FW: FI Evening Grain Comments 06/27/18

PDF attached

 

Weather and crop conditions

• The longer-term forecasts are calling for drier and warmer temperatures for the US Midwest.
• World Weather evening update: “The most important part of the model run was the consistent forecast for the upper level ridge of high pressure that builds into the central Plains and western Corn Belt July 4-5 and then shifts to the Great Basin and Rocky Mountain region July 6-10. The ridge begins to shift back toward the high Plains region by July 12.”
• The US trends warmer this week.
• The forecast calls for limited precipitation during the second week of July, but the northern and eastern Midwest may pick up on rain.
• U.S. northern Plains will receive daily rainfall through the next ten days.
• The Texas Blacklands, West Texas and parts of the Delta where dryness will continue to see crop stress due to net drying through early July.
• Eastern Australia will receive needed rain today and Wednesday.
• Shandong, China, saw beneficial rain Monday into Tuesday. Southern Shanxi, extreme northern Henan and central Shaanxi saw rain as well.
• Northeast China rainfall will be frequent through July 4.
• Western Europe will continue to see a high-pressure ridge in place through Friday, limiting rainfall and keeps temperatures warm.
• Eastern Ukraine through Kazakhstan will see drought conditions for a while. Eastern portions of Russia’s Southern Region into Kazakhstan will see some relief from warm temperatures this weekend.
• Brazil and Argentina will see net drying through at least July 8.

Source: World Weather Inc. and FI

 

SIGNIFICANT CORN AND SOYBEAN BELT PRECIPITATION EVENTS

                                WEST CORN BELT                             EAST CORN BELT              

Thu                        15% cvg of up to 0.75”                    15% cvg of up to 0.50”

                                and local amts to 1.75”;                 and local amts to 1.0”;

                                far NW wettest                                 wettest SW

Fri                                                                                           10% cvg of up to 0.25”

                                                                                                and locally more;

                                                                                                wettest SW

Fri-Sat                   75% cvg of up to 0.75”

                                and local amts to 1.50”

                                with some 1.50-3.0”

                                amts from Ia. to west

                                Wi.; far SE and far NW

                                driest

Sat-Sun                                                                                80% cvg of up to 0.60”   

                                                                                                and local amts to 1.30”

Sun-Mon             50% cvg of up to 0.65”

                                and local amts to 1.35”;

                                wettest NW

Mon-Tue                                                                             40% cvg of up to 0.35”   

                                                                                                and local amts to 0.65”

Tue-Jul 4              5-20% daily cvg of up

                                to 0.40” and locally                         

                                more each day;

                                wettest north

Jul 4                                                                                       20% cvg of up to 0.30”

                                                                                                and locally more

Jul 5-6                   45% cvg of up to 0.40”                    45% cvg of up to 0.30”

                                and local amts to 1.0”;                    and local amts to 0.65”

                                wettest north

Jul 7-11                 5-20% daily cvg of up                      5-20% daily cvg of up

                                to 0.25” and locally                          to 0.25” and locally

                                more each day                                  more each day

 

U.S. DELTA/SOUTHEAST SIGNIFICANT PRECIPITATION EVENTS

                                DELTA                                                   SOUTHEAST

Tdy-Fri                  5-20% daily cvg of up                     

                                to 0.25” and locally                         

                                more each day

Tdy-Mon                                                                             20-40% daily cvg of         

                                                                                                up to 0.60” and locally   

                                                                                                more each day

Sat-Jul 4               20-40% daily cvg of                         

                                up to 0.60” and locally                   

                                more each day;

                                wettest south

Tue-Jul 5                                                                              25-50% daily cvg of

                                                                                                up to 0.75” and locally

                                                                                                more each day

Jul 5-6                   5-20% daily cvg of up                     

                                to 0.30” and locally                          

                                more each day                                  

Jul 6-11                                                                                 20-40% daily cvg of

                                                                                                up to 0.60” and locally

                                                                                                more each day

Jul 7-11                 10-25% daily cvg of                         

                                up to 0.30” and locally                   

                                more each day                                  

Source: World Weather Inc. and FI

 

 

Upcoming

THURSDAY, JUNE 28:

• USDA weekly crop net-export sales for corn, wheat, soy, cotton, 8:30am
• USDA hogs & pigs inventory data for 2Q, 3pm
• U.S. agriculture prices received for May, 3pm
• Buenos Aires Grain Exchange weekly crop report
• EU weekly grain, oilseed import and export data
• Port of Rouen data on French grain exports
• Bloomberg weekly survey of analysts’ expectations on grain, sugar prices

FRIDAY, JUNE 29:

• Statistics Canada to release June seeded area for wheat, soy, barley, canola, durum 8:30am
• USDA annual plantings data for corn, soy, wheat, cotton, noon
• USDA grain stockpiles data for 2Q, noon
• Traders’ estimates for July raw sugar delivery on ICE Futures
• 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
• Honduran Coffee Institute releases monthly exports, 4pm
• FranceAgriMer weekly updates on French crop conditions

SATURDAY, JUNE 30:

• AmSpec data on Malaysia’s June 1-30 palm oil exports, 11pm ET Friday (11am Kuala Lumpur Saturday)

 

 

 

 

 

 

 

Macros.

·         US Durable Goods Orders May Prelim: -0.6% (est -1.0% prev R -1.0%)

US Durable Ex Trans May Prelim: -0.3% (est 0.5% prev R 1.9%)

US Cap Goods Orders Nondef Ex Air May Prelim: -0.2% (est 0.5% prev R 2.3%%)

US Cap Goods Ship Nondef Ex Air May Prelim: -0.1% (est 0.3% prev R 1.0%)

·         US Wholesale Inventories May Prelim: 0.5% (est 0.2% prev 0.1%)

US Retail Inventories May M/M: 0.4% (prev R 0.5%)

·         US Advance Goods Trade Balance May: -$64.8bln (est -$69bln prev R $67.3bln)

·         US Pending Home Sales (M/M) May: -0.5% (est 0.5%; prev -1.3%)

 

Corn.

• September corn futures traded two-sided, ending 0.5 cent higher. December was unchanged on the day at $3.7325.
• Funds sold an estimated net 5,000 corn contracts, according to Reuters.
• South Africa reported the 2018 corn crop up 297,000 tons or 2 percent to 13.207 million tons from its May estimate of 12.91 million tons. Traders were looking for 12.99 million tons.
• The EPA reported carryover RINs total 3.06 billion versus 2.22 million in December. They include 1.460 billion that were not required to be retired for 2017 and another 790 million for 2016. This may keep current RIN’s prices below 2017 levels.
• Euronext will add a corn delivery point in Ghent, Belgium.
• The USDA Broiler Report showed eggs set in the US up 3 percent from a year ago and chicks placed up 3 percent. Cumulative placements from the week ending January 6, 2018 through June 23, 2018 for the United States were 4.58 billion. Cumulative placements were up 1 percent from the same period a year earlier.

 

US weekly ethanol update

• US weekly ethanol production increased 8,000 barrels per day to 1.072 million. A Bloomberg survey was looking for a decline to 1.059 million.
• US ethanol stocks increased 27,000 barrels to 21.674 million, near the Bloomberg trade average. 
• Note the record weekly ethanol production was 1.108 million barrels as of December 1, 2017.
• US ethanol production of 1.072 million barrels per day was highest since 12/22/17 and up 5.6% from about the same time a year ago.
• September 2017 to date US ethanol production is running 2.6% above the same period a year ago.
• There were no imports reported this week. Last weekly imports recorded back in December.
• Ethanol stocks of 21.674 million barrels are up 1.9% from last month and down 0.8% from a year ago.
• Days of inventory of 20.2 compares to 21.3 a month ago and 22.0 during comparable period a year ago.
• Weekly ending stocks of total gasoline were up 1.156 million barrels to 241.2 million barrels.
• The net blender input of fuel ethanol was up 12,000 from the previous week at 947,000 bpd, above its 4-week average of 931,000 bpd. 
• Net production of finished reformulated and conventional motor gasoline with ethanol, increased 132,000 to 9.377 million barrels, or 91.4 percent of the net production of all finished motor gasoline, down from up from 92.8 percent for the previous week.
• Our 2017-18 crop-year corn for ethanol usage is 5.625 billion bushels, above USDA’s current estimate of 5.575 and compares to 5.432 billion for 2016-17.

 

 

 

Export Developments

• None
• China sold an estimated 46.9 million tons of corn out of reserves since April 12.

 

 

6/19/18. Our bottom for 2017-18 corn is $3.15 but see September remaining in a large $3.30-$3.75 range.

 

Soybean complex.

·         Soybeans ended mostly higher in a wide, two-sided trade. Trade fears continue to loom.  Some commercials took advantage when prices were lower. Meal finished slightly lower and soybean oil up 7-11 points.

·         Funds were even in soybeans, sold 3,000 soybean meal, and bought 3,000 soybean oil.

·         China continues to prepare to for a US/China trade war. Several studies, meetings, and comments have flowed out of China over the past couple of days. The president of China hinted a slowdown in US Treasury buying, and/or eventual reduction of what they are holding. China carries a lot of US debt. US equity markets traded in a wide range today.

·         Brazil is scheduled to ship 6.56 million tons of soybeans as of June 26. They are on track to export about 10 million tons for the month. 

·         China increased its number of Ukraine sunflower companies to supply sunflower meal to China to 18 from 7.

·         China soybean meal futures hit a 7-week high.

 

Export Developments

·         Egypt seeks 30,000 tons of soybean oil and 10,000 tons of sunflower on June 28 for arrival around Aug 15-31. GASC will also accept offers for at least 10,000 tons of soyoil and 5,000 tons of sunflower oil in Egyptian pounds. (Reuters)

·         China sold 106,859 tons of soybeans (21% of the 500,000 tons offered) and 1,991 tons of soybean oil (4% of the 50,000 tons offered) from state reserves. The soybeans were sold at an average price of 3,008 yuan per ton or $455.42/ton and soybean oil at 5,000 yuan per ton or $760.35/ton. China sold 376,965 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.

 

6/19/18 Trading ranges:

·        August soybeans are now seen in a $8.25-$9.75 range; November $8.00-$10.75 range.

·        August soybean meal $310-385 range; December $300-$410 range.

·        August soybean oil 27.00-30.00 range; December 27.50-30.50 range.

 

Wheat. 

• Chicago and KC wheat ended higher led again by the nearby Chicago markets. MN traded lower on improving Australian weather. KC and Chicago found technical buying after contracts high multi week lows on Tuesday (KC wheat bounced off a 12-week low). MN made fresh all-time contract lows.  Remember the USDA reports are due out on Friday so some shorts are closing out positions.
• September Chicago wheat is at a 10.25 cents premium over KC wheat.

• Funds in Chicago were buyers of an estimated net 5,000 SRW wheat futures, according to Reuters, bringing the estimated net long position for traditional funds to about 17,500 contracts. 
• Ukraine’s southern and central regions harvested 2.7 million tons of grain with an average yield of 3.06 tons per hectare, on a target area of 9.6 million hectares.
• The Ukraine state forecaster estimated 2018 grain production at 59.3 million tons, with 23.3 million tons of wheat and 26.8 million tons of corn.
• SovEcon warned the Russian wheat crop could end up being the smallest in decades.
• Egypt collected 3.15 million tons of wheat, well below the target of 3.5-4.0 million tons. A year ago, they collected 3.6 million tons. 
• Low water levels on the Rhine and Danube rivers in Germany are low, forcing boats to carry less grain that normally allowed.
• France is getting ready to ship three vessels of wheat to Algeria.

 

Export Developments.

• Tunisia bought 125,000 tons of optional origin soft milling wheat at $210.89/ton c&f. They also bought 75,000 tons of feed barley. Reuters provided the following:
  • Three wheat consignments, each of 25,000 tons were bought at $210.89 a ton c&f and one of 25,000 tons at $211.64 a ton c&f.
  • One 25,000-ton wheat consignment was also bought at $210.98 a ton c&f.
  • Wheat shipment was said to be in stages between Aug. 15 and Sept. 25.
  • Of the barley, one consignment of 25,000 tons was bought at $209.19 a ton c&f, another of 25,000 tons at $209.41 a ton c&f and another of 25,000 tons at $212.68 a ton c&f.
  • The barley is for shipment in stages between Aug. 1 and Sept. 15.
• Jordan passed on 120,000 tons of wheat.
• Japan in a SBS import tender bought only 50 tons of feed wheat and passed on barley. 
• Japan in a SBS import tender seeks 120,000 tons of feed wheat and 200,000 tons of barley on July 4 for arrival by December 28. 
• Syria seeks 200,000 tons of wheat on July 2 for Aug 1-Sep 30 shipment. Origins include Russian, Romania and/or Bulgaria.
• Iraq seeks 50,000 tons of wheat from the US, Australia and/or Canada on July 2, valid until July 8.
• Bangladesh seeks 50,000 tons of wheat on July 3 for shipment within 40 days of contract signing.

 

Rice/Other

• Results awaited: 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.

 

 

Revised lower: 6/27/18. Trading ranges:

• September Chicago wheat $4.50-$5.30 range.
• September KC $4.55-$5.40 range.
• September MN $5.00-$6.00 range.