FW: FI Mid Morning Grain Comments

PDF attached

 

• Weather sending wheat higher
• Soybeans pair some losses from good US shipments
• Corn in limbo from higher wheat/lower soy

 

Weather and crop conditions

 

·         Rain that fell over the weekend was welcome across parts of IA into southern WI. Other areas saw increasing crop stress.

·         World weather highlights:

“Critical rain is expected later today into Tuesday across southern Iowa, but not all of the region is likely to receive enough rain to prevent rising levels of crop stress when a week to ten days of mostly dry weather begins Wednesday.  Drying in recent weeks and the past weekend’s hot and dry weather raised crop stress and many crops are likely on the verge of significant yield reductions.  Rain is expected throughout the region and some locally heavy rain will fall, but coverage of rain greater than 1.00 inch is not likely to be widespread and those areas that fail to receive significant rain are likely to see steadily increasing levels of crop stress and declining yields until the next round of rain occurs.  Corn should be too far advanced to suffer from significant declines in yields, but soybean yields could come down significantly.  Rain advertised during the Aug. 15-17 period will be another critical event.  Temperatures will be mild most often during the next ten days and that will help prevent rapid increases in crop stress. 

            Eastern Kansas into Missouri will also see rain by Tuesday, but the soil there is drier than southern Iowa’s soil and outside of the small areas that see multiple inches of rain, stress to crops is likely to increase again soon after drier weather begins Wednesday. 

Michigan will see widespread rain by Tuesday with additional showers possible through early next week.  Most of the region should receive enough rain to maintain or improve soil conditions. 

Meanwhile, the remainder of the Midwest, will continue to see mostly favorable conditions for crops and high yield potentials through the next two weeks.  Most areas in the west will dry down significantly from Wednesday into the middle of next week, but soil moisture should be high enough to support the needs of most crops.  Shower activity will be greater in the eastern Corn Belt and conditions for crops will be highly favorable in most areas.  “

 

AREAS OF GREATEST INTEREST

• Europe weather is expected to change during the middle and latter part of this week
  • A succession of weather disturbances will begin impacting western and central Europe bringing cooler temperatures and periodic rainfall
    • It will take several days for meaningful rain to reach all of the driest areas, but relief is expected and the pattern change will continue into next week
    • Soil moisture improvements will come very slowly, but cooler temperatures will evolve more swiftly
• Drought continued in northwestern Europe where weekend rainfall was minimal and temperatures still well above average
  • High temperatures in the middle and upper 90s Fahrenheit occurred in most of France and parts of Germany and 80s and lower 90s in England, Wales, Denmark and other southwestern Scandinavia areas
  • Spain and Portugal reported highest temperatures of 100 to 108 except in southern Portugal where extremes reached 113
• The bottom line in Europe will be good for late season crops, but it has been dry and warm enough for a long enough period of time in the northwest that production cuts will not be fully reversible. Some late season crop improvement is possible, however
• Typhoon Shanshan may impact Honshu, Japan in the second half of this week, although confidence in the storm’s path is low
  • Landfall is expected late Wednesday or Thursday near Tokyo and the storm may then move north northeast through the upper half of Honshu producing torrential rainfall and strong wind
    • The storm threatens rice and citrus production areas, although most of the potential damage will be on central and eastern portions of Honshu
• Eastern Australia will receive some rain today and Monday
  • Northern New South Wales and Queensland will receive 0.05 to 0.35 inch with local totals to 0.60 inch
    • The precipitation will be welcome, but not enough on its own for a serious change in soil moisture
    • No follow up moisture is advertised for at least ten days
• Australia weekend rain was minimal in the east while Western Australia reported scattered showers and thunderstorms
• The bottom line for Australia is a more urgent need for rain this month in preparation for spring crop development in Queensland and northern New South Wales.  Without improved rainfall the east-central crop areas will yield very poorly. Sufficient rain is expected in the west and south to combine with favorable soil moisture to ensure good late winter crop conditions.
• India monsoonal rainfall will continue limited in the west and south through the next ten days
  • Rain is expected frequently from eastern Madhya Pradesh and Uttar Pradesh into Bangladesh, West Bengal, Odisha and the far Eastern States where multiple inches of rain are anticipated
  • Rain will fall in Rajasthan, Gujarat and areas south into Tamil Nadu and Andhra Pradesh, but amounts will be below average with many areas failing to get enough rain to counter evaporation
  • Temperatures will be seasonable
• India weekend rainfall was minimal from Maharashtra and western Madhya Pradesh to Pakistan and erratic showers and thunderstorms of limited significance occurred farther south
  • Weekend rainfall was greatest in northern and eastern Uttar Pradesh and India’s far Eastern States where 0.50 to more than 2.50 inches resulted
    • Local totals of 7.00 to more than 11.00 inches occurred from Uttaranchal into far northern Uttar Pradesh and to 3.50 inches in the Eastern States
• Pakistan continues to suffer from excessive heat and dry weather
  • Highest temperatures during the weekend were in the range of 100 to 111 degrees Fahrenheit similar to that reported last week
  • Monsoonal rainfall has failed to reach southern Pakistan this year stressing some crops
    • Water supply in northern parts of the nation was already below average this year and limited summer rainfall and persistent heat has not helped the situation
    • Crop yields may be down, although irrigation has continued to be applied
• Southern Canada Prairies drought will not change this week; hot dry conditions are expected most of this week
  • Very little rainfall is expected in the drought region until late in the coming weekend or early next week
• Hot weather is expected throughout the Canada Prairies this week with readings well above average until the weekend when rain and cooling evolve
  • Extreme highs in the upper 80s and 90s Fahrenheit will be widespread and several extremes over 100 degrees are expected in the drought stricken areas in the south
    • Thursday into Saturday will be hottest
• Canada Prairies weekend rainfall occurred most significantly from Manitoba to northeastern Saskatchewan where 0.05 to 0.75 inch and local totals of more than 1.00 inch resulted
  • Rainfall elsewhere was 0.05 to 0.50 inch with very little rain of significance near the U.S. border
  • Highest temperatures were in the upper 60s and 70s northwest and in the 80s and lower 90s in the south
• The bottom line for Canada’s Prairies remains one of concern over ongoing drought in the south and some central crop areas where production cuts are prevailing. Northern crop areas remain in mostly good shape, but a few areas will need later than usual frost and freezes to avoid crop damage because of wet weather at times this year.
• Russia’s Southern Region, middle and lower Volga River Valley and central and eastern Ukraine will experience net drying over the next ten days
  • Temperatures will be warmer than usual, but not excessively hot
    • Highs in the 80s and 90s Fahrenheit are most likely
  • Net drying will raise crop moisture stress and return a more serious level of drought in southern portions of the described region
• A boost in western Russia, Belarus, Baltic States and western Ukraine rainfall is expected next week, but this week is expected to be drier biased with a more erratic distribution of rain
  • Seasonably warm temperatures are expected
• Brazil rain fell significantly Friday into Saturday from northern Parana and Mato Grosso do Sul to southern Minas Gerais and Rio de Janeiro
  • Rain amounts reached 4.12 inches in northern Parana and nearly 4.68 inches in central Mato Grosso do Sul while 0.60 to 1.61 inches occurred elsewhere
    • Rainfall of 0.05 to 0.60 inch surrounded the heavier rainfall region
  • Some coffee flowering will result
  • Wheat areas in northern Parana and Sao Paulo benefited from the moisture as did sugarcane and citrus
    • No citrus flowering was suspected, although bud swelling may be taking place
• Interior southern Brazil and southern portions of Center South Brazil will receive additional rain through Friday
  • Rain totals of 1.00 to 2.00 inches may impact far southern Minas Gerais and Rio de Janeiro, portions of Sao Paulo, Parana and southern Mato Grosso do Sul
    • The greatest rain will occur tonight and Monday
    • Showers rest of this week will be more random and light with Rio Grande do Sul, Santa Catarina and southern Parana wettest late this week
    • Net drying is expected this weekend and next week

Source: World Weather INC

 

 

 

 

SIGNIFICANT CORN AND SOYBEAN BELT PRECIPITATION EVENTS

                        WEST CORN BELT              EAST CORN BELT  

Tdy-Tue           50% cvg of up to 0.75”           90% cvg of 0.15-0.90”

                        and local amts over 2.0”;         and local amts over 2.50”;

                        wettest south                            driest SE

Wed                                                                 40% cvg of up to 0.40”

                                                                        and local amts to 0.65”                       

Wed-Fri           10-25% daily cvg of

                        up to 0.30” and locally

                        more each day;

                        wettest east

Thu-Aug 13                                                     20-40% daily cvg of

                                                                        up to 0.40” and locally

                                                                        more each day

Sat-Aug 14       Up to 20% daily cvg of          

                        up to 0.25” and locally           

                        more each day; some              

                        days may be dry

Aug 14-15                                                       5-20% daily cvg of up

                                                                        to 0.30” and locally

                                                                        more each day

Aug 15-17       65% cvg of up to 0.60”          

                        and local amts to 1.30”           

Aug 16-18                                                       75% cvg of up to 0.60”

                                                                        and local amts to 1.30”

Aug 18             15% cvg of up to 0.20”

                        and locally more

Aug 19                                                             15% cvg of up to 0.20”

                                                                        and locally more

Aug 19-21       55% cvg of up to 0.50”

                        and locally more                  

Aug 20-21                                                       65% cvg of up to 0.50”

                                                                        and locally more         

 

U.S. DELTA/SOUTHEAST SIGNIFICANT PRECIPITATION EVENTS

                        DELTA                                   SOUTHEAST

Tdy-Tue                                                           15-35% daily cvg of

                                                                        up to 0.50” and locally

                                                                        more each day

Tue-Wed          75% cvg of up to 0.75”

                        and local amts to 1.70”;

                        driest south

Wed-Fri                                                           75% cvg of up to 0.75”

                                                                        and local amts to 2.0”;

                                                                        east Ga. and S.C. driest

Thu-Fri            75% cvg of up to 0.75”

                        and local amts to 2.0”;

                        wettest south

Sat-Aug 13                                                       80% cvg of up to 0.75”

                                                                        and local amts to 1.50”;

                                                                        driest west

Sat-Sun            15-35% daily cvg of

                        up to 0.50” and locally

                        more each day                                    

Aug 13-16       5-20% daily cvg of up            

                        to 0.30” and locally                 

                        more each day                        

Aug 14-16                                                       10-25% daily cvg of

                                                                        up to 0.30” and locally

                                                                        more each day

Aug 17-19       65% cvg of up to 0.60”           65% cvg of up to 0.75”

                        and locally more                      and locally more

Source: World Weather INC and FI

 

 

 

 

Bloomberg weekly agenda

MONDAY, AUG. 6:

• Canada on holiday
• Malaysian Palm Oil Council POINTERS webinar
  • Malaysian Palm Oil Board, Malaysian Palm Oil Council, Indonesian Palm Oil Association give their latest market outlook
• 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: Tyson Foods

TUESDAY, AUG. 7:

• New Zealand dairy auction on Global Dairy Trade online market starts ~7am ET (~noon London, ~11pm Wellington)
• China National Grain and Oils Information Center (CNGOIC) publishes forecast on country’s grains output
• EARNINGS: Dean Foods, Mosaic

WEDNESDAY, AUG. 8:

• China’s General Administration of Customs releases preliminary agricultural commodity trade data for July, 11pm ET Tuesday (11am Beijing Wednesday)
• EIA U.S. weekly ethanol inventories, output, 10:30am
• French Agriculture Ministry publishes crop areas, production forecasts

THURSDAY, AUG. 9:

• USDA weekly net-export sales for corn, wheat, soy, cotton, 8:30am
• Brazil’s crop agency Conab updates its forecast on 2017-18 grain and oilseed crop, 8am ET (9am Sao Paulo)
• Strategie Grains monthly report on European market outlook
• 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
• EARNINGS: BayWa

FRIDAY, AUG. 10:

• USDA’s monthly World Agricultural Supply and Demand Estimates (WASDE) report for August, noon
• China’s Ministry of Agriculture publishes China Agricultural Supply & Demand Estimates (CASDE) report
• Malaysian Palm Oil Board (MPOB) releases data on palm oil stockpiles, exports, production as of end-July, 12:30am ET (12:30pm Kuala Lumpur)
• Cargo surveyors Intertek, AmSpec release respective data on Malaysia’s Aug. 1-10 palm oil exports, 11pm ET Thursday (11am Kuala Lumpur Friday)
  • SGS data during same period, 3am ET Friday (3pm Kuala Lumpur Friday)
• Unica’s bi- weekly Brazil Center-South sugar output, 9am ET
• FranceAgriMer weekly updates on French crop conditions
• 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
• EARNINGS: BRF

Source: Bloomberg and FI

 

Registrations

• Soybeans down 333 to 910

·         Ethanol up 51 to 305

 

 

 

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.

 

 

 

 

USDA inspections versus Reuters trade range                                            

Wheat                325,486                   versus   300,000-450,000

Corn                    1,287,772               versus   1,000,000-1,700,000

Soybeans           893,109                   versus   500,000-750,000

 

 

 

Macros.

·         US stocks turned higher after a lower open, USD higher, WTI crude higher, and gold lower, at the time this was written.

·         Geological issues are keeping some traders nervous.

 

Corn.

• Corn prices were nearly unchanged again on lack of direction due to lower soybeans and higher wheat.

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

·         USDA US corn export inspections as of August 02, 2018 were 1,287,772 tons, within a range of trade expectations, below 1,661,593 tons previous week and compares to 979,006 tons year ago. Major countries included Japan for 365,828 tons, Mexico for 276,186 tons, and Korea Rep for 208,071 tons.

·         Malaysia reported at H5N1 bird flu outbreak in Sabah. 3-28k egg-laying chickens were culled.

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

·         China: China Announces Temporary Anti-Dumping Duties on Brazilian Poultry https://gain.fas.usda.gov/Recent%20GAIN%20Publications/China%20Announces%20Temporary%20Anti-Dumping%20Duties%20on%20Brazilian%20Poultry_Beijing_China%20-%20Peoples%20Republic%20of_6-8-2018.pdf

 

Export Developments

·         South Korea’s NOFI bought 67,000 tons of optional origin corn at $210.58/ton c&f for early Jan 2019 arrival.

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

 

Soybean complex.

·         Soybeans traded sharply lower with current session lows hitting about an hour after the day session open. Soybean meal fell about $4.00 and soybean oil is moderately lower in the front months.

·         Ideas China will be able to weather the absent of US soybeans are weighing on CBOT soybean complex futures. 10 million ton cut was noted in this article. http://www.china.org.cn/china/2018-08/06/content_58132178.htm

·         But strong US exports week after week are likely limiting losses in CBOT soybeans.

·         China’s economy is suffering since the start of the trade issues.

·         CBOT crush is higher in part to SBO prices reluctant to erode. September SBO is holding above a 20-day MA.

·         USDA’s August Crop Production and S&D’s are due out on Friday.

·         USDA US soybean export inspections as of August 02, 2018 were 893,109 tons, above a range of trade expectations, above 768,769 tons previous week and compares to 686,770 tons year ago. Major countries included Vietnam for 74,414 tons, Spain for 65,001 tons, and China Main for 64,581 tons.

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

·         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.

·         Offshore values were suggesting a higher lead for US soybean meal and lower lead for soybean oil.  Malaysian palm was higher overnight but leading SBO 12 points lower.

·         BOT soybean oil prices may have bottomed recently.

·         Reuters: “Malaysian palm oil prices are set to average 2,410 ringgit ($591) a ton in 2018, the Malaysian Palm Oil Council (MPOC) forecast on Monday, down about 14 percent from last year’s average prices, according to Thomson Reuters Eikon data.”

·         Palm oil was last near 2196, down from 2500 ringgit at the start of 2018.

·         Traders look for Malaysian palm oil stocks to hit a 5-month high. We expect a gradual draw over the next several months.

·         MPOB Malaysian July S&D estimates by Reuters:

	Range	Median
Production	1,450,000 – 1,700,000	1,544,666
Exports	1,094,521 – 1,620,000	1,139,500
Imports	40,000 – 85,000	51,300
Closing Stocks	2,070,000 – 2,439,226	2,342,650

 

 

Export Developments

• The CCC 9,000 tons of crude degummed soybean oil for Senegal and Guatemala, on August 8 for September shipment.
• Egypt seeks 30k SBO and 10k Sunflower oil for LH September.
• 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 are higher on ongoing world weather problems chipping away at global wheat production prospects. 

·         USDA US all-wheat export inspections as of August 02, 2018 were 325,486 tons, within a range of trade expectations, below 379,149 tons previous week and compares to 636,942 tons year ago. Major countries included Philippines for 55,000 tons, Mexico for 44,676 tons, and China T for 37,149 tons.

·         Russian wheat export prices were +$11 wow to $234/ton for shipment in 1H of Sept. – IKAR.  UkrAgroConsult showed Ukraine wheat up 4.6% to $226/ton.

·         Ukraine’s AgMin sees 2018-19 food wheat exports to 8 million tons versus 10MMT in 2017-18.

·         Ukraine exported 3.4MMT of grain from July 1-Aug 6, 100,000 below same period a year ago.

·         The low water levels for rivers in Germany are forcing some boats to carry 50 percent or less grain.

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

·         Reuters graphic on Ausi’s drought https://tmsnrt.rs/2M4UXP7

 

Export Developments.

·         Israel bought 25,000 tons of feed wheat from the Black Sea at $210/ton c&f.

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

·         Jordan issued an import tender for 120,000 tons of hard milling wheat on August 9.

• 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

·         China sold 33,643 tons of rice out of auction at 2605 yuan per ton ($381.91/ton), 4 percent of what was offered.

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