FI Evening Grain Comments 07/27/21

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Mixed
close.  Midday weather models indicated good rain could fall across western IA and surrounding areas. 

 

Weather

 

 

WORLD
WEATHER INC.

MOST
IMPORTANT WEATHER OF THE DAY

• Not
  much change in North America weather was noted in today’s two week outlook
• Restricted
  rain will fall in Canada’s Prairies, although some rain is expected periodically in central and northern Alberta that will support crops well
• U.S.
  northern Plains and northwestern Corn Belt will continue dry bias during much of the coming ten days to two weeks, despite a few showers and thunderstorms
• U.S.
  greatest rainfall in this first week of the outlook is expected from southern South Dakota through eastern Nebraska and southwestern Iowa to northern Missouri Friday
• Rainfall
  of 0.50 to 1.50 inches and locally more will be possible
• Very
  warm to hot temperatures will occur in the northern U.S. Plains through Wednesday and impact a part of the western Corn Belt and central U.S. Plains Wednesday into Thursday as well
• Timely
  rainfall and seasonable temperatures are likely in other areas in the U.S. Plains, Midwest, Delta and southeastern states
• West
  Texas will warm up for a few days and then receive rain as temperatures cool down for a little while early next week
  
• U.S.
  Delta and southeastern states will see a good mix of weather for the next ten days.
  
• Far
  western U.S. dryness is expected to prevail for a while
• Southeastern
  Canada corn, soybean and wheat production areas continue to experience a favorable mix of weather
• Wheat
  areas would benefit from an extended period of dry weather to support the best harvest conditions
• Australia
  weather will be favorably mixed for canola, wheat and barley
• Crops
  have established well in most of the nation
• Queensland
  and northern New South Wales need more rain
• Europe
  will experience periodic showers this week slowing some of the small grain and winter rapeseed harvest progress
• Some
  worry over crop quality is expected, but it will not be as wet as it was earlier this month from eastern Germany to Poland
• Most
  CIS crop areas will see a good mix of weather during the next couple of weeks
• However,
  dryness will remain in parts of Russia’s Southern Region and areas east northeast through Kazakhstan
• Ukraine
  soil and crop conditions should remain favorably rated, although some increase in rainfall may be needed in parts of the region
• China
  received more heavy rainfall Monday from Tropical Storm In-Fa over Zhejiang, Jiangsu and southeastern Anhui
• Flooding
  has been significant the past few days in parts of Zhejiang
• In-Fa
  will advance to the northeast over the next few days spreading rain from east-central China into the northeastern part of the nation
• India
  weather continues to benefit many central, northern and eastern parts of the nation, but drying is ongoing in the south and in a few far northwestern parts of the nation
• Southern
  Pakistan is also unlikely to get much beneficial moisture for a while
• Ethiopia
  rainfall has been sufficient to support coffee and other crops recently, but Uganda and Kenya rainfall has been light
• The
  pattern will continue for a while longer
• West-central
  Africa rainfall has diminished seasonably for a while
• Rain
  will be needed in Ghana and Ivory Coast soon
• Recent
  rain in southeastern Asia has been good for bolstering soil moisture and improving crop conditions in Laos, parts of Cambodia, eastern Thailand and western Myanmar
• Philippines
  rain diminished Monday in the northwest after excessive rain impacted western Luzon Island during the weekend
• Indonesia
  rainfall has decreased, but should be increasing again soon
• South
  Africa weather is expected to be dry for a while, but recent rain has western wheat and barley crops well established
• A
  boost in rainfall is needed in unirrigated eastern wheat production areas
• Argentina
  needs rain in its western wheat production areas, although cold weather has the crop dormant or semi-dormant right now leaving the need for a moisture boost to a time later in August and September prior to aggressive spring crop development
• Rain
  will fall in southern Brazil crop areas today and Wednesday followed by colder weather
• Frost
  and some freezes are expected in coffee production areas of Sul de Minas, Brazil Friday and Saturday
• Most
  low temperatures will be zero to +4 Celsius (32-40F) with a few readings as cold as -3 in the traditionally coldest areas of the region
• Western
  coffee areas will only experience some patches of light frost
• Sugarcane
  and citrus in Brazil are not likely to be seriously impacted by frost and freezes Friday or Saturday, but some vegetative development will be negatively impacted
• No
  blossom bud damage is expected in citrus areas and leaf mass damage on the cane will not kill the crop, but it will set back its growth rates for a while
• Southern
  Oscillation Index has reached +15.86 and it is peaking after a strong rising trend since June 22 when the index  was -3.36
• 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
• Both
  Honduras and Nicaragua have received frequent bouts of rain this month easing long term dryness, but more may be needed in some locations
• Flooding
  rainfall occurred in a part of the region from southern Nicaragua into Panama during the weekend
• 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

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

 

Macros

Archer-Daniels
Midland Q2 EPS $1.33 Beats $0.99 Est., Sales $22.93B Beat $17.88B Est.

US
Durable Goods Orders Jun P: 0.8% (est 2.1%; prevR 3.2%; prev 2.3%)

US
Durable Goods Orders Ex-Transportation Jun P: 0.3% (est 0.8%; prevR 0.5%; prev 0.3%)

US
Cap Goods Orders Nondef Ex-Air Jun P: 0.5% (est 0.8%; prevR 0.5%; prev 0.1%)

US
Cap Goods Ship Nondef Ex-Air Jun P: 0.6% (est 0.8%; prevR 0.9%; prev 0.1%)

US
CB Consumer Confidence Jul: 129.1 (est 123.8; prev 127.3)

–
Present Situation: 160.3 (prev 157.7)

–
Expectations: 108.4 (prev 107.0)

US
CB 1-Year Consumer Inflation Expectations Jul: 6.6% (prev 6.7%)

71
Counterparties Take $927.419 Bln At Fed’s Fixed-Rate Reverse Repo (prev $891.203 Bln, 70 Bidders)

 

Corn

• Corn
  started higher on a lower than expected decline in US crop ratings but fell around 10 am CT after fund buying eroded and outside commodity markets softened.  Corn ended 0.50-3.25 cents lower.   
  
• Funds
  sold an estimated net 1,000 corn contracts. 
• Private
  group Soybean and Corn Advisory lowered their estimate for the Brazil corn crop to 86 million tons from 88MMT, and increased Argentina by 1MMT to 48 million.
  
• Per
  Fastmarkets, domestic price of Brazilian corn is on the rise in part to a pickup in exports mid-July, with Cepea reporting over 100 real per bag – highest since May.  Fastmarkets calculates a 3.2 million ton Argentina corn export lineup, which is large. 
  
• AgRural
  reported the Brazil center-south second corn harvest progress at 39% complete, well down from 53% year earlier.
  
• Anec
  sees Brazil’s corn exports at 3.2 million tons, slightly below their previous forecast. 
  
• China
  will auction off 202,264 tons of imported US corn and 49,695 tons of imported Ukrainian corn on July 30. 
  
• China
  pork prices averaged 20.01 yuan (about 3.1 U.S. dollars) per kg in June, down 16.6 percent month on month. The price index dropped 54.1 percent compared with the same period last year.  (Bloomberg)
• The
  European Union granted imports licenses for 285,000 tons of corn imports, bringing cumulative 2020-21 imports to 752,000, 8 percent below same period year ago. 
  
• A
  Bloomberg poll looks for weekly US ethanol production to be up 3,000 barrels (1008-1054 range) from the previous week and stocks up 130,000 barrels to 22.648 million.
  

 

Export
developments.

• Qatar
  seeks about 100,000 tons of barley on August 18 for Sep-Nov delivery. 
• Jordan
  seeks 120,000 tons of feed barley on July 28 for Nov/Dec shipment. 

 

 

Updated
07/26/21

September
corn is seen is a $5.00-$6.25 range

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

 

Soybeans

• Soybean
  complex started higher on a lower than expected decline in US crop ratings and support from outside markets.  Soybean meal rallied on talk of US crush downtime and reversal in product spreads.  Soybean meal ended $5.20 to $6.50 higher and soybean oil 17 to
  134 points lower (bull spreading).  The front four month soybean contracts ended higher.  That market also saw bull spreading.  August soy was up 5.50 cents and November up 1.75 cents.  See attached spreads changes (includes modified close). 
  
• Gulf
  soybean meal basis was up $6-$7/short ton to $22 to $33 over the August.  We heard many crushers out west were taking downtime. 
  
• Funds
  bought an estimated net 4,000 soybeans, bought 2,000 soybean meal and sold 3,000 soybean oil. 
  
• November
  Canadian canola was down 6.50 at $890/ton. 
• Indonesia’s
  biodiesel production was 4.56 million kiloliters in January to June (APROBI).  Indonesia Domestic biodiesel consumption were 4.17 million kiloliters and exports were  21,809 kiloliters.
• SGS
  reported Malaysia July 1-25 palm oil exports down 1.5% to 1,150,452 tons (in line with other estimates). 
  
• Argentina
  ship workers are thinking of striking on Friday. 
• Argentine
  producers sold 25.8 million tons of soybeans through July 21, up 747,600 tons from the previous week, below 27.9 million tons at this time year ago.  BS Grains Exchange is at 43.5 million tons, below 49 million produced in 2019-20.
• Anec
  sees Brazil’s soybean exports at 8.5 million tons, below their previous forecast of 9.5 million. 
  
• The
  European Union reported soybean import licenses since July 1 at 817,000 tons, below 1.030 million tons a year ago. European Union soybean meal import licenses are running at 708,000 tons so far for 2020-21, below 1.3 million tons a year ago. EU palm oil import
  licenses are running at 263,000 tons for 2020-21, below 466,000 tons a year ago, or down 44 percent.

 

December
oil share

Source:
Reuters and FI

 

 

Export
Developments

• The
  USDA seeks 2,880 tons of packaged oil for use under the PL480 program on August 3 for Sep 1-30 shipment. 
  

 

Updated
7/26/21

August
soybeans are seen in a $13.50-$15.00 range; November $11.75-$15.00

August
soybean meal – $330-$400; December $320-$425

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

 

Wheat

• Wheat
  traded mostly higher on renewed global import demand and a drop in the US spring wheat crop ratings for the US, but Chicago turned lower in late trading to close off 2.50-4.50 cents, fourth consecutive session lower.  KC and MN ended mostly higher.
  Egypt
  bought 180,000 tons of Ukrainian and Romanian wheat. 
• Funds
  sold an estimated net 1,000 SRW wheat contracts. 
• The
  US spring wheat tour started today.  #wheattour21   Early estimates vary.  North of Fargo yields look lower than average.  Spring-wheat yield averaged 41 bu/acre after four stops along a route in south central N.D, according to Bloomberg.   We may adjust lower
  our spring and durum yield for the purpose of the August USDA Crop
  Production
  survey based results of this week’s spring wheat crop tour. 
• SovEcon
  lowered its forecast for Russia’s wheat exports by 1.3 million tons to 37.1 million tons in the current 2021-22 marketing season.
• North
  and western Europe is expected to see cooler than normal temperatures over the next two weeks. 
  
• December
  Paris wheat was up 0.25 at 214.75 euros. 
• The
  European Union granted export licenses for 30,000 tons of soft wheat exports, bringing cumulative 2020-21 soft wheat export commitments to 625,000, well down from 1.245 million tons committed at this time last year, a 50 percent decrease.  Imports are down
  13% from year ago at 93,000 tons.

 

 

Export
Developments. 

• Egypt
  bought 180,000 tons of wheat for September 20-30 shipment. It included 120,000 tons of Ukrainian wheat and 60,000 tons of Romanian wheat.

60,000
tons of Ukrainian wheat at $244.50 plus $34.50 freight, equating to $279.00.

60,000
tons of Ukrainian wheat at $244.80 plus $34.50 freight, equating to $279.30

60,000
tons of Romanian wheat at $246.86 plus $33.05 freight, equating to $279.91

• South
  Korea’s FLC bought 65,000 tons of Black Sea feed wheat at $293.74/ton for Sep 20 through Oct 20 shipment. 
  
• Jordan
  bought 60,000 tons of wheat at $285/ton c&f for first half January 2020 shipment.  
  
• Pakistan
  lowest offer for 110,000 tons of wheat at $304/ton c&f.  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.
  
• Turkey’s
  TMO seeks up to around 900,000 tons of 11.5-12.5% milling wheat (395k) and feed barley (515k) for late September 16-30 shipment.  The barley is sought on August 3 and wheat on August 4. Turkey is one of Russia’s best customer. 
  
• Results
  awaited: Ethiopia seeks 400,000 tons of wheat on July 19. 

 

Rice/Other

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

 

Updated
7/26/21

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 $8.10-$9.25