FI Evening Grain Comments 08/02/22

PDF Attached

 

Selected
commodity price index from Jan 1

 

 

The
US weather outlook this morning was mostly unchanged, but the midday turned hotter for the 11-15 day bias Midwest. The midday GFS model increased rainfall for the southwestern Great Plains Thursday into Saturday. The second week of the forecast reduced US
rain for the southwestern Plains, southeastern states and parts of the Delta. US representative visits to Taiwan kept traders nervous as China may back off on buying US goods. Equities were sharply lower by close and USD up nearly 85 points. Grains, soybeans
and soybean oil were lower in part to USDA reporting better than expected crop conditions and resumption of Ukraine grain shipments. Losses in wheat were partially offset by good global demand. We heard China bought a cargo of soybeans on Friday and another
on Monday from the US. Soybean meal was strong on good demand and product spreading. Soybeans closed well off session lows. We expect US crops to see a good amount of stress this week with hot temperatures forecast for the majority of the US.

 

A
Bloomberg poll looks for weekly US ethanol production to be down 1,000 barrels to 1021 thousand (1009-1045 range) from the previous week and stocks down 65,000 barrels to 23.263 million.

Weather

 

 

World
Weather Inc.

WEATHER
TO WATCH AROUND THE WORLD

• Today’s
  weather around the world has not changed greatly from that of Monday and most areas that have been dealing with weather adversity will continue to do so
  
• No
  tropical cyclones or potential for tropical cyclones are present in the Atlantic Ocean Basin; including the Gulf of Mexico or the Caribbean Sea for the next five days
• Tropical
  Storm Frank and Tropical Depression Georgette remain over open water in the eastern Pacific Ocean posing no threat to land
• No
  tropical cyclones were present in the western Pacific or Indian Oceans today
• Eastern
  Ukraine and neighboring areas of Russia will receive rain over the next several days bolstering topsoil moisture for improved summer crop development
• Net
  drying is expected in Russia’s New Lands where temperatures may also be a little warmer biased, but crop conditions should remain favorably rated
  
• A
  boost in rainfall is still needed in eastern parts of Russia’s Southern Region, western Kazakhstan and the lower Volga River Basin, although the situation is not critical
• Europe
  weather will continue drier than usual through the next ten days, despite a weak cool front and some showers expected Thursday into Friday from France to Poland
• Some
  brief showers will also occur in southeastern Europe’s dry region next week, but the precipitation will be light and sporadic
• A
  general boost in rainfall is needed in both western and southeastern Europe, but the precipitation noted above will fail to bring a serious change to any location and crop moisture stress will continue
• Europe
  temperatures will be quite warm relative to normal over the coming week in central and southern crop areas with highs in the 90s and a few extremes over 100 Fahrenheit expected
  
• Temperatures
  next week will be warmer than usual in western Europe and in particular from Spain through France to Germany and the U.K.  while more seasonably warm to the east
• The
  bottom line for Europe remains stressful for most unirrigated crops from France and the U.K. into Germany, as well as the Iberian Peninsula and the Balkan Countries. Dryness has been most persistent and threatening to production from Hungary into the lower
  Danube River Basin and in parts of France and relief in the next couple of weeks is unlikely to be significant enough to make a difference to production potentials.
  
• U.S.
  Pacific Northwest cooling is expected over the next few days ending a prolonged period of excessive heat and dryness, but the break will not last long
• Warmer
  than usual temperatures will be back during the weekend and especially next week with more temperatures in the 90s to over 100 Fahrenheit possible
• Some
  cooling already occurred Monday with highs in the 90s to near 100 which was down from 100 to 113 during the weekend
• U.S.
  Plains and western Corn Belt will be hot periodically into the end of this week causing greater crop and livestock stress in areas that have been quite dry recently
• Temperatures
  in the 90s to 106 degrees Fahrenheit occurred from Montana into South Dakota and western Nebraska Monday
• Very
  warm to hot weather occurred in the central and southern Plains as well Monday with highs in the 90s to 104
• Extreme
  highs today will vary from 96 to 108 from Texas to South Dakota and in the 90s to 102 from southwestern Minnesota to Arkansas.
  
• Most
  of the heat will become confined briefly to the southern Plains and southwestern Corn Belt Wednesday before returning to areas from the Dakotas and eastern Montana to Texas Thursday and Friday
  
• The
  heat will then concentrate on the southern Plains and southwestern Corn Belt this weekend into early next week
  
• U.S.
  eastern Midwest, Delta and southeastern states will experience a more seasonable range of temperatures and experience periodic showers and thunderstorms during the coming week to ten days resulting in a favorable environment for crop development
• U.S.
  crop moisture stress remains serious in the southern Plains and is worsening in the northwestern Corn and Soybean Belt, the northern Plains and in a few areas of southern Canada’s Prairies
• Not
  much relief is expected for a while even though some showers and thunderstorms may pop up during the weekend and next week
• Favorable
  U.S. crop weather continues near and east of the Mississippi River in the Midwest and throughout areas from the lower Delta into the southeastern states
• Recent
  rain in the northern Delta has brought relief from recent drying
• Texas
  corn, cotton, sorghum and other crops outside of the Panhandle will remain quite dry through the next ten days to two weeks with temperatures seasonably warm to occasionally hot, but not as hot as earlier this summer
• Northeastern
  Mexico and Texas drought will not end without the help of a tropical cyclone, and none are anticipated for a while
• Northeastern
  Mexico has been quite dry this year and will see lower production of many crops
• Canada’s
  southern Prairies will continue drier than usual along with the northern U.S. Plains through the next ten days to two weeks
• Crop
  moisture stress is rising and will continue to rise with lower production for late season crops possible without a weather change soon
• Southeastern
  Canada (Quebec and Ontario) crop conditions are rated favorably with little change likely for a while
• Argentina’s
  drought stricken western wheat and barley areas will have a new chance for rain late this weekend and into early next week
• Early
  indications suggest 0.10 to 0.60 inch of moisture will result with locally more, but confidence is low for now
• Southern
  Brazil weather will continue favorably moist for winter crops
• Brazil’s
  Safrinha cotton harvest is advancing well due to dry and warm weather
• Brazil’s
  coffee, citrus and sugarcane areas continue dry, but the harvest season has been good because of limited precipitation
• There
  is no threat of frost or freezes in the next ten days
• Eastern
  China’s weather in the next ten days will be drier than usual in the interior southeast and favorably to excessively wet from the Yellow River Basin and North China Plain into northeastern China
• Xinjiang,
  China will see a good mix of weather over the next two weeks maintaining favorable crop development and normal yield potentials
  
• 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
  central areas may become too wet, but the precipitation will occur with sufficient breaks in this coming week to prevent serious flooding from occurring
• Worry
  over Uttar Pradesh, Bihar and Jharkhand will continue even though timely rain is expected
• These
  three states and immediate neighboring areas received well below normal precipitation earlier this summer and have moisture deficits still lingering
• Greater
  rain is needed in these areas but may be slow in coming.
• Nationwide
  rainfall is still expected to be above normal through mid-August and additional relief should occur to the dry areas of Uttar Pradesh and Bihar, but the amounts will need to be closely monitored. Cotton, groundnut and soybean areas of northwestern India should
  experience mostly good weather for crop improvements after flooding rain earlier this month
• Sumatra,
  Indonesia rainfall continues a little too erratic and greater moisture is still needed in some areas, despite a little rain earlier this week
• Greater
  rain is expected to slowly evolve over the next two weeks
• 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 rain is expected over the next couple of weeks
• East-central
  Africa rainfall is increasing and will be greatest in central and western Ethiopia, but Uganda and Kenya will get some much needed improved rainfall
• 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 and Ghana
  
• Seasonal
  rains are shifting northward leading to some drying in southern areas throughout west-central Africa
• Cotton
  areas are expecting frequent 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 +8.36 and it will move erratically higher over the next week
• 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

Tuesday,
Aug. 2:

• New
  Zealand global dairy trade auction
• EU
  weekly grain, oilseed import and export data
• Australia
  commodity index
• US
  Purdue Agriculture Sentiment, 9:30am
• EARNINGS:
  FMC, Green Plains, Andersons

Wednesday,
Aug. 3:

• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• Malaysia’s
  July 1-20 palm oil export data
• New
  Zealand Commodity Price

Thursday,
Aug. 4:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• EARNINGS:
  Corteva

Friday,
Aug. 5:

• FAO
  World Food Price Index
• 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
• Malaysia’s
  Aug. 1-5 palm oil export data

Source:
Bloomberg and FI

 

Several
trade groups are updating US yield estimates.

-STONEX
SAYS ESTIMATES U.S. 2022 CORN PRODUCTION AT 14.417 BILLION BUSHELS, YIELD OF 176.0 BU/ACRE

-STONEX
SAYS ESTIMATES U.S. 2022 SOYBEAN PRODUCTION AT 4.490 BILLION BUSHELS, YIELD OF 51.3 BU/ACRE (Reuters)

 

Soybean
and Corn Advisory

2022
U.S. Corn Yield Lowered 1.0 bu/ac to 174.0 bu/ac

2022
U.S. Soybean Yield Lowered 0.5 bu/ac to 50.5 bu/ac

 

Barchart
is at 51.4 & 177.8

FI
is at 49.9 & 177.6

 

Macros

105
Counterparties Take $2.156 Tln At Fed Reverse Repo Op (prev $2.162 Tln, 103 Bids)

Canadian
S&P Global Manufacturing PMI Jul: 52.5 (prev 54.6)

Canadian
PMI At 25-Month Low In July

US
Briefing 2/8/22: Pelosi Poised To Visit Taiwan As China Threatens Military Action, Eurozone Yields Fall As Taiwan Jitters Boost Safe-Haven Demand

Oil
Slips As Global Demand Concerns Weigh, OPEC+ Meeting Eyed

US
JOLTs Job Openings Jun: 10.698M (prev R 11.303M)

 

White
House’s Kirby: US Monitoring Pelosi’s Travel, Taken Measures To Ensure Safety

–         
Anticipated Chinese Announcements About Military Drills

–         
China Has Positioned Itself To Take Further Steps

–         
Expect China To React Beyond Pelosi’s Trip, Including By Scheduling Live Fire Exercises

–       
  Other Steps By China Could Include Economic Coercion

–         
US Will Continue To Operate In Seas And Skies Of Western Pacific

 

Corn

·        
Corn futures traded lower on better than expected US corn conditions and uncertainty over US/China relations. Global export developments have been very quiet, and traders are waiting to see if Ukraine will boost Black Sea corn
shipments. The US WCB will continue to dry out and temperatures are hot. Several WCB and Great Plain states have issued temperature warnings. Many areas will see triple digits by the end of Wednesday. US weather may limit further downside risk for the remainder
of the week.

·        
Equities were sharply lower by close and USD up nearly 85 points (3:00 pm CT)

·        
September corn was down 25 cents over the last two days.

·        
Funds today sold an estimated net 8,000 corn contracts.

·        
Ukraine grain shipments are expected to increase this week out of the Black Sea but some wonder if they will last as the grain moving was already at the ports. Getting grain from the interior to ports might be a challenge.

·        
A Ukraine shipment of corn headed to Lebanon is expected to land later this week.

·        
AgRural reported Brazil’s Center-South corn harvest 73 percent as of Friday, up from 62 percent week earlier and 49 percent year ago.

·        
Several African countries are scrambling to increase grain production after the Black Sea invasion. Zimbabwe is looking to double corn production in 2022-23 from 1.56 million tons year ago.

·        
A Bloomberg poll looks for weekly US ethanol production to be down 1,000 barrels to 1021 thousand (1009-1045 range) from the previous week and stocks down 65,000 barrels to 23.263 million.

 

Export
developments.

·        
Taiwan’s MFIG seeks up to 65,000 tons of corn on Aug 3 for Oct 1-20 shipment if from the Gulf/SA, or later if from PNW.

 

BA
Grains Exchange brief on Argentina fertilizer. 

BA
Grains Exchange on Argentina fertilizer suggests policy changes are needed to sustain a large corn planted area for 2022.

file:///C:/Users/treilly/Downloads/situacionmercadofertilizantes-bolsadecereales.pdf

 

 

Updated
7/28/22

September
corn is seen in a $5.25 and $6.50 range

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

 

Soybeans

·        
US soybeans were mostly lower on better than expected US crop conditions, technical selling, lower soybean oil, and US/China tensions. Palm oil fell more than 5 percent on Tuesday. Soybean meal futures were higher, mainly on product
spreading. The USD was sharply higher and US equities sharply lower by the time they closed. Don’t expect a large correction in soybean oil/meal spreads as other North American vegetable oil suppliers are getting tighter. Canada has been consistently crushing
less canola resulting in tight canola supplies, lessoning US imports of the product.

·        
We heard China bought a cargo of soybeans on Friday and another on Monday from the US.

·        
The US weather forecast, which improved from that of Friday, was largely unchanged this morning, but the midday was mixed with less rain for the second week of the forecast which could be countered by hotter temperatures.

·        
September soybeans were down 71.50 cents over the last two days, September meal down $8.20 and September soybean oil off 417 points.

·        
Funds today sold an estimated net 6,000 soybeans, bought 3,000 meal and sold 5,000 soybean meal contracts. 

·        
There were no CBOT deliveries posted Monday night.

·        
EU soybean imports as of July 31 were 1.27 million tons, nearly unchanged from a year earlier. Rapeseed imports are up sharply from the previous year, at 491,443 tons versus 286,826 prior year. Soybean meal imports were 1.28 million
tons, up from 1.14 million year ago. EU sunflower oil imports were 126,033 tons versus 136,733 tons year ago, despite the Ukraine situation.  Much of that likely came by rail if Ukraine origin.

·        
Cargo surveyor SGS reported July Malaysian palm exports at 1,306,393 tons, 75,396 tons above a month earlier or up 6.1%, and 142,090 tons below year ago or down 9.8%. Cargo surveyor AmSpec reported Malaysian July palm exports
at 1,227,118 tons, compared to 1,179,545 tons a month earlier.

·        
StoneX sees the 2022-23 Brazil soybean crop at 152.57 million tons and corn at 125.53 million.

 

US
soybean complex S&D

We
lowered US soybean product crush for 2021-22 by a small amount but remain above USDA based on strong crush margins. Our new crop US soybean meal ending stocks was tightened a touch. For the Sep-Aug soybean crush, we are using 2.206 billion, one million above
USDA. Out 2021-22 US soybean carryout remains higher than USDA at 247 million bushels (USDA @ 215). We see USDA lowing US soybean exports in its August S&D update. For 2022-23, we project the US carryout at a very tight 175 million bushels based on expectations
for US supply to fall short of USDA’s supply projection by more than 100 million bushels. We cut new-crop exports to 2.1 billion, 35 million below USDA. For soybean oil, recall last week we lowered SBO for biofuel use by 200 million pounds, same amount below
USDA’s current estimate.

 

Export
Developments

·        
China looks to sell a half a million tons of soybeans out of reserves on August 5.

 

Trade
News Service

 

Updated
7/28/22

Soybeans
– September $13.00-$15.00

Soybeans
– November is seen in a $12.25-$16.00 range

Soybean
meal – September $400-$500

Soybean
oil – September wide range of 56.00-68.00.

 

Wheat

·        
US wheat futures were lower from a sharply higher USD (+84 by 3 pm CT) and resumption of Ukraine grain shipments, but losses were limited from an increase in global demand. Algeria picked up 660,000 tons of mostly French origin
and included Baltic wheat, which caused a reversal in Paris milling wheat futures. They paid $384, down from $445 per ton for their last major import tender in late June.

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

·        
The GFS model increased rainfall for the southwestern Great Plains Thursday into Saturday. The second week of the forecast reduced rain for the southwestern Plains, southeastern states and parts of the Delta.

·        
Paris September wheat was up 2.75 euros at 339 euros. December milling wheat settled up 0.3% at 326.50 euros ($332.83) a ton. That contract was near a one-week low earlier.

·        
Turkey expects the first Ukraine grain shipment to anchor in Istanbul on Tuesday night before inspection Wednesday.

·        
Russia will likely have the upper hand of supplying Black Sea grain over the medium term. With a large 2022 grain production on hand, Russia has plenty of supplies to potentially outbid Ukraine grain. But with western sanctions
in place, we see many countries sourcing grain, if they can, from Ukraine. Trade flows are going to be difficult to predict for 2022-23.

·        
Some vessels carrying grain on the Rhine River are running below 50 percent capacity due to low water levels.

·        
Wheat yields in German have been reported below average.

·        
EU soft wheat exports as of July 31 were 1.77 million tons, up from 1.57 MMT year earlier. Barley exports were 585,013 tons versus 1.47 million tons year earlier.

 

 

Export
Developments.

·        
Algeria bought about 660,000 tons of optional origin wheat, at an average $384 per ton, for Sep/Oct shipment.  We think most of it was French origin. They paid $445 per ton for their last major import tender (740,000 tons) in
late June.

·        
Japan seeks 122,103 tons of milling wheat later this week for October loading.

·        
Tunisia seeks 100,000 tons of soft wheat and 50,000 tons of barley on August 3 for nearby and October shipment.

·        
South Korea millers seek 100,000 tons of wheat from the US and Australia, 50k each, on Wed. for October (US) and/or LH December (Ausi) shipment.

·        
The Philippines seek 150,000 tons of milling wheat and 150,000 tons of feed barley on Thursday for OND shipment.

·        
Jordan bought 60,000 tons of wheat at an estimated $404/ton c&f for FH January 2023 shipment. 

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

 

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