FI Evening Grain Comments 06/08/20

PDF Attached

 

 

Weather

 

 

 

 

 

 

 

 

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:
Weather conditions in the U.S. will be mixed over the next two weeks with some net drying in the eastern Midwest and Tennessee River Basin. The drying trend will be closely monitored, but for now this change in weather will be good for late season summer crop
planting. Weekend rainfall in the upper Midwest and that expected early this week will bolster soil moisture for improved summer crop conditions

Weekend rainfall in Canada’s Prairies was good for “some” of its canola, but additional rain will be needed in parts of the region this week.

            South
America weather did not change much during the weekend and little change was expected this week. Net drying in key summer coarse grain and oilseed areas will be great for crop harvesting.

            Rain
is needed in South Africa and Australia to improve canola planting conditions.

            Philippines
rainfall has become erratic and light and needs to be bolstered in a major way. Most of Malaysia and Indonesia rainfall is still rated favorably and likely to prevail for a while.

            Europe
weather will remain mostly good for coarse grain and oilseed development, although some additional warming is needed in Eastern Europe. A boost in rainfall coming for Western Europe will likely translate into improving summer crop development potential, although
it may come a little late for winter rapeseed.

            Drying
in Russia’s Southern Region, Kazakhstan and central and eastern Ukraine will raise some interest for soybeans, corn and sunseed development, but the region is not too dry today except in parts of Kazakhstan and Russia’s Southern Region.

            The
bottom line will make weather a growing interest for coarse grain and oilseed development around the world, although it does not seem like there is an immediate threat to production. Just enough concern may help induce some rising market premium as time moves
along.

 

MARKET
WEATHER MENTALITY FOR WHEAT:
Rain in Canada’s Prairies during the weekend helped to improve wheat conditions, although there are still some pockets that need greater rainfall. Dryness is also a concern in parts of the northern U.S. Plains. In the meantime, less rain in the eastern Midwest
will be good for soft wheat as it fills and matures over the next few weeks.

            U.S.
hard red winter wheat is finishing out relatively well, but dryness and frost damage in the southwestern Plains has left production low in some areas. Hot, dry weather over the next few days will speed along crop development and maturation.

Rain in Europe has improved small grain conditions in recent weeks and will continue to support crops, although some areas need temperatures to trend just a little warmer.  Spring cereals are still rated favorably with little change expected this week. There
will be some interest in eastern Russia’s spring wheat as time moves along this summer, but for now the environment is still mostly good.

            Australia’s
rain event expected late this week and into the weekend should improve some crops, but there will be an ongoing need for greater moisture.  South Africa and parts of Argentina still need greater rainfall to support wheat planting and establishment.

            Overall,
weather today will likely provide a mixed influence on market mentality with a slight bearish bias.

Source:
World Weather Inc. and FI

 

Seven-day
outlook:

 

 

 

Bloomberg
Ag Calendar

MONDAY,
June 8:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  crop progress — corn, soybean plantings, winter wheat conditions, 4pm
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• French
  Agriculture Ministry crop report due during week (no set day)
• HOLIDAY:
  Australia, Malaysia

TUESDAY,
June 9:

• Brazil’s
  Conab grains report

WEDNESDAY,
June 10:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• International
  Grains Council virtual conference
• FranceAgriMer
  crop report and press briefing
• Crop
  report by Australia’s Abares
• Malaysia
  MPOB palm oil stockpiles, export, production data for May
• Cargo
  surveyors release Malaysia export numbers for June 1-10

THURSDAY,
June 11:

• USDA’s
  monthly World Agricultural Supply and Demand (Wasde) report, noon
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
• China
  CASDE monthly crop supply and demand report
• Vietnam’s
  coffee, rice and rubber export data for May
• Malaysian
  Palm Oil Council webinar: Palm oil in post- pandemic
• HOLIDAY:
  Brazil

FRIDAY,
June 12:

• 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
• New
  Zealand food prices
• Shanghai
  exchange’s weekly commodities inventory
• HOLIDAY:
  Russia

Source:
Bloomberg and FI

 

 

 

 

 

 

 

 

 

USDA
inspections versus Reuters trade range

Wheat
432,919     versus  400000-625000           range

Corn
1,100,078  versus  800000-1250000         range

Soybeans
213,047     versus  350000-600000           range

 

USDA
reported soybean inspections at only 7.828 million bushels (213,000 tons), well below a trade range and lowest since 6/30/2016 when they were 7.087 million bushels.  Back then, from March 31, 2016 through July 14, 2016, the soybean inspection pace was terrible,
in part to a large South American crop. We note the lowest week reported during that period was 3.246 million as of May 19, 2016.

 

 

 

 

GRAINS
INSPECTED AND/OR WEIGHED FOR EXPORT

REPORTED IN WEEK ENDING JUN 04, 2020

— METRIC TONS —

————————————————————————-

CURRENT     PREVIOUS 

             ———–
WEEK ENDING ———-  MARKET YEAR  MARKET YEAR

GRAIN      06/04/2020  05/28/2020  06/06/2019    TO DATE     TO DATE  

 

BARLEY
0           0         196            0          196 

CORN
1,100,078   1,146,284     851,765   29,611,226   40,179,103 

FLAXSEED
0           0           0            0            0 

MIXED
0           0           0            0            0 

OATS
0           0         299            0          299 

RYE
0           0           0            0            0 

SORGHUM
195,657     125,119      52,436    3,515,642    1,465,689 

SOYBEANS
213,047     399,152     734,098   35,624,912   34,969,082 

SUNFLOWER
0           0           0            0            0 

WHEAT
432,919     555,500     479,754      169,153      470,766 

Total
1,941,701   2,226,055   2,118,548   68,920,933   77,085,135 

————————————————————————-

CROP
MARKETING YEARS BEGIN JUNE 1 FOR WHEAT, RYE, OATS, BARLEY AND

FLAXSEED;
SEPTEMBER 1 FOR CORN, SORGHUM, SOYBEANS AND SUNFLOWER SEEDS.

INCLUDES
WATERWAY SHIPMENTS TO CANADA.

 

 

Macros

 

<![if !supportLists]>·
<![endif]>Goldman Roll began on Friday

 

Corn.

 

<![if !supportLists]>·
<![endif]>Corn futures
ended
higher on follow through short covering from Friday and improving corn for ethanol demand. The strong US domestic demand for soybean meal is seen supportive for US corn futures.

<![if !supportLists]>·
<![endif]>AgRural lowered its second corn production estimate to 65.3 million tons from 66.7 million tons previously, 4 million tons below 2019.

<![if !supportLists]>·
<![endif]>Funds bought an estimated net 9,000 corn contracts.

<![if !supportLists]>·
<![endif]>USDA US corn export inspections as of June 04, 2020 were 1,100,078 tons, within a range of trade expectations, below 1,146,284 tons previous week and compares to 851,765 tons year ago. Major countries
included Korea Rep for 238,350 tons, Mexico for 223,330 tons, and Japan for 202,056 tons.

<![if !supportLists]>·
<![endif]>Goldman Roll started on Friday.

<![if !supportLists]>·
<![endif]>US slaughter rates are returning back to normal.  From TNS:

 

 

Corn
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.

 

U.S.
fuel ethanol production and inventory changes have largely followed motor gasoline

https://www.eia.gov/todayinenergy/detail.php?id=44015&src=email

 

 

Updated
6/4/20

• July
  corn is seen in a $3.20 and $3.45 range.  December lows could reach $2.90 if US weather cooperates.
  

 

 

Soybean
complex

 

• The
  soybean complex traded mixed, eventually ending the day slightly lower for the products down 1.0-3.0 cents led by the July.  US weather conditions remain favorable. China is expected to buy additional US soybean this week.  There were no 24-hour sales this
  morning.  Showers for the WCB from the tropical storm are expected to provide relief to the soybean crop.  Some areas west of these rains should be monitored over the next ten days as heat will set in by the end of the workweek.  US export inspections were
  poor.
• Funds
  sold an estimated net 4,000 soybeans, 2,000 soybean meal and were even in soybean oil.
  
• USDA
  US soybean export inspections as of June 04, 2020 were 213,047 tons, well below a range of trade expectations, below 399,152 tons previous week and compares to 734,098 tons year ago. Major countries included Japan for 56,397 tons, Mexico for 49,629 tons, and
  Egypt for 48,281 tons.  This was the lowest level since 6/30/2016 when they were 7.087 million bushels.  Back then, from March 31, 2016 through July 14, 2016, the soybean inspection pace was terrible, in part to a large South American crop. We note the lowest
  week reported during that period was 3.246 million as of May 19, 2016. 
• Bloomberg:
  China bought $185 million worth of American soybeans last week, according to U.S. Trade Representative Robert Lighthizer.
  
• Brazil
  exports of soybean to China during the month of May were 9.38 million tons, up from 7.36 million year ago, and compare to 6.7 million in April.  Total Brazil soybean exports during May were 15.5 million tons, down from 16.3 million in April and compares to
  10.8 million tons in May 2019. 
• The
  BRL was up against the USD (recovery) at 4.8165, back to March 13 levels.
• We
  heard India was looking to increase import taxes by about 5 percent.  According to Reuters, India currently has a 37.5% and 45% import tax on crude and refined palm oil, respectively. Imports of crude soybean oil, crude sunflower oil and rapeseed oil have
  a 35% import duty.

 

<![if !supportLists]>·
<![endif]>GAPKI reported Indonesia palm exports at 2.65 million tons for April, down from 2.72MMT in March. Stocks were seen at 3.4MMT, nearly unchanged from the end of March.  April palm oil production increased
12.6% from March.  

<![if !supportLists]>·
<![endif]>Malaysian was
on holiday today. 

<![if !supportLists]>·
<![endif]>Traders are looking for a 9.9 percent increase in May ending stocks for palm oil.

<![if !supportLists]>·
<![endif]>The European Union reported soybean import licenses since July 1 at 14.177 million tons, above 14.077 million tons a year ago. European Union soybean meal import licenses are running at 16.873 million
tons so far for 2019-20, above 16.550 million tons a year ago. EU palm oil import licenses are running at 5.353 million tons for 2019-20, down from 6.030 million tons a year ago, or down 11 percent.

<![if !supportLists]>·
<![endif]>European Union rapeseed import licenses since July 1 were 5.656 million tons, up 44 percent from 3.939 million tons from the same period a year ago.

 

 

Oilseeds
Export Developments

 

• Last
  week USDA bought 12,500 tons of vegetable oil for the export program and another 5,000 tons for the PL480 program.
  

• 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.

 

 

Managed
money net short position for soybean meal going home was estimated around 47,000 contracts versus 51,000 as of Tuesday evening.  We look for additional short covering this week.

 

 

Updated
6/4/20

• July
  soybeans are seen in a $8.35-$8.90 range. 
• July
  soybean meal is seen in a $280 to $310 range. 
• July
  soybean oil range is now seen in a 26.75 to 28.50 range. 

 

 

 

Wheat

 

• July
  Chicago wheat ended 0.50-3.75 cents lower. KC wheat ended slightly lower and MN higher.  The July KC contract found resistance overnight at its 20-day MA of 458.00 and bounced off that level.
  
• Funds
  sold an estimated net 4,000 soft red winter wheat contracts. 

<![if !supportLists]>·
<![endif]>USDA US all-wheat export inspections as of June 04, 2020 were 432,919 tons, at the low end of a range of trade expectations, below 555,500 tons previous week and compares to 479,754 tons year ago.
Major countries included China Main for 62,999 tons, Philippines for 53,000 tons, and Nigeria for 48,731 tons.

• World
  Weather: “Net drying in the eastern two-thirds of Ukraine and Russia’s Southern Region along with ongoing dry conditions in Kazakhstan may lead to some crop stress and if it persists long enough could lead to summer crop yield issues.”
• Coceral
  lowered its forecast of soft wheat production this year in the European Union and Britain to 129.7 million tons from 135.4 million estimated last month.
• Paris
  September milling wheat dropped 0.4% to 186.00 euros ($210.2) a ton.
• SovEcon
  reported 12.5 percent Black Sea wheat prices for July at $204.50/ton FOB, up $2.50 from the previous week.  IKAR had $206, up $6.00 for July-Aug.
  

<![if !supportLists]>·
<![endif]>Interfax news agency via Reuters: Russia’s southern Stavropol region, one of country’s main grain-producing areas, may see its 2020 crop fall by 40% compared with last year due to cold weather and
drought.

<![if !supportLists]>·
<![endif]>An Australian official mentioned China was unresponsive to pleas to calm tensions between both countries.

<![if !supportLists]>·
<![endif]>CFTC-CBOT wheat speculators trim net short position by 4,259 contracts to 39,058.

<![if !supportLists]>·
<![endif]>The European Union granted export licenses for 113,000 tons of soft wheat exports, bringing cumulative 2019-20 soft wheat export commitments to 32.316 MMT, up from 19.591 million tons committed at
this time last year, a 65 percent increase.  Imports are down 49 percent from year ago at 3.872 million tons.

 

 

 

Export
Developments.

• Pakistan
  seeks to import 500,000 tons of wheat sometime this year to boost inventories.
  
• Jordan
  seeks 120,000 tons of wheat on June 17 for November-December shipment. 

 

 

Rice/Other

 

• CBOT
  July rice continued to erode versus the September contract.
• Results
  awaited: Lowest offer $489.25/ton from Myanmar.  The Philippines seeks 300,000 tons of rice.
  

 

 

 

Updated
6/4/20

 

• Chicago
  July is seen in a $5.00-$5.31 range
• KC
  July $4.65-$4.95
• MN
  July $5.10-$5.40