FI Evening Grain Comments 06/15/20

PDF Attached

 

Opening
calls:

Corn
4-5 cents higher, soybeans steady to 2 higher and wheat up 3-4 cents. 

 

 

Crop
Conditions

 

 

 

 

 

 

 

Weather

 

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:  U.S. crop weather remains mostly good and should stay that way through the next ten days. Southeastern Canada’s frost and freezes during the weekend may have damaged some corn and soybeans, but the impact should have
been low. Canola in Canada’s Prairies varies from being too wet in the west to too dry in the east. Some relief to the Prairies weather will occur over the next two weeks.

            India’s
planting weather for coarse grain and oilseeds is advancing well.

Relief
to dryness in east-central China last week has improved summer crop prospects in some areas. However, net drying in parts of the North China Plain and northern Yellow River Basin this week will raise unirrigated crop stress. Flooding in rapeseed areas during
the weekend may have reduced crop quality and certainly delayed harvesting.

            Australia’s
weekend rain was good for canola areas and additional showers are expected over the next ten days to maintain that trend.

            South
Africa’s western canola benefited from some rain during the weekend, but more is needed.

            Argentina’s
harvest has advanced well recently and will continue to move forward around periods of rain. Brazil’s Safrinha corn is maturing, although some late season filling occurred while dryness prevailed resulting in greater worry over late season yield and quality
declines. Brazil’s weather has not been seriously impacting late season crops, but some small impact is expected.

           
South Africa’s harvest is advancing relatively well.

            Europe
weather is trending sufficiently wet to improve many crops. Net drying from the Volga River Basin into Kazakhstan could harm some summer coarse grain and oilseed crops if the trends last deeply into the summer.

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

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Rain moving through a part of Saskatchewan Canada Sunday was benefiting some very dry areas in the province, but there are other areas in the Prairies that still need relief. Eastern and far south-central Saskatchewan and parts
of Manitoba are still quite dry. Additional opportunity for rain will evolve later this week for some of the drier areas. In the meantime, parts of Alberta are still too wet and will stay that way for a while this week.

            Frost
and freezes in Quebec and eastern Ontario during the weekend may have negatively impacts a small amount of wheat, but the impact is not known.

            Northern
U.S. Plains will be another area dealing with pockets of dryness during the next ten days while other areas are sufficiently moist.

            Good
harvest weather is expected in U.S. hard red winter wheat areas and a favorable environment for late season filling will occur in Nebraska, northern Kansas as well as across the Midwest.

            Europe
weather will be mostly good for winter crops, although there may be some need for drier weather in early maturing crop areas to protect small grains from wet weather disease. Drying from the Volga River Basin into Kazakhstan may be a threat to unirrigated
winter crops, but most of the region’s crops are still rated favorably today. Spring wheat areas in the eastern Russia New Lands are also experiencing mostly favorable conditions, but some rain is needed near the Kazakhstan border.

            China’s
southern wheat quality may be slipping because of recent heavy rainfall. Drier weather will be slow to return and that may prolong harvest delays and concern over grain quality.

            Australia’s
recent rain was good for improving establishment for wheat and barley across the nation, although more rain is still needed in many areas.

            South
Africa recent rain in the far west was welcome, but rain is needed in other winter crop production areas. Rain coming up in Argentina during mid-week this week will be a tremendous help for wheat germination and emergence.

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

Source:
World Weather Inc. and FI

 

 

 

WPC
5-day Quantitative Precipitation Forecast

 

Bloomberg
Ag Calendar

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

 

CFTC
COT

 

 

 

 

 

 

 

 

 

USDA
inspections versus Reuters trade range                                            

Wheat      
444,031     versus  400000-600000           range

Corn         
910,495     versus  950000-1250000         range

Soybeans  
376,323     versus  300000-500000           range

 

 

 

GRAINS
INSPECTED AND/OR WEIGHED FOR EXPORT

                 
REPORTED IN WEEK ENDING JUN 11, 2020

                           
— METRIC TONS —

————————————————————————-

                                                  
CURRENT     PREVIOUS 

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

 
GRAIN      06/11/2020  06/04/2020  06/13/2019    TO DATE     TO DATE   

 

BARLEY             
0           0           0            0          196 

CORN         
910,495   1,161,477     678,024   30,583,120   40,857,127 

FLAXSEED           
0           0           0            0            0 

MIXED              
0           0           0            0            0 

OATS             
200           0           0          200          299 

RYE                
0           0           0            0            0 

SORGHUM      
222,400     196,102       3,669    3,738,487    1,469,358 

SOYBEANS     
376,323     274,052     680,370   36,114,746   35,649,452 

SUNFLOWER          
0           0           0            0            0 

WHEAT        
444,031     477,236     382,670      657,501      853,436 

Total      
1,953,449   2,108,867   1,744,733   71,094,054   78,829,868 

————————————————————————-

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.

 

The
Fed says it is going to start buying individual corporate bonds

https://www.cnbc.com/2020/06/15/the-fed-says-it-is-going-to-start-buying-individual-corporate-bonds.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail

 

Corn.

·        
Corn
ended 0.75 lower in July and 1.50 cents lower for the December.  Bearish outside markets and good weather for the US pressured prices.  Weather should be in focus this week.  Warmer and drier weather may stress some of the crop that missed rain across the
far western Corn Belt.  Therefore, we see limited downside on corn prices this week.  Weather models between the GFS and European (wetter) differ for precipitation for the US during the 6-10 timeframe.  Precipitation should be monitored with the noon and am
models over the next few days. 

·        
Funds sold an estimated net 4,000 contracts. 

·        
Fears of a second spike in Covid rattled markets on Monday. 

·        
Corn crop conditions declined 4 points due to large downward revisions in WCB states and 2 points declines in the “I” states.  We lowered our corn yield but still considered relatively high.  At
178.0 it would be up from 167.8 bushels per acre. 

·        
China corn futures hit a 5-year high. 

·        
USDA US corn export inspections as of June 11, 2020 were 910,495 tons, below a range of trade expectations, below 1,161,477 tons previous week and compares to 678,024 tons year ago. Major countries
included Japan for 280,563 tons, Mexico for 216,822 tons, and Korea Rep for 69,418 tons.

 

Corn
Export Developments

• Taiwan’s
  MFIG seeks 65,000 tons of corn on Wednesday for October 2-21 shipment.

 

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 ended lower led by the September position despite USDA confirming additional sales to China.  Soybean meal ended lower and soybean oil higher by 18-24 points.  We see China buying US soybeans this week as the price for Brazilian soybeans increased
  in recent weeks. 

·        
Funds were net sellers of 2,000 net soybeans, sold 1,000 meal, and bought 2,000 net soybean oil contracts. 

·        
US soybean conditions were unchanged in the G/E categories and we left our yield estimate unchanged at 50.3 bushels per acre.  Over the next couple of weeks that could decline if dryness hampers
recently planted soybeans.  93 percent of the crop had been planted. 

• Argentina
  was on holiday. 
• NOPA
  May US crush came in 3.5 million bushels below expectations and soybean oil stocks were 188 million pounds below a Reuters trade guess.  
  

·        
USDA US soybean export inspections as of June 11, 2020 were 376,323 tons, within a range of trade expectations, above 274,052 tons previous week and compares to 680,370 tons year ago. Major countries
included Egypt for 104,152 tons, China Main for 68,253 tons, and Bangladesh for 55,496 tons.

·        
Soybean meal basis at Claypool, IN dropped $5.00 per short ton to 5 over. 

·        
AmSpec June 1-15 Malaysia palm exports were 922,251 tons, up from 504,928 tons month earlier.  ITS was at 914,120 tons, up 82.5%. 

·        
Indonesia 2020 biodiesel consumption is seen around 8 million kiloliters, below a target of 9.6 million KL.  B30 will likely not be achieved. 

 

The
NOPA crush report
was supportive soybean oil prices, in our opinion, with the trade looking for over 2.0 billion pounds for end of May stocks.  At 1.880 billion pounds, it was 188 million below a Reuters trade guess and lowest since end of December ending stocks.  There may
have been more downtime than expected during the month of May.  The crush of 169.6 million bushels was 3.5 million below the average trade guess.  At 5.47 million bushels per day, this was the lowest daily rate since September.  Soybean meal exports were good
at 776,700 short tons, above 617,300 short tons a year ago but below May 2018 of 904,900 tons.  The soybean meal yield was unchanged from the previous month at 47.11 and compares to 47.36 year ago. 

 

 

Oilseeds
Export Developments

• Under
  the 24-hour announcement system, US exporters sold 390,000 tons of soybeans to China for 2020-21 delivery.
  
• Egypt
  seeks 30,000 tons of soybean oil and 10,000 tons of sunflower oil for Aug – Sep 5 shipment.
  

• 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
6/15/20

• 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 27.00 to 28.25 range

 

Wheat

• US
  wheat traded mixed on prospects for large global supplies and US winter wheat harvest pressure.  A sharply lower USD limited losses. Nearby Chicago wheat ended higher and back months.  KC settled lower and MN mostly higher. 
  
• Funds
  were net even in Chicago wheat.
• US
  spring and winter wheat crop ratings declined by one point each.  We slightly adjusted our winter wheat production estimate. Spring and durum production combined was left unchanged. 
  

·        
USDA US all-wheat export inspections as of June 11, 2020 were 444,031 tons, within a range of trade expectations, below 477,236 tons previous week and compares to 382,670 tons year ago. Major countries
included Philippines for 130,656 tons, Mexico for 57,479 tons, and Japan for 51,891 tons.

• Paris
  September wheat 2.25 euros to 181.25/ton. 
• Good
  rain fell across south and central Germany over the weekend. 
• The
  EU Crop Monitor lowered their estimate of the 2020 soft wheat yield to 5.60 tons per hectare from 5.72 tons in May. 
  
• Russian
  wheat export prices for 12.5% protein was up $0.50/ton to $205/ton fob, according to SovEcon.  IKAR reported $206/ton, flat from the previous week. 
  
• ABARES
  estimated 2020-21 wheat exports at 16.5 million tons, up from 8.897 million tons in 2019-20 and 8.897 million in 2018-19.  They have new-crop production at 26.7 million tons. 
  

 

Export
Developments.

• Saudi
  Arabia bought about 1.08 million tons of barley for arrival between August and September at an average price of $198.81/ton. 
  
• 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
6/15/20

• Chicago July is seen in a $4.95-$5.20 range
• KC July $4.35-$4.65
• MN July $5.00-$5.25