FI Evening Grain Comments 06/03/20

PDF Attached

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:  U.S. crop weather should be mostly good this week with warmer temperatures and less rain occurring to spur on faster crop development while stimulating late season planting. Timely rainfall will become very important
later in June and is likely to occur.  Tropical Depression Three in the Bay of Campeche will become a tropical storm and should bring moisture to the U.S. lower Midwest next week. The moisture should be timely after net drying this week and help maintain moisture
abundance for long term crop development.

           
China weather is a concern in some of the dry areas in east-central parts of the nation, although up until now the dryness has been great for promoting aggressive spring planting. Limited rainfall and very warm to hot temperatures over the next week will raise
concern over crop development and the region will need to be closely monitored. Some rain is possible in the driest areas during mid-week next week, but it may be light and sporadic. Northeastern China may be a little wetter than usual for a while slowing
some of its planting, but most crops in the region are suspected of being in good condition.

            India’s
monsoon is expected to perform well this year, although initial rainfall will be erratic over the next ten days. A small tropical cyclone will move through northern Maharashtra into western Madhya Pradesh today and Wednesday with very little negative impact.

            Oil
palm and coconut production in Southeast Asia looks to be advancing normally with little change likely.

            Canola
planting is moving along in Australia, but there is need for greater rainfall in many areas. There is plenty of time for the greater rain to fall, however. Canola in Canada’s Prairies has been planted in many areas, but rain is needed in parts of the central
and east to stimulate germination, emergence and improved establishment.

            Brazil’s
Safrinha corn crop is finishing favorably after rain fell in late May. Some production cut did occur earlier in the month because of dryness especially in eastern production areas.

            Argentina’s
harvest is moving along well as is that of South Africa.

           
Most of Eastern Europe’s crop weather has improved with recent rainfall, although the precipitation came a little late to seriously turn around winter rapeseed production. Corn, sunseed and soybean planting should be advancing well with favorable emergence,
but warming is needed to stimulate better crop development from Eastern Europe into the western CIS. Rain is needed in northwestern Europe and some of that may occur in the coming week to ten days.

           
Overall, weather today is likely to have a mixed influence on market mentality with a bearish bias.

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Dryness remains a worry in parts of southern and eastern Saskatchewan and west-central Manitoba, although rain is expected by this time next week. Western Alberta is still too wet and moving slowly in its spring planting.

            U.S.
northern Plains spring wheat planting and emergence should be advancing well, although parts of the region (mostly in North Dakota) are becoming too dry and this week’s dryness will exacerbate the situation. Timely rain should come along for this region during
the weekend and next week.

            U.S.
hard red winter wheat production areas will be experience net drying this week, despite a few showers and thunderstorms because of very warm to hot temperatures. However, much of the crop has reproduced and is filling with crops in the south maturing. The
limited rainfall and heat will stress a few crops, but Nebraska and northern Kansas crops are most immature while having the best soil moisture. The bottom line to net drying is not expected to be very great on crop conditions or production, although maturation
will be rushed.

            U.S.
soft wheat conditions in the Midwest will improve with this week’s decreasing rain frequency and rising temperatures.  Dryness in the northwestern states remains a concern and weekend heat did not help the situation.

           
Northwestern Europe dryness will continue a concern for a little while longer this week. Rain is expected later in the week and into next week. Crops elsewhere in Europe and the western CIS will experience a favorable mix of weather, although production will
not be restored in areas that had inclement conditions last autumn and earlier this spring to harm production.

            China’s
winter wheat crop is rated favorably, although drying now may be stressing a few of the more immature crops. Spring crops are favorably moist and expected to perform well.

            India’s
harvest should be complete and Australia’s planting of small grains has advanced well. There is still need for greater rain in many of Australia’s winter crop areas. Queensland, northern and western New South Wales and parts of South Australia and northern
Western Australia crop areas need more rain. South Africa and western Argentina also need more rain.

            Overall,
weather today will likely contribute a mixed influence on market mentality.

Source:
World Weather Inc. and FI

 

Seven-day
outlook:

 

Bloomberg
Ag Calendar

TUESDAY,
June 2:

• U.S.
  Purdue Agriculture Sentiment, 9:30am
• New
  Zealand global dairy trade auction
• EU
  weekly grain, oilseed import and export data (delayed because of holiday)

WEDNESDAY,
June 3:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• China’s
  CNGOIC to publish monthly forecast on crop output, supply and demand
• EARNINGS:
  Tereos

THURSDAY,
June 4:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
• FAO
  world food price index, 4am
• Port
  of Rouen data on French grain exports
• New
  Zealand commodity price

FRIDAY,
June 5:

• ICE
  Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• FranceAgriMer
  weekly update on crop conditions
• Malaysia’s
  palm oil export data for June 1-5

Source:
Bloomberg and FI

 

 

Corn.

·        
Corn futures
closed 0.25 lower in July, unchanged in September and up 0.25 in December.  

·        
Funds sold an estimated net 5,000 corn. 

·        
Corn futures initially eased on good US weather prospects. Heat followed by rain  later this week for the US Midwest is seen ideal for early development. 

·        
Newswires are collecting information for the USDA June S&D update.  

·        
US ethanol production increased for the fifth consecutive week to 765,000 barrels per day, up 41,000 from the previous week.  This was below a Bloomberg estimate of 60,000, but still a positive news
for corn bulls.  US ethanol stocks fell 700,000 to 22.476 million barrels.  Traders were looking for a 130,000-barrel decrease.  In mid-April ethanol stocks were 27.689 million barrels. 

 

 

 

Corn
Export Developments

• Taiwan’s
  MFIG bought 65,000 tons of optional origin corn (US, Brazil, Argentina or South Africa) for Sep shipment at 124.57 cents over the December CBOT contract.
  

• Syria
  will retender for 50,000 tons of soymeal and 50,000 tons of corn on June 24 for delivery within four months of contract.

 

US
broiler chick placements
are rebounding nicely, despite a small setback for the week ending May 30.   USDA reported eggs set in the US down slightly and  chicks placed in the US down 3 percent.  Cumulative placements from the week ending January 4, 2020 through May 30, 2020 for the
United States were 4.07 billion. Cumulative placements were down slightly from the same period a year earlier.

 

 

 

Updated
5/28/20

• July
  corn is seen in a $3.10 and $3.50 range.  December lows could reach $2.90 if US weather cooperates. 
  

 

Soybean
complex

• The
  soybean complex traded higher for much of the session. Soybeans ended higher by 4.75-7.00 led by bulls spreading, meal $2.10-2.70 higher, but soybean oil sold off to settle 7-9 points. 
  
• Funds
  bought an estimated net 6,000 soybeans, bought 3,000 soybean meal and sold 1,000 soybean oil.
• Follow
  through buying was again seen in the soybean complex today as Chinese private buyers turn to cheaper US soybeans.  We heard late Tuesday a China state buyer bought one cargo of Brazilian soybeans for October shipment and two September US cargoes were purchased
  by private buyers.
• Then
  USDA announced additional soybean sales split between old and new crop.  
• After
  the close, WSJ headline said China cancelled some US farm shipments.  This includes an estimated 23 cargoes. The article quoted a shipping executive stating, “They were looking at 23 American soybean cargoes last week, but held off.” In our opinion, we will
  see some light pork, corn and possibly soybean cancellations but it appears they didn’t buy the 23 cargoes in the first place. In addition, if China does cancel soybeans, it might be by state run companies, not the private crushers.  China has outstanding
  about 33 cargoes on the books, not including what had been purchased over the past 13 days and what could be destined for the “unknown” categories. 
  
• The
  BRL was up 2.3% against the USD at the time this was written at 5.0786.

• The
  July soybean oil contract traded above 24.14, its April high, but failed to close above it. 
  
• CNGOIC
  estimated China 2019-20 soybean imports at 91MMT, up 1MMT from previous and compares to 82.5MMT in 2018-19.  2020-21 was estimated at 92MMT. 
  
• The
  US will see a drier bias in many areas over the coming week with temperatures warmer than usual.
  

 

European
Union: Biofuel Mandates in the EU by Member State in 2020

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Biofuel%20Mandates%20in%20the%20EU%20by%20Member%20State%20in%202020_Berlin_European%20Union_05-26-2020

 

Oilseeds
Export Developments

• Syria
  will retender for 50,000 tons of soymeal and 50,000 tons of corn on June 24 for delivery within four months of contract.
• Under
  the 24-hour announcement system private exporters sold 186,000 tons of soybeans to unknown, of which 66,000 tons for old crop and 120,000 tons for new crop. 
  
• Today
  the CCC under the PL 480 program seeks 5,000 tons of vegetable oils in 4-liter cans for July-September shipment on June 3. 
  

 

Updated
5/21/20

• July
  soybeans are seen in a $8.15-$8.65 range. 
• July
  soybean meal is seen in a $270 to $305 range. 
• July
  soybean oil range is now seen in a 26.00 to 28.50 range. 

 

Wheat

• Wheat
  ended higher by 2.25-7.00 cents. KC July was up by most.  MN settled 2.25-3.75 cents higher and Chicago up by 2.75-4.00 cents. 
  
• Funds
  bought an estimated net 4,000 SRW contracts. 
• Wheat
  traded higher after being down over the past two days.  Short-term charts still indicate an upward trend. The recent rise in Russian local wheat prices to a record high has slowed export interest and this might be helping US wheat futures. 
  

·        
Paris December wheat ended up 0.50 euros or 0.4 percent at 187.25. 

·        
Southern France saw additional rain today. 

·        
Rabobank: Australia wheat production 26MMT

·        
Kazakhstan’s AgMin expects to harvest 18.0-18.5 million tons of grain this year and export 7.0-7.5 million tons.

·        
APK-Inform reported Ukraine export wheat prices are up $3-$4 per ton over the past week.  Milling wheat from the new 2020 harvest was quoted at $172-174 per ton CPT (Carriage Paid To) in small Ukrainian
Black Sea ports compared with around $168-170 a week earlier.

 

Export
Developments.

• Japan
  received no offers for feed wheat and feed barley. They were in for 80k wheat and 100k barley for arrival by November 26.  They are in for the same amount on June 10. 
  
• 4
  participants: Jordan’s state grains buyer seeks 120,000 tons of optional origin hard milling wheat on June 3.
• Indonesia
  millers bought 35,000 tons of Black Sea wheat for around $225 a ton C&F for August shipment.
  
• The
  Philippines bought 60,000 tons of feed wheat last week at around $215 a ton C&F for September shipment.
• Reuters:
  Black Sea wheat prices were quoted at around $230 a ton, C&F to Asia, up from $225 a ton last week.
• Yesterday
  Egypt bought 120,000 tons of Ukraine wheat for July 10-25 shipment at $210.00/ton.   
  
• Syria
  looks to sell 100,000 tons of feed barley.  Offers are due June 23. 

 

Rice/Other

• CBOT
  rice hit another fresh 11 year high on lack of supplies across the US amid more and more people cooking from home. It’s very hard to find rice in grocery stores.
  
• The
  Philippines seeks 300,000 tons of rice on June 8. 

 

Updated
5/28/20

• Chicago
  July is seen in a $5.00-$5.31 range
• KC
  July $4.50-$4.80
• MN
  July $5.10-$5.40