FI Evening Grain Comments 05/11/21

PDF Attached does not include daily estimate of funds

 

Technical buying supported prices.  July soybeans reached above $16 for the first time since 2012.  China bought another 680,000 tons of corn.  Wheat appreciated after seeing one of its worst daily declines on Monday in more than a year.  Look for additional positioning ahead of the 11 am CT USDA S&D report on Wednesday. 

 

 

 

 

 

 

 

 

 

 

 

Weather

Next 7 days

 

World Weather, Inc.

NOT MANY CHANGES OVERNIGHT

• West Texas rain potentials are improving, although the precipitation will occur as sporadic showers and thunderstorms initially and should eventually give way to a more generalized rain event later in the coming week to ten days
• The moisture boost will improve spring planting potentials for cotton, corn, sorghum and peanuts
• Other areas in the U.S. southern Plains will also benefit from rain expected in the coming ten days, although some wheat areas in the south may eventually become a little too wet
• Local flooding will also evolve over time in central and northern parts of Texas, including the Blacklands
• U.S. Northern Plains and Canada’s weather will continue to be dry-biased resulting in crop moisture stress for early planted crops and delays to seed germination, emergence and establishment
• Drought still poses a significant threat to portions Saskatchewan and Manitoba and weather conditions in the next two weeks will not fix the situation
• Far western U.S. dryness remains a concern as well with unirrigated areas in the Pacific Northwest still struggling with dryness and this will continue through the coming week with only partial relief possible next week
• U.S. Midwest, Delta and southeastern states weather should be favorably mixed for a while supporting crop needs and field progress, although rain will induce some short-term bouts of delay
• No change in Brazil’s crop weather occurred overnight
• Parana is the only Safrinha corn production state that will get some beneficial moisture tonight and Wednesday
• Rainfall of 0.20 to 0.80 inch will occur in the west half of the state while a trace to 0.30 inch occurring in neighboring areas to the west and north
• Greater rain will occur near the coast
• Any other precipitation that impacts Safrinha corn or cotton areas will not be significant
• Coffee, sugarcane and citrus areas will continue to experience net drying throughout the next two weeks supporting faster crop maturation and harvest progress relative to normal
• Declines in immature coffee quality are still a concern
• Sugarcane sucrose levels will remain high, although tonnage is low due to dryness periodically this year
• Argentina will remain dry during much of the coming ten days
• Temperatures will be a little cooler than usual in the northeast and slightly warmer biased in the far southwest during the coming two weeks
• Argentina’s weather will be ideal for summer crop maturation and harvest progress. The environment might also be good for some early season wheat planting later this month
• Wet weather is expected to return to western parts of Russia later this week and into next week after a short-term break from rainy weather
• Eastern Russia New Lands and Kazakhstan spring wheat areas are drying down and will need s some greater rain soon
• Southern and eastern portions of the CIS will encounter a good mix of rain and sunshine over the next two weeks
• The best field working conditions are expected in Russia’s Southern Region, the eastern New Lands and the Ural Mountains region. There is some growing concern over decreasing soil moisture in the eastern New Lands and northern Kazakhstan, so, while fieldwork increases due to limited rain and warm temperatures the ground will begin to firm up as well raising need for rain later this month.
• Temperatures will be cooler than usual in Ukraine and warmer than usual east of the Ural Mountain region while near normal in the northwestern parts of Russia, the Baltic States and Belarus
• China rainfall in the Yangtze River Basin will become excessive in the coming week to ten days resulting in some flooding
• The rain is spread out over multiple days and flooding should not be nearly as serious as that of last year
• China’s North China Plain and Yellow River Basin will receive some needed rain Thursday into Saturday easing dryness that has evolved recently and restoring favorable crop and field conditions in both winter and spring production areas
• Northeastern China will continue to experience periodic rainfall that will keep spring planting moving along a little sluggishly for a while
• Xinjiang China’s cotton areas will trend cooler and wetter over the balance of this week
• Daily rainfall will vary from 0.05 to 0.60 inch with a few totals over 1.00 inch, although the greater rainfall will be rare
• Temperatures will cool to the upper 50s and 60s in the northeast later this week followed by lows in the upper 30s and 40s
• Cooling in the southwest will force high temperatures to the 70s and lows into the 40s after being in the 80s and lower 90s recently
• Crop development and additional planting are occurring favorably. Rain will disrupt some farming operations this week, but fieldwork will occur around the precipitation and the long-term benefits of rain will outweigh the disruption to farming activity.
• China’s Yangtze River Basin will be inundated by frequent rain through the next ten days raising the potential for flooding periodically and delays in farming activity
• Rainfall may vary from 3.00 to more than 10.00 inches during the next ten days with locally more
• Flooding is expected, but it will not be as damaging as last year
• Much needed rain will fall in a part of the Yellow River Basin and North China Plains late this week through the weekend with 0.20 to 0.75 inch and locally more will occur
• Shandong will not be included in the greater rainfall
• Alternating periods of rain and sunshine will occur in other areas in the nation favoring crop development and some fieldwork around the expected precipitation
• Temperatures should be in a mostly seasonable range
• The bottom line for China remains one of concern for the wetter areas in the Yangtze River Basin where crop development will not advance as well as it could and where fieldwork will be disrupted frequently. Rain in the Yellow River Basin and North China Plain will bring relief from recent dryness to a part of the region while other areas will need more rain. Better weather is expected in the far Northeast Provinces in the next two weeks in which less frequent and less significant rain and warmer temperatures will evolve over the next couple of weeks improving planting, emergence and establishment conditions for spring and summer crops.
• Mexico drought remains quite serious, but there is some rain and thunderstorms advertised for southern and eastern parts of the nation during the next two weeks
• The precipitation will begin erratically and then increase over time this week and then decrease again next week
• Water supply is quite low and winter crops in a few areas have not performed well
• The moisture will help improve planting, emergence and establishment conditions for most summer crops in the wetter areas, but the west-central and northwest parts of the nation will continue quite dry.
• Europe will receive waves of rain this week bolstering soil moisture for many areas including France, Italy, Germany and the U.K. which have been driest
• Temperatures will be near to below average for a while with the west and southeast coldest relative to normal while northeastern Europe is warmest
• Some flooding is possible in the Alps this week and some immediate neighboring crop areas
• Australia precipitation will be restricted over the coming week to nearly ten days
• Temperatures will be close to normal
• Weekend precipitation was erratic and mostly quite light failing to change soil moisture in a significant manner
• The bottom line supports aggressive planting in Western Australia where significant rain fell last week, but most other areas will wait on significant rain to bolster soil moisture for improved autumn planting and germination conditions in unirrigated areas
• South Africa will not receive much rain in the coming two weeks favoring summer crop maturation and harvest progress
• Winter crop planting is under way and additional rain would be welcome for that purpose
• Temperatures will be warmer than usual
• India winter crop harvesting has advanced well in the dry areas, but some rain has hindered fieldwork in a few areas
• Scattered showers will occur this week in far northern, southern and extreme eastern India resulting in near to above average amounts of rain
• The moisture coming could disrupt farming activity from time to time, but the greatest rain will be in West Bengal into the far Eastern States and in and small part of southwestern India leaving most other areas to experience a mostly favorable environment for crops.
• No tropical cyclones are present in the western tropical Pacific Ocean
• A tropical disturbance will evolve southeast of the Philippines late this week into the weekend and another may threaten northern parts of the nation early to mid-week next week
• Tropical Depression Andres was located well to the west of Mexico moving away from land and will soon diminish. The storm poses no threat to land
• Southern Oscillation Index is mostly neutral at +2.69 and the index is expected to move erratically this week
• North Africa rainfall is expected to be minimal over the next ten days
• Temperatures will be warmer than usual
• Winter small grains will be rushed toward maturation faster than usual without much moisture
• West-central Africa will see an erratic mix of rain and sunshine this week.
• Temperatures will be near to above average and rainfall will be below average
• A boost in precipitation will be needed later this month to ensure soil moisture stays as good as possible and crop development continues normally
• 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
• However, the mainland areas will report below to well below average rainfall and a boost in rain is already needed in Vietnam’s Central Highlands
• Greater rain is also needed in the northern and western Philippines
• Sulawesi also needs a boost in rainfall
• New Zealand precipitation for the next week to ten days will be frequent across North Island and in western portions of South Island
• Temperatures will trend cooler with the increasing rainfall

Source: World Weather, Inc.

 

Source: World Weather, Inc.

 

Bloomberg Ag Calendar

Wednesday, May 12:

• China farm ministry’s CASDE outlook report
• FranceAgriMer monthly grains report
• USDA’s monthly World Agricultural Supply and Demand (WASDE) report, 12pm
• EIA weekly U.S. ethanol inventories, production
• Conab’s data on yield, area and output of corn and soybeans in Brazil
• Brazil’s Unica data on cane crush and sugar output (tentative)

Thursday, May 13:

• New Zealand April food prices, 10:45am local
• Port of Rouen data on French grain exports
• USDA net-export sales for corn, soy, wheat, cotton, pork, beef, 8:30am
• HOLIDAY: Indonesia, Malaysia, Singapore, India, Dubai, France, Germany

Friday, May 14:

• ICE Futures Europe weekly commitments of traders report, 6:30pm London
• FranceAgriMer weekly update on crop conditions
• CFTC commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• HOLIDAY: Indonesia, Malaysia, Dubai

Source: Bloomberg and FI

 

 

Macro

EPA: Waives Some Gasoline Mandates To Address Fuel Shortages

Fuel Waivers Could Give Refiners More Flexibility

 

China producer price index (PPI) rose 6.8% in April from a year earlier – National Bureau of Statistics, versus 6.5% Reuters poll and a 4.4% rise in March.

Consumer price index (CPI) rose by 0.9% on year.

 

https://www.eia.gov/todayinenergy/detail.php?id=47917&src=email

 

 

Corn

• CBOT corn traded higher during the day session led by the nearby contracts after opening lower overnight.  China bought an additional 680,000 tons of corn.  July broke 32 cents from its absolute high established Friday to its overnight low, but today July settled 10.50 cents higher at $7.2225.  US plantings were about expected and by the end of this week corn plantings should be over 75 percent complete and soybeans over 55 percent done. Weather in Brazil and Argentina is not advertised differently today, second corn production state of Parana will see rain.
• The USD was down about 11 points as of 12:35 pm CT. 
• Eleven days into the month of May and under the 24-hour announcement system, private exporters sold a combined 3.5 million tons of new-crop corn (China 3.06MMT) and 87,000 tons old-crop, and cancellations of 420,000 tons old crop. 
• We do not have a strong opinion on market direction post USDA report but expect the market to digest new-crop estimates which could influence spreads.  US ending stocks are expected to remain tight for new crop. We look for USDA to increase US domestic use for soybeans, corn, and possibly wheat (feed use predicted to increase by many). 
• France sees a 10 percent decrease in the corn planted area to 1.44 million hectares from 1.61 million in 2020.  The spring barley area was estimated at 593,000 hectares, down 25% from last year. 
• Soybean and Corn Advisory lowered his estimate of the Brazil corn crop by 3 million tons to 97 million.  Brazil soybeans were reduced 1 million to 134 million while Argentina was unchanged at 45 million tons.  The lowered Argentina corn production to 46.5 million tons. 
• Conab will release their production updates for Brazil corn and soybeans on Wednesday. A Bloomberg poll looks for Brazil corn production down 7.9 million tons Conab’s April estimate to 101.1 million tons.  The lowest estimate was 94.4 million tons.  Soybean production was seen rising to 136.1 million tons vs 135.5 million tons in April. 
• A Bloomberg poll looks for weekly US ethanol production to be up 9,000 barrels (950-976 range) from the previous week and stocks down 24,000 barrels to 20.416 million.

 

Export developments.

• South Korea’s KFA was believed to have passed on 69,000 tons of corn due to high prices.  Lowest offer was $347.80/ton for arrival around September 5. 
• Under the 24-hour announcement system, private exporters sold 680,000 tons of new-crop corn to China. 

 

 

 

Updated 5/7/21

July is seen in a $6.00 and $7.75 range

December corn is seen in a $4.75-$7.00 range.

The US needs to see a massive crop to pull new-crop futures below $4.00, which could happen for 2022 contracts if the export campaign for Q1 (SON) does not end up a record .  Keep an eye on new-crop corn commitments this summer. 

 

Soybeans

• CBOT soybeans basis the July position topped $16.00/bu, first time since 2012.  SBO started the day session lower on unwinding of oil/meal spreads but rocketed higher after soybean made another leg higher.  Soybean meal held healthy gains throughout the session.  100 soybean oil registrations were cancelled out of Volga, SD, leaving total registrations at 1,055.  Egypt bought 29,000 tons of soybean oil and 10,000 tons of sunflower oil.  This was the first-time buying sunflower oil since October when they paid below $1000/ton. 
• July soybeans were up 27.25 cents, July meal up $4.70, and soybean oil up 96 points.  July canola fell $37.50 to $938.40 per ton. 
• In a Reuters poll, US 2021-22 soybean ending stocks were seen at 138 million bushels, and 2020-21 stocks at 117 million bushels from 120 million last month.
• In Brazil, Santos port workers are threatening a 24-hour strike later this week over vaccine timeline demands. 
• Brazil Parana AgMin, Deral, rated 30 percent of the second corn crop at poor to very poor and 25 percent as good, leaving 45 percent average, as of May 10.  37% of the crop was in the flowering stage.  Note Mato Grosso producers about 70 percent of Brazil’s second corn crop. 
• Summer crop areas across Canada’s Saskatchewan and parts of Alberta are still in need of rain. 
• Cargo surveyor SGS reported month to date May 10 Malaysian palm exports at 455,285 tons, 111,246 tons above the same period a month ago or up 32.3%, and 101,195 tons above the same period a year ago or up 28.6%.

 

Export Developments

• Egypt’s GASC bought 29,000 tons of domestic soyoil and 10,000 tons of international sunflower oil for arrival July 11-31 at $1,590 a ton for payment at sight.  The following for domestic soybean oil:

12,000 tons of soyoil at 21,200 EGP/mt (eqv $1,348.60)

10,000 tons of soyoil at 21,200 EGP/mt (eqv $1,348.60)

4,000 tons of soyoil at 21,200 EGP/mt (eqv $1,348.60)

3,000 tons of soyoil at 21,200 EGP/mt (eqv $1,348.60)

• On May 18 USDA seeks a total of 4,770 tons of packaged oil for use in Title II, PL480 and the McGovern-Dole Food for Education export programs. Shipment was set for June 16-July 15 (July 1-31 for plants at ports).

 

Updated 5/11/21

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 60-68 (narrowed); December 48-60 cent range

 

Wheat

• US wheat futures traded higher on technical buying despite additional rain relief forecast for the southern US Great Plains over the coming week. Higher corn and soybeans were helping wheat futures.  Additional precipitation will fall this weekend into next week for both the northern Plains and Canada’s Prairies, providing additional relief.  US winter wheat conditions improved 1 point to 49 percent, one point above expectations and compares to 53 year ago and 54 percent average. 
• A Reuters poll looks for the 2021-22 US all-wheat carryout to end up near 730 million bushels and 2020-21 stocks at 846 million bushels from 852 million in April. 
• Russian wheat export prices rose in the first 10 days of May, according to IKAR.  12.5% protein from Black Sea ports was at $278 a ton FOB at the end of last week, up $13 from late April.  Sovecon reported wheat prices rose by $4 to $274 a ton.
• September Paris wheat was up 3.00 euros to 225.00.
• France estimated the French soft wheat area at 4.89 million hectares, up about 15% from last year and slightly above the five-year average.  The rapeseed area was estimate at 989,000 hectares, down 11% on the year and 27% below the five-year average.

 

 

Export Developments.

• Japan seeks 122,180 tons of food wheat from the US, Canada, and Australia this week. 

 

• Taiwan Flour Millers’ Association seeks 89,425 tons US milling wheat on May 13.  One consignment of 42,505 tons is sought for shipment between July 2 and July 16. A second consignment of 46,920 tons is sought for shipment between July 19 and Aug. 2.

 

Rice/Other

·         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.

 

Source: World Weather, Inc.

 

Updated 5/10/21

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 $7.25-$8.25