FI Evening Grain Comments 07/26/22

PDF Attached

 

Adverse
US weather expected through mid-August and Black Sea shipping uncertainties sent CBOT agriculture markets higher. A high pressure ridge is in the forecast for the US Midwest next week.
Outside
markets had little influence on the rising grain prices, other than a lower WTI crude oil market that could have capped gains in  soybean oil. The USD was up 71 points and US equities lower.

 

 

Weather

 

World
Weather Inc.

WEATHER
TO WATCH AROUND THE WORLD

• Argentina
  began receiving some rain this morning and more will fall over the next few days improving wheat germination, emergence and establishment
• Southern
  Buenos Aires was wettest with a few amounts of 0.40 to 1.39 inches
• La
  Pampa also reported some rain with amounts of up to 0.80 inch.
• Additional
  rain will fall in Argentina’s wheat region during the next few days, but Cordoba and some immediate neighboring areas in western wheat and barley areas may not get enough rain to seriously moisten the soil
• Crop
  conditions in Buenos Aires, Entre Rios, southern Santa Fe and parts of La Pampa will improve following this week’s rain
• GFS
  operational model runs continue to push high pressure into the U.S. Midwest next week and into the following weekend
• Such
  a movement would result in dry and warmer biased conditions in key summer crop areas; however, confidence in the outlook is very lows
• GFS
  Ensemble, European Ensemble and the European operational models all keep the ridge axis farther to the west in the Plains with some short term presence over the western Corn Belt – these solutions are preferred over that of the operational GFS model solution
• World
  Weather, Inc. says to watch the positioning of the high pressure ridge not only because of the implications for the Midwest corn and soybean production areas, but also because of its potential to bring rain to west Texas cotton, sorghum and corn areas if the
  ridge gets far enough to the east
• U.S.
  Midwest crop and soil moisture is good enough to support corn and soybean development into mid-August making the greatest risk to late season crops “if” a high pressure ridge moves over or closer to the Midwest
  
• There
  are no tropical cyclones in the Atlantic Ocean, Caribbean Sea or Gulf of Mexico and non are expected during the next ten days
• A
  tropical depression has formed in the eastern Pacific Ocean west of Central America and southern Mexico
• This
  system is expected to become better organized and evolve to a tropical storm and/or a hurricane, but its movement should be away from western North America
  
• Net
  drying continues in the northwestern U.S. Plains and southwestern portions of Canada’s Prairies over the next ten days
• Crop
  moisture stress is expected to slowly evolve especially as temperatures heat up during the coming week
• Cooler
  than usual temperatures are expected in the northern Plains and upper Midwest for the next five days resulting in slower crop development and slower drying rates
• The
  cool bias will be replaced by much warmer temperatures next week and into the following weekend
  
• Returning
  excessive heat to the central United States next week will return crop and livestock moisture and heat stress, but conditions are improving in some areas this week because of rain and cooling
• Rain
  will be most significant from Colorado into Kansas and northern Oklahoma over the next few days
• Texas
  cotton, corn, sorghum, soybean and rice will continue seriously stressed by heat and dryness over the next ten days
  
• Significant
  relief is unlikely unless a tropical system evolves and moves into Texas
• Drought
  also continues in northeastern Mexico with little to no rain and hot temperatures likely through the next ten days
• U.S.
  southeastern states and lower Delta will continue sufficiently wet enough to support crops favorably over the next ten days
• Southeastern
  Canada crop conditions are rated favorably with little change likely for a while
• Much
  of Europe rainfall will be restricted over the next ten days while temperatures are near to above normal
  
• Net
  drying is expected in the majority of the continent, but especially in France, the U.K., Belgium, Netherlands, Germany, Spain, Portugal and from the lower Danube River Basin to Hungary
• Eastern
  Europe will receive rain this weekend into early next week from Czech Republic and Austria to Belarus and northwestern Ukraine with rainfall of 1.00 to 2.00 inches and locally more resulting
• Net
  drying will persist for the next couple of weeks from Hungary into Greece resulting in more threatening crop heat and moisture stress
• A
  mostly good mix of weather will occur in the Commonwealth of Independent States through the next two weeks
  
• Concern
  remains over erratic rainfall in Russia’s Southern Region, southeastern Ukraine and parts of Kazakhstan
• Rain
  is expected in Russia’s Southern region and temperatures will be mild enough to conserve the resulting rainfall through lower evaporation rates
• A
  boost in rainfall is advertised for western, central and northern Ukraine after the end of this week and the moisture increase will bring on better crop and field conditions
• India’s
  monsoonal rainfall is expected to continue widespread across the nation during the next two weeks with all areas impacted and most getting sufficient rain to bolster soil moisture and/or induce flooding
• Some
  areas may become too wet, but the precipitation will occur with sufficient breaks to prevent serious flooding from occurring
• Nationwide
  rainfall is still expected to be above normal at mid-August and serious relief should occur to the dry areas of Uttar Pradesh and Bihar which have not received nearly as much rain as usual so far this year. Cotton, groundnut and soybean areas of northwestern
  India should experience mostly good weather for crop improvements after flooding rain earlier this month
• China’s
  weather is still advertised to be drier than usual in the southeastern corner over the next ten days, but rain is expected thereafter
• The
  return of rain should benefit rice and other late season crops
• Timely
  rainfall is expected in most other areas in the nation during the next two weeks maintaining moisture abundance and a mostly good crop development environment
• 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
• Far
  southern Brazil will receive periodic rainfall during the next ten days maintaining a typically moist pattern in the soil from Rio Grande do Sul into Paraguay, southernmost Mato Grosso do Sul and parts of both Parana and southern Sao Paulo
• The
  moisture will be great for winter crops and should not have much impact on Safrinha crop maturation or harvesting
• Safrinha
  cotton and late corn harvesting in Brazil will advance well due to continued dry and warm weather
• There
  is no threat of cold weather in Brazil coffee, citrus or sugarcane areas during the next two weeks
• Some
  cooling is expected in Argentina late this week into early next week
• Sumatra,
  Indonesia rainfall has started to improve with a couple of central west coast locations reporting heavy rainfall Monday and early today
• Rain
  
• 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
• Australia
  weather in the coming ten days will be favorable for most winter crops
• Central
  Queensland received rain Wednesday and Thursday favoring a boost in topsoil moisture for a part of winter crop country
  
• Western
  Australia will get most of the significant rain this coming week, but some rain will eventually reach the southeastern parts of the nation in time next week.
  
• South
  Korea rice areas are still dealing with a serious drought, despite some rain that fell recently.
  
• Some
  additional showers are expected over the next couple of weeks, but a soaking rain will continue to elude the region
• East-central
  Africa rainfall this week 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
• Kenya
  and Uganda will trend wetter next week
• 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
• Seasonal
  rains are shifting northward leading to some drying in southern areas throughout west-central Africa
• Cotton
  areas are expecting greater rainfall in the next couple of weeks
• 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
• Mexico
  rain will be most abundant in the west and southern parts of the nation
• Rain
  in the Greater Antilles will occur periodically, but no excessive amounts are likely
• Today’s
  Southern Oscillation Index was +8.13 and it will continue to drift lower over the next several days
• New
  Zealand weather is expected to be well mixed over the next two weeks
• Temperatures
  will be seasonable with a slight cooler bias

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Wednesday,
July 27:

• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• Earnings:
  Bunge

Thursday,
July 28:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Buenos
  Aires grains exchange weekly crop report
• HOLIDAY:
  Thailand

Friday,
July 29:

• Vietnam
  July coffee, rice and rubber export data
• FranceAgriMer
  weekly update on crop conditions
• ICE
  Futures Europe weekly commitments of traders report
• US
  agricultural prices paid, received, 3pm
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• HOLIDAY:
  Thailand

Source:
Bloomberg and FI

 

Macros

US
New Home Sales Change Jun: 590K (est 655K; prev R 642K)

–
New Home Sales (M/M): -8.1% (est -5.9%; prev R 6.3%)

–
Median Sale Price (Y/Y) (USD): 402.4K or +7.4% (prev 449.0K or +15.0%)

US
CB Consumer Confidence Jun: 95.7 (est 97.0; prev R 98.4)

–
Present Situation: 141.3 (prev R 147.1)

–
Expectations: 65.3 (prev R 65.8)

Philadelphia
Fed Non-Manufacturing Index Jul: 0.1 (prev 4.6)

US
To Sell Additional 20M Bbls Of Oil From Strategic Reserve As Part Of Plan To Sell 180M Bbls

98
Counterparties Take $2.189 Tln At Fed Reverse Repo Op (prev $2.192 Tln, 100 Bids)

 

Corn

·        
CBOT corn
was sharply higher this morning on US weather concerns, decline in US crop conditions, and higher outside related markets. 

·        
Funds bought an estimated net 9,000 corn contracts.

·        
China’s end of June pig herd was down 1.9% from a year ago, according to the AgMin, and sow herd down 6.3%.

·        
There was more talk of Brazil and China re-negotiating Brazil corn export protocols. Some think both countries will reach an agreement before September. Note US premiums for new crop favor US corn exports during the fall quarter,
but Brazil might be able to get some cargos sold before the US new-crop harvest if they quickly reach an agreement.

·        
Due to the June heatwave that swept across the Great Plains, we are hearing thousands of cattle perished in Kansas, with some buried as recycling companies (pet food, fertilizer…) were unable to keep up with demand.

·        
A Bloomberg poll looks for weekly US ethanol production to be down 2,000 barrels to 1032 thousand (1020-1042 range) from the previous week and stocks up 95,000 barrels to 23.648 million.

 

Export
developments.

·        
None reported

 

 

Updated
7/25/22

September
corn is seen in a $5.10 and $6.40 range

December
corn is seen in a $5.00-$7.50 range

 

Soybeans

·        
Soybeans, meal and oil were higher from the larger than expected decline in US soybean conditions and possible ridging across the US next week. WTI crude oil turned negative by mid-session and limited gain in soybean oil.  August
soybeans closed up 59.75 cents. Bull spreading in soybeans and meal was seen  today, in part to good demand in nearby products.

·        
November closed nearly on its 200 day MA. Contract was up 37.75 cents at $13.8375.

·        
Funds bought an estimated net 14,000 soybean contracts, bought 7,000 soybean meal and bought 8,000 soybean oil.

·        
European Union soybean imports iso far for 2022-23 (July 1 start) reached 890,412 tons by July 24, up from 966,648 tons by the same week year ago. Soymeal imports were 1.02 million tons versus 854,907 tons year earlier.

·        
China committed to import 1 million tons of Indonesian palm oil.

·        
Cargo surveyor SGS reported month to date July 25 Malaysian palm exports at 970,243 tons, 21,381 tons below the same period a month ago or down 2.2%, and 180,209 tons below the same period a year ago or down 15.7%.

 

Export
Developments

·        
China looks to sell a half a million tons of soybeans out of reserves on July 29. Last week they sold just 7,500 tons.

 

Updated
7/26/22

Soybeans
– September $12.65-$14.20

Soybeans
– November is seen in a $12.25-$14.50 range (lowered 50 cents bottom of range)

Soybean
meal – September $390-$450

Soybean
oil – September wide range of 52.80-66.00.

 

Wheat

·        
US wheat was higher again from a dip in US spring wheat ratings and Black Sea shipping concerns despite a sharply higher USD. We heard Russian missiles were launched at another port city in Ukraine, not the port itself but the
city.

·        
Funds bought an estimated net 13,000 Chicago wheat contracts.

·        
Paris wheat was up 11.75 euros at 344.50 euros or 3.5%.
The
weakness in the euro and Pakistan buying more than expected French wheat last week added to the bullish sentiment.

·        
Agritel expects the French soft wheat crop at 33.44 million tons, down 5.6% from last year. Exports were seen rising 12.4 percent to 10.95 million tons for countries outside the EU.

·        
As a part to resume grain exports out of Ukraine, the Joint Coordination Centre (JCC) was established and today the major countries (and UN) started work in Istanbul.

·        
Iraq announced they seek 1.5 million tons of wheat for strategic reserves to cover needs in early 2023. They have enough wheat to last through the end of this year. Iraq may eventually buy 400,000 tons, then buy the rest at a
later time. Iraq may seek the wheat from the US, Canada and Australia.

·        
Kazakhstan estimated their 2022 wheat crop at 13.0 to 13.50 million tons, up 15 percent from a year ago, and domestic consumption at 6.0 million tons.

·        
US soft wheat exports from the European Union from July 1 totaled 1.40 million tons by July 24, compared to 1.03 million tons by the same week in 2021-22,

·        
The US spring wheat crop tour started. Day one comments showed variable conditions. Height, scabs and grasshoppers were some problems noted. Reuters of day one should be out later.

·        
Note the combined North Dakota and Montana spring wheat harvest area represents about 75 percent of the US crop. Much of the tour will be focused on North Dakota (around 50% of the US harvested area). USDA estimated the ND spring
wheat yield at 51 bushels per acre )production 267.750 million) in their July crop production update, up from 33.5 bushels for 2021 (174.535 million). The US yield was pegged at 47 versus 32.6 last year.

 

 

 

USDA
Attaché: Argentina Grain and Feed update

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Update_Buenos%20Aires_Argentina_AR2022-0012

Wheat
exports for marketing year (MY) 2022-2023 are forecast at 12.35 million tons, l.15 million tons lower than USDA’s official number as a result of lower production. The wheat and barley crops are suffering very dry weather. Barley exports in MY 2022-2023 are
forecast at 3.7 million tons, the same as in MY 2021-2022. Corn exports in MY 2022-2023 are forecast at 38.8 million tons, 2.2 million tons lower than USDA as Post forecasts a lower production at 53 million tons. Sorghum exports for MY 2022-2023 are forecast
at 1.65 million tons, 850,000 tons lower than USDA as China’s demand has recently cooled down. Rice exports in MY 2022-2023 are forecast at 350,000 tons, 30,000 tons higher than USDA.

 

 

 

Export
Developments.

·        
Pakistan bought up to 7 cargos of French wheat last week. $404.86 c&f for Aug 1-25 shipment was noted.

·        
Jordan bought an estimated net 60,000 tons of wheat at $405.75/ton for LH December shipment.

·        
The World Food Program seeks 30,000 tons of Ukrainian milling wheat for August delivery. (AgriCensus)

·        
Jordan seeks 120,000 tons of feed barley on July 27 for Dec/Jan shipment.

 

Rice/Other

·        
South Korea’s Agro-Fisheries & Food Trade seeks 92,100 tons of rice on Aug 3 for arrival in SK between Feb & Apr.

 

Updated
7/25/22

Chicago
– September $7.35 to $9.00 range, December $7.00-$10.50

KC
– September $7.45 to $9.50 range, December $7.00-$10.75

MN
– September $8.00‐$10.00, December $8.00-$11.50