FI Morning Grain Comments 07/07/22

PDF attached include daily estimate of funds that was revised

 

Good
morning. 

 

US
weather forecast is mostly unchanged for the Midwest and Great Plains and improved slightly for the Delta. There was some shatter of net drying for the Midwest for the 6-10 period. Argentina is expected to see a few showers across wheat country Friday through
Monday. China will see heavy to moderate rain across the northern and eastern Northeast growing areas. Western Europe will be hot next week lasting until at least mid-month.

 

Brazil’s
Conab showed little changes to corn and soybean supply in its June update. Soybean production of 124 million tons did come in 900,000 tons below expectations and corn of 115.7 MMT was 400,000 tons above expectations. From last month soybeans were down  200,000
tons and corn up 400,000.

 

US
agriculture futures are higher on follow through technical buying, lower USD, higher WTI and other related commodity markets, and rally in US equities. Chicago wheat is leading grains higher. The soybean complex rallied in part to a higher lead in offshore
product values. Some of the buying could be related to renewed inflation concerns after US FOMC hinted a 50 to 75 basis hike for interest rates in July. Commercial bottom picking might also be noted.
Indonesia
is considering a cut in their palm oil export levy to increase shipments. Indonesia had cut the export levy to a maximum $200 per ton for July from $375 previously. It was expected to increase to $240 in August. Meanwhile a senior official said Indonesia is
still looking at boosting the biodiesel blend rate to 40 percent from 30 percent. Malaysian palm oil snapped a 4-day losing streak on Indonesia exports and weaker ringgit. September Malaysian palm oil futures were up 85MYR and cash was unchanged at $1,045.
China soybean complex futures were mixed, with soybeans up 1.0%, meal 2.5% higher, soybean oil 0.4% lower and palm down 1.3%. India placed restrictions on wheat flour and related products. Like wheat, exporters must seek permission to export the product. CBOT
Chicago wheat deliveries were 171. So far Term stopped a total of 925 Chicago wheat contracts this delivery period. Egypt’s GASC in a private tender for September / October shipment bought an additional 63,000 tons of German wheat on July 5 after buying an
estimated 444,000 tons of wheat on Monday. Russia and the EU were thought to be the other origins. Results are awaited on the Philippines seeking at least 50,000 tons of feed wheat for October to December shipment. Japan bought 122,420 tons of food wheat for
September loading. A
Bloomberg poll looks for weekly US ethanol production to be down 4,000 barrels to 1047 thousand (1036-1058 range) from the previous week and stocks up 52,000 barrels to 22.798 million.

 

 

 

Weather

 

 

 

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR JULY 7, 2022

• Western
  Europe will become hot next week and continue that way beyond mid-month
• Rainfall
  is expected to be minimal as well 
• Some
  computer forecast model runs have recently suggested two weeks of dry weather for France, parts of the southern U.K., Spain, Portugal, western Germany, Belgium and the Netherlands as well as parts of Italy
• Eastern
  Europe precipitation will continue erratically dispersed leaving some areas in the southeast quite dry
• Russia’s
  Southern Region still needs greater rainfall, although showers are expected infrequently
• U.S. 
  weather today is a little drier than that advertised Wednesday, but another round or two of rain is still expected in the lower Midwest through Saturday that will help to fill in the hole of dryness that remains from northern Missouri and southern Iowa through
  parts of central and southern Illinois to Indiana and southern Ohio 
• The
  lower Midwest rainfall will be welcome and extremely well timed for corn pollination and early soybean blooming, but subsoil moisture improvements will be limited and rainfall after this weekend is expected to be a little light again for a while
• Temperatures
  are still advertised to be mild to cool across the central and eastern Midwest during much of the coming ten days 
• Western
  U.S. Midwest will see some warm weather briefly this weekend and again late next week, but sufficient cooling is expected at other times to protect crop development
• Texas,
  Oklahoma, southern Kansas, the northern and western Delta and the far northwestern U.S. Plains will not see much moisture during the next two weeks
• Canada’s
  Prairies are expecting to see less frequent and less significant rain in the southwest and central production areas for a little while
• China
  will remain wetter biased during the next ten days, but not as wet as it has been
• India
  will eventually get too much rain across the middle two-thirds of the nation with flooding ultimately expected – mostly next week and in the following weekend
• Australia
  crop areas still look to experience fine establishment conditions
• Argentina
  rainfall is still expected elude western wheat areas for quite a while

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Thursday,
July 7:

• EIA
  weekly U.S. ethanol inventories, production, 11am
• Vietnam’s
  customs department releases coffee, rice and rubber export data for June
• Brazil’s
  Conab releases data on area, yield and output of corn and soybeans

Friday,
July 8:

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

• FAO
  world food price index, grains supply and demand outlook
• 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

Source:
Bloomberg and FI

 

 

 

 

 

Macros

US
Initial Jobless Claims Jul 2: 235K (est 230K; prev 231K)

US
Continuing Claims Jul 25: 1375K (est 1328K; prev 1328K)

U.S.
Crude Oil Exports Reached 3.44 Million Barrels Per Day In May (VS 3.24 Million BPD In April) – U.S. Census

US
Goods Trade Balance May: -85.5Bln (est -84.9Bln; prev -86.7Bln)

Monthly
U.S. International Trade In Goods And Services, May 2022

Canadian
Trade Balance (CAD) May: 5.32Bln (est 2.40Bln; prev 1.50Bln)

Canadian
Exports (CAD) May: 68.44Bln (prev 64.31)

Canadian
Imports (CAD) May: 63.11Bln (prev 62.81Bln)

 

 

Corn

·        
CBOT corn is higher on technical buying and talk of drier Midwest weather for the 6-10 day period. One of the morning weather models suggest a ridge moving into the heart of the country during the 14^th and 15^th
period. Too early to digest, in our opinion, but something to monitor. For the short term soil moisture levels are ample enough for corn development.

·        
The USD is lower, WTI crude oil higher and equities higher.

·        
We lowered our US corn yield to 179.6 bushels per acre versus 180.1 previously. After adjusting to USDA’s June harvested area, we lowered our production by 93 million bushels to 14.716 billion, 256 million above USDA’s June S&D
estimate.  There is a slight chance USDA could adjust their July US corn yield, but at this point we think they will leave their 177.0 estimate unchanged.  The first NASS survey for the US yield will be the August report. In that report, they may adjust plantings
for MN, ND, and SD. 

·        
A Bloomberg poll looks for weekly US ethanol production to be down 4,000 barrels to 1047 thousand (1036-1058 range) from the previous week and stocks up 52,000 barrels to 22.798 million.

 

Export
developments.

·        
None reported

 

 

Soybeans

·        
CBOT soybean complex is higher on commercial and fund buying after prices hit multi-month lows this week. September soybeans gapped higher. Outside related markets are lending support.

·        
Indonesia is considering a cut in their palm oil export levy to increase shipments. Indonesia had cut the export levy to a maximum $200 per ton for July from $375 previously. It was expected to increase to $240 in August. Meanwhile
a senior official said Indonesia is still looking at boosting the biodiesel blend rate to 40 percent from 30 percent.

·        
Malaysian palm oil snapped a 4-day losing streak on Indonesia exports and weaker ringgit.

 

MPOA
Malaysia palm oil production June vs May

Peninsular
Malaysia +9.58%

East
Malaysia +3.72%

Sabah
+3.31%

Sarawak
+4.88%

Full
Malaysia +7.46% or 1.56 million tons

 

·        
September Malaysian palm oil futures were up 85MYR and cash was unchanged at $1,045.

·        
China soybean complex futures were mixed, with soybeans up 1.0%, meal 2.5% higher, soybean oil 0.4% lower and palm down 1.3%.

·        
Rotterdam vegetable oils were higher and meal quotes not available
for Argentina but higher for Brazil.

·        
Offshore values were leading SBO about 189 points higher earlier this morning and meal $3.70 short ton higher.

·        
We lowered our US soybean yield by 0.5 bushel to 51.5, same as USDA’s June S&D estimate. With harvested area down, per June Acreage report, our US production estimate is 4.507 billion bushels, 133 million below USDA and 72 million
above year ago. 

 

Export
Developments

·        
Yesterday Egypt’s GASC bought 15,000 tons of soybean oil in a local import tender at 27,295 Egyptian pounds a ton ($1441.89). They were also in for local sunflower oil, but no results were provided. 

·        
China looks to sell a half a million tons of soybeans out of reserves on July 8.

 

Wheat

·        
US wheat futures are higher on technical buying after prices traded sharply lower earlier this week.  Parts of Kansas will dry down over the next week and western Europe will see hot temperatures.

·        
India placed restrictions on wheat flour and related products. Like wheat, exporters must seek permission to export the product.

·        
Romania reopened an old rail line to help move Black Sea grain.

·        
CBOT Chicago wheat deliveries were 171. So far Term stopped a total of 925 Chicago wheat contracts this delivery period.

 

Export
Developments.

·        
Egypt’s GASC in a private tender for September / October shipment bought an additional 63,000 tons of German wheat on July 5 after buying an estimated 444,000 tons of wheat on Monday. Russia and the EU were thought to be the other
origins.

·        
Results awaited on the Philippines seeking at least 50,000 tons of feed wheat for October to December shipment.

·        
Japan bought 122,420 tons of food wheat for September loading. Original details as follows:

·        
Jordan seeks 120,000 tons of barley on July 14 for Nov/Dec shipment. They bought 60,000 tons on July 6.

·        
Japan seeks 70,000 tons of feed wheat and 40,000 tons of barley on July 13 for arrival by December 22.

 

Rice/Other

·        
Vietnam’s rice exports in June were 726,308 tons, up 2.2 percent from May.  they exported 3.5 million tons of rice in the first half this year, up 15.4% from a year earlier.