FI Morning Grain Comments 07/14/21

PDF attached

 

Good
morning.

 

Soybeans
are higher despite a drop in November Canadian canola futures.  Products are higher.  Corn turned higher on inflation concerns despite expectations for the majority of the Corn Belt to see rain one time or another over the next 7 days and soy/corn spreading. 
Wheat is higher on North American supply concerns.  Traders will be watching the WCB rain event over the next 24-hours as precipitation amounts will be important.  By the end of the workweek rains shift east.  IA looks mostly dry 3-7 days out.  NOPA crush
is due out on Thursday.  A Reuters poll calls for the U.S. June soybean crush to fall to 159.5 million bushels from 163.5 million bushels in May and 167.3 million bushels in June 2020. Soybean stocks were estimated at 1.623 billion pounds, down from 1.671
billion previous month.  Lowest offer for Egypt’s import tender was $231.88/ton for 60,000 tons of Romanian wheat. 

 

 

 

 

Weather

Day
1

 

Day
2

 

Days
4-5

 

WORLD
WEATHER INC.

WORLD
WEATHER HIGHLIGHTS FOR JULY 14, 2021

• Today’s
  focus of attention in the market will likely be on the continued development of hot, dry, conditions across Canada’s Prairies, the northern U.S. Plains, and far northwestern Midwest.
  
• These
  areas will eventually see daily highs in the 90s and over 100 Fahrenheit (32-40C) next week and into the following weekend.
  
• Wet
  weather in the U.S. Midwest will gradually diminish over the coming week and some warming is expected both of which will be welcome to the wettest areas. 
  
• Western
  Russia, Ukraine and Belarus have dried down over the past week, but good subsoil moisture will carry crops into next week when rain begins to evolve once again.
  
• China
  will see less excessive rain in the coming ten days which will be a welcome change for some areas.
  
• Most
  of China is quite wet. 
• India’s
  monsoon will continue to perform erratically.  Most crop areas will get rain at one time or another, but the drier areas in the north and far south will need greater amounts of moisture.
  
• Southeastern
  Europe will experience improved soil moisture late this week into next week. 
  
• Some
  cooling is expected in southern Brazil next week that may raise a potential for frost and a few freezes in some wheat production areas
• Coffee,
  sugarcane and citrus areas are not likely to experience threatening cold
• Recent
  rain has improved soil conditions in Thailand, Cambodia, Vietnam and parts of Myanmar, but many of these areas still need more rain and it will be coming during the next seven days
• Ivory
  Coast and Ghana are expected to dry down over the next couple of weeks
• Crop
  conditions have been good, but moisture stress will slowly evolve during this period
• Seasonal
  rainfall may not resume until September since the region is entering its normal drier biased period
• Because
  of the long period of lighter rain the region should be closely monitored for a while
• No
  tropical cyclones are present in the world today, but one may form in the far western Pacific Ocean this weekend that may bring more heavy rain to northeastern China Next week and/or in the following weekend

Source:
World Weather Inc. 

 

Bloomberg
Ag Calendar

Wednesday,
July 14:

• EIA
  weekly U.S. ethanol inventories, production
• Brazil
  Unica cane crush, sugar production (tentative)
• Malaysia
  2Q cocoa grinding data (tentative)
• HOLIDAY:
  France

Thursday,
July 15:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• China
  2Q pork output and inventory levels
• Malaysia
  July 1-15 palm oil export data
• Malaysia
  crude palm oil export tax for August (tentative)
• Port
  of Rouen data on French grain exports
• Barry
  Callebaut 9-month key sales figures

Friday,
July 16:

• 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
• Cocoa
  Association of Asia releases 2Q cocoa grinding data

Source:
Bloomberg and FI

 

 

 

 

Macros

US
PPI Final Demand (M/M) Jun: 1.0% (est 0.6%; prev 0.8%)

US
PPI Ex-Food, Energy (M/M) Jun: 1.0% (est 0.5%; prev 0.7%)

US
PPI Ex-Food, Energy, Trade (M/M) Jun: 0.5% (est 0.5%; prev 0.7%)

US
PPI Final Demand (Y/Y) Jun: 7.3% (est 6.7%; prev 6.6%)

US
PPI Ex-Food, Energy (Y/Y) Jun: 5.6% (est 5.1%; prev 4.8%)

US
PPI Ex-Food, Energy, Trade (Y/Y) Jun: 5.5% (est 5.6%; prev 5.3%)

Canadian
Manufacturing Sales (M/M) May: -0.6% (est 1.0%; prev -2.1%)

 

Corn

• Corn
  turned higher in inflation concerns despite expectations for the majority of the Corn Belt to see rain one time or another over the next 7 days and soy/corn spreading.  U.S. producer prices increased more than expected in June, suggesting inflation could remain
  high.  Final demand increased 1.0% last month after rising 0.8% in May. 
  
• Traders
  will be watching the WCB rain event over the next 24-hours as precipitation amounts will be important.  By the end of the workweek rains shift east.  IA looks mostly dry 3-7 days out. 
  
• We
  heard 8-10 Argentina corn cargoes were booked by Brazil recently. No other details yet.
  
• A
  Bloomberg poll looks for weekly US ethanol production to be down 8,000 barrels (1049-1075 range) from the previous week and stocks up 242,000 barrels to 21.391 million.
  

 

Export
developments.

• Jordan
  seeks 120,000 tons of feed barley on July 28 for Nov/Dec shipment. 

 

 

Soybeans

• Soybeans
  are higher despite a decline in November Canadian canola futures (down 13.90).  Products are higher.  We are now hearing most estimates for Canadian canola production being dropped into the 17 to 19-million-ton range. USDA is at 20.2 million tons. 
  
• Decatur
  soybeans were up 25 cents to 90 over the November. 
• A
  Reuters poll calls for the U.S. June soybean crush to fall to 159.5 million bushels from 163.5 million bushels in May and 167.3 million bushels in June 2020. Soybean stocks were estimated at 1.623 billion pounds, down from 1.671 billion previous month. 
  
• Germany’s
  association of farm cooperatives estimated the 2021 winter rapeseed crop at 3.68 million tons, (2.67 June estimate) a 4.7% increase from year ago. 
  
• Brazil
  increased their mandatory biodiesel blend requirement to 12% from 10%, below the 2021 target of 13%.  About 70% of Brazil’s biodiesel is produced from soybean oil.  Brazil dropped the blend rate from 13% to 10% on April 9 to help ease high fuel prices. 
  
• Argentine
  producers sold 24.5 million tons of 2020-21 soybeans so far this season (up 831,300 tons from week earlier) through July 7, below 26.9 million tons year ago.  BA Grains Exchange has a 43.5-million-ton production this year, down from 49 million tons for 2019-20.
• Limits
  for November Canadian canola are at $45/ton. 
• Ignore
  the China values in offshore values.  We attached settlements. 
• Offshore
  values are leading SBO 112 points lower and meal $2.10 higher. 
• Rotterdam
  rapeseed and soybean oil prices were 5-10 euros higher and meal mostly lower.
  
• Indonesia
  May palm oil exports were 2.95 million tons, a 21.6% increase from a year ago and up 12% from April. Gapki reported Indonesia palm stocks fell 7.7% at the end of May from April to 2.88 million tons.  Production was 4.35 million tons vs. 4.1 million in April. 
  
• Malaysian
  palm 1-15 shipment data is expected to be up 3% from the same period a month ago.  That data will be out overnight. 
  
• Malaysian
  palm oil:  

 

 

(Reuters)
– The European Union must increase the amount of renewable energy to 40% of final consumption by 2030 under proposals the bloc’s executive Commission published on Wednesday to help meet a more ambitious greenhouse gas reduction goal.  That replaces a previous
target for a 32% renewables target by 2030.

 

Export
Developments

• South
  Korea’s Agro-Fisheries & Food Trade Corp. seeks around 7,600 tons of GMO-free soybeans on July 21 for arrival in South Korea between Aug. 20 and Oct. 20.

 

Wheat

• Wheat
  is higher on North American supply concerns.  The Chicago/Minneapolis wheat spread is seeing a small correction. 
  
• Egypt
  seeks wheat for September 11-20 shipment.  Lowest
  offer was $231.88/ton for 60,000 tons of Romanian wheat. 
• Look
  for the trade to turn more attention to the hot and dry conditions for the Canada’s Prairies, northern U.S. Plains, and far northwestern Midwest. Upcoming daily highs will be in the 90s and over 100 Fahrenheit (32-40C) next week and into the following weekend.
  

• September
  Paris wheat were up 1.25 at 203.75 euros. 
• Germany’s
  association of farm cooperatives estimated the 2021 wheat harvest at 22.80 million tons, down from 22.98 million estimated in June and up 3.2% increase from last year. 
  
• China’s
  statistics bureau estimated summer wheat production at 134 million tons, up 2% from 2020.  But some analysts warned quality in some top growing areas might have been compromised due to bad weather, including Shandong, Henan, Hebei and Hubei.  Wheat acreage
  and yield rose 0.9% and 1.1% from the previous year respectively.
• Vietnam
  will lift its 3% wheat import tariff and cut its corn import tariff from 3% from 5%.  France is on holiday today. 
  
• Ukraine
  exported 700,000 tons of grain so far this season, nearly unchanged from same period a year ago.  This included 223,000 tons of wheat, 95,000 tons of barley and 373,000 tons of corn.  Ukraine may collect 76 million tons of grain this year, up from 65 million
  tons in 2020. 

 

Export
Developments. 

• Egypt
  seeks wheat for September 11-20 shipment.  Lowest
  offer was $231.88/ton for 60,000 tons of Romanian wheat. 
• Japan
  passed on feed wheat and bought only 200 tons of feed barley.  They
  were seeking 80,000 tons of feed wheat and 100,000 tons of barley for arrival by December 23. 
  
• Results
  awaited:  Iran’s GTC seeks 60,000 tons of milling wheat for August and September shipment on Wednesday, July 14.
• Taiwan
  Flour Millers’ Association seeks 55,000 tons of million wheat from the United States on July 16 for shipment from the U.S. Pacific Northwest coast between Aug. 31 and Sept. 14.
  
• Japan’s
  AgMin seeks 118,911 tons of food-quality wheat from the United States and Canada.

• Bangladesh’s
  seeks 50,000 tons of milling wheat on July 15.
• Bangladesh’s
  seeks 50,000 tons of milling wheat on July 18.

• Ethiopia
  seeks 400,000 tons of wheat on July 19. 

• Pakistan’s
  TCP seeks 500,000 tons of wheat on July 27.  200,000 tons are for August shipment, and 300,000 tons are for September shipment.

 

Rice/Other

• South Korea seeks 91,216 tons of rice from China, the United
  States and Vietnam for arrival in South Korea between Oct. 31, 2021, and April 30, 2022. 
  
• Bangladesh seeks 50,000 tons of rice on July 18.