From: Terry Reilly
Sent: Tuesday, July 03, 2018 8:03:59 AM (UTC-06:00) Central Time (US & Canada)
Subject: FI Morning Grain Comments 07/03/18
Early CBOT close today and US markets will be closed on Wednesday.
Australia’s Bureau of Meteorology sees a 50 percent change for El Nino this year. The last El Nino lowered Ausi grain production prospects in 2015-16. Argentina could benefit from El Nino with good rains.
US corn conditions were down one, soybeans down two, and both winter & spring wheat unchanged. Traders were looking for a one-point decline in G/E for corn, soybeans, and spring wheat, and unchanged for winter wheat. US winter wheat harvesting progress increased 10 points from the previous week. Traders were looking for a 15-point increase for winter wheat harvesting progress.
- The US Midwest eastern crop areas will be drier than the western areas. The high pressure aloft will build up across the Plains and Midwest this workweek before shifting to the High Plains region and Rocky Mountain region by Friday. The Midwest in general will see warm temperatures and restricted rainfall during this period. Rainfall will range from 0.25 to 0.75 inch with local totals to 1.00 inch by early next week. Then the ridge of high pressure will shift to the east Friday and then flatten out during the coming weekend and early in the week of July 9. New ridge development will evolve in the western United States later in the week of July 9.
- U.S. Delta and much of the southeastern United States will see a favorable mix of rain and sunshine.
- U.S. hard red winter wheat production areas will see a good mix of weather with net drying most dominant favoring crop maturation and harvest progress.
- The U.S. southern Plains drought will change little over the next 30 days.
- The U.S northern U.S. Plains will receive showers and thunderstorms through mid-week this week and then trend drier for a while.
- Canadian Prairies will see rain in the west, north and far east. The south-central and southwestern areas will be drier than usual.
- China weather improves for the dry areas of Liaoning, Hebei, and Shanxi over the next week.
- Western Australia will get some rain Monday and Tuesday. Victoria and South Australia has an opportunity for rain during mid-week this week.
- Northern Europe will continue to see net drying through at least July 11.
- The southern portions of Russia’s Southern Region will see 0.50” to 1.50” this week.
- Eastern Ukraine to western Kazakhstan will see some showers mid- to late-week.
- India could use rain across the central and western growing regions. Low rainfall has delayed planting progress. As of July 1, 15.5 million hectares of summer crops had been planted, down from 21.1 million at this time last year.
Source: World Weather Inc. and FI
SIGNIFICANT CORN AND SOYBEAN BELT PRECIPITATION EVENTS
WEST CORN BELT EAST CORN BELT
-Tue 20% cvg of up to 0.75” 30-60% daily cvg of
and local amts to 1.50” up to 0.60” and locally
with some 1.50-3.50” more each day
amts from east N.D. to
NW Mn.
Wed-Thu 75% cvg of up to 0.75”
and local amts to 2.0”;
wettest north
Wed-Fri 85% cvg of up to 0.70”
and local amts to 1.40”
Fri-Sun 5-20% daily cvg of up
to 0.30” and locally
more each day
Sat-Jul 9 Up to 20% daily cvg of
up to 0.25” and locally
more each day; some
days may be dry
Jul 9-10 40% cvg of up to 0.40”
and local amts to 1.0”;
wettest north
Jul 10-11 40% cvg of up to 0.30”
and local amts to 0.60”
Jul 11-13 35% cvg of up to 0.50”
and locally more;
wettest north
Jul 12-16 5-20% daily cvg of up
to 0.25” and locally
more each day
Jul 14-16 5-20% daily cvg of up
to 0.25” and locally
more each day
DELTA SOUTHEAST
Tdy-Tue 85% cvg of up to 0.75”
and local amts to 1.75”;
wettest south
Tue 20% cvg of up to 0.40”
and locally more;
driest NE
Wed 30% cvg of up to 0.30” 65% cvg of up to 0.40”
and locally more and local amts to 1.0”
Thu 60% cvg of up to 0.40” 25% cvg of up to 0.50”
and locally more; and locally more;
driest north wettest north
Fri-Sat 80% cvg of up to 0.60” 80% cvg of up to 0.75”
and local amts to 1.30” and local amts to 1.75”
Sun-Jul 9 20-40% daily cvg of 25-50% daily cvg of
up to 0.60” and locally up to 0.75” and locally
more each day; more each day
driest north
Jul 10-11 15-35% daily cvg of 15-35% daily cvg of
up to 0.50” and locally up to 0.50” and locally
more each day more each day
Jul 12-13 60% cvg of up to 0.50” 55% cvg of up to 0.50”
and locally more and locally more
Jul 14-16 5-20% daily cvg of up 5-20% daily cvg of up
to 0.30” and locally to 0.35” and locally
more each day more each day
Source: World Weather Inc. and FI
Source: World Weather Inc. and FI
Source: World Weather Inc. and FI
Source: World Weather Inc. and FI
- New Zealand dairy auction on Global Dairy Trade online market starts ~7am ET Tuesday (~noon London Tuesday, ~11pm Wellington Tuesday)
- OECD-FAO annual report on agriculture outlook, 9am ET (2pm London)
WEDNESDAY, JULY 4:
- U.S. Independence Day holiday; CBOT grains trading closed
THURSDAY, JULY 5:
- Guatemala coffee exports for June
- AB Foods trading updates, 2am ET (7am London)
- FAO Food Price Index, 4am ET (9am London)
- EIA U.S. weekly ethanol inventories, output, 11am (delayed from Wednesday due to U.S. holiday)
- Andre Pessoa, head of Agroconsult, and executives from Brazil’s grain exporter group Anec speak on nation’s 2018-19 soybean and corn crops
- EU weekly grain, oilseed import and export data
- Port of Rouen data on French grain exports
- Bloomberg weekly survey of analysts’ expectations on grain, sugar prices
FRIDAY, JULY 6:
- China is set to start levying tariffs on agriculture products, in retaliation for U.S. tariffs on imports from China
- USDA weekly crop net-export sales for corn, wheat, soy, cotton, 8:30am (delayed from Thursday due to U.S. holiday)
- ICE Futures Europe commitments of traders weekly report on coffee, cocoa, sugar positions, ~1:30pm ET (~6:30pm London)
- CFTC commitments of traders report will be delayed until Monday July 9
- FranceAgriMer weekly updates on French crop conditions
Source: Bloomberg and FI
· USD is lower, WTI crude higher, and gold higher, at the time this was written.
· US jobs report is due out Friday.
Corn.
- Higher trade in corn early Tuesday. Prices were rebounding on higher wheat and technical bounce ahead of the one-day holiday Wednesday and short trading session today.
- FC Stone raised their outlook for Brazil’s corn crop to 79.15 million tons from 78.4 million previously.
- Brazil’s Mato Grosso corn harvest is 21 percent complete as of June 29, according to Imea, below 29 percent a year earlier.
- IKAR lowered Russia’s 2018 corn crop to 12.3 million tons, down from 12.8 million tons previously.
- US corn conditions fell 1 point, as expected. We lowered our yield by 0.5 to 180.5 bu/ac. Soybean and Corn Advisory is at 178.0, unchanged from the previous week. Planalytics is using 172.8 bu/ac.
- 17 percent of the US crop is silking. Some states are ahead of normal (IL through lower Ohio River Valley). The next 4 weeks will be very important for US corn crop development.
· USDA US corn export inspections as of June 28, 2018 were 1,537,871 tons, within a range of trade expectations, below 1,540,434 tons previous week and compares to 1,127,210 tons year ago. Major countries included Mexico for 311,797 tons, Japan for 200,225 tons, and China T for 158,138 tons.
- Baltic Dry Index was up 54 points to 1,476, or 3.8%.
· South Korea’s NOFI group bought 69,000 tons of corn at $205.99/ton for arrival by December 15.
· China plans to auction off 8 million tons of corn on July 5 and 6.
Soybean complex.
· US soybean complex is mixed with soybeans chopping around, ending moderately higher at the electronic close. Soybean meal is higher and soybean oil mixed. Higher crude oil could limit downside rink in soybean oil today.
· Looming US tariffs on Chinese goods are keeping nervous traders away from the market. It appears no one wants to own long positions in soybeans, when China is expected to shut off the US from importing soybeans. China already effectively shup off taking US soybeans. One last US boat is expected to land on Thursday, day before the deadline kicks in. Lack of China buying has pressured US soybean prices but the this has provided opportunity for other major importers to secure US soybeans. Lower US soybean prices have also kept the US crush running at strong rates.
· Traders are looking for additional cancellations of US cargos by China when USDA updates their weekly export sales report on Friday. Little more than 1 million tons of soybean sales are on the books for China.
· Due to the federal holiday on July 4th, the next U.S. Export Sales report is scheduled for release at 8:30 A.M. on Friday, July 6, 2018. (USDA)
· Apparently, some Chinese crushers and importers were warned to look for a 15-20 percent decline in soybean arrivals over the next year, resulting in a large decline in soybean meal production, in the event tariffs go into effect on US soybeans.
· US soybean conditions fell two points from the previous week. Trade was looking for a one-point decrease. We lowered our US yield by 0.2 to 49.4 bu/ac. Soybean and Corn Advisory is at 51.0, unchanged from the previous week. Planalytics is using 49.0 bu/ac, up from 48.4 in June.
· Brazil will release trade data soon. We are looking for 10 million tons for soybean exports.
· China September soybean meal futures fell from a two-month high.
· China September soybean futures decreased 21 yuan per ton or 0.4%, September meal was down 14 or 0.4%, China soybean oil up 8 (0.1%) and China September palm up 8 at 4864 yuan/ton (0.2%).
· September China cash crush margins were last running at 76 cents, and compares to 78 cents last week and 67 a year ago.
· Rotterdam vegetable oils were mixed and SA soybean meal when delivered into Rotterdam were 2.00-4.50 euros lower as of early morning CT time.
· September Malaysian palm was 16 lower at MYR2313 and cash $3.75 lower at $596.25.
· Offshore values were leading the soybean oil 34 points higher and soybean meal $1.10 higher.
· The CFTC noted most of the volume in CME agriculture block trading occurs in the nearby contracts. The block trading was rolled out by the CME to provide trading opportunities to illiquid contracts.
- India could use rain across the central and western growing regions. Low rainfall has delayed planting progress. As of July 1, 15.5 million hectares of summer crops had been planted, down from 21.1 million at this time last year.
· USDA US soybean export inspections as of June 28, 2018 were 849,204 tons, above a range of trade expectations, above 516,711 tons previous week and compares to 281,945 tons year ago. Major countries included Mexico for 122,222 tons, Bangladesh for 108,274 tons, and Japan for 99,405 tons.
- The US May soybean crush was reported at 172.5 bushels per acre, 1.4 bu below a Bloomberg trade average. Soybean oil stocks were reported at 2.374 billion pounds, 94 million below a trade average. Soybean meal stocks fell to 433,000 short tons from 452,000 short tons last month and compare to 428,000 short tons a year ago. We through the report was bullish soybean oil, slightly bearish soybeans, touch friendly soybean meal.
· China plans to sell another 500,000 tons of soybeans and 50,000 tons of soybean oil out of reserves on Wednesday. China sold 376,965 tons of soybeans out of reserves so far, this season.
- Iran seeks 30,000 tons of sunflower oil on July 10.
- Iran seeks 30,000 tons of palm olein oils on July 10.
- Iran seeks 30,000 tons of soybean oil on August 1.
- Chicago and KC wheat are rebounding hard on Tuesday. Ongoing crop concerns and a lower USD are underpinning the market. Some traders are liquidating long positions ahead of the short trading session on Tuesday and closed market on Wednesday (US July 4th). MN prices are following Chicago and KC higher.
- December Paris wheat futures were 1.75 euros higher as of early this morning.
- Russia’s AgMin said about 60,000 hectares in southern Russia’s Krasnodar region were affected by hail and high winds over the weekend. They didn’t say what crops were impacted by the unfavorable weather.
- Russia’s grain harvest totaled 9.5 million tons as of July 2 with an average yield of 3.82 tons/hectare, and compares to only 1.2 million tons a year ago with an average yield of 4.42 tons/hectare. (AgMin)
- US winter wheat and spring wheat crop condition for the combined G/E categories were unchanged from the previous week.
· USDA US all-wheat export inspections as of June 28, 2018 were 324,181 tons, within a range of trade expectations, below 364,312 tons previous week and compares to 519,098 tons year ago. Major countries included Korea Rep for 63,562 tons, Philippines for 49,500 tons, and Thailand for 49,500 tons.
Export Developments.
- Lowest offer for Bangladesh seeking 50,000 tons of wheat was $256.38/ton from a Singapore trading company, for shipment within 40 days of contract signing.
- China sold 1,000 tons of 2013 imported wheat from state reserves at auction at an average price of 2330 yuan/per ton or $349.54/ton, 0.05 percent of what was offered.
- China sold 480 tons of 2012 wheat from state reserves at auction at an average price of 2320 yuan/per ton or $349.54/ton, 0.5 percent of what was offered.
- Results awaited: Algeria seeks optional origin milling wheat for September shipment.
- Results awaited: Syria seeks 200,000 tons of wheat on July 2 for Aug 1-Sep 30 shipment. Origins include Russian, Romania and/or Bulgaria.
· Jordan seeks 120,000 tons of barley on July 4 for Oct-Nov shipment.
- Japan in a SBS import tender seeks 120,000 tons of feed wheat and 200,000 tons of barley on July 4 for arrival by December 28.
· Jordan seeks 120,000 tons of wheat on July 8 for Oct-Nov shipment.
Rice/Other
- China sold 104,647 tons of rice from state reserves at auction at an average price of 2396 yuan/per ton or $358.01/ton, 4.36 percent of what was offered.
- Results awaited: South Korea seeks 102,800 tons of rice for September-February arrival on June 27.
TONNES(M/T) GRAIN TYPE ARRIVAL/PORT
20,000 Brown Short Sept. 15, 2018/Incheon
20,000 Brown Short Sept. 15, 2018/Ulsan
20,000 Brown Short Sept. 15, 2018/Masan
10,000 Brown long Sept. 30, 2018/Mokpo
10,000 Brown long Sept. 30, 2018/Donghae
2,800 Milled Medium Dec. 1-31, 2018/Busan
10,000 Milled Medium Feb. 28, 2019/Busan
10,000 Milled Medium Feb. 28, 2019/Busan
- Results awaited: Iran seeks 50,000 tons of rice from Thailand on July 3.
Terry Reilly
Senior Commodity Analyst – Grain and Oilseeds
Futures International │190 S LaSalle St., Suite 410│Chicago, IL 60603
W: 312.604.1366
AIM: fi_treilly
ICE IM: treilly1
Skype: fi.treilly
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AMcom070318.pdf