FI Morning Grain Comments 07/11/22

PDF attached

 

Good
morning. 

 

Traders
are keen on weather models. Other fundamental news is light. We are seeing little lead from offshore markets.  China was mixed and Malaysia is on holiday.  USD is sharply higher and WTI lower.  In a normal environment CBOT grains and soybean complex would
be lower, but a US weather forecast turning drier for the near term is catching attention. The Monday weather forecast turned slightly drier for the Midwest for this week, bias central and southern areas. Traders are expected to position today ahead of the
USDA report. Volatility in ags should not be ruled out.

 

 

 

 

Weather

Last
7-days

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR JULY 11, 2022

• Hot
  weather occurred in the U.S. Plains and a party of the Delta during the weekend
  
• Temperature
  extremes of 95 to 111 Fahrenheit resulted
• The
  U.S. heat will temporarily abate over the next few days, but will be back late this week and it will the prevail in the U.S. Plains through much of next week with some of the heat getting into the western Corn Belt
  
• Livestock
  and crop stress is expected in many areas
• Rapid
  declines in soil moisture are expected in the west-central and southwestern Corn and Soybean Belt while continued dryness threatens production from the west-central through all of the southern Plains and in the northern Delta
• Limited
  rainfall is expected in the Eastern Midwest during the next ten days, although it will not be completely dry and temperatures will be more seasonable than areas in the western Corn Belt and Plains
• Tropical
  or Subtropical disturbance expected to form along the north-central U.S. Gulf of Mexico coast over the next few days will produce some very heavy rainfall and induce flooding from northwestern Florida to Louisiana
  
• This
  system could evolve into a tropical depression, although it may be too close to the coast; nevertheless, it will generate flooding rain along the central coast while restricting rain in the Midwest
• Canada’s
  southwestern and central Prairies will experience some net drying for a while this week with relief possible next week away from the U.S. border
• Western
  Europe will continue to deal with dry and warm to hot weather over the coming week to ten days
  
• Some
  relief is expected early next week as scattered showers arrive and some cooling, but the resulting rain will not be enough to seriously bolster topsoil moisture and concern about long term crop development will continue
• India
  will be quite wet over  the next couple of weeks in the middle two-thirds of the nation
• China
  will continue wetter biased except in the interior southeast where some short term drying is expected
  
• China
  needs greater sunshine and better drying conditions to improve crops after recent flooding rainfall
• Southern
  Australia’s wheat, barley and canola crops are still rated favorably with good weather likely for a while
• Argentina’s
  western wheat areas will continue struggling with dryness
• Good
  harvest weather in Brazil Safrinha crop areas

Source:
World Weather INC

 

Bloomberg
Ag Calendar

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

 

 

 

 

 

 

 

 

 

 

CFTC
Commitment of Traders

Funds
were heavy sellers for the week ending July 5 in corn, good sellers in soybeans, but were much lighter sellers for Chicago wheat. The funds position was less long for corn, but traders missed soybeans and to a much higher extent the Chicago wheat market. Indexes
continued to liquidate longs for the five major commodities. Meanwhile producers loaded up on positions in corn.

 

 

 

 

Macros

 

Corn

·        
CBOT corn is higher from unfavorable outlooks for US weather despite a sharply higher USD and lower trade in WTI crude oil. Last week, the COT report showed heavy fund selling during the week ending July 5^th for corn,
and that may have rebounded a touch Wed-Fri period. Bottom picking was noted over the recent fourth trading sessions.

·        
The Monday weather forecast turned slightly drier for the Midwest for this week, bias central and southern areas. 

·        
Traders are expected to position today ahead of the USDA report. Volatility in ags should not be ruled out.

 

Export
developments.

·        
The Philippines may have bought a cargo of SA corn. Details awaited.

 

Soybeans

·        
CBOT soybean complex is higher on US weather uncertainty. Other than that, all the outside related markets and offshore values would suggest a lower trade. Look for positioning today ahead of the USDA report. Keep in mind corn
and soybean surveys are initially reported next month. July yields are an observation for soybean and corn with adjustments to planted and harvested acres. Wheat yields for winter and spring are surveyed.

·        
Indonesia set their biodiesel blend rate of 35 percent target on July 20, a short period for the industry to adjust. It’s currently at 30 percent. 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.

·        
ITS reported July 1-10 palm oil exports down 20.5 percent from the same period a month ago. 330,310 tons were reported versus 415,348 tons previous.

·        
Malaysia is on holiday, returning Tuesday.

·        
China soybean complex futures were mixed, with soybeans down 0.4%, meal 1.0% higher, soybean oil 0.3% higher and palm up 0.4% lower.

·        
Rotterdam vegetable oils were mixed and meal
mostly
higher.

·        
Offshore values were leading SBO about 101 points lower earlier this morning and meal $7.60 short ton lower.

 

Export
Developments

·        
China looks to sell a half a million tons of soybeans out of reserves on July 15.

 

Due
out July 12.

 

Wheat

·        
US wheat futures continue to correct after a sharp decline a week ago despite a higher USD and lack of US export developments other than routine sales, this time to Taiwan. We remain concerned over US demand for grains.

·        
News is light.

·        
Russia July exports are seen 22 percent higher for wheat from July 2021.

·        
Japan’s weather service sees a 60 percent chance of La Nina continuing through the NA fall period and predicted a 40% chance of weather conditions returning to normal in summer.

 

 

Export
Developments.

·        
Taiwan seeks 44,725 tons of wheat from the US on July 13 for Aug 31-Sep 14 shipment.

·        
The Philippines bought 50,000 to 60,000 tons of feed wheat from Australia and $415 c&f/ton for November shipment.  They also may bought 55,000 to 60,000 tons of corn from South America. 

·        
Jordan AgMin seeks 120,000 tons of wheat.

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

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

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

 

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