FW: FI Evening Grain Comments 07/13/18

PDF attached

 

Weather and crop conditions

 

 

• The US Midwest will be hot though the weekend.
• The US Midwest will see several rounds of timely rain are expected during the next two weeks, but not heavy in any locations. Some areas may receive multiple events, resulting in slowing of development.
• For areas that receive little or no precipitation, we believe crop stress is most vulnerable across eastern Kansas into Missouri and portions of southeastern Iowa and west-central Illinois. These areas show short top soil moisture, and should be monitored over the next couple of weeks.
• Rain prospects improve for the Delta.
• Periodic rainfall and warm temperatures should be good for summer crop development for US hard red wheat.
• There are no issues with Brazil second corn crop harvesting.
• Europe will continue to see net drying in parts of the northern and western growing regions, but in general weather is expected to improve this weekend into next week for many dry areas.
• Net drying is expected to persist across eastern Ukraine and in Russia’s southern, central and Volga regions.
• Australia will see an increase in net drying.

Source: World Weather Inc. and FI

 

 

SIGNIFICANT CORN AND SOYBEAN BELT PRECIPITATION EVENTS

                                WEST CORN BELT                             EAST CORN BELT              

Sat                          30% cvg of up to 0.75”                    40% cvg of up to 0.65”

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

                                wettest south                                   wettest west

Sun-Mon             70% cvg of up to 0.60”                   

                                and local amts to 1.40”;                

                                wettest SE; far NW

                                driest

Sun-Tue                                                                               90% cvg of up to 0.75”   

                                                                                                and local amts to 2.0”;

                                                                                                driest north       

Tue                        20% cvg of up to 0.30”

                                and locally more;

                                wettest south

Wed                                                                                      10% cvg of up to 0.20”

                                                                                                and locally more              

Wed-Jul 20          50% cvg of up to 0.40”

                                and local amts to 1.0”

                                             

Thu-Jul 21                                                                            60% cvg of up to 0.60”

                                                                                                and local amts to 1.30”

Jul 21                     15% cvg of up to 0.35”

                                and locally more;

                                wettest north

Jul 22                                                                                     15% cvg of up to 0.25”

                                                                                                and locally more

Jul 22-23               40% cvg of up to 0.50”

                                and locally more;

                                wettest north

Jul 23-24                                                                               50% cvg of up to 0.40”

                                                                                                and locally more

Jul 24-26               50% cvg of up to 0.50”                    

                                and locally more                              

Jul 25-27                                                                               40% cvg of up to 0.40”

                                                                                                and locally more 

 

U.S. DELTA/SOUTHEAST SIGNIFICANT PRECIPITATION EVENTS

                         DELTA                                                    SOUTHEAST

Tdy-Sun               5-20% daily cvg of up                      25-50% daily cvg of

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

                                more each day                                  more each day; N.C.

                                                                                                and Va. driest

Mon-Wed           70% cvg of up to 0.75”                    85% cvg of up to 0.75”

                                and local amts to 1.50”                   and local amts to 1.75”

                                                                                                with a few bands of

                                                                                                1.75-3.0”

Thu-Jul 20            50% cvg of up to 0.40”

                                and local amts to 1.0”

Thu-Jul 21                                                                            75% cvg of up to 0.75”

                                                                                                and local amts to 1.75”;

                                                                                                driest west

Jul 21-23               5-20% daily cvg of up

                                to 0.25” and locally

                                more each day

Jul 22-23                                                                               15-35% daily cvg of

                                                                                                up to 0.35” and locally

                                                                                                more each day

Jul 24-26               40% cvg of up to 0.50”                    60% cvg of up to 0.75”

                                and locally more                               and locally more

                                more each day                                  more each day

Source: World Weather Inc. and FI

 

Bloomberg weekly agenda

MONDAY, JULY 16:

• Japan on holiday; no rubber trading on Tokyo Commodity Exchange
• Cargo surveyors AmSpec and Intertek release their respective data on Malaysia’s July 1-15 palm oil exports, 11pm ET Sunday (11am Kuala Lumpur Monday); SGS data during same period, 3am ET Monday (3pm local time Monday)
• European Cocoa Association 2Q cocoa grind data, 2am ET (7am London)
• German Confectionery Industry 2Q cocoa grind data, 2am ET (7am London)
• USDA weekly corn, soybean, wheat export inspections, 11am
• USDA weekly crop progress report, 4pm
• EU weekly grain, oilseed import and export data
• Ivory Coast weekly cocoa arrivals

TUESDAY, JULY 17:

• New Zealand dairy auction on Global Dairy Trade online market starts ~7am ET (~noon London, ~11pm Wellington)

WEDNESDAY, JULY 18:

• EIA U.S. weekly ethanol inventories, output, 10:30am

THURSDAY, JULY 19:

• Nicaragua on holiday
• USDA weekly net-export sales for corn, wheat, soy, cotton, 8:30am
• USDA red meat production for June, 3pm
• National Confectioners Association North America 2Q cocoa grind, ~4pm
• Port of Rouen data on French grain exports
• Buenos Aires Grain Exchange weekly crop report
• Bloomberg weekly survey of analysts’ expectations on grain, sugar prices

FRIDAY, JULY 20:

• Colombia on holiday
• Cocoa Association of Asia is set to release 2Q cocoa grind data
• ICE Futures Europe commitments of traders weekly report on coffee, cocoa, sugar positions, ~1:30pm ET (~6:30pm London)
• USDA milk production for June, 3pm
• USDA cattle on feed for June, 3pm
• CFTC commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• FranceAgriMer weekly updates on French crop conditions

Source: Bloomberg and FI

 

 

CFTC Commitment of Traders

·         Traditional funds for the futures and options position only, sold off more corn than the trade estimated, by 23,100 contracts to net long 109,300 contracts (sold net 39,000 from the previous week). In futures and options, funds in corn unloaded 48,700 contracts, going negative for the first time since early February.

·         The traditional funds for futures and options combined are now short in corn, oats, soybeans, soybean meal and Minneapolis wheat.

·         Funds during the week ending July 10 bought more soybean contracts than expected.

·         Money managers were also busy selling corn and a little meal.

·         Index funds sold off 16,600 contracts of corn.

 

 

 

 

 

Macros.

·         US Import Price Index (m/m) June: -0.4% (est 0.1%, prev 0.6%)

–          US Import Price Index Ex Petroleum (m/m) June:  -0..3% (est 0.2%, prev0.1%)

–          US Import Price Index (y/y) June:  4.3%  (est 4.6%, prev 4.3%)

·         US Export Price Index (m/m) June:  0.3%  (est 0.2%, prev 0.6%)

–          US Export Index (y/y) June : 5.3 % (prev 4.9%)

 

Corn.

• Corn prices traded lower by 4.25-5.50 cents in part to lower soybeans. Some profit taking was noted after the rally in corn on Thursday. The US weather outlook is favorable with rain in the forecast next week after warmer than normal temperatures fade by the end of this weekend. US export developments remain slow.
• Funds sold an estimated net 13,000 corn contracts.
• China sold another 942,336 tons of corn out of reserves.
• France’s corn crop conditions as of July 9 fell one point from the previous week to 73 percent G/E.

·         Safras & Mercado estimated the 2018-19 corn planted area to decline 1.6 percent from 2017-18. They see soybeans rising 2.3 percent.

·         We lowered our 2017-18 crop year rolling average for corn futures by 4 cents to $3.61/bu. Our working 2018-19 corn crop-year average is $3.55, subject to change.

 

Export Developments

·         South Korea’s MFG bought 69,000 tons of optional origin corn at $204.95/ton c&f for arrival around December 23. Yesterday KFA and NOFI (69k) bought corn.

·         Taiwan’s MFIG bought 65,000 tons of US or Brazil origin corn at $1.6123/bu premium over the December contract, c&f for arrival after September.

·         China sold 942,336 tons of corn out of state reserves at an average price of 1417 yuan per ton or $212.49/ton, 23 percent of the total offered. Yesterday China sold 1.235 million tons of corn out of state reserves.

·         China sold about 53 million tons of corn this season.

·         China will offer about 8 million tons of corn from state reserves on July 19 and July 20.

 

Soybean complex.

·         Soybeans on a rolling contract basis, fell to its lowest level since December 2008. The complex was under a pressure from follow through bearish sentiment from the July 12 USDA report and ongoing US/China trade concerns. What failed to happen Thursday happened on Friday.  Lower values in China and Malaysia were weighing on the soybean complex early.

·         Funds sold an estimated net 9,000 soybean contracts, sold 4,000 meal and sold 3,000 soybean oil.

·         China imported 8.70 million tons of soybean in June, down from 9.68 million tons in May but up 13 percent from June 2017. June edible vegetable oil imports were 529,000 tons, off nearly 12 percent from May.

·         The most active rolling China soybean futures hit a 10-year low. The combination of slowing soybean meal demand, higher 2018 domestic soybean production, and successful state reserve sales of soybeans, contributed to the price declines. Some cargos are being held from being unloaded out of Chinese ports due to large supplies.

·         September Malaysian palm was 39 lower. Palm oil prices are nearing a 3-year low.

·         Safras & Mercado estimated the 2018-19 soybean planted area to increase 2.3 percent from 2017-18 to 36 million hectares. We were looking for the area to increase 3.2 percent. Safras’ crop estimate could total 119.78 million tons, just above their forecast for 2017-18.

·         NOPA is due out with the US soybean crush on Monday, July 16.

 

Export Developments

• Results awaited: Iran seeks 30,000 tons of sunflower oil on July 10.
• Results awaited: Iran seeks 30,000 tons of palm olein oils on July 10. 
• Iran seeks 30,000 tons of soybean oil on August 1.
• China will offer 61,000 tons of rapeseed oil on July 17.

·         China sold 832,302 tons of soybeans out of reserves so far, this season.

 

CBOT Second Month Rolling Soybean Crush

Source: Reuters and FI

 

September China and US soybean futures adjusted to USD/ton

Source: Reuters and FI

 

Wheat. 

·         US wheat futures ended mostly higher led by the non-expiring front months in Chicago and KC. MN ended mixed on bull spreading. Follow through buying after USDA lowered several production estimates on Thursday for major exporting countries continued to set into the market.

·         Funds today bought an estimated net 8,000 SRW wheat contracts.

·         Russia’s AgMin said the wheat production at 64.4 million tons, grain production at 100 million, and total loss of the crops this year around 30 million tons. USDA is using 67 million tons for Russia wheat.

·         The Rosario Exchange lifted their Argentina wheat area by 180,000 hectares to 6.18 million hectares. Good weather this week allowed Argentina wheat plantings and establishment to advance. They estimate production at record 20 million tons, above the previous record of 18.2 million in 2016-17.

• France’s soft wheat crop conditions as of July 9 fell one point from the previous week to 73 percent G/E. 20 percent of the soft wheat crop had been harvested, up from 3 percent for the previous week. Spring barley fell one point to 75.
• December Paris wheat was up 2.25 euros to 185.50 euros during early US trading hours. 

 

Export Developments.

• China sold 2,660 tons of 2013 wheat from state reserves at auction at an average price of 2250 yuan/per ton or $336.65/ton, 0.15 percent of what was offered.

·         Results awaited: Saudi Arabia seeks 595,000 tons of wheat.

·         Results awaited: Saudi Arabia seeks 1,740,000 million tons of fodder barley during the period September-October 2018.

• Japan in a SBS import tender seeks 120,000 tons of feed wheat and 200,000 tons of barley on July 18 for arrival by December 28. 

·         Jordan seeks 120,000 tons of barley for Oct/Nov shipment on July 17.

·         Jordan seeks 120,000 tons of wheat on July 19 for Oct-Nov shipment.

• Bangladesh seeks 50,000 tons of optional origin milling wheat on July 25 for shipment within 40 days of contract signing.

 

Rice/Other

·         China officials traveled to India to inspect rice mills to allow imports of non-basmati rice. They were also looking at importing sugar.

·         Results awaited: Mauritius seeks 6,000 tons of white rice for Sep 1-Nov 30 shipment.

• Thailand seeks to sell 120,000 tons of raw sugar on July 18.