FW: FI Morning Grain Comments 07/27/18

PDF attached

 

Weather and crop conditions

·         We look for US corn and soybean conditions to be unchanged to down 1 when updated early next week, and spring wheat ratings to slip 2 points in the combined G/E categories.

·         Cooler temperatures continue to dominate the bulk of the Midwest. Favorable conditions remain for corn silking and filling. Soil moisture levels remain a concern, especially for the southwestern Corn Belt. Other pockets of dry areas include southern IA, northern Missouri growing areas, and central IL. The central and parts of the northern Great Plains remain in good shape after a wet week. The southern Midwest and Delta are slated to get rain over the next week.

·         The ridge of high pressure is expected to stay centered over the southwestern US through mid-next week.

·         A very important event will occur this weekend with 0.60 to 0.80 inch of rain likely and local totals to 1.50 inches.

·         Northern Europe remain hot and dry.

·         Ukraine’s central and western growing areas and southern Central Region saw good rain recently, improving conditions.

 

WORLD WEATHER AREAS OF GREATEST INTEREST THIS WEEK

·         Southern Oscillation Index has held close to zero in the past few days this adds support for improved rain potentials in eastern Australia during August

·         Rain is already advertised for New South Wales Friday into Saturday with 0.10 to 0.50 inch

·         Both Queensland and New South Wales may get some additional rain of significance late next week and into the following weekend

·         Japan’s heat wave continues with temperatures high into the 90s and over 100 degrees Fahrenheit expected to prevail into the weekend

·         Tropical Storm Jongdari is expected to reach Honshu, Japan late in the weekend and will bring some relief to the recent hot, dry, weather, but might also bring some damaging wind and flooding rain to areas near the coast southwest of Tokyo

·         Western Europe continues to heat up with 90s reaching into Germany and France with extremes possibly reaching 100 briefly ahead of weekend showers

·         Sweden also reached into the lower 90s Fahrenheit Wednesday

·         France, Germany, the U.K. and Scandinavia will receive some rain this weekend and then trend drier and warmer again during the second half of next week into the following weekend.

·         Rainfall of 0.20 to 0.75 inch is expected with the U.K. getting local totals over 1.00 inch

·         Stress through Friday and that returning next week is expected for many crop areas with losses in production likely to continue expanding, despite the showers

·         Eastern Europe and the far western CIS will see frequent rain maintaining concern over unharvested small grain quality for a few more days, but much less rain is expected in western Russia by the weekend and improving conditions will occur next week; Belarus, western Ukraine and eastern Poland will stay wet into next week

·         Indonesia and Malaysia rainfall remains erratic and lighter than usual with little sign of change

·         India’s Monsoon will take a short term break with most of the west and south experiencing net drying conditions for the next week to ten days

·         Subsoil moisture will carry crops favorably during this period of time, but greater rain must return in August

·         Rain and soil moisture will continue adequately to abundantly in northeastern parts of the nation throughout the forecast period

·         Interior eastern and central China areas will be drying in the coming week with temperatures rising well above average

·         Extreme highs over 100 are expected with little to no rain of significance

·         Topsoil moisture has already been depleted in many areas and subsoil moisture is decreasing

·         Crop stress will become common during the week next week as the heat and dryness prevails

·         U.S. Midwest weather will be mild to cool with sufficient rainfall to maintain good crop development

·         The forecast models are wetter today than they were Wednesday, but some of the rain is likely overdone

·         Dry pockets will remain in the southwest and far northeast parts of the region, despite expected shower activity

·         Southern U.S. Plains livestock and crops will experience some relief from hot dry conditions this weekend

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

·         Sunday and Monday’s precipitation will be most significant and may bring relief to West Texas dryness in at least a portion of the region.

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

·         Some rain is expected in the Prairies late Sunday into Tuesday, but the drought areas in the south will receive the least rainfall

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              

Fri                                                                                           20% cvg of up    to 0.15”

                                                                                                and locally more;

                                                                                                north and east wettest

Fri-Sat                   65% cvg of up to 0.75”

                                and local amts to 2.0”;

                                wettest south

Sat-Sun                                                                                40% cvg of up    to 0.65”

                                                                                                and local amts to 1.20”;

                                                                                                wettest west

Sun-Mon             45% cvg of up to 0.75”

                                and local amts to 1.50”;

                                wettest south

Mon-Wed                                                                           80% cvg of up to 0.60”

                                                                                                and local amts to 1.20”

Tue-Wed             10-20% daily cvg of

                                up to 0.35” and locally

                                more each day

Aug 2                                                                                     20% cvg of up to 0.30”

                                                                                                and locally more              

Aug 2-3                 65% cvg of up to 0.60”

                                and local amts to 1.30”

Aug 3-4                                                                                 70% cvg of up to 0.55”

                                                                                                and local amts to 1.20”

Aug 4-5                 10-25% daily cvg of

                                up to 0.60” and locally

                                more each day

Aug 5-7                                                                                 15-30% daily cvg of

                                                                                                up to 0.50” and locally

                                                                                                more each day

Aug 6-9                 5-20% daily cvg of up

                                to 0.35” and locally

                                more each day

Aug 7-9                                                                                 5-20% daily cvg of up

                                                                                                to 0.30” and locally

 

U.S. DELTA/SOUTHEAST SIGNIFICANT PRECIPITATION EVENTS

                                DELTA                                                   SOUTHEAST

Tdy                         20% cvg of up to 0.35”

                                and locally more;

                                wettest north

Tdy-Fri                                                                                  15-30% daily cvg of

                                                                                                up to 0.50” and locally

                                                                                                more each day;

                                                                                                driest west

Fri-Sat                   Up to 15% daily cvg of

                                up to 0.20” and locally

                                more each day; some

                                days may be dry

Sat-Sun                                                                                20-40% daily cvg of

                                                                                                up to 0.75” and locally

                                                                                                more each day;

                                                                                                wettest NE

Sun-Mon             85% cvg of up to 0.75”                   

                                and local amts to 1.50”                  

Mon-Wed                                                                           90% cvg of up to 0.75”

                                                                                                and local amts to 1.50”  

                                                                                                with a few bands of

                                                                                                1.50-3.0”

Tue-Wed             50% cvg of up to 0.40”

                                and local amts to 0.80”;

                                wettest south                                                  

Aug 2-4                                                                                 80% cvg of up to 0.75”

                                                                                                and local amts to 2.0”

Aug 2-5                 15-30% daily cvg of                         

                                up to 0.40” and locally                   

                                more each day

Aug 5-9                                                                                 10-25% daily cvg of

                                                                                                up to 0.40” and locally

                                                                                                more each day

Aug 6-9                 5-20% daily cvg of up                     

                                to 0.25” and locally                         

                                more each day                                 

Source: World Weather Inc. and FI

 

Bloomberg weekly agenda

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

MONDAY, JULY 30:

• Thailand on holiday
• 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: Heineken NV

TUESDAY, JULY 31:

• Cargo surveyors AmSpec, Intertek and SGS release their respective data on Malaysia’s July palm oil exports
• EARNINGS: AGCO Corp., Archer-Daniels-Midland Co.

WEDNESDAY, AUG. 1:

• Switzerland public holiday
• EIA U.S. weekly ethanol inventories, output, 10:30am
• USDA soybean crush for June, 3pm
• NOTE: Starting this day, the U.S. Agriculture Department ends its decades-long policy of giving crop data to news organizations under embargo in favor of posting reports directly on the web. This could benefit businesses with ability to quickly scan and trade on the figures

THURSDAY, AUG. 2:

• Costa Rica public holiday
• FAO food price index, 4am ET (9am London)
• USDA weekly net-export sales for corn, wheat, soy, cotton, 8:30am
• 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
• Colorado State University provides its final seasonal forecast adjustment before the usual peak of the Atlantic hurricane season in late August
• EARNINGS: Pilgrim’s Pride Corp., Kellogg Co., Asahi Group Holdings

FRIDAY, AUG. 3:

• 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
• EARNINGS: Kraft Heinz Co.

Source: Bloomberg and FI

 

Weekly Bloomberg Bull/Bear Survey

• Wheat: Bullish: 10 Bearish: 5 Neutral: 3
• Corn: Bullish: 10 Bearish: 5 Neutral: 3
• Soybeans: Bullish: 5 Bearish: 5 Neutral: 8
• Raw sugar: Bullish: 2 Bearish: 2 Neutral: 4
• White sugar: Bullish: 2 Bearish: 2 Neutral: 4
• White-sugar premium: Widen: 1 Narrow: 1 Neutral: 6

 

Registrations

·         Soybeans down 296 to 106. (CIRM – Chicago)

 

 

 

 

Macros.

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

·         US GDP Annualised (Q2): 4.1% (est 4.2%, prevR 2.2%)

US GDP Index (Q2):  3.0% (est 2.3%, prevR 2.0%)

·         Personal Consumption Expenditures Prices (Q2):  4.0% (est 3.0%, prevR 0.5%)

Core Personal Consumption Expenditures (QoQ):  2.0% (est 2.2%, prevR 2.2%)

 

Corn.

• Corn is lower following wheat. Not much is going on. Look for a possible two-sided trade after the 24-hour sale announcement.
• The US and Mexico are closer in reaching a NAFTA deal. An agreement could be in place as early as August.
• French crop conditions for corn were unchanged from the previous week at 71 percent.
• Baltic Dry Index fell 32 points to 1,676 or 1.9%.
• South Africa’s CEC left its corn crop forecast unchanged at 13.2 million tons. Traders were looking for 13.305 million tons. USDA is at 13.8 million tons, down from 17.55 million in 2017.

 

Export Developments

·         Private exporters reported to the U.S. Department of Agriculture the following activity:

–Export sales of 154,100 metric tons of soybeans for delivery to unknown destinations during the 2018/2019 marketing year.

·         China sold 968,796 tons of 2014 corn of corn out of auction at an average price of 1,418 yuan per ton ($208.54/ton), 24 percent of what was offered. Yesterday they sold 1.169 million tons.

·         China also sold 4,561 tons of 2013 corn out of reserves at 1490 yuan per ton.

·         China sold about 57.7 million tons of corn out of reserves this season.

 

Soybean complex.

·         The soybean complex is higher on technical rebound and US export business.

·         GAPKI reported Indonesia exports of palm and palm kernel oils up 7.5 percent from a year earlier to 2.29 million tons. Domestic stocks of palm oil rose to 4.85 million tons by the end of June from 4.76 million a month earlier.

·         China September soybean futures decreased 11 yuan per ton or 0.3%, September meal was down 6 or 0.2%, China soybean oil up 12 (0.2%) and China September palm up 2 (0.1%).

·         September China cash crush margins were last running at 48 cents/bu, down from 50 previous session, and compares to 46 cents last week and 71 cents a year ago.

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

·         October Malaysian palm was 16 lower at MYR2186, and cash down $5.00 at $572.50/ton. 

·         Offshore values were leading soybean oil 4 points higher (77 lower WTD) and meal $5.10/short ton lower ($0.90/short ton lower for the week).

·         The CNGOIC reported crush rates at ports declined from last week to 1.61 million tons from 1.71 million. Soybean stocks were running at about 5 weeks of supply needs.

·         Brazil is seeking a 5-million-ton soybean meal export quota from China.

·         Canada’s canola yield was estimated at 41.9 bu/ac, above 41.1 in 2017, according to the Grain World crop tour.

 

Export Developments

• Private exporters reported to the U.S. Department of Agriculture the following activity:

–Export sales of 270,000 metric tons of corn for delivery to unknown destinations during the 2018/2019 marketing year; and

• South Korea seeks 12,000 tons of non-GMO soybeans in Aug 7 for Nov/Dec arrival.
• Iran seeks 30,000 tons of soybean oil on August 1.
• Iran seeks 30,000 tons of sunflower oil on September 24.

·         China sold 1.031 million tons of soybeans out of reserves so far, this season.

 

Wheat. 

·         US wheat futures are surprisingly lower this morning on follow through profit taking from the recent rally.

·         Yields from the US SW crop tour were disappointing.

·         Black Sea wheat prices increased to $240/ton C&F, up from $235/ton from the previous week. Some trades occurred around $220-$225/ton. US wheat into Asia was quoted at $265 for soft white and $282 for HRW, and $288 for spring.

·         French crop conditions for soft wheat were unchanged from the previous week at 71 percent. 88 percent of the crop had been harvested as of July 22, up from 64 percent previous week.

·         Germany’s river levels are low, affecting grain transport.

·         December Paris wheat futures was last 1.50 euros lower at 199.25 euros.

·         The US spring wheat crop tour total average was 41.1, matching its HRS average yield.   Scouts sampled 342 fields total, including 325 HRS and 17 durum.

·         HRS averaged 41.1 bu/acre compared to 38.1 bu/acre last year and below the 5-yr average of 45.4 bu/acre. ND’s G/E condition was last reported at 88 percent, up from 40% this time last year.  This is leaving many to believe USDA will lower SW production in August.

·         The spring wheat crop tour counted zero HRW fields this year. Last time that happened was back in 2002.

·         Canada’s all-wheat yield was estimated at 54.4 bu/ac, above 53.8 in 2017, according to the Grain World crop tour.

 

THURSDAY/FRIDAY BLACK SEA MORNING BLOCKS

Source: CBOT and FI

 

Export Developments.

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

• 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. 

·         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.