FI Evening Grain Comments 05/14/21

PDF Attached

 

 

As
we learned last week, most CME/CBOT pits are now permanently closed.  Video link provided takes us back what they used to look like.
https://www.youtube.com/watch?v=a25jc54YFzo

 

Weather

 

Next
7 days

 

Last
7 days

 

World
Weather, Inc.

MOST
IMPORTANT WEATHER IN THE WORLD

• Tropical
  cyclone 1A is developing off the lower west coast of India and promises to become a significant tropical cyclone this weekend and early next week before moving inland during mid-week next week over western Gujarat and/or southeastern Pakistan
• Property
  damage is expected along with some loss of early season summer crops and unharvested winter crops
• Agricultural
  losses are expected to be low and there is plenty of time to replant some crops
  
• Winter
  crop harvesting should be quite advanced across some of the threatened production areas
• Some
  frost and freezes occurred this morning in minor crop areas of far southern and extreme northeastern Rio Grande do Sul into southeastern Santa Catarina
• The
  cold missed all of the most important crop areas and should have had a minimal impact
• Canada’s
  eastern Prairies are not likely to see much significant rainfall over the coming week, although a few sporadic showers will continue to tease some of the region with minimal amounts of moisture
• Alberta
  and far western Saskatchewan have some potential to receive meaningful rain late next week into the following weekend, but there is plenty of time for the advertised storm to change
  
• Temperatures
  will turn very warm to hot in the eastern Canada Prairies during the late weekend through early half of next week
• The
  northern U.S. Plains are not expecting very much “meaningful” rain over the next week and concern over drought will expand this late weekend into early next week as temperatures rise over 80 degrees Fahrenheit
• U.S.
  Upper Midwest will have some potential for rainfall late next week and into the following weekend; until then the region will stay mostly dry
• Frequent
  rain will fall in the central and southern U.S. Plains during the coming week to ten days possibly inducing some flooding over time.
  
• Eastern
  Kansas, Missouri, Oklahoma, the Texas Blacklands, the northwestern U.S. Delta and the lower most Midwest will be wettest
  
• Excessive
  rain is expected in a part of Oklahoma and southeastern Kansas wheat production areas
  
• Wheat
  conditions will stay mostly good, but drier weather will be needed soon after this period to protect crops from wet weather disease and a threat to early maturing crop quality
• West
  Texas rain potentials are still looking very good over the coming week
• Scattered
  showers and thunderstorms will begin tonight night and be most significant Saturday night into Sunday until early to mid-week next week when the most generalized rainfall is expected
• Good
  coverage is anticipated by this time next week with sufficient rain to improve planting moisture in much of the region
• The
  intensity and coverage of rain has been reduced today, although all areas will get rain
• The
  storm system in the central and southern Plains, Missouri and Arkansas may rob some of the moisture from falling in West Texas especially near the New Mexico border where rain amounts will be lightest
• Cotton,
  corn, rice, soybean and sorghum areas of central and southern Texas will benefit from rain during the next ten days, although some local flooding may evolve
• U.S.
  southeastern states will experience net drying during the coming week to ten days
• Southern
  Georgia, northern Florida, southeastern Alabama and South
  Carolina will be included in the driest conditions
• Good
  field working opportunities will remain, but the ground is expected to eventually become a bit too dry
• U.S.
  Pacific Northwest unirrigated winter crop areas are still being stressed by dryness and there is no significant relief coming anytime soon
• California,
  the Great Basin and most of the southwestern desert states will be dry through the next ten days
• Southeast
  Canada corn, soybean and wheat  production areas are favorably moist and poised for good field progress and crop development this year
• Brazil’s
  Safrinha crop areas will receive no meaningful rainfall through next Friday morning and then scattered showers will occur in many areas May 21-23 with resulting rainfall mostly under 0.50 inch
• Additional
  showers are possible after May 23 in Brazil’s corn country, but confidence is low
• The
  European continent will continue wet over the next ten days
• Spain
  and Portugal will be the only drier biased countries
• Russia’s
  New Lands are continuing to dry out  and this will become a market interest soon as the regions turns warmer than usual and becomes a little too dry
  
• The
  area includes the southern Ural Mountains region, northern Kazakhstan and neighboring areas to the north in Russia’s southeastern New Lands and perhaps also impacting eastern portions of the lower Volga River Basin
• This
  region is not too dry today and is expected to see aggressive spring planting and early crop development until the soil becomes too dry
• Mainland
  areas of Southeast Asia and Luzon Island, Philippines still need greater rain
• West
  Africa will receive lighter than usual rainfall for a while in the coming week
• A
  boost in precipitation is needed, but unlikely for a while
• Australia
  will be dry over the next ten days
• Rain
  is needed to support better wheat, barley and canola planting conditions
• Argentina
  weather will remain favorable for its harvest
• Restricted
  rainfall and seasonable temperatures are expected in the next ten days
• China
  rainfall in the Yangtze River Basin will be 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
• Some
  excessive rain has already been reported in random locations in the interior southern parts of China over the past several days
• Portions
  of China’s North China Plain and Yellow River Basin will receive some needed rain through Saturday and into early Sunday easing dryness that has evolved recently and restoring favorable crop and field conditions in both winter and spring production areas
• Hebei,
  Liaoning and Shandong will not receive nearly as much rain as other areas and will have a growing need for precipitation during the balance of this month
• Shanxi,
  Henan and a few neighboring areas will be wettest
• 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 be cooler than  usual through the weekend and again late next week
• The
  environment will be poor for degree day accumulations
• Showers
  are expected today and Saturday, although most of the precipitation will be key very light
• Temperatures
  will cool to the upper 50s and 60s in the northeast followed by lows in the middle and upper 30s into the 40s Saturday
  
• Cooling
  in the southwest will force high temperatures to the 60s and 70s briefly through Saturday
• Warming
  will occur early to mid-week next week with temperatures returning closer to normal
• Another
  bout of cooling is expected late next week
• The
  cool weather is slowing crop development and there is some concern over the overall condition of crops because of so much cool weather this spring
• 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.
  
• Australia
  precipitation will be restricted over the coming week, although some showers are now being suggested for late next week and into the following weekend
• Temperatures
  will be close to normal in the east and warmer than usual in the west
• 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
• Rain
  will diminish over the next few days as the tropical cyclone moves northward off the west coast.
  
• Southern
  Oscillation Index is mostly neutral at +5.57 and the index is expected to move higher for a while this weekend
• 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 a mix of rain and sunshine through the coming 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 under way in 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 are reporting below to well below average rainfall recently and a boost in rain is needed in Vietnam’s Central Highlands and neighboring areas
  
• Greater
  rain is also needed in the northern and western Philippines
• Sulawesi
  also needs a boost in rainfall
• Most
  of these areas will see improving rainfall May 20-26 with scattered showers and thunderstorms until then
  
• Luzon
  Island, Philippines will be last to get significant rain
• New
  Zealand precipitation for the next week to ten days will be periodic across North Island and more frequent in western portions of South Island
  
• Temperatures
  will be a little cooler than usual

Source:
World Weather, Inc.

 

Bloomberg
Ag Calendar

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

Monday,
May 17:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• U.S.
  crop plantings – soybeans, cotton; winter wheat condition, 4pm
• U.S.
  Green Coffee Association releases monthly green-coffee stockpiles
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• Malaysia
  crude palm oil export tax for June (tentative)

Tuesday,
May 18:

• China
  customs to publish trade data, including imports of corn, wheat, sugar and cotton
• New
  Zealand global dairy trade auction
• Brazil’s
  Conab releases cane, sugar and ethanol production data
• International
  Sugar Organization and Datagro to hold New York sugar & ethanol conference

Wednesday,
May 19:

• EIA
  weekly U.S. ethanol inventories, production
• BMO
  Farm to Market Conference, day 1
• International
  Sugar Organization and Datagro to hold New York sugar & ethanol conference
• HOLIDAY:
  Hong Kong

Thursday,
May 20:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• China
  customs to release trade data, including country breakdowns for commodities such as soybeans
• BMO
  Farm to Market Conference, day 2
• Black
  Sea Grain conference
• Port
  of Rouen data on French grain exports
• Malaysia
  May 1-20 palm oil export data
• USDA
  total milk, red meat production, 3pm
• EARNINGS:
  Suedzucker

Friday,
May 21:

• 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
• FranceAgriMer
  weekly update on crop conditions
• Black
  Sea Grain conference
• U.S.
  Cattle on Feed, 3pm

Source:
Bloomberg and FI

 

 

IHS
Markit 2021 Plantings:

Corn:
96.8 mil acres, up 3.26 mil from last month and 5.7 mil above USDA

Soybeans:
88.5 mil, down 1.3 mil from prior estimate and 885,000 above USDA

Other
Spring: 11.6 mil, down 130,000 from USDA

Cotton:
11.7 mil, down 355,000 from USDA

-Trade

 

CFTC
Commitment of Traders

Traditional
funds were much less long than expected for corn, soybeans, wheat and meal. 

 

 

 

 

The
net long position gained over corn by a large amount for the week ending May 11.

 

Are
CBOT soybean oil prices getting into a dangerously high territory as the net long position for managed money funds fail to test early January net long highs? 

 

Macro

US
Retail Sales Advance (M/M) Apr: 0.0% (est 1.0%; prevR 10.7%; prev 9.8%)

US
Retail Sales Ex-Autos (M/M) Apr: -0.8% (est 0.6%; prevR 9.0%; prev 8.4%)

US
Retail Sales Ex-Autos, Gas Apr: -0.8% (est 0.3%; prevR 8.9%; prev 8.2%)

US
Retail Sales Control Group Apr: -1.5% (est -0.2%; prevR 7.6%; prev 6.9%)

US
Import Price Index (Y/Y) Apr: 10.6% (est 10.2%; prev 6.9%)

US
Import Price Index (M/M) Apr: 0.7% (est 0.6%; prevR 1.4%; prev 1.2%)

US
Import Price Index Ex-Petroleum (M/M) Apr: 0.7% (est 0.5%; prev 0.9%)

US
Export Price Index (Y/Y) Apr: 14.4% (est 14.0%; prev 9.1%)

US
Export Price Index (M/M) Apr: 0.8% (est 0.8%; prevR 2.4%; prev 2.1%)

Canadian
Manufacturing Sales (M/M) Mar: 3.5% (est 3.3%; prev -1.6%)

Canadian
Wholesale Trade Sales (M/M) Mar: 2.8% (est 1.0%; prev -0.7%)

US
Industrial Production (M/M) Apr: 0.7% (est 0.9%; prev 1.4%)

US
Capacity Utilization Apr: 74.9% (est 75.0%; prev 74.4%)

US
Manufacturing (SIC) Production Apr: 0.4% (est 0.3%; prev 2.7%)

 

Corn

• Corn
  futures were in a freefall again during the day session led by the July contract.  For the week they declined by most for one week in nearly five years. July fell 12.1% this week and stands at $6.4375, off 31 cents and well off its contract absolute high of
  $7.3525 (91.50 cents).  July oats dropped 11.2% this week.  Funds sold an estimated net 25,000 net corn contracts. 
  
• CBOT
  corn attempted to rebound on a lower USD (down 43 by 1:50 pm CT), strength in WTI crude oil (up $1.55) and higher US equities but broke during the early day session after July position started to sell off.  A private form estimated the US corn planted area
  well above USDA’s March estimate.  The US Coast Guard lifted river restriction on Lower Mississippi River near I-40 bridge, according to a news release, but this did little to slow the selling post new flash announcement.  As of Friday morning, there were
  62 vessels and 1,058 barges in queue.  The selling in the July contract was likely related to profit taking in July/December spreads and a pickup in producer movement as 2021 US plantings start to wind down.  The absolute high on the
  July/December corn spread was $1.26 (May 12) and Friday it was last $1.0225. 
  
• IHS
  Markit estimated the US corn planted area at 96.85 million acres, above USDA March of 91.144 million.  Using normal abdomen and near trend yield, this estimate, if realized, could add 800 to a billion bushels to supply.  We agree the US corn area is too low
  and look for June plantings to come in greater than March intentions.  Domestic and export demand for corn should be strong for 2021-22, and we believe any access supply realized by USDA could be absorbed by exports, feed and possibly ethanol use, keeping
  the US carryout near their working 1.5-billion-bushel estimate. 
• China
  bought 1.36 million tons of new-crop corn per USDA on Friday.  So far during the month of May China bought 5.1 million tons of new-crop corn under the 24-hour reporting system.
  

 

• China’s
  sow herd expanded 1.1% in April from the previous month and rebounded 23% over a year earlier. The sow herd in April stood at 97.6% of the end-2017 level, according to Reuters.  Newborn piglets up 58.8% from last year.  China has 180,000 large pig farms, up
  from 161,000 at the beginning of last year, according to the AgMin. 
• FranceAgriMer
  reported the French corn planting progress at 95% complete as of May 10, up from 89% the previous week and 88% a year ago.
• Ukraine
  planted about 74% percent of their planned corn area, or about 3.9 million tons.  Ukraine early spring plantings are near complete with more than 1.9 million hectares sowed as of May 13.  The area included 1.33 million hectares of barley, 229,600 hectares
  of peas, 186,800 hectares of oats and 174,700 hectares of spring wheat. 
  

 

EIA:
In 2020, U.S. exports of fuel ethanol fell for the second consecutive year

https://www.eia.gov/todayinenergy/detail.php?id=47956&src=email

 

 

Export
developments.

• We
  heard SK importers bought little more than 200,000 tons of corn late this workweek for September arrival. 
  
• Under
  the 24-hour announcement system, US exporters sold 1,360,000 tons of corn for delivery to China during the 2021-22 marketing year.
  

 

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 ended
  higher in the non-expiring months led by a strong rally in soybean oil.  Soybean meal fell on product spreading.  For the week July soybean oil was up 4.8%, July soybeans down 0.2%, and July soybean meal off 5.3%. 
  
• CBOT
  soybeans were generally higher to start on technical buying and strong world cash prices. 
  
• Funds
  were net buyers of only 2,000 soybeans, sellers of 5,000 soybean meal and buyers of 9,000 soybean oil. 
  
• News
  was fairly light. 
• Soybean
  meal basis for Chicago rise $3/short ton to 2 under and both Decatur (IL) and Morristown (IN) were up $1 to 3 under. 
  
• The
  NOPA report due out early next week indicates a good amount of US crush downtime during the month of April and that should remain the same theme for this month.  Rationing is part of the reason for some areas of the US while if crushers can source soybeans
  in other areas, they are taking advantage of the good margins. 
• US
  weather looks good for plantings and emergence but some areas across the northern Midwest are in need of rain where drought conditions expanded since the beginning of the month.  Rains return to the Delta Monday and Tuesday of next week. 
  
• According
  to a Reuters story, Brazil is on track to sell the largest volume of soybeans to the United States since 2014, using Cargonave data.  238,000 tons of Brazil soybeans have been shipped or will be soon shipped. 
  
• Argentina
  harvested about 71 percent of their soybean crop – BA Grains Exchange. 
• Singapore
  is headed towards lock down amid COVID-19 cases on the rise, according to news outlets. 
  
• A
  Reuters poll calls for the April US soybean crush to end up near 168.7 million bushels, compared 178.0 million during March and down from 171.8 million during April 2020.  End of April soybean stocks were estimated at 1.785 billion pounds, up from 1.771 billion
  at the end of March but down from 2.111 billion pounds at the end of April 2020.
• China
  cash crush margins on our analysis were negative 20 cents (negative 4 previous) vs. 214 cents late last week and compares to 77 cents year earlier.  We use the imported price of US soybeans which has rocketed higher this week. 
  
• Malaysian
  palm oil: (uses settle price).
  

ON
HOLIDAY

 

 

Export
Developments

• 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
5/14/21

July
soybeans are seen in a $15.00-$16.50 (up 25, unchanged);
November $12.75-$15.00

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

Soybean
oil – July 64-70 (up 400, up 200);
December 48-60 cent range

 

 

Wheat

• US
  wheat futures started higher on fund buying and some concern over hot temperatures projected over the next 2 weeks across parts of the Black Sea growing areas that are already experiencing some drought conditions.  After corn sold off hard, that put pressure
  on EU and US wheat prices, with July Chicago wheat ending 5.75 cents higher, July KC unchanged and July MN 0.25 cent lower.  The Great Plains are expected to see rain through early next week. 
  
• For
  the week, KC July fell more than 10.5 percent. 

• Funds
  bought an estimated net 3,000 soft red winter wheat contracts. 
• September
  Paris wheat market basis September was up 1.50 euro at $218.00.   
• French
  wheat conditions for the week ended May 10 at 79% good or excellent condition, unchanged from the previous week, according to FranceAgriMer, up from 55% year ago. The winter barley and durum wheat were also unchanged on the week, at 76% and 69% respectively. 
  Spring barley conditions improved to 85% from 82%.
• FranceAgriMer
  reported the French corn planting progress at 95% complete as of May 10, up from 89% the previous week and 88% a year ago.

 

Export
Developments.

• Japan
  bought 122,180 tons of food wheat from the US, Canada, and Australia this week.  Original details as follows:
  

• Results
  awaited:  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.
• Japan
  seeks 80,000 tons of feed wheat and 100,000 tons of feed barley on May 19 for arrival by October 28. 
  

 

Rice/Other

·        
Results awaited: 
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
5/14/21

July
Chicago wheat is seen in a $6.60-$8.00 range (down 20, unchanged)

July
KC wheat is seen in a $6.20-$7.25 (down 40, down 25)

July
MN wheat is seen in a $7.25-$8.25