FI Midday Grain Comments 07/22/22

PDF attached

 

There
has been a surge in opinions surrounding the Black Sea deal, leaving us with more questions than answers. US domestic supply and demand should not be overlooked in the background as US crop conditions vary and water levels for the south Miss River decline.
Meanwhile, the Rhine River is forcing shippers to cut back on loadings. Some global logistical problems may continue well into the OND period.

 

USD
is lower and WTI higher. Friday positioning and fund flows are influencing soybeans and corn. Wheat is trading lower in part to a large decline in Paris wheat, down more than 20 euros at the time this was written. Ukraine Black Sea shipping deal was said to
be complete. Five million tons of grain might be available for export with a deal struck, IMO. Rest will be logistical issues for grains to reach to export terminals and shipment flow will become questionable going forward.
War disrupts domestic deliveries of commodities. US temperatures will be hot in the Plains today and in the central and southern Plains Saturday, then cools off before returning to hot and dry mid next week.

 

 

 

Weather

 

Last
seven days

 

World
Weather Inc.

WEATHER
TO WATCH AROUND THE WORLD

• Not
  much change occurred overnight for world weather
• Europe
  heat and dryness will continue a concern for the next ten days
• The
  region of greatest concern will be from Slovakia into Greece where dryness is already significant in many areas
• Warmer
  than usual temperatures and restricted rainfall in these areas will keep crops stress and lower production will be inevitable in unirrigated corn, soybean, sorghum and sunseed production areas
• Daily
  high temperatures in the 90s Fahrenheit with some extremes over 100 are expected
• Western
  Europe will also continue drier biased, but temperatures will not be as hot as they were earlier this week, and a few showers may occur
• Net
  drying is expected to continue with France at the center of the most negatively impacted nations
• Rain
  will fall most often from Czech Republic into the Baltic States and Belarus including Poland where the best soil and crop conditions are likely
• U.S.
  weather is still advertised to be favorable in the coming ten days with rain for most areas; including some of the drier areas of the Plains and southwestern Corn Belt
• Rain
  advertised for northern and western Texas and Oklahoma does not occur significantly until late next week and into the following weekend
• Some
  of the advertised rain may be overdone and it will be totally dependent upon the cold surge from Canada being as great as advertised
  
• The
  cold may be overdone and there is nearly a week between now and then for the model to moderate its outlook – so use some caution
• U.S.
  second week outlook is expected to trend drier and hotter with the heat first bubbling up in the central and southern Plains and southwestern Corn Belt
• The
  relief expected in the central Plains, Oklahoma and northern Texas as well as the northern Delta will only last ten days – at the most and since some of these areas do not get rain or any cooling until late next week the period of relief may be restricted
  to less than a week
• West
  Texas cotton, corn and sorghum areas will get “some” showers late next week through the first couple of days in August, but the odds are not high that there will be enough rain to change the bottom line
• Northern
  U.S. Delta, central Missouri, eastern Kansas and neighboring areas will not likely get much rain or relief from recent hot and dry weather until late next week
• Showers
  and thunderstorms should evolve late next week and into the following weekend offering a short term bout of relief
• Much
  more rain will be needed, though, to turn around crops and follow up rainfall may not be very great
  
• U.S.
  northern Plains will get some showers in the next week to ten days, but much of it may be a little too light to change soil moisture especially in the northwest where the driest soil is present
  
• Excessive
  heat in the central U.S. is expected to abate for a little while, but the next few days will continue hot enough to stress crops, livestock and humans from eastern Montana and South Dakota to Texas
• Highest
  temperatures will be in the upper 90s to 110, although most readings will stay below 107 and the hottest readings will stay mostly in the southern Plains.
  
• All
  of the heat should retreat into Texas next week and into the following week while near to below average temperatures impact the northern Plains and Midwest
• Montana
  and South Dakota will be hot today and milder after that
• Central
  U.S. Plains and southwestern Corn Belt will be hottest through Saturday and possibly Sunday before cooling down to more seasonable levels
• Drought
  in the western United States will be intensified during the latter part of July and early August because of a ridge of high pressure expected in the region and resulting hot and dry conditions
• U.S.
  southeastern states will continue to experience a favorable mix of weather for a little while longer, but may dry down briefly this weekend into next week before resuming in the second week of the outlook
• Drought
  in northeastern Mexico and the southern U.S. Plains is unlikely to change in the next two weeks
  
• Most
  likely the only way drought will break in these areas will be from a tropical cyclone and none is expected for a while – at least not in that region.
  
• Many
  corn, sorghum, citrus, sugarcane and dry bean crops are being negatively impacted in Mexico along with various other fruit and vegetable crops
• Mexico
  rain will be most abundant in the west and southern parts of the nation
• India’s
  monsoon is expected to continue performing favorably with widespread rain across most of the nation during the next couple of weeks
• Central
  and some northern parts of the nation may be a little too wet at times resulting in some flooding
• Sufficient
  breaks in the rain are expected to prevent a major flood from occurring
• Russia’s
  Southern Region will receive periods of rain and drizzle during the next several days while temperatures are cooler than usual
• The
  environment will be good for improving summer crops that have been recently stressed and strained by dryness
  
• Other
  areas in Russia will experience a good mix of weather during the next ten days
• Portions
  of western and southern Ukraine are expected to miss out on rainfall during the next ten days to two weeks and that may raise the potential for crop moisture stress as time moves along
• Argentina
  rain potentials remain good for next week as two waves of moisture come into wheat production areas
  
• The
  rain will bolster topsoil moisture for better germination, emergence and establishment, although follow up rain will be imperative
  
• Canada’s
  Prairies weather will trend a little drier the remainder of this week and into next week, although some showers will occur periodically
• Temperatures
  will be near to normal with restricted rainfall
• Crop
  development should advance relatively well in most areas, but timely rain will soon be needed once again
  
• The
  southwestern Prairies are expecting to be drier than normal for at least the next ten days
• Southeastern
  Canada crop conditions are rated favorably with little change likely for a while
• South
  America temperatures over the next week will be near to above average with some cooling likely in Argentina and southern Brazil during the middle to latter part of next week
• Brazil
  rainfall will be minimal except in Atlantic coastal areas and in far southern Brazil
• Rainfall
  will be light and some areas will experience net drying
• Drying
  in other areas of Brazil will be great for Safrinha crop harvesting
• Most
  of China’s crop region east of Tibet and north of the Yangtze River Valley will get rain at one time or another during the next two weeks and all of it will be good for summer crop development
• The
  greatest rainfall may occur in east-central and northeastern parts of the nation
  
• Southeastern
  China is expected to continue drying out through the next ten days and perhaps longer
• Soil
  conditions will eventually become a little too dry raising concern for the region’s late season rice and eventually stressing some sugarcane and a few other crops
• Dryness
  is not a problem today, but a couple of weeks from now the situation will be different
  
• Temperatures
  will continue near to above normal
• 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
• There
  were no organized tropical cyclones in the world today, although a new disturbance is expected to evolve in the eastern Pacific in the coming week
  
• Sumatra,
  Indonesia rainfall remained restricted Thursday
• Below
  average precipitation has occurred in many areas from northern and central Sumatra into northwestern Borneo in recent weeks and greater rain is needed
• Locally
  heavy rain fell in central Sumatra briefly Tuesday, but only a few areas were impacted
• Some
  increase in rain is expected in coming days, but amounts may continue lighter than usual in many areas
  
• Precipitation
  will become more widespread next week
• 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
• Recent
  rain has improved soil moisture in parts of Thailand after a drier than usual bias earlier this season
• 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 rain is expected over the next couple of weeks and it should gradually be enough to ease dryness and crop stress, but production will be down
• East-central
  Africa rainfall 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
• Some
  areas in Kenya are expected to trend wetter in the next ten days
• 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 much greater rainfall in the next couple of weeks and there is some potential for flooding
• Flooding
  is also possible in Guinea, Sierra Leone and southern Mali over the next couple weeks
  
• Mali
  has been drier than usual over the past 30 days and rain would benefit cotton and many other crops – at least for a while
• 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
• Rain
  in the Greater Antilles will occur periodically, but no excessive amounts are likely
• Today’s
  Southern Oscillation Index was +9.13 and it will continue to move lower over the next several days
• New
  Zealand weather is expected to be well mixed over the next ten days
• Temperatures
  are expected to be a little cooler than usual
• Rainfall
  will be greater than usual in North Island in this coming week and near to below average in South Island

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Friday,
July 22:

• 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
• US
  cattle inventory; cold storage data for beef, pork and poultry, 3pm

Monday,
July 25:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• US
  June poultry slaughter, 3pm
• US
  crop conditions for spring and winter wheat, corn, soybeans and cotton; spring wheat harvest, 4pm
• Brazil’s
  Unica to release cane crushing and sugar output data (tentative)
• Malaysia’s
  July 1-25 palm oil export data

Tuesday,
July 26:

• EU
  weekly grain, oilseed import and export data
• Earnings:
  ADM

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

Canada
Retail Sales M/M May: 2.2% (est 1.6%, prevR 0.7%)

Retail
Sales Ex Auto M/M May: 1.9% (est 1.8%, prev 1.1%)

 

Corn

·        
CBOT corn
rallied earlier but lack of news led to fund selling and positioning ahead of the weekend, bias potential US and EU weather forecast changes. China’s weather, adverse, is abating.

·        
Technical buying was noted earlier after a three day selling spree by the investment funds and higher soybeans are supporting prices. US weather is a concern with temperatures and restricted rain seen next week, limiting losses.

·        
Ukraine’s deal to ship grain safely through the Black Sea should be bearish for corn, IMO, as bulk commodities take up storage space. But don’t expect significant quantities to be shipped over the medium term. Short term it might
be bearish US corn export demand. Long-term bullish US demand as it will be hard to move inventories from farms to ports.

 

 

Export
developments.

·        
South Korea’s KFA bought about 65,000 tons of corn from SA and/or SAf At $310.39/ton c&f for arrival around November 10.

·        
South Korea’s FLC bought about 65,000 tons of optional-origin feed corn at an estimated $317.22 a ton c&f  for arrival in South Korea around Nov. 15.

 

Soybeans

·        
The soybean complex is mixed with SBO/Meal spreading in focus in part to a recovery in US WTI crude oil and talk of good US biodiesel demand. Unwinding of grain/soybean spreads and US weather concerns are underpinning soybeans.

·        
Malaysia October palm was down 16 MYR to 3704 ton and cash down $10.00 to $945.

·        
China soybean futures were lower, meal 1.1% lower, soybean oil 1.1% and palm down 2.9%.

·        
Rotterdam vegetable oils were 10-30
euros lower earlier (now likely higher) and meal 3-60 euros lower, from this time yesterday morning.

·        
Offshore values were leading SBO up by about 66 points earlier this morning and meal $0.80 short ton lower.

 

Export
Developments

·        
SK’s NOFO bought 60,000 tons of soybean meal at $532.00 per ton C&F for arrival around November 25. Origin was unknown.

·        
There is talk of China seeking corn and soybeans.

·        
China looks to sell a half a million tons of soybeans out of reserves on
July 29.

 

Wheat

·        
US wheat futures are lower following weakness in Paris wheat and talk of Ukraine resuming Black Sea wheat shipments. Other new seems to be overlooked, including strong export demand and a USD lower promoting US export demand potential.

·        
Paris wheat was down 24.00 euros at 326.75 euros as of 11:00 am CT.

·        
China has been aggressive in buying French and Australian wheat over the past week. Recall they bought a large amount of wheat from the US per export sales report a week earlier, so look for 24-hour announcements, if any, over
the next 14 days.

 

Reuters:
Sep milling wheat Paris

Paris
September milling wheat. Reuters and FI

 

Export
Developments.

·        
Jordan seeks 120,000 tons of wheat on July 26 for November and/or December shipment.

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

Rice/Other

·        
None reported