FI Evening Grain Comments 06/07/23

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US
wheat and corn settled lower, soybeans & meal mixed (bull spreading noted for soybeans and corn from strong spot cash prices), and soybean oil lower. Weather models somewhat improved for the US Midwest (morning and afternoon updates). Not all areas will benefit
from rain over the next 10 days. The
Goldman Roll started today. The Great Plains will see rain over the next week. The heart of the US will see rain Friday through Sunday. The northwestern Midwest will turn drier next week while the southeast turns wetter. Black Sea grain export deal talks resume
Friday in Geneva. Earlier this week Russia said it saw no prospects to extend the deal. China May soybean imports jumped to a record 12.02 million tons despite tighter inspection protocols.

Fund
estimates as of June 7 (net in 000)

Weather

A map of the united states

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World
Weather Inc.

WEATHER
TO WATCH

Low
soil moisture in the U.S. crop areas and recent warm weather has expanded crop stress and raised more market worry over the fate of crops

Cooling
in the next week will reduce that stress and even though rain is advertised it is likely to be sporadic and light enough to maintain some concern over crop conditions and production potential especially in the longer-range outlook since this is only June and
there is a lot of summer weather still yet to come

GFS
model is predicting too much rain for the U.S. Midwest, Delta and southeastern states during the second week of the outlook today
Less
rain and more sunshine in U.S. hard red winter wheat areas in the next two weeks should bode well for improved crop and field conditions
West
Texas cotton, corn and sorghum areas will experience a good mix of light showers and sunshine, though there is need for greater warmth

Some
southwestern counties in West Texas did not get adequate relief from dryness and still need greater rain
Temperatures
will continue cooler than usual into the weekend, but next week’s temperatures will be a little closer to normal
The
longer range outlook will promote less rain and greater warmth over time a favorable outlook for late summer rainfall

Soil
and crop conditions in the heart of central, eastern and southern Texas are mostly good for developing cotton, corn and sorghum
GFS
model is predicting too much rain for Alberta and southwestern Saskatchewan during the second week of the forecast today; some showers are expected, but a general soaking seems to be a little out of line with reality
Ontario
and Quebec, Canada will get some welcome rain next week while dry and mild to cool weather occurs over the balance of this week and during the weekend
Mexico’s
drought remains serious with western and central parts of the nation quite warm to hot and dry over the next week to ten days
Tropical
Cyclone Biparjoy in the Arabian Sea will spend several days over open water and it will disrupt normal monsoon rainfall in southern and eastern parts of the nation
There
are no tropical cyclones in the Atlantic Ocean Basin today and none are expected
Tropical
Cyclone Guchol in the Philippine Sea poses no threat to land
Southeast
Asia rainfall continues to occur routinely enough to support most crops favorably
Northern
Europe temperatures will be warmer than usual this week and that will create a more stressful environment for crops as they deal with another week of dry conditions
Southern
Europe has been receiving frequent rainfall in recent weeks and the trend will continue for another week
Eastern
CIS New Lands will begin to receive some timely rainfall the remainder of this week bringing some relief to the drier biased areas of Kazakhstan and Russia’s eastern New Lands

The
precipitation will be sporadic helping some areas more than others

Kazakhstan
is not likely to get nearly as much rain and unirrigated crop stress will continue

Russia’s
Volga River Basin and Ukraine will be dry for the next week to ten days raising crop moisture stress for some crops since the ground is already drying out

There
is some potential for relief after June 14

Summer
crops in China are expected to see a mostly good mix of rain and sunshine during the next ten days

Some
far southern China crop areas may become a little too wet during the next ten days.
Northeast
China will see sufficient rain to maintain a good outlook for corn, soybeans, sugarbeets and spring wheat

There
is a dryness concern from northern Jilin into Inner Mongolia and “some” relief is possible in the next couple of weeks, although more rain will be needed

Xinjiang,
China will experience more seasonable temperatures over the next two weeks

The
province has struggled with coolness in recent weeks and crop development is behind the usual pace

Production
potentials have decreased because of some reduced area planted and due to the poor early season start to crop development

There
is concern over early season frost and freeze potentials coming along before the crop is fully mature

Monsoonal
rainfall is expected to occur in the mainland areas of Southeast Asia during the next two weeks resulting in improved sugarcane, rice and coffee conditions among other crops like corn

Some
caution is needed since some of the computer forecast model data is exaggerating the anticipated rainfall

Philippines,
Indonesia and Malaysia will see a favorable mix of weather during the next two weeks supporting most crop needs
Australia
weather over the next ten days will include rain in Victoria, New South Wales, southeastern South Australia and southwestern Western Australia

The
moisture will be ideal for wheat, barley and canola establishment
A
boost in rainfall will be needed in Queensland and in interior South Australia and in some northern and eastern Western Australia crop areas

South
Africa rainfall will be restricted over the next ten days, though some rain will benefit southwestern winter wheat, barley and canola production areas
West-Central
Africa rainfall will be favorably distributed for coffee, cocoa, sugarcane and cotton as well as rice during the next ten days
East-central
Africa has been and will continue to be favorably distributed from Uganda and southwestern Kenya to Ethiopia through the next ten days with western Ethiopia wettest relative to normal
Argentina
weather over the next ten days will not provide much rainfall which will favor fieldwork in many areas, but no relief from dryness is likely in the southwest
Brazil
weather during the coming will be dry for most of the nation’s key crop areas this week, although some rain will fall in coastal Bahia and areas northward

Rain
is expected in far southern Brazil Sunday into Wednesday of next week, June 11-14

Today’s
Southern Oscillation Index was -19.42 and it will move erratically higher over the next week

Source:
World Weather, INC.

Bloomberg
Ag calendar

Thursday,
June 8:

USDA
weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
Port
of Rouen data on French grain exports
Russia
grain union conference in Gelendzhik, day 3
HOLIDAY:
Brazil

Friday,
June 9:

USDA’s
World Agricultural Supply & Demand Estimates (WASDE), 12pm
China’s
agriculture ministry (CASDE) releases monthly supply and demand report
Sustainable
World Resources conference in Singapore
ICE
Futures Europe weekly commitments of traders report
CFTC
commitments of traders weekly report on positions for various US futures and options, 3:30pm
FranceAgriMer’s
weekly crop condition report
Russia
grain union conference in Gelendzhik, day 4

Source:
Bloomberg and FI

Reuters
estimates for USDA S&D

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Bloomberg
estimates for Conab – June 13 release

Macros

POLL:
78 Of 86 Economists See Fed Holding Fed Funds Rate At 5.00%-5.25% In June; 8 See 25Bp Hike – RTRS

–
32 Of 86 Economists See Fed Raising Fed Funds Rate At Least Once More In 2023; 8 Say June, 24 Say July

US
Trade Balance Apr: -$74.6B (est -$75.8B; prevR -$60.6B)

Bank
Of Canada Hikes Policy Rate By 25Bps To 4.75%, Analysts Saw BoC On Hold

Canadian
Int’l Merchandise Trade Apr: C$1.94B (est C$0.55B; prevR C$0.23B)

Canadian
Labour Productivity (Q/Q) Q1: -0.6% (prev -0.5%)

U.S.-China
April Trade Deficit $20.28 Bln VS March Deficit $16.61 Bln

U.S.
Crude Oil Exports Fell To 4.00 Million Barrels Per Day In April (VS 4.83 million BPD In March) – U.S. Census

Cor n

·
Corn futures traded lower on improving rain prospects for parts of the Midwest through early next week. July/December spread widened 6.50 cents on strong spot cash prices. One NE location posted 110 cents over the July contract.

·
Fundamental news was light.

·
Traders are losing confidence that the national US corn yield will end up above trend this year, but on our corn crop condition weighted basis, the national yield as of August 1 is currently projected above a 15 and 30-year trend.
Our bias is for US corn conditions to decline over the next few weeks given the dryness across the majority of the belt. It’s early though.

·
The USDA Broiler Report showed eggs set in the US up 1 percent and chicks placed down 2 percent. Cumulative placements were down slightly from the same period a year earlier.

US
weekly ethanol update

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

·
US weekly ethanol production increased 32,000 barrels per day to 1.036 million barrels per day, largest volume since December 9, 2022. US ethanol stocks increased a large 616,000 barrels to 22.948 million barrels.

·
For comparison, a Bloomberg poll looked for weekly US ethanol production to be up 13,000 thousand barrels from the previous week and stocks up 72,000 barrels.

·
US ethanol production of 1.036 million barrels per day is about 0.3% below from about the same time a year ago.

·
Over the past 4 weeks, production changes averaged up 18,000 and stocks down 86,000 barrels.

·
Early September 2022 to date (40 weeks) US ethanol production is running 3.1% below the same period a year ago.

·
There were no ethanol imports reported this week. Exports were 97,000 barrels, up from 54,000 barrels from the previous.

·
Ethanol stocks of 22.948 million barrels are down about 2.9% from a year ago and 1.0% below a previous 4-week average. The record for ethanol stocks was 27.689 million barrels set on 4/17/20, but today’s inventories are still
considered at a good level.

·
Days of inventory of 21.6 compares to 24.2 a month ago and 22.1 during comparable period a year ago.

·
Weekly ending stocks of total gasoline were up 2.745 million barrels to 218.815 million barrels (was down 5 consecutive weeks). Implied gasoline demand was up 120,000 barrels to 9.218 million barrels.

·
The net blender input of fuel ethanol was down 39,000 from the previous week to 887,000 bpd, below its previous 4-week average of 915,000 bpd.

·
Net production of combined finished reformulated and conventional motor gasoline with ethanol was 8.720 million barrels, down 405,000 barrels from the previous week and represents 91.0 percent of total finished motor gasoline,
below 91.1% previous week.

·
For 2022-23, we are using 5.215 billion bushels, unchanged from previous, and compares to 5.250 billion by USDA and 5.326 billion for 2021-22.

University
of Illinois: Perspectives on Non-decreasing National Yield Trends

Schnitkey,
G., C. Zulauf, N. Paulson and J. Baltz. “Perspectives on Non-decreasing National Yield Trends.”
farmdoc daily (13):103, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, June 6, 2023.

https://farmdocdaily.illinois.edu/wp-content/uploads/2023/06/fdd060623.pdf

Export
developments.

Algeria
seeks up to 140,000 tons of corn on June 8 for July-Aug 15 shipment.

Updated
06/6/23

July
corn $5.75-$6.35

September
corn $4.50-$5.75

December
corn $4.25-$5.75

Soybeans

·
Soybeans and meal were mostly higher in the nearby contracts with bull spreading in focus while back months fell from a wetter morning and midday weather outlooks. Not all areas for the 6-10 turned wetter. Missouri into southern
IL was drier. Soybean oil traded lower following weakness in offshore values and a reversal in product spreading after rallying yesterday. Yesterday there was a rumor a large commercial is looking to buy back soybean oil receipts. There was no SBO registration
cancelations Tuesday evening, but more soybean meal came out.

·
Nearby soybeans are seeing follow through bull spreading in part of the USDA old crop sales announcement to Spain. Additional US soybean purchases by EU crushers should not be ruled out despite the large Brazil crop.

·
SN/SX was last 180.00/183.25, up 13.25 cents on the day.

·
China May soybean imports jumped to a record 12.02 million tons despite tighter inspection protocols and were up 24 percent from year ago and compares to 7.26 million tons during April. Higher soybean product prices in China drew
stocks lower by the end of April, prompting a boost in May arrivals. One trader expects June China soybean arrivals to reach 13 million tons. January-May China soybean imports were 42.31 million tons, up 11.2 percent from the same period year ago.

·
China edible vegetable oil imports in May were 646,000 tons, bringing Jan-May totals to 3.736 million, a 129.5% increase from the previous period.

·
Germany formally asked the EU Commission to launch an investigation over concerns that companies in Asia, including China, are mixing biofuels with cheaper oils before exporting to the EU. They want to find out if the “whether
the sustainability and greenhouse gas emission savings criteria are met” (Reuters). Recently, other trade groups also asked the Commission to investigate the sharp rise in EU biofuel imports.

Export
Developments

·
Iran seeks 120,000 tons of soybean meal from Brazil for July and/or August shipment.

·
Algeria seeks 35,000 tons of soybean meal on June 8 for July 1-15 shipment.

Reuters
MPOB estimates

Updated
6/6/23

Soybeans
– July $13.00-$14.00, November $11.00-$14.50

Soybean
meal – July $370-$420, December $290-$450

Soybean
oil – July 48-52, December 43-53, with bias to upside

Wheat

·
US wheat futures traded two-sided in Chicago before fund selling pulled contracts more than 10 cents lower. High protein wheat futures were sharply lower led by KC (down 16.75-33.25 cents). MN was over 20 cents lower. US export
demand is poor and the US Great Plains will see rain one time or another over the next seven days.

·
Traders will be monitoring wheat production areas for southeast Ukraine after the dam breach.

·
China’s largest wheat producing province of Henan saw heavy rains over the past 14 days, potentially lowering quality. About 30 million tons is grown in that province.

·
It remains dry across the Canadian Prairies.

·
Argentina’s wheat area was revised down 300,000 hectares by the Rosario Board of Trade due to unfavorable dry conditions. The planting progress pace is expected to improve after recent rains but note the window normally closes
by early July.