FI Morning Grain Comments 06/08/20

PDF attached

 

 

Morning.
OPEC+ extended their production cuts. USDA S&D due out Thursday.

 

 

BRL
back below 5.00, first since March 16. 

Source:
Reuters and FI

 

 

 

 

 

Weather

 

 

CHINA

• Relief
  from dryness is still advertised for portions of east-central and northern China this week
  • 06z
    GFS model predicted rainfall for this week was reduced over that of previous model runs and especially those of Sunday
  • The
    European model run still is offering significant rain for Henan, northern Anhui and parts of both Jiangsu and southern Shandong with lighter rain farther to the north
• Excessive
  rain is still expected in parts of southern China that will be on top of the excessive rain that has occurred in the first week of this month
  • More
    crop damage will be possible in Guangxi, southeastern Guizhou and parts of Hunan with new flooding northward closer to the Yangtze River
• GFS
  reduced rain during the middle part of next week which makes the entire second week of the outlook dry for much of east-central and northern China (not including the Northeast Provinces)

 

The
bottom line is one of temporary improvement from drought in east-central and some northern parts of China this week, but next week trends dry and warm once again. That will limit the extent of relief and even though some rain will fall this week a close watch
on next week is warranted for follow up moisture.  In the meantime, parts of southern China will be experiencing more horrendous flooding and crop damage this week.

 

UNITED
STATES

• No
  general theme change was noted this morning
  • Tropical
    Depression Cristobal will move through Arkansas and Missouri before ending up in the western Great Lakes region today through Wednesday
    • Moderate
      to heavy rain will occur in these areas
  • Restricted
    rainfall is expected in the eastern Midwest this week
• Cooler
  temperatures and restricted rainfall are advertised to occur in the much of the Midwest late this week through the weekend
• A
  high-pressure ridge will return to the middle of the U.S. for a while next week bringing back warmer temperatures and keeping rainfall restricted
• Another
  tropical system may form in the Caribbean Sea early next week and it will need to be closely monitored

 

A
close watch on net drying in the Great Plains and in the eastern Midwest will be made over the next couple of weeks. Totally dry weather is not expected in either location, but net drying will occur in many areas and that will move some crop areas a little
closer to some moisture stress a little later in the summer growing season. Tropical Depression Cristobal will not produce much detrimental weather. Moisture that occurs in the western Midwest and parts of the northern Delta will be good for future crop development
and will be most welcome when next week’s drier and warmer weather evolves. Very little crop damaging weather has occurred in the lower Delta because of the tropical system and none was expected.

 

EUROPE/BLACK
SEA REGION

• Net
  drying will occur from central and eastern Ukraine through Russia’s Southern Region to Kazakhstan during the next ten days to two weeks
• Rain
  will occur in other western and northern CIS crop areas maintaining good crop conditions in those areas
• Europe
  will experience frequent showers and thunderstorms for the next ten days and possibly two weeks
• Temperatures
  will be cool in the west part of Europe and warm in the east as well as in the western CIS

 

Net
drying in the eastern two-thirds of Ukraine and Russia’s Southern Region along with ongoing dry conditions in Kazakhstan may lead to some crop stress and if it persists long enough could lead to summer crop yield issues. The region will be closely monitored.
Most of Europe and the far western CIS will benefit from ongoing showers and thunderstorms this week with some improvement in crop conditions in the U.K., northern France and Germany.

 

EASTERN
RUSSIA NEW LANDS

• 06z
  GFS was a little wetter in parts of far western and northern Russia, but the impact does not change the official outlook which continues to perpetuate some periodic showers across the nation; including the eastern New Lands
  
  • Rainfall
    will be erratic with many areas failing to get enough rain to counter evaporation which may lead to slow drying
  • Temperatures
    will be seasonable which should keep drying rates somewhat in check

 

Mostly
good crop conditions will prevail in the eastern New Lands through the next ten days to two weeks. Some dryness remains near the Kazakhstan border, but crop moisture stress is not serious enough to have a big impact on crops. However, a close watch on the
distribution of rain in the next few weeks is warranted since some of the forecast models downplay rainfall across the region and that may lead to greater crop stress and moisture shortages over time.

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

 

 

 

Seven-day
outlook:

 

 

 

Bloomberg
Ag Calendar

MONDAY,
June 8:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  crop progress — corn, soybean plantings, winter wheat conditions, 4pm
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• French
  Agriculture Ministry crop report due during week (no set day)
• HOLIDAY:
  Australia, Malaysia

TUESDAY,
June 9:

• Brazil’s
  Conab grains report

WEDNESDAY,
June 10:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• International
  Grains Council virtual conference
• FranceAgriMer
  crop report and press briefing
• Crop
  report by Australia’s Abares
• Malaysia
  MPOB palm oil stockpiles, export, production data for May
• Cargo
  surveyors release Malaysia export numbers for June 1-10

THURSDAY,
June 11:

• USDA’s
  monthly World Agricultural Supply and Demand (Wasde) report, noon
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
• China
  CASDE monthly crop supply and demand report
• Vietnam’s
  coffee, rice and rubber export data for May
• Malaysian
  Palm Oil Council webinar: Palm oil in post- pandemic
• HOLIDAY:
  Brazil

FRIDAY,
June 12:

• ICE
  Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• FranceAgriMer
  weekly update on crop conditions
• New
  Zealand food prices
• Shanghai
  exchange’s weekly commodities inventory
• HOLIDAY:
  Russia

Source:
Bloomberg and FI

 

 

 

 

 

 

 

CFTC
commitment of traders

 

 

 

 

 

 

 

 

 

 

 

 

Macros

 

 

 

Corn.

<![if !supportLists]>·
<![endif]>Corn futures
are
higher on follow through short covering from Friday and improving corn for ethanol demand. The strong US domestic demand for soybean meal is seen supportive for US corn futures.

<![if !supportLists]>·
<![endif]>Goldman Roll started on Friday. 

<![if !supportLists]>·
<![endif]>CFTC-CBOT corn speculators increase net short position by 2,760 contracts to 315,219.

<![if !supportLists]>·
<![endif]>US slaughter rates are returning back to normal.  From TNS:

 

 

Corn
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.

 

 

 

Soybean
complex.

• The
  soybean complex was mixed this morning and we may continue see a two-sided trade after WTI turned lower and the USD seeing a two-sided trade.  US weather conditions remain favorable. China is expected to buy additional US soybean this week.
  
• Bloomberg:
  China bought $185 million worth of American soybeans last week, according to U.S. Trade Representative Robert Lighthizer.
  
• Brazil
  exports of soybean to China during the month of May were 9.38 million tons, up from 7.36 million year ago, and compare to 6.7 million in April.  Total Brazil soybean exports during May were 15.5 million tons, down from 16.3 million in April and compares to
  10.8 million tons in May 2019. 
• The
  BRL was up about 3% against the USD (recovery) at the time this was written at 4.9585, back to March 16 levels.
  

<![if !supportLists]>·
<![endif]>CFTC-CBOT soybean speculators increase net short position by 5,355 contracts to 19,415 in week to June 2.

• • Rotterdam
    values this morning showed soybean oil near unchanged from this time previous session, rapeseed oil up 7, and soybean meal when imported from South America up 0.50-3.00.
    

 

• Offshore
  values this morning were leading CBOT soybean oil 30 points lower and meal $0.40 higher.
  

 

<![if !supportLists]>·
<![endif]>China

<![if !supportLists]>·
<![endif]>China cash crush margins as of this morning, using our calculation, were 58 cents per bushel and compares to 63 cents a week ago and 88 cents around this time last year.

 

<![if !supportLists]>·
<![endif]>GAPKI reported Indonesia palm exports at 2.65 million tons for April, down from 2.72MMT in March. Stocks were seen at 3.4MMT, nearly unchanged from the end of March.  April palm oil production increased
12.6% from March.  

<![if !supportLists]>·
<![endif]>Malaysian palm:
Holiday
Monday. 

<![if !supportLists]>·
<![endif]>Traders are looking for a 9.9 percent increase in May ending stocks for palm oil.

 

 

 

Oilseeds
Export Developments

 

• Last
  week USDA bought 12,500 tons of vegetable oil for the export program and another 5,000 tons for the PL480 program.
  

• 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.

 

 

 

Wheat

 

• July
  wheat traded lower, filling a 515.50-517.50 gap. Earlier KC led US wheat futures lower on rapid harvest progress but turned slightly higher on concerns over the Black Sea region. The July KC contract found resistance overnight at its 20-day MA of 458.00 and
  bounced off that level. MN wheat was lower. 
• US
  harvest progress will likely remain strong after this weekend into this week. Much of the rain from the tropical storm may stay east of the main areas of TX and OK that are undergoing harvest progress.
  
• World
  Weather: “Net drying in the eastern two-thirds of Ukraine and Russia’s Southern Region along with ongoing dry conditions in Kazakhstan may lead to some crop stress and if it persists long enough could lead to summer crop yield issues.”
• Paris
  December wheat was down 0.25 euro at 188.25 at the time this was written. 
  

<![if !supportLists]>·
<![endif]>SovEcon reported 12.5 percent Black Sea wheat prices for July at $204.50/ton FOB, up $2.50 from the previous week.  IKAR had $206, up $6.00 for July-Aug.

<![if !supportLists]>·
<![endif]>Interfax news agency via Reuters: Russia’s southern Stavropol region, one of country’s main grain-producing areas, may see its 2020 crop fall by 40% compared with last year due to cold weather and drought.

<![if !supportLists]>·
<![endif]>Australia mentioned China was unresponsive to pleas to calm tensions between both countries.

<![if !supportLists]>·
<![endif]>CFTC-CBOT wheat speculators trim net short position by 4,259 contracts to 39,058.

 

 

 

June
5 US Wheat Harvest Report  – from US Wheat Associates

HARD
RED WINTER

The
2020 HRW harvest made significant progress over the past week, slowed only by fast moving rain showers on June 4 across areas of north-central Texas and western/southwestern Oklahoma. If the hotter, drier weather holds, test cutting is expected to begin on
the Oklahoma/Kansas border June 7. The Texas harvest is now 35% complete and Oklahoma’s harvest is 21% complete.

Yields
continued to vary depending on impact from spring freeze events and drier conditions with reports ranging from 10 bu/ac (1.3 tons/ha) to over 60 bu/ac (4.0 tons/ha). Protein reports have also been quite variable, ranging from 9% to over 14%, averaging between
11% and 12%. Test weights are generally above 60 lb/bu (78.9 kg/hl).

Wheat
maturity is being pushed by hot, dry and windy weather making its way across Kansas, Colorado, Nebraska and South Dakota with drought a concern in Colorado and western Kansas. Conditions across the growing region, including the Northern Plains, Pacific Northwest
and California remain good to very good.

https://www.uswheat.org/wp-content/uploads/2020/06/HR_2020-6-5-1.pdf

 

 

Export
Developments.

• Pakistan
  seeks to import 500,000 tons of wheat sometime this year to boost inventories.
  
• Jordan
  seeks 120,000 tons of wheat on June 17 for November-December shipment. 

 

 

Rice/Other

 

• CBOT
  July rice continued to erode versus the September contract.
• Results
  awaited: Lowest offer $489.25/ton from Myanmar.  The Philippines seeks 300,000 tons of rice.