FI Morning Grain Comments 07/19/22

PDF attached

 

Good
morning.

 

Reversal
in many commodities markets this morning. Corn, soybeans, and wheat are all lower. WTI was down about $2.58, US equities higher, and USD down 81 points, at the time this was written.
US crop conditions were slightly off trade expectations. One highlight was corn where conditions remained unchanged versus some trade expectations for about a 2-point drop. Long term US weather models suggest dry and hot conditions through
August.  Egypt lowered their wheat protein level for US wheat for their import tender to 10.5% from previous 11.5% (acceptable down to 11%). Egypt is in for wheat for September 16-30, October 16-31, and November 1-15 shipment. 

 

 

 

Weather

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR JULY 19, 2022

• Excessive
  heat continues in Europe and the central United States
• Temperatures
  at mid-day today in western Europe were reaching near 100 degrees Fahrenheit in London, England and neighboring areas of southeastern U.K. 
• Hot
  weather will retreat from the North and Baltic Sea regions during the remainder of this week, but central and southern Europe will continue hot
  
• Temperatures
  in the 90s and over 100 Fahrenheit will occur often in the southern half of the continent later this week into next week and rainfall will be too light to counter evaporation
• Crop
  moisture stress is expected to become quite serious in southern Europe and especially in the Balkan Countries as time moves along
• A
  few waves of showers and thunderstorms will move across northern Europe during the coming week offering some relief from heat and dryness in those areas, but resulting rainfall will be erratic and often light resulting in an ongoing need for greater rain and
  more cooling
• Central
  and southern portions of the U.S. Plains will also experience excessive heat and limited rainfall for another week
  
• Temperatures
  reached 112 degrees Fahrenheit in central Texas Monday and 111 Fahrenheit in northwestern Nebraska
• Most
  of the hottest temperatures will retreat to the southern half of the Plains and Delta regions today and Wednesday, although warming will return to the northern Plains Wednesday
• Extreme
  temperatures in the central U.S. could reach 115 degrees over the next few days with 100-degree readings reaching as far north as South Dakota and far western Iowa
• The
  heat will reach into Missouri and the northern Delta while it will be most punishing in areas from Kansas to Texas
• Relief
  from the heat in the central U.S. is possible in the second week of the outlook
  
• Today’s
  GFS model runs were too wet in the central Plains as monsoonal moisture from the southwestern states reaches the area with too much abundance
• U.S.
  northern, central and eastern Midwest will see timely rainfall and seasonable temperatures during the next couple of weeks supporting most summer crop needs
• Argentina
  has a very good opportunity for rain early to mid-week next week that would relief dryness in wheat production areas if it verifies 
• Texas
  and Oklahoma rainfall will be minimal for at least another week and possibly ten days
• Hotter
  weather is expected in the far western U.S. especially next week and in the following weekend
• Canada’s
  southern Alberta received significant rain Monday and the moisture will move east across southern Saskatchewan today and into southern Manitoba tonight
  
• the
  moisture offers relief to recent dryness and crop stress
• No
  changes in India’s abundant rainfall outlook, China’s great mix of rain and sunshine or Australia’s timely rainfall in wheat, barley and canola areas were noted overnight

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Tuesday,
July 19:

• EU
  weekly grain, oilseed import and export data
• New
  Zealand global dairy trade auction

Wednesday,
July 20:

• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• China’s
  third batch of June trade data, including soy, corn and pork imports by country
• Malaysia’s
  July 1-20 palm oil export data

Thursday,
July 21:

• International
  Grains Council releases monthly report
• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• USDA
  total milk and red meat production, 3pm

Friday,
July 22:

• 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
• US
  cattle inventory; cold storage data for beef, pork and poultry, 3pm

Source:
Bloomberg and FI

 

 

 

 

USDA
inspections versus Reuters trade range

Wheat                 
185,989                 versus   250000-525000  range

Corn                     
1,073,972             versus   700000-1150000                range

Soybeans           
362,622                 versus   100000-575000  range

 

 

Macros

Housing
Starts In US Decline To Lowest Level Since September

US
Housing Starts Jun: 1559K (est 1580K; prev 1549K)

US
Building Permits Jun: 1685K (est 1650K; prev 1695K)

US
Housing Starts (M/M) Jun: -2.0% (est 2.0%; prev -14.4%)

US
Building Permits (M/M) Jun: -0.6% (est -2.7%; prev -7.0%)

 

 

Corn

·        
CBOT corn
is lower on better-than-expected crop conditions, despite a sharply lower USD. 

·        
Traders will be monitoring President Putin’s visit to Iran. Many leaders are optimistic a Black Sea grain shipping deal will be struck.

·        
USDA US corn export inspections as of July 14, 2022, were 1,073,972 tons, within a range of trade expectations, above 934,533 tons previous week and compares to 1,076,668 tons year ago. Major countries included China for 455,465
tons, Mexico for 325,421 tons, and Japan for 228,165 tons.

·        
USDA US corn conditions were unchanged from the previous week in the combined G/E condition at 63 percent, one point above trade expectations. 

·        
We did lower our US corn yield estimate by 1.0 bushel per acre, but still above USDA.

 

Export
developments.

·        
None reported

 

 

 

Soybeans

·        
Soybeans are lower on widespread commodity selling. WTI was down more than $2 as of 8:00 am CT (trended lower since the biscuit break). Lower energy prices are pressuring soybean oil. Losses in meal were limited.

·        
Malaysia will keep its export tax for crude palm oil unchanged at 8 percent for August. They are using a reference price of 5,257.91 ringgit ($1,181.55) per ton for the next month.

·        
Malaysia September palm was down 120MYR to 3799/ton (-3.1%) and cash down $40.00 to $965.

·        
There was talk Indonesia will delay implementation of B35.

·        
China soybean futures were down 1%, meal 0.5% higher, soybean oil up 1.7% and palm up 3.4%.

·        
Rotterdam vegetable oils were mixed
and meal unchanged to 6 euros lower, from this time yesterday morning. 

·        
Offshore values were leading SBO lower by about 247 points earlier this morning and meal $5.20 short ton lower.

·        
USDA US soybean export inspections as of July 14, 2022, were 362,622 tons, within a range of trade expectations, above 358,527 tons previous week and compares to 143,934 tons year ago. Major countries included China for 136,679
tons, Japan for 116,062 tons, and Mexico for 56,780 tons.

·        
USDA US soybean conditions declined one point in the combined G/E condition to 62 percent, same as what the trade was looking for. Soybeans blooming were 48 percent, up 16 points from the previous week and compares to 61 percent
year ago and 55 percent average.  Soybeans setting pods were 14 percent and compares to 19 percent average.

 

Export
Developments

·        
South Korea’s MFG bought 60,000 tons of soybean meal from South America at an estimated $537.97 a ton c&f for shipment between Sept. 18 and Oct. 7. This comes after NOFI passed on soybean meal on Monday with lowest $541.49 a ton.

·        
China looks to sell a half a million tons of soybeans out of reserves on July 22.

 

Wheat

·        
US wheat futures are lower on technical selling and broad based commodity selling.

·        
Egypt lowered their wheat protein level for US wheat for their import tender to 10.5% from previous 11.5% (acceptable down to 11%). Egypt is in for wheat for September 16-30, October 16-31, and November 1-15 shipment.  It could
include US origin.

·        
USDA US all-wheat export inspections as of July 14, 2022, were 185,989 tons, below a range of trade expectations, below 310,002 tons previous week and compares to 532,898 tons year ago. Major countries included Nigeria for 27,800
tons, Mexico for 27,555 tons, and Brazil for 26,000 tons.

·        
Paris wheat was down 2.25 euros at 332.50 euros as of 8:00 am CT.

·        
Adverse weather for the Western US is threatening parts of spring wheat country. Traders should monitor the weather forecast the western Great Plains and PNW states where hot temperatures will occur this week. The Pacific Northwest
saw drought conditions expand last week. The Great Plains weather outlook favors winter wheat harvesting while spring wheat states will see stress.

·        
USDA spring wheat conditions were up one point to 71 G/E from the previous week and were one point above a trade average. 68 percent of the spring wheat crop was headed, below 91 percent year ago and 90 percent average.

·        
US winter wheat harvesting progress was 5 points below trade expectations. It came in at 70 percent complete, up from 63 percent previous week, and compares to 71 percent year ago and 71 percent average. 

·        
(Bloomberg) — Most Chinese provinces along the Yangtze river from Sichuan to Guizhou, Hubei and Jiangsu, as well as part of Shandong, will receive heavy rains over the next 10 days, which will improve farmland moisture, said
the national meteorological center. 

-Some
of these regions will be hit by torrential rains through Wednesday, with increased flooding risks

-Southern
and southeastern China however will continue to see searing heat, which is unfavorable for growth of crops and fruit, but it’s good for early rice collection and drying

 

Export
Developments.

·        
Egypt is in for wheat on Tuesday for September 16-30, October 16-31, and November 1-15 shipment.  Remember in their last import tender Egypt bought a large amount of wheat, but when spread out over a three-month shipping period
volumes on a monthly adjusted basis were lighter than other regular tenders.

·        
Jordan passed on 120,000 tons of milling wheat
for
possible shipment sometime in November and/or December.

·        
Jordan seeks 120,000 tons of feed barley on July 20 for Dec and/or Jan shipment.

 

Rice/Other

·        
USDA rice conditions declined 5 points to 72 precent and compares to 72 percent year ago.

·        
Cotton conditions were down 1 point to 38 percent and compares to 60 a year ago.