FI Morning Grain Comments 05/31/23

PDF Attached

 

Good
morning. 

 

Month
end. Follow through selling, poor manufacturing China economic data, and ample global grain supplies are weighing on CBOT ags.
The USD was up 25 points earlier and WTI crude oil $2.19 lower.

 

Week
to date price changes (Tue-Wed US, Mon-Wed palm and EU wheat)

 

There
were no major surprises for US crop progress. Many spot and benchmark ag futures hit multi-week or multi-month lows overnight. The SRW July wheat contract continued to lose ground to nearby corn. South Korea’s MFG bought 55,000 tons of feed wheat, optional
origin, at an estimated $263.90 a ton c&f. Malaysian palm oil traded sharply lower overnight on slowing palm oil exports. Offshore values were leading SBO higher by about 20 points this morning and meal $4.30 short ton lower.

 

Daily
trading limits expand in CME hogs after limit-up move today

https://www.cmegroup.com/trading/price-limits.html

 

Fund
estimates as of May 30

 

 

 

 

 

 

 

 

Weather

 

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR MAY 31, 2023

• Northern
  Europe will continue unusually dry for at least another week and probably ten days
• Eastern
  Russia’s New Lands will be dry for several more days, but rain is expected sporadically later this week and into next week offering some relief to recent drying
• Kazakhstan
  will continue dry biased throughout the next ten days
• Australia
  still has a very good chance for needed moisture in each of the major wheat, barley and canola production areas during the coming ten days
• North
  Africa and southern Europe will continue wetter than usual
• India’s
  Monsoon will start poorly this year with the first half of June notably drier biased in the south and east parts of the nation
• U.S.
  Midwest crop areas will continue to dry down over the next ten days with temperatures very warm in this first week of the outlook and then cooler conditions will occur briefly
  
• U.S.
  Great Plains weather will continue west from western Texas to Montana
• Some
  relief from dryness is expected in eastern Alberta and western Saskatchewan, Canada during the coming week, although no drought busting rain event is expected
• Southern
  Manitoba, Canada will continue to experience limited rainfall and be drier than usual for a while

Source:
World Weather, INC.

 

Bloomberg
Ag calendar

Wednesday,
May 31:

• US
  agricultural prices paid, received
• Malaysia’s
  May palm oil exports

Thursday,
June 1:

• EIA
  weekly US ethanol inventories, production, 11am
• USDA
  soybean crush, corn for ethanol, DDGS production, 3pm
• Port
  of Rouen data on French grain exports
• HOLIDAY:
  Indonesia

Friday,
June 2:

• FAO
  food price index, monthly grains report
• USDA
  weekly net- export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various US futures and options, 3:30pm
• FranceAgriMer’s
  weekly crop condition report
• HOLIDAY:
  Italy, Indonesia

Source:
Bloomberg and FI

 

 

 

 

USDA
inspections versus Reuters trade range

Wheat                 
382,031                 versus   200000-600000  range

Corn                     
1,313,411             versus   600000-1400000                range

Soybeans           
239,736                 versus   100000-400000  range

 

 

Macros

Canada
Quarterly GDP Annualized Q1: 3.1% (est 2.5%, prev 0.0%; prevR -0.1%)

Canada
GDP M/M Mar: 0.0% (est -0.1%, prev 0.1%)

–
GDP Y/Y Mar: 1.7% (est 1.8%, prev 2.5%)

German
CPI Y/Y MayP: 6.1% (est 6.5%, prev 7.2%) 

German
CPI M/M MayP: -0.1% (est 0.2%, prev 0.4%)

German
CPI EU Harmonized Y/Y MayP: 6.3% (est 6.7%, prev 7.6%)

German
CPI EU Harmonized M/M MayP: -0.2% (est 0.2%, prev 0.6%)

 

Corn

·        
Corn futures are sharply lower. USD is higher and WTI crude oil is lower.
USDA
initial corn conditions came in at 69% G/E which was below the 71% expected, but still good considering the ongoing drought across the WCB.  Most of the miss can be attributed to the low initial rating in PA, MO, and NE.  Last year we were at 73% G/E and the
5-year average of 71 percent.

·        
Baltic Dry Index fell 13 percent to 977 points.

·        
USDA US corn export inspections as of May 25, 2023, were 1,313,411 tons, within a range of trade expectations, below 1,326,281 tons previous week and compares to 1,412,248 tons year ago. Major countries included China for 466,764
tons, Japan for 198,622 tons, and Mexico for 188,472 tons.

 

Export
developments.

• None
  reported

 

 

Soybeans

·        
Another lower trade for the soybean complex. Malaysian palm oil traded sharply lower overnight on slowing palm oil exports. Some contracts hit lows.

·        
USDA crop progress showed that 83% of the crop was planted compared to the 65% 5yr average.  Next week the initial soybean crop rating will be released. 

·        
AmSpec reported May Malaysian palm oil exports at 1.085 million tons, down 1.8 percent from April. ITS reported a 0.8% decline to 1.167 million tons.

·        
Indonesia set its CPO reference price at $811.68 per ton for the June 1-15 period, below $893.23 per ton for the May 16-31 period. The new export tax reference price was $33 per ton and levy at $85.

·        
August Malaysia palm futures decreased 202 ringgit to 3201 and Aug. cash decreased $45.00 to $757.500/ton.

·        
China May soybean futures were down 1.0%, meal down 1.1%, SBO down 2.9% and palm oil futures down 3.7%.

·        
Nearby Rotterdam vegetable oils were 35-55 euros lower from this time yesterday morning and meal 6-10 euros lower.

·        
Offshore values were leading SBO higher by about 20 points this morning and meal $4.30 short ton lower.

·        
USDA US soybean export inspections as of May 25, 2023, were 239,736 tons, within a range of trade expectations, above 166,590 tons previous week and compares to 404,350 tons year ago. Major countries included Indonesia for 67,467
tons, Mexico for 53,587 tons, and Japan for 39,138 tons.

 

Export
Developments

·        
Egypt seeks vegetable oils June 1 for July 11-25 arrival.

·        
USDA seeks 1,140 tons of packaged vegetable oil on June 6 for July shipment.

 

 

Wheat

·        
US wheat is lower again from widespread commodity selling, slowing US export interest, and a 3 point increase in US winter wheat ratings to 34 percent good/excellent. Despite the 3 point increase in the national rating, all three
classes dropped on our weighted basis. OK fell 8.1%, TX down 0.8%, and CO was off 2.0% (weighted adjusted).

·        
December Paris wheat futures are down 4.25 euros earlier to 216.00 per ton, a new multi-month low.

·        
US end users were thought to have bought 60,000 tons European Union (Poland and Germany) for July shipment. Total purchases range from 270,000 to 300,000 tons. Polish wheat is about $100 percent ton cheaper than Gulf HRW wheat.

·        
China’s AgMin is asking local authorities to increase the pace of wheat harvesting of damaged grain, after heavy rain flooded fields, mainly across Henan, which produces about 25 percent of China’s crop. .Heavy rain across the
southern half of central Henan province last week.

·        
Russian 12.5% wheat was about $225 ton earlier this week (July position), well below the AgMin target of $260/ton.

·        
Hungary asked the EU to extend export curbs until the end of 2023.

·        
Ukraine grain exports to date (June-May) were 45.3 million tons, down from 47 million previous season. That included 15.4 million tons of wheat, 26.9 million tons of corn and 2.6 million tons of barley.

 

·        
USDA US all-wheat export inspections as of May 25, 2023, were 382,031 tons, within a range of trade expectations, below 440,094 tons previous week and compares to 344,319 tons year ago. Major countries included Thailand for 120,994
tons, Dominican Rep for 41,768 tons, and Japan for 35,279 tons.

 

Export
Developments.

·        
South Korea’s FLC bought 55,000 tons of feed wheat at $261.25/ton c&f, optional origin.

• South
  Korea’s MFG bought 55,000 tons of feed wheat, optional origin, at an estimated $263.90 a ton c&f.
  

 

Rice/Other

·        
None reported. See above weather section for crop progress.