FW: FI Evening Grain Comments 07/30/18

PDF attached

 

Weather and crop conditions

 

·         Crop conditions were a point higher than trade expectations for corn, soybeans, and spring wheat. Winter wheat harvest progress was 85 percent, 2 points below expectations, and spring wheat harvest at 4 percent, 3 below expectations.

·         One US main feature to keep an eye on is a ridge of high pressure building up over the Great Plains and a part of western Corn Belt during the coming weekend and next week, accelerating net drying and limiting rainfall across the Plains, Midwest and Delta from August 5^th through August 14.

·         Rainfall between now and August 5 for the Midwest will be very important.

·         The US weather outlook is all not that bad. There will be some ongoing dry pockets across the western US and temperatures warn across the WBC this week. Rest of the Midwestern growing areas will see cool temperatures, which should slow evaporation rates.

·         Europe’s weather will improve this week but much of the damage is done.

·         Southern Russia and parts of Ukraine improved over the past week. Some areas will return to net drying.

·         Australia’s canola crop will continue to see crop stress across New South Wales. There is an opportunity for rain across northern New South Wales this week but it will not be widespread enough to ease drought conditions.

·         China’s weather improved late last week and conditions will overall be favorable.

·         Canada’s southern Prairies will still see stress this week for the summer crops. Southeastern Canada is in good shape.

·         Net drying in the US PNW will add stress to the spring wheat crop.

 

 

 

 

SIGNIFICANT CORN AND SOYBEAN BELT PRECIPITATION EVENTS

                             WEST CORN BELT                             EAST CORN BELT              

Tdy-Tue                                                                               80% cvg of up to 0.75”

                                                                                                and local amts over 2.0”;

                                                                                                central In. wettest;

                                                                                                Mich. driest

Tue-Thu               15-30% daily cvg of

                                up to 0.50” and locally

                                more each day; Ia.

                                to Wisc. wettest

Wed-Sat                                                                              15-35% daily cvg of

                                                                                                up to 0.35” and locally

                                                                                                more each day

Fri-Sat                   60% cvg of up to 0.75”

                                and local amts to 1.75”;

                                far south driest

Sun-Aug 6           50% cvg of up to 0.75”

                                and local amts to 1.50”;

                                wettest north

Sun-Aug 7                                                                           75% cvg of up to 0.75”

                                                                                                and local amts to 1.75”

Aug 7-9                 5-20% daily cvg of up

                                to 0.30” and locally

                                more each day

Aug 8-10                                                                              5-20% daily cvg of up

                                                                                                to 0.30” and locally

                                                                                                more each day

Aug 10-12            45% cvg of up to 0.65”

                                and locally more;

                                driest SW

Aug 11-12                                                                            50% daily cvg of

                                                                                                up to 0.35” and locally

                                                                                                more each day

 

U.S. DELTA/SOUTHEAST SIGNIFICANT PRECIPITATION EVENTS

                                DELTA                                                   SOUTHEAST

Tdy-Tue               80% cvg of up to 0.65”                   

                                and local amts over 1.50”;

                                far north driest                                

Tdy-Wed                                                                             90-100% cvg of 0.35-1.50”

                                                                                                and local amts to 2.0”     with

                                                                                                lighter rain in a few

                                                                                                locations and some bands

                                                                                                of 2.0-3.50”; driest west

Wed-Thu             Up to 15% daily cvg of

                                up to 0.20” and locally                   

                                more each day; some

                                days may be dry                                              

Thu-Fri                                                                                  80% cvg of up to 0.75”

                                                                                                and local amts to 2.0”

Fri-Sat                   15-35% daily cvg of

                                up to 0.40” and locally

                                more each day;

                                wettest south

Sat-Aug 7                                                                             15-35% daily cvg of

                                                                                                up to 0.40” and locally

                                                                                                more each day

Sun-Aug 7           10-25% daily cvg of                                         

                                up to 0.30” and locally                   

                                more each day                                 

Aug 8-10              65% cvg of up to 0.75”                    70% cvg of up to 0.75”

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

Aug 11-13            5-20% daily cvg of up                      15-35% daily cvg of

                                to 0.25” and locally                          up to 0.50” and locally

                                more each day                                  more each day

Source: World Weather Inc. and FI

 

Bloomberg weekly agenda

MONDAY, JULY 30:

• Thailand on holiday
• EU weekly grain, oilseed import and export data, 10am (3pm London)
• USDA weekly corn, soybean, wheat export inspections, 11am
• USDA weekly crop progress report, 4pm
• Ivory Coast weekly cocoa arrivals
• EARNINGS: Heineken NV

TUESDAY, JULY 31:

• Cargo surveyors AmSpec, Intertek and SGS release their respective data on Malaysia’s July palm oil exports
• EARNINGS: AGCO Corp., Archer-Daniels-Midland Co.

WEDNESDAY, AUG. 1:

• Switzerland public holiday
• EIA U.S. weekly ethanol inventories, output, 10:30am
• USDA soybean crush for June, 3pm
• NOTE: Starting this day, the U.S. Agriculture Department ends its decades-long policy of giving crop data to news organizations under embargo in favor of posting reports directly on the web. This could benefit businesses with ability to quickly scan and trade on the figures

THURSDAY, AUG. 2:

• Costa Rica public holiday
• FAO food price index, 4am ET (9am London)
• USDA weekly net-export sales for corn, wheat, soy, cotton, 8:30am
• 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
• Colorado State University provides its final seasonal forecast adjustment before the usual peak of the Atlantic hurricane season in late August
• EARNINGS: Pilgrim’s Pride Corp., Kellogg Co., Asahi Group Holdings

FRIDAY, AUG. 3:

• 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
• FranceAgriMer weekly updates on French crop conditions
• EARNINGS: Kraft Heinz Co.

Source: Bloomberg and FI

 

USDA inspections versus Reuters trade range

Wheat       379,149     versus  300,000-500,000         range

Corn          1,658,477  versus  1,000,000-1,400,000   range

Soybeans   740,323     versus  500,000-700,000         range

 

 

 

GRAINS INSPECTED AND/OR WEIGHED FOR EXPORT

                  REPORTED IN WEEK ENDING JUL 26, 2018

                            — METRIC TONS —

                                                   CURRENT     PREVIOUS 

             ———– WEEK ENDING ———-  MARKET YEAR  MARKET YEAR

  GRAIN      07/26/2018  07/19/2018  07/27/2017    TO DATE     TO DATE  

 

BARLEY            343           0       2,245        1,223        7,564 

CORN        1,658,477   1,327,546     993,045   51,485,716   52,823,215 

FLAXSEED            0          24           0           48        3,281 

MIXED               0           0           0           24           24 

OATS                0           0         100        1,098        1,397 

RYE                 0           0           0            0            0 

SORGHUM        47,899      12,653     222,653    4,846,672    5,527,897 

SOYBEANS      740,323     728,139     493,492   52,448,820   54,451,632 

SUNFLOWER           0           0           0          335          383 

WHEAT         379,149     429,297     584,503    3,032,218    5,026,833 

Total       2,826,191   2,497,659   2,296,038  111,816,154  117,842,226 

CROP MARKETING YEARS BEGIN JUNE 1 FOR WHEAT, RYE, OATS, BARLEY AND

FLAXSEED;  SEPTEMBER 1 FOR CORN, SORGHUM, SOYBEANS AND SUNFLOWER SEEDS.

INCLUDES WATERWAY SHIPMENTS TO CANADA.

 

Macros.

·         US Pending Home Sales (M/M) Jun: 0.9% (est 0.2%; prev -0.5%)

– Pending Home Sales (Y/Y) Jun: -4.0% (prev -2.8%)

 

Corn.

• Corn ended higher for the first time since mid-June.  Prices followed strength in wheat and US weather concerns starting to build as dry and warmer temperatures are forecast for the US Midwest during the Aug 5-14 period.
• Funds bought an estimated net 7,000 corn contracts.

·         USDA US corn export inspections as of July 26, 2018 were 1,658,477 tons, above a range of trade expectations, above 1,327,546 tons previous week and compares to 993,045 tons year ago. Major countries included Japan for 510,809 tons, Mexico for 288,922 tons, and Korea Rep for 280,572 tons.

• Mexico is looking to buy corn from Argentina.
• Brazil and China are a step closer in reaching a deal to ease trade restrictions on China imports of Brazilian raw sugar and poultry.
• US corn conditions were unchanged from the previous week but on our weighted rating it was down 2/10 of a percent to 83.2. We lowered our yield by a bushel to 178.0 and production by 82 million to 14.543 billion, 61 million below last year.

 

 

 

 

Export Developments

·         South Korea’s KFA bought 67,000 tons of corn, optional origin, at $213.40/ton c&f for arrival around Jan 10.

·         China sold about 57.7 million tons of corn out of reserves this season.

·         China plans to offer another 8 million tons of corn from state reserves in early August.

 

 

 

 

Soybean complex.

·         Soybeans ended higher on renewing US weather concerns, US producer economic relief, and higher soybean meal. Soybean meal/oil spreading is pressuring soybean oil.

·         Funds were net buyers of 6,000 soybeans, bought 3,000 soymeal, and sold 4,000 soybean oil contracts.

·         The US Midwest may turn drier during the August 5-14 period.

·         USDA US soybean export inspections as of July 26, 2018 were 740,323 tons, above a range of trade expectations, above 728,139 tons previous week and compares to 493,492 tons year ago. Major countries included Japan for 95,916 tons, Mexico for 83,758 tons, and China T for 79,585 tons.

·         USDA Ag Secretary Perdue said about $7-$8 billion of the $12 billion US aid package could start hitting mailboxes as early as late September (around peak of harvest) and $200 million could be allocated to trade missions.

·         Strategie Grains lowered their EU rapeseed production outlook by 1.16 million tons from the previous month to 19.95 million, down 9.5 percent from 22.04 million tons in 2017-18. Note the EU rapeseed area is up 1.4 percent to 6.79 million hectares from 2017-18.

·         The EU increased soybean meal import commitments by 314,000 tons last week to 1.382 million tons for the July 1-July 29 period, down from 1.744 million tons at this time last year. Soybean import commitments are running at 983,000 tons, down from 1.073 million during July 2017.

·         Argentina crushed 3.268 million tons of soybeans in June, down from 3.918 million a year ago and down from 3.672 million in May 2018.  January through June Argentina soybean crush was about 18.5 million tons, down from 21.4 million during the same period a year ago.

·         Argentina imported 2.95 million tons of soybeans during first half 2018, up from 1.1 million year earlier.

• US soybean conditions were unchanged from the previous week but on our weighted rating it was down 4/10 of a percent to 82.5. We lowered our yield by 0.2/bu to 49.0 and production by 18 million to 4.353 billion, 38 million below last year.

 

 

 

 

Export Developments

• USDA seeks 2,160 tons of refined vegetable oil under the PL480 program on August 7 for shipment in September for Zimbabwe.
• Iran seeks 30,000 tons of soybean oil on August 1.
• South Korea seeks 12,000 tons of non-GMO soybeans in Aug 7 for Nov/Dec arrival.
• Iran seeks 30,000 tons of sunflower oil on September 24.

·         China sold 1.031 million tons of soybeans out of reserves so far, this season.

 

 

 

 

Wheat. 

·         US wheat futures traded higher from ongoing EU crop losses and unfavorable weather across the US PNW/spring wheat production regions, and Canadian southern growing areas. September Chicago wheat is sitting near a mid-June high. KC wheat basis September ended at its highest level since mid-June. Same goes for September Minneapolis.

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

·         USDA US all-wheat export inspections as of July 26, 2018 were 379,149 tons, within a range of trade expectations, below 429,297 tons previous week and compares to 584,503 tons year ago. Major countries included Philippines for 89,888 tons, Thailand for 56,371 tons, and China T for 50,662 tons.

·         Manitoba’s crop report reported “Crops are advancing rapidly with the warm and dry conditions. Rain is needed in most areas to sustain crops and replenish soil moisture.“

·         Germany’s farming association (DBV) seeks around 1 billion euros to aid producers that have lost 30 percent or more of their crop(s) due to drought/hot temperatures.

·         Germany continues to see low water levels in the Rhine and Danube rivers.

·         December Paris wheat futures was last 4.25 euros higher at 204.00 euros.

·         The EU increased soft wheat commitments by 226,000 tons to 775,000 tons, down from 1.452 million tons at this time last year.

·         SovEcon reported Black Sea FOB wheat prices increased $9.00/ton as of late last week and IKAR reported 12.5% Russian wheat from the Black Sea up $12/ton to $223/ton.

·         Russia’s wheat grain harvest progress is running above this time last year.

·         Ukraine’s wheat exports in 2017-18 were 17.2 million tons (July-June), according to UkrAgroConsult, down from 17.5 million tons in 2016-17. Ukraine exported 1.96 million tons of wheat to Egypt and 1.56 million tons to Bangladesh.

·         Australia’s New South Wales announced a AUD$500 million drought relief package.

·         US spring wheat conditions were down 1 in the G/E conditions to 78. We made a very small adjustment in our spring wheat yield and left durum unchanged from the previous week. Our estimates for the August report as follows:

 

 

 

 

Export Developments.

·         Iraq’s lowest offer for wheat was $327.77/ton cif, US origin.

·         South Korea’s NOFI group seeks 63,000 tons of feed wheat on July 31 for arrival around December 15.

·         Algeria seeks at least 50,000 tons of milling wheat on August 1 for October shipment.

·         China sold 2,000 tons of 2013 imported wheat at auction from state reserves at 2405 yuan/ton ($352.28/ton), 0.11 percent of wheat was offered.

·         Jordan seeks 120,000 tons of hard milling wheat on August 2.

·         Jordan seeks 120,000 tons of barley on July 31.

• Japan in a SBS import tender seeks 120,000 tons of feed wheat and 200,000 tons of barley on August 1 for arrival by January 31. 

·         Iraq seeks 50,000 tons of US, Canadian, and/or Australian wheat on July 29, valid until August 2.

• Results awaited: Bahrain Flour Mills seeks 17,000 tons of semi-hard wheat and 8,000 tons of hard wheat, on July 24, valid until July 25, for shipment in late Aug/early Sept.  Origins include Australia, Baltics, & Canada.

 

Rice/Other

·         China sold 38,435 tons of rice at auction from state reserves at 2592 yuan/ton ($379.14/ton), 4.4 percent of wheat was offered.

·         Vietnam rice exports fell 16.4 percent from June to 450,000 tons, but year to date exports are up 14.2% to 3.93 million tons.

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