FW: FI Evening Grain Comments 07/31/18

PDF attached

 

Weather and crop conditions

·         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.

·         Before temperatures warm during the second week of August, 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.

 

Source: World Weather Inc. and FI

 

 

SIGNIFICANT CORN AND SOYBEAN BELT PRECIPITATION EVENTS

                             WEST CORN BELT                             EAST CORN BELT              

Tdy-Wed             15-30% daily cvg of

                                up to 0.50” and locally

                                more each day; wettest

                                SE today; Ia. to Wisc.

                                wettest Wednesday

Wed-Sat                                                                              15-35% daily cvg of

                                                                                                up to 0.35” and locally

                                                                                                more each day

Thu                        10% cvg of up to 0.20”

                                and locally more;

                                wettest NW

Fri-Sun                  60% cvg of up to 0.75”

                                and local amts to 1.75”;

                                far south driest

Sun-Aug 7                                                                           75% cvg of up to 0.65”

                                                                                                and local amts to 1.50”

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

                                to 0.35” and locally

                                more each day;

                                wettest north

Aug 8-9                                                                                 5-20% daily cvg of up

                                                                                                to 0.30” and locally

                                                                                                more each day

Aug 9-11              45% cvg of up to 0.65”

                                and locally more;

                                driest SW

Aug 10-12                                                                            50% cvg of up to 0.65”

                                                                                                and locally more

Aug 12-14            5-20% daily cvg of up

                                to 0.30” and locally

                                more each day;

                                wettest north

Aug 13-14                                                                            5-20% daily cvg of up

                                                                                                to 0.30” and locally

                                                                                                more each day

 

U.S. DELTA/SOUTHEAST SIGNIFICANT PRECIPITATION EVENTS

                                DELTA                                                   SOUTHEAST

         -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

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

 

Macros.

·         US Personal Income (Jun): 0.4% (est 0.4%, prev 0.4%)

–          US Personal Spending (Jun): 0.4% (est 0.4%, prevR 0.5%)

·         CAD GDP (M/M) (May): 0.5% (est 0.3%, prev 0.1%)

–          CAD GDP (Y/Y) (May):  2.6% (est 2.3%, prev 2.5%)

·         PCE Core (M/M) (Jun): 0.1% (est 0.1%, prev 0.2%)

–          PCE Core (Y/Y) (Jun): 1.9% (est 2.0%, prevR 1.9%)

 

Corn.

• Corn ended at its highest level since mid-June following strength in wheat and US weather concerns. We lowered our August corn yield by a bushel to 178.0 bushels.
• Funds bought an estimated net 16,000 corn contracts.
• Mexico is looking to buy 1 MMT of corn from Argentina.
• How much corn they can buy from Argentina will depend on availability. Soybean and Corn Advisory lowered their estimate for the Argentina corn production by 1 million tons to 31 million tons. USDA is at 33 million tons.
• UAC lowered its estimate for the Russia corn production to 11.0-11.5 million tons, from prior 12.7 million tons.
• ProAgro increased its Ukraine 2018 corn production estimate to a record 30.9 MMT from 26.9MMT previously, and compares to 24.1 million in 2017.
• Ukraine’s AgMin estimated 2018 corn production between 27 & 28 million tons from 24.1 million tons in 2017. Ukraine may increase corn exports to China by 10 percent in 2018-19.
• AgRural lowered Brazil’s center-south winter corn crop estimate to 53.4MMT from previous 53.6MMT, down from 63.5 million last season. Total winter crop was seen at 56.8MMT versus 57.1MMT previous estimate, compared to 67.4MMT last season.
• A Bloomberg survey calls for weekly US ethanol production to decrease 8,000 barrels per day and stocks to increase 132,000 barrels.

 

Export Developments

·         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.

 

US ethanol production in May was 32.215 million barrels, slightly below the 32.495 million we were looking for, and compares to 30.532 million in April and 31.700 million in May 2017.

 

 

 

 

Soybean complex.

·         Soybeans traded sharply higher on renewed optimism on China/US trade talk, US weather concerns and higher values outside the US. Yesterday we lowered out US soybean yield by 0.2/bu to 49.0/acre.

·         A Bloomberg article broke around the CBOT open that high level China/US officials were back in talks over trade.

·         Funds were net buyers of 10,000 soybeans, bought 4,000 soymeal, and bought 2,000 soybean oil contracts.

·         The US Midwest may turn drier during the August 5-14 period. This was confirmed again by the morning models. Temperatures could average 4 to 10 degrees Fahrenheit above normal during the August 7-12 period, concentrated across the central and northern Plains into the northern Midwest and much of Canada’s Prairies.

·         ICE canola futures hit a 2-week high.

·         Consultant Datagro projected the 2018-19 Brazil soybean area 3 percent higher and production at 121 million tons.

·         AmSpec reported Malaysian palm exports at 1,030,909 tons, down 4 percent from the previous period last month.

·         MATIF Rapeseed looking to take out the contract high close at 374.50 currently sitting at 374.25, but is still well off the contract high trade dating to 5/29 when the opening apparently screamed to 384 though I do not remember that specifically. (MPI)

·         Ukraine’s 2018-19 rapeseed crop was forecast at 2.65 million tons from previous 2.52 million tons, according to UAC, and exports to rise to 2.3 million from 2.28MMT.

·         Palm oil supplies are growing in Indonesia.

 

 

Export Developments

• 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.
• 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 sunflower oil on September 24.

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

 

EIA Monthly US feedstock use for biodiesel production during May was 581 million pounds, well below our estimate of 630 million pounds. All feedstock use totaled 1.148 billion pounds, 10 million below our estimate. Soybean oil for biodiesel was up from 520 million in April and 546 million in May 2017. Soybean oil for biodiesel in May made up of 50.6 percent of the total feedstock, up from 48.2% in April and down from 51.8% in May 2017.  U.S. production of biodiesel was 149 million gallons in May 2018, 9 million gallons higher than production in April 2018. We lowered our 2017-18 US soybean oil for biodiesel use by 25 million to 7.000 billion pounds, still 100 million above USDA.

 

 

 

 

USDA will update its US crush for June on Wednesday and the trade looks for 168.6 million bushels, up from 172.5 million in May and 148.2 million in June 2017, according to Bloomberg. Reuters is using a 168.8 average.  The Bloomberg average for US soybean oil stocks is 2.265 billion, down from 2.468 billion last month.

 

 

 

Wheat. 

·         US wheat ended sharply higher on follow through buying from global crop concerns. Additional downgrades to the Black Sea wheat crops are fueling cash prices, spilling over into US wheat futures.

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

• EU wheat traded to a three year high before settling only 0.25 euro higher to 204.25 euros. New crop standard bread wheat with 12 percent protein for September delivery in Hamburg was offered for sale at 6 euros over Paris December, up 1 euro, according to Reuters.
• ProAgro increased its Ukraine 2018 wheat production estimate to 24.4 MMT from 27.8MMT previously and compares to 26.1 million in 2017.
• Ukraine’s AgMin estimated 2018 wheat production between 22 & 23 million tons from 26.1 million tons in 2017.

·         The Swedish wheat crop could fall 40 percent from 2017 due to drought to 1.7-1.9MMT from 3.2MMT in 2017, according to a farm cooperative.

·         Bulgaria’s 2018 wheat production fell to 5.5 million tons with the average yield off 7 percent from a year ago to 4.9 tons/hectare.

 

Export Developments.

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

·         Jordan passed 120,000 tons of barley.

·         China sold 1,202 tons of 2013 imported wheat at auction from state reserves at 2401 yuan/ton ($351.50/ton), 0.07 percent of wheat was offered.

·         Japan seeks 140,968 tons of food wheat on Thursday.

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

• 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. 

·         Jordan seeks 120,000 tons of hard milling wheat on 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 71,611 tons of rice at auction from state reserves at 2372 yuan/ton ($347.75/ton), 4 percent of wheat was offered.

·         Iraq seeks 30,000 tons of rice on August 12, open until Aug 16.