PDF Attached

 

FOMC
Hikes By 75Bps; Target Range Stands At 2.25% – 2.50%    

FOMC
Interest Rate On Reserves Balances Raised To 2.40% From 1.65%

Fed
Raises Main Rate In Unanimous Vote, Ongoing Hikes Likely To Be Appropriate

US
Interest Rate Futures See Fed Funds Rate 3.4% In December After 75Bps Hike

–         
See 107Bps Of Tightening For Rest Of 2022

 

The
US morning and midday weather outlook appeared to be mostly unchanged. Ridging is still a strong possibility for the Midwest next week. The Midwest will see rain favoring the southern areas through Saturday and north central areas today. The Great Plains will
see rain across NE and northern KS through today and far western GP Thursday through Saturday.

US
equities rallied post FED rate announcement and short speech thereafter. US corn traded mixed, ending higher. Wheat sold off on technical selling while the soybean complex rallied on US weather concerns and ideas US meal export demand could increase due to
lack of global meal shortages.

 

Weather

6 to 10 Day Outlook - Temperature Probability

 

6 to 10 Day Outlook - Precipitation Probability

 

 

World
Weather Inc.

WEATHER
TO WATCH AROUND THE WORLD

  • Northwestern
    U.S. Corn and Soybean Belt already trending too dry
    • The
      latest soil assessment shows an expansion of dryness from Nebraska and South Dakota into southern Minnesota and western Iowa
      • The
        poorest soil conditions are in northeastern Nebraska, northwestern Iowa, southeastern South Dakota and southern Minnesota
  • Soil
    conditions have improved from this week’s rain from eastern Kansas into southwestern Illinois and
  • Rain
    is expected to continue into the weekend from southern Kansas, Oklahoma and the northern Texas Panhandle into the U.S. Delta and Kentucky with a few areas in the Ohio River Valley to be included
    • Net
      drying is advertised in other areas in the Midwest, but temperatures will be mild during much of this period of time keeping the drying rates slow. Crop conditions should remain favorable outside of the northwestern Corn and Soybean Belt
  • Hotter
    conditions will reach the Great Plains late this weekend before intensifying and advancing from west to east across the Midwest during the week next week
    • The
      heat will not be preceded by much significant rain suggesting the northwestern U.S. Corn and Soybean Belt will be facing some very stressful conditions next week unless greater rain evolves than advertised and that is not very likely
  • Warming
    across most of the U.S. Midwest along with restricted rainfall next week and into the following weekend will accelerate drying rates
    • Much
      of the Midwest will have favorable soil moisture initially to help limit the impact of hotter and drier weather, but temperatures in the 90s Fahrenheit will be sufficient to accelerate drying rates
      • Extreme
        highs over 100 will impact the Plains next week with the northern and central Plains and western Corn Belt in the midst of the hottest conditions during mid- to late week next week
    • Crop
      stress in the Midwest outside of the northwestern Corn and Soybean Belt will evolve in the week 2 period (August 3-9) period, but the most threatening period of potential stress would come in the August 10-17 period “IF” the drier and warmer weather pattern
      prevails
    • Northwestern
      Corn and Soybean areas will see stress immediately since soil conditions are already quite dry
  • The
    bulk of Texas will continue in a dry and warm to hot mode for much of the coming week to nearly ten days
    • There
      is potential that rain may evolve in Texas while the high pressure ridge attempts to move into the eastern Midwest during the August 5-10 period
      • Confidence
        in this eastward shift in the ridge is low and therefore so is the rain potential in Texas; however, in August rainfall potential should improve for the Texas coast, South Texas and neighboring northeastern Mexico
  • Excessive
    heat continues to improve the Pacific Northwest and this pattern will prevail through the weekend
    • Extreme
      highs reached 111 degrees at The Dalles, Oregon
      • Other
        highs in the Pacific Northwest were in the 90s to 106 Fahrenheit
      • Southern
        British Columbia reported extreme highs to 104
    • Some
      relief is expected after the weekend, although warmer than usual conditions may continue for a little while longer
    • Temperatures
      should become more seasonable during the second week of the outlook
  • Increased
    monsoonal rainfall is possible in the southwestern United States next week and into the following weekend – especially if the North America high pressure ridge briefly shifts farther to the east
  • World
    Weather, Inc. believes the U.S. high pressure ridge may briefly reach into the heart of the Midwest late next week and into the following weekend, but the odds are high that the ridge will retrograde to the west in the following week allowing some cooling
    in the eastern Midwest, but keeping the Plains and western Midwest quite warm and drier biased
  • 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
  • Argentina
    received some welcome rainfall Tuesday and early today in Buenos Aires and La Pampa
    • Moisture
      totals varied from 0.10 to 0.60 inch in central and southern Buenos Aires and La Pampa with local totals of 1.00 to 2.00 inches in western Buenos Aires
      • The
        greatest rain fell in east-central Buenos Aires where 2.00 to 4.39 inches resulted in several areas.
    • Wheat
      and barley emergence and establishment will improve as a result of the rain.
  • Argentina
    will see additional rain today and Thursday mostly in the south and east-central parts of the nation while the west-central and northwest stay a little too dry
  • 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
  • Southeastern
    Canada crop conditions are rated favorably with little change likely for a while
  • Canada’s
    southwestern and central Prairies will dry down over the next week to ten days and temperatures will slowly rise above normal.
    • Crop
      stress will rise once again as soil moisture is slowly depleted
      • The
        greatest stress will eventually evolve in central, west-central, southwestern and south-central Saskatchewan and southeastern Alberta, but conditions will remain favorable through the weekend
  • 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 five days, but rain is expected thereafter
    • The
      return of rain should benefit rice and other late season crops
      • The
        greatest rain is still a week away
    • 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
  • 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 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
  • Western
    Pacific Ocean tropical activity is expected to increase greatly over the next two weeks with multiple storms possibly impacting China, Taiwan, Japan and the Korean Peninsula
    • The
      stormiest conditions are expected in the second week of the forecast
  • There
    are no tropical cyclones in the Atlantic Ocean, Caribbean Sea or Gulf of Mexico and none are expected during the next ten days
    • Tropical
      Storm Frank remained well off the southwest coast of Mexico today
      • This
        system is expected to become better organized and evolve into a hurricane, but its movement should be away from western North America
  • East-central
    Africa rainfall this week will be greatest in central and western Ethiopia, but it will soon be increasing in Uganda and Kenya
    • Tanzania
      is normally dry at this time of year, and it should be that way for the next few of weeks
  • 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 +7.33 and it will continue to drift a little lower over the next few days, but should gradually level out
  • 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
Durable Goods Orders Jun P: 1.9% (est -0.4%; prev 0.8%)


Durable Goods Ex Transportation Jun P: 0.3% (est 0.2%; prev 0.7%; prevR 0.5%)


Cap Goods Orders Nondef Ex Air Jun P: 0.5% (est 0.2%; prev 0.6%; prevR 0.5%)


Cap Goods Ship Nondef Ex Air Jun P: 0.7% (est 0.2%; prev 0.8%; prevR 1.0%)

US
Wholesale Inventories (M/M) Jun P: 1.9% (est 1.5%; prev 1.8%; prevR 1.9%)

US
Pending Home Sales (M/M) Jun: -8.6% (est -1.0%; prev R 0.4%)


Pending Home Sales NSA (Y/Y): -19.8% (est -13.5%; prev R -12.3%)

 

US
DoE Crude Oil Inventories (W/W) 22-Jul: -4.523M (est -1.037M; prev -0.445M)


Distillate Inventories: -0.784M (est +0.500M; prev -1.295M) 


Cushing OK Crude: +0.751M (prev +1.143M) 


Gasoline Inventories: -3.304M (est -0.857M; prev +3.498M) 


Refinery Utilization: -1.5% (est +0.4%; prev -1.2%)

 

102
Counterparties Take $2.189 Tln At Fed Reverse Repo Op (prev $2.189 Tln, 98 Bids)

 

Corn

·        
CBOT corn started higher on follow through buying from dryness across Europe and drier weather for the US through first week of August. Prices eventually eroded from a reversal in wheat to the downside but rebounded into the close
with September settling 3.25 cents higher and December 2.25 cents higher. Bull spreading was a feature all day.

·        
Funds bought an estimated net 1,000 corn contracts.

·        
Look for US weather to remain the driver for price influence.

·        
South Africa’s CEC in their initial estimate of the 2022 corn crop was 14.713 million tons, down 10 percent from 16.315 million tons collected in 2021. White corn was seen at 7.470 million tons and 7.243 million tons for yellow
corn.  

·        
Bloomberg: Saudi Arabia is expected to increase its price for crude oil to a record differential for September.

 

US
weekly ethanol production

decreased 13,000 barrels from the previous week to 1.021 million and stocks decreased 225,000 barrels to 23.328 million. A Bloomberg poll looked for weekly US ethanol production to be down 2,000 barrels and stocks up 95,000 barrels to 23.648 million. Weekly
gasoline demand increased 724,000 barrels to 9.245 million.

 

 

 

US
DoE Crude Oil Inventories (W/W) 22-Jul: -4.523M (est -1.037M; prev -0.445M)


Distillate Inventories: -0.784M (est +0.500M; prev -1.295M) 


Cushing OK Crude: +0.751M (prev +1.143M) 


Gasoline Inventories: -3.304M (est -0.857M; prev +3.498M) 


Refinery Utilization: -1.5% (est +0.4%; prev -1.2%)

 

USDA
Attaché: Canada Grain and Feed Update

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Update_Ottawa_Canada_CA2022-0021.pdf

 

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 surged led by the soon expiring August contract. Soybean oil and meal were also higher. Nearby meal was very firm on concerns over tight global supplies. US soybean crush margins remain very strong.  August soybeans finished
46 cents higher and September up 24.75 cents. Soybean oil ended 76 to 124 points higher (bear spreading) and meal $7.60 to $12.50 higher.

·        
Funds bought an estimated net 10,000 soybean contracts, bought 2,000 soybean meal and bought 4,000 soybean oil.

·        
US soybean producer selling increased today after prices reached $15/bushel. Soybean basis decreased at selected processor and elevator locations, at least in Iowa.

·        
Several factors are supporting August soybean meal / December meal spreads. US meal demand is strong, and the summer US crush rates may be slightly lower than anticipated if uncovered end users are unable to secure soybeans. Argentina
soybean producer selling is slow. Lastly, Russia is cutting off natural gas to Europe which should force crush plants to back seat with winter energy rationing, reducing soybean meal and rapeseed meal supplies. This could EU end user imports of soybean meal
from SA and possibly the US. 

·        
US cash soybean meal basis was unchanged today at several locations.

·        
Argentina meal offers are scarce from lack of producer selling to crushers with inflation on the rise.

·        
Argentina rolled out a financial instrument to help improve the FX price discrepancy between the official and blue rate, so producers get a fairer selling price for commodities. But we are also hearing the new financial instrument
is a little complicated and may not have a large impact on producer to end use flow. Some say it might be better for producers to hold soybeans.

·        
Indonesia started road testing B40 palm oil. Palm oil exports have increased to around 100,000 to 140,000 tons per day since the export levy was lifted July 15. Yesterday China pledged to buy 1 million tons of Indonesia palm oil.
Indonesia has issued palm oil export permits for a combined 3.84 million tons as of July 25.

 

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
7/27/22

Soybeans
– September $12.65-$14.75

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

Soybean
meal – September $390-$490

Soybean
oil – September wide range of 52.80-66.00.

 

Wheat

·        
US and Paris wheat futures started higher (MN lower on spring wheat tour) then turned lower during the session on profit taking. Chicago and KC snaped a two day winning streak. Black Sea export uncertainty limited losses. Higher
US protein wheat was weaker against Chicago on favorable day 1 spring wheat crop tour results. September Chicago was down 13.50 cents, Sep KC off 15.25 and Sep MN down 17.75 cents. Paris wheat ended mixed.

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

·        
September Paris wheat was down 4.50 euros at 340 euros.  December closed 0.50 euro higher at 327 euros.

·        
Day two of the US spring wheat crop tour results should be out this this evening. Day 1 the tour reported very good yields for the southern and eastern areas of ND. The HRW yield was reported at 48.9 bushels per acre, highest
for day 1 since 2015. In July 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.

·        
India local wheat prices hit a record high of 23,547 rupees per ton, on strong domestic demand and a heat wave that cut production.

·        
Ukraine’s navy said they have started to prepare three Black Sea ports for grain export. Ukraine grain exports since July 1 are down 47 percent from year earlier to 1.23 million tons.

·        
Three out of the ABDC’s, so far, warned it may take some time to ship grain out of Ukraine.

·        
Turkey expects grain exports from Ukraine ports could restart within a week and reach 25 million tons by the end of the year.

·        
Russia mentioned the export agreement could “collapse” if “obstacles” to Russian ag exports are not removed. We think Russian Deputy Foreign Minister Andrei Rudenko may have been referring to Western sanctions. If that is the
case, then this is a real threat, IMO.

·        
Manitoba’s (Canada) weekly crop report reported most of the spring wheat crop in good/excellent condition. Canola crop conditions were variable.

 

 

Export
Developments.

·        
Egypt cancelled their import tender for 240,000 tons of Ukrainian wheat for Feb/Mar delivery because it was never loaded due to the invasion. The four cargoes were bought in late 2021 at $346 to $360 per ton. Prices were nearly
$500 by late April.

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

·        
Taiwan seeks 50,910 tons of US wheat on August 4 for shipment from the PNW between September 21 and October 5.

·        
Jordan seeks 120,000 tons of wheat on August 2.

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

 

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

 

 

Terry Reilly

Senior Commodity Analyst – Grain and Oilseeds

Futures International
One Lincoln Center
18 W 140 Butterfield Rd.

Oakbrook Terrace, Il. 60181

W: 312.604.1366

treilly@futures-int.com

ICE IM: 
treilly1

Skype: fi.treilly

 

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