FI Evening Grain Comments 06/11/20

Jun 11, 2020

PDF Attached

 

USDA’s
largest surprise today was likely in US soybean oil stocks.  USDA reported 720,000 tons of soybeans were sold to China.  USDA due out later.   China S&D’s unchanged for 2020-21.  USD is higher and WTI crude sharply lower.  US Dow futures are down nearly 900
points.  The US Fed estimates a three-year recovery in GDP. 

 

 

USDA
released it June report update 

 

Initial
reaction:

Bearish
soybean oil and wheat.  Bull spreading corn justified with change in 2019-20 and 2020-21 US ending stocks.

USDA
NASS and OCE executive summaries

https://www.nass.usda.gov/Newsroom/Executive_Briefings/index.php

https://www.usda.gov/oce/commodity/wasde/Secretary_Briefing/index.htm

 

 

 

 

  • USDA
    increased 2020 US wheat production by 27 million bushels by increasing HRW by 25 million and winter white by a small amount.
  • US
    all wheat ending stocks were taken up 16 million bushels to 925 million, 6 percent below 2019-20.

<![if !supportLists]>·
<![endif]>US 2019-20 corn ending stocks came in 47 million bushels below trade expectations at 2.103 billion, 5 million above the previous month, promoting bull spreading. This is because new-crop US corn stocks of 3.323 billion ended up
37 million bushels below an average trade guess.  US corn for ethanol for 2019-20 was

<![if !supportLists]>·
<![endif]>US new-crop (2020-21) soybean oil stocks were upward revised 135 million pounds, the biggest surprise in this report, in our opinion.  USDA took the 2019-20 soybean crush up 15 million bushels and to compliment new-crop, they
raised 2020-21 US crush by 15.  This added a combined 285 million pounds of soybean oil to supply.  At 2.0 billion pounds ending stocks for 2020-19 and 2019-20 stocks forecast at 1.940 million, soybean oil prices fell further late this morning.  USDA increased
2019-20 US soybean oil exports by 150 million pounds and raised new-crop exports by 100 million.  Biodiesel was again cut by USDA for 2019-20, this time by 100 million pounds to 7.500 billion, too low in our opinion.

<![if !supportLists]>·
<![endif]>US soybean stocks for 2019-20 were near expectations and new-crop were reported 31 million below the trade guess. USDA lowered 2019-20 US soybean exports by 25 million to reflect higher Brazilian exports.

<![if !supportLists]>·
<![endif]>There was no change in soybean meal stocks by USDA increased domestic use for 2019-20 by 400,000 short tons and raised new-crop by 300,000 short tons.

<![if !supportLists]>·
<![endif]>2019-20 world ending stocks for corn and soybeans tightened slightly, and world wheat was up slightly.  USDA took 2019-20 Brazil soybean exports up 1 million tons to 85 million tons.

<![if !supportLists]>·
<![endif]>New-crop world wheat stocks increased 6.0MMT to 310 million, 6.8 percent higher than end of 2019-20.  India’s wheat production was upward revised a large 4.2 million tons to 107.2 million tons, and if the government provides an
incentive for exporters, India could easily contribute to the world trade.

 

 

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, the far southwestern Corn Belt 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.


Canada’s Prairies are too wet in the west and a little too dry in parts of the south-central and east.  Some canola and other late season planting has stopped in the wetter areas of Alberta and those fields may be abandoned because of too much moisture and
the lateness of the season. Rain in the eastern Prairies late this weekend into early next week may offer some relief.


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, although rain in the east will induce
some disruption.


Rain is needed in South Africa and Australia to improve canola planting conditions. Some rain is expected in Australia beginning in the west today and reaching the east Friday into Saturday.


Philippines rainfall is being boost by a tropical disturbance with additional dryness relief expected in Luzon Island over the next few days.

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 and a boost in rain is still needed in France, parts of the U.K. and Germany. Some of that needed rain is coming.


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 eastern parts of Russia’s Southern Region.


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

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Too
much rain recently in Alberta, Canada has raised concern over small grain conditions and additional rain slated for the next several days will induce some additional concern and crop damage. Eastern parts of the Prairies may get some needed rain late this
weekend into early next week, but many areas will be looking for greater rain.


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 earlier this week benefited late season
crop development.


Rain in Europe has improved small grain conditions in recent weeks, although there is need for more rain in France, the U.K. and parts of Germany. Eastern Europe would benefit from some warmer temperatures.  Spring cereals are still rated favorably in many
areas outside of northwestern Europe with little change expected through the coming 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. Net drying in central
and eastern Ukraine will raise some concern over small grain crop conditions later this month, but conditions today are still good.


Australia’s rain event expected from west to east over the next few days should improve some crops, but there will be an ongoing need for greater moisture.  A follow up rain event in the west during mid-week next week will improve some crops.

South
Africa and parts of Argentina still need greater rainfall to support wheat planting and establishment. Eastern Argentina wheat areas should get some beneficial rain next week.


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

Source:
World Weather Inc. and FI

 

CPC
sees a 60 percent chance of a neutral weather through the summer (NH)

 

<![if !vml]>30-day outlook - Temperature Probability<![endif]><![if !vml]>30-day outlook - Precipitation Probability<![endif]>

 

 

 

 

Bloomberg
Ag Calendar

 

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

 

 

 

 

 

 

 

 

Macros

 

<![if !supportLists]>·
<![endif]>US Dow futures are sharply lower, USD higher and WTI more than $2.50 lower

<![if !supportLists]>·
<![endif]>livesquawk US Initial Jobless Claims Jun 6: 1542K (est 1550K; prevR K; prevR 1897K; prev 1877K)

US
Continuing Claims May 30: 20929K (est 20000K; prevR K; prevR 21268K; prev 21487K)