FI Evening Grain Comments 08/04/2

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Soybeans
were higher on strength in meal and US weather concerns during August.  Wheat fell on technical selling.
 Lower WTI crude oil, down $2.59
at 2 pm CT, added to the negative sentiment in the grains and SBO.  Meal was higher on product spreading.  A couple more weeks and many parts of the Corn Belt corn crop could be made. 

 

 

 

Weather

NOAA: 

·        
65% chance of an above-normal 2021 Atlantic hurricane season, up from previous 60% chance.

·        
15 and 21 named storms this season versus previous estimate of 13 to 20 named storms.

 

 

 

 

WORLD
WEATHER INC.

MOST
IMPORTANT WEATHER OF THE DAY

• Torrential
  rain continued to fall across northern Madhya Pradesh and southeastern Rajasthan grain, oilseed, rice and minor cotton production areas Tuesday
• Five-day
  rain totals in the region have varied from 8.00 to 14.00 inches
• Damage
  to some crops and personal property has been occurring.
• Rain
  will linger in the same region through the weekend with additional rainfall of 3.00 to nearly 8.00 inches resulting bringing some of the total rainfall up over 20.00 inches for the week
• Grain
  quality concerns remain from France to Belarus where small grain and a few winter rapeseed crops have been negatively impacted by frequent rainfall this season
• Rain
  will continue frequently in these areas through the weekend
• Net
  drying is expected in many of these wetter areas next week
• Southeastern
  Europe’s dry and warm bias will continue over the next ten days
• The
  impact will be mostly on the Balkan countries where the ground is already dry and recent temperatures have been hot
• Unirrigated
  summer crops are stressed and need significant rain soon to protect production potentials
• China
  continues to recover from serious flooding, but another week may be needed for some of the flood water to recede from crop areas in east-central China
• China
  weather over the next ten days will be erratic with alternating periods of rain and sunshine in key grain, oilseed, rice and cotton areas
• Flooding
  rain is expected in Guangdong and some immediate neighboring areas due to Tropical Storm Lupit as it meanders through southeastern China
• 10.00
  to 20.00 inches of rain will fall in Guangdong and southeastern Guangxi with 6.00 to 12.00 inches likely in many other areas near and mostly south of the Yangtze River over the next ten days
• Some
  crop damage to rice and sugarcane will be possible
• Thailand
  rainfall is expected to continue lighter than usual in many areas during the next ten days
• Totally
  dry weather is not likely, but a part of the interior east and interior south will fail to receive more than 1.50 inches which is well below that of most years
• Vietnam
  rainfall is also expected to be lighter than usual while Laos and eastern Cambodia are plenty moist along with Myanmar
• Indonesia
  and Malaysia weather is expected to trend wetter and that will prove to be quite favorable after recent weeks of lighter than usual rain
• The
  weekend and next week will be wettest with some heavy rain possible in western Sumatra and moderate amounts in Malaysia
  
• Timely
  rainfall is still expected in Iowa, Minnesota, Wisconsin and northwestern Illinois in the coming week to prevent much expansion of dryness from the northwestern Corn Belt into these critically important crop areas
• Sufficient
  rain will fall to lift topsoil moisture for favorable crop development
• Other
  areas in the U.S. Midwest will see a good mix of rain and sunshine
• Net
  drying and crop moisture stress will continue in the Dakotas while expanding southward through Nebraska into Kansas and also from parts of Missouri into southern Illinois and southwestern Indiana
  
• U.S.
  Midwest temperatures will be mild over the next few days reducing evaporation rates with daily highs in the 70s and 80s Fahrenheit and lows in the 50s and 60s
• Some
  warming will occur again this weekend into next week
• The
  second half of August will likely trend drier cooler than usual once again
• Texas
  rainfall will be restricted in both West Texas and the Blacklands for a while, but after weekend rain fell in these areas the change will be good for crops
• Some
  warming is needed in West Texas and that should evolve for a little while with late week and weekend temperatures rising to the 90s and close to 100 degrees eventually
• Showers
  will be possible in parts of West Texas late in the coming weekend and early next week
  
• South
  Texas harvest weather will be mostly good, but some showers are expected today and Thursday that will disrupt some of the field progress
• Weather
  disturbances near the lower U.S. east coast today and again this weekend will induce some heavy rainfall from coastal areas of the Carolinas and Virginia back to northern Florida
• Most
  of this significant rain will occur near the coast
• Far
  western U.S. will continue dry for much of the coming ten days and temperatures will be warm biased
• Canada’s
  Prairies will receive some needed rain in the next week to ten days, but amounts will be light in many areas
  
• Rainfall
  will be lightest and most sporadic in the southern Prairies where drought is most serious, but any rain would be welcome
• Central,
  western and northern Alberta will be wettest along with a few areas in northwestern Saskatchewan where rainfall could range from 0.50 to 1.50 inches and locally more over the coming week
• Northern
  Saskatchewan and a small area in northern and eastern Manitoba may also get some favorable rainfall
  
• Temperatures
  will remain warmer than usual with some 90-degree Fahrenheit heat expected over the next few days
• Philippines
  rainfall increased greatly last week across western Luzon where flooding was widespread and threatening to rice and a few other crops
• Less
  rain fell in the region Tuesday
• Some
  damage to rice and other crops has occurred
• Lighter
  rainfall will continue for a few days, but a boost in precipitation may occur again this weekend into next week restoring some of the flood conditions near the west coast of Luzon
• Soil
  conditions in Philippines are now driest in western Mindanao and in some of the southern Visayan Islands
• CIS
  weather over the coming ten days will provide net drying conditions in portions of Russia’s Southern Region and Volga River Basin into the southern Ural Mountains Region and northwestern Kazakhstan
  
• Eastern
  Ukraine may also experience net drying
• Rain
  will fall in Ukraine, Belarus, the Baltic States, far western Russia and in most of the eastern Russia New Lands
• The
  moisture will be good for late season crops, but dryness in summer corn, sorghum and sunseed areas from southern Russia into Kazakhstan is a concern and greater rainfall needed, but not much more than sporadic showers will occur for at least ten days
• Brazil
  coffee areas are beginning to warm up after last week’s frost and freezes
• A
  lack of rain and warmer temperatures will likely stress crops while trying to recover from the freeze which should lead to some additional concern over 2022 production
  
• Most
  Brazil grain, citrus and sugarcane areas were also free of damaging cold Tuesday and early today
• The
  impact of cold weather last week in citrus areas was minimal, but it may have been a little greater in sugarcane areas, but not as great as that which occurred July 19-21
• Winter
  wheat production may have been negatively impacted by the freezes of July 19-21 and July 29-30.
  
• Brazil
  rainfall will be limited to coastal areas during the coming week
• The
  nation’s temperatures will be mild to warm in the east with no other threats of frost or freezes
• Warm
  temperatures are expected to evolve in the west and north
• Some
  rain will evolve in the far south during mid-week next week
• Argentina
  weather will be dry biased until the weekend when rain is expected in the interior south and east
• Soil
  conditions are still dry in the west where wheat and barley may not be as well established as they should be, although most of the crop is in better shape than either of the past two years
• Tropical
  Storm Lupit will move into southern China over the next few days producing heavy rain and flooding in Guangdong and some immediate neighboring areas
• A
  new tropical cyclone will evolve near the southern Ryukyu Islands of Japan today and Thursday before moving toward the upper east coast of Honshu, Japan this weekend
• The
  storm will produce heavy rain and flooding in northeastern Honshu and it will need to be closely monitored for some impact on rice and citrus
• Southeastern
  Canada corn, soybean and wheat production areas continue to experience a favorable mix of weather
• Net
  drying is expected in this first week of the outlook followed by three waves of rain in the following week
• Wheat
  areas will benefit most from this week’s drier bias
• 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
• This
  week’s rainfall will be lighter and less frequent than that of last week
• Ethiopia
  rainfall has been abundant in recent weeks along with that in Kenya, according to the U.S. Climate Prediction Center, but Uganda has been drier than usual
• The
  next two weeks will be wetter than usual in western Ethiopia and mostly near normal in Kenya and Uganda coffee and cocoa production areas
• West-central
  Africa rainfall has diminished seasonably for a while
• Rainfall
  during July was below average in southwestern Nigeria and Cameroon while closer to normal in other coffee, cocoa, sugarcane and coffee areas
• Rainfall
  was above normal last month in Senegal
• Rain
  will be needed in Ghana and Ivory Coast soon, but this is the normal dry season and rain will resume in September
• South
  Africa weather was mostly dry Tuesday
• Some
  periodic showers will occur in the far southwest of the nation – mostly near the coast during the coming week while other areas will be dry
• Southern
  Oscillation Index has reached +13.71 and it will slowly decline this week
• Mexico
  weather has been improving with increased rainfall in the south and west parts of the nation
• Drought
  conditions are waning and crops are performing better
• Dryness
  remains in eastern 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
• Central
  America rainfall will be near to above average during the next ten days
• New
  Zealand rainfall during the coming week will be near normal except in the western part of South Island where rainfall will be greater than usual
• temperatures
  will be seasonable

Source:
World Weather Inc. 

 

Bloomberg
Ag Calendar

Wednesday,
Aug. 4:

• EIA
  weekly U.S. ethanol inventories, production
• New
  Zealand Commodity Price
• France
  agriculture ministry updates 2021 crop estimates

Thursday,
Aug. 5:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• China’s
  CNGOIC to publish monthly soy and corn reports
• FAO
  World Food Price Index
• Port
  of Rouen data on French grain exports
• Malaysia
  Aug. 1-5 palm oil export data
• Risi
  pulp conference, Sao Paulo
• BayWa
  earnings

Friday,
Aug. 6:

• 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

Saturday,
Aug. 7

• China’s
  first batch of July trade data, incl. soybean, edible oil, rubber and meat imports

Source:
Bloomberg and FI

 

 

Macros

US
DoE Crude Oil Inventories (W/W) 30-Jul: 3627K (est -3000K; prev -4089K)

–
Distillate: 832K (est -500K; prev -3088K)

–
Cushing Crude: -543K (prev -1268K)

–
Gasoline: -5291K (est -1500K; prev -2253K)

–
Refinery Utilization: 0.20% (est 0.50%; prev -0.30%)

 

69
Counterparties Take $931.755 Bln At Fed’s Fixed-Rate Reverse Repo (prev $909.442 Bln, 72 Bidders)

US
ISM Services Index Jul: 64.1 (est 60.5; prev 60.1)

 

Corn

• US
  corn futures settled 1.75-5.25 cents lower on lower wheat, slow US export commitments, and private US yield estimates calling for north of 175.  Some have an upper range of 180 bushels per acre.  StoneX in their first survey of the season pegged the US corn
  yield/production at 176.9/14.945, and the yield compares to 179.5 by USDA.  We are at 176.0. 
  
• Lower
  WTI crude oil, down $2.59 at 2 pm CT, added to the negative sentiment. 
• The
  morning weather models were mostly unchanged for the US but the midday did call for drier conditions for the 11 to 15-day across the Midwest and Delta.  That would be good for the Delta as harvest progress could be in full swing by then. 
  
• A
  private shipping lineup calls for Brazil August corn exports to fall to around 3 million tons from 6.7 million tons a year earlier.  Recall July exports were halved from July 2020 from the slow harvest pace. 
  
• China
  authorities are looking into fertilizer prices as one of the components that drove up domestic corn prices. 
  

 

Export
developments.

• China
  plans to auction off 219,218 tons of US imported corn on August 6, and 49,760 tons of Ukraine imported corn. 
  

• Qatar
  seeks about 100,000 tons of barley on August 18 for Sep-Nov delivery. 

 

US
ethanol production
declined a less than expected 1,000 barrels per day to 1.013 million barrels.  Trade was looking for a 7,000-barrel decline.  Stocks fell 84,000 barrels to 22.649 million, near trade expectations.  Production is lowest since May 27.  September 2020 through
July 30 ethanol production is running 3.4% above the same period a year earlier.  2020-21 corn used for ethanol production is still expected to exceed USDA’s 2020-21 estimate of 5.050 billion bushels (4.852 used during 2019-20).  Last week we projected 5.077
billion for 2020-21 and may adjust this slightly down.  For 2021-22 USDA is at 5.200 billion.  We are 50 million below USDA’s estimate for new-crop. 

 

 

 

 

U
of I:  2021 Fertilizer Price Increases in Perspective, with Implications for 2022 Costs

Schnitkey,
G., N. Paulson, C. Zulauf and K. Swanson. “2021 Fertilizer Price Increases in Perspective, with Implications for 2022 Costs.” farmdoc daily (11):114,  Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, August 3,
2021.

https://farmdocdaily.illinois.edu/2021/08/2021-fertilizer-price-increases-in-perspective-with-implications-for-2022-costs.html?utm_source=rss&utm_medium=rss&utm_campaign=2021-fertilizer-price-increases-in-perspective-with-implications-for-2022-costs

 

Updated
8/3/21

September
corn is seen is a $5.25-$6.00 range.  (down 25 cents for both ends)

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

 

Soybeans

• US
  soybean futures were higher on technical buying and US weather concerns.  The 11 to 15-day midday weather outlook was drier for the Delta and Midwest.  Some think the selling yesterday was overdone.   Major support is seen at $13.00 for November soybeans and
  after today we are about 25.75 cents away from that after the contract settled up 6.00 cents at $13.2575/bu. 
  
• Truckers
  on strike since Friday in Argentina’s port of Bahia Blanca has slowed down arrivals of grains and soybeans.  Demand at this southern location has been key this season as low water levels have forced ships to reduce drafts, then stop to get topped off Bahia
  Blanca before sailing onward. 
• Argentina
  producer sales so far in 2020-21 are running at 26.3 million tons, down nearly 8 percent from 28.5 million at this time year ago. 
  
• China
  crush margins improved this week.  We are hearing they still need to secure September and October soybean supplies.  One source thinks they are only about 40 percent covered for October. 
  
• Soybean
  meal rallied after soybean oil turned lower from a reversal in the oil share.  Soybean oil was down 13 points basis September, in part to a $2.59 drop in WTI, despite Malaysian pam October futures climbing 148 points.  September soybean meal was up $4.00/short
  ton. 
• StoneX
  in their first survey of the season pegged the US soybean yield/production at 50.0/4.332.  USDA is at 50.8.  We are at 50.8. 
  
• China
  cash crush margins were last positive 90 cents on our analysis (63 previous) versus 50 cents late last week and 129 cents around a year ago. 
  

 

Export
Developments

• None
  reported

 

Updated
8/3/21

September
soybeans are seen in a $12.50-$14.50 range; November $11.75-$15.00

September
soybean meal – $335-$370; December $320-$425

September
soybean oil – 57.50-69.00; December 48-67 cent range

 

Wheat

• US
  wheat futures traded in a choppy, wide trading range.  All three markets ended lower, at least in the front four contracts.  September Chicago wheat was up 0.25 cent. 
  
• Parts
  of Russia’s Southern Region into Kazakhstan will continue to see net drying. 
  
• France
  lowered their estimate for the soft wheat crop from 37.10 million tons to 36.69 million tons, 26% above the previous season and 10% above a 5-year average. 
  
• Association
  of German farmers DBV cut its forecast of Germany’s 2021 winter wheat crop to 21 million tons from 22.82 million tons from last month.  Too much rain over the past few weeks lowered yields. 
  
• December
  Paris wheat settle down 2.25 at 227.75 euros per ton.

 

Export
Developments. 

• Jordan
  passed on wheat.
• Pakistan
  seeks 400,000 tons of wheat for Sep and Oct shipment.
• Turkey
  confirmed they bought 245,000 tons of wheat for LH September shipment.
• Algeria
  bought about 300,000 tons of milling wheat at $320 to $323/ton c&f for Aug and/or Sep shipment.
• Japan
  (SBS) seeks 80,000 tons of feed wheat and 100,000 tons of feed barley on August 18 for loading by November 30. Algeria seeks at least 50,000 tons of wheat for Aug/Sep shipment.
• The
  Taiwan Flour Millers’ Association seeks 48,000 tons of grade 1 northern spring, hard red winter and white milling wheat to be sourced from the United States, on Aug. 6 for shipment from the U.S. Pacific Northwest coast between Sept. 24 and Oct. 8.
• Japan
  seeks 119,435 tons of food wheat this week.

• Jordan
  is in for wheat and barley. The wheat import tender for 100,000 tons is on August 4 and 100,000 tons of barley on August 5. 
  

• Turkey’s
  TMO seeks up to around 395,000 tons of 11.5-12.5% milling wheat (395k) for late September 16-30 shipment.  The wheat is sought on August 4.
  

 

Rice/Other

• South
  Korea will release 80,000 tons of rice in August to help cool domestic prices. 
  
• South
  Korea’s Agro-Fisheries & Food Trade Corp. seeks 39,226 tons of rice from the United States for arrival in South Korea on Jan. 31 and March 31, 2022.

 

Updated 7/29/21

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 $8.50‐$10.00