FW: FI Evening Grain Comments 09/05/18

PDF attached

 

Weather and crop conditions

 

 

First indication of frost/freeze, that we see, may occur tonight.

 

 

Selected World Weather bullet points:

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

      -Thu                                                                               90% cvg of up to 0.75”

                                                                                                and local amts to 1.50”;

                                                                                                wettest west

Thu                        20% cvg of up to 0.75”

                                and local amts to 2.0”;

                                SE Mo. wettest

Fri-Sat                   20% cvg of 0.75-2.0”

                                and local amts over 3.50”

                                from central to east Mo.

                                with up to 0.75” and

                                locally more elsewhere

Fri-Sun                                                                                  80% cvg of 0.75-3.0”

                                                                                                and local amts over 4.50”

                                                                                                from west-central and

                                                                                                SW Il. to east Oh. with

                                                                                                up to 0.75” and locally

                                                                                                more elsewhere; driest

                                                                                                north

Sun-Tue               15-30% daily cvg of

                                up to 0.50” and locally                   

                                more each day;

                                wettest NW

Mon                                                                                      15% cvg of up to 0.60”

                                                                                               and locally more;

                                                                                                wettest SE

Tue-Sep 14                                                                         Up to 20% daily cvg of

                                                                                                up to 0.25” and locally   

                                                                                                more each day; some

                                                                                                days may be dry

Sep 12-13            10-25% daily cvg of

                                up to 0.60” and locally                   

                                more each day;

                                wettest NW

Sep 14-16            60% cvg of up to 0.50”

                                and locally more

Sep 15-17                                                                            60% cvg of up to 0.40”

                                                                                                and locally more

Sep 17-19            5-20% daily cvg of up

                                to 0.35” and locally                         

                                more each day

Sep 18-19                                                                            5-20% daily cvg of up

                                                                                                to 0.30” and locally         

                                                                                                more each day

 

U.S. DELTA/SOUTHEAST SIGNIFICANT PRECIPITATION EVENTS

                        DELTA                                   SOUTHEAST

        -Thu                                                                               40% cvg of up to 0.75”

                                                                                                and local amts to 1.50”

                                                                                                with some 1.50-4.0”

                                                                                                amts from central to SE

                                                                                                Ms. and SW Ala.

Tdy-Fri                  100% cvg of 0.75-3.0”                    

                                and local amts over 4.0”                

                                with lighter rain in a

                                few southern locations

Fri-Sat                                                                                   10-25% daily cvg of

                                                                                                up to 0.40” and locally

                                                                                                more each day

Sat-Mon              90-100% cvg of 0.15-0.85”

                                and local amts over 2.0”

Sun-Tue                                                                               75% cvg of up to 0.75”

                                                                                                and local amts to 2.0”;

                                                                                                wettest west

Tue-Sep 15         10-25% daily cvg of

                                up to 0.35” and locally

                                more each day

Sep 12-15                                                                            10-25% daily cvg of

                                                                                                up to 0.35” and locally

                                                                                                more each day

Sep 16-19            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

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

 

Macros.

·         US International Trade Balance (USD) Jul: -50.1B (est -50.3B; prev R -45.7B)

·         Canadian Trade Balance (CAD) Jul: -0.11B (est -1.13B; prev R -0.74B)

·         Canada Total Crude Oil Imports Rose 96K Bpd To 611K Bpd In July (Vs 515K Bpd In June)

– Total Crude Oil Exports Fell 70K Bpd To 3.52M Bpd In July (Vs 3.59M Bpd In June)

– Crude Oil Imports From US Rose 103K Bpd To 393K Bpd In July (Vs 290K Bpd In June)

– Crude Oil Exports To US Fell 210K Bpd To 3.33M Bpd In July (Vs 3.54M Bpd In June)

 

Selected crop estimates:

·         Allendale Inc. survey: 177.7 / 14.529 corn; 52.2 / 4.636 soybeans

·         FC Stone: 177.7 / 14.532 corn; 53.8 / 4.782 soybeans

·         FI: 175.5 / 14.355 corn; 50.9 / 4.517 soybeans

·         Informa may release updated figures on Thursday

·         Informa AUGUST: 176.0 / 14.392 corn; 49.8 / 4.445 soybeans

·         USDA @ 178.4 / 14.586 corn; 51.6 / 4.586 soybeans

 

 

Macros.

·         Trade talks between the US and Canada resumed. Canada is taking a hard stance.

·         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.

• Corn prices eased Wednesday after hitting a two-week high on Tuesday. WTI crude oil is sharply lower. Traders are anticipating some deterioration in US crop quality this week from heavy rainfall across the Delta and Midwest. Price declines should be limited.
• Funds sold an estimated net 7,000 contracts.

·         Oats were higher until near the CBOT close after southern Canada saw frost/freezes in many areas from Alberta into western Manitoba and Saskatchewan.

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

• 9^th outbreak confirmed. China reported African swine fever outbreak in Jiamusi city in northeast Heilongjiang province, killing 12 pigs and infected another 39 animals.

 

Export Developments

·         Under the 24-hour reporting system, USDA reported private exporters sold 101,736 tons of corn for delivery to Mexico during the 2018-19 marketing year.

·         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.

 

 

Soybean complex.

• The soybean complex traded lower as traders access heavy Midwestern rainfall. The USDA combined good/excellent rating for soybeans was unchanged from the previous week at 66 percent.

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

·         Canada’s PM Justin Trudeau said he will not back down to the US when they resume NAFTA talks.

·         Funds sold 3,000 soybeans, sold 2,000 soybean meal and sold 2,000 soybean oil.

·         Gulf soybeans are about 13-15 cents above the November contract, lowest level for this time of year since 2017.

·         Census reported July US soybean exports 6 million bushels higher than what we expected at 126 million bushels, above 119.6 million in June and well above 83.15 million in July 2017. We are using 2.128 billion bushels for 2017-18 US soybean exports. USDA is at 2.110 billion. 

·         July exports for soybean meal were a large 1.23 million short tons but they still came in 68,000 short tons below our estimate.

·         US July soybean oil exports were only 175 million pounds and weekly shipments for August are currently running roughly 75 percent of July shipments when eyeballing USDA export sales data. We lowered out soybean oil export figure for 2017-18 to 2.410 billion pounds, 40 million pounds less than USDA.

·         Brazil increased the minimum truck freight rate on average by 5 percent. The increase in freight rates varies by type of goods. This comes after Petrobras last week increased trucker fuel prices by 13 percent. Anec speculates exporter profit margins could shrink to about one percent. The 5 percent increase in freight rates was expected to cost the country’s grain sector 3.4 billion reais ($818 million).

·         Brazil’s Abiove increased their 2018 soybean export forecast to record 76.1 million tons, up 3.5% from 73.5 million tons. They lowered ending stocks to 1.465 million tons from 3.865 million tons.  2018 production was seen at 118.8 million tons, 100,000 tons above their previous forecast.  The crush is expected at 43.6MMT.

·         Weaker mineral oil pressured Malaysian palm oil overnight.

·         MPOB is due out September 12.  Reuters poll estimated August end-stocks may increase 9 percent month-on-month to 2.41 million tons and production rising 9.9 percent to 1.65 million tons. August exports are seen up 2.3 percent to 1.23 million tons from the previous month.

 

Export Developments

• China sold 33,748 tons of 2013 soybean at auction at an average price of 3,002 yuan ($438.72) per ton, 31.25 percent of total soybean available for the auction.
• China sold about 1.69 MMT of soybeans out of reserves this season.
• China failed to sell any of the 29,245 tons of soyoil and 18,151 tons of rapeseed oil offered at auction.

·         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.

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

• Results awaited: 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.

 

Wheat. 

·         US wheat futures rebounded today in part to Egypt floating an import tender and technical buying, but fell to close 4.25-9.75 cents. Russia wheat remains completive. Egypt’s GASC bought 60,000 tons of Russian wheat for October 21-30 shipment at $217.90 fob, $235.00 c&f. In comparison US HRW wheat is about $245/ton for 11% protein.

·         Funds in Chicago wheat sold an estimated net 4,000 contracts.

• December Matif wheat futures fell, setting at 199.75, down 0.75 euro.

·         Australia’s Bureau of Meteorology mentioned the drought across eastern has intensified and forecast it will continue to experience dry weather for at least the next three months.

• US Wheat Associates (USW) will soon close its office in Moscow after 26 years. They closed their office in Egypt late last year.

 

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

 

Export Developments.

·         Egypt’s GASC bought 60,000 tons of Russian wheat for October 21-30 shipment at $217.90 fob, $235.00 c&f. In comparison US HRW wheat is about $245/ton for 11% protein.

·         Jordan bought 60,000 tons of wheat at $257.00/ton.

• Japan in a SBS import tender bought 9,500 tons of feed wheat and passed on barley for arrival by late February. 
• Japan in a SBS import tender seeks 120,000 tons of feed wheat and 200,000 tons of barley on September 12 for arrival by late February. 

·         Japan bought 107,965 tons of food wheat. Original details as follows:

• 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

·         The Philippines seeks an extra 250k tons of rice for Q4 and Q1 2019 shipment.

·         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