FI Morning Grain Comments 07/27/22

PDF attached

 

Good
morning.

 

The
US morning weather outlook appeared to be mostly unchanged. Ridging is still a strong possibility for the Midwest next week. The Midwest will see rain favoring the southern areas through Saturday and north central areas today. The Great Plains will see rain
across NE and northern KS through today and far western GP Thursday through Saturday.

 

CBOT
corn is higher on follow through buying from dryness across Europe and drier weather for the US through first week of August. The USD was lower and WTI higher. The US soybean complex is mixed with soybean oil sharply higher. Meal is seeing bull spreading in
part to strong demand for domestic supplies. Offshore values were leading SBO 11 points higher earlier this morning and meal $11 short ton lower. US and Paris wheat futures are higher, exception MN, for the third consecutive day, on Black Sea export uncertainty,
lower USD and dry European weather that is hindering spring grain development. Day one of the US spring wheat crop tour reported very good yields. FED out today with interest rate update.

 

Weather

 

 

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR JULY 27, 2022

• Northwestern
  U.S. Corn and Soybean Belt is quickly becoming quite dry 
• Concern
  will rise over crop conditions in this region during the next two weeks if rain falls as lightly as expected
• Hot
  weather is predicted for the region next week and if greater rain fails to evolve prior to that period the stress will become threatening to some crops 
• Recent
  rain in the central Plains into the lower Midwest has been welcome and good for crop improvements
  
• Additional
  rain is expected to linger into Friday before drying begins
• Some
  welcome rain will fall in southern Kansas, Oklahoma, the northern Delta and the Texas Panhandle over the next few days offering a short-term reprieve from excessive heat and dryness, but this is no trend changer
  
• Hot
  and dry weather will return next week 
• The
  heart of Texas will not see much rain potential for the coming week to nearly ten days, but there is some potential for rain in parts of the state late next week and into the following weekend if the U.S. ridge of high pressure gets far enough to the east
  in the Midwest to bring monsoon moisture into West Texas and subtropical moisture from the Gulf of Mexico into the Coastal Bend
  
• Confidence
  in the potential rain events is low 
• Central
  and southwestern Canada’s Prairies will dry down for the next week to possibly ten days bringing back some stress to wheat, canola, corn and soybean production areas, although most crops with “weather” the situation well
• Argentina
  has received some rain in the southeast recently and more is expected, but western wheat areas are not expected to get much moisture especially not Cordoba
• Western
  and southeastern Europe will continue quite dry and warm at times during the next two weeks
  
• crop
  moisture stress will continue in both regions with lower production potential likely for many unirrigated summer crops
• Weather
  in much of Russia, China, India and Australia is looking very good in the next couple of weeks 
  
• Relief
  from dryness is likely in to continue in Uttar Pradesh, Bihar and neighboring areas of India
• A
  more active tropical pattern is being advertised for the western Pacific Ocean this weekend and especially next week 

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Wednesday,
July 27:

• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• Earnings:
  Bunge

Thursday,
July 28:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Buenos
  Aires grains exchange weekly crop report
• HOLIDAY:
  Thailand

Friday,
July 29:

• Vietnam
  July coffee, rice and rubber export data
• FranceAgriMer
  weekly update on crop conditions
• ICE
  Futures Europe weekly commitments of traders report
• US
  agricultural prices paid, received, 3pm
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• HOLIDAY:
  Thailand

Source:
Bloomberg and FI

 

 

 

 

Macros

US
Durable Goods Orders Jun P: 1.9% (est -0.4%; prev 0.8%)

–
Durable Goods Ex Transportation Jun P: 0.3% (est 0.2%; prev 0.7%; prevR 0.5%)

–
Cap Goods Orders Nondef Ex Air Jun P: 0.5% (est 0.2%; prev 0.6%; prevR 0.5%)

–
Cap Goods Ship Nondef Ex Air Jun P: 0.7% (est 0.2%; prev 0.8%; prevR 1.0%)

US
Wholesale Inventories (M/M) Jun P: 1.9% (est 1.5%; prev 1.8%; prevR 1.9%)

 

Corn

·        
CBOT corn
is higher on follow through buying from dryness across Europe and drier weather for the US through first week of August. The USD was lower earlier and WTI higher.

·        
Look for US weather to remain the driver for price influence.

·        
Bloomberg: Saudi Arabia is expected to increase its price for crude oil to a record differential for September.

 

Export
developments.

·        
None reported

 

 

Soybeans

·        
Soybeans are higher in part to sharply higher soybean oil. Mel is mixed on product spreading. The August and September positions were higher while the back months were lower. US soybean crush margins are at their strongest levels
since early June.

·        
Several factors are supporting August soybean meal / December meal spreads. US meal demand is strong and the summer US crush rates may be slightly lower than anticipated if uncovered end users are unable to secure soybeans. Argentina
soybean producer selling is slow. Lastly, Russia is cutting off natural gas to Europe which should force crush plants to back seat with winter energy rationing, reducing soybean meal and rapeseed meal supplies. This could EU end user imports of soybean meal
from SA and possibly the US. 

·        
We are hearing Argentina rolled out a financial instrument to help improve the FX price discrepancy between the official and blue rate, so producers get a fairer selling price for commodities. But we are also hearing the new financial
instrument is a little complicated and may not have a large impact on producer to end use flow.

·        
Indonesia started road testing B40 palm oil. Palm oil exports have increased to around 100,000 to 140,000 tons per day since the export levy was lifted July 15. Yesterday China pledged to buy 1 million tons of Indonesia palm oil.
Indonesia has issued palm oil export permits for a combined 3.84 million tons as of July 25.

·        
Malaysia October palm was up 39 MYR to 3826 /ton and cash unchanged at $965.

·        
China soybean futures were up 1.0%, meal 1.3% higher, soybean oil up 0.3%, and palm 1.6% lower.

·        
Rotterdam vegetable oils were unchanged
to 27 euros higher earlier and meal 9-12 euros higher, from this time yesterday morning.

·        
Offshore values were leading SBO 11 points higher earlier this morning and meal $11 short ton lower.

 

Export
Developments

·        
China looks to sell a half a million tons of soybeans out of reserves on July 29. Last week they sold just 7,500 tons.

 

Wheat

·        
US and Paris wheat futures are higher (MN lower on spring wheat tour), for the third consecutive day, on Black Sea export uncertainty, lower USD and dry European weather that is hindering spring grain development.

·        
Paris wheat was up 2.50 euros at 347 euros as of 7.40 am CT.

·        
Day one of the US spring wheat crop tour reported very good yields for the southern and eastern areas of ND. The HRW yield was reported at 48.9 bushels per acre, highest for day 1 since 2015. In July USDA estimated the ND spring
wheat yield at 51 bushels per acre )production 267.750 million) in their July crop production update, up from 33.5 bushels for 2021 (174.535 million). The US yield was pegged at 47 versus 32.6 last year.

·        
India local wheat prices hit a record high of 23,547 rupees per ton, on strong domestic demand and a heat wave that cut production.

·        
Ukraine’s navy said they have started to prepare three Black Sea ports for grain export. Ukraine grain exports since July 1 are down 47 percent from year earlier to 1.23 million tons.

·        
Turkey expects grain exports from Ukraine ports could restart within a week and reach 25 million tons by the end of the year.

·        
Russia mentioned the export agreement could “collapse” if “obstacles” to Russian ag exports are not removed. We think Russian Deputy Foreign Minister Andrei Rudenko may have been referring to Western sanctions. If that is the
case, then this is a real threat, IMO.

·        
Manitoba’s (Canada) weekly crop report reported most of the spring wheat crop in good/excellent condition. Canola crop conditions were variable.

 

Export
Developments.

·        
Taiwan seeks 50,910 tons of US wheat on August 4 for shipment from the PNW between September 21 and October 5.

·        
Jordan saw 6 offers for 120,000 tons of feed barley for Dec/Jan shipment.

·        
Jordan seeks 120,000 tons of wheat on August 2.

·        
The World Food Program seeks 30,000 tons of Ukrainian milling wheat for August delivery. (AgriCensus)

 

Rice/Other

·        
South Korea’s Agro-Fisheries & Food Trade seeks 92,100 tons of rice on Aug 3 for arrival in SK between Feb & Apr.