FW: FI Evening Grain Comments 06/21/18

 

Weather and crop conditions

• The Midday GFS model was wetter from east-central Colorado to Nebraska and South Dakota into much of the Midwest July 1-5. The run was likely too wet but it contradicts typical net drying seen from ridging that is expected to occur during that period.
• Too much rain across US hard red winter wheat country is starting to raise concern for unharvested winter wheat. This is also starting to raise concerns for the summer crops across the Midwest.
• A high-pressure ridge will develop across Western Europe this weekend into next week, resulting in net drying for the UK and Germany. 
• The western CIS will see an improvement in rainfall.
• Australia’s weather will improve slightly in the west bias south. Queensland and northern New South Wales will remain mostly dry through the end of the month but coastal areas should get rain sometime through June 29.

 

 

 

 

 

8-day Australia precipitation forecast

 

SIGNIFICANT CORN AND SOYBEAN BELT PRECIPITATION EVENTS

                                WEST CORN BELT                             EAST CORN BELT              

Tdy-Fri                                                                                  90-100% cvg of 0.15-1.0”

                                                                                                and local amts to 2.0”

                                                                                                with a few 2.0-3.0”

                                                                                                bands and lighter rain in

                                                                                                a few areas; central areas

                                                                                                wettest; driest SW

Fri-Sun am          10-25% daily cvg of                         

                                up to 0.40” and locally

                                more each day; central

                                areas driest

Sat-Sun                                                                                20-40% daily cvg of up

                                                                                                to 0.60” and local amts

                                                                                                over 1.0” each day;

                                                                                                wettest south

Mon                                                                                      15% cvg of up to 0.25”

                                                                                                and locally more;

                                                                                                wettest west

Sun pm-Tue       80% cvg of up to 0.75”                   

                                and local amts to 1.50”

                                with some 1.50-3.50”

                                amts in central and

                                southern areas; Neb.

                                and west Ia. wettest;

                                far NW driest

Tue-Wed                                                                             75% cvg of up to 0.75”   

                                                                                                and local amts to 2.0”;

                                                                                                wettest west

Wed-Jun 30        15-30% daily cvg of                         

                                up to 0.60” and locally                   

                                more each day;

                                wettest north

Jun 28-30                                                                             5-20% daily cvg of up

                                                                                                to 0.25” and locally         

                                                                                                more each day

Jul 1-5                   5-20% daily cvg of up                      15-30% daily 1cvg of

                                to 0.25” and locally                          up to 0.35” and locally

                                more each day                                  more each day

 

U.S. DELTA/SOUTHEAST SIGNIFICANT PRECIPITATION EVENTS

                                DELTA                                                   SOUTHEAST

Tdy-Fri                                                                                  70% cvg of up to 0.75”

                                                                                                and local amts to 2.0”;

                                                                                                west and north wettest;

                                                                                                SE Ga. to N.C. driest

Fri-Sun                  55% cvg of up to 0.70”                   

                                and local amts to 1.50”;                

                                wettest north                                   

Sat-Sun                                                                                15-35% daily cvg of

                                                                                                up to 0.60” and locally   

                                                                                                more each day 

Mon-Jun 28        5-20% daily cvg of up                     

                                to 0.25” and locally                         

                                more each day

Mon-Tue                                                                             70% cvg of up to 0.75”

                                                                                                and local amts to 2.0”

Wed-Jun 29                                                                        5-20% daily cvg of up

                                                                                                to 0.30” and locally

                                                                                                more each day

Jun 29-30             5-20% daily cvg of up                     

                                to 0.30” and locally                         

                                more each day                                  

Jun 30-Jul 5                                                                         10-25% daily cvg of

                                                                                                up to 0.40” and locally

                                                                                                more each day

Jul 1-5                   10-25% daily cvg of                         

                                up to 0.30” and locally                   

                                more each day

 

SIGNIFICANT PRECIPITATION EVENTS FOR BRAZIL

Tdy-Sat 15% cvg of up to 0.60” and local amts to 1.10”;

                                far south wettest

Sun-Mon             15% cvg of up to 0.75” and local amts to 2.0”;

                                south Parana and north Santa Catarina wettest

Tue-Jun 28          15% cvg of up to 0.75” and local amts to 1.50”;

                                far south wettest

Jun 29-Jul 1         5-20% daily cvg of up to 0.30” and locally more

                                each day; wettest NE and far south

Jul 2-4                   15% cvg of up to 0.75” and locally more;

                                wettest south

 

SIGNIFICANT PRECIPITATION EVENTS FOR ARGENTINA

Tdy-Fri                  5-15% daily cvg of up to 0.25” and locally

                                more each day; Entre Rios wettest

Sat                          25% cvg of up to 0.40” and locally more;

                                Corrientes wettest

Sun-Mon             Mostly dry with a few insignificant showers

Tue-Jun 28          20% cvg of up to 0.50” and locally more;

                                wettest NE

Jun 29-30             Up to 20% daily cvg of up to 0.25” and locally

                                more each day; some days may be dry

Jul 1-3                   20% cvg of up to 0.30” and locally more;

                                wettest east

Jul 4-5                   5-20% daily cvg of up to 0.25” and locally

                                more each day

Source: World Weather Inc. and FI

 

Upcoming

FRIDAY, JUNE 22:

• USDA cold-storage report, cattle-on-feed figures for May, both at 3pm
• FranceAgriMer weekly updates on French crop conditions
• ICE Futures Europe commitments of traders weekly report on coffee, cocoa, sugar positions, ~1:30pm ET (~6:30pm London)
• CFTC commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm

SATURDAY, JUNE 23:

• China scheduled to release May commodities trade data (final), including imports of palm oil, cotton, 2:30am ET (2:30pm Beijing)

 

USDA export sales. All-wheat sales and product shipments were some of the positive numbers this week’s USDA export sales report. Soybean, corn, and meal sales were on the low side. Soybean oil sales were ok.

 

 

Bloomberg weekly bull/bear survey

·         Wheat: Bullish: 7 Bearish: 8 Neutral: 3

·         Corn: Bullish: 12 Bearish: 6 Neutral: 2

·         Soybeans: Bullish: 7 Bearish: 9 Neutral: 4

·         Sugar survey results: Bullish: 6 Bearish: 1 Neutral: 2

·         White sugar: Bullish: 4 Bearish: 3 Neutral: 2

·         White- sugar premium: Widen: 0 Narrow: 4 Neutral: 5

 

 

Corn.

• Lower USD, bottom picking, and good demand for US corn along with higher wheat supported corn to close higher on Thursday. USDA export sales were arguably low but somehow traders looked past that by citing additional South Korean corn business that included a cargo of US corn.

• Funds bought an estimated net 9,000 corn contracts.
• We are looking for the 2017-18 crop-year average for US nearby corn futures to end up at $3.65 per bushel. This translates into higher prices than the $3.57 June 21 settlement, for the remainder of the crop-year, if realized.
• A Bloomberg poll showed 60 percent of the respondents are bullish corn as of Wednesday, up from 52.6 percent as of June 14.

• Newswires reported the EPA will delay their biofuel announcement that was due out on Friday. 2019 mandates were expected to be addressed but yesterday we learned EPA may propose reallocating waived biofuels volumes to other refiners. The announcement was thought to be delayed on the latter. Details to either subject is lacking, but below is an earlier prediction of what the 2019 proposed biofuel requirements may look like.

• Reuters noted prices of renewable fuel credits fell to 29.5 cents after reaching a high of 32 on Thursday, up from 28 cents on Wednesday.
• The EPA showed US May D6 RIN generation at 1.298 billion, up from 1.244 billion in April.
• The U.S. House of Representatives approved a $867 billion farm bill that includes changes to the Supplemental Nutrition Assistance Program (SNAP) program. Some Democrats opposed. Meanwhile the Senate has a different version.  Separately, the White House unveiled an overhaul to many government agencies, that includes moving the government food stamp program from USDA to the Department of Health and Human Services, among several other changes in other agencies. If they can get it done, it would be the largest reform since the Great Depression. Many past administrations attempted to do this but failed.
• The Argentina AgMin estimated corn production at 42.4 million tons, up from 42.0 million tons previously.
• South Africa’s CEC will update its corn crop estimate on Wednesday and traders are looking for 12.991 million tons, slightly above 12.909 million reported in May and compares to 16.82 million tons in 2017. Breakdown of a Reuters survey put white corn at 6.768 million tons and yellow at 6.223 million tons.
• Yesterday the USDA reported the weekly Broiler Report showed eggs set in the United States up 3 percent and chicks placed up 2 percent. Cumulative placements from the week ending January 6, 2018 through June 16, 2018 for the United States were 4.40 billion. Cumulative placements were up 1 percent from the same period a year earlier.

 

Export Developments

• China sold 1.418 million tons of corn from state reserves or 35.6 percent of what was offered at an average price of 1518 yuan per ton (233.47/ton). China sold an estimated 46.1 million tons of corn out of reserves since April 12.
• South Korea’s FLC bought 66,000 tons of optional origin corn at $208.99/ton c&f for late November arrival.
• South Korea’s KOCOPIA bought 60,000 tons of US origin corn at $213.55/ton c&f for late October arrival.
• South Korea bought a combined 1.6 million tons of corn so far in June. They are taking advantage of the lower prices.
• Brazil looks to sell corn out of reserves soon.

 

 

Export Developments

• South Korea’s MFG bought 138,000 tons of corn at $207.99/ton c&f for November arrival.
• South Korea bought a combined 1.5 million tons of corn so far in June. They are taking advantage of the lower prices.
• Brazil looks to sell corn out of reserves soon.
• China sold an estimated 44.7 million tons of corn out of reserves since April 12.

 

 

 

Soybean complex.

·         The soybean complex ended lower on follow through selling from China/US trade fears. A higher trade in corn prompted further unwinding of long soybean/corn spreads. USDA export sales were poor for soybeans.

·         Funds sold 11,000 soybeans, sold 4,000 soybean meal, and sold 5,000 soybean oil.

·         US soybean drought conditions increased from the previous week. Eleven percent of the US soybean growing areas are expecting some type of drought, up a point from the previous week and compares to 6 percent a year ago.  States experiencing the most drought: KS (72), Missouri (38), SD (30) and ND (27). These observations are similar to what was reported for US corn.

• The EPA showed US May D4 RIN generation at 342.8 million, up from 314.5 billion in April. Soybean oil use for biodiesel production could end up around 600 million pounds in May.
• The Argentina AgMin estimated soybean production that is nearing harvest completion at 37.2 million tons, up from 36.6 million previously, first uptick in production we have seen in more than six months for the crop.
• Brazil soybean premiums have doubled recently but some transit costs to get the soybeans to ports have increased 150 percent, leaving some producers reluctant sellers.

·         The European Union reported soybean import licenses since July 1 at 13.073 million tons, below 13.652 million tons a year ago. European Union soybean meal import licenses are running at 18.095 million tons for 2017-18, above 17.490 million tons a year ago. EU palm oil import licenses are running at 5.934 million tons for 2017-18, up from 5.948 million tons a year ago.

 

 

Export Developments

·         China plans to auction off 60,000 tons of soybean oil on June 22 using a base price of 5,000 yuan per ton.

·         China plans to offer to sell 500,000 tons of soybeans and 50,000 tons of soybean oil from state reserves on June 27. China sold 270,106 tons of soybeans out of reserves so far this season.

• Iran seeks 30,000 tons of sunflower oil on July 10.
• Iran seeks 30,000 tons of palm olein oils on July 10. 
• Iran seeks 30,000 tons of soybean oil on August 1.

 

Wheat. 

• US wheat futures ended higher led by Chicago despite USDA export sales suggesting MN type wheat should have led the charge to the upside. SRW type wheat export sales showed a small net reduction while higher protein class wheat were good. Declining Black Sea prospects brought funds back to the markets, in which they like to pile into Chicago anyway. 

·         US drought conditions eased a touch from the previous week. Thirty-three percent of the US winter wheat growing areas are expecting some type of drought, unchanged from the previous week and compares to 5 percent a year ago. The US spring wheat area is experiencing 27% of drought, down from 29 percent from the previous week, and compares to 52% a year ago.

·         Our winter wheat production estimates by class and all wheat as follows:

 

 

 

• Funds in Chicago were buyers of an estimated net 5,000 SRW wheat futures, according to Reuters. 

·         Agritel estimated wheat production in Russia at 67.4 million tons, down 21.5 percent from 2017. USDA is at 68.50 million tons. UkrAgroConsult took their estimate down 4 to 70 million tons from 74 million. 

• The Argentina AgMin slightly lowered its Argentina wheat planted area to 6.135 million hectares from 6.15 million previously.
• Bulgaria looks for the 2018 wheat crop to come in at 6.1 million tons, near unchanged from the previous season, and on the larger side for their typical harvest. 
• The European Union granted export licenses for 93,000 tons of soft wheat imports, bringing cumulative 2017-18 soft wheat export commitments to 19.349 million tons, well down from 23.625 million tons committed at this time last year.

 

 

Export Developments.

• The Philippines are in for 220,000 tons of feed wheat for Aug-Oct shipment.
• China sold 3,008 tons of imported wheat out of reserves or less than 0.17% of what was offered at an average price of 2210 yuan per ton ($339.86/ton).
• Japan bought 91,188 tons of milling wheat on June 21. Origins were open to Australia and US. No Canada. Original details of tender below:

• Taiwan seeks 95,350 tons of US wheat on June 26 for Aug/early Sep shipment, depending on origin.
• Jordan seeks 120,000 tons of barley on June 26.
• Jordan seeks 120,000 tons of wheat on June 27.
• Japan in a SBS import tender seeks 120,000 tons of feed wheat and 200,000 tons of barley on June 27. 
• Syria seeks 200,000 tons of wheat on July 2 for Aug 1-Sep 30 shipment. Origins include Russian, Romania and/or Bulgaria.
• Bangladesh seeks 50,000 tons of wheat on July 3.

 

Rice/Other

• South Korea seeks 102,800 tons of rice for September-February arrival on June 27.

    TONNES(M/T)    GRAIN TYPE      ARRIVAL/PORT

    20,000         Brown Short     Sept. 15, 2018/Incheon

    20,000         Brown Short     Sept. 15, 2018/Ulsan

    20,000         Brown Short     Sept. 15, 2018/Masan

    10,000         Brown long      Sept. 30, 2018/Mokpo

    10,000         Brown long      Sept. 30, 2018/Donghae

     2,800         Milled Medium   Dec. 1-31, 2018/Busan

    10,000         Milled Medium   Feb. 28, 2019/Busan

    10,000         Milled Medium   Feb. 28, 2019/Busan

• Iran seeks 50,000 tons of rice from Thailand on July 3.