FW: FI Morning Grain Comments 08/21/19

PDF attached

 

Good morning.  Crop tour results will be out at the end of the week and consensus is for lower national yields relative to USDA August.  328,000 tons of corn was sold to Mexico.  Short positions in soybeans are building leading to potential short covering in coming days. 

 

 

Weather and Conditions

·         Additional rain fell across the US Midwest over the past day, bias IA and northern IL. 

·         The 6-10 day was slightly drier in the northern and far southern Great Plains. Temps are cooler.  11-15 day is wetter in the northwestern Great Plains, and temperatures are slightly warmer.

·         US Midwest weather will remain well mixed, although the northeastern Corn Belt will be a little low on rainfall in the coming week.

·         U.S. southeastern states will see periodic showers and thunderstorms through the next week.  Resulting moisture will vary from 1.00 to 3.00 inches with local totals over 6.00 inches

·         U.S. hard red winter wheat areas will experience frequent showers and thunderstorms over the next week.

·         Restricted rainfall will occur in the southern Plains over the next two weeks. TX will remain dry. 

Source: World Weather Inc. and FI

 

One day precipitation

 

5-day outlook

 

Bloomberg Ag Calendar

WEDNESDAY, AUG. 21:

• EIA U.S. weekly ethanol inventories, production, 10:30am
• Brazil’s chicken exporter group ABPA releases estimates for chicken and pork exports in 2019, 9.30am
• Cofco Meat Holdings earnings

THURSDAY, AUG. 22:

• Brazilian crop agency Conab’s report on sugarcane crop, ~8am ET (~9am Sao Paulo)
• USDA weekly crop net-export sales for corn, soybeans, wheat, 8:30am
• Asia Palm Oil Conference, Day 1, Pattaya

FRIDAY, AUG. 23:

• Asia Palm Oil Conference, Day 2

Source: Bloomberg and FI

 

No changes in CBOT ag registrations

 

 

 

 

Macros

·         USD:  -2 (8:22 am CT)

·         US DOW:  +235

·         Crude:  +$0.50

·         Gold:  -$4.60

 

Corn.

·         US corn futures are higher on US yield concerns.   

·         The Pro Farmer Midwest Crop Tour started on Monday. As expected, crops widely vary this year.   https://twitter.com/commodityweek/lists/pro-farmer-crop-tour?lang=en   

• IN corn averaged 161.45 vs. 182.33 in 2018 and 3-year average of 175.66. 
• NE corn averaged 172.55 vs. 179.17 in 2018 and 3-year average of 167.73. 
• Ohio corn averaged 154.35 vs. 179.57 in 2018 and 3-year average of 164.38. 
• SD corn averaged 154.08 vs. 178.01 in 2018 and 3-year average of 158.59. 

·         Argentina’s BA Grains exchange looks for 2019-20 corn area to see a slowdown in expansion due to economics favoring soybeans.  Last year the Exchange estimated corn plantings at 6 million hectares and production at 48 million tons.

·         Russia reported a case of ASF near the Chinese border. 

·         More and more US ethanol plants are idling or slowing down considerably.  This week we look for weekly production to increase, but next week’s numbers should show a decline. 

·         Poet just announced they will be idling a 92-millon-gallon plant in Cloverdale, IN.  Poet has cut production at half of its plants. 

·         A Bloomberg weekly survey looks for ethanol production to average 1.048 million barrels, up from 1.045 last week, and stocks to decrease to 23.799 million barrels from 23.883 million last week.  We are looking for an increase in production and increase in stocks. 

 

Export Developments

• Under the 24-hour announcement system, private exporters sold 328,000 tons of corn to Mexico for 2019-20 delivery. 
• Last time private exporters sold corn to Mexico for 2019-20 was back on June 20 (old and new crop for combined 120k), and then June 13 of 175,000 tons.
• China sold about 19.3 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 low pod counts reported out of the US crop tour. 

·         The Pro Farmer Midwest Crop Tour started Monday. 

• IN soybean pod count averaged 923.94 vs. 1,311.87 in 2018 and 3-year average of 1,219.69
• NE soybean pod count averaged 1,210.83 vs. 1,299.08 in 2018 and 3-year average of 1,217.72
• Ohio soybean pod count averaged 764.01 vs. 1,248.20 in 2018 and 3-year average of 1,136.75
• SD soybean pod count averaged 832.85 vs. 1,024.72 in 2018 and 3-year average of 964.96

·         We did not hear of any China soybean buying overnight. 

·         China prices:

·         Our China cash crush margin calculation were last +85 cents and compares to +81 cents late last week and +84 cents year ago.

• Offshore values early this morning was leading the soybean oil 36 points higher and meal $0.50 lower.
• Rotterdam vegetable oils were mixed.  Rotterdam meal when imported from SA were 1-3 euros higher. 

·         Malaysia Aug 1-20 palm shipments:

o   Cargo surveyor SGS reported month to date August 20 Malaysian palm exports at 983,575 tons, 57,318 tons above the same period a month ago or up 6.2%, and 357,756 tons above the same period a year ago or up 57.2%.

o   AmSpec 1.028MMT, up 13 percent from last month

o   ITS 1.005MMT, up 8.7 percent l/m

·         Malaysian palm markets:

 

Oilseeds Export Developments

·         Egypt seeks 30,000 tons of soybean oil and 10,000 tons of sunflower oil on Thursday for October 10-30 arrival. 

 

Wheat

·         US wheat futures are lower by losses in MN are limited from the increase in global milling wheat import tenders this week.  

·         December Paris wheat futures were down 0.50 euro at 169.50 euros per ton, a 16-month low.  

·         News was light. 

 

Export Developments.

• Tunisia is in for 92k soft milling wheat and lowest offer was $210.48/ton.  Shipment periods are for September 15 through October 25. 
• Japan received no offers for 120k wheat and 200k barley for arrival by the end of January.
• Japan is back in for 120k wheat and 200k barley on August 28 for arrival by the end of January.

·         Japan seeks 110,057 tons of food wheat on Thursday. 

·         Jordan is back in for 120,000 tons of wheat on August 28.

·         Morocco’s ONICL seeks 576,000 tons of milling wheat and 345,455 tons of durum wheat from the US on September 5, under a preferential tariff quota, for arrival by December 31. 

 

Rice/Other

·         None reported.