leave unchanged their export tax rate on crude palm oil at 8% for August from July.  China sold 8,207 tons of imported GMO corn at auction, only 4% of what was offered. 
  

• India
  imported 13.35 million tons of edible vegetable oils in 2020.  This compares to 12.47 million tons produced domestically.  Consumption was 25.82 million tons.  -India AgMin
  
• India
  is the latest country to see too much rain.  The monsoon rains caused widespread damage to property and more than 135 people have perished as of Saturday morning. 
  https://www.bbc.com/news/world-asia-india-57952521
• Offshore
  values as of Friday morning were leading SBO 132 points higher (209 higher for the week to date) and meal $0.40 lower ($6.40 lower for the week). 
  
• We
  heard over the past week China was searching around for grain and oilseeds, notably hard red winter wheat from the US but nothing was posted by USDA. 
  
• China
  cash crush margins as of late Friday were last negative 9 cents on our analysis,
  a little weaker than the start of the week. 
• Paraguay
  crushed 1.39 million tons of soybeans during the January through June period, well down from 1.77 million tons from a same period last year, according to AgriCensus.  Paraguayan soybean meal is normally the preferable type for Middle Eastern buyers.
  
• The
  Rosario Grain Exchange sees Argentina’s soybean area declining 5 percent for 2021-22 (planted in a couple months) to 4.57 million hectares.  AgriCensus noted producers may favor corn over soybeans this year. 
  

 

Soybean
meal is oversold relative to soybean oil, in our opinion.

 

 

Export
Developments

• USDA
  announced 100,000 tons of soybeans were sold to Mexico for 2021-22 delivery.
  

 

Updated
7/21/21

August
soybeans are seen in a $13.25-$15.25 range; November $11.75-$15.00

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

August
soybean oil – 64.50-70.00; December 48-67 cent range

 

Wheat

• US
  wheat started
  higher but closed lower in all three US markets on heavy selling in corn and profit taking.  The USD ended Friday slightly higher. 
  
• Funds
  sold an estimated net 7,000 SRW wheat contracts.  
• Argentina’s
  shipping woes due to low water levels may extend into the fourth quarter (OND) that could disrupt 2021 wheat shipments.  Argentina harvests wheat December through January.   
  
• Russia’s
  AgMin noted wheat yields averaged 3.45 tons per hectare as of July 20, down from 3.47 tons a year earlier.
  
• Russia’s
  Southern Region and parts of the dry areas of Kazakhstan will see rain through this (Friday) evening.  This is welcome. 
  
• Ukraine’s
  wheat harvest is near 30 percent of the expected 8.9 million hectare area. 
  
• December
  Paris wheat was up 2.00 at 214.25 euros. 

• French
  soft wheat conditions fell in the week to July 19 to 75% good or excellent against 76% a week earlier.  14% of the crop had been harvested versus 4% a week earlier and 67% a year ago.
• US
  wheat Associates: “The U.S. winter wheat harvest is approaching 60% complete as combines run in drier areas of the Plains. HRW crop conditions remain variable. Harvest of a larger SRW crop is almost complete and all samples have been tested. With above-normal
  temperatures and very little rain in South Dakota, North Dakota, Minnesota and Montana, the HRS crop conditions declined again this week. Harvest of winter SW is progressing well ahead of normal in the dry Pacific Northwest. Durum conditions are slightly better
  than HRS but remain drought and heat stressed.”

 

Export
Developments. 

• Results
  awaited: 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

• Mauritius
  seeks 6,000 tons of white rice on July 27 for October through December shipment. 
  

 

Updated
7/21/21

September Chicago wheat is seen in a $6.25-$7.50 range

September KC wheat is seen in a $5.90-$7.25

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