FI Evening Grain Comments 06/23/20

PDF Attached

 

Weather
and Crop Progress

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:  U.S. weather is expected to be nearly ideal over the coming two weeks with periodic showers and thunderstorms intermixing with periods of sunshine and warm temperatures over this first week while drying and warming
occurs in the second week. Crop development will advance aggressively.

            Summer
crops in Europe may trend drier in the west, but some rain will return in early July to prevent dryness from becoming a big issue. Eastern Europe and the western CIS will continue favorably moist throughout the next two weeks. Most of China’s summer coarse
grain and oilseed crops will also stay in good shape along with much of India’s crops. Some dryness will occur north of the Yellow River in China while the Northeast Provinces in China are a little too wet, but the impact on corn and soybeans should be low.

           
Drying in Russia’s Southern Region will continue a concern.

            Canola
production potential in Australia is looking good, but rapeseed in China has suffered from too much moisture this year. Europe’s winter rapeseed has likely yielded a little poorly, but summer crops are poised to perform well.

            Brazil
Safrinha corn is maturing relatively well and harvesting in Argentina has gone well also.

            The
bottom line will likely lead to a bearish bias for market mentality today, although there is some evidence that ridge building will occur in early July over some key U.S. crop areas.

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Weather conditions in U.S. hard red winter wheat in the Plains and soft red wheat areas in the Midwest will be wet enough this week to raise some concern over crop quality, but drier weather should evolve in time to limit the
impact of too much moisture.

            Canada’s
wheat will remain in good condition in Ontario and Quebec while varying from fair to good condition in the Prairies. Dryness remains a concern from eastern Montana and the western Dakotas into southwestern Manitoba and eastern Saskatchewan where some relief
is possible next week, but confidence is low.

            Wheat
conditions in Europe vary greatly with some concern over crop conditions in parts of France, Germany and the United Kingdom from dryness earlier this year. Some rain in southeastern Europe has improved winter crop production potentials as well as in Ukraine
and southwestern Russia. Rain this week in the eastern CIS New Lands should translate into improved soil moisture for better spring wheat development near the Kazakhstan border.

           
Argentina wheat conditions have been improving except in the western parts of the nation where La Pampa, Cordoba, far western Buenos Aires and western Santa Fe need more rain. Brazil wheat conditions are fair to very good with rain needed in the north and
some drying in the south.  Rain in Brazil during the next week to ten days will fix the moisture deficits and may make parts of the south too wet.

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

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

WEDNESDAY,
June 24:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• U.S.
  poultry slaughter, 3pm

THURSDAY,
June 25:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• International
  Grains Council monthly report
• Port
  of Rouen data on French grain exports
• Malaysia’s
  palm oil export data for June 1-25
• USDA
  hogs and pigs inventory, red meat production, 3pm

FRIDAY,
June 26:

• 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

Source:
Bloomberg and FI

 

 

 

 

Corn.

·        
Corn futures hit a three-week low on improving corn conditions and large Chinese state corn sales. 

·        
September corn low was 3.2575.  $3.25 is our current low end for the trading range. 

·        
The general US weather theme was unchanged from yesterday.  A short-lived ridge will develop over the US Midwest next week. Before and after that event sporadic rain will occur. 

·        
50 percent of a Reuters poll posted on Twitter thinks a yield of 180 bu/acre is possible. 

·        
US corn conditions increased one point to 72 percent,  The trade was looking for a one-point decline.  2 percent of the US corn is silking, same as average. 

·        
China’s Sinograin sold 1.1MMT of corn out of auction (1.7MMT total so far this season). 

·        
China imported 370,000 tons of pork during May, up 86 percent from the previous year, and 640,000 tons of corn, down 15 percent.

·        
The EU lowered their import tariff on corn to 4.65/euros per ton, a 55 percent decrease, after it was increased in April from depressed landed import corn prices. 

·        
A Bloomberg poll looks for weekly US ethanol production to be up 32,000 at 811,000 barrels (837-921 range) from the previous week and stocks to decrease 14,000 barrels to 21.332 million.

 

Corn
Export Developments

• None
  reported

 

 

 

Updated
6/18/20
(near the range low)

·       
September corn is seen in a $3.25 and $3.50 range over the short term.  December lows could reach $2.90 if US weather cooperates. 

 

Soybean
complex.

• CBOT
  soybeans ended
  1.25 cents lower for the July position and 4.25 cents lower for the September.  Nearby soybean spreads are very firm.  We think it’s due in part to lack of CBOT registrations, lack of US producer selling allowing for crushers to bid up soybeans, large 2020
  US crop prospects and forward 2021 pricing by Brazilian producers. 

• July
  meal was down $0.20 and July soybean oil off 18 points.  BON/BOQ spreads were active.  2000 were sold -20 around 12:20. 
  

• CBOT
  soybeans were generally lower on a good weather forecast for the US.  President Trump mentioned the Phase One trade deal was still intact, creating some volatility in soybean and corn prices overnight.  This comes after Peter Navarro said the deal was off. 
  https://www.reuters.com/article/us-usa-trade-china-navarro/white-house-adviser-navarro-says-china-trade-deal-is-over-idUSKBN23U02Q
  

• Higher
  USD limited downside risk. 
• USDA
  under the 24-hour reported private exporters reported to the U.S. Department of Agriculture export sales of 132,000 tons of soybeans for delivery to China during the 2020-21 marketing year.
• China
  state owned crushers price checked US PNW soybeans on Monday while it was thought a private crusher covered 3 cargoes for Q4 shipment-2 US and 1 Brazil. 
  

·        
US soybean conditions fell 2 points to 70 percent, one point below trade expectations.  96 percent of the soybean crop had been planted. 

·        
There are rumors China is asking US soybean shippers to provide papers that state their product is free of coronavirus, similar to what they did with the meat industry.  We see no market impact from
this, but wonder is there a political point to this or just an extension to safety measures.  Will they test the people that handle the soybeans before they test the soybeans?

 

Oilseeds
Export Developments

• 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
6/18/20

• August
  soybeans are seen in a $8.50-$8.90 range, over the short term (ST).
• August
  soybean meal is seen in a $285 to $300 range.  (ST)
• August
  soybean oil range is seen in a 27.00 to 29.00 range over the medium term

 

Wheat

·        
US wheat markets ended mixed, with Chicago and KC higher and MN lower-despite the sharp decline in US spring wheat ratings.  Weather prospects improved over the next week for Canada and northern
Great Plains. 

·        
US winter wheat conditions increased 2 points to 52 percent versus unchanged by the trade guess. US winter wheat harvesting progress advanced 14 points to 29 percent, three points above average. 
Spring wheat conditions fell 6 points to 75 percent versus a one-point decline by the trade. 

• Paris
  December wheat was down 1.25 euros at 179.75 at the time this was written.
  

 

Export
Developments.

·        
50,000 tons of US soft white wheat was sold to the Philippines and Indonesia at $245/ton c&f. 

·        
Japan seeks 101,243 tons of food wheat later this week. 

• Japan
  seeks 80,000 tons of feed wheat and 100,000 tons of feed barley on June 24 for arrival by November 26. 
  
• Ethiopia
  seeks 400,000 tons of wheat on July 10 for shipment within two months.    
  

 

Rice/Other

None
reported

 

Updated 6/18/20
(MN nearing the range low)

• Chicago September is seen in a $4.80-$5.10 range, over the short term.
  
• KC September$4.3750 initial support; $4.30-$4.60 range over the medium
  term. 
• MN September $5.20-$5.50 range over the medium term with bias to upside.