FI Evening Grain Comments 06/16/20

PDF Attached

 

 

Weather

US week one GFS showed southern Plains wetter Thursday into Saturday but southwestern Kansas and eastern Oklahoma was wetter. 

 

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 crop conditions will remain mostly good. 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 with less rain in the west and more in the east for a little while.
• India’s planting weather for coarse grain and oilseeds will be good over the next couple of weeks. 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 recently may have reduced crop quality and certainly delayed harvesting.
• Australia’s weather will be favorable for canola areas over the next ten days. 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.
• 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 bearish bias to market mentality because of anticipated better weather.

 

MARKET WEATHER MENTALITY FOR WHEAT:

• Periodic rain in Canada’s Prairies and eventually in the U.S. northern Plains will bring a little improvement to small grain crops, but more rain will be needed. Eastern and far south-central Saskatchewan and parts of Manitoba are still quite dry along with western North Dakota and eastern Montana. 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.
• Quebec and eastern Ontario crop conditions will be mostly good over the next ten days.
• 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 this week. Wetter conditions next week could interfere with some farming activity.
• 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.

Source: World Weather Inc. and FI

 

WPC 5-day Quantitative Precipitation Forecast

 

Bloomberg Ag Calendar

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

 

Macros

US Retail Sales Advance (M/M) May: 17.7% (exp 8.4%; prev -16.4%)

–          Retail Sales Ex Auto (M/M) May: 12.4% (exp 5.5%; prev =17.2%)

–          Retail Sales Ex Auto And Gas May: 12.4% (exp 5.1%; prev -16.2%)

–          Retail Sales Control Group May: 11.0% (exp 5.2%; prev -15.3%)

US Industrial Production (M/M) May: 1.4% (exp 3.0%; R prev -12.5%)

–          Capacity Utilization May: 64.8% (exp 66.9%; R prev 64.0%)

 

Corn.

·         Corn closed marginally down on the day but spent most of the session higher on the G/E crop decline revealed yesterday’s USDA crop conditions report.  The market expects rallies to run into farmer selling and we may have seen that today into the close.

·         Corn crop conditions foe good-to-excellent 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. 

·         Ukraine’s Economy Minister raised the grain crop forecast to 68 million tons from 65-68 million.

·         USDA Cattle on Feed is due out at the end of the week. 

·         Funds were net sellers of 1,000 corn contracts on the session.

 

Corn Export Developments

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

 

Bloomberg Survey for EIA Ethanol Report

	Survey Results			EIA
	Avg	Low	High	Prev. Week
Production (k bpd)	876	843	905	837
Stockpiles (m bbl)	21.748	21.502	22.000	21.802
Source: Bloomberg and FI

 

 

 

 

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 finished lower on weaker meal markets and worries over Chinese purchases as Beijing COVID-19 cases spiked. 
• Soybeans were  higher led by outside markets, higher corn and rumors China bought a couple cargoes of US soybeans on Monday, but we saw no large business done as the USDA did not report any sales

·         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. 

• We see China buying US soybeans this week as the price for Brazilian soybeans increased in recent weeks. 
• Brazil exported just over 6 million tons of soybeans during FH June.
• Funds were net sellers of 3,000 soybean contracts and 2,000 meal contracts, and buyers of 2,000 soybean oil contracts on the session.
• Brazil’s oil regulator, ANP, announced a reduction in biodiesel blending mandates to B10 from B12 until June 21 to keep the supply chain moving as the feedstock may not be sufficient to meet the previous blending levels to diesel B, which has been widely consumed, despite the current pandemic situation.

·         Indonesia will push back its biodiesel target targets to 2026 due to slowing consumption and production of the fuel.  Indonesia 2020 biodiesel consumption is seen around 8 million kiloliters, below a target of 9.6 million KL. 

 

 

Oilseeds Export Developments

• Egypt’s GASC passed on 30,000 tons of soybean oil and 10,000 tons of sunflower oil for Aug 20 – Sep 5 shipment.  Lowest offer for SBO was $707.75 tons and sunflower oil at $802.50, not including freight.  

• Egypt’s GASC seeks 3,000 tons of soybean oil and 2,000 tons of sunflower oil in local market for Aug 10-30 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 was hit today with harvest selling and relaxation of export quotas on Russian grain exports. 
• US spring and winter wheat crop ratings declined by one point each which helped wheat gain in early trading.
• Russia sad they have no plans to impose grain export quotas between the July and December period, but may raise them after that.  
• Building global wheat supplies accompanied with harvest should keep pressure on the crop’s upside.  Price usually finds demand so look for global tender activity to increase following the break below the psychological $5.00/bu for WU0 and WN0 we saw today. 
• Paris December wheat ended down 1.00 euros at 182.50.
• Funds were net sellers of 8,000 SRW wheat contracts on the session.

 

 

Export Developments.

• Taiwan Flour Millers’ Association seeks 88,815 tons of US milling wheat on June 19.  One consignment of 39,300 tons is sought for shipment between Aug. 10 and Aug. 24 while a second of 49,515 tons is sought for shipment between Aug. 26 and Sept. 9. (Reuters)
• Japan seeks 80,000 tons of feed wheat and 100,000 tons of feed barley on June 17 for arrival by November 26. 
• Japan seeks 76,143 tons of food wheat from the US and Australia this week. 

• 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