FI Morning Grain Comments 07/06/21

PDF attached

 

Good
morning.

 

Calls:

Soybeans
15-25 lower

Soybean
meal $4-7 lower

Soybean
oil 50-100 lower (could be supported post open amid large drop in registrations)

Corn
8-13 lower

Wheat
10-20 lower bias MN to downside

 

Calls
are predicated on sharply lower Canadian canola and weaker values in Europe.  Weather is the primary driver, with the US returning to a normal weather pattern with rain on and off every few days.  Weekend rains for the US were as expected.  Some of the models
are suggesting an unchanged forecast while others are shifting rains into the dry areas of the US and southern Canadian Prairies.  See 1-7 day below.  Outside markets are supportive.  OPEC cancelled their meeting, driving mineral oil higher.  USD was up 17
points but WTI turning lower by 8 am.

 

Crop
Conditions

 

Weather

1-7
DAY

 

WORLD
WEATHER INC.

WORLD
WEATHER HIGHLIGHTS FOR JULY 6, 2021

• Beneficial
  rain fell during the U.S. holiday weekend in southwestern Alberta, Canada canola and wheat production areas. 
  
• Rain
  also fell overnight in parts of the Dakotas and additional rain is expected from southern Canada’s Prairies through the Dakotas into much of the Corn Belt.
  
• The
  end result of this week’s rain will be good for corn pollination in the heart of the Midwest later this month and will temporarily stop the decline in crop conditions in the northern Plains and southern Canada’s Prairies.
  
• Drier
  and warmer weather will return to a part of this region in Canada and the north-central U.S. during the middle to latter part of next week.
  
• No
  threatening cold is seen in Brazil coffee, citrus, sugarcane or grain areas for the next ten days.
  
• China
  was very wet during the weekend with some significant flooding in the south.
  
• India
  is expecting improved rainfall in its dry northern areas this weekend and next week
  
• Western
  Russia will dry down for a while in the coming ten days.
• Kazakhstan
  and southern Russia’s New Lands are expecting some periodic rainfall this week to help ease their drier bias like that in North America. 
• Australia
  will see a good mix of weather during the next ten days for most of its canola, wheat and barley, although South Australia and northwestern Victoria will eventually need greater rain
• Europe
  weather is expected to be favorably mixed with partial relief expected in the drier areas of the Balkan Countries
• Greater
  rain will be needed in the Balkan Countries soon
• Today’s
  GFS 06z model run was too wet in Germany with the advertised flooding run unlikely to verify
• Argentina’s
  periodic rainfall advertised over the coming ten days would be great for its wheat and barley establishment if it verifies
• U.S.
  West Texas cotton, corn and sorghum areas received additional heavy rainfall during the holiday weekend – at least in a part of the production region
  
• Less
  rain, more sunshine and warmer temperatures in the next couple of weeks will be welcome to the region
• U.S.
  Delta and southeastern states weather will be mostly good over the next two weeks
• Remnants
  of Tropical Storm Elsa will not harm corn, soybeans, peanuts, cotton, citrus or sugarcane from Florida to Virginia – at least not permanently
  
• There
  is some potential for minor citrus fruit droppage in the western part of Florida today and tonight.
• A
  developing tropical cyclone will move across Hainan China later today and then into northern Vietnam Wednesday and Thursday producing heavy rain and some windy conditions, but very little crop damage to rice, sugarcane or coffee is expected
  

Source:
World Weather, Inc.

 

Bloomberg
Ag Calendar

Tuesday,
July 6:

• CNGOIC
  monthly report on Chinese grains & oilseeds
• USDA
  export inspections – corn, soybeans, wheat, 11am
• U.S.
  crop conditions — corn, cotton, soybeans, wheat, 4pm
• EU
  weekly grain, oilseed import and export data
• Purdue
  Agriculture Sentiment
• New
  Zealand global dairy trade auction

Wednesday,
July 7:

• No
  major event scheduled

Thursday,
July 8:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Brazil’s
  Conab releases data on yield, area and output of corn and soybeans
• FAO
  World Food Price Index
• EIA
  weekly U.S. ethanol inventories, production
• Brazil
  Coffee Council Conference, Sao Paulo
• Port
  of Rouen data on French grain exports
• EARNINGS:
  Suedzucker, Agrana

Friday,
July 9:

• 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

 

 

 

 

 

Macros

 

Commitment
of Traders

Funds
sold more than expected soybeans and corn for the week ending 6/29.  Funds were also less long than expected in soybean oil before the late rally seen last week. 

 

 

 

 

 

 

Corn

• US
  corn futures
  are expected to trade lower following weekend rains across some of the US drought areas and today’s forecast calling for rain across the Dakota’s.  The 1-7 day outlook is wetter than that of later last week. 
  
• China
  corn demand was lowered by two agencies over the past few days (Attaché and think tank), a bearish indication for corn.  We may see USDA downward revise their China corn import forecast by some 4 million tons after reducing feed demand. 
  
• Brazil
  corn crop seen at 85.3MMT – AgRural  (bullish).  The second corn crop is about 13 percent harvested, below 23% year ago.  Note USDA is at 98.5 million tons for the Brazil crop. 
  

 

Export
developments.

• Iran
  bought about 60,000 tons of corn and 60,000 tons barley for Aug/Sep shipment. 
  
• (Reuters)
  – South Korea’s Feed Leaders Committee (FLC) purchased about 65,000 tons of corn expected to be sourced from the Black Sea region in a private deal on Friday without an international tender being issued, European traders said on Monday.
• (Reuters)
  – China will auction more than 130,000 tons of imported corn from the United States and Ukraine at an auction on July 9, according to the country’s grain stockpiler Sinograin on Tuesday.

 

Soybeans

• A
  lower trade is expected if soybeans follow canola and EU rapeseed lower.  Weekend rains across parts of Canadian canola country sent canola futures sharply lower on Monday into Tuesday morning.  Outside related markets are leading products lower, but higher
  mineral oil and gold could limit downside. Several soybean oil registrations were cancelled on Friday. 
  
• Last
  week NASS reported extremely high soybean meal stocks but some of that meal was in export transit off the PNW. 
  
• Keep
  an eye out for the US biofuel RVO proposal announcement.  Some think it will be out this week. 
  
• Over
  a two day period, palm oil futures increased 62 points and cash was up $35/ton. 
  
• China
  soybean oil over a two day period was up 52 yuan, soybeans up 138 or 2.4% and meal down 39 or 1.1%. 
  
• Offshore
  values are leading soybean oil 97 points lower and soybean meal $1.70/short ton lower. 
  
• Rotterdam
  rapeseed and soybean oil prices were mostly 10-18 euros lower (2 days), and meal mostly 1-3 euros lower. 
  
• China:
  

Monday
& Tuesday combined

• Malaysian
  palm oil:  

Monday
& Tuesday combined

 

Export
Developments

• (Reuters)
  – South Korea’s state-backed Agro-Fisheries & Food Trade Corp. has bought around 15,600 tons of soybeans free of genetically-modified organisms (GMOs) for food use in an international tender for the same volume, European traders said on Tuesday.
• (Reuters)
  – Turkey’s state grain board TMO has issued an international tender to purchase around 440,000 tons of animal feed barley, European traders said on Tuesday.
• Iran
  bought 60,000 tons of soybean meal for Aug/Sep shipment. 

 

Wheat

• US
  wheat may see some pressure this week on improving North American weather.  This afternoons US crop progress report will reflect conditions over the past week, and we look for mixed ratings among the winter and spring wheat states. 
  
• Northern
  Great Plains saw much needed rain over the weekend and the weather outlook is wetter for the Northern Plains and Canadian Prairies. 
  
• Several
  import tenders were announced over the weekend. 
• September
  Paris wheat was down 2.25 euro at 198.25/ton.

 

Export
Developments. 

• (Reuters)
  – Japan’s Ministry of Agriculture sought 108,175 tons of food-quality wheat from the United States, Canada and Australia in a regular tender.

• Jordan
  bought 60,000 tons of wheat for Jan/Feb 2022 shipment. 

• (Reuters)
  – Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC,) said on Monday it had bought 240,000 tons of wheat in an international purchasing tender for shipment Sept. 1-15.
• (Reuters)
  – A group of importers in Thailand has issued an international tender to purchase up to 230,700 tons of animal feed wheat, European traders said on Tuesday.
• Iran
  bought milling wheat (in for 60k) for Aug/Sep shipment.
• Bangladesh’s
  seeks 50,000 tons of milling wheat on July 15.
• Bangladesh’s
  seeks 50,000 tons of milling wheat on July 18.

• Jordan
  retendered for 120,000 tons of feed barley set to close July 7 for Nov/Dec 2021 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.