FI Evening Grain Comments 05/25/22

PDF Attached

 

Good
morning.

 

USDA
increased their food price inflation index for 2022 to a range of 6.5 to 7.5%. This would be the highest annual price increase since 1980 (all food).

https://www.ers.usda.gov/data-products/food-price-outlook/food-price-outlook/#Consumer%20Price%20Index

 

The
Russian Defense Minister said they will open two sea corridors from Ukraine ports. Grains and the soybean complex sold off this morning on lack of bullish news, but some markets paired most losses, from session lows, on light bottom picking.

 

 

Weather

 

World
Weather Inc.

WEATHER
EVENTS AND FEATURES TO WATCH

• Additional
  rain in West Texas overnight was welcome and further expanded the area of improved soil conditions after  significant drought during the  winter and early spring
• Rainfall
  was greatest in central parts of the West Texas production region where 0.50 to 1.50 inches occurred
  
• Lighter
  rain fell in far southern parts of West Texas
• Rain
  also fell in U.S. hard red winter wheat areas and the Texas Blacklands Tuesday with some of the rain in the Blacklands heavy
  
• Rain
  totals of 1.00 to 3.00 inches resulted
• Eastern
  U.S. ridge of  high pressure expected next week
• Temperatures
  will be warmer than usual in the  eastern states; including the eastern Midwest, but crops will  benefit from the  pattern due to moisture abundance already present and the warmer temperatures should stimulate faster crop development
  
• The
  ridge may help pump moisture out of the Gulf of Mexico and into the southern U.S. Plains next week at about the same time that a frontal system drapes over the region resulting in more showers and thunderstorms similar to that of this week
  
• West
  Texas, Oklahoma, the Central Plains and the heart of other Texas crop areas could receive significant rain again during the middle and latter parts of next week because of this set up
• Additional 
  rain in West Texas could be a boon for unirrigated cotton, corn and sorghum production potentials
• Temperatures
  in the U.S. Plains continued well below normal Tuesday with temperatures confined to the 40s and 50s Fahrenheit for a second day in a row Tuesday
  
• Warming
  expected during the latter part of this week and during the weekend will stimulate  faster crop development and quicker drying
• Recent
  rain in the central and southern Plains has been ideal for winter crops reproducing and filling, although a complete restoration in wheat production is not likely because of the length of the more harsh conditions that occurred from last autumn into the spring
• Northern
  U.S. Plains and eastern Canada’s Prairies will turn wetter again late this week through the first half of next week
• Some
  areas are just beginning to dry down and the returning rain will further delay spring fieldwork
• Planting
  is notably late in Canola, spring wheat and sugarbeet production areas with corn planting drifting farther behind in some areas as well
• Canada’s
  southwestern Prairies have little potential for significant rain in the coming week to ten days, although recent light precipitation has bought a little time for previously planted crops to emerge and establish on.
  
• Ontario
  and Quebec rainfall is expected to diminish next week as ride building begins in the U.S. Midwest
  
• The
  drier and warmer weather will good for advancing spring and summer crop planting and supporting winter wheat planting
• U.S.
  Delta and southeastern states will experience a mostly good balance of rain and sunshine over the  next couple of weeks, although today’s forecast is drier in the second week of the outlook because of the high pressure ridge expected in the eastern U.S. next
  week
• U.S.
  Pacific Northwest precipitation will continue restricted over the next two weeks, although not completely absent
  
• The
  moisture will be good for crops when it occurs, but the  precipitation frequency and amounts will be a little low to fix long term moisture deficits
• France
  is still advertised to the driest nation in the European Community during the next week to nearly ten days
• Timely
  rain will become increasingly more important during the next few weeks to keep winter wheat and rapeseed production intact.
• Portions
  of the U.K., Spain and Portugal will also experience restricted rainfall in the coming week while showers in eastern Europe offer a better environment for many crops
• Dryness
  will remain a potential issue in a portion of southeastern Europe where soil moisture has been below average for an extended period of time
• Dryness
  is most significant near and surrounding Romania
• Western
  and northern Russia will continue in a wet weather pattern for the next two weeks
• This
  may impact Belarus, the Baltic States and northwestern Ukraine as well
• Slow
  field progress is expected and “weediness” may become a greater issue
• Crop
  development may be a little slow as well
• Russia’s
  Southern Region and southeastern Ukraine will experience net drying for a while
• Argentina
  rainfall is expected to be greatest in the northeastern one-third to one-half of the nation over the next ten days
• Most
  of the  expected rain will be outside of key wheat production areas
• Rain
  is needed in key wheat areas to bolster soil moisture for planting, emergence and establishment especially in the west
• 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 nationwide during the coming week 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.
  
• 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
• A
  small tropical cyclone may form off the upper west coast of Central America and near the Mexico lower east coast this weekend
• The
  storm could bring heavy rain to a part of southern Mexico in Chiapas and Oaxaca
  
• 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 +19.42 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

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

 

 

Macros

94
Counterparties Take $1.996 Tln At Fed Reverse Repo Op (prev $1.988 Tln, 92 Bids)

US
Durable Goods Orders Apr P: 0.4% (est 0.6%; prev 1.1%)

US
Durable Ex Transportations Apr P: 0.3% (est 0.5%; prev 1.4%)

US
Cap Goods Orders Nondef Ex Air Apr P: 0.3% (est 0.5%; prev 1.3%)

US
Cap Goods Ship Nondef Ex Air Apr P: 0.8% (est 0.5%; prev 0.4%)

 

US
DoE Crude Oil Inventories Change (W/W) 20-May: -1019K (est -2129K; prev -3394K)

–
Distillate Inventories: 1657K (est 1000K; prev 1235K)

–
Cushing OK Crude: -1061K (prev -2403K)

–
Gasoline Inventories: -482K (est -1641K; prev -4779K)

–
Refinery Utilization: 1.40% (est 0.70%; prev 1.80%)

EIA:
US Crude Stocks In SPR Last Week Fell To Lowest Level Since Sept 1987

 

Corn

·        
July corn futures earlier hit their lowest level since April 8. The contract closed moderately higher.
Back
month US corn futures were lower on improving US weather, higher USD and lower wheat.

·        
Funds sold an estimated net 4,000 corn contracts.

·        
Russia will open two safe seaway passages for Ukraine exports.

·        
A UN official plans to visit Moscow later this week to discus resuming fertilizer exports. 

·        
Rain will increase for the Midwest through the end of the workweek before drying down this weekend. That should favor recently planted spring grains.  South American weather looks good.

·        
The Baltic Dry index decreased 126 points or 3.9% to 3,127 points.

·        
The USDA Broiler Report showed eggs set in the US up slightly and chicks placed up slightly. Cumulative placements from the week ending January 8, 2022 through May 21, 2022 for the United States were 3.73 billion. Cumulative placements
were down slightly from the same period a year earlier.

 

Weekly
ethanol update

·        
The US weekly EIA ethanol data was viewed slightly supportive for US corn futures.

·        
Weekly US ethanol production increased 23,000 barrels from the previous week to 1.014 million barrels per day (bbl). This was the largest weekly increase since the week ending May 4, 2022.  

·        
Ethanol stocks decreased 79,000 barrels to 23.712 million, second consecutive weekly decline. 

·        
For comparison, A Bloomberg poll looked for weekly US ethanol production to increase 8,000 barrels from the previous week and stocks to increase 45,000 barrels.

·        
US ethanol production of 1.014 barrels per day is about 0.3% above from about the same time a year ago.

·        
Early September 2021 to date US ethanol production is running 8.5% above the same period a year ago.  

·        
There were no ethanol imports reported this week.

·        
Days of inventory of 23.5 compares to 25.3 a month ago and 19.2 during comparable period a year ago.

·        
Weekly gasoline stocks fell 482,000 barrels to 219.7 million barrels. Gasoline stocks fell 8 consecutive weeks.

 

US
DoE Crude Oil Inventories Change (W/W) 20-May: -1019K (est -2129K; prev -3394K)

–
Distillate Inventories: 1657K (est 1000K; prev 1235K)

–
Cushing OK Crude: -1061K (prev -2403K)

–
Gasoline Inventories: -482K (est -1641K; prev -4779K)

–
Refinery Utilization: 1.40% (est 0.70%; prev 1.80%)

 

 

 

Export
developments.

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

 

Potential
2022 Fall Prices for Corn and Soybeans Based on History

Schnitkey,
G., K. Swanson, C. Zulauf and N. Paulson. “Potential 2022 Fall Prices for Corn and Soybeans Based on History.”
farmdoc daily (12):76, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, May 24, 2022.

https://farmdocdaily.illinois.edu/2022/05/potential-2022-fall-prices-for-corn-and-soybeans-based-on-history.html

 

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, meal and oil ended lower on technical selling, higher USD and lack of bullish news. WTI crude was higher.

·        
Funds sold an estimated net 7,000 soybeans, sold 3,000 meal and sold 5,000 soybean oil.

·        
Argentina markets are closed today.

·        
AmSpec Agri reported Malaysia May 1-25 palm oil exports at 1.105 million tons, a 23 percent increase from 901,978 tons during the same period in April. ITS reported May 1-25 palm oil exports at 1.142 million tons, a 25 percent
increase.

·        
Palm oil futures trended lower on Wednesday after India cut import taxes on crude soybean oil and crude sunflower oil to help cool domestic prices.

·        
A slowdown in China and India palm oil imports also weighed on palm futures. Some traders are looking for India soybean oil imports to jump, by about 50 to 60 percent, to a record 4.5 million tons, according to a Reuters average
forecast from five dealers. Palm oil imports could drop by a fifth to 6.7 million tons. Soybean oil imports for India are slightly at a discount to palm oil imports, which still have a 5.5% import tax. Sunflower imports were seen at 1.9 million tons for the
current year, according to the survey.

·        
There was talk last week of the US Administration lowering biofuel mandates but think this was on hold with President Biden traveling to Asia.  An executive order would be easiest way to get this done but also think the EPA will
need to be in agreement. 

 

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.

 

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

·        
Chicago and most KC wheat futures extended losses on improved prospects to free up some of the grain exportable supply out of the Black Sea and a higher USD.  Russia’s Foreign Ministry is calling for a dialogue on supplies from
Ukraine in response to requests for humanitarian passage. Later the Russian Defense Minister said they will open two sea corridors from Ukraine ports. Russia might still be looking for some sanctions to be lifted. Demining is underway in the Black Sea.

·        
Chicago wheat is now down 5 out of the last 6 trading sessions.

·        
MN wheat ended higher. Spring
wheat plantings are expected to remain slow for the upper GP and parts of Canada.

·        
Funds sold an estimated net 5,000 Chicago wheat contracts.

·        
India Commerce Minister Piyush Goyal told Reuters they have no immediate plans to lift the wheat export ban. Exports have been pushing for some of the wheat at ports to be released for shipment. India is looking into government
to government tenders rather than private transactions.

·        
Manitoba (Canada) crop update reported only 10 percent of the intended spring grains at only 10 percent versus 5-year average of 77%, leading some farmers to switch a small amount of planned corn or soybean acres into canola and
spring wheat.

·        
The International Islamic Trade Finance Corporation (ITFC) has doubled the total financing granted to Egypt to cover the country’s imports of wheat to $6 billion, Minister of Supply and Internal Trade Ali El-Moselhi said in an
interview with MBC Masr TV channel on May 23rd. (Reuters)

·        
Two week low: September Paris wheat fell 5.75 to 404.50 euros.

 

Export
Developments.

·        
Pakistan saw offers for the 500,000 tons of wheat they seek. Lowest offer was believed to be $515.49/ton c&f. Bulk shipment is sought to Pakistan in June to July 2022.

·        
Jordan bought 60,000 tons of barley for Aug/Sep shipment at $452/ton c&f.

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

 

Rice/Other

·        
None reported

 

 

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