FI Morning Grain Comments 07/01/21

PDF attached

 

Good
morning.

 

Higher
trade in CBOT soybeans and corn this morning on follow through buying post bullish USDA Acreage report.  Soybeans attempted to grind lower overnight but rebounded from a surge in corn prices and nearly 190 point soybean oil.  Wheat is higher.  US inflation
story is back on the table with WTI topping $75/barrel for first time in well over a year.  Some are warning the commodity markets could see an inflow in new money from equities.  The USD was 12 points lower and gold higher. 

 

The
US weather models yesterday suggested rain for the northern Great Plains during the back end of the 1-7 outlook, but it looks a touch drier this morning (drier 6-10 day drier).  The southwestern Plains will see additional rain slowing SRW wheat harvesting. 
Midwest looks good and rain frequency will less next week than that of this week. 

 

(room
for upside for longs?)

 

CME
margin changes:

RAISES
SOYBEAN FUTURES (S) MAINTENANCE MARGINS BY 11.1% TO $5,000 PER CONTRACT FROM $4,500 FOR JULY 2021

SAYS
INITIAL MARGIN RATES ARE 110% OF MAINTENANCE MARGIN RATES

SAYS
RATES WILL BE EFFECTIVE AFTER THE CLOSE OF BUSINESS ON JULY 1, 2021

Soybean
meal was also adjusted higher. 

https://www.cmegroup.com/notices/clearing/2021/06/Chadv21-232.html

 

Weather

 

 

1-7
DAY

 

 

WORLD
WEATHER INC.

WORLD
WEATHER HIGHLIGHTS FOR JULY 1, 2021

• Tropical
  Storm Elsa’s forecast path may need to be adjusted slightly to the west through the Caribbean Sea relative to the U.S. National Hurricane “Center forecast, but landfall near Cross City, Florida does make sense. 
  
• Today’s
  European model run is too wet for Canada’s Prairies, the northern Plains and Upper Midwest, although the GFS may be a little too dry.
• Ongoing
  dryness issues are expected in these areas throughout the two week forecast period, despite a few showers periodically.
• Abundant
  rain will continue to fall in Texas and Oklahoma during the next ten days keeping those areas wetter biased and making our July outlook too dry possibly.
  
• Dryness
  continues a concern in Kazakhstan and neighboring areas of Russia.
• A
  new ridge of high pressure is predicted to evolve in western Russia next week that will make rain in the western CIS very important over the next several days.
  
• Some
  areas could trend a little dry later this month if good rainfall does not occur ahead of the ridge.
  
• China,
  Australia and Europe weather are mostly unchanged Today.
• Frost
  and freezes occurred in Sul de Minas, Brazil coffee areas overnight. 
• Frost
  also occurred in northern Parana and southern Sao Paulo coffee areas and in southern Mato Grosso do Sul corn areas
• Europe’s
  dry region from eastern Adriatic Sea to Hungary and western Slovakia remains dry in today’s forecasts for the next ten days
• Northern
  India will be drier than usual for the next ten days
• Model
  divergence in the second week of July raises some debate over whether rain will evolve at that time or not
• The
  GFS brings rain to most of northern India, but the European model keeps those areas dry for at least ten days
• Thailand,
  Vietnam and Cambodia dryness are expected to be eased over the next two weeks

Source:
World Weather, Inc.

 

Bloomberg
Ag Calendar

Thursday,
July 1:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• World
  cotton outlook update from International Cotton Advisory Committee
• Costa
  Rica, Honduras monthly coffee exports
• U.S.
  corn for ethanol, DDGS production, 3pm
• USDA
  soybean crush, 3pm
• Port
  of Rouen data on French grain exports
• Australia
  Commodity Index
• AB
  Sugar trading update
• HOLIDAY:
  Canada, Hong Kong

Friday,
July 2:

• 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
• Source:
  Bloomberg and FI

Source:
Bloomberg and FI

 

 

 

 

USDA
Export Sales

Unimpressive
USDA export sales with exception of new-crop soybeans that came in as expected.  Meal, soybean oil, and wheat sales were near the bottom end of trade expectations.  Corn sales were very disappointing.  Lower prices for the week ending June 24 appeared to have
failed to attract new-crop business.  We were looking for an increase in commitments but may see this next week after commodity prices rallied, prompting some importers to secure supplies amid outlook for tighter US supplies.  China did buy 31,200 tons of
old crop US soybeans and 1.147 million tons of new crop (as expected).  Romania and Slovenia bought soybean meal.  Pork sales were very good at 28,600 tons with Mexico committing to 17,700 tons. 

 

 

 

Macros

US
Initial Jobless Claims Jun 26: 364K (est 388K; prevR 415K; prev 411K)

US
Continuing Claims Jun 19: 3469K (est 3340K; prevR 3413K; prev 3390K)

Brazil
Markit Manufacturing PMI Jun: 56.4 (prev 53.7)

 

Corn

• US
  corn futures
  are leading the major agriculture markets higher on follow through buying post USDA report showing less than expected US corn and soybean plantings.  Weather forecast does not suggest the Dakota’s and parts of Minnesota weather will
  improve.  Export sales were disappointing, but the trade is focused on weather. 
  
• After
  managed money reduced their net long positions over the past few weeks, we now look at this as an opportunity, or “room”, for them to add longs if additional bullish sentiment trickles into the market. 
  
• News
  is light this morning and traders are still digesting the reports from yesterday.  We look for a tighter US new-crop corn stocks outlook over the long run while changes in the US soybean balance should be minimal over the short-term, at least for stocks until
  the August update. 
• USDA’s
  weekly Broiler Report showed eggs set in the United States Up 2 Percent and chicks placed down slightly.  Cumulative placements from the week ending January 9, 2021 through June 26, 2021 for the United States were 4.68 billion. Cumulative placements were up
  1 percent from the same period a year earlier.
• Weekly
  US ethanol production was up 10,000 barrels to 1.058, highest since 1.067 million a month ago.  The trade was looking for a 4,000-barrel decrease.  Stocks were up 452,000 barrels to 21.572 million, highest since 3/19/21.  Ethanol blended to finished motor
  gasoline improved from the previous week to 91.3% from 90.5%.  Gasoline product supplied fell 267,000 barrels to 9.173 million.  Report is viewed slightly friendly for corn. 
  

 

Export
developments.

• Results
  awaited: Iran in for 60,000 tons of corn and 60,000 tons barley for Aug/Sep shipment. 
  
• China
  plans to auction off 155,000 tons of imported corn on July 2.
• 123,977
  tons of US
• 31,539
  tons of Ukraine origin

 

 

Soybeans

• Soybeans
  are sharply higher after a lower overnight open.  Soybean oil was up nearly 200 points before easing a touch headed into the electronic close. 
  Ag
  news is light.  China soybean meal was up a large 3.3% overnight.  China crush margins improved but are still negative on our analysis. 
  
• USDA
  NASS crush is due out later with May update. 
• Malaysian
  palm futures were up 111 points and cash up $45/ton.  SGS reported June palm oil exports for Malaysia at 1.546 million tons, a 10.8 percent increase from May. 
  
• India
  CPO import margins are positive after they cut their import tax on crude palm oil to 10% from 15% for three months, effective June 30.
• Offshore
  values are leading soybean oil 15 points lower and meal $5.00/short ton lower. 
  
• Rotterdam
  rapeseed and soybean oil prices were 10-25 euros higher, and meal mostly 20-31 euros higher. 
  
• China:
  

• Malaysian
  palm oil:  

 

Export
Developments

• Results
  awaited: Iran in for 60,000 tons of soybean meal for Aug/Sep shipment. 

 

 

Wheat

• US
  wheat rallied into the electronic close on higher corn and dry weather forecast for the US northern Great Plains.  Talk of ridging next week for Russia’s wheat area and a weaker USD is adding support.  Ukraine’s weather is in good shape and selected agencies
  continue to upgrade crop prospects. 
• Ukraine’s
  AgMin mentioned the grain group could reach above 75 million tons, a record.  Ukraine’s state weather forecaster sees the grain crop even higher at 75.8 million tons, up from 65 million tons in 2020 (2021 37.1 million tons of corn, 28.5 million tons of wheat,
  and 8.3 million ton of barley). 
• Ukraine
  restored its value-added tax (VAT) rate of 20% will apply to livestock, milk, oilseeds, sugar beets. They left unchanged the rate of 14% for wheat, barley, corn, soybeans, sunflower seeds, rapeseed.
  
• Bulgaria
  expects the wheat crop to end up between 5.7 million and 5.8 million tons, a 20% annual increase from 4.7 million tons in 2020.
• September
  Paris wheat was down 0.75 euro at 202/ton.

 

Export
Developments. 

• Bangladesh’s
  seeks 50,000 tons of milling wheat on July 15.
• Results
  awaited: Iran seeks 60,000 tons of milling wheat on Wednesday for Aug/Sep shipment.
  

• Jordan
  retendered for 120,000 tons of feed barley set to close July 7 for Nov/Dec 2021 shipment. 
  
• Jordan
  retendered for 120,000 tons of wheat set to close July 6 for Jan/Feb 2022 shipment. 
  
• Ethiopia
  seeks 400,000 tons of wheat on July 19. 

 

Rice/Other

• Bangladesh
  seeks 50,000 tons of rice from India. Separately….

• Bangladesh seeks 50,000 tons of rice on July 12. 

 

USDA Export Sales

U.S. EXPORT SALES FOR WEEK ENDING  06/24/2021

	CURRENT MARKETING YEAR						NEXT MARKETING YEAR
COMMODITY	NET SALES	OUTSTANDING SALES		WEEKLY EXPORTS	ACCUMULATED EXPORTS		NET SALES	OUTSTANDING SALES
		CURRENT YEAR	YEAR AGO		CURRENT YEAR	YEAR AGO
	THOUSAND METRIC TONS
WHEAT
HRW	91.2	1,549.4	1,932.9	99.8	519.4	838.6	0.0	0.0
SRW	17.9	1,039.8	510.8	8.9	31.8	68.3	0.0	0.0
HRS	93.8	1,562.6	1,621.1	26.9	353.1	464.2	0.0	0.0
WHITE	23.5	1,078.2	1,098.8	0.4	231.1	319.3	0.0	0.0
DURUM	0.0	8.4	225.0	0.0	26.3	85.0	0.0	0.0
TOTAL	226.3	5,238.4	5,388.7	136.0	1,161.7	1,775.4	0.0	0.0
BARLEY	0.0	23.7	40.3	0.0	1.1	1.3	0.0	0.0
CORN	15.0	12,147.5	8,430.9	1,136.7	57,399.6	33,882.6	67.6	15,748.3
SORGHUM	4.0	893.1	843.4	0.1	6,337.0	3,313.1	0.0	1,594.9
SOYBEANS	92.8	3,567.7	7,745.1	148.5	58,272.9	37,076.7	1,670.1	9,279.4
SOY MEAL	232.8	2,288.2	2,092.9	81.5	8,950.6	8,970.3	184.5	856.0
SOY OIL	2.3	26.1	212.9	1.0	651.8	976.4	0.0	0.6
RICE
L G RGH	26.9	221.1	81.7	48.5	1,525.3	1,317.4	0.0	0.0
M S RGH	-7.0	8.4	24.0	0.5	25.5	72.5	7.0	7.0
L G BRN	-0.6	12.2	11.4	0.3	38.9	56.8	0.7	0.7
M&S BR	0.1	23.0	31.6	0.1	133.7	86.4	0.0	0.0
L G MLD	4.0	45.2	58.6	3.2	607.8	830.6	0.0	0.0
M S MLD	-7.7	136.1	129.1	16.1	548.2	610.2	12.5	12.5
TOTAL	15.6	446.0	336.4	68.7	2,879.5	2,973.9	20.2	20.2
COTTON		THOUSAND RUNNING BALES
UPLAND	42.6	2,425.4	4,441.8	274.0	13,638.7	12,551.1	133.9	2,427.1
PIMA	2.2	121.5	126.0	10.4	700.8	448.4	0.1	4.1

 

This
summary is based on reports from exporters for the period June 18-24, 2021.

Wheat:  Net
sales of 226,300 metric tons (MT) were reported for delivery in marketing year 2021/2022.  Increases primarily for Japan (148,700 MT), Mexico (31,100 MT, including decreases of 1,200 MT), unknown destinations (18,500 MT), Jamaica (9,400 MT, switched from unknown
destinations and decreases of 300 MT), and Guyana (8,100 MT, switched from unknown destinations and decreases of 200 MT), were offset by reductions primarily for Nigeria (2,500 MT).  Exports of 136,000 MT were primarily to Mexico (59,200 MT), Nigeria (27,500
MT), Japan (27,200 MT), Jamaica (9,400 MT), and Guyana (8,100 MT).

Corn: 
Net sales of 15,000 MT for 2020/2021 were down 93 percent from the previous week and 94 percent from the prior 4-week average.  Increases primarily for Japan (99,700 MT, including 159,200 MT switched from unknown destinations and decreases of 4,500 MT), Mexico
(94,700 MT, including decreases of 12,100 MT), Honduras (29,200 MT, including decreases of 6,000 MT), Nicaragua (22,500 MT), and Venezuela (8,400 MT, including 8,000 MT switched from unknown destinations), were offset by reductions primarily for unknown destinations
(167,200 MT) and China (75,000 MT).  For 2021/2022, net sales of 67,600 MT were for unknown destinations (50,000 MT), Honduras (12,000 MT), Mexico (4,500 MT), Canada (600 MT), and Taiwan (500 MT).  Exports of 1,136,700 MT were down 33 percent from the previous
week and 36 percent from the prior 4-week average.  The destinations were primarily to China (335,000 MT), Japan (334,700 MT, including 60,700 MT – late), Mexico (252,500 MT), South Korea (61,300 MT), and Honduras (49,600 MT). 

Optional
Origin Sales: 
For 2020/2021, new optional origin sales of 65,000 MT were reported for South Korea.  The current outstanding balance of 30,500 MT is for unknown destinations.  For 2021/2022, the current outstanding balance of 125,000 MT is for South Korea (65,000 MT) and
unknown destinations (60,000 MT).

Late
Reporting:
For 2020/2021, exports totaling 80,900 MT of corn were reported late to Japan (60,700 MT) and Guatemala (20,200 MT).

Barley: 
No net sales or exports were reported for the week.

Sorghum: Total
net sales for 2020/2021 of 4,000 MT were for China.  Exports of 100 MT–a marketing year low–were unchanged from the previous week, but down noticeably from the prior 4-week average.  The destination was to South Korea.

Rice: 
Net sales of 15,600 MT for 2020/2021 were down 80 percent from the previous week and 63 percent from the prior 4-week average.  Increases primarily for Mexico (19,700 MT, including decreases of 7,000 MT), Jordan (2,200 MT), Guatemala (2,000 MT), Canada (1,800
MT, including decreases of 700 MT), and Haiti (800 MT), were offset by reductions for Japan (12,000 MT).  For 2021/2022, net sales of 20,200 MT were for Japan (12,000 MT), Mexico (7,000 MT), Canada (700 MT), and Taiwan (500 MT).  Exports of 68,700 MT were
up 61 percent from the previous week and 25 percent from the prior 4-week average.  The destinations were primarily to Mexico (25,700 MT), Nicaragua (23,600 MT), Japan (12,400 MT), Canada (2,400 MT), and Saudi Arabia (1,800 MT).

Exports
for Own Account: 
For 2020/2021, new exports for own account totaling 200 MT were for Canada.  The current exports for own account outstanding balance is 200 MT, all Canada.

Soybeans: 
Net sales of 92,800 MT for 2020/2021 were down 35 percent from the previous week, but up 62 percent from the prior 4-week average.  Increases primarily for China (31,200 MT, including decreases of 100 MT), Canada (19,800 MT), Mexico (7,300 MT, including decreases
of 3,300 MT), unknown destinations (6,400 MT), and Vietnam (6,100 MT,  including decreases of 100 MT), were offset by reductions for South Korea (100 MT).  For 2021/2022, net sales of 1,670,100 MT reported for China (1,147,000 MT), unknown destinations (511,600
MT), Indonesia (9,000 MT), and Taiwan (3,000 MT), were offset by reductions for Canada (500 MT).  Exports of 148,500 MT were down 39 percent from the previous week and 33 percent from the prior 4-week average.  The destinations were primarily to Mexico (69,900
MT), Indonesia (23,100 MT), China (9,500 MT), Japan (8,900 MT), and Vietnam (7,500 MT).

Exports
for Own Account: 
For 2020/2021, the current exports for own account outstanding balance is 5,800 MT, all Canada.

Export
Adjustments: 
Accumulated exports of soybeans to Mexico were adjusted down 11,742 MT for week ending May 27th.  This shipment was reported in error.

Late
Reporting:
For 2020/2021, exports totaling 4,000 MT of soybeans were reported late to Cuba.

Soybean
Cake and Meal: 
Net sales of 232,800 MT for 2020/2021 were down 40 percent from the previous week, but up 1 percent from the prior 4-week average.  Increases primarily for Vietnam (95,000 MT, including 50,000 MT switched from unknown destinations), Romania (45,000 MT), Slovenia
(42,000 MT), Colombia (34,000 MT), and Mexico (21,400 MT, including decreases of 2,000 MT), were offset by reductions primarily for unknown destinations (44,300 MT), Ecuador (27,000 MT), and Costa Rica (3,500 MT).  For 2021/2022, net sales of 184,500 MT were
primarily for Ecuador (90,000 MT), Mexico (84,200 MT), Honduras (6,000 MT), and Costa Rica (3,500 MT).  Exports of 81,500 MT were down 62 percent from the previous week and 63 percent from the prior 4-week average.  The destinations were primarily to Mexico
(29,300 MT), Canada (17,400 MT), Guatemala (12,200 MT), Panama (5,700 MT), and Sri Lanka (4,400 MT).

Soybean
Oil: 
Net sales of 2,300 MT for 2020/2021 were down 2 percent from the previous week, but up 6 percent from the prior 4-week average.  Increases were primarily for Mexico (1,300 MT, including decreases of 900 MT).  Exports of 1,000 MT were down 85 percent from the
previous week and 91 percent from the prior 4-week average.  The destinations were to Canada (600 MT) and Mexico (400 MT).

Cotton: 
Net sales of 42,600 RB for 2020/2021 were down 43 percent from the previous week and 64 percent from the prior 4-week average.  Increases primarily for Vietnam (10,500 RB, including 3,100 RB switched from China, 800 RB switched from Japan, 400 RB switched
from Thailand, and decreases of 11,000 RB), Pakistan (7,800 RB), Turkey (5,900 RB), Bangladesh (4,100 RB), and China (3,400 RB, including 2,200 RB switched from Vietnam), were offset by reductions for Malaysia (300 RB).  For 2021/2022, net sales of 133,900
RB were primarily for Mexico (54,800 RB), Bangladesh (46,800 RB), Pakistan (8,300 RB), China (7,700 RB), and Vietnam (4,400 RB).  Exports of 274,000 RB were up 33 percent from the previous week, but down 3 percent from the prior 4-week average.  Exports were
primarily to Vietnam (77,800 RB), China (54,100 RB), Turkey (44,400 RB), Pakistan (22,500 RB), and Mexico (18,300 RB).  Net sales of Pima totaling 2,200 RB–a marketing-year low–were down 76 percent from the previous week and 61 percent from the prior 4-week
average.  Increases primarily for Peru (1,600 RB), India (400 RB), and Turkey (300 RB), were offset by reductions for China (100 RB).  Total net sales for 2021/2022 of 100 RB were for Japan.  Exports of 10,400 RB were down 30 percent from the previous week
and 27 percent from the prior 4-week average.  The destinations were primarily to India (6,300 RB), China (2,300 RB), Turkey (500 RB), Peru (300 RB), and Pakistan (300 RB).

Exports
for Own Account: 
For 2020/2021, the current exports for own account totaling 6,500 RB to Vietnam (4,500 RB), China (1,500 RB), and Bangladesh (400 RB) were applied to new or outstanding sales.  The outstanding balance of 4,700 RB is for China.

Hides
and Skins: 
Net sales of 964,300 pieces for 2021 were up noticeably from the previous week and from the prior 4-week average.  Increases primarily for China (855,700 whole cattle hides, including decreases of 6,400 pieces), South Korea (36,200 whole cattle hides, including
decreases of 4,800 pieces), Mexico (18,500 whole cattle hides, including decreases of 1,300 pieces), Brazil (16,000 whole cattle hides, including decreases of 200 pieces), and Japan (11,500 whole cattle hides, including decreases of 1,600 pieces), were offset
by reductions for Spain (200 pieces).  Total net sales of 11,200 kip skins were reported for Belgium.  Exports of 351,900 pieces were up 2 percent from the previous week, but down 4 percent from the prior 4-week average.  Whole cattle hides exports were primarily
to China (243,300 pieces), South Korea (32,500 pieces), Mexico (23,800 pieces), Thailand (17,800 pieces), and Brazil (8,700 pieces).

Net
sales of 114,300 wet blues for 2021 were down 45 percent from the previous week and 31 percent from the prior 4-week average.  Increases primarily for China (74,000 unsplit, including decreases of 200 unsplit), Mexico (23,000 unsplit and 300 grain splits),
and Vietnam (16,300 unsplit), were offset by reductions for Italy (100 unsplit).  Exports of 154,800 wet blues were up 20 percent from the previous week, but down 3 percent from the prior 4-week average.  The destinations were primarily to Italy (35,300 unsplit
and 3,600 grain splits), China (38,600 unsplit), Vietnam (31,000 unsplit), Mexico (12,200 unsplit and 3,500 grain splits), and Thailand (13,500 unsplit).  Net sales of 719,900 splits reported for Vietnam (600,000 pounds) and Taiwan (129,800 pounds), were offset
by reductions for China (9,800 pounds).  Exports of 122,600 pounds were to China. 

Beef: 
Net
sales of 12,100 MT reported for 2021 were down 28 percent from the previous week and 17 percent from the prior 4-week average.  Increases were primarily for Japan (3,300 MT, including decreases of 500 MT), South Korea (2,800 MT, including decreases of 600
MT), China (2,100 MT, including decreases of 100 MT), Taiwan (1,500 MT, including decreases of 200 MT), and Canada (600 MT, including decreases of 200 MT).  Exports of 18,900 MT were up 4 percent from the previous week and 9 percent from the prior 4-week average. 
The destinations were primarily to Japan (4,900 MT), South Korea (4,900 MT), China (4,200 MT), Taiwan (1,200 MT), and Mexico (1,100 MT).

Pork: 
Net
sales of 28,600 MT reported for 2021 were unchanged from the previous week, but up 12 percent from the prior 4-week average.  Increases primarily for Mexico (17,700 MT, including decreases of 900 MT), Japan (2,800 MT, including decreases of 400 MT), Canada
(1,800 MT, including decreases of 800 MT), Colombia (1,600 MT, including decreases of 100 MT), and China (1,500 MT, including decreases of 1,000 MT), were offset by reductions for New Zealand (100 MT).  Exports of 32,200 MT were down 4 percent from the previous
week and 5 percent from the prior 4-week average.  The destinations were primarily to Mexico (13,500 MT), China (5,100 MT), Japan (4,000 MT), South Korea (3,000 MT), and Canada (2,000 MT).