FW: FI Evening Grain Comments 07/05/18

PDF attached

 

Weather and crop conditions

• Rest of July could yield near normal precipitation and above normal temperatures for the US, but an extended period of warm temperatures next week, last 7 days, could result in some crop stress. For this week, rain will be restricted across many areas.
• The morning model runs are suggesting greater rain in the Midwest during the latter part of next week and into the following weekend. This includes the July 13-20^th period. An increase of rain will become very important after the hot spell.
• The high pressure across the Midwest will shifting to the west today and Friday, then shift back east resulting in the warm temperatures Sunday through mid-week.
• Australia’s Victoria and South Australia has an opportunity for rain today and Friday.
• Northern Europe will continue to see net drying through at least July 11.
• Eastern Ukraine to Kazakhstan will experience slightly less threatening weather over the coming week to ten days.

Source: World Weather Inc. and FI

 

 

SIGNIFICANT CORN AND SOYBEAN BELT PRECIPITATION EVENTS

                                WEST CORN BELT                             EAST CORN BELT              

Tdy                         20% cvg of up to 0.30”                   

                                and local amts to 0.75”;                

                                wettest south and in

                                SE Wi.

Tdy-Fri                                                                                  75% cvg of up to 0.50”

                                                                                                and local amts to 1.0”;

                                                                                                south and east wettest

Fri                           5% cvg of up to 0.25”

                                and locally more;

                                mostly SE Mo.

Sat                                                                                          Mostly dry with a few

                                                                                                insignificant showers

Sat-Sun                5-20% daily cvg of                            

                                up to 0.60” and locally                   

                                more each day;

                                wettest NW

Sun-Mon                                                                             5-20% daily cvg of up     

                                                                                                to 0.30” and locally         

                                                                                                more each day;

                                                                                                wettest south

Mon-Tue             5-20% daily cvg of up                     

                                to 0.25” and locally                         

                                more each day

Tue-Wed                                                                             10-20% daily cvg of

                                                                                                up to 0.40” and locally   

                                                                                                more each day; south

                                                                                                and west wettest

Wed-Jul 12          60% cvg of up to 0.55”

                                and local amts to 1.25”;

                                far NW driest

Jul 12-13                                                                               70% cvg of up to 0.55”

                                                                                                and local amts to 1.25”

Jul 13-15               55% cvg of up to 0.60”                   

                                and locally more                              

Jul 14-16                                                                               65% cvg of up to 0.60”

                                                                                                and locally more              

Jul 16-19               10-25% daily cvg of

                                up to 0.35” and locally                   

                                more each day

Jul 17-19                                                                               10-25% daily cvg of

                                                                                                up to 0.35” and locally   

                                                                                                more each day

                                   DELTA                                               SOUTHEAST

Fri-Sat                   75% cvg of up to 0.75”                    80% cvg of up to 0.75”

                                and local amts to 1.50”;                 and local amts to 2.0”

                                central and south

                                wettest

Sun-Mon             35-60% daily cvg of                          20-40% daily cvg of

                                up to 0.65” and locally                    up to 0.75” and locally

                                more each day;                                 more each day; south

                                driest north                                        and west wettest

Tue-Jul 12            10-25% daily cvg of                          5-20% daily cvg of up     

                                up to 0.35” and locally                    to 0.30” and locally         

                                more each day                                  more each day

Jul 13-14               70% cvg of up to 0.50”                    60% cvg of up to 0.50”

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

                                wettest north                                    driest south

Jul 15-16               50% cvg of up to 0.50”

                                and locally more;

                                wettest north

Jul 15-17                                                                               50% cvg of up to 0.60”

                                                                                                and locally more

Jul 17-19               10-25% daily cvg of                         

                                up to 0.30” and locally                   

                                more each day

Jul 18-19                                                                               10-25% daily cvg of

                                                                                                up to 0.40” and locally

                                                                                                more each day

Source: World Weather Inc. and FI

 

Upcoming

THURSDAY, JULY 5:

• Guatemala coffee exports for June
• AB Foods trading updates, 2am ET (7am London)
• FAO Food Price Index, 4am ET (9am London)
• EIA U.S. weekly ethanol inventories, output, 11am (delayed from Wednesday due to U.S. holiday)
• Andre Pessoa, head of Agroconsult, and executives from Brazil’s grain exporter group Anec speak on nation’s 2018-19 soybean and corn crops
• 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, JULY 6:

• China is set to start levying tariffs on agriculture products, in retaliation for U.S. tariffs on imports from China
• USDA weekly crop net-export sales for corn, wheat, soy, cotton, 8:30am (delayed from Thursday due to U.S. holiday)
• ICE Futures Europe commitments of traders weekly report on coffee, cocoa, sugar positions, ~1:30pm ET (~6:30pm London)
• CFTC commitments of traders report will be delayed until Monday July 9
• FranceAgriMer weekly updates on French crop conditions

Source: Bloomberg and FI

 

 

Bloomberg weekly bull/bear survey (taken Thursday)

•        Wheat: Bullish: 10 Bearish: 0 Neutral: 4

•        Corn: Bullish: 10 Bearish: 2 Neutral: 3

•        Soybeans: Bullish: 5 Bearish: 2 Neutral: 8

•        Raw sugar: Bullish: 2 Bearish: 5 Neutral: 2

•        White sugar: Bullish: 2 Bearish: 5 Neutral: 2

•        White-sugar premium: Widen: 3 Narrow: 2 Neutral: 4

 

Informa        

MOM                   July       June

Corn yield            176.0      174.5

Corn Production       14392      14216

Soybean yield         49.8       49.5

Soybean Production    4425       4409

Source: newswires and floor traders

 

Selected Brazil commodity exports

Commodity                      June 2018          May 2018            June 2017

COFFEE(60 KG BAG)              2,157,363          1,413,717           1,905,101

CRUDE OIL (TNS)                2,858,774          3,783,303           6,194,667

ETHANOL (LTR)                  131,873,478        90,734,403          160,099,900

SOYBEANS (TNS)                 10,420,130         12,353,479          9,197,020

IRON ORE                       35,314,719         38,978,042          33,789,202

FROZEN ORANGE JUICE (TNS)      48,022             71,566              28,181

NON-FROZEN ORANGE JUICE (TNS)  156,958            141,023             135,483

SUGAR RAW (TNS)                1,705,553          1,813,633           2,635,632

Source: Brazil AgMin, Reuters and FI

 

Macros.

·         US Pres. Trump: Scott Pruitt Has Resigned From EPA

·         Friday is the day the US is going to impose tariffs against China.

·         China said they will not impose tariffs against the US until the US decides to pull the trigger.

·         US jobs report is due out Friday.

·         WTI Futures Settle At $72.94/Bbl, Down $.120

 

Corn.

• Corn opened higher, traded two-sided, and finished moderately higher. Higher wheat and lower soybeans left prices in limbo. Gains were limited on a wetter outlook for the US during the July 13-20 period.
• Reuters noted “high water levels restricted navigation and limited barge tow sizes on the Mississippi River. High waters also prevented some elevators on northern stretches of the river from loading barges.”

·         US ethanol production decreased 5,000 barrels per day to 1.067 million, and stocks increased 301,000 barrels to 21.975 million. A Bloomberg poll called for weekly US ethanol production and stocks at 1.068 million/day and 21.733 million, respectively. The report was neutral for corn.

• The USDA Broiler report showed eggs set in the US 3 percent and chicks placed up 2 percent.  Cumulative placements from the week ending January 6, 2018 through June 30, 2018 for the United States were 4.77 billion. Cumulative placements were up 1 percent from the same period a year earlier.
• US Pres. Trump: Scott Pruitt Has Resigned From EPA (ICE).  We understand RINs traded 3 cents higher post announcement. Speculators stepping in.

 

Export Developments

·         Under the 24-hour reporting system, exporters sold 137,000 tons of OPTIONAL ORIGIN corn to South Korea for 2018-19 delivery.

·         China sold 1.088 million tons of corn out of state reserves, at an average price of 1529 yuan per ton ($230.47/ton), 27 percent of the corn offered. China plans to auction off 4 million tons of corn on July 6.

 

 

 

Soybean complex.

·         US soybeans finished sharply lower by 8.50-8.75 cents, at new contract lows. Soybean meal ended mixed, and soybean oil was down 15-19 points. The near unchanged meal futures rallied the CBOT crush with August settling 7.50 cents higher at $1.9350, a contract high.

·         Two fundamentals hung over the soybean market. US weather is a little less threatening for second half July and China is expected to retaliate against the US by slapping on import tariffs that will include soybeans, after the US does so with 34 billion USD on good this Friday.

·         China has already been maximizing soybean purchases from Brazil, so tariff or no tariff, the damage has already started.  Some traders are asking if this is a buying opportunity. We think so if other countries step up US purchases and/or a weather problem develops.

·         The CNGOIC reported China bought 1.1 million tons of soybeans last week from Brazil.

·         For the week ending June 29, Brazil exported 2.22 million tons of soybeans, down from 2.34 million previous week. Commitments were thought to be running at 56.6MMT, a record.

·         Anec said Brazil may have to import 1 million tons of soybeans from the US by the end of the year to meet crush consumption requirements.

·         Due to the federal holiday on July 4th, the next U.S. Export Sales report is scheduled for release at 8:30 A.M. on Friday, July 6, 2018. (USDA)  Traders are looking for additional cancellations of US cargos by China when USDA updates their weekly export sales report on Friday. Little more than 1 million tons of soybean sales are on the books for China.

·         The European Union reported soybean import licenses since July 1 at 13.383 million tons, below 14.110 million tons a year ago. European Union soybean meal import licenses are running at 18.678 million tons for 2017-18, above 18.071 million tons a year ago. EU palm oil import licenses are running at 6.060 million tons for 2017-18, up from 6.151 million tons a year ago.

·         China plans to launch a GMO labeling investigation on cooking oils.

·         Brazil producers are suing a large seed company over a patent’s validity to collect 800 million reais ($204 million) in royalties.

·         India raised their government set purchase prices for several crops, by most since at least 2014. They are rising about 25 percent compares to previous increases of 3-4 percent in the last three years. Some warned this could hurt India’s economy.

 

 

 

Export Developments

·         China sold 283,559 tons of 2013 soybeans out of reserves at an average price of 3028 yuan per ton ($457.08/ton), 56.7 percent of the 500,000 tons offered. China sold 660,524 tons of soybeans out of reserves so far, this season.

·         China sold 29,817 tons of 2011 soybean oil out of reserves at an average price of 5002 yuan per ton ($753.68/ton), 50.9 percent of the 50,000 tons offered.

• 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. 

• All three US wheat markets traded sharply higher from lower EU crop prospects and a lower USD.
• December Paris wheat futures were 3.00 euros higher.
• A Reuters poll calls for EU soft wheat production to fall to 136 million tons from 141.8 million tons last year.
• The European Union granted export licenses for 65,000 tons of soft wheat imports, bringing cumulative 2017-18 soft wheat export commitments to a final 20.297 million tons, well down from 24.026 million tons committed at this time last year.
• The EU awarded 10,150 tons of wheat import quotas and 3,500 tons of barley import quotas.
• Germany’s grain production was forecast to drop 9.9% in 2018, according to DBV (Bloomberg). They are using 20.5 million tons for 2018 winter wheat, down 15.1 percent from 2017. That would be the smallest wheat crop in more than 10 years. Dry weather continues to impact Germany this week.
• The Food and Agriculture Organization’s (FAO) food price index averaged 173.7 points last month, down 1.4 percent from May.
• Hottest U.K. Summer in Decades May Mean Bigger Wheat Imports (Bloomberg).
• France’s Rouen Grain Exports Fell 26% in Week to July 4 (Bloomberg).
• Manitoba weekly crop report headlined “Warm Conditions and Rainfall over the past week welcomed and has advanced crop development.”
• India plans to sell 7 to 8 million tons of wheat to the domestic market for the local marketing year ending March 31, up from a 2017-18 target of 5.3 million tons.
• Russia’s AgMin increased their forecast for 2018-19 to 40-45 from previous 35-40 million tons. They left their crop estimate of 100 million tons unchanged.
• A Reuters poll calls for the Black Sea wheat exports to fall 11 percent to 58.8 million tons, and leave Russia as the world largest exporter at 35 million tons. Ukraine was polled at 16 million and Kazakhstan at 7.8 million tons. The combined crop of Russia, Ukraine and Kazakhstan is expected to decline by 12.6 percent to 110.8 million tons of wheat in 2018, the Reuters article added.
• Ukraine exported 17.1 million tons of wheat in 2017-18.
• The Czech grain harvest is seen at 6.3 million tons, down 8.2 percent from last season.

 

 

Export Developments.

• Iraq bought 100,000 tons of Australian wheat at $306.75/ton CIF.
• Algeria bought about 600,000 optional origin milling wheat at $234-$237/ton for September shipment.
• Brazil bought 25,000 tons of Russian wheat recently.
• Japan in a SBS import tender bought 27,210 tons of feed wheat and 38,180 tons of barley for arrival by December 28. 
• Japan in a SBS import tender seeks 120,000 tons of feed wheat and 200,000 tons of barley on July 11 for arrival by December 28. 
• Japan seeks 79,770 tons of food wheat on Thursday. Original details of the tender as follows:

·         Jordan canceled their import tender for 120,000 tons of barley for Oct-Nov shipment.

·         Jordan seeks 120,000 tons of barley on July 11 for Oct/Nov shipment.

• China sold 3,000 tons of 2013 imported wheat from state reserves at auction at an average price of 2370 yuan/per ton or $358.08/ton, 0.2 percent of what was offered.
• China sold 2,447 tons of 2013 imported wheat from state reserves at auction at an average price of 2250 yuan/per ton or $339.27/ton, 0.1 percent of what was offered.
• Saudi Arabia seeks 1.5 million tons of barley for Sep/Oct shipment.
• Results awaited: Syria seeks 200,000 tons of wheat on July 2 for Aug 1-Sep 30 shipment. Origins include Russian, Romania and/or Bulgaria.

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

 

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

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