FW: FI Morning Grain Comments 07/25/18

PDF attached includes daily estimate of funds, weekly US soy cash sheet, FI export sales estimates and SGS palm oil export update

 

Weather and crop conditions

·         6-10 day is drier for the central and southwestern Midwest and central Plains. 11-15 day is wetter for the north central Plains and drier for the southern Delta.

·         Brazil and Argentina were virtually dry.

·         The ridge of high pressure is expected to stay centered over the southwestern United States throughout this week, creating a northwesterly flow aloft in the central U.S., Northern Plains and Corn Belt.

·         It was hot again across the US southwest.

·         The western Corn Belt will see net dry this week. The eastern Midwest will see rain.

·         Not all areas of the southwestern Corn Belt will remain dry this week. A very important event will occur this weekend with 0.30 to 0.80 inch of rain likely and local totals to 1.50 inches.

·         Other U.S. weather late this week through the weekend will be wettest from the central Plains into the lower Ohio River Valley and far northern Delta.

·         Warmer temperatures will evolve late in the first week of August, but no excessive heat is expected.

 

 

WORLD WEATHER AREAS OF GREATEST INTEREST THIS WEEK

·         Indonesia and Malaysia rainfall remains erratic and lighter than usual

·         Western Luzon Island, Philippines rainfall eased up Monday after a couple of weeks of frequent heavy to torrential rainfall

·         Northern Vietnam weather has begun to dry down

·         India’s Monsoon will take a short-term break from mid-week this week into the end of next week, but sufficient moisture is present in most of the nation to support crops favorably as long as rain resumes in August

·         Northern Europe dryness is not likely to change much the remainder of this week, but some showers will begin to increase late in the week through early next week with Germany and Scandinavia seeing some relief

·         Eastern Europe and the western CIS will see frequent rain maintaining concern over unharvested small grain quality for a few more days, but much less rain is expected by the weekend and improving conditions will occur next week

·         Interior eastern and some central China areas will be drying in the coming week while remnants of Tropical Depression Ampil produce heavy rain in northeast parts of the nation for the next couple of days

·         East-central Australia drought will be eased by showers in Queensland today and in New South Wales Thursday into Friday with some additional showers “possible” during mid-week next week

·         U.S. Midwest weather will be mild to cool, but net drying is still expected in the central and southwestern Corn Belt through the end of this week. Rain this weekend is expected to bring some needed relief to dryness in the southwest

·         Southern U.S. Plains livestock and crops will get relief from excessive heat the remainder of this week

·         Key Texas crop areas will stay dry this week, but some rain will fall in West Texas Thursday into Friday and again Sunday into Monday

·         SW Canada Prairies, northwestern U.S. Plains and U.S. Pacific Northwest will stay drier and warmer biased through the next week.

Source: World Weather Inc. and FI

 

Source: World Weather Inc. and FI

 

SIGNIFICANT CORN AND SOYBEAN BELT PRECIPITATION EVENTS

                                               WEST CORN BELT                             EAST CORN BELT              

Wed-Thu                                                                             35% cvg of up to 0.25”

                                                                                                and locally more;

                                                                                                north and east wettest

Thu                        15% cvg of up to 0.10”                   

                                and locally more;                             

                                far SE wettest                                   

Fri                                                                                           15% cvg of up    to 0.25”

                                                                                                and locally more;

                                                                                                wettest SE         

Fri-Sat                   60% cvg of up to 0.75”

                                and local amts to 1.50”

                                with a few bands of

                                1.50-2.50”; driest north

Sat-Sun                                                                                80% cvg of up    to 0.75”

                                                                                                and local amts to 1.50”;

                                                                                                wettest west

Sun-Mon             10-25% daily cvg of

                                up to 0.35” and locally

                                more each day

                      

Mon-Aug 31                                                                       40% cvg of up to 0.40”

                                                                                                and local amts to 1.0”;

                                                                                                south and east wettest

Jul 31-Aug 1        25% cvg of up to 0.40”                   

                                and locally more;

                                wettest north                                   

Aug 1-2                                                                                 40% cvg of up to 0.35”

                                                                                                and local amts to 0.90”

Aug 2-3                 40% cvg of up to 0.50”

                                and local amts to 1.10”;

                                central areas wettest

Aug 3-4                                                                                 60% cvg of up to 0.50”

                                                                                                and locally more

Aug 4-7                 10-25% daily cvg of

                                up to 0.60” and locally

                                more each day

Aug 5-7                                                                                 10-25% daily cvg of

                                                                                                up to 0.50” and locally

                                                                                                more each day

 

U.S. DELTA/SOUTHEAST SIGNIFICANT PRECIPITATION EVENTS

                             DELTA                                                  SOUTHEAST

Tdy-Fri                  Up to 15% daily cvg of

                                up to 0.20” and locally

                                more each day; some

                                days may be dry

Wed                                                                                      50% cvg of up to 0.65”

                                                                                                and local amts to 1.35”;

                                                                                                driest west

Thu-Sat                                                                                20-40% daily cvg of

                                                                                                up to 0.65” and locally

                                                                                                more each day;

                                                                                                driest west

Sat                          15% cvg of up to 0.35”

                                and locally more

Sun-Jul 31            80% cvg of up to 0.75”                    85% cvg of up to 0.75”

                                and local amts to 2.0”                     and local amts over 2.0”;

                                                                                                driest west

Aug 1-3                 10-25% daily cvg of                          80% cvg of up to 0.75”

                                up to 0.35” and locally                    and local amts to 2.0”;

                                more each day                                  driest west

Aug 4-7                 5-20% daily cvg of up                      10-25% daily cvg of

                                to 0.30” and locally                          up to 0.40” and locally

                                more each day                                  more each day

Source: World Weather Inc. and FI

 

Bloomberg weekly agenda

WEDNESDAY, JULY 25:

• Costa Rica public holiday; Pakistan holds general election
• Cargo surveyors AmSpec, Intertek to release data on Malaysia’s July 1-25 palm oil exports, 11pm ET Tuesday (11am Kuala Lumpur Wednesday); SGS data for same period, 3am ET Wednesday (3pm local time Wednesday)
• EIA U.S. weekly ethanol inventories, output, 10:30am
• Allendale holds webinar on grains and oilseeds, 3pm ET (2pm CST)
• U.S. poultry slaughter June, 3pm
• Wheat Quality Council’s U.S. spring wheat crop tour, 2nd day
• Grain World crop tour in Canada, 2nd day
• EARNINGS: Coca-Cola

THURSDAY, JULY 26:

• Intl Grains Council monthly grains report, 8:30am ET (1:30pm London)
• USDA weekly net-export sales for corn, wheat, soy, cotton, 8:30am
• Allendale holds webinar on livestock outlook, 3pm ET (2pm CST)
• Port of Rouen data on French grain exports
• Buenos Aires Grain Exchange weekly crop report
• Wheat Quality Council’s U.S. spring wheat crop tour, 3rd day
• Grain World crop tour in Canada, final day
• Bloomberg weekly survey of analysts’ expectations on grain, sugar prices
• World Trade Organization holds a General Council meeting that will last through July 27 to cover issues related to the U.S.-China trade conflict
• EARNINGS: Nestle SA, Anheuser-Busch Inbev, Diageo Plc

FRIDAY, JULY 27:

• Thailand, Peru public holidays
• G20 Agriculture ministers meet in Buenos Aires
• 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
• FranceAgriMer weekly updates on French crop conditions

Source: Bloomberg and FI

 

Registrations

·         No Changes

 

 

Macros.

·         US stocks are lower, USD lower, WTI crude higher, and gold higher, at the time this was written.

 

Corn.

• Corn is higher as traders start to take some of the unfavorable US weather into account. Higher US wheat futures are supporting corn.
• It will remain hot in the US southwest and Midwest will see normal to below normal temperatures.
• The USDA said it will provide up to $12 BLN in farmer support to help offset losses incurred over the trade disputes.  The market took this as long-term bearish due to the talk of direct payments to farmers and the fact that if the farmer is subsidized they will produce more crop.

https://content.govdelivery.com/accounts/USDAOC/bulletins/200ecdd

• Baltic Dry Index fell 2 points to 1,772, or 0.1%.
• There are repairs underway to a lock near St. Louis, slowing Mississippi River vessel traffic. The U.S. Army Corps of Engineers closed the Melvin Price Locks near Alton, IL, to make repairs last week. 

·         Private analysts in Argentina said today that the Argentina 2018/19 corn harvest may reach 44 MLN tons on favorable prices and weather.

·         Brazil is sending a delegation to Mexico to look into importing agriculture commodities, such as corn.

·         Flooding across China prompted the government to notify local agencies to ensure current supplies are protected and report prices on a daily basis.

• A Bloomberg survey calls for weekly ethanol production to average 1.053 million barrels per day versus 1.064 last week and stocks to average 21.819 million versus 21.768 million last week.
• EPA’s acting administrator Andrew Wheeler said he would consider following through with overhauling biofuel policy, including counting ethanol exports toward annual biofuels quotas.

 

Export Developments

·         None reported.

·         China sold about 55.6 million tons of corn out of reserves this season.

 

 

Soybean complex.

·         The soybean complex is mixed with the product near unchanged on lack of direction. Good demand for US domestic end users and surge in exports to countries other than China continue to underpin prices, even as the US crop is expected to be reported larger by USDA in August from their early summer estimate.

·         US soybeans were about $60/ton discount to Brazil yesterday.

·         Argentina economic woes are renewing. The economy shrank 5.8 percent in May from a year ago, second consecutive monthly decline. This was largest decline since July 2009. Farming activity shrank 35 percent year-over-year.

·         Delays to unload soybeans in China are holding up the unloading of two US soybean cargos near Dalian.

·         China September soybean futures increased 17 yuan per ton or 0.5%, September meal was up 16 or 0.5%, China soybean oil up 16 (0.3%) and China September palm up 20 (0.4%).

·         September China cash crush margins were last running at 45 cents/bu, up from 41 previous session, and compares to 46 cents last week and 71 cents a year ago.

·         Rotterdam vegetable oils were unchanged to higher and SA soybean meal unchanged to lower, as of early morning CT time.

·         Indonesia is close to finalizing a plan to increase domestic biodiesel use.

·         Before closing higher, palm oil hit a 3-year low.

·         October Malaysian palm was 11 higher at MYR2163, and cash up $2.50 at $565.00/ton. 

·         Malaysian palm exports improved over the last 5 days. Cargo surveyor SGS reported July 1-25 Malaysian palm exports at 910,774 tons, up 50,557 tons or 6% from the same period a month ago but down 133,682 tons from the same period a year ago (13% decrease). AmSpec reported palm exports at 902,979 tons, up 5 percent from the previous period last month.

·         Offshore values were leading soybean oil 13 points lower and meal $0.10/short ton lower.

·         The fact that the US will provide producer aid of $12 billion paid through direct assistance, a food purchase and distribution program, and a trade promotion program, was seen as supportive yesterday for soybeans. As it should have.  Details of the programs will be released over the next two weeks. 

·         The Chinese are not happy with the announcement, calling it “vicious”.

·         Meanwhile, China plans to allocate emergency funds to help producers battle flooding. $147.8 million will go to local governments.

 

Export Developments

·         China sold 59,079 tons of soybeans out of reserves at an average price of 2997 yuan per ton ($440.90/ton), nearly 12 percent of what was offered. China sold 1.031 million tons of soybeans out of reserves so far, this season.

• China sold 800 tons of soybean oil out of reserves at an average price of 5,000 yuan per ton ($736.25/ton), nearly 2 percent of what was offered.
• South Korea seeks 1,500 tons of non-GMO soybeans on July 25 for September-December delivery.
• Iran seeks 30,000 tons of sunflower oil on September 24.
• Iran seeks 30,000 tons of soybean oil on August 1.

 

Wheat. 

·         US wheat futures are sharply higher on renewed US/Canadian crop concerns, and higher Paris & Black Sea wheat prices.

·         Day 1 HRS wheat crop tour showed the yield below average. Another crop tour in Saskatchewan shows dry areas are affecting summer grain production.

·         The KWZ and WZ spread is widening.

·         December Paris wheat futures was last 2.50 euros higher at 199.50 euros.

·         Egyptians are paying the most for wheat since 2015 (inflation and drought).

·         Strategie Grains lowered its estimate for the EU soft wheat crop to about 130 million tons versus 132.4 in early July and compares to 141.8 million in 2017. They have Germany at 20.7 million tons, down from 22.8 million estimated in early July, and France at 33.2 million tons, unchanged from earlier.

• The Wheat Quality Council’s U.S. spring wheat crop in North Dakota began yesterday. Day one calculated 38.9 bu/ac for HRS for 135 fields (138 overall), up from 37.9 year ago and 44.7 average. Results are due out Thursday.

·         The weekly Manitoba crop report showed hot temperatures accompanied with rain last week advanced quickly, which may lead to early harvesting.

·         Black Sea barley prices are back above wheat.

·         There was heavy trading in Black Sea wheat overnight.

Block activity today:

AUG +1.75 from settle

NOV +2.00 from settle

MAR +.75 from settle

Below is the BSW December price chart

Source: Profit X and FI

 

Export Developments.

• Bangladesh’s lowest offer was $270.89/ton c&f for 50,000 tons of optional origin milling wheat for shipment within 40 days of contract signing.
• Japan in a SBS import tender bought 3,500 tons of feed wheat and passed on barley for arrival by December 28. 
• Japan in a SBS import tender seeks 120,000 tons of feed wheat and 200,000 tons of barley on August 1 for arrival by January 31. 
• China sold 9,946 tons of 2013 wheat out of auction at an average price of 2,217 yuan per ton ($326.92/ton), 0.6 percent of what was offered.

·         Jordan seeks 120,000 tons of barley on July 31.

·         Jordan seeks 120,000 tons of wheat on July 26.

·         Iraq seeks 50,000 tons of US, Canadian, and/or Australian wheat on July 29, valid until August 2.

• Results awaited: Bahrain Flour Mills seeks 17,000 tons of semi-hard wheat and 8,000 tons of hard wheat, on July 24, valid until July 25, for shipment in late Aug/early Sept.  Origins include Australia, Baltics, & Canada.

 

Rice/Other

• Results awaited: Thailand seeks to sell 120,000 tons of raw sugar on July 18.

·         Results awaited: Mauritius seeks 6,000 tons of white rice for Sep 1-Nov 30 shipment.