FW: FI Morning Grain Comments 07/24/19

PDF attached

 

• Bloomberg: China Approves Tariff-Free U.S. Soybean Purchases as Goodwill – don’t read too much into this

We are awaiting details but hearing it’s for 30 days and limited to 6 million tons. There is another story its 3.0 million tons.

• US Negotiators To Travel To China For ‘Face-To-Face’ Talks On Monday…Negotiators Will Be In Shanghai From Monday To Wednesday

 

Weather and Conditions

• 6-10 day is drier for the northern Midwest and wetter for the Delta. Temperatures are slightly cooler for the Midwest and eastern Great Plains.  The precipitation outlook for the 11-15 day is slightly wetter for the northern Great Plains and drier for the Delta and far southeastern Midwest. Temperatures are slightly cooler for the northern Great Plains and western Midwest.

·         Europe will remain in a heat wave for the next 2-3 days.

·         China’s corn area in parts of Hebei, areas along Yellow River and Huaihe River will see hot temperatures this week.

• Australia will remain dry through at least another week. Eastern Australia is seeing crop stress.
• Ukraine and the Baltic States will be wet this week.
• US Midwest weather will not deviate far from normal for late July and August-World Weather Inc.
  • Dryness may prevail for Illinois, east-central Iowa and some areas in Indiana. 
  • Other areas in the Midwest will get rain periodically during the next couple of weeks.
  • U.S. Midwest rainfall will increase Sunday into Tuesday as a cool front drifts across the region
  • No excessive heat is expected for a while.
• U.S. hard red winter wheat weather is expected to be mostly good for the next two weeks.

Source: World Weather Inc. and FI

 

 

7-day

 

Bloomberg Ag Calendar

TUESDAY, JULY 23:

• China agriculture trade data expected
• North Dakota wheat tour starts
• Agriculture technology conference in Chicago, Day 2

WEDNESDAY, JULY 24:

• EIA weekly U.S. ethanol inventories, output, 10:30am
• U.S. poultry slaughter for June, 3pm

THURSDAY, JULY 25:

• USDA to release new US producer trade support package (by the end of this week) 
• China agriculture imports by country
• Malaysian Palm Oil Council Market Forum
• AmSpec, Intertek, SGS release Malaysia’s July 1-25 palm oil exports
• Port of Rouen data on French grain exports
• USDA weekly crop net-export sales for corn, soybeans, wheat, 8:30am
• North Dakota wheat tour final data expected
• USDA red meat production, 3pm
• International Grains Council monthly report
• Bloomberg weekly survey of analysts’ expectations on grain, sugar prices

FRIDAY, JULY 26

• 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

 

 

 

USDA Trade Aid: U.S. Agriculture Secretary Sonny Perdue mentioned the minimum payment to farmers under the next round of trade-related federal aid will be $15 per acre.  More details will be out this week.

 

Trade Talks: U.S. officials are headed to China on Monday to resume trade talks.  Negotiators Will Be In Shanghai From Monday To Wednesday. 

 

Macros

·         USD -5 (7:12 am CT)

·         US DOW -88

·         Crude +0.14

·         Gold +$5.25

 

Corn.

·         Corn futures are higher on a US weather forecast calling for additional net drying for east-central IA into most of IL and parts of IN, coupled with above normal temperatures into the first week of August.

·         We look for poor USDA export sales to be reported Thursday morning. 

·         Managed money funds estimate: corn net long 142,000.

·         Baltic Dry Index fell for the second day. It was down 151 points or 7 percent to 2,014 points.

·         Europe will remain in a heat wave for the next 2-3 days.

·         China’s corn area in parts of Hebei, areas along Yellow River and Huaihe River will see hot temperatures this week.

·         South Africa’s CEC is due out Thursday with their 6^th corn production update and traders look for a slightly decrease in output to 10.913 million tons from 10.933 million tons. 

·         Another outbreak of ASF was discovered in Bulgaria’s in Ruse, a north-eastern city. 

·         A Bloomberg survey calls for EIA ethanol production to average 1.056 million barrels, down from 1.066 million last week. Stocks are expected at 23.369 million barrels, up from 23.365 million last week. 

 

Export Developments

·         Indian state-run trading company MMTC seeks a minimum 24,000 tons to 25,000 tons of corn on July 30 and offers must remain valid until Aug. 12 for shipment periods between Aug. 1-31, Sept. 1-30 and Oct. 1-31.

• China sold about 17.5 million tons of corn since the start of year’s reserve sale campaign. CNGOIC estimates about 50 million tons will be sold this season.

 

 

Soybean complex.

·         Soybeans are higher on strength in outside related oilseed and product markets, rumors China’s private buyers could be exempt from the US import tariff for a limited amount (2-3MMT?) of US soybeans, and slightly unfavorable US weather.  Back to the rumors on China, it would make sense for private imports to continue to shop for cheaper SA origin soybeans.  The only position that the US might be competitive is August PNW, otherwise the US is largely uncompetitive.  Lack of Brazil offers for fall shipment could entice China to seek new-crop US soybeans, but that’s our speculation. 

·         USDA reported the cancellation of 100,000 tons of 2018-19 to unknown. 

·         We look for poor USDA export sales to be reported Thursday morning. 

·         Managed money funds estimate: soybeans net short 96,000 futures and options, short 31,000 meal and short 35,000 SBO.

·         There was talk yesterday that Argentina soybean meal might be headed to the US for southeastern feed end users. 

·         Argentina crushed 4.3MMT of soybeans in June.  490,000 tons were exported. Since April, Argentina shipped 7.9 million tons of soybean meal, with Vietnam largest taker of 16 percent of the market share. 1.4 million tons of soybean oil was shipped, with India taking 40 percent. 

·         China:

·         Our China cash crush margin calculation were last +30 cents (30 previous) and compares to +41 cents late last week and +48 cents year ago.

• Offshore values early this morning was leading the soybean oil 2 points lower and meal $1.50 higher. 
• Rotterdam vegetable oils were up about 6-8 euros and meal when imported from SA mixed to higher.
• Malaysian palm markets: India import demand seen up over medium-term.

• The EU formally sent a proposal to impose import duties on Indonesia biodiesel. Import duties would vary by company, from the 8-18 percent proposed range. 

 

Oilseeds Export Developments

·         24-hour: USDA reported the cancellation of 100,000 tons of 2018-19 to unknown. 

 

Wheat

·         US wheat is higher on Russia production concerns, but MN is seeing light pressure over day 1 spring wheat results.

·         Managed money funds estimate: Chicago wheat net short 1,000.

·         SovEcon lowered their Russia wheat crop production estimate from 83 million tons last month to 73.7 million tons and compares to 74.2 million tons by USDA.  Grain crop 117.2MMT versus previous 121.9MMT. 

·         APK-Inform estimated Ukraine grain production at a record 71.8 million tons, up from 70.4 million previously. 

·         The US spring wheat crop tour started yesterday, and day 1 average yield was 43.1 bu/acre, compared to 38.9 in 2018 and 5-year average of 43.9.  Results will be out on Thursday. 

·         EU December wheat futures were up 1.50 at 180.75 euros/ton.

• Yesterday Egypt’s GASC) bought 300,000 tons of wheat, including 120,000 tons of Romanian wheat, 120,000 tons of Ukrainian wheat and 60,000 tons of Russian wheat for shipment Aug. 25 – Sept. 5.
  • 60,000 tons of Ukrainian wheat at $198.80 and $18.30 freight, equating to $217.10
  • 60,000 tons of Russian wheat at $202.50 and $17.40 freight, equating to $219.90
  • 60,000 tons of Romanian wheat at $203.60 and $16.30 freight, equating to $219.90
  • 60,000 tons of Romanian wheat at $203.60 and $16.30 freight, equating to $219.90
  • 60,000 tons of Ukrainian wheat at $201.60 and $18.30, equating to $219.90

 

Export Developments.

• The Philippines seeks 220,000 tons of feed wheat on July 25 for October through February 2020 shipment. 
• Japan bought 10,560 tons of feed wheat and passed on barley.  They are back in for 120k wheat and 200k barley on July 21. 
• Lowest offer $212.81/ton c&f optional origin: Tunisia seeks 92,000 tons of soft milling wheat on July 24 for shipment between Aug. 20 to Sept. 25, depending on origin selected. 
• Jordan seeks another 120,000 tons of wheat on July 30. 
• Japan is in for food wheat. 

 

Rice/Other

·         India plans to build up their new-crop sugar inventories to 4 million tons to help support local prices.  The current year buffer stocks were set at 3 million tons.