FI Morning Grain Comments 07/13/22

PDF attached

 

Good
morning. 

 

US
CPI (Y/Y) Jun: 9.1% (est 8.8%; prev 8.6%)

Euro
Hits Parity Vs US Dollar For First Time Since December 2002 (yesterday technically)

 

A
mixed trade is seen this morning in the agriculture commodity markets. Soybeans are seeing pressure from lower soybean oil, but losses are limited from higher meal. Grains are mixed. The morning US weather outlook improved for the Midwest with more rain in
the forecast for the weekend. The northeastern Midwest growing areas will see rain today and the northwest is slated to see rain Friday and Saturday.
Many global vegetable oil markets were lower on Wednesday. There was chatter overnight of new China Covid lockdown concerns and slow Malaysian palm oil exports. Meanwhile India imports for palm surged last month by 15% from May, most
of it from Indonesia. Look for price influence from outside markets. WTI traded two-sided and US equities are lower following a bearish US CPI report. A weaker euro suggests EU wheat exports are little more favorable over NA exports.

 

 

Weather

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR JULY 13, 2022

• Europe
  drying will continue dry and heating up through the weekend
• Relief
  next week is not likely to be very great and additional declines in soil moisture and crop conditions are expected
• France,
  the U.K., western Germany, Spain and Portugal will be at the heart of the heatwave
  
• livestock
  and crop stress is expected with some potential for falling summer crop yields
• Significant
  rainfall may not fall over the region for much of the coming ten days, but August weather looks better
• U.S.
  Great Plains will experience frequent hot temperatures over the next couple of weeks with restricted rainfall resulting in livestock and crop stress
  
• lower
  production potentials are likely from South Dakota to Texas 
• Western
  U.S. Corn Belt will also experience very warm to hot temperatures periodically, although the most threatening conditions should occur mostly in the Missouri River Basin 
• Eastern
  U.S. Midwest crop conditions will be mostly good during the next two weeks, despite lower than usual rainfall at times
  
• No
  excessive heat is expected and showers and thunderstorms will occur periodically, but not necessarily producing large volumes of rain
• enough
  moisture will fall to support many crops
• U.S.
  Delta weather will continue poor in the north until Sunday into Monday of next week when some rain is expected to finally fall
  
• only
  temporary relief is expected
• U.S.
  southern Plains will continue too hot for sporadic showers to have any meaning in easing long term dryness
• Canada’s
  southwestern Prairies are drying down again 
• too
  much heat and poor rainfall is expected and that will lead to net drying
• northern
  parts of the Prairies should continue to get timely rainfall
• Argentina
  will get a few showers of limited significance Friday and Saturday, but much more rain will still be needed to change wheat conditions
  
• GFS
  model run overnight suggested greater rain in Argentina late this month, but confidence is very low
• China
  weather is slowly improving with surplus soil moisture and flood conditions slowly abating
  
• frequent
  rain will continue, but warm temperatures will help induce some firming of the soil over time
• India
  will see abundant rainfall during the next couple of weeks with some areas of flooding
• Australia’s
  winter crop establishment environment will remain very good

Source:
World Weather INC

 

Bloomberg
Ag Calendar

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

 

 

 

 

Macros

US
CPI (Y/Y) Jun: 9.1% (est 8.8%; prev 8.6%)

US
CPI (M/M) Jun: 1.3% (est 1.1%; prev 1.0%)

US
CPI Ex Food And Energy (Y/Y) Jun: 5.9% (est 5.7%; prev 6.0%)

US
CPI Ex Food And Energy (M/M) Jun: 0.7% (est 0.5%; prev 0.6%)

US
Real Avg Hourly Earning (Y/Y) Jun: -3.6% (prevR -2.9%)

US
Real Avg Weekly Earning (Y/Y) Jun: -4.4% (prevR -4.0%)

 

Fed
Swaps Show Around 79bp Hikes Priced In For July After CP

US
Interest Rates Futures Now See 80% Chance Of Another 75 Bps Hike In Sept – Fedwatch

US
Rate Futures Pricing In 22% Chance Of 100 Bps Hike In July Meeting, 79% Of 75 Bps – Fedwatch

 

Euro
Hits Parity Vs US Dollar For First Time Since December 2002 (yesterday technically)

 

Corn

·        
CBOT corn turned lower after WTI and other markets sold off after the US CPI came in much higher than expected, renewing recession concerns. The macros are expected to keep underling volatility relatively high for the grain markets. 
Some are expecting a 100 point basis rate hike this month.

·        
US weather forecast improved for the Midwest will more rain seen this weekend, but overall conditions will be dry over the next week.  

·        
We look for US crop conditions to drop 1-2 points when updated on Monday. 

·        
News is fairly light. SK stepped back in and bought corn, from South America. 

 

Export
developments.

·        
South Korea’s KFA bought 68,000 tons of corn from South America at $324.99/ton c&f for arrival around October 20.   They were in for 136k.

 

 

Bloomberg
est.

 

Soybeans

·        
CBIT soybeans are lower following weaker soybean oil. Meal is higher on product spreading. 

·        
China June soybean imports were only 8.25 million tons, a 23 percent decline from a year ago and compares to 9.67 million tons during May. Falling crush margins and a reduction in hog inventories slowed China soybean arrivals.
FH 2022 soybean imports were down 5.4% from same period a year ago at 46.28 million tons. 

·        
China crush margins across the north have been negative since mid-April, in part to lower vegetable oil prices. 

·        
Many global vegetable oil markets were lower on Wednesday.

·        
There was chatter overnight of new China Covid lockdown concerns and slow Malaysian palm oil exports.

·        
Meanwhile India imports for palm surged last month by 15% from May, most of it from Indonesia.

·        
Cargo surveyor SGS reported month to date July 10 Malaysian palm exports at 397,140 tons, 10,930 tons below the same period a month ago or down 2.7%, and 9,757 tons below the same period a year ago or down 2.4%.

·        
Malaysia September palm was down 8.6% and cash fell $50/ton to $1,005.

·        
China soybean futures were down 0.9%, meal 2.0% lower, soybean oil 4.4% lower and palm down 5.6%.

·        
Rotterdam vegetable oils were lower
by 9-18 euros and vegetable oils lower by 5-10 euros.

·        
Offshore values were leading SBO about 195 points higher earlier this morning and meal $1.10 short ton lower.

 

Export
Developments

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

 

Wheat

·        
US wheat futures are mixed with Chicago and KC mostly higher and MN slightly lower.  With the euro hitting parity against the USD, which is a reminder EU wheat exports are favored over US.  Taiwan did buy US high protein wheat
overnight, routine.  We look for US export developments to slow or remain steady over the next month, then pick up as we approach spring wheat harvest progress.

·        
Paris wheat is down 1.50 euros as of 7:45 am CT at 340.25 euros. The market remains near multi-month lows and favorable for major importers.

·        
FranceAgriMer sees soft wheat exports throughout 2022-23 at a three-year high at 10.3 million tons. That would be up 17% from 8.8 million tons for 2021-22. Non-EU wheat exports are seen higher from last season.

 

Export
Developments.

·        
Taiwan bought 44,725 tons of wheat from the US for Aug 31-Sep 14 shipment. Reuters noted the following:

-30,275
tons of U.S. dark northern spring wheat of 14.5% protein content bought at an estimated $395.05 a ton FOB U.S. Pacific Northwest coast.

-9,900
tons of hard red winter wheat of 12.5% protein bought at $394.26 a ton FOB

-4,550
tons of soft white wheat of 10.0% protein bought at $400.13 a ton FOB.

·        
No offers were presented in Japan’s import tender for 70,000 tons of feed wheat and 40,000 tons of barley for arrival by December 22.

·        
Jordan bought 60,000 tons of optional origin wheat at $413/ton c&f.

·        
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

·        
None reported