FW: FI Evening Grain Comments 06/28/18

PDF attached

 

Weather and crop conditions

 

• The US trends warmer into the weekend through mid-next 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              

Fri                           15% cvg of up to 0.30”                    10% cvg of up to 0.30”

                                and local amts to 0.75”;                 and locally more;

                                wettest NW                                       wettest SW

Sat-Sun                80% cvg of up to 0.75”                    60% cvg of up to 0.60”

                                and local amts to 1.50”                   and local amts to 1.30”;

                                with some 1.50-3.50”                     wettest west

                                amts in north Ia. and

                                south Mn.; SE and far

                                NW driest

Mon-Wed           10-25% daily cvg of                          15-35% daily cvg of

                                up to 0.75” and local                       up to 0.40” and locally

                                amts to 1.50” each                           more each day 

                                day; driest south                             

Jul 5-6                   55% cvg of up to 0.75”                    60% cvg of up to 0.40”

                                and local amts to 1.50”;                 and local amts to 1.0”

                                wettest north; driest

                                SW

Jul 7                       15% cvg of up to 0.20”

                                and locally more

Jul 7-8                                                                                   5-20% daily cvg of up

                                                                                                to 0.25” and locally

                                                                                                more each day

Jul 8-9                   60% cvg of up to 0.60”

                                and locally more

Jul 9-10                                                                                 60% cvg of up to 0.50”

                                                                                                and locally more

Jul 10-12               5-20% daily cvg of up                     

                                to 0.25” and locally                         

                                more each day                                 

Jul 11-12                                                                               5-20% daily cvg of up     

                                                                                                to 0.25” and locally         

                                                                                                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-Sat                                                                                 20-40% daily cvg of         

                                                                                                up to 0.60” and locally   

                                                                                                more each day; N.C.

                                                                                                and Va. driest

Sat-Sun                20-40% daily cvg of                          

                                up to 0.40” and locally                   

                                more each day

Sun-Tue                                                                               70% cvg of up to 0.75”

                                                                                                and local amts to 1.50”

                                                                                                and a few 1.50-3.0”

                                                                                                amts; Carolinas and

                                                                                                Va. driest                                                            

Mon-Tue             75% cvg of up to 0.60”

                                and local amts to 1.35”;

                                wettest south

Wed-Jul 6            10-25% daily cvg of                          25-50% daily cvg of

                                up to 0.30” and locally                    up to 0.75” and locally

                                more each day                                  more each day

Jul 7-12                 10-25% daily cvg of                          15-35% daily cvg of

                                up to 0.30” and locally                    up to 0.50” and locally

                                more each day                                  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)

Source: Bloomberg and FI

 

 

 

 

 

 

 

 

Weekly Bull/Bear Bloomberg Survey (taken Wed.)

・         Corn: Bullish: 10 Bearish: 6 Neutral: 3

・         Wheat: Bullish: 7 Bearish: 6 Neutral: 6

・         Soybeans: Bullish: 7 Bearish: 6 Neutral: 6

・         Raw Sugar : Bullish: 3 Bearish: 2 Neutral: 4

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

・         White-sugar premium: Widen: 2 Narrow: 1 Neutral: 6

 

Macros.

・         President Donald Trump and Russian President Vladimir Putin will meet in Helsinki, Finland, July 16, the White House and Kremlin have announced.

・         US Initial Jobless Claims: 227k (est 220k prev 218k)

–          US Continuing Claims: 1.705mln (est 1.717mln prev R 1.726mln)

–          US Personal Consumption Q1 T: 0.9% (est 1.0% prev 1.0%)

–          US Core PCE Q1 T Q/Q: 2.3% (prev 2.3%)

・         US GDP Annualized Q1 T Q/Q: 2.0% (est 2.2% prev 2.2%)

–          US GDP Price Index Q1 T Q/Q: 2.2% (est 1.9% prev 1.9%)

 

Corn.

• CBOT corn ended sharply lower. Good weather over the past week with widespread rains was thought to have been ample enough to combat hot and drier conditions over the next several days. Positioning ahead of the USDA report due out Friday added to the selling.
• The Senate passed their version of the Farm Bill 86-11. The Bill did not change the food stamp program. Negotiation between House and Senate will begin. The House version did not pass.
• Funds sold an estimated net 13,000 corn contracts, according to Reuters. We estimate the traditional net long fund position at 235,900 contracts.

• USDA US corn export sales were good on a combined old and new-crop basis.

・         The European Commission lowered its EU soft wheat production forecast to 137.6 million tons from 140.25 million tons, down from 141.8 million tons in 2017-18. Exports for 2018-19 were left unchanged at 27 million tons, but stocks are down to 13.4 million tons from 16.0 million tons previously.

・         End of the month reports from the US government will include EIA biofuel updates (biodiesel and ethanol). The next business day, Monday, will include the USDA/NASS updated on corn and oilseed grind/crushing.  Our trade estimates can be found after the export development section(s).

• We look for USDA on Friday to report the June US corn planted area at 88.326 million acres (300,000 acres above USDA March), below an average trade guess of 88.562 million (536,000 acres above USDA).
• Combining the average trade guesses for US corn, soybean, wheat, cotton, sorghum, barley, oats and rice area, the trade looks for 1.404 million acre increase from March. We are looking for this combined area to increase 0.853 million. We are looking for USDA to decrease the all-wheat area by 3,000 acres, and the trade looks for all-wheat to decrease 257,000 acres.
• FI looks for the June 1 US corn stocks to end up at 5.220 billion bushels, 48 million below a Reuters trade guess and 9 million below a year ago.
• The USDA Hogs and Pigs report showed a larger than expected US herd. It came in a record 73.451 million, up 3.4 percent from a year ago. Kept for breeding rose 3.5%, 1.8 percentage points above a Reuters trade guess. Going forward, good US pork exports, excluding China, could limit a downtrend in hog prices amid large supplies. But there is a lot of uncertainty from trade spats spreading to other countries.

 

 

Export Developments

・         China sold 1.060 million tons of corn out of reserves, 26.5% of what was offered at an average price of 1514 yuan per ton ($228.89/ton). China sold an estimated 48 million tons of corn out of reserves since April 12.

 

USDA Export Sales Text

• Corn:    Net sales of 849,900 MT for 2017/2018 were up noticeably from the previous week and up 16 percent from the prior 4-week average.  Increases were reported for South Korea (206,700 MT, including 130,000 MT switched from unknown destinations and decreases of 1,000 MT), Mexico (195,200 MT, including decreases of 3,400 MT), Japan (163,600 MT, including 58,300 MT switched from unknown destinations and decreases of 14,900 MT), Colombia (79,600 MT), and Peru (78,200 MT, including decreases of 3,500 MT).  Reductions were primarily for unknown destinations (188,100 MT).  For 2018/2019, net sales of 636,800 MT were reported for South Korea (132,000 MT), Japan (125,000 MT), Panama (117,000 MT), and Mexico (108,800 MT).  Exports of 1,479,900 MT were down 16 percent from the previous week and 9 percent from the prior 4-week average.  The destinations were primarily to South Korea (275,500 MT), Mexico (275,100 MT), Japan (237,800 MT), Taiwan (91,500 MT), and Tunisia (84,500 MT).  Optional Origin Sales:    For 2017/2018, the current optional origin outstanding balance of 417,000 MT is for South Korea (206,000 MT), unknown destinations (91,000 MT), Saudi Arabia (70,000 MT), and Egypt (50,000 MT).   For 2018/2019, the current outstanding balance of 138,000 MT is for Saudi Arabia (70,000 MT) and South Korea (68,000 MT).
• Barley:    No net sales were reported for the week.  Exports of 600 MT were to Japan (500 MT) and Taiwan (100 MT). 
• Sorghum:    There were no net sales or exports reported during the week. 

 

 

 

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.

・         US soybean complex traded mixed on Thursday and crush margins were higher. Soybeans saw pressure after China switched away cargos to other countries as indicated in the USDA export sales report. Soybean meal saw buying on end user positioning but closed lower on fund selling. Soybean oil gained in part to higher US WTI crude oil but lower soybeans and meal left soybean oil to close unchanged in the front 5 contract months (can’t remember last time that happened). January and March 2019 soybean oil fell one point. Chinese crush margins have also been improving this week.

・         Funds sold 5,000 soybeans, sold 2,000 soybean meal, and bought 3,000 soybean oil.

• Brazil committed about 54.3 million tons of soybeans so far this season, up 6 million tons from this time last year.
• USDA soybean export sales were within expectations for this crop-year and above for new-crop. Iran bought 60k tons (switched from China). There were a few other countries that posted increases that were switched from unknown or China.
• USDA soybean oil export sales were above expectations for the current marketing year.
• USDA soybean meal export sales were within expectations.
• We look for USDA on Friday to report the June US soybean planted area at 89.432 million acres (450,000 acres above USDA March), below an average trade guess of 89.691 million (709,000 acres above USDA).
• FI looks for the June 1 US soybean stocks to end up at 1.280 billion bushels, 55 million above a Reuters trade guess and 314 million above a year ago.

・         The European Commission left its EU corn production forecast unchanged at 63.95 million tons from last month.

・         September Malaysian palm was 28 higher at MYR2343 and cash up $6.25 at $602.50. 

・         Dorab Mistry estimated palm prices will decline over the next two months to 2100/ton ($560/ton) due to larger supplies. He added palm oil could also benefit from the U.S.-China trade war.

・         Felda Global Ventures annual report showed the forecast average price of crude palm oil at 2,400 ringgit to 2,600 ringgit per ton in 2018.

・         End of the month reports from the US government will include EIA biofuel updates (biodiesel and ethanol). The next business day, Monday, will include the USDA/NASS updated on corn and oilseed grind/crushing.  Our trade estimates can be found after the export development section(s).

・         Reuters shows the average trade guess for the USDA/NASS US May crush at 173.9 million bushels (173.1-174.5) and stocks at 2.462 billion (2.420-2.521). We are using 173.7 and 2.521.  The trade average for soybean oil implies excellent demand during May.

・         The USDA Attaché estimated 2017-18 China soybean imports at 97.0 million tons (same as USDA), and 2018-19 at 100.5 million tons (2.5MMT below USDA official). The also reported very little soybean meal imports for new-crop. https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Oilseeds%20and%20Products%20Update_Beijing_China%20-%20Peoples%20Republic%20of_6-22-2018.pdf

 

USDA Attaché on China soybeans

Source: USDA Attaché and FI

 

Export Developments

・         Egypt bought 25,000 tons of soybean oil and 40,000 tons of sunflower for arrival around Aug 15-31, Breakdown of the purchase from Reuters:

o   30,000 tons of sunflower oil at $776.00

o   10,000 tons of sunflower oil at $778.50

o   10,000 tons of soyoil at 12,638 Egyptian pounds a ton ($715.68)

o   15,000 tons of soyoil at 12,638 Egyptian pounds a ton ($715.68)

• 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.

・         China sold 376,965 tons of soybeans out of reserves so far, this season.

 

USDA Export Sales Text

• Soybeans:    Net sales of 358,500 MT for 2017/2018 were up 19 percent from the previous week and 14 percent from the prior 4-week average.  Increases were reported for Vietnam (79,700 MT, including 65,000 MT switched from unknown destinations), the Netherlands (76,700 MT, including 66,000 MT switched from unknown destinations), Bangladesh (64,000 MT, including 63,000 MT switched from China), Iran (60,000 MT, switched from China), and Peru (34,500 MT, including 35,000 MT switched from unknown destinations and decreases of 500 MT).  Reductions were for China (120,000 MT).    For 2018/2019, net sales of 642,300 MT were primarily for Pakistan (207,000 MT), Thailand (148,000 MT), and Mexico (135,000 MT).    Exports of 500,500 MT were down 50 percent from the previous week and 27 percent from the prior 4-week average.  The destinations included the Netherlands (76,700 MT), Vietnam (75,500 MT), China (71,700 MT), Pakistan (69,300 MT), and Mexico (39,900 MT).  Optional Origin Sales:    For 2018/2019, the current optional origin outstanding balance of 228,000 MT is for China (165,000 MT) and unknown destinations (63,000 MT).  Export for Own Account:    The current outstanding balance of 71,400 MT is for Canada.
• Soybean Cake and Meal:    Net sales of 146,300 MT for 2017/2018 were up 27 percent from the previous week and from the prior 4-week average.   Increases were reported for Mexico (37,200 MT, including decreases of 500 MT), the Philippines (29,600 MT, including decreases of 100 MT), Canada (26,600 MT), Colombia (14,000 MT), and Guatemala (12,000 MT, including 12,900 MT switched from unknown destinations, 2,000 MT switched from Panama, 2,000 MT switched from El Salvador, and decreases of 100 MT).  Reductions were reported for unknown destinations (13,100 MT).  For 2018/2019, net sales of 75,500 MT were primarily for Panama (48,500 MT), El Salvador (12,000 MT), and Canada (4,200 MT).  Exports of 273,400 MT were up 30 percent from the previous week and 19 percent from the prior 4-week average.  The primary destinations were the Philippines (71,300 MT), Mexico (32,000 MT), Morocco (31,800 MT), Venezuela (22,000 MT), and Guatemala (21,100 MT).
• Soybean Oil:    Net sales of 30,500 MT for 2017/2018 were up 91 percent from the previous week and up noticeably from the prior 4-week average.  Increases were primarily for Peru (13,900 MT), Mexico (7,600 MT), Jamaica (3,500 MT), Colombia (2,200 MT, including decreases of 2,000 MT), and the Dominican Republic (1,600 MT).  For 2018/2019, net sales of 2,400 MT were reported for Mexico.  Exports of 7,500 MT were down 75 percent from the previous week and 77 percent from the prior 4-week average.  The primary destinations were Guatemala (5,000 MT) and Mexico (2,200 MT).   

 

 

 

6/19/18 Trading ranges:

・        August soybeans are 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. 

• All three US wheat markets were struggling to trade higher early but fell hard to close sharply lower on positioning and US harvest pressure.
• Funds in Chicago were sellers of an estimated net 4,000 SRW wheat futures, according to Reuters, bringing the estimated net long position for traditional funds to about 13,400 contracts. 

• All wheat export sales improved from last week to 563,700 tons. HRW amounted to 208.8k and White 117.6k. HRS were 179.1k while soft wheat was only 32.2k.
• The Indian rupee hit a 19-month low on Wednesday.
• Iran estimated the wheat crop at 2 million tons, down from 2.379 million in 2016-17. Look for imports to rise for wheat and rice. Rice plantings were down and they will need to import at least 100,000 tons.
• China plans to donate 5-10k tons of rice to Iran.
• The General Director of The Institute for Agricultural Market Studies (IKAR) said early harvesting of some wheat in Russia’s main growing areas are more optimistic than expected, and the crop could reach 70 million tons or higher. They are using 71.5 million tons.
• Yesterday SovEcon warned the Russian wheat crop could end up being the smallest in decades.
• USDA pegged the Russia wheat crop at 68.5 million tons, down from 84.99 million in 2017.
• On Friday we look for USDA to increase the spring wheat planted area by 50 million acres but the trade is looking for a 196,000 acre decrease. Our winter wheat planted area is 148,000 below USDA and we see durum seedings increasing 95,000 acres. The trade is looking for winter wheat to decline 75,000 acre and durum to increase 26,000 acres. Our all-wheat planted area of 47.336 million acres is 3,000 acres below USDA March. The trade is looking for a 237,000 acre decrease.
• June 1 US all-wheat stocks are estimated by FI at 1.087 million acres, 4 million below an average trade guess, and 94 million below a year ago. 

・         The European Commission lowered its EU barley production forecast to 58.4 million tons from 61.0 million tons last month.

 

Export Developments.

・         China sold 3,000 tons of imported wheat out of reserves, 0.2% of what was offered at an average price of 2210 yuan per ton ($333.58/ton).

・         Jordan seeks 120,000 tons of barley on July 4 for Oct-Nov shipment.

・         Jordan seeks 120,000 tons of wheat on July 8 for Oct-Nov shipment.

• 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.

 

USDA Export Sales Text

• Wheat:  Net sales of 563,700 metric tons were reported for delivery in marketing year 2018/2019.  Increases were primarily for unknown destinations (205,700 MT), Mexico (86,700 MT, including decreases of 3,600 MT), South Korea (84,800 MT), the Philippines (45,200 MT, including 32,000 MT switched from unknown destinations and decreases of 12,000 MT), and El Salvador (27,700 MT).  Reductions were reported for Japan (1,900 MT).   Exports of 356,800 MT were reported to the Philippines (101,200 MT), Indonesia (55,000 MT), Mexico (51,700 MT), Japan (35,700 MT), and South Korea (31,600 MT).
• Rice:    Net sales of 31,400 MT for 2017/2018 were up noticeably from the previous week, but down 38 percent from the prior 4-week average.  Increases reported for Haiti (15,300 MT), Costa Rica (6,000 MT), Honduras (4,200 MT), Canada (3,500 MT, including decreases of 100 MT), and Mexico (1,400 MT, including decreases of 300 MT), were partially offset by reductions for El Salvador (500 MT), Jordan (300 MT), the Dominican Republic (200 MT), and Nicaragua (200 MT).  Exports of 56,900 MT were up 57 percent from the previous week, but down 22 percent from the prior 4-week average.  The destinations were primarily to Honduras (17,000 MT), Haiti (15,000 MT), Japan (7,900 MT), Mexico (6,400 MT), and Guatemala (5,900 MT).

 

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.