FI Evening Grain Comments 05/04/21

PDF Attached

 

Inflation
fears among ongoing tight grain/oilseed supplies, record US corn exports for the month of March, and high cash prices pulled CBOT agriculture futures higher.  The fundamentals have not changed. 

 

 

Selected
trend yield grid for 2021 US production

 

Weather

Next
7 days

 

World
Weather, Inc.

WEATHER
TO WATCH THIS WEEK

• Frost
  occurred in southwestern Argentina overnight with little to no impact on unharvested crops
  
• Frost
  is expected again Wednesday morning over southern Buenos Aires with a couple of extreme lows near freezing, but the impact should be similar
• Hard
  freezes occurred from Saskatchewan into North Dakota overnight with extreme lows in the middle and upper teens to the 20s
• No
  permanent damage was done to most crops, although perhaps a few of the earliest emerged spring crops might have been negatively impacted
• Most
  of the cold will moderate over the next couple of nights, but additional frost and a few light freezes are expected as far south as northern Iowa and northern and western Nebraska
• The
  impact of this will be mostly minimal
• South
  Dakota to Alberta and Montana will receive some welcome rain Friday into the weekend
• Rainfall
  of 0.20 to 0.80 inch and local totals to 1.25 inches is possible
• Showers
  of a more limited significance are possible today in a part of the same region
• Drought
  remains a concern for the heart of Saskatchewan, east-central Alberta and central and southern Manitoba, Canada
• Rain
  is not likely in these areas – at least not significantly – for the next ten days
• Lower
  U.S. Midwest, Delta and Tennessee River Basin will be frequented by rain too often during the next ten days limiting field progress, although some will take place
• Drier
  and warmer weather is needed to induce the best environment
• Recent
  corn planting progress in the U.S. has been substantial, but the planting pace will slow with the more active weather in parts of the Midwest during the coming week to ten days

 

• U.S.
  hard red winter wheat production areas will receive a good mix of weather during the next two weeks, but rain volumes will be light in the west-central and southwestern Plains leaving an ongoing need for greater rain
• Showers
  in the southwestern U.S. Plains Monday produced 0.05 to 0.56 inch of rain with local totals to 0.73 inch
  
• Areas
  from southwestern Kansas into the Texas Panhandle benefited most from the rain along with a few areas in western Oklahoma
• West
  Texas rain chances will be best Friday into Saturday when scattered thundershowers develop
  
• Resulting
  rainfall will be a little too light for a lasting impact on the region
• Another
  chance for rain will evolve during mid-week next week
• Dryness
  will remain a concern for the next two weeks, despite recent rain and that which is forthcoming
• South
  Texas rain chances may improve next week, but the area will continue drier biased for much of the next ten days
• U.S.
  southeastern states will experience a greater amount of rain during the coming ten days than previously advertised which may slow field progress for a while
• Far
  western U.S. weather will continue drier biased for an extended period of time.
• Brazil
  is facing another ten days to two weeks of dry weather in its Safrinha corn and cotton areas along with its sugarcane, coffee and citrus areas
• Most
  of the drying is normal for this time of year, but soil conditions are already quite dry and reproducing and filling Safrinha crops will suffer enough stress to hurt production
• Brazil
  rainfall will be mostly confined to the far northern fringes of crop country and in Rio Grande do Sul for the coming ten days
• Crops
  in Rio Grande will benefit greatly from alternating periods of rain and sunshine
• Argentina
  rainfall overnight and that expected into Wednesday will be sufficient to maintain moisture abundance for late season crop development
• Argentina
  will be dry Thursday through Monday with another chance for rain during mid-week next week
  
• The
  bottom line will be very good for late season crops, although a little less rain might be best for late season summer crop maturation and harvest progress
• The
  moisture will be good for winter wheat planting late this month and in June
• Another
  period of drying will occur late next week through May 17.
• Europe
  will receive waves of rain this week across some of the central and north improving topsoil moisture in some areas after recent drying
• Southern
  Europe will be drier this week
• Temperatures
  will be cooler than usual in the north and near to above normal in the south
• Next
  week’s weather will be wetter from northern Spain and Portugal through France to Poland, Slovakia and Hungary while a little drier farther to the north
• Temperatures
  will also be a little warmer in the north next week while cooler in the wetter areas
• Several
  waves of rain will impact western Russia, Belarus, the Baltic States and in a few areas of northwestern Ukraine during the coming ten days maintaining wet field conditions
  
• Farming
  activity will remain restricted in these areas with rising concern over delayed spring planting
• Good
  field progress will occur farther to the south where much less precipitation is expected, and temperatures will be more seasonable
• Temperatures
  will be cooler than usual in the wetter areas of the northwest.
• Eastern
  Russia New Lands will experience a dry and warm bias through the next two weeks
• The
  environment will eventually be great for spring planting
• North
  China Plain weather will be limited on precipitation for the next couple of weeks and temperatures will be warming
• A
  steady decline in soil moisture is expected with temperatures trending warmer
  
• A
  rising need for rain is expected later this month
• Excellent
  planting progress is anticipated for a while until dryness becomes more of an issue
• Northeastern
  China will experience frequent rain and mild to cool weather over the next week resulting in farming delays, but soil moisture will be bolstered for use later this spring
• Southern
  China rain will fall abundantly and frequently over the next couple of weeks limiting some farming activity and keeping the region saturated or nearly saturated
• Some
  local flooding will be possible at times
• Western
  Australia will receive waves of rain through mid-week this week while other areas are mostly dry
  
• The
  moisture will support some early season wheat, barley and canola planting, but follow up moisture will be needed
• A
  few sporadic showers may occur in other areas, but resulting rainfall will not likely be very great except in the Great Dividing Range of the east
  
• Temperatures
  will be near to above average
• Western
  Australia started to receive rain Monday with moisture totals to 0.39 inch through dawn today
• Rain
  also fell in New South Wales and Victoria with rainfall to 0.62 inch
• The
  exception was in coastal areas of central Victoria where very heavy rain fell and possibly resulted in local flooding
• More
  than 4.00 inches of rain occurred near the coast
• South
  Africa will receive some late season showers again Friday through the weekend and into early next week
  
• Next
  week will trend drier once again
• The
  environment will be good for harvesting and late season crop maturation
• Production
  this year has been very good for nearly all crops
• Winter
  wheat and barley planting should benefit from the moisture, although rain will soon be needed in the west
• India
  weather will remain good for winter crop maturation and harvest progress, although showers will continue periodically in some areas
• Southern
  India will be wetter than usual over the next couple of weeks and rain will also fall frequently from Bangladesh into the far Eastern States
• Delays
  to harvest progress will be greatest in the south
• Showers
  in northern India will not be great enough to be much of a factor to crop maturation or harvesting
• No
  tropical cyclones are present in the world today
• Southern
  Oscillation Index is mostly neutral at +0.06 and the index is expected to slip a little lower over the next couple of the days, but stay mostly in a narrow range
• Mexico
  drought will continue during the next two weeks, although scattered showers will occur periodically in the east and far south with the south wettest.
  
• Next
  week will be wetter than this week favoring the east half of the nation
• Xinjiang
  China’s cotton areas turned a little cooler Monday with no rain
• Temperatures
  will trend warmer again for the next couple of days and then cool off briefly Friday into Saturday and the heat up one more time before cooling again early to mid-week next week
• Not
  much rain is expected
• Crop
  development and additional planting are occurring favorably
• North
  Africa rainfall will receive erratic rainfall this week favoring Algeria and Tunisia where crop conditions will be good or getting better. Northwestern Algeria will see the lightest rain
• Morocco
  is not likely to see nearly as much rain and may experience net drying, but crops are in the best shape in northern Morocco and drying should not induce any harm.
  
• Southwestern
  Morocco is still too dry, though
• Temperatures
  are trending warmer than usual
• West-central
  Africa will a mix of rain and sunshine during the next ten days
• Crop
  conditions will stay good
• East-central
  Africa rainfall has been erratic in recent weeks and a boost in rainfall is coming to Kenya, Ethiopia and northern Tanzania during the coming week
• Southeast
  Asia rainfall will be favorably distributed in Indonesia, Malaysia and most of the mainland areas during the next two weeks
• Greater
  rain is needed in the northern and western Philippines and in southern parts of central Vietnam and other mainland crop areas
• New
  Zealand precipitation for the next two weeks will be lighter than usual in North Island and eastern parts of South Island while moderate to heavy rain occurs long the west coast of South Island possibly inducing some flooding
• Temperatures
  were near to above average

Source:
World Weather, Inc.

 

Bloomberg
Ag Calendar

Wednesday,
May 5:

• EIA
  weekly U.S. ethanol inventories, production
• Malaysia
  May 1-5 palm oil export data
• New
  Zealand Commodity Price
• HOLIDAY:
  Japan, China

Thursday,
May 6:

• FAO
  World Food Price Index
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports

Friday,
May 7:

• China
  customs publishes trade data, including imports of soy, edible oils, meat and rubber
• ICE
  Futures Europe weekly commitments of traders report (6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• CNGOIC
  monthly report on Chinese grains & oilseeds
• Canada’s
  Statcan to issue wheat, canola, barley and durum stockpile data
• FranceAgriMer
  weekly update on crop conditions

Source:
Bloomberg and FI

 

Macro

YELLEN
SAYS RATES MAY HAVE TO RISE TO STOP ECONOMY OVERHEATING

YELLEN
SAYS REALLOCATION MAY RESULT IN SOME SMALL INCREASES IN INTEREST RATES

 

US
Trade Balance (USD) Mar: -74.4B (est -74.3B; prevR -70.5B; prev -71.1B)

Canadian
International Merchandise Trade Mar: -1.14B (est 0.55B; prev 1.04B)

Canadian
Building Permits (M/M) Mar: 5.7% (est 1.5%; prevR 3.1%; prev 2.1%)

US
Crude Oil Exports Fell To 2.61Mln B/D In March (Vs 2.65Mln B/D In Feb) – US Census

Crude-oil
production from OPEC members declined by 50,000 barrels per day in April, according to the latest Bloomberg survey. 

 

Corn

• CBOT
  corn
  was higher on bull spreading (does not include May) on same fundamentals and inflation story. Strong US corn exports for the month of March added to the bullish undertone. High cash prices, tight inventories, and Brazilian weather continues to support prices. 
  Some might have been eyeing the CFTC fund positions as there is still some room to the upside for managed money to add long positions.  Recall there were no record long position posted as of last Tuesday. 
  

• Although
  the May position already traded above $7.00, the “most active” July contract reached above 2013 for the first time since 2013.  We could see $7.50 before rationing hits domestic end users.  Meanwhile ethanol plants are still bidding on corn as prices for the
  fuel have been creeping higher. 
• US
  corn exports during March were a record 373 million bushels, above the previous record set in May 2018.  February 2021 corn exports were 248 million bushels and March 2020 were 182 million.  We were using 2.800 billion bushels prior to US trade data, well
  above 2.675 billion USDA has for April.  However, based on latest weekly April inspections data, we raised our estimate by 50 million to 2.850 billion.  April US corn exports could end up about 10 percent lower than March.  Next week USDA should release its
  monthly inspections report that will give us a better indication for April US corn exports. 
  
• US
  corn plantings came in slightly above trade expectations and should be around 50 percent complete by Wednesday.  As a coworker mentioned, it’s not what’s going in the ground but what’s in the bins that matters.  As of Sunday, Iowa was at 69%, Minnesota 60%
  and Illinois 54% planted.
• Funds
  bought an estimated net 23,000 corn contracts. 
• A
  Bloomberg poll looks for weekly US ethanol production to be up 9,000 barrels (949-965 range) from the previous week and stocks down 12,000 barrels to 19.724 million.
  

 

 

Export
developments.

• None
  reported

 

 

July
is seen in a $6.00 and $7.75 range

December
corn is seen in a $4.00-$6.50 range.

 

Soybeans

• CBOT
  soybeans
  started and ended sharply higher despite a higher USD and China on holiday.   July ICE canola traded limit higher by $30 or 3.5% to $894 per ton.  April Brazil soybean exports were a very good 17.4 million tons, an all-time high, up from 13.5 million for March
  and down from 14.8 million from April 2020. Anec sees Brazil May soybean exports slipping to 12 million tons.  July SBO hit a fresh record today.  Meal was up sharply.   
  
• Some
  traders are concerned India demand for palm oil will slow because of the surge in COVID-19 cases but vegetable oil prices in general are very strong across the globe.  Soybean oil basis was mixed from the previous week across selected US locations, according
  to USDA AMS.  Attached is our weekly US soybean cash crush sheet. 
• March
  soybean exports came in at expectations of 84 million bushels.  We will keep the export forecast unchanged at 2.285 billion, 5 million above USDA.  Imports were 1 million bushels, and we lowered our import forecast by 6 million tons 23 million.  Soybean oil
  exports were only 156 million pounds, well below our working estimate.  We took exports down to 2.550 billion from 2.675 billion previously.  Domestic use will likely be upward revised.  There were no surprises in meal exports or imports for the month of March. 
  
• Low
  river water levels are starting to affect boat loadings along Rosario’s ports. 
  
• A
  Bloomberg survey calls for Malaysian palm oil stocks at the end of last month to be at a 5-month high of 1.5 million tons. 
  
• China
  will be on holiday through Wednesday for Labor Day.
• US
  planting progress at 46% complete for corn and 24% for beans is progressing at a rapid pace. 
  
• Funds
  on Tuesday bought an estimated net 9,000 soybean contracts, bought 4,000 soybean meal and bought 3,000 soybean oil. 
  

 

EIA
– U.S. imports of biomass-based diesel increased 12% in 2020

U.S.
imports of biomass-based diesel, which include biodiesel and renewable diesel, grew 12% in 2020 to more than 31,000 barrels per day (b/d), increasing for the second consecutive year. Imports of biomass-based diesel increased in 2020 because of growing demand
to meet government renewable fuel programs. U.S. consumption of biomass-based diesel, unlike demand for other fuels, remained relatively unaffected by responses to COVID-19 during 2020.

https://www.eia.gov/todayinenergy/detail.php?id=47816&src=email

 

Export
Developments

• Results
  awaited: Algeria
  seeks 30,000 tons of soybean meal on April 29 for shipment by June 15.
• Results
  awaited: Tunisia seeks 27,000 tons of soybean oil and/or rapeseed oil for late June / early July shipment. 
  

 

 

Updated
4/26/21

July
soybeans are seen in a $14.75-$16.50; November $12.75-$15.00

Soybean
meal – July $400-$460; December $380-$460

Soybean
oil – July 56-70; December 48-60 cent range

 

Wheat

• US
  wheat ended higher led by KC type wheat on strength in corn.  KC type wheat conditions slightly declined from the previous week while white and SRW wheat improved.  The US precipitation forecast calls for net drying across parts of the US Great Plains over
  the next week. 

• March
  US all-wheat exports were 79 million bushels, above expectations, above 67 million for Feb and 67 March 2020.  We are using 1.000 billion bushels for US wheat exports (one month to go) versus 996 previous and compares to 985 million for USDA. 
  
• Overnight
  Tunisia announced an import tender for 50,000 tons of feed barley and SK is in for 134,994 tons of rice. 
  
• September
  Paris wheat was up 4.75 euros to 220.75. 
• Funds
  on Tuesday bought an estimated net 6,000 CBOT SRW wheat contracts.
• Argentina
  2021-22 wheat production was estimated at 19 million tons, a record, by the BA Grains Exchange.  That would be up from 17 million tons this year. 
  

 

Export
Developments.

• Tunisia
  seeks 50,000 tons of optional origin animal feed barley on May 5 for shipment between June 5 and June 20 if from the Black Sea or slightly earlier if form Europe. 
  
• The
  Philippines seeks up to 185,000 tons of wheat on May 4 for shipment in June, July and August depending on origin.
  
• Bangladesh
  seeks 50,000 tons of milling wheat on May 6. 

 

Rice/Other

·        
Results awaited: Offers low as $407.79/ton – Bangladesh seeks 50,000 tons of rice on May 2.  

·        
South Korea’s Agro-Fisheries & Food Trade Corp seeks 134,994 tons of rice from Vietnam, China, the United States and Australia, on May 13, for arrival between September 2021 and January 2022.

 

Updated
4/26/21

July
Chicago wheat is seen in a $6.75-$8.00 range

July
KC wheat is seen in a $6.60-$7.50

July
MN wheat is seen in a $7.15-$8.00