FI Evening Grain Comments 05/24/22

PDF Attached

 

Good
morning.

 

China
approved Brazil corn imports and with US corn plantings advancing nicely, that sent corn futures sharply lower. Wheat traded two-sided, ending lower in part to improving US weather and slowing global trade demand. Old crop soybeans rallied in part to strength
in meal and Chinese demand. New crop was under pressure with 50% of the US crop planted as off Sunday. Soybean oil traded two-sided, falling during the day session from weakness in corn and to some extent WTI crude oil. Argentina soybean oil basis rallied
after India dropped their import duties on crude soybean oil and crude sunflower oil. World Weather Inc.: The big rain event in the southern Plains will shift to the Midwest, Delta and Tennessee River Basin today and Wednesday before shifting farther to the
east Thursday.

 

 

Weather

 

 

World
Weather Inc.

WEATHER
EVENTS AND FEATURES TO WATCH

• Rain
  fell in parts of West Texas, the Texas Panhandle and Oklahoma overnight
• Rainfall
  of 1.00 to 2.50 inches occurred in northwestern parts of West Texas crop country
• Heavier
  rain fell in northern Oklahoma with some amounts over 4.00 inches
• The
  greatest rainfall and strong thunderstorms likely produced some hail and may have damaged a few wheat and early summer crops
• The
  big rain event in the southern Plains will shift to the Midwest, Delta and Tennessee River Basin today and Wednesday before shifting farther to the east Thursday
• Field
  working delays are expected, but they will not last long in most areas
• A
  transient ridge of high pressure is expected to move across the Plains this weekend and into next week resulting in  significant heat and dryness over several days
• This
  will negate some of the rain that has just fallen in West Texas, but crops will benefit from the moisture before the heat and dryness comes along
• Extreme
  high temperatures in the southwestern Plains will reach above 100 with a few highs over 110 possible during the peak of the expected heatwave
• Some
  of the warm weather will shift to the Midwest and Delta next week, but it will not be as oppressively hot as it will be in the southern Plains. 
  
• Precipitation
  will continue to fall across the northern U.S. Plains and a part of Canada’s Prairies this week, but the precipitation may not be nearly as great as that of last week allowing some areas to experience a little drying
• However,
  the drying time will be short enough to raise concern over planting progress in the wettest areas
• Southwestern
  parts of Canada’s Prairies are still expecting below average precipitation in the next ten days resulting in some continued concern over limited rainfall.
  
• The
  precipitation is expected in June and especially July and August making the next few weeks extremely important for timely precipitation even if it is lighter than usual just to keep the crop viable until greater rain evolves
• Portions
  of U.S. hard red winter wheat production areas received rain overnight
• Southern
  Kansas, Oklahoma and the Texas Panhandle were most impacted, but some of the moisture came a little late for wheat production changes of significance
• Much 
  lighter rain occurred in other parts of the  region, although a few more showers are possible today  before drier weather resumes and the temperatures heat up again
• The
  moisture will be great for crops in Kansas, Colorado and Nebraska, but a little too late to change production in the southern Plains (Oklahoma/Texas)
• NOAA’s
  ENSO forecast model has been suggesting a strong weakening trend in La Nina for the next few weeks
  
• The
  model suggests dissipation is possible in July
• The
  latest ocean data certainly supports a marginal La Nina event (at best) for the summer months
• This
  change will allow the negative phase of Pacific Decadal Oscillation (PDO) to have greater influence on North America weather and that should place a trough of low pressure along the Pacific Coast and a  ridge in the middle of nation
• This
  change in the upper air wind flow pattern cannot occur until the jet stream slows down which may be a few weeks away
• South
  Texas, the Texas Coastal Bend and Blacklands will also be impacted by rain Today into Wednesday morning with amounts of 0.50 to 1.50 inches resulting
• Local
  rain totals in the Blacklands will vary from 1.50 to more than 3.00 inches
  
• The
  moisture will be great for improving topsoil moisture and crop conditions, although local flooding could cause some short term concerns
• U.S.
  Delta and southeastern states will receive significant rain in this coming week with sufficient amounts to bolster soil moisture and further minimize the potential for drought
• U.S.
  Midwest weather will be sufficiently moist in the coming week to support earlier planted summer crops.
  
• Today
  through Thursday of this week will be wettest with favorable drying conditions Monday and late this week through early next week
  
• Fieldwork
  will advance most significantly this weekend into next week
• Temporary
  ridge building (aloft) next week will also allow temperatures to turn much warmer accelerating drying rates and allowing fieldwork to advance fastest at that time
• The
  warmth will stimulate crop development
• The
  bottom line to the U.S. Midwest weather for the next two weeks will be mostly good with a favorable mix of rain and sunshine supporting fieldwork and crop development. Fieldwork will advance around the precipitation and early season crop development should
  advance favorably.
• U.S.
  Pacific Northwest crops need greater precipitation to improve dryland crop development potentials
• Quebec
  and Ontario weather during the weekend was mixed with some sunshine, some rain and some warm weather
• The
  favorable environment will continue over the next two weeks allowing fieldwork of all types to advance along with some aggressive crop development
• Argentina
  rainfall is expected later this week in northeastern parts of the nation missing the drier wheat areas in the southwest.
  
• Greater
  amounts will be needed to more seriously bolster soil moisture for winter crop planting, germination and emergence
• Cooler
  temperatures will be returning to Argentina late  this week resulting in slower drying rates, but no crop damaging temperatures are expected
• Brazil
  weather will turn wetter in the southwest and far southern parts of the nation late this week into the weekend
• The
  moisture will be good for future winter crop development and for late filling and maturing Safrinha crops
• Ongoing
  dryness in Mato Grosso and Goias will continue threat late season corn development
• Brazil
  temperatures will be warmer than usual in the north during this first week of the outlook and then cooler air will come into the far south next week while the northeast is warmest
• Brazil’s
  bottom line remains good for early maturing Safrinha crops and for coffee, citrus and sugarcane as they mature and are harvested. Rain would not likely benefit many crops other than late maturing summer crops, some citrus and sugarcane.
  
• Europe
  rainfall will be scattered throughout the continent during the next two weeks; however, its intensity and daily coverage will vary greatly
• Moisture
  totals will be greatest in the Alps and eastern parts of the continent
• Coverage
  of rain will be greatest from northern Poland and eastern Germany into the Baltic States and Belarus as well as from central Ukraine into Romania and the southwestern Balkan Countries
• Net
  drying is expected in most other areas
• France
  will be one of the driest nations with crop stress expected to become more significant threatening winter wheat and rapeseed
  
• Temperatures
  will be seasonable
• Frequent
  rain is still expected in western and northern Russia over the next ten days with some rain also falling in the Baltic States, Belarus and central and western Ukraine
• Western
  and southern portions of Russia’s Southern Region will also be impacted by rain periodically with areas near Georgia wettest
• Temperatures
  will be cooler than usual western Russia this week and a little more seasonable next week
• Temperatures
  will be warmer than usual in the eastern New Lands this week and throughout much of the New Lands next week
• The
  bottom line remains good for many winter crop areas, but spring planting progress is not likely to advance very well without some greater drying between weather events. This is especially true for western Russia
• Little
  to no rain will fall in the North China Plain for the next nine to ten days
• The
  region has already been drying out and this pattern will continue for a while longer
• Temperatures
  will be seasonable
• Rain
  is possible
• There
  is “some” potential for rain in the first days of June, but confidence is low
• Other
  areas in eastern China will see a mix of rain and sunshine during the next two weeks.
  
• Xinjiang,
  China weather is expected to be drier biased during much of the coming two weeks in crop areas with some rain falling in and near the mountains periodically
• Planting
  progress in corn and cotton areas will advance normally
• India
  will receive pre-monsoonal showers and thunderstorms over the next week to ten days resulting in some moistening in the topsoil, but greater rain will be needed
• Monsoonal
  precipitation will begin a little earlier than usual, but the precipitation will be mostly confined to the lower west coast and in the far Eastern States
• The
  monsoonal rainfall is advertised to be lighter than that suggested for the region last week
• Temperatures
  will be seasonable
• South
  Africa is trending drier
• The
  recent rain was great for bolstering topsoil moisture in favor of winter grain and oilseed planting, although Western Cape was largely missed by the greater rain
• Both
  the harvest of summer crops and the planting of winter grains will advance well in the drier weather this week
• Temperatures
  will be near to above normal this week
• Australia
  will experience a light mix of rain and sunshine over the next two weeks. Soil conditions will slowly become wetter favoring autumn planting of wheat, barley and canola, but grater rainfall will be needed outside of Victoria, southern New South Wales and southeastern
  South Australia where the greatest rain is expected. Far southwestern parts of South Australia will also be favorably moist
• Temperatures
  will be seasonably warm (near to above normal)
• All
  of Southeast Asia will get rain at one time or another over the next couple of weeks.
• The
  precipitation will be good for most crop needs; however, it will be heavy along the Myanmar lower coast and in parts of both Laos and Vietnam into Cambodia
• Northwestern
  Luzon Island, Philippines and Taiwan will also be wet
• Thailand
  may not be included in the wetter weather that other Southeast Asia nations experience for a while
• West-central
  Africa rainfall during the next ten days will be favorable for coffee, cocoa, sugarcane, rice and cotton
  
• East-central
  Africa rainfall will be most significant in Ethiopia, southwestern Kenya and Uganda during the next ten days while Tanzania’s Pare region driest down seasonably
• North
  Africa rainfall will be limited in the next two weeks, although some rain is expected very lightly
• Most
  wheat and barley in the region is maturing and being harvested keeping the need for rain very low
• Most
  of the rain expected will be limited and should not adversely impact crop conditions or field progress
• Northern
  and some eastern Turkey crop areas will be the only ones in the Middle East nation to get significant rainfall during the next week to ten days
• A
  boost in rain is needed in many areas, but Syria, Jordan and Iraq have been and will continue driest
  
• These
  areas may experience a decline in wheat, rice and cotton production this year – at least in unirrigated areas
• Mexico
  rainfall is expected to slowly increase in western and southern parts of the nation during the next ten days
• The
  moisture will be welcome and should be a part of the developing monsoon season
• Central
  America will see periodic rain in the coming ten days with some of it to become heavy this weekend and next week from Costa Rica into Panama.
  
• Today’s
  Southern Oscillation Index was +19.18 and it will steadily decline over the next few weeks
• New
  Zealand rainfall will be limited this week, but should increase next week

Source:
World Weather Inc.

 

Bloomberg
Ag Calendar

Tuesday,
May 24:

• Grain
  & Maritime Days conference in Istanbul, May 24-25
• Russian
  Meat & Feed Industry conference in Moscow
• EU
  weekly grain, oilseed import and export data
• Brazil’s
  Unica may release cane crush and sugar output data during the week (tentative)

Wednesday,
May 25:

• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• Malaysia’s
  May 1-25 palm oil export data
• U.S.
  poultry slaughter, 3pm
• HOLIDAY:
  Argentina

Thursday,
May 26:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• USDA
  releases World Sugar Markets and Trade outlook
• Russian
  grain forum starts in Sochi
• HOLIDAY:
  France, Germany, Indonesia

Friday,
May 27:

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

Source:
Bloomberg and FI

 

Soybean
and Corn Advisory

2021/22
Brazil Corn Estimate Unchanged at 107.0 Million Tons

2021/22
Argentina Corn Estimate Unchanged at 49.0 Million Tons

2021/22
Brazil Soybean Estimate Unchanged at 122.0 Million Tons

2021/22
Argentina Soybean Estimate Unchanged at 40.0 Million Tons

 

Macros

U.S.
Crude Oil Futures Settle At $109.77/Bbl, Down $0.52 Or 0.47%

Brent
Crude Futures Settle At $113.56/Bbl, Up $0.14 Or 0.12%

US
DoE Announces Additional Notice Of Sale Of Up To 40.1M Bbls Crude Oil From SPR

US
New Home Sales Change Apr: 591K (est 750K; prev R 709K)

–
New Home Sales (M/M): -16.6% (est -1.7%; prev R -10.5%)

–
Median Sale Price (USD): 450.6K Or +19.6% (prev 436.7K or +21.4%)

US
S&P Global Manufacturing PMI May P: 57.5 (est 57.7; prev 59.2)

–
Services: 53.5 (est 55.2; prev 55.6)

–
Composite: 53.8 (est 55.7; prev 56.0)

JPMorgan
Cut Chinese GDP Forecast To -5.4% AR From -1.5%

JPMorgan:
Maintains Brent Price Forecast Of $114/Bbl For Q2

–
Prices Seen Surging To Over $120/Bbl In Interim, Averaging $104/Bbl For 2022

 

Corn

·        
Six week low was established for nearby corn futures. Corn was lower on US export uncertainty for last half 2022 and rapid US planting progress (72% vs. 68% trade poll). Funds sold an estimated net 15,000 corn contracts. 

·        
Argentina raised their corn export cap and now Brazil has some leverage. China signed an agreement with Brazil to import corn. They may soon agree to import soybean meal. Talks have been going on for years. Brazil corn is about
$25/ton cheaper than US corn, according to a Bloomberg story. SA corn exports to China will make up for some of the loss in Ukraine exports, but not all of it.

·        
We heard China bought Brazil corn for September/October shipment. Trade was talking up to 400,000 tons.

·        
Our 2021-22 US corn export projection stands unchanged at 2.550 billion bushels (USDA 2.500), but we cut new crop exports by 50 million to 2.450 billion (USDA @ 2.400).

·        
Anec: Brazil corn exports for May seen at 1.243 million tons, down from 1.264 previous.

·        
APK-Inform noted Ukraine exported 28,000 tons of grain by trucks so far in May. That included 26,300 tons of corn.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 8,000 barrels to 999 thousand (991-1014 range) from the previous week and stocks up 45,000 barrels to 23.836 million.

·        
USDA could possibly issue their initial US corn crop condition next week. Corn emerged needs to be around 50 percent for conditions to be collected and as of Sunday corn was at 39 percent. We are eying 70 percent good/excellent
for initial 2022 ratings, same as the 5-year average and down from 76 year ago. 

 

Export
developments.

·        
Turkey’s TMO seeks 175,000 tons of feed corn on May 26 for shipment between June 7 and June 30.

 

 

Updated
5/24/22

July
corn is seen in a $7.40 and $8.40 range

December
corn
is seen in a wide $5.50-$8.00 range

 

Soybeans

·        
Soybeans traded two-sided, ending higher in the sport position and lower for November. Earlier Indonesian palm oil export uncertainty rallied palm oil futures, spilling into SBO, but that market collapsed during the morning trade
from weakness in grains and WTI crude oil. WTI was mixed by 1:50 pm CT. India cut crude oil soybean oil and sunflower oil import duties, which was friendly for Argentina soybean oil premiums. India sourcing sunflower oil may be still a problem. Nearby CBOT
soybean meal rebounded. News was light. US soybean plantings were 50% vs. a trade poll of 49%. With US producers tending to fields, soybean and corn basis increased across some key domestic locations.

·        
Funds bought an estimated net 2,000 soybeans, bought 3,000 meal and sold 1,000 soybean oil.

·        
India cut import taxes on crude soybean oil and crude sunflower oil to help cool domestic prices. They will allow imports of 2 million tons each of duty-free crude soybean oil and crude sunflower oil. Earlier the Agriculture Infrastructure
and Development Cess (AIDC) said to Reuters the government could either cut or axe the 5%.

·        
China may soon agree to import soybean meal from Brazil. They are currently not an active importer of soybean meal.

·        
AgriCensus, referencing IMEA, reported Brazil’s Mato Grosso crushed 3.5 million tons for the first four months of 2022, a 3% increase from same period year ago.

·        
Europe’s slowing economy from rising inflation may soon weigh on high protein demand. The negative interest rate environment was projected to end by September, and that help the Euro to gain on the USD.

·        
Indonesia is still looking at changing rules to ensure domestic supplies of cooking oil. Overnight they announced replacing its subsidy on bulk cooking oil to a domestic price obligation program.

·        
Anec: Brazil soybean exports for May seen at 11.278 million tons, down from 11.483 previous.

·        
EU soybean imports by May 22 for the July 2021-22 season totaled 12.83 million tons, versus 13.52 million for the same period 2020-21.

 

 

Export
Developments

·        
China plans to sell another 500,000 tons of soybeans from reserves on May 27.

·        
The USDA seeks 5,710 tons of packaged veg oil for use in export programs for shipping July 1-25 on June 1, with notice following day.

 

Third
Consecutive La Niña? What to Expect from Soybean Yields in the United States, Brazil and Argentina

Cabrini,
S., J. Colussi and G. Schnitkey. “Third Consecutive La Niña? What to Expect from Soybean Yields in the United States, Brazil and Argentina.”
farmdoc daily (12):75, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, May 23, 2022.

https://farmdocdaily.illinois.edu/2022/05/third-consecutive-la-nina-what-to-expect-from-soybean-yields-in-the-united-states-brazil-and-argentina.html

 

Updated
5/24/22

Soybeans
– July $15.75-$18.00

Soybeans
– November is seen in a wide $12.75-$16.50 range

Soybean
meal – July $375-$465

Soybean
oil – July 77-84

 

Wheat

·        
Wheat futures extended gains early but prices collapsed after the funds resumed selling. Chicago wheat has been down 4/5 last trading sessions. Funds have sold an estimated net 49,000 contracts since May 18 and are estimated at
net short 18,000 (managed money futures only) contracts. Global trade flows have slowed, and US weather is improving (for spring wheat producers and central Great Plains winter wheat production).  Past 24-H precipitation below.

·        
The trade is monitoring India. If they relax on wheat exports, a potential 2.5 million tons could be cleared for exports.

·        
APK-Inform raised their estimate of the Ukraine 2022 wheat crop to 17.1 million tons from 16.96 million previous. The 2022-23 Ukraine grain forecast was increased to 39.4 million tons from 33.2 million previous.

·        
Egypt said they have enough wheat reserves for 4.5 months. They procured 2.7 million tons from their local harvest, out of 5 million they aim for.

·        
We are nearing 3 months into the Ukraine/Russia conflict.

·        
September Paris wheat fell 16.50 to 410.50 euros a ton.

·        
France is expected to see some rain this week and cooler temperatures.

·        
EU soft wheat exports by May 22 for the July 2021-22 season totaled 24.13 million tons, versus 24.23 million for the same period 2020-21.

 

 

Export
Developments.

·        
Jordan passed on 120,000 tons of wheat for Aug/Sep shipment.

·        
Pakistan seeks 500,000 tons of wheat on May 25. Bulk shipment is sought to Pakistan in June to July 2022.

·        
Jordan seeks on 120,000 tons of barley on May 26 for Aug/Sep shipment.

·        
Bangladesh seeks 50,000 tons of wheat on May 29 for shipment within 40 days.

 

Rice/Other

·        
May 24 (Reuters) – ICE cotton futures slipped on Tuesday, pressured by demand concerns and rain in key West Texas growing regions which could help boost supply.

·        
(Reuters) – India has restricted sugar exports for the first time in six years to prevent a surge in domestic prices and asked traders to secure permission for overseas sale of the sweetener from June 1 to Oct. 31, the government
said in a notification on Tuesday.

 

Updated
5/24/22

Chicago
– July $10.50 to $13.00 range, December
$8.50-$12.50

KC
– July $11.50 to $13.75 range,
December $8.75-$13.50

MN
– July $11.75‐$14.00, December
$9.00-$14.00