FI Morning Grain Comments 04/30/21

PDF attached

 

Good
morning.

 

Soybeans
and soybean meal are set to end the week lower if current prices hold. Lower trade in all the front month contracts for the CBOT ag markets this morning as we continue to see risk off and profit taking ahead of the weekend.  China will be on holiday May 1-5
for Labor Day. 

 

 

CME
Margin changes:

RAISES
SOYBEAN FUTURES (S) MAINTENANCE MARGINS BY 7.2% TO $4,100 PER CONTRACT FROM $3,825 FOR MAY 2021

SAYS
INITIAL MARGIN RATES ARE 110% OF MAINTENANCE MARGIN RATES

SAYS
RATES WILL BE EFFECTIVE AFTER THE CLOSE OF BUSINESS ON APRIL 30, 2021

 

Reminder:
CME is resetting price limits for grain, soybean complex and lumber futures on May 2. For example, corn to 40 cents, soybeans to 1.00, wheat to 45. 
https://www.cmegroup.com/content/dam/cmegroup/notices/ser/2021/04/SER-8761.pdf

 

 

Weather

We
may see a 1-2 point decline in US winter wheat ratings when reported on Monday and a slowdown in spring wheat planting progress due to dry conditions across the northern Great Plains.  US corn and soybean planting progress could advance 16 and 7 points respectively,
keeping corn slightly below average and soybeans 4 points above average. 

 

Past
7-days

 

Next
7 days

 

World
Weather, Inc.

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Alternating
periods of rain and sunshine in the U.S. Midwest during the next two weeks will prove beneficial for spring planting and early crop development. Too much rain in the Delta might induce some flooding and some crop damage.

In
South America, Argentina’s weather is still favorable for late season summer crop development and drier weather through the coming weekend will improve maturation and harvest conditions after recent rain. Brazil weather will be dry keeping a great amount of
concern over long term Safrinha corn production potentials.

            Rapeseed
in Western Europe will see improved weather and some warming this week will help support better corn, sunseed and other spring and summer crop planting in southwestern Europe. Western Ukraine weather will remain inclement for planting of summer crops and the
same is true for parts of Eastern Europe.

            China’s
rapeseed will experience better weather over the coming week with less frequent rain and some warmer weather, but too much moisture during much of the spring likely reduced production and quality. Spring planting of other coarse grain and oilseeds in the south
will improve with warmer temperatures and less rain for a while. China’s outlook may not be ideal, but it should improve for spring planting. Northern China planting weather is good.

            India’s
harvest of winter coarse grain and oilseeds will advance well during the next two weeks. Australia’s canola planting will begin soon, but some rain is needed first – at least in some areas. Dry conditions in Australia will prevail for a while longer, but some
showers will develop in the southwest late this week and throughout Western Australia early next week.

            Southeast
Asia oil palm production areas are experiencing a mostly good environment for crop development and little change is expected, despite some drier biased weather for a while.

            Canada
canola planting should begin soon, but dryness and cold temperatures will be a concern for a while along with the potential for some cool weather in May.

            Overall,
weather today will likely maintain support for the marketplace, but improving U.S. weather conditions may take some of the bullishness down a bit. Brazil is still the biggest potential problem area, though.

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Concern over dryness in the southwestern U.S. Plains will continue over the next week to ten days, although some showers are expected in this coming week.  Rain is needed to support crops as they move toward reproduction. Dryness
is also an ongoing concern for Canada’s Prairies and the northern U.S. Plains where some increase in rainfall is expected during May. Poor seed germination and plant emergence will occur in spring wheat areas of Canada and the northern Plains without improving
rainfall.

            Today’s
forecast in Australia is advertised to bring showers to many wheat and barley production areas during the coming ten days. Any precipitation would be welcome and good for moistening topsoil moisture ahead of planting, but greater amounts will still be needed.

Wheat
conditions in Europe and the western CIS are fair to good, although recent cold weather in Europe caused some concern over a few crops. Rainy weather in western Russia and parts of Ukraine has been raising concern over winter crop conditions and early season
planting delays.

            India’s
harvest is moving along well while China’s wheat is rated favorably. Some spring planting is under way in northern China and it should advance well.

            North
Africa wheat is in mostly good shape, but rain is needed in northwestern Algeria and southwestern Morocco. The best crops are in northern Morocco and that will not change for a while.

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

Source:
World Weather, Inc.

 

 

 

Bloomberg
Ag Calendar

Friday,
April 30:

• ICE
  Futures Europe weekly commitments of traders report (6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• U.S.
  agricultural prices paid, received
• Malaysia’s
  April 1-30 palm oil export data
• FranceAgriMer
  weekly update on crop conditions
• Holiday:
  Vietnam

Monday,
May 3:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• U.S.
  crop plantings – corn, wheat, cotton; winter wheat condition, 4pm
• EU
  weekly grain, oilseed import and export data
• U.S.
  corn for ethanol, soybean crush, DDGS production, 3pm
• Honduras,
  Costa Rica monthly coffee exports
• International
  Cotton Advisory Committee updates world supply and demand outlook
• Australia
  Commodity Index
• Ivory
  Coast cocoa arrivals
• HOLIDAY:
  U.K., Japan, China, Vietnam, Thailand

Tuesday,
May 4:

• Purdue
  Agriculture Sentiment
• New
  Zealand global dairy trade auction
• EARNINGS:
  Bunge, Andersons, Minerva
• HOLIDAY:
  Japan, China, Thailand

Wednesday,
May 5:

• EIA
  weekly U.S. ethanol inventories, production
• Malaysia
  May 1-5 palm oil export data
• New
  Zealand Commodity Price
• HOLIDAY:
  Japan, China

Thursday,
May 6:

• FAO
  World Food Price Index
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports

Friday,
May 7:

• China
  customs publishes trade data, including imports of soy, edible oils, meat and rubber
• ICE
  Futures Europe weekly commitments of traders report (6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• CNGOIC
  monthly report on Chinese grains & oilseeds
• Canada’s
  Statcan to issue wheat, canola, barley and durum stockpile data
• FranceAgriMer
  weekly update on crop conditions

Source:
Bloomberg and FI

 

 

 

 

 

Macro

US
Personal Income Mar: 21.1% (est 20.2%; prevR -7.0%; prev -7.1%)

US
Personal Spending Mar: 4.2% (est 4.1%; prev -1.0%)

US
Real Personal Spending Mar: 3.6% (est 3.7%; prev -1.2%)

US
PCE Core Deflator (Y/Y) Mar: 1.8% (est 1.8%; prev 1.4%)

US
PCE Core Deflator (M/M) Mar: 0.4% (est 0.3%; prev 0.1%)

US
PCE Deflator (Y/Y) Mar: 2.3% (est 2.3%; prev 1.6%)

US
PCE Deflator (M/M) Mar: 0.5% (est 0.5%; prev 0.2%)

Canadian
GDP (M/M) Feb: 0.4% (est 0.5%; prev 0.7%)

Canadian
GDP (Y/Y) Feb: -2.2% (est -2.3%; prev -2.3%)

Canadian
Industrial Product Price (M/M) Mar: 1.6% (est 1.6%; prev 2.6%)

Canadian
Raw Materials Price Index (M/M) Mar: 2.3% (est 2.0%; prev 6.6%)

US
Employment Cost Index Q1: 0.9% (est 0.7%; prev 0.7%)

US
Q1 Employment Cost Index Report – BLS

 

 

Corn

• CBOT
  corn
  is lower on end of week profit taking and improving US weather conditions for plantings. 
  
• The
  USD was up 25 points as of 8:19 am CT. 
• There
  were no fresh import tenders reported overnight but we are hearing China bought new crop corn this past week that went unreported. 
  
• The
  BA Grains Exchange pegged Argentina corn harvesting at 19%, below a 5-year average of 30%. They left their Argentina corn production unchanged 46MMT (USDA @ 47). 
  
• US
  ethanol biofuel RIN’s closed at $1.53 Thursday, highest on record.  EIA should release biofuel data for the month of February later today. 
  
• US
  corn and soybean planting progress could advance 16 and 7 points respectively, keeping corn slightly below average and soybeans 4 points above average. 
  
• On
  Thursday, the funds sold an estimated net 3,000 corn contracts.
• China
  will exempt some imported seeds from value-added tax until the end of 2025 – Ministry of Finance via Reuters. 
  

 

 

 

Export
developments.

• None
  reported

 

Soybeans

• CBOT
  soybeans
  and soybean meal are set to end the week lower if current prices hold. Lower trade in all the front month contracts for the CBOT ag markets this morning as we continue to see risk off and profit taking ahead of the weekend. 
  
• There
  were 629 soybean oil deliveries (JPM/Cargill) while the trade was looking for zero, but it appears some of them is retendering receipts that probably will get cancelled. The oil spread broke by 350 pts from top to bottom yesterday and that may be why today’s
  reaction is muted. 66 soybean deliveries were posted, also a surprise. 22 of the soybean deliveries were at a new location. 
  
• Argentina
  soybean harvest is now one third complete. 
• AmSpec
  reported April Malaysian palm exports increased 9.7% to 1.4 million tons.
• After
  a one day holiday, palm futures fell 68 points to 3868MYR, and cash was down $10/ton to $985/ton.
  
• Drier
  weather forecast for Argentina should boost harvest progress.
• Russia
  plans to reduce its export tax on soybeans to 20% from current 30% with a minimum level of $100 per ton (from min 165 euros or $200/ton), starting from July 1, according to the economy ministry. The new tax will be in place until September 2022. Russia grew
  4.3MMT of soybeans last year, nearly four times higher than a decade ago.  2020-21 exports are projected by USDA at 1.45MMT, up from virtually zero ten years ago. 
  
• A
  Reuters poll calls for the March crush to be reported near 188.4 million bushels (5.94 mil bu per day), up from 164.3 million in February (5.87 mil/d) and below 192.1 million in March 2020 (5.85 million/day).  Soybean oil stocks were estimated at 2.317 billion
  pounds, up from 2.306 million in February and below 2.327 billion at the end of March 2020. 
  
• Funds
  on Thursday sold an estimated net 9,000 soybean contracts, bought 1,000 soybean meal and sold 6,000 soybean oil. 
  
• Offshore
  values were leading CBOT SBO 216 points higher (124 lower for the week to date) and meal $3.00 short ton lower ($0.30 lower for the week). 
  
• Rotterdam
  vegetable oil values were mixed from this time previous session and Rotterdam meal mixed. 
  
• China
  cash crush margins on our analysis were 178 cents (194 previous) vs. 141 cents late last week and compares to 132 cents year earlier. 
  
• China:
  

• Malaysian
  palm oil: (uses settle price).
  

Back
from holiday

 

 

 

 

Export
Developments

• Algeria
  seeks 30,000 tons of soybean meal on April 29 for shipment by June 15.
• Results
  awaited: USDA under the food export program seeks 420 tons of vegetable oils for June 1-30 shipment.  
  

 

Wheat

• Most
  US wheat futures contracts are mostly lower despite a decline in French crop conditions from the previous week.  Talk of a slowdown in US exports due to high prices was noted. 
  
• We
  may see a 1-2 point decline in US winter wheat ratings when reported on Monday and a slowdown in spring wheat planting progress due to dry conditions across the northern Great Plains. 
  
• French
  soft wheat crop conditions declined 4 points to 81% good or excellent for the week ending April 26 against 85%, above 57% score at the same point last season. 
  
• Funds
  on Thursday bought an estimated net 4,000 CBOT SRW wheat contracts.
• September
  Paris wheat was down 1.00 at 217.75 euros. 

 

Export
Developments.

• The
  Philippines seeks up to 185,000 tons of wheat on May 4 for shipment in June, July and August depending on origin.
  
• Bangladesh
  seeks 50,000 tons of milling wheat on May 6. 

 

Rice/Other

·        
Bangladesh seeks 50,000 tons of rice on May 2.