FI Evening Grain Comments 06/09/20

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Weather

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:  Once remnants of Tropical Depression Cristobal leave the Corn Belt, net drying is expected for a while. Soil moisture will be favorable for good crop development in most areas, although slowly declining soil
moisture in the eastern Midwest and parts of the Tennessee River Basin will be closely monitored. Timely rain will be very important for all of these areas late this month and in July.

           
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. Dryness remains in a part of the eastern Prairies and rain will have to fall more significantly soon to ensure that
the dryness does not become a greater problem.

           
South America weather remains mostly good for maturing crops and their harvest. Dryness in some eastern and northern Safrinha crops may have harmed late season yields. Argentina’s harvesting will continue aggressively.

           
Rain is needed in South Africa and Australia to improve canola planting conditions. Some rain is expected in Australia late this week.

           
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. Rain in Nebraska, parts of Kansas and a few Colorado locations today will benefit late season crop development.

           
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.

Source:
World Weather Inc. and FI

Bloomberg
Ag Calendar

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

 

www.conab.gov.br/info-agro/safras/graos

 

 

 

 

 

 

 

Macros

·        
Goldman Roll began on Friday

 

Corn.

·        
An increase in US crop ratings and US Midwest forecast for rain this week are prompting CBOT corn futures to take a breather after three consecutive days of higher prices. 

·        
Funds sold an estimated net 16,000 corn contracts. 

·        
Conab reported the 2020 corn crop at 101 million tons, 1.2 million tons above a Bloomberg estimate and down 1.3 million tons projected last month.

·        
Yesterday AgRural lowered its second corn production estimate to 65.3 million tons from 66.7 million tons previously, 4 million tons below 2019.  Conab is at 74.233 million for the second crop, down
from 75.913 million in May.

·        
USDA reported a one-point increase for the US corn crop condition to 75 percent G/E categories, in line with trade expectations.  97 percent of the corn crop had been planted. 

·        
Goldman Roll started on Friday. 

·        
Soybean and Corn Advisory
www.soybeansandcorn.com

• 2019/20
  Brazil Corn Estimate Unchanged at 96.0 Million Tons
• 2019/20
  Argentina Corn Estimate Unchanged at 49.0 Million Tons
• A
  Bloomberg poll looks for weekly US ethanol production to be up 46,000 at 811,000 barrels (796-842 range) from the previous week and stocks to decrease 221,000 barrels to 22.255 million.

 

Corn
Export Developments

• None
  reported

 

 

Updated
6/9/20

• July
  corn is seen in a $3.20 and
  $3.40 range. 
  December lows could reach $2.90 if US weather cooperates. 

 

Soybean
complex

• The
  soybean complex traded lower on poor US export inspections and forecast for rain for the WCB. Outside markets are weighing on prices. USD was up 19 at the time this was written.  Meal/oil spreading reversed by mid-morning trading that supported soybean oil
  prices.    Soybeans ended lower but well off the intraday low after wires reported rumors that China bought 2 US PNW cargoes of soybeans for December shipment. 
  
• Funds
  were even in soybeans, sold 3,000 soybean meal and bought 2,000 soybean oil. 
  

·        
USDA reported 72 percent of the US soybean crop in G/E shape, up from 70 percent previous week and 1 point above the average trade guess.  86 percent of the crop had been planted.

• 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. 
  
• Most
  US soybean processors have boost supply as the recent rally in futures enticed producer selling.  With the downturn today, producer selling slowed.  
  
• China
  soybeans were up 2.4 on Tuesday. 
• Conab
  reported the Brazil soybean crop at 120.4 million tons, up just 100,000 tons from the previous month but well below trade expectations of 122.5 million tons. 
  
• USDA
  will update their world crop production estimates on Thursday. 
• France’s
  AgMin estimated their winter rapeseed crop at 3.46 million tons, nearly unchanged from 2019 and 27.3% below the 2015-2019 average.

·        
Malaysia
is back from holiday and palm futures prices were up 3.2 percent , highest since March 31.  Traders are looking for large June 1-10 shipments compared to last month after the government last week said they will exempt export duties until December. Note this
move favors crude oil palm exports over processed palm oil.  MBOB is due out on Wednesday. Traders are looking for a 9.9 percent increase in May ending stocks for palm oil.

·        
Soybean and Corn Advisory
www.soybeansandcorn.com

• 2019/20
  Brazil Soybean Estimate Unchanged at 121.0 Million Tons
• 2019/20
  Argentina Soybean Estimate Unchanged at 50.0 Million Tons

 

Oilseeds
Export Developments

• None
  reported overnight.  There are rumors China bought cargos in recent days, but we can not confirm this.
  

• 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.

 

Updated
6/9/20

• 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 27.25 to 28.75 range. 

 

Wheat

• Improving
  weather conditions for the US and large upward revision to the Australian wheat crop sent US wheat futures lower.  After the close Egypt announced they are in for wheat for July 12-22 shipment. 
  
• Funds
  sold an estimated net 7,000 soft red winter wheat contracts. 
• Australia
  increased their wheat production forecast to 26.7 million tons from 21.3 million tons estimated in March, a 25 percent increase.  Favorable rain and an 8 percent increase in the area were noted.  USDA is using 24 million tons for 2020-21, up from 15.2 million
  tons for 2019-20 and 17.3 million prior year,  In 2016-17 Australia produced 31.8 million tons. 
  

·        
Harvest progress for the US winter wheat crop was reported at only 7 percent, 5 points below expectations.  Winter wheat conditions were unchanged. The trade was looking for a 1-point decrease. 

·        
US spring wheat was 97 percent planted and conditions remain very favorable at 82 percent, 2 points above the previous week and 2 points above what the trade expected.

• US
  wheat harvest progress will likely be rapid this week as the tropical rains stay east of the large HRW wheat production areas. 
  
• Central
  Russia will be hot this workweek, through at least Friday, and the southern regions will be hot through Monday. 
  
• Rains
  should return to southeastern Queensland and northeastern New South Wales states on Wednesday and Thursday – Bloomberg
• France’s
  AgMin estimated the soft wheat area at 4.59 million hectares, down from 4.62 million last month and 8 percent lower than 2019. 
  
• Paris
  September milling wheat was down 1.50 euros, or 0.8%, at 184.50 euros ($209.5) a ton.

 

Export
Developments.

• Egypt
  is in for wheat for July 12-22 shipment. 
• The
  Philippines seek 168,000 tons of feed wheat on Wednesday for August 16-October 22 shipment, depending on origin. 
  
• Thailand
  bought 240,000 tons of feed wheat on June 10 for August and September shipment. 
  
• Ethiopia
  cancelled their import tender for 400,000 tons, part of the 600,000 tons sought, due to higher prices.  Reuters reported prices offered included $215.64/ton fob Russian and $206.95 fob Ukrainian.  
  
• 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 tank versus the September contract. This spread has made violent moves over the past week. 
  
• South
  Korea’s Agro-Fisheries and Food Corp seeks 80,605 tons of non-glutinous rice for October 2020 and March 2021 shipment.
  

    TONNES(M/T)   
GRAIN TYPE    ORIGIN    ARRIVAL/PORT

           
90     Milled Long   Thailand  Oct 31,2020/Busan

        
1,410     Milled Long   Thailand  Oct 31,2020/Busan

       
20,000     Brown Short   China     Jan 31,2021/Gunsan

       
20,000     Brown Short   China     Jan 31,2021/Ulsan

       
20,000     Brown Short   China     March 31,2021/Donghae

       
19,105     Brown Short   China     March 31,2021/Mokpo

• Results
  awaited: Lowest offer $489.25/ton from Myanmar.  The Philippines seeks 300,000 tons of rice. 
  

 

Updated
6/9/20

• Chicago
  July is seen in a $4.90-$5.25 range
• KC
  July $4.45-$4.85
• MN
  July $5.10-$5.40