FW: FI Evening Grain Comments 09/04/18

PDF attached

 

Weather and crop conditions

 

MOST SIGNIFICANT WEATHER AROUND THE WORLD

•                    Southern Oscillation Index continues to waiver well below zero maintaining potential for El Nino, although ocean temperature changes during the past week have not been substantially great.

•                    Drought continues in western CIS, but relief is likely for central and southeastern Ukraine Thursday into the weekend with daily showers expected

•                    Hard freezes in northern Alberta did not occur overnight because of too much cloudiness

• Freezes are eastern Canada’s Prairies Wednesday and Thursday ending the growing season for some areas that have not seen significant freezes this season.  Some areas will only receive frost

•                    Drought in Canada’s Prairies will prevail through the next ten days

•                    Eastern Australia will get some additional rainfall in the coming week

•                    Western Australia will dry out over the next ten days

•                    Northwestern and southern India will dry down this week and the northwest may stay dry during much of this month

•                    Southeast Asia rainfall is expected to continue improving with less dryness

•                    China’s Yellow River Basin and parts of the North China Plain will dry out over the next couple of weeks

•                    U.S. wet weather bias will continue this week, but less rain is expected next week

• Flooding will raise concern over crop conditions from Kansas and southeastern Nebraska to southern Michigan and northern Ohio

•                    Tropical Storm Gordon will become a hurricane later today before reaching the Louisiana/Mississippi coast tonight heavy rain and strong wind impacting coastal areas

• Most crops away from the coast will likely weather the storm without much, if any, damage

•                    Tropical Storm Florence will remain far from land in the Atlantic and poses no threat to agriculture or shipping

•                    Typhoon Jebi was moving across western Japan today with some damage to personal property and agriculture anticipated, but losses will not be huge

•                    Portions of Europe will receive some rain this week, but northern France, parts of Germany, southern portions of the U.K. and western Poland will still struggle for moisture

•                    Southern Brazil rainfall during the weekend was significant

•                    Brazil weather will be drier this week until the weekend and early next week when rain returns to the south

•                    Argentina weather will stay dry into Saturday this week and then may get some light showers Sunday into Tuesday of next week

Source: World Weather and FI

 

 

SIGNIFICANT CORN AND SOYBEAN BELT PRECIPITATION EVENTS

                        WEST CORN BELT              EAST CORN BELT  

Tdy-Wed         80% cvg of 0.40-2.0”

                        and local amts over 4.0”

                        in most areas from east

                        Neb. and east Ks. to Wi.

                        with up to 0.40” and

                        locally more elsewhere

Tdy-Thu                                                          85% cvg of up to 0.75”

                                                                        and local amts to 1.50”;

                                                                        wettest west

Thu                  20% cvg of up to 0.65”

                        and local amts to 1.50”;

                        SE Mo. wettest

Fri-Sat              40% cvg of up to 0.75”

                        and local amts to 1.50”

                        with some 1.50-4.0”

                        amts and locally more

                        in north Mo. and SE

                        Ia.

Fri-Sun                                                             90-100% cvg of 0.15-1.0”

                                                                        and local amts to 2.0”

                                                                        with some 2.0-4.0” amts

                                                                        and locally more from

                                                                        central and north Il. to

                                                                        Mi. 

Sun-Sep 11      15-35% daily cvg of

                        up to 0.50” and locally           

                        more each day;

                        wettest north

Mon-Sep 13                                                     Up to 20% daily cvg of

                                                                        up to 0.25” and locally           

                                                                        more each day; some

                                                                        days may be dry

Sep 12-14        10-25% daily cvg of

                        up to 0.30” and locally           

                        more each day;

                        wettest north

Sep 14-15                                                        10-25% daily cvg of

                                                                        up to 0.30” and locally           

                                                                        more each day

Sep 15-17        75% cvg of up to 0.75”

                        and locally more

                        

Sep 16-18                                                        70% cvg of up to 0.75”

                                                                        and locally more

 

U.S. DELTA/SOUTHEAST SIGNIFICANT PRECIPITATION EVENTS

                        DELTA                                   SOUTHEAST

Tdy-Thu                                                          50% cvg of up to 0.75”

                                                                        and local amts to 1.50”

                                                                        with some 1.50-6.0”

                                                                        amts from centrl to SE

                                                                        Ms. and SW Ala.

Wed-Fri           100% cvg of 0.50-2.0”           

                        and local amts over 4.0”         

                        with lighter rain in a

                        few far north locations;

                        central areas wettest                

Fri-Sat                                                              10-25% daily cvg of

                                                                        up to 0.30” and locally

                                                                        more each day

Sat-Mon           90-100% cvg of up to 0.75”

                        and local amts over 2.0”

Sun-Sep 11                                                      80% cvg of up to 0.75”

                                                                        and local amts to 1.50”

Sep 11-14        10-25% daily cvg of

                        up to 0.35” and locally

                        more each day

Sep 12-14                                                        10-25% daily cvg of

                                                                        up to 0.35” and locally

                                                                        more each day

Sep 15-18        Up to 20% daily cvg of           5-20% daily cvg of up

                        up to 0.30” and locally            to 0.30” and locally

                        more each day                         more each day

Source: World Weather and FI

 

Bloomberg weekly agenda

TUESDAY, SEPT. 4:

• USDA weekly corn, soybean, wheat export inspections, 11am; USDA weekly crop progress report, 4pm (delayed from Monday because of Labor Day holiday)
• New Zealand dairy auction on Global Dairy Trade online market starts ~7am ET (~noon London, ~11pm Wellington)
• USDA soybean crush for July, 3pm
• UN Climate Change Conference in Bangkok, Sept. 4-9
• Malaysian Rubber Glove Manufacturers Association hosts International Rubber Glove Conference and Exhibition in Kuala Lumpur, Sept. 4-6

WEDNESDAY, SEPT. 5:

• 9th Annual Kingsman Asia Sugar Conference in New Delhi, Sept. 5-6
  • Indian Sugar Mills Association President Gaurav Goel, Intl Sugar Organization Executive Director Jose Orive due to speak
• Rabobank 2019 market outlook seminar in Kuala Lumpur
  • Projections include palm oil, soy; Global Head of Financial Markets Research Jan Lambregts, analyst Oscar Tjakra due to speak
• UN Climate Change Conference in Bangkok, Day 2
• Intl Rubber Glove Conference in Kuala Lumpur, Day 2

THURSDAY, SEPT. 6:

• Trump administration awaits Sept. 6 end of public comment period before it potentially proceeds with next round of tariffs on $200b Chinese goods; China expected to retaliate
• EIA U.S. weekly ethanol inventories, output, 11am (delayed from Wednesday because of Labor Day holiday)
• Statistics Canada’s domestic crop stockpile report for July, 8:30am ET
• FAO Food Price Index for August, 4am
• The Russian Grain Union hosts conference in Moscow
  • Agriculture Ministry’s director for food markets Anatoly Kutsenko, director of crop department Pyotr Chekmarev expected to attend
• 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
• UN Climate Change Conference in Bangkok, Day 3
• Kingsman Asia Sugar Conference in New Delhi, final day
• Intl Rubber Glove Conference in Kuala Lumpur, final day

FRIDAY, SEPT. 7:

• Brazil on public holiday
• USDA weekly net-export sales for corn, wheat, soy, cotton, 8:30am (delayed from Thursday because of Labor Day holiday)
• Guatemala’s National Coffee Association’s export data for August
• FranceAgriMer weekly updates on French crop conditions
• UN Climate Change Conference in Bangkok, Day 4
• 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

SATURDAY, SEPT. 8:

• China’s General Administration of Customs releases agricultural commodity trade data for August (preliminary), including soybean imports
• UN Climate Change Conference in Bangkok, Day 5

Source: Bloomberg and FI

 

Brazil selected export data for the month of August.

 Commodity                      August 2018           July 2018             August 2017

COFFEE(60 KG BAG)              2,255,585             1,242,462             2,375,452

CRUDE OIL (TNS)                4,354,096             8,098,498             4,576,543

ETHANOL (LTR)                  262,470,278           180,685,275           176,840,420

SOYBEANS (TNS)                 8,127,228             10,195,879            5,952,411

IRON ORE                       35,621,273            35,999,441            34,125,980

FROZEN ORANGE JUICE (TNS)      29,197                22,431                38,014

NON-FROZEN ORANGE JUICE (TNS)  112,279               179,491               175,607

SUGAR RAW (TNS)                1,444,137             1,709,222             2,160,409

Source: Reuters, Brazil AgMin and FI

 

USDA inspections versus Reuters trade range                                            

Wheat       391,920     versus  350000-550000           range

Corn          1,334,565  versus  900000-1300000         range

Soybeans   769,357     versus  700000-1000000         range

 

 

 

GRAINS INSPECTED AND/OR WEIGHED FOR EXPORT

                  REPORTED IN WEEK ENDING AUG 30, 2018

                            — METRIC TONS —

                                                   CURRENT     PREVIOUS 

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

  GRAIN      08/30/2018  08/23/2018  08/31/2017    TO DATE     TO DATE  

BARLEY              0         587       1,895        2,886       14,122 

CORN        1,334,565   1,264,787     828,036   57,732,863   56,947,583 

FLAXSEED            0          24           0          170        3,575 

MIXED               0           0           0           24           24 

OATS                0           0         499        1,198        1,996 

RYE                 0           0           0            0            0 

SORGHUM           792     139,813       6,572    5,112,421    5,940,481 

SOYBEANS      769,357     907,945     712,121   56,279,551   57,848,672 

SUNFLOWER           0           0           0          335          383 

WHEAT         391,920     488,750     291,266    5,235,208    7,750,050 

Total       2,496,634   2,801,906   1,840,389  124,364,656  128,506,886 

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.

·         Trade talks between the US and Canada resume this week.

·         Tropical Storm Gordon Has Shut Down 9% Of Daily Crude Oil Production, Nat Gas Output In Gulf Of Mexico.

·         ARGENTINE CENTRAL BANK SAID TO SELL $258M IN 2ND FX AUCTION

 

Corn.

·         December Corn traded two-sided, ending 3.25 cents higher, near session highs.  Sharply lower wheat dragged corn lower early but US harvesting delays helped support the market.

• Funds bought an estimated net 10,000 contracts.

·         Argentina’s government met Monday and increased its corn and wheat export tax to roughly 10 percent from zero.

·         The Argentina tax hike was about as expected.

·         Look for US harvest progress to slow this week especially across the Delta and lower Midwest.

• Soybean and Corn Advisory left its 2018 U.S. corn estimate unchanged at 178.0 bu/ac.
• We hear Informa is due out Thursday.
• USDA US corn export inspections as of August 30, 2018 were 1,334,565 tons, above a range of trade expectations, above 1,264,787 tons previous week and compares to 828,036 tons year ago. Major countries included Mexico for 423,316 tons, Japan for 345,103 tons, and Korea Rep for 137,516 tons.
• China reported its 6^th and 7^th case of African swine fever in the same city of Auancheng, Anhui, over the weekend. More than 2400 hogs were culled.
• China banned transportation of live hogs from infected provinces.
• Agritel estimated the Ukraine corn crop at 30.28 million tons, up from 24.67 million tons in 2017. Yields average 6.69 tons/hectare versus 5.51 last year.
• Brazil’s SCA estimated Brazil ethanol stocks in September could hit a record.
• Brazil exported 2.9MMT of corn in August, down from 5.3MMT a year ago.

 

USDA crop progress. Corn conditions decreased one point to 67 for the combined good/excellent categories. Trader were looking for unchanged. Corn harvesting will be reported next week. For the purpose of the September USDA report, we are using 175.5 bu/ac, unchanged from the previous week.

 

 

 

 

 

Export Developments

·         China’s Sinograin sold 7,600 tons of corn in an auction in Jilin at 1690 yuan per ton ($247.79/ton).

·         China sold about 71 million tons of corn out of reserves this season. Another 8 million tons of China corn reserves will be offered next week.

 

USDA reported July corn for ethanol production at 481 million bushels, above our expectations, above 463 million last month and 455 million bushels in July 2017. Sorghum use ended up at 6.2 million bushels, below 9.5 million in July 2017. DDGS production increased to 2.109 million short tons from 2.021 million in June and above 1.931 million short tons in July 2017. We are using 5.603 billion bushels for corn for ethanol usage during 2017-18, 3 million bushels above USDA.

 

 

Soybean complex.

• Soybeans traded all lover the place, ending mixed. Soybean meal traded sharply higher on speculation Argentina will slow soybean meal shipments, shifting business to the US. Soybeans found support on good USDA export inspections. Soybean oil traded mixed, ending moderately higher. The soybean oil market was higher earlier on strength in crude oil.
• USDA export inspections showed another 35,000 tons of soybeans went to Argentina and 66k was for China out of the PNW.

·         Funds bought 4,000 soybeans, bought 4,000 soybean meal and bought 3,000 soybean oil.

·         USD was up 27 by early afternoon. 

·         Indiana sent their producers an update on the 50%, commodity payment assistance USDA rolled out. Producers will have to wait until production ended. Indiana FSA Update: USDA Launches Trade Mitigation Programs https://content.govdelivery.com/accounts/USFSA/bulletins/20ada0d

• USDA US soybean export inspections as of August 30, 2018 were 769,357 tons, within a range of trade expectations, below 907,945 tons previous week and compares to 712,121 tons year ago. Major countries included Spain for 120,486 tons, China T for 78,374 tons, and China Main for 65,999 tons.

·         Argentina lowered one soybean tax and added another that resulted in a net 3% increase in overall tax to about 28%. They did the same thing for the products. Corn and wheat were increased to roughly 10 percent from zero. Reuters noted “a 25.5 percent export tax that had been put on soybeans was dropped on Monday to 18 percent, as has the 23 percent tax placed on international soyoil and soymeal shipments. But on top of that 18 percent tax, the three products will now be slapped with an additional levy of 4 pesos per export dollar, bringing the effective tax hike on soybeans and byproducts to 3 percentage points. “

·         The Argentina tax hike was about as expected.

·         Argentina started talks with the IMF for part of a $50 billion standby loan.

·         The USDA Attaché estimates a higher 2018-19 Argentina (2019-20 local crop-year) soybean production estimate than USDA official by 1.5MMT. 2018-19 ending stocks are projected over 13 million tons, high in our opinion.

·         A hurricane is expected to make landfall around Tuesday near NOLA, which should delay harvesting across the Delta early this week.

• A significant frost and freeze event is expected in eastern Canada’s Prairies Wednesday and Thursday.
• Soybean and Corn Advisory estimated the 2018 U.S. soybean yield up 0.5 bushels to 53.0 bu/ac.

·         Cargo surveyor SGS reported August Malaysian palm exports at 1,054,169 tons, 4,199 tons below the same period a month ago or up 0%, and 205,071 tons above the same period a year ago or down 16%.

·         Brazil’s real was under pressure.

·         Brazil’s high court ruled 6-1 to ban imprisoned Luiz Inacio Lula da Silva from running in the October elections.  This could be a problem for the Brazil stock market and currency on Monday when trading resumes as both markets rallied late last week in anticipation the court would let him run.  An appeal will be filed. Meantime, traders should monitor soybean price reaction on possible large currency moves in Brazil and Argentina ahead of the Monday overnight open. https://www.bloomberg.com/news/articles/2018-09-01/lula-banned-from-brazil-presidential-race-by-election-court

·         FC Stone estimated a 2 percent rise in Brazil’s 2018-19 soybean area, and production up slightly to 119.18 million tons with exports falling to 71 million tons from 74 million this season.

·         Brazil exported 8.13MMT of soybeans in August, down from 10.20MMT in July and up from 5.95MMT a year ago. 1.46MMT of soybean meal was exported in August versus 1.73MMT a month earlier and 1.23MMT last year. Brazil exported 209,268 tons of soybean oil in August vs. 210,904 tons in July and 145,914 tons a year ago.

·         China’s Soybean Industry Association said they will not face a soybean shortage in Q4.

·         China’s Jiusan Group projected 2018-19 soybean imports at a low 84.67 million tons, down 10.79 million tons from last year. 71.06 million tons could originate from Brazil and 7.5MMT from Argentina.

·         Strategie Grains lowered their EU rapeseed production to 19.62MMT from 19.95MMT last month and compares to their forecast of 22.17MMT for 2017-18.

 

USDA crop progress. Soybean conditions were unchanged at 66 for the combined good/excellent categories. Trader were looking for unchanged. Soybean harvesting should be reported in two weeks. We are using 50.9 bu/ac for the purpose of the USDA report, 0.7/bu below USDA August.

 

 

 

USDA reported July soybean crush at 178.8 million bushels, 1.7 million bushels above a Bloomberg trade guess, above 169.5 million in June, and well above 155.6 million a year earlier. We are using 2.058 billion bushels for the 2017-18 US crush, above USDA’s 2.040 billion estimate. On a product year basis, the crush is pegged at 2.072 billion bushels, above 2.050 billion USDA projected in August. End of July soybean oil stocks were reported at 2.384 billion pounds, up from 2.305 billion at the end of June and above 2.000 billion at the end of July 2017. USDA end of July soybean meal stocks were a high 512,000 short tons, up from 399,000 short tons for June and 412,000 short tons a year earlier.

 

 

 

Export Developments

·         Results awaited: South Korea seeks 15,000 tons of non-GMO soybeans on September 4 for Nov/Dec arrival.

• USDA seeks 5,000 tons of refined oil for the export program on September 5 for October shipment.
• Iran seeks 30,000 tons of sunflower oil on September 24.

·         China plans to suspend rapeseed oil sales from reserves on September 10. The remaining stocks of imported rapeseed and soybean oil will be auction off through September 6.

• China sold about 1.35MMT of soybeans out of reserves this season.

 

 

The USDA Attaché estimates a higher 2018-19 Argentina (2019-20 local crop-year) soybean production estimate than USDA official by 1.5MMT. 2018-19 ending stocks are projected over 13 million tons, high in our opinion.  https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Oilseeds%20and%20Products%20Update_Buenos%20Aires_Argentina_8-24-2018.pdf

 

Source: USDA Attaché and FI

 

Wheat. 

• Wheat traded sharply lower following Paris wheat futures after Russia said they had no plans to add a wheat export duty. Russia also requested that 1.5 million tons of intervention grains could be sold to the domestic market.
• All three markets settled well off session lows.
• Matif wheat ended 2.75 euros lower at 200.00 euros.
• Funds were net sellers of an estimated 7,000 contracts.

·         IKAR reported 12.5% Russia Black Sea wheat prices at $225/ton at the end of last week, unchanged from the previous week. SovEcon reported $223/ton for fob wheat.

·         Russia wheat exports in August were a record for the month at 3.9MMT – SocEcon.

·         Argentina’s government met Monday and increased its corn and wheat export tax to roughly 10 percent from zero.

• USDA US all-wheat export inspections as of August 30, 2018 were 391,920 tons, within a range of trade expectations, below 488,750 tons previous week and compares to 291,266 tons year ago. Major countries included Mexico for 90,923 tons, Philippines for 66,102 tons, and Indonesia for 39,474 tons.

 

USDA crop progress. US spring wheat harvesting progress was reported at 87 percent complete, 2 points below expectations, and compare to 87 percent a year ago and 75 percent average. 

 

 

Statistics Canada is due to release July 31 Canada stocks on Thursday morning, September 6.

 

Export Developments.

·         Egypt’s GASC seek wheat for October 21-30 shipment.

·         Jordan bought 60,000 tons of barley at $263.50/ton, c&f for 2H Oct. shipment.

·         China sold 98,787 tons of 2012 wheat at auction, at an average price of 2105 yuan per ton ($308.69/ton), 94.4 percent of wheat was offered.

·         China sold 2,676 tons of 2012 wheat at auction, at an average price of 2249 yuan per ton ($329.38/ton), 46 percent of wheat was offered.

·         Japan seeks 107,965 tons of food wheat on Thursday.

·         Results awaited: Note Taiwan seeks 110,500 tons of US milling wheat from the US on August 31 for October/November shipment.

• Japan in a SBS import tender seeks 120,000 tons of feed wheat and 200,000 tons of barley on September 5 for arrival by January 31. 
• Syria’s General Establishment for Cereal Processing and Trade (Hoboob) seeks 200,000 tons of soft bread wheat from Russia, Romania or Bulgaria, with shipment sought between Oct. 15 and Dec. 15. The deadline is Sept. 17 and requires payment in Syrian pounds.
• Ethiopia seeks 200,000 tons of milling wheat on September 18 for shipment two months after contract signing.

 

Rice/Other

·         China sold 301,011 tons of rice at auction, at an average price of 2487 yuan per ton ($364.52/ton), 16.6 percent of wheat was offered.

·         China sold 40,563 tons of rice at auction, at an average price of 2633 yuan per ton ($385.17/ton), 4.76 percent of wheat was offered.

·         The Philippines will import 132,000 tons of additional rice soon.

·         Results awaited: South Korea seeks 92,783 tons of rice on Aug. 31 for Nov/Dec arrival.

    TONNES(M/T)    GRAIN TYPE      ARRIVAL/PORT

    10,000         Brown medium    Nov 30/Gwangyang

    10,000         Brown medium    Dec 31/Busan

    20,000         Brown medium    Dec 31/Gunsan

    20,000         Brown medium    Dec 31/Mokpo

    20,000         Brown medium    Dec 31/Donghae

    12,783         Brown long      Nov 30/Masan