FI Evening Grain Comments 06/12/20

PDF Attached

 

Weather
and Crop Conditions

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:  

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

WPC
5-day Quantitative Precipitation Forecast

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

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

MONDAY,
June 15:

• Monthly
  MARS bulletin on crop conditions in Europe
• USDA
  weekly corn, soybean, wheat export inspections, 11am
• USSEC’s
  Asia Trade Exchange 2020, day 1
• U.S.
  crop progress — corn, soybean plantings, winter wheat conditions, 4pm
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• Malaysia’s
  palm oil export data for June 1-15

TUESDAY,
June 16:

• New
  Zealand global dairy trade auction
• Abares
  agricultural commodities report for June quarter 2020
• Asia
  Trade Exchange 2020, day 2

WEDNESDAY,
June 17:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• Asia
  Trade Exchange 2020, day 3

THURSDAY,
June 18:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
• Brazil
  Conab releases 2nd estimate for 2020 coffee crop, Sao Paulo
• Port
  of Rouen data on French grain exports
• USDA
  total milk production, 3 pm

FRIDAY,
June 19:

• ICE
  Futures Europe weekly commitments of traders report, 1:30pm (6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• FranceAgriMer
  weekly update on crop conditions
• U.S.
  Cattle on Feed, 3pm

SATURDAY,
June 20:

• Malaysia’s
  palm oil export data for June 1-20

Source:
Bloomberg and FI

 

 

 

 

Corn.

·        
July corn rose only a quarter-cent today in a quiet trade.  With mild weather currently and the crop in great shape, there is no impetus to move. 

·        
Weather should be in focus for the upcoming week.  Warmer and drier weather may stress some of the crop that missed rain across the far western Corn Belt.

·        
We look for soybean and corn crop conditions to improve when reported by USDA on Monday, but with dry weather on horizon, they could decline the following two to three weeks.  Conditions are already
at high levels for this time of year for both crops. 

·        
APK-Inform increased its forecast for Ukraine corn production to 35.4 million tons from 35.1 million a month ago and compares to 35.8 million tons in 2019.  They will likely dominate the Chinese
import market for at least three years running. 

·        
CFTC reported that corn specs increased their net shorts by 17,066 contracts to short 332,285 contracts for the week ending June 9.

·        
Funds were net sellers of 2,000 net corn contracts on the session.

·        
Flint Hills Resources announced the closure of its 120 MLN gallon/year ethanol facility in Camila, Georgia which has been idled since May because of COVID-19 caused demand destruction.

 

Corn
Export Developments

• None
  reported

 

 

 

Updated
6/11/20

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

 

Soybean
complex

• CBOT
  soybeans closed higher after USDA announced additional soybeans were sold under the 24-hour system.  US soybean currently make the most sense economically on the global market for China so expect them to continue buying despite trade tensions.
  
• Poor
  China crush margins should be monitored as they are in focus for Q4 interest. Note China sold all of its 60,486 tons of soybeans overnight at auction.
  
• If
  soybean prices were to rise over the next week due to unfavorable US weather, we are under the opinion meal will appreciate over soybean oil after USDA pegged new-crop soybean oil ending stocks at a physiological 2.0 billion pounds.  Coupled with Argentina
  crushing woes, we look for US soybean meal export interest to remain high. 
  
• Our
  carryout for the 2019-20 US soybeans balance stands at 517 million bushels and new-crop at 509 million.  Reason we have a large new-crop carryout is we look for exports to total 1.975 billion bushels, less than USDA.  We believe with more than 30 percent of
  the Brazil new-crop soybeans sold, area will expand around 1.5-2.5 percent, and Brazil, if weather permitting, will realize a record 2021 production, and again suppress the US soybean export potential. 
  

·        
CFTC reported that soybean specs decreased their net shorts by 16,115 contracts to short 3,300 contracts for the week ending June 9.

·        
Funds were net buyers of 6,000 net soybeans, and sold 2,000 net soymeal, and sold 1,000 net bean oil contracts.

 

 

 

 

Oilseeds
Export Developments

• Under
  the 24-hour announcement system, US exporters sold 120,000 tons of soybeans to unknown for 2020-21 delivery.
  
• Sold
  all @ 4,679 yuan per ton: China’s Sinograin will sell 60,486 tons of domestic 2017 soybeans from reserves on Friday, out of Heilongjiang. 
  

• 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
6/11/20

• July
  soybeans are seen in a $8.44-$8.85 range. 
• July
  soybean meal is seen in a $280 to $310 range. 
• July
  soybean oil range is seen in a 26.75 to 28.25 range

 

Wheat

• US
  wheat reversed early losses to close higher today on some mild short-covering prompted by the weather outlook calling for net drying across the Prairies and US Great Plains. 
  
• French
  wheat conditions were unchanged from the previous week at 56 percent G/E, well down from 80 percent year ago and lowest level since they started reported just over a decade ago.
  

 

• France
  experienced their second warmest spring on record behind the 2011 calendar year. 
  
• Paris
  December wheat finished up 1.00 euro at 185.75.
• Funds
  bought a net 3,000 wheat contracts on the session.

·        
CFTC reported that wheat specs increased their net shorts by 3,950 contracts to short 43,008 contracts for the week ending June 9.

• We
  look for no change in the US spring (very high rating) and winter wheat rating on Monday.
  

 

Export
Developments.

• Saudi
  Arabia seeks 960,000 tons of barley for arrival between August and September. 
  
• Japan
  seeks 80,000 tons of feed wheat and 100,000 tons of feed barley on June 17 for arrival by November 26. 
  
• Jordan
  seeks 120,000 tons of wheat on June 17 for November-December shipment. 

 

 

Rice/Other

• 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

 

 

 

Updated 6/11/20

• Chicago July is seen in a $4.80-$5.05 range
• KC July $4.35-$4.65
• MN July $5.00-$5.25