FW: FI Morning Grain Comments 08/29/18

PDF attached

 

Weather and crop conditions

·         Decent rain fell across Western Australia. Not much follow up rain is expected in Western Australia this weekend or next week. New South Wales and southeastern Queensland will get rain Thursday into Friday with a few showers early next week.

·         Dry conditions are raising planting and establishment concerns for central and eastern Ukraine into the middle and lower Volga River Basin, Kazakhstan and Russia’s Southern Region.

·         Northern Missouri and the northwest half of Illinois into Minnesota, Wisconsin and Michigan all saw rain into Wednesday.

·         Rain this week will slow crop maturation rates and delay some early harvesting. Next week flooding is possible in parts of Iowa, northern Missouri, Minnesota and Wisconsin.

·         A mix of rain and sunshine is expected across the Delta and southeastern states through September 7.

·         Canada’s Prairies will remain dry from southeastern Alberta through central and southern Saskatchewan through September 7.

·         Northern and western Europe weather will see below normal precipitation through early September.

·         Argentina will receive rain through Friday.

Source: World Weather and FI

 

 

SIGNIFICANT CORN AND SOYBEAN BELT PRECIPITATION EVENTS

                             WEST CORN BELT                                                            EAST CORN BELT  

      -Wed                                                                                                      85% cvg of up to 0.75” and local amts to 1.50”;

                                                                                                                     wettest NW

Wed                     10% cvg of up to 0.40” and locally more;

                              far SE wettest

 

Thu                                                                                                               15% cvg of up to 0.25” and local amts to 0.50”;

                                                                                                                     wettest SE

Thu-Fri                 80% cvg of up to 0.75” and local amts to 1.50”             

                              with some 1.50-3.50” amts in the south; far

                              NW driest

 

Fri-Sat                                                                                                          80% cvg of up to 0.75” and local amts to 2.0”;

                                                                                                                     driest NE

Sat-Sun                45% cvg of up to 0.75” and local amts to 1.50”

                              with some 1.50-3.0” amts in the south

Sun-Mon                                                                                                     75% cvg of up to 0.75” and local amts to 1.50”

 

Mon-Sep 5          75% cvg of up to 0.75” and local amts to 2.0”

Sep 4-6                                                                                                        75% cvg of up to 0.75” and local amts to 1.75”

Sep 6-7                5-20% daily cvg of up to 0.25” and locally                                                

                              more each day

Sep 8-9                30% cvg of up to 0.50” and locally more;

                              wettest north

Sep 7-11                                                                                                      5-20% daily cvg of up to 0.30” and locally more

Sep 10-12            65% cvg of up to 0.75” and locally more

 

U.S. DELTA/SOUTHEAST SIGNIFICANT PRECIPITATION EVENTS

                             DELTA                                                                              SOUTHEAST

Wed-Thu             90% cvg of up to 0.75” and local amts to 1.50”

Wed-Fri                                                                                                       80% cvg of up to 0.75” and local amts to 1.50”

Fri-Mon               5-20% daily cvg of up to 0.30” and locally

                              more each day

Sat-Sun                                                                                                        15-35% daily cvg of up to 0.40” and locally

                                                                                                                     more each day

Mon-Sep 5                                                                                                  5-20% daily cvg of up to 0.35” and locally

                                                                                       more each day

Sep 4-5                 10-25% daily cvg of up to 0.35” and locally                                              

                              more each day                                                 

Sep 6-7                 50% cvg of up to 0.50” and locally more

Sep 6-8                                                                                                        60% cvg of up to 0.70” and locally more

Sep 8-11               10-25% daily cvg of up to 0.35” and locally                                             

                               more each day                                 

Sep 9-11                                                                                                      15-35% daily cvg of up to 0.50” and locally

                                                                                       more each day

Source: World Weather and FI

 

Source: World Weather Inc.

 

Bloomberg weekly agenda

WEDNESDAY, AUG. 29:

• EIA U.S. weekly ethanol inventories, output, 10:30am

THURSDAY, AUG. 30:

• 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

FRIDAY, AUG. 31:

• Malaysia on holiday; No palm oil futures trading on Bursa Malaysia Derivatives
• Statistics Canada’s domestic crop production report for July, 8:30am ET
• FranceAgriMer weekly updates on French crop conditions
• 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

Source: Bloomberg and FI

 

Farm Futures 2019 US area:

·         Corn 90.8 million acres, up 1.9% from 2018

·         Soybean 87.5 million acres, down 2.3%

·         All-wheat 48.3 million, up 1.0%

·         All winter wheat 33.6 million, up 2.6%

·         Spring wheat 12.9 million, down 2.5%

·         Durum wheat 1.8 million, down 2.5%

·         Sorghum seedings 6.5 million, up 7.9%

·         Cotton seedings 13.8 million, up 1.9%

924 growers survey from July 20 to early August

Source: Reuters, Farm Futures and FI

 

StatsCan production survey via Bloomberg

================================================================

               |——–Survey Results———|StatsCan|

  Production:  |   Avg   |    Low    |  High   |     2017| YOY%

================================================================

All-Wheat      |   30.418|     29.315|   31.100|   29.984|  1.4%

Durum Wheat    |    6.028|      5.400|    7.400|    4.962| 21.5%

Canola         |   20.723|     20.444|   21.270|   21.313| -2.8%

Barley         |    8.289|      7.911|    8.600|    7.891|  5.0%

Soybeans       |    7.120|      6.900|    7.260|    7.717| -7.7%

Oats           |    3.378|      3.310|    3.450|    3.724| -9.3%

Source: Bloomberg and FI

 

Registrations

• No changes

 

 

 

Macros.

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

·         US GDP Annualized (Q/Q) Q2 S: 4.2% (est 4.0%; prev 4.1%)

– GDP Price Index (Q/Q) Q2 S: 3.0% (est 3.0%; prev 3.0%)

– Personal Consumption (Q/Q) Q2 S: 3.8% (est 3.9%; prev 4.0%)

– Core PCE (Q/Q) Q2 S: 2.0% (est 2.0%; prev 2.0%)

·         US Pending Home Sales (M/M) Jul: -0.7% (est 0.3%; prevR 1.0%)

Pending Home Sales (Y/Y) Jul: -0.5% (est -2.5%; prev -4.0%)

 

Corn.

• Corn traded two-sided. News is light.
• Trade is awaiting details of the US/Canada trade talks.
• Baltic Dry Index fell 1.4 percent to 1,661 points.
• China mentioned they can not rule out additional cases of African swine fever outbreaks, and stated the disease came from another country. Four Chinese cases have been confirmed.
• US ethanol production decreased 3,000 barrels per day to 1.07 million and stocks fell 198,000 to 23.06 million (first stocks decrease since July 20). Traders were looking for a 1,000 barrel/day increase in production and 44,000 barrel decrease in stocks.

 

Export Developments

·         Another 4 million tons of China corn reserves will be offered on Thursday and Friday. China sold about 65.4 million tons of corn out of reserves this season.

 

 

 

Soybean complex.

·         Soybeans and meal are higher on short covering. Soybean oil is trading lower after we learned yesterday that Argentina is loading a China-bound 29,000-ton cargo of soybean oil in Timbues, along the Parana River.  This is the first large Argentine SBO cargo in three years for China. According to the vessel line-up published by NABSA there are two more due to load the first week of September and a fourth cargo may set sail after additional two cargoes.

·         Brazil real is under pressure again and the currency could test a multiyear low set mid-September 2015.

·         One analyst out there has a US 2018-19 carryout over 1 billion bushels.

·         Bloomberg noted the spread between soybeans and corn narrowed to a 10-year low on Wednesday.

·         Note First Notice Deliveries are on Friday. There are only 12 soybean registrations, zero meal and 3,719 soybean oil.  Look for 0-50 meal, no soybeans, and 1500-2000 soybean oil.

·         India’s SEA has a 10 million ton plus soybean production for 2018-19 (starts October), about a 20 percent increase from last year, making the country a little less dependent on soybean oil imports.

·         Dorab Mistry expects palm prices to fall to 2100/ton (MYR) in the next six months and that stocks could rise to between 3.0 and 3.3MMT by the end of December. This is opposite to Oil World’s outlook whom lowered the Malaysian palm oil production estimate for 2018 to 19.8 million tons and set a price target of 2500MRY. James Fry has a target of 2,200 MYR/ton based on a steady price of $75/barrel Brent crude oil.

·         GAPKI estimated palm oil production for Indonesia between 40 and 42 million tons in 2018, up 4-6 million tons from adverse weather production year of 2017.

·         November Malaysian palm decreased 15MYR to 2217 and leading SBO 6 points lower. Cash was down $2.50/ton or 0.4%.

·         Rotterdam oils were lower and SA soybean meal when imported into Rotterdam lower. 

·         Cofeed estimated China soybean imports in August at 8.5MMT and 8.0MMT in September and will need to source more soybeans for the November through December period.

·         China plans to suspend rapeseed oil sales from reserves on September 10. The remaining stocks of imported rapeseed and soybean oil will be auction off through September 6.

·         China cash margins were last 72 cents/bu on our analysis, up 1 cent from previous session, down 84 cents late last week, and 96 cents last year.

·         China’s soybean complex traded mixed.

·         Offshore values were suggesting a higher lead for US soybean meal by $3.30 and lower lead for soybean oil by 11 points. 

 

Export Developments

·         Egypt’s GASC bought 21,500 tons of soybean oil and 10,000 tons of sunflower oil.

o   10,000 tons of sunflower oil at $736.00 per ton

o   10,000 tons of soyoil at 12,200 Egyptian pounds per ton ($681.55)

o   11,500 tons of sunflower oil at $736.00 per ton

·         China sold 40,266 tons of 2013 soybeans at 3,002 yuan per ton ($436.72/ton), 13.36 percent of what was offered.

• China sold about 1.35MMT of soybeans out of reserves this season.

·         China sold 24,730 tons of 2011 soybean oil at 5,000 yuan per ton ($727.38/ton), 45.81 percent of what was offered.

·         China sold 1,780 tons of rapeseed oil at 6,000 yuan per ton ($872.85/ton), 2.96 percent of what was offered.

·         China plans to suspend rapeseed oil sales from reserves on September 10. The remaining stocks of imported rapeseed and soybean oil will be auction off through September 6.

·         Results awaited: The CCC seeks 15,610 tons of crude degummed soybean oil for export to Pakistan. Shipment was for Sep 27 to Oct 7.

·         South Korea seeks 15,000 tons of non-GMO soybeans on September 4 for Nov/Dec arrival.

• USDA seeks 5,000 tons of refined oil for the export program on September 5 for October shipment.
• Iran seeks 30,000 tons of sunflower oil on September 24.

 

Wheat

• Higher trade in Paris wheat futures and technical buying are lifting US wheat higher.
• An unfounded rumor circulated that Russia lowered their export forecast for wheat during the 2018-19 crop year to 25 million tons. USDA is using 35 million tons. We don’t buy into the rumor. 
• Ukraine’s AgMin reported producers harvested 34.4 million tons of grain as of Wednesday, with a yield of 3.46 tons per hectare compared with 37.4 million at the same date in 2017. This was on 9.95 million hectares, out of a projected total area of 14.85 million hectares. Wheat harvest is complete with 25.1 million tons, with an average yield of 3.80 tons per hectare.
• Ukraine exported 5 million tons of grain year to date, 700,00 lower than a year ago.

·         Romania’s PM estimated the 2018 wheat crop at 10.2 million tons, up from 9.9MMT in 2017.

·         Yesterday Egypt’s GASC bought 350,000 tons of optional origin wheat for October 11-20 shipment.

·         US wheat was offered in Egypt’s import tender but they bought from the Black Sea.

 

Export Developments.

• Ethiopia seeks 200,000 tons of milling wheat on September 18 for shipment two months after contract signing.
• Japan in a SBS import tender bought 21,395 tons of feed wheat and 41,160 tons of barley for arrival by January 31. 
• Japan in a SBS import tender seeks 120,000 tons of feed wheat and 200,000 tons of barley on September 5 for arrival by January 31. 

·         China sold 1,102 tons of 2013 imported wheat at 2,370 yuan per ton ($347.45/ton), 0.06 percent of what was offered.

·         Jordan bought 60,000 tons of hard milling at $258.90/ton c&f for shipment in the first half of November. 

·         Taiwan seeks 110,500 tons of US milling wheat from the US on August 31 fir October/November shipment.

 

Rice/Other

·         The Philippines will imports 132,000 tons of rice soon.

·         South Korea seeks 92,783 tons of rice on Aug. 31 for Nov/Dec arrival.

    TONNES(M/T)    GRAIN TYPE      ARRIVAL/PORT

    10,000         Brown medium    Nov 30/Gwangyang

    10,000         Brown medium    Dec 31/Busan

    20,000         Brown medium    Dec 31/Gunsan

    20,000         Brown medium    Dec 31/Mokpo

    20,000         Brown medium    Dec 31/Donghae

    12,783         Brown long      Nov 30/Masan