FI Morning Grain Comments 07/08/22

PDF attached

 

Good
morning. 

 

USD
rallied after US employment data was released, then paired some gains. Nearby WTI crude oil turned higher, and equities are lower. USDA export sales were poor. Yet, most CBOT grain and oilseed/product markets are higher this morning. Not much has changed with
the fundamentals. Easing recession fears were again noted. We are getting a little concerned for the US demand side for ags. Other than the occasional US grain tenders, major importers have been absent from the US market. Last USDA 24-H announcement was June
17.

 

For
the near term, the US weather forecast for the Great Plains and Midwest was mostly unchanged Delta improved. The 6-10 day still has hot temperatures domination much of the western US and below precipitation for the upper Midwest-bias ECB. The Great Plains
will see rain across OK today and upper & western GP this weekend into Monday. The Midwest will see rain across the southeast and northwest through the weekend. Argentina is still expected to see a few showers across wheat country through Monday. Western Europe
will be hot next week lasting until at least mid-month.

 

 

 

Weather

 

 

 

 

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR JULY 8, 2022

• Not
  a tremendous amount of change has occurred overnight
• Western
  Europe is still facing ten days of dry and eventually very warm to hot weather
  
• Some
  relief is expected during the days 11-15, but the resulting rainfall is unlikely to be great enough to seriously bolster soil moisture or offer a  long-term bout of relief – more rain will be needed
• Eastern
  Europe will continue to have pockets of dryness throughout the next ten days maintaining some crop stress in parts of that region as well
• A
  few more showers were advertised by most computer weather forecast models in Russia’s Southern Region today versus Thursday, but no general soaking of rain is expected leaving a need for more moisture
• The
  European operational model has suggested rain early next week and again at the end of next week into the following weekend in Argentina’s wheat country
  
• However,
  this change is not supported by the GFS model or the European Ensemble model both of which have showers early next week, but not much other precipitation 
  
• Relief
  is expected to be minimal if it occurs at all in the western wheat areas 
• North
  China Plain, Yellow River Basin and a part of China’s Northeast Provinces will remain wet over the next week – drying is needed
• India’s
  Monsoon is expected to be active over the next two weeks with abundant rain and some flooding possible in central and northwestern parts of the nation 
• Australia’s
  southern crops will remain in a good environment for establishment
• U.S.
  weather tendencies did not change greatly overnight
• There
  was a little more rain suggested in the second week of the two weeks outlook today relative to that of Thursday, but it will still be questionable as to how much rain will fall after Saturday
  
• Temperatures
  will be milder than usual which should conserve soil moisture in those areas that got rain and were eased from dryness this week, but there will still be some areas in the southwestern Corn Belt and Delta that will be too dry
• Texas
  and Oklahoma rainfall is still looking limited for the next two weeks
• Northern
  U.S. Delta dryness and heat should be eased, although not eliminated in the next couple of weeks

Source:
World Weather INC

 

Bloomberg
Ag Calendar

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

Monday,
July 11:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• US
  crop conditions for spring and winter wheat, corn, soybeans and cotton, 4pm
• Brazil’s
  Unica to release cane crushing and sugar output data (tentative)
• HOLIDAY:
  Singapore, Malaysia, Pakistan, Bangladesh

Tuesday,
July 12:

• USDA’s
  monthly World Agricultural Supply and Demand Estimates (WASDE), 12pm
• China’s
  agriculture ministry (CASDE) releases monthly report on supply and demand for corn and soybeans
• The
  Malaysian Palm Oil Board releases palm oil stockpiles, output and export data for June
• World
  Coffee Producers Forum (virtual session)
• France
  agriculture ministry 2022 crop production estimates
• EU
  weekly grain, oilseed import and export data

Wednesday,
July 13:

• China’s
  first batch of June trade data, incl. soybean, edible oil, rubber and meat imports
• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• France
  AgriMer monthly grains outlook
• New
  Zealand food prices
• HOLIDAY:
  Thailand

Thursday,
July 14:

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

Friday,
July 15:

• 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
• China’s
  1H pork output and hog inventory
• Malaysia’s
  July 1-15 palm oil export data
• FranceAgriMer
  weekly update on crop conditions
• The
  Cocoa Association of Asia releases 2Q cocoa grind data

Source:
Bloomberg and FI

 

 

 

 

 

 

USDA
Export Sales

Another
poor week of sales for the books. We are under the impression both corn and soybean exports will fall short of USDA’s 2021-22 export projection, based on Census, inspection, and sales data.

 

 

 

 

Macros

US
Change In Nonfarm Payrolls Jun: 372K (est 268K; prev 390K)

US
Unemployment Rate Jun: 3.6% (est 3.6%; prev 3.6%)

US
Average Hourly Earnings (M/M) Jun: 0.3% (est 0.3%; prev 0.3%)

US
Average Hourly Earnings (Y/Y) Jun: 5.1% (est 5.0%; prev 5.2%)

Revisions***
US Change In Nonfarm Payrolls Jun: 372K (est 268K; prevR 384K)

US
Unemployment Rate Jun: 3.6% (est 3.6%; prev 3.6%)

US
Average Hourly Earnings (M/M) Jun: 0.3% (est 0.3%; prevR 0.4%)

US
Average Hourly Earnings (Y/Y) Jun: 5.1% (est 5.0%; prevR 5.3%)

 

Corn

·        
CBOT corn is higher on follow through technical buying. The 6–10-day weather outlook still has very warm temperatures bias WCB and GP and net drying for the upper Midwest.  USDA export sales were again poor, and slowing demand
is leading us to think 2021-22 ending stocks will be higher than what the trade has penciled in. The USD is lower, WTI crude oil turned higher and equities lower.

·        
The central and southern Great Plains are seeing hot conditions.

·        
French corn conditions as of July 4 were rated 84% good or excellent, up slightly from 83% the previous week and compared with 89% a year earlier.

·        
Weekly US ethanol production declined 7,000 barrels per day (trade estimate down 4,000) to 1.051 million and stocks increased a large 744,000 barrels (trade looked for up 52,000) to 23.490 million barrels. PADD 2 stocks were up
567,000 barrels from the previous week. 

 

Export
developments.

·        
South Korea’s FLC bought 65,000 tons of corn at an estimated $321.29/ton c&f for arrival around October 25.

 

Soybeans

·        
CBOT soybean complex is mixed with soybeans mostly higher, meal lower (non-expiring), and soybean oil higher. Offshore values were mixed. Fundamentals have not changed. USDA export sales were poor and its unlikely US soybean exports
will reach USDA’s current crop year projection based on actual shipments.  Don’t discount some selling in futures during the day session.

·        
Indonesia now wants to set their biodiesel blend rate to 35 percent by the end of the month. They have been testing B40, an eventual target they want to hit. Indonesia’s palm oil stocks hit a high of 6.2 million tons following
the ban.

·        
Malaysian palm oil futures fell 11.6 percent this week, fourth weekly loss over the last five weeks. MPOB is due out July 12. June inventories are expected to be up 12.3 percent.

·        
September Malaysian palm oil futures were up 17MYR and cash was up $35 at $1,070.

·        
China soybean complex futures were higher, with soybeans up 0.3%, meal 1.7% higher, soybean oil 3.3% higher and palm up 4.1%.

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

·        
Offshore values were leading SBO about 166 points lower earlier this morning (144 higher for the week to date) and meal $7.10 short ton lower ($2.50 higher for the week).

 

Export
Developments

·        
China looks to sell a half a million tons of soybeans out of reserves on July 15.  Results are awaited on today’s import tender. 

 

Due
out July 12.

 

Wheat

·        
US wheat futures are higher with US weather concerns for late planted winter wheat and hot temperatures for Western Europe. USDA export sales slipped from the previous week.

·        
CBOT Chicago wheat deliveries were 102 with no apparent commercial stoppers. 

·        
FOA’s food price index fell in June to 154.2 points versus 157.9 for May, 23.1 percent higher than a year earlier.

·        
France’s soft wheat harvest reached 14 percent as of July 4, up from 5 percent week earlier and compares to just 1 percent year ago. Soft wheat conditions fell one point to 63 percent.

·        
Ukraine collected 1.1 million tons of 2022 grains from about 3 percent of the planted area, mainly wheat and barley. 

·        
Brazil’s wheat production could end up near 9 million tons, according to the Conab, thanks to one of the largest areas planted in more than 30 years, and projections for good yields. About 65 percent of the wheat area had been
planted.

·        
The BA Grains Exchange lowered their estimate for the Argentina wheat area to 6.2 million hectares from 6.3 million from unfavorable drought conditions.

 

Export
Developments.

·        
Pakistan issued a new import tender for 300,000 tons of wheat, set to close July 18 for Aug 1-25 shipment.

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

·        
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

·        
(Bloomberg) — World 2022-23 cotton production seen 776,000 bales lower than USDA’s previous estimate, according to the avg in a Bloomberg survey of ten analysts.

Estimates range from 119m to 122m bales

World ending stocks seen down 321,000 bales to 82.45m bales

US production seen 471,000 bales lower, and US ending stocks seen 31,000 bales lower

 

USDA Export Sales

Another poor week of sales for the books. We are under the impression both corn and soybean exports will fall short of USDA’s 2021-22 export projection, based on Census, inspection, and sales data.

 

 

 

 

Export Sales Highlights

This summary is based on reports from exporters for the period June 24-30, 2022.

Wheat: Net sales of 286,400 metric tons (MT) for 2022/2023 primarily for Taiwan (42,800
MT), Japan (39,500 MT), South Korea (36,100 MT), the Philippines (34,000 MT), and Mexico (32,400 MT, including decreases of 4,700 MT), were offset by reductions primarily for Italy (10,000 MT) and Canada (3,200 MT).  Exports of 287,100 MT were primarily to
Egypt (66,000 MT), Taiwan (62,800 MT), Mexico (58,200 MT), Colombia (38,200 MT), and Japan (31,800 MT). 

Corn:  Net sales reductions of 66,600 MT for 2021/2022–a marketing-year low–were
down noticeably from the previous week and from the prior 4-week average.  Increases primarily for Mexico (67,400 MT, including decreases of 2,700 MT), China (63,400 MT, including 68,000 MT switched from unknown destinations and decreases of 4,800 MT), Japan
(49,200 MT, including 42,500 MT switched from unknown destinations and decreases of 700 MT), Colombia (14,000 MT, including 21,000 MT switched from unknown destinations and decreases of 500 MT), and El Salvador (8,200 MT, including 7,500 MT switched from Guatemala,
3,300 MT switched from Colombia, 700 MT switched from Nicaragua, and decreases of 600 MT), were more than offset by reductions primarily for unknown destinations (137,600 MT) and Canada (100,700 MT).  Net sales of 111,200 MT for 2022/2023 reported for China
(84,000 MT), Saudi Arabia (30,000 MT), Guatemala (24,100 MT), Japan (3,000 MT), and Honduras (2,400 MT), were offset by reductions for Mexico (30,000 MT) and Canada (2,300 MT).  Exports of 1,027,400 MT were down 18 percent from the previous week and 21 percent
from the prior 4-week average.  The destinations were primarily to Mexico (302,000 MT), Japan (236,500 MT), China (199,200 MT), Canada (126,100 MT), and Honduras (47,000 MT). 

Optional Origin Sales:  For 2021/2022, the current outstanding
balance of 108,300 MT is for unknown destinations (65,000 MT), Italy (34,300 MT), and Saudi Arabia (9,000 MT).  For 2022/2023, the current outstanding balance of 35,400 MT is for Italy.

Barley:  Total net sales of 1,800 MT for 2022/2023 were for South Korea.  No exports
were reported for the week. 

Sorghum:  Net sales of 54,000 MT for 2021/2022 were up noticeably from the previous
week and up 96 percent from the prior 4-week average.  Increases were primarily for unknown destinations (50,000 MT), China (2,600 MT), and Mexico (1,000 MT).  Exports of 69,000 MT were down 7 percent from the previous week and 52 percent from the prior 4-week
average.  The destinations were primarily to China (67,600 MT) and Mexico (1,100 MT).

 Rice:  Net sales of 30,400 MT for 2021/2022 were up 73 percent from the previous
week, but down 2 percent from the prior 4-week average.  Increases primarily for Haiti (15,100 MT, including decreases of 200 MT), Nicaragua (6,000 MT), Honduras (5,100 MT), Canada (3,100 MT), and El Salvador (1,100 MT), were offset by reductions for Costa
Rica (1,500 MT) and Argentina (300 MT).  Net sales of 1,600 MT for 2022/2023 were reported for Guatemala (1,100 MT) and El Salvador (500 MT).  Exports of 33,100 MT were down 28 percent from the previous week and 42 percent from the prior 4-week average.  The
destinations were primarily to Japan (19,600 MT), Haiti (7,100 MT), Canada (2,200 MT), Mexico (1,100 MT), and South Korea (900 MT).

Exports for Own Account:  For 2021/2022, new exports for own account totaling 100
MT were to Canada.  The current exports for own account outstanding balance is 100 MT, all Canada.

 Soybeans:  Net sales reductions of 160,000
MT for 2021/2022–a marketing-year low–were up 33 percent from the previous week, but down noticeably from the prior 4-week average.  Increases primarily for the Netherlands (68,800 MT, including 63,000 MT switched from unknown destinations and decreases
of 200 MT), Germany (68,500 MT), Egypt (61,700 MT, including 52,000 MT switched from unknown destinations and decreases of 2,900 MT), Mexico (48,900 MT, including 47,500 MT switched from unknown destinations and decreases of 1,700 MT), and Colombia (17,100
MT, including 18,000 MT switched from unknown destinations and decreases of 2,600 MT), were more than offset by reductions primarily for unknown destinations (405,800 MT) and China (59,200 MT).  Net sales of 240,100 MT for 2022/2023 were primarily for unknown
destinations (115,500 MT), Mexico (101,000 MT), and Colombia (17,500 MT).  Exports of 504,900 MT were down 3 percent from the previous week and 5 percent from the prior 4-week average.  The destinations were primarily to Mexico (125,300 MT), China (74,200
MT), the Netherlands (68,800 MT), Germany (68,500 MT), and Egypt (51,700 MT). 

 Export for Own Account: For 2021/2022, the current exports for own account outstanding balance is 6,300 MT, all Canada.

 Export Adjustment: Accumulated exports of soybeans to the Netherlands were adjusted down 68,525 MT for week ending June 9th.  The
correct destination for this shipment is Germany.

Soybean Cake and Meal:  Net sales of 148,800 MT for 2021/2022 were up noticeably
from the previous week and up 47 percent from the prior 4-week average.  Increases primarily for the Philippines (107,300 MT), Colombia (21,300 MT, including decreases of 5,500 MT), Canada (6,900 MT, including decreases of 5,200 MT),
Belgium (4,600 MT), and Nicaragua (3,400 MT switched from Honduras), were offset by reductions primarily for Honduras (4,100 MT), Mexico (1,300 MT), Guatemala (800 MT), Ireland (800 MT), and Ecuador (700 MT).  Net sales of 30,400 MT for 2022/2023 were primarily
for Guatemala (14,900 MT), the Dominican Republic (14,000 MT), Japan (900 MT), and Canada (500 MT).  Exports of 237,000 MT were down 20 percent from the previous week and 2 percent from the prior 4-week average.  The destinations were primarily to the Philippines
(47,300 MT), Colombia (42,000 MT), Canada (25,800 MT), Honduras (24,700 MT), and Morocco (22,600 MT).

Soybean Oil:  No net sales
were reported for the week.  Exports of 800 MT were up noticeably from the previous week, but down 91 percent from the prior 4-week average.  The destination was primarily to Canada (700 MT). 

Cotton:  Net sales of
37,400 RB for 2021/2022 were down 22 percent from the previous week and 57 percent from the prior 4-week average.  Increases primarily for Turkey (14,700 RB, including decreases of 15,100 RB), Vietnam (13,200 RB, including 2,200 RB switched from South Korea
and 400 RB switched from Japan), China (10,000 RB, including 100 RB switched from India), Peru (2,600 RB), and Taiwan (1,300 RB), were offset by reductions primarily for Thailand (2,500 RB), South Korea (2,200 RB), and India (1,300 RB).  Net sales of 381,900
RB for 2022/2023 were primarily for Pakistan (98,700 RB), Turkey (95,500 RB), Bangladesh (66,100 RB), Vietnam (47,900 RB), and China (22,000 RB).  Exports of 377,800 RB were up 4 percent from the previous week and 7 percent from the prior 4-week average. 
The destinations were primarily to China (106,900 RB), Vietnam (58,800 RB), Turkey (51,500 RB), Pakistan (45,200 RB), and India (23,800 RB).  Net sales of Pima totaling 900 RB for 2021/2022 were up 19 percent from the previous week and 9 percent from the prior
4-week average.  Increases were primarily for Thailand (600 RB), Italy (200 RB), and Malaysia (100 RB).  Net sales of 5,500 RB for 2022/2023 were reported for Turkey (3,300 RB), India (1,300 RB), and Germany (900 RB).  Exports of 10,500 RB were up 64 percent
from the previous week and 41 percent from the prior 4-week average.  The destinations were primarily to China (3,900 RB), Vietnam (1,900 RB), Thailand (1,700 RB), India (1,500 RB), and Ethiopia (500 RB). 

Optional Origin Sales: 
For 2021/2022, options were exercised to export 2,100 RB to Vietnam from the United States.  The current outstanding balance of 12,700 RB is for Vietnam (10,200 RB) and Pakistan (2,500 RB). 

Export for Own Account: For
2021/2022, new exports for own account totaling 16,600 RB were to Vietnam (10,900 RB) and China (5,700 RB).  Exports for own account totaling 5,200 RB primarily to Vietnam (4,000 RB) were applied to new or outstanding sales.  The current exports for own account
outstanding balance of 50,100 RB is for China (31,400 RB), Vietnam (13,900 RB), and Indonesia (4,800 RB).

Hides and Skins:  Net
sales of 314,700 pieces for 2022 were down 14 percent from the previous week and 27 percent from the prior 4-week average.  Increases primarily for China
(214,900 whole cattle hides, including decreases of 7,000 pieces), South Korea (46,400 whole cattle hides, including decreases of 500 pieces), Mexico (25,100, including decreases of 3,500 pieces), Japan (7,200 whole cattle hides), and Thailand (5,700 whole
cattle hides, including decreases of 400 pieces), were offset by reductions for Indonesia (200 pieces).  Exports of 343,600 pieces were down 23 percent from the previous week and 17 percent from the prior 4-week average.  Whole cattle hides exports were primarily
to China (198,500 pieces), Mexico (48,100 pieces), South Korea (40,500 pieces), Thailand (25,100 pieces), and Brazil (8,400 pieces). 

Net sales of 255,300 wet blues for 2022 were up noticeably from the previous week and up
60 percent from the prior 4-week average.  Increases were primarily for Italy (97,600 unsplit and 19,100 grain splits, including decreases of 1,600 unsplit), China (85,400 unsplit, including decreases of 100 unsplit), Hong Kong (20,000 unsplit), Vietnam (13,800
unsplit), and Taiwan (7,500 grain splits).  Exports of 83,500 wet blues were down 30 percent from the previous week and 45 percent from the prior 4-week average.  The destinations were primarily to China (28,900 unsplit), Vietnam (25,500 unsplit), Italy (14,200
unsplit and 3,000 grain splits), Taiwan (6,500 unsplit), and Thailand (3,100 unsplit).  Net sales of 561,300 splits were up noticeably from the previous week and from the prior 4-week average.  Increases were primarily for Vietnam (495,100 pounds).  Exports
of 515,500 pounds were up 44 percent from the previous week and 17 percent from the prior 4-week average. The destination was to Vietnam.

Beef:  Net sales of 11,000
MT for 2022 were down 35 percent from the previous week and 30 percent from the prior 4-week average.  Increases primarily for Japan (6,300 MT, including decreases of 600 MT), South Korea (1,700 MT, including decreases of 500 MT), Canada (1,100 MT), Mexico
(900 MT), and Vietnam (600 MT), were offset by reductions for China (1,600 MT) and the United Arab Emirates (100 MT).  Exports of 20,400 MT were up 3 percent from the previous week and 7 percent from the prior 4-week average.  The destinations were primarily
to Japan (5,500 MT), South Korea (4,400 MT), China (4,200 MT), Taiwan (1,400 MT), and Mexico (1,100 MT). 

Pork:  Net sales of 31,200
MT for 2022 were down 3 percent from the previous week, but up 23 percent from the prior 4-week average.  Increases were primarily for Mexico (16,200 MT, including decreases of 200 MT), China (11,400 MT, including decreases of 200 MT), Japan (1,100 MT, including
decreases of 400 MT), Canada (900 MT, including decreases of 600 MT), and Australia (500 MT).  Exports of 32,200 MT were up 16 percent from the previous week and 19 percent from the prior 4-week average.  The destinations were primarily to Mexico (16,100 MT),
China (3,900 MT), Japan (3,800 MT), South Korea (3,000 MT), and Canada (1,400 MT).

 

U.S. EXPORT SALES FOR WEEK ENDING  6/30/2022

 

	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	113.0	1,359.3	1,514.1	96.6	436.3	655.4	0.0	0.0
SRW	47.4	1,003.7	932.4	39.8	191.0	151.1	0.0	0.0
HRS	106.2	1,249.1	1,609.8	124.9	527.5	425.1	0.0	0.0
WHITE	29.8	903.2	1,079.4	25.8	274.2	283.6	0.0	0.0
DURUM	-10.0	94.4	8.4	0.0	18.0	31.6	0.0	0.0
TOTAL	286.4	4,609.6	5,144.1	287.1	1,447.0	1,546.8	0.0	0.0
BARLEY	1.8	13.3	23.7	0.0	2.2	1.4	0.0	0.0
CORN	-66.6	7,858.9	11,034.3	1,027.4	52,498.4	58,685.9	111.2	6,488.1
SORGHUM	54.0	641.0	893.1	69.0	6,317.3	6,337.0	0.0	0.0
SOYBEANS	-160.0	7,724.4	3,410.3	504.9	52,165.4	58,494.0	240.1	13,737.7
SOY MEAL	148.8	2,056.6	2,329.9	237.0	9,208.5	9,120.6	30.4	576.3
SOY OIL	0.0	81.8	21.2	0.8	603.8	656.3	0.0	0.0
RICE
L G RGH	12.1	82.5	224.5	0.4	1,246.5	1,532.3	1.6	13.1
M S RGH	0.0	6.8	8.4	0.0	14.1	25.5	0.0	0.0
L G BRN	0.1	3.1	11.9	0.5	51.6	39.5	0.0	0.0
M&S BR	-0.2	9.6	22.9	0.0	78.0	133.8	0.0	0.0
L G MLD	16.8	73.7	46.5	10.3	760.7	611.8	0.0	0.0
M S MLD	1.6	114.6	117.5	21.8	420.5	570.6	0.0	0.0
TOTAL	30.4	290.3	431.8	33.1	2,571.5	2,913.6	1.6	13.2
COTTON		THOUSAND RUNNING BALES
UPLAND	37.4	3,751.7	2,182.8	377.8	11,888.7	13,933.5	381.9	4,448.5
PIMA	0.9	48.4	107.7	10.5	432.3	720.0	5.5	59.1