FW: FI Evening Grain Comments 08/03/18

 

Weather and crop conditions

 

 

·         The near-term weather model appears to be drier for the central WCB through early next week.

·         Crop stress will increase this weekend with rising temperatures.

·         The ridge of high pressure building up over the Great Plains and a part of western Corn Belt during the coming weekend and next week is still slated to happen, 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.

·         Some of the Midwest northern growing areas will pick up on rain. The northwestern growing areas will see rain this weekend. The Delta will see rain in the southeastern areas on Saturday. All other areas of the Delta will see net drying through the weekend.

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

 

SIGNIFICANT CORN AND SOYBEAN BELT PRECIPITATION EVENTS

                             WEST CORN BELT                             EAST CORN BELT              

Tdy-Sat                 45% cvg of up to 0.65”

                                and local amts to 1.20”

                                most often with some

                                1.20-3.0” amts in Mn.

                                and a few nearby areas;

                                driest south

Tdy-Sun                                                                               15-35% daily cvg of

                                                                                                up to 0.30” and locally

                                                                                                more each day

Sun-Mon             55% cvg of up to 0.75”

                                and local amts over 2.0”;

                                east-central and NE Neb.

                                to south Wisc. wettest;

                                driest NW and south

Mon-Tue                                                                             80% cvg of up to 0.75”

                                                                                                and local amts to 2.0”;

                                                                                                west-central and SW

                                                                                                Illinois driest

Tue-Aug 10         10-25% daily cvg of

                                up to 0.30” and locally

                                more each day

Wed-Aug 10                                                                       10-25% daily cvg of

                                                                                                up to 0.30” and locally

                                                                                                more each day

Aug 11-13            Up to 20% daily cvg of                   

                                up to 0.25” and locally                   

                                more each day; some                   

                                days may be dry

Aug 11-14                                                                            5-20% daily cvg of up

                                                                                                to 0.30” and locally

                                                                                                more each day

Aug 14-16            40% cvg of up to 0.50”                   

                                and locally more;                             

                                wettest north                                   

Aug 15-17                                                                            55% cvg of up to 0.40”

                                                                                                and locally more

 

U.S. DELTA/SOUTHEAST SIGNIFICANT PRECIPITATION EVENTS

                                DELTA                                                   SOUTHEAST

Sat-Mon              5-20% daily cvg of

                                up to 0.30” and locally

                                more each day

Sat-Tue                                                                                15-35% daily cvg of

                                                                                                up to 0.50” and locally

                                                                                                more each day

Tue-Wed             80% cvg of up to 0.75”

                                and local amts to 1.70”;

                                driest south

Wed-Aug 10                                                                       80% cvg of up to 0.75”

                                                                                                and local amts to 2.0”;

                                                                                                wettest west

Thu-Aug 10         75% cvg of up to 0.75”

                                and local amts to 1.75”;

                                driest north

Aug 11-17            10-25% daily cvg of                          10-25% daily cvg of

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

                                more each day                                  more each day

Source: World Weather Inc. and FI

 

 

Weekly Bloomberg Bull/Bear Survey

·         Wheat survey results: Bullish: 9 Bearish: 2 Neutral: 3

·         Corn: Bullish: 8 Bearish: 2 Neutral: 5

·         Soybeans: Bullish: 6 Bearish: 5 Neutral: 4

·         Raw sugar: Bullish: 5 Bearish: 3 Neutral: 1

·         White sugar: Bullish: 5 Bearish: 1 Neutral: 3 White-sugar

 

 

CFTC Commitment of Traders Report

·         Chicago wheat, futures only position for traditional funds was a record net long 75,028 contracts as of 7/31, taking out 8/21/12. 

·         For the week ending July 31, traditional funds were buyers of corn, Chicago wheat, KC wheat and MN wheat. Futures only for soybeans traditional funds sold a little and bought a small amount in the futures and options positions.

·         For managed money, funds were large buyers of corn, bought a good amount of Chicago wheat and added longs to KC wheat.

·         Traditional funds were about 16k less long in corn that trade expectations, 22k more short in soybeans were the traditional funds posted a short position of 14,100, heavier buyers in Chicago wheat than anticipated and didn’t sell as much meal as the daily estimate of funds suggested.

·         We estimate the funds futures only for traditional funds going home on Friday at net long 118k corn, net short 24k soybeans, net long 88k meal, net short 56k soybean oil, and net long 84k wheat.

·         Traditional funds futures only in soybean oil hold a near record short position. (55.1 short 8/1/13). For options combined the record short was hit three weeks ago. Managed money positions for soybean oil are also near record net short.

 

 

 

 

 

Macros.

·         Change In Nonfarm Payrolls (Jul): 157K  (est 193K, prevR 248k)

–          Unemployment Rate (Jul): (est 3.9%, prev 4.0%)

–          Average Hourly Earnings (M/M) (Jul): 0.3% ( est 0.3%, prevR 0.1%)

–          Average Hourly Earnings (Y/Y) (Jul): 2.7% (est 2.7%, prev 2.7%)

–          Change In Private Payrolls (Jul): 170K (est 190K, prev 234K)

–          Change In Manufacturing Payrolls (Jul):  37K (est 25K, prevR 33K)

–          Average Weekly Hours All Employees (Jul):  34.5(est 34.5, prevR 34.6)

–          Labor Force Participation Rate (Jul): 62.9% (prev 62.9%)

·         US Trade Balance (Jun):  $-46.3 (est -$46.5Bln, prevR -$43.2Bln)

·         China To Levy Differentiated Tariffs On About $60Bln US Goods

·         China Govt Says It Will Immediately Impose The Import Tax Measures If The U.S. Starts To Slap Tax On China Imports (livesquak)

·         China Central Bank Says Raising Reserve Requirements For Forex Settlements In Order To Fend Off Financial Risks, Promote Stable Operations Of Financial Institutions

 

Corn.

• Corn prices were higher following soybeans and technical buying.
• The funds bought an estimated net 11,000 corn contracts.

·         Farm Futures sees the 2018 US corn yield at 175.4 bushels per acre and production at 14.360 billion.

·         Informa reportedly left their US corn yield at 176.0 bu/ac from their July outlook, and production also unchanged at 14.392 billion. USDA is at 14.230 billion bushels and 174.0/bu for the yield.

·         FI is using 178.0 with 14.543 billion.

·         US crop conditions are expected to decline one in corn.

·         A Reuters report mentioned Mexico sees key NAFTA issues resolved with the US next week.

·         French corn conditions for the week ending July 29 fell by 5 points from the previous week to 66 percent, below 79 percent at this time last year.

·         Vietnam reported an outbreak of H5N6 bird flu in backyard birds.

 

Export Developments

·         Under the 24-hour USDA export system, Vietnam bought 130,000 tons of 2018-19 corn-optional origin.

·         China sold 856,885 tons of corn out of reserves at an average price of 1416 yuan per ton ($206.16/ton), 22 percent of total offered. Yesterday they sold 1.1 million tons.

·         China sold about 59.4 million tons of corn out of reserves this season.

 

Soybean complex.

·         Soybeans on Friday saw a choppy trade after China said they plan to levy additional tariffs on about $60 billion US products if the US adds more tariffs, so it’s subject to US actions they said.

·         Soybeans settled higher after a wide two-sided trade. Soybean meal fell on additional talk Argentina will start exporting meal to China, and soybean oil was higher in part to a higher lead in palm oil. .

·         China Gvt’s New Proposed Tariffs On U.S. Goods Include  Soybean Oil, Peanut Oil, Corn Oil, Olive Oil, Mutton, Dried, Smoked And Salted Beef, Coffee, Wheat Flour, Spirits (ICE)

·         Funds bought an estimated net 6,000 soybeans, sold 2,000 soybean meal and bought 3,000 soybean oil.

·         Farm Futures sees the 2018 US soybean yield at 49.8 bushels per acre and production at 4.420 billion.

·         Informa reportedly raised their US soybean yield to 50.0 bu/ac and production to 4.445 billion. In July we understand Informa used a 49.1 yield and 4.425 billion bushel crop.  USDA is at 4.310 billion bushels and 48.5/bu for the yield.

·         FI is using 49.0 with 4.353 billion.

·         US crop conditions are expected to be unchanged in soybeans.

·         Brazil shipped 1.37 million tons of soybeans last week, down from 1.95 million tons from a year ago. Commitments were thought to be running at 63.7 million tons.

·         Safras reported Brazil’s new-crop soybean sales at 18 percent, up from the very slow pace of 8 percent a year ago. Even though producers are reluctant sellers, high Brazil soybean premiums over the US and good China demand enticed forward selling. For the current crop year, 84 percent of the soybean crop had been sold, up from 74 percent from this time last year.

·         Yesterday we learned Argentina’s crushing industry was making a big push to get China to agree on importing soybean meal from Argentina crushers. Today the Argentina AgMin said they like to export “major amounts” of soybean meal to China starting May 2019. Apparently officials were in China today finalizing the paperwork. It will be interesting to see if Argentina continues to import US soybeans even after they realize a rebound in their crop.  Meanwhile, a shift to China in export soybean meal as a destination raises the question how much of the EU market could be lost.  Each Argentina cargo unshipped to the EU could be a an extra cargo shipped from the US.

·         China approved the imports of sunflower seeds from Bulgaria.

 

Export Developments

• No fresh export developments for Friday.
• The CCC 9,000 tons of crude degummed soybean oil for Senegal and Guatemala, on August 8 for September shipment.
• 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.
• Results awaited: Iran seeks 30,000 tons of soybean oil on August 1.
• Iran seeks 30,000 tons of sunflower oil on September 24.

·         China sold 1.054 million tons of soybeans out of reserves so far, this season.

 

Wheat. 

·         US wheat futures settled mixed, with Chicago and KC lower on the front end and far back months moderately higher. MN ended higher for most positions on US spring wheat crop concerns.

·         Funds sold an estimated net 5,000 SRW wheat contracts.

·         We look for a 1-2 point drop in the US spring wheat rating.

·         December Paris wheat futures settled 1.50 euros lower at 211.75 euros.

·         The Ukraine AgMin increased their estimate for the wheat crop to 24 million tons from previous 22-23 million tons, including 13MMT of milling wheat. We are using 25.1MMT. The Ministry of Agrarian Policy and Food of Ukraine keeps the forecast for wheat harvest at 23 million tons against 26.2 million tons in 2017.

·         Informa reportedly lowered their US all wheat crop to 1.825 billion from 1.869 billion last month. This included 1.168 billion bushels of winter wheat, 71 million bushels of durum wheat 586 million bushels of spring wheat. Informa estimated the average U.S. yield for spring wheat at 45.4 bushels per acre, down from its July forecast of 46.8. (Reuters)

·         For the August US Crop Production report, we are using 47.5 and 613 million bushels for spring wheat, 41.7 and 77 million for durum, and 47.6 bu/ac and 1.884 billion for the all-wheat crop.

·         Northern Europe weather conditions have not changed much.

·         Britain’s wheat crop could fall to a five-year low according to AHDB (Agriculture and Horticulture Development Board) of 13.5 million tons, down from 14.8 million last year. Low yields are mainly contributing to the decline.

·         India’s weather office noted there is a 47 percent chance of India recording below average rainfall during the second half of the monsoon season which stretches between June to September. The first two months of the season were below normal.

·         Egypt said they have enough strategic wheat reserves for 4 months.

 

Export Developments.

·         Jordan issued an import tender for 120,000 tons of feed barley on August 8.

• Japan in a SBS import tender seeks 120,000 tons of feed wheat and 200,000 tons of barley on August 8 for arrival by January 31. 

 

Rice/Other

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

 

soymeal hulls        13,275,000      14,865,000      12,332,000    13,986,000

of Commerce.

(*)NOTE: Year

TOTAL WHEAT                101,319,031     223,408,463      68,198,138     150,376,894

 

barley                       2,651,387       5,846,308       9,461,222      20,861,995

oats                           529,625       1,167,823         973,220       2,145,950

 

corn                        38,696,049      85,324,788      32,647,078      71,986,807

other corn                  17,282,479      38,107,866       8,632,822      19,035,373

TOTAL CORN                  55,978,528     123,432,654      41,279,900      91,022,180

Write to Rodney Christian at csstat@dowjones.com

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