FW: FI Morning Grain Comments 06/20/19

PDF attached

 

Weather and Conditions

·         Near-term outlook is wet but by the end of the 7-day precipitation starts to ease.

·         6-10 day is drier for the central and southeastern Midwest, Delta, and southeastern Great Plains and temperatures are warmer for the Midwest and Great Plains.  The 11-15 day is slightly wetter for the eastern Midwest and central Delta, and drier for the northwestern Midwest.

·         There is talk of a high-pressure ridge coming in for the first week of July.

·         The US Midwest will continue to see rain on a daily basis, with the lower Midwest wettest, through the end of the week.  2.00 to 4.00 inches with occur this week (Mon-Sun), with local totals over 5.00 inches from eastern Kansas and Nebraska through Ohio and Kentucky.  From NE through IA, MN and eastern Dakotas will see 1-3 inches.  The Great Lakes will see less than an inch, which is good for lower MI and northern IN. 

·         The Corn Belt will dry down June 25-July 2, but this will be too late for producers that have not planted. 

·         River flooding will continue into next week.

·         A favorable mix of weather is expected in both the Delta and southeastern states over the next ten days.

·         The North China Plain and central Yellow River Basin will be drier than normal during the next two weeks. 

·         A good mixture of rain and sunshine will occur throughout most of Europe this week.

·         Western Australia is expected to see rain relief this weekend. 

Source: World Weather Inc. and FI

 

 

 

7-day – Thursday morning

 

7-day – Wed morning

 

 

 

Bloomberg Ag Calendar

THURSDAY, JUNE 20:

• China International Cotton Conference on textile exports, cotton policy
• Intertek, AmSpec release Malaysia’s June 1-20 palm exports data, 11pm Wednesday (11am in Kuala Lumpur); SGS data at 3am (3pm Kuala Lumpur)
• USDA weekly crop net-export sales for corn, soybeans, wheat, 8:30am
• Holiday in Brazil

FRIDAY, JUNE 21:

• Argentina releases monthly crop report
• FranceAgriMer weekly update on French crop conditions
• ICE Futures Europe commitments of traders weekly report on coffee, cocoa, sugar positions, ~1pm (~6pm London)
• CFTC commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm

Source: Bloomberg and FI

 

No changes in CBOT registrations

 

 

USDA export sales

·         USDA export sales were better than expected for old-crop soybeans at 571,500 tons (74,700 tons for China), within for new-crop at 200,000 tons (as expected).  Soybean meal export sales of 109,600 tons were near the low end of expectations and shipments were only 167,300 tons. Soybean oil export sales of only 4,400 tons were poor and shipments improved to 12,900 tons.

·         USDA corn export sales were 38,400 tons old crop and 360,800 tons new-crop, poor in our opinion.

·         USDA all-wheat US export sales fell below expectations at 187,600 tons, down from 325,400 tons last week.

·         Pork sales were 23,100 tons.

·         Sorghum sales were net reductions of 200 tons.

 

 

 

 

Macros

·         US Initial Jobless Claims Jun-15: 216K (exp 220K; prev 222K)

–          Continuing Claims Jun-8: 1662K (exp 1680K; R prev 1699K)

·         US Philadelphia Fed Business Outlook Jun: 0.3 (exp 10.4; prev 16.6)  

–          Philadelphia Fed New Orders Index Jun: 8.3 (prev 11.0)

–          Philadelphia Fed Employment Index Jun: 15.4 (prev 18.2)

–          Philadelphia Fed Prices Paid Index Jun: 12.9 (prev 23.1)

–          Philadelphia Fed Six-Month Capital Expenditures Outlook Jun: 28.0 (prev 23.3)

–          Philadelphia Fed Six-Month Business Conditions Jun: 21.4 (prev 19.7) 

·         Canadian Non-Farm Payroll Employment May: 16.0K (prev 61.7K)

·         USD 45 points lower (7:15 am CT)

·         US DOW +226

·         Crude +$1.90

·         Gold +$40.60 (near 5-year high)

·         U.S. FOMC  – Fed keeps target rate unchanged at 2.25-2.50%.

The Fed built its case for a possible rate cut later this year.  Nearly half of the policy makers see lower rates by year-end.  The Fed cites uncertainties increasing in regard to the outlook for sustained economic expansion.  The Fed said they will act appropriately to sustain economic expansion with a strong labor market and near target inflation.

 

Corn.

·         CBOT corn traded lower on Thursday in the nearby positions (paired losses), for the third session after 5-year highs were recently reached.

·         China reported an outbreak of ASF in southwestern Guizhou.

·         Armyworms are becoming a big problem for Asian countries.

·         US ethanol production declined by most since 4/26, falling 15,000 barrels per day, short of a Bloomberg survey calling for a 23 million barrel decline.  Ethanol stocks fell 189,000 barrels to 21.613 million, lowest level since 5/25/2018. The trade was looking for an increase in stocks. 

·         The June Acreage report should show a 10+ million-acre loss in corn acres, but the survey taken during the first two weeks of June may show only a 7 million acre decline amid producers reporting “intended” acres and take prevent plantings.  We look for 85.57 million corn and 85.02 million soybeans, down 7.23 million and up 400,000 from March Intentions.

·         The USDA Broiler Hatchery report showed eggs set in the US down slightly and chicks placed up 2 percent. Cumulative placements from the week ending January 5, 2019 through June 15, 2019 for the United States were 4.46 billion. Cumulative placements were up 2 percent from the same period a year earlier.

 

Export Developments

·         Under the 24-hour announcement system, private exporters reported 122,000 tons of corn for delivery to Mexico. Of the total, 52,000 tons is for delivery during the 2018/2019 marketing year and 70,000 tons for delivery during the 2019/2020 marketing year.

·         Set for June 25: India’s MMTC seeks at least 20,000 tons and a maximum 100,000 tons of corn on June 25, postponed from June 12 (originally May 8, postponed to May 15 and then to May 22, and then to June 6, and then to June 12, and then to June 19) for shipment between July 1 and July 31.

·         Taiwan seeks 30,000 tons of US corn on June 26.

• China sold about 12 million tons of corn since the start of year’s reserve sale campaign. CNGOIC estimates about 50 million tons will be sold this season.

 

 

USDA Export Sales Text        

·         Corn:   Net sales of 38,400 MT for 2018/2019 were down 77 percent from the previous week and 90 percent from the prior 4-week average.  Increases were reported for Japan (107,500 MT, including 104,200 MT switched from unknown destinations and decreases of 30,800 MT), Honduras (9,300 MT, including 12,200 MT switched from Guatemala and decreases of 2,900 MT), the French West Indies (8,100 MT), Canada (7,900 MT), and Taiwan (7,500 MT).  Reductions were primarily for unknown destinations (61,500 MT), Mexico (22,700 MT), Colombia (21,000 MT), and Guatemala (10,500 MT).  For 2019/2020, net sales of 360,800 MT reported for unknown destinations (184,400 MT), Mexico (175,000 MT), and Canada (2,900 MT), were partially offset by reductions for the French West Indies (1,500 MT).  Exports of 640,900 MT–a marketing-year low–were down 28 percent from the previous week and 40 percent from the prior 4-week average.  The destinations were primarily to Mexico (266,800 MT), Japan (155,900 MT), Saudi Arabia (68,700 MT), Honduras (39,200 MT), and Taiwan (38,400 MT).   Optional Origin:  For 2018/2019, decreases totaling 4,000 MT were reported for South Korea.  The current outstanding   balance of 349,000 MT is for South Korea (186,000 MT), unknown destinations (98,000 MT), and Taiwan (65,000 MT).  For 2019/2020, new optional origin sales of 125,000 MT were reported for South Korea (65,000 MT) and Israel (60,000 MT).  The current outstanding balance of 375,000 MT is for South Korea (195,000 MT), unknown destinations (120,000 MT), and Israel (60,000 MT).  

·         Barley:   No net sales for 2018/2019 were reported for the week.  Exports of 600 MT were primarily to Japan (500 MT).

·         Sorghum:   Net sales of 2,000 MT for 2018/2019 were reported for Mexico.  Exports of 3,000 MT were down 94 percent from the previous week and 92 percent from the prior 4-week average.  The destination was Mexico. Optional Origin:   For 2018/2019, the current outstanding balance of 10,500 MT is for unknown destinations.

·         Beef:  Net sales of 18,000 MT reported for 2019 were up 9 percent from the previous week, but down 9 percent from the prior 4-week average.  Increases were reported for Japan (4,400 MT, including decreases of 300 MT), South Korea (4,200 MT, including decreases of 500 MT), Mexico (3,600 MT, including decreases of 100 MT), Canada (1,600 MT, including decreases of 100 MT), and Hong Kong (1,600 MT, including decreases of 200 MT).  For 2020, net sales of 500 MT were primarily for Canada.  Exports of 19,300 MT were up 6 percent from the previous week and 14 percent from the prior 4-week average.  The primary destinations were Japan (6,700 MT), South Korea (5,300 MT), Mexico (1,800 MT), Hong Kong (1,700 MT), and Taiwan (1,200 MT).

·         Pork:  Net sales of 19,700 MT reported for 2019 were down 15 percent from the previous week and 50 percent from the prior 4-week average.  Increases were reported for Mexico (8,200 MT), Australia (3,600 MT), Japan (2,300 MT), South Korea (1,700 MT), and Canada (1,300 MT).  Reductions were reported for China (100 MT).  Exports of 24,100 MT were down 4 percent from the previous week, but up 2 percent from the prior 4-week average.  The primary destinations were Mexico (7,700 MT), China (5,800 MT), Japan (2,900 MT), Canada (1,500 MT), and South Korea (1,500 MT).

 

Soybean complex.

·         CBOT soybean complex was lower before rebounding ahead of the electronic close, on fund selling and drier conditions this week for the US Midwest.

• China bought about 8-9 cargos of soybeans so far this week for June-August shipment. Last week they bought about 10 cargos, down from 20 previous week. 
• National Grain and Oils Information Center – crush margin on processing Brazilian soy for July shipment is now negative 54 yuan a ton if hedged against Dalian September soybean meal contracts. Crushers have covered 70% of their needs for July loading and 40% for Aug (Bloomberg)
• Offshore values early this morning were leading the soybean oil 5 points lower and meal $2.40 higher.
• China soybean complex futures traded lower again but this time led by soybeans.

·         China:

·         Our China cash crush margin calculation were last +71 cents (+74 yesterday) and compares to +88 cents late last week and +52 cents year ago.

• Rotterdam vegetable oils were 2-5 euros lower and meal when imported from SA 5-8 euros lower.
• AmSpec reported June 1-20 Malaysian palm shipments down 5.8 percent to 913,159 tons.
• Malaysian palm markets:

 

Oilseeds Export Developments

·         Under the 24-hour announcement system, private exporters reported 189,000 tons of soybeans for delivery to unknown destinations. Of the total, 126,000 tons is for delivery during the 2018/2019 marketing year and 63,000 tons for delivery during the 2019/2020 marketing year.

·         South Korea seeks 60,000 tons of soybean meal from South America for Sep 18-Oct 7 shipment.

 

USDA Export Sales Text        

·         Soybeans:   Net sales of 571,500 MT for 2018/2019 were up noticeably from the previous week and up 34 percent from the prior 4-week average.  Increases were reported for unknown destinations (141,400 MT), Egypt (110,000 MT), the Netherlands (82,600 MT, including 66,000 MT switched from Argentina and decreases of 3,900 MT), Japan (56,600 MT, including 41,200 MT switched from unknown destinations and decreases of 1,000 MT), and Indonesia (55,700 MT, including 55,000 MT switched from unknown destinations and decreases of 400 MT).  Reductions were reported for Argentina (66,000 MT) and Malaysia (800 MT).  For 2019/2020, net sales of 200,000 MT were primarily for Thailand (68,000 MT), Pakistan (66,000 MT), and unknown destinations (63,000 MT).  Exports of 736,500 MT were down 3 percent from the previous week, but up 28 percent from the prior 4-week average.  The destinations were primarily to China (339,800 MT), Indonesia (84,300 MT), Japan (75,500 MT), the Netherlands (62,100 MT), and Mexico (54,900 MT).  Optional Origin: For 2018/2019, the current outstanding balance of 50,000 MT is for unknown destinations.  For 2019/2020, the current outstanding balance is 10,000 MT, all unknown destinations.   Exports for Own Account:  For 2018/2019, the current exports for own account outstanding balance is 12,100 MT, all Canada.

·         Soybean Cake and Meal:    Net sales of 109,600 MT for 2018/2019 were down 3 percent from the previous week and 26 percent from the prior 4-week average.  Increases were reported for the Philippines (95,500 MT), Honduras (7,200 MT, including 5,900 MT switched from Guatemala), Canada (4,500 MT), Guyana (3,400 MT, including 3,500 MT switched from unknown destinations and decreases of 100 MT), and the French West Indies (2,800 MT).  Reductions were primarily for Guatemala (5,300 MT), Ecuador (4,000 MT), and unknown destinations (3,800 MT).    For 2019/2020, net sales of 37,700 MT were for Guatemala (21,2000 MT), El Salvador (9,600 MT), and Canada (6,900 MT).   Exports of 167,300 MT were up 4 percent from the previous week, but down 14 percent from the prior 4-week average.  The destinations were primarily to the Philippines (55,300 MT), Mexico (21,900 MT), Venezuela (21,000 MT), Canada (14,400 MT), and the Dominican Republic (12,000 MT). 

·         Soybean Oil:   Net sales of 4,400 MT for 2018/2019 were down 14 percent from the previous week and 73 percent from the prior 4-week average, resulting in increases for the Dominican Republic (4,700 MT), were partially offset by reductions for Canada (400 MT).   Exports of 12,900 MT were up noticeably from the previous week, but down 35 percent from the prior 4-week average.  The destinations were primarily to the Dominican Republic (11,000 MT) and Mexico (1,400 MT).

 

Wheat

·         US wheat is lower on fund selling/profit taking and Egypt opting for cheaper Black Sea supplies.

·         Egypt secured 3.66 million tons of local wheat so far this season.

·         It is too early to blame US harvest pressure for the selloff, but with the high prices expect the farmer to want to get in the fields as soon as possible so they can market the grain locally.

·         EU Sep. wheat futures were 1.25 euros lower at 177.75 euros/ton.

·         Black Sea Platts wheat basis July was last $194/ton, down from $196/ton.

·         IKAR and SovEcon currently expect Russia’s 2019 wheat crop at 80 million tons and 82.2 million tons respectively. That is compared with a crop of 72.1 million tons in 2018. IKAR lowered Russia’s 2019/20 wheat exports by 500,000 tons to 36.5 million tons. Its estimate of grain exports was cut by 1.4 million tons to 46 million tons. (Reuters)

·         SovEcon lowered its wheat export forecast by 600,000 tons to 37.6 million tons. The estimate of grain exports was cut by 500,000 tons to 48.9 million tons. (Reuters)

 

Export Developments.

·         Saudi Arabia’s SAGO on Friday seeks 900,000 tons of animal feed barley for shipment between August and October.

• Bangladesh plans to import 100,000 tons of wheat from Russia at $267.30/ton c&f.
• Japan bought 61,864 tons of US wheat on June 20 for Aug shipment. Original details as follows.

• Yesterday Egypt bought 290,000 tons of wheat for July 22-31 shipment. 
  • 55,000 tons of Russian wheat at $196.86 FOB and $14.35 freight equating to $211.21 c&f
  • 180,000 tons of Romanian wheat at $198 FOB and $12.45 freight equating to $210.45 c&f
  • 55,000 tons of Russian wheat at $196.16 FOB and $13.93 freight equating to $210.09 c&f
• Results awaited: Jordan seeks 120,000 tons of wheat on June 20 for possible shipment between October and FH November.
• Taiwan seeks 83,200 tons of US wheat on June 21.  The tender is for two consignments from PNW:
  • first consignment of 39,425 tons is sought for shipment between Aug. 4-18
  • second of 43,775 tons is sought for shipment between Aug. 19-Sept. 2. (Reuters)
• Jordan’s Silos and Supply General Company seeks 25,000 tons of milling wheat on July 1 for shipment in the first half of September.
• Syria seeks 200,000 tons of wheat on July 8 for LH July and FH September shipment.

 

Rice/Other

·         South Korea bought 20,000 tons of non-glutinous brown rice for arrival between July and August. They paid $759.68/ton for Chinese rice.

·         Results awaited: Mauritius seeks 6,000 tons of optional origins rice on June 17 for delivery between Aug. 1 to Oct. 31 in shipping containers. 

 

USDA Export Sales Text        

·         Wheat:  Net sales of 187,600 metric tons were reported for delivery in marketing year 2019/2020.  The primary destinations were Algeria (59,900 MT, including 60,000 MT switched from unknown destinations and decreases of 100 MT), Yemen (58,400 MT), Japan (38,700 MT), Mexico (31,600 MT, including decreases of 20,600 MT), and Guatemala (30,700 MT, switched from unknown destinations).  Reductions were reported for unknown destinations (83,900 MT), Indonesia (65,500 MT), and South Korea (6,500 MT).  Exports of 431,000 MT were primarily to Indonesia (84,500 MT), the Philippines (65,900 MT), Mexico (61,100 MT), Iraq (52,500 MT), and Vietnam (43,000 MT).   

·         Rice:   Net sales of 28,100 MT for 2018/2019 were down 57 percent from the previous week and 58 percent from the prior 4-week average.  Increases were reported for Colombia (10,000 MT), Haiti (7,100 MT), Guatemala (4,500 MT), Honduras (2,500 MT), and South Korea (1,800 MT).  Reductions were reported for Jordan (300 MT) and Nicaragua (300 MT).  Exports of 69,500 MT were down 57 percent from the previous week and 20 percent from the prior 4-week average.  The destinations were to Colombia (24,400 MT), Mexico (23,400 MT), Japan (7,800 MT), Haiti (7,100 MT), and Canada (2,500 MT).  Exports for Own Account:   For 2018/2019, the current exports for own account outstanding balance of 100 MT is for Canada.

·         Cotton:   Net sales reductions of 119,300 RB–a marketing-year low–for 2018/2019 were down noticeably from the previous week and from the prior 4-week average.  Increases reported for India (15,600 RB, including 1,000 RB switched from Vietnam), Mexico (5,300 RB), Egypt (5,100 RB), Taiwan (3,700 RB), and Indonesia (3,100 RB, including 1,100 RB switched from China, 100 RB switched from Japan, and decreases of 800 RB), were more than offset by reductions for Turkey (84,600 RB) and China (69,900 RB).  For 2019/2020, net sales of 221,800 RB were primarily for Turkey (98,200 RB), China (49,400 RB), El Salvador (22,500 RB), Guatemala (15,800 RB), and Mexico (10,000 RB).  Exports of 321,200 RB were down 11 percent from the previous week and 10 percent from the prior 4-week average.  Exports were primarily to India (59,200 RB), Turkey (55,700 RB), Vietnam (55,400 RB), China (36,000 RB), and Bangladesh (22,900 RB).  Net sales of Pima totaling 4,000 RB primarily for El Salvador (2,200 RB), Bangladesh (1,300 RB), Austria (400 RB), and Turkey (300 RB), were partially offset by reductions for Switzerland (400 RB).  Exports of 19,200 RB were up 2 percent from the previous week, but down 2 percent from the prior 4-week average.  The destinations were primarily to India (8,500 RB), China (8,300 RB), Turkey (800 RB), Pakistan (400 RB), and Bangladesh (400 RB).  Exports for Own account:    For 2018/2019, new exports for own account totaling 100 RB were to India.  Exports for own account totaling 1,700 RB to Vietnam (1,600 RB) and India (100 RB) were applied to new or outstanding sales.   Decreases totaling 100 RB were reported for Vietnam.   The current exports for own account outstanding balance of 3,900 RB is for China (2,300 RB), Vietnam (800 RB), Taiwan (500 RB), and Thailand (300 RB).

 

U.S. EXPORT SALES FOR WEEK ENDING 6/13/2019 

	CURRENT MARKETING YEAR						NEXT MARKETING YEAR
COMMODITY	NET SALES	OUTSTANDING SALES		WEEKLY EXPORTS	ACCUMULATED EXPORTS		NET SALES	OUTSTANDING SALES
		CURRENT YEAR	YEAR AGO		CURRENT YEAR	YEAR AGO
	THOUSAND METRIC TONS
WHEAT
HRW	-21.1	2,145.8	952.3	262.8	454.1	171.0	0.0	0.0
SRW	57.7	895.8	498.6	15.8	45.8	129.4	0.0	0.0
HRS	105.3	1,358.0	1,475.9	94.6	172.9	192.6	0.0	0.0
WHITE	45.7	945.9	1,224.8	47.8	105.3	242.4	0.0	0.0
DURUM	-0.1	179.1	99.8	9.9	33.0	1.6	0.0	0.0
TOTAL	187.6	5,524.6	4,251.3	431.0	811.1	736.9	0.0	0.0
BARLEY	0.0	49.3	47.3	0.6	1.2	1.7	0.0	0.0
CORN	38.4	6,545.1	14,231.2	640.9	41,900.0	42,171.5	360.8	3,068.8
SORGHUM	2.0	414.6	320.1	3.0	1,147.4	4,840.0	0.0	0.0
SOYBEANS	571.5	11,101.1	8,257.8	736.5	36,408.3	48,114.1	200.0	1,994.9
SOY MEAL	109.6	2,630.1	2,632.3	167.3	8,597.9	8,596.6	37.7	641.4
SOY OIL	4.4	142.5	157.1	12.9	623.6	743.7	0.0	4.2
RICE
L G RGH	6.7	166.5	136.3	43.8	1,187.1	1,093.2	0.0	9.0
M S RGH	0.0	15.5	0.0	0.3	81.5	52.7	0.0	14.1
L G BRN	0.1	3.1	2.5	0.5	38.2	14.3	0.0	0.0
M&S BR	0.1	2.7	0.2	0.1	144.3	64.7	0.0	0.0
L G MLD	17.9	186.7	63.2	12.1	764.4	834.6	0.0	0.0
M S MLD	3.3	135.4	117.8	12.7	507.0	495.5	0.0	26.4
TOTAL	28.1	509.9	320.0	69.5	2,722.4	2,555.0	0.0	49.5
COTTON		THOUSAND RUNNING BALES
UPLAND	-119.3	4,078.8	3,443.8	321.2	10,970.2	12,741.3	221.8	3,954.1
PIMA	4.0	148.0	105.0	19.2	572.5	528.9	0.0	54.9