FI Morning Grain Comments 06/22/21

PDF attached

 

Good
morning.
 

 

US
weather forecast appears to be offsetting lower ratings, exception with wheat after the US spring wheat rating dropped a large 10 points. 

 

CME
RAISES CORN FUTURES (C) MAINTENANCE MARGINS BY 3.2% TO $2,400 PER CONTRACT FROM $2,325 FOR JULY 2021 – Reuters News

 

 

 

Weather

 

1-7
DAY

 

 

WORLD
WEATHER INC.

WORLD
WEATHER HIGHLIGHTS FOR JUNE 22, 2021

• Frost
  and freezes occurred north of grain and oilseed areas in Michigan this morning possibly impacting some fruits and vegetable crops.
  
• Torrential
  rain event still advertised for Missouri, Illinois and neighboring areas in both southeastern Iowa and Indiana for Thursday and Friday.
  
• This
  event should not be ignored.
• There
  is potential for serious flooding with rainfall of 4.00 to 10.00 inches occurring in some very important crop areas over a relatively short period of time.
  
• There
  is also a rumor in marketplace about a ridge of high pressure coming into the central U.S. during the July 4 U.S. holiday weekend, but the ridge is more likely to be farther to the west keeping most of the Midwest away from the heat.
  
• Make
  sure to see our special situation story on the coming summer dryness written  last night.  We have attached that article to this email
• In
  Russia, the heat and dryness event under way now will begin to break down during the weekend and especially next week offering cooler temperatures and some rain for areas north of Russia’s Southern Region.
• Until
  then highs in the 80s and 90s Fahrenheit and now rain will  maintain aggressive drying
• Extreme
  highs near and above 100 will occur in Russia’s Southern Region and western Kazakhstan
• No
  change in South America
• Argentina’s
  summer harvest is going well along with winter wheat planting
• A
  little moisture would be good for drier areas in the west
• Brazil
  rain will be mostly in the far south
• Good
  harvest weather for Safrinha corn
• Safrinha
  cotton is still struggling with dryness resulting in smaller bolls
• Australia
  will see a good mix of weather during the next ten days favoring winter crop establishment
• China
  weather will remain good, although a little wet in the south and net drying from Jiangsu to Shaanxi and Shanxi for the next ten days
• India’s
  interior west and northwest will see well below average rainfall into early July
• Concern
  will be slowly rising over future crop development in those areas
• Thailand
  will be drying down for a while especially in the west and south (north of the Malay Peninsula)
  
• Europe
  weather will remain well mixed
• Russia’s
  Spring wheat and sunseed in the southeastern New Lands and northern Kazakhstan will get some needed rain

Source:
World Weather, Inc.

 

Bloomberg
Ag Calendar

Tuesday,
June 22:

• Copersucar,
  one of Brazil’s top sugar and ethanol exporters, holds presser on the market’s outlook
• Future
  Food-Tech’s Alternative Proteins Summit, day 1
• OECD
  to release agricultural policy evaluation report
• U.S.
  cold storage data – pork, beef, poultry, 3pm

Wednesday,
June 23:

• EIA
  weekly U.S. ethanol inventories, production
• Future
  Food- Tech’s Alternative Proteins Summit, day 2

Thursday,
June 24:

• 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
• USDA
  hogs and pigs inventory, poultry slaughter, red meat production, 3pm

Friday,
June 25:

• 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
• Malaysia
  June 1-25 palm oil export data
• U.S.
  cattle on feed, 3pm

Source:
Bloomberg and FI

 

 

 

 

USDA
inspections versus Reuters trade range

Wheat                 
548,578                 versus   300000-525000  range

Corn                     
1,481,426             versus   1200000-1625000             range

Soybeans           
175,359                 versus   100000-300000  range

 

CFTC
Commitment of Traders

Money
managers were not as long in corn but were much more long than expected for soybeans, soybean oil, meal and Chicago wheat.  This comes after they reduced long positions for the major agricultural commodities for the week ending 6/15.  We see this as slightly
supportive, but with the one business day in reporting, some traders may look past the positions as we are four trading days beyond actual data. 

 

 

 

 

 

Macros

 

Corn

• US
  corn futures are lower on a favorable US weather outlook. USD is lower.  WTI is lower.  Brent crude is lower after it climbed above $75 a barrel for the first time since April 2019. 
  
• Corn
  open interest fell 17,518 contracts. 
• US
  corn conditions were down 3 points, one point lower than expected. 
• Cooler
  US temperature this week should slow evaporation rates for parts of the US WCB.  Note 41 percent of IA growing regions was experiencing some type of drought as of last week.  Most of IA saw rain over the weekend but more is needed to stabilize and/or improve
  crop conditions.
• We
  dropped our corn yield to 177.8 bu/ac from 179.5 week ago and lowered corn production by 145 million to 15.162 billion.  USDA is at 14.990 billion. 
  
• (Reuters)
  – Brazilian farmers will harvest an estimated 93.93 million tons of corn this season, a fall of 8.5% from the last due to a severe drought, a Reuters poll with ten forecasters suggested on Tuesday.
• (Bloomberg)
  — China’s hog population rose 24% in the year through May. 
• Funds
  sold an estimated net 4,000 corn contracts on Monday. 
  
• USDA
  US corn export inspections as of June 17, 2021 were 1,481,426 tons, within a range of trade expectations, below 1,610,533 tons previous week and compares to 1,305,824 tons year ago. Major countries included China for 794,475 tons, Mexico for 317,883 tons,
  and Japan for 200,502 tons.

 

Export
developments.

• China’s
  Sinograin plans to auction off 18,207 tons of imported Ukraine corn on June 25. 
  

 

 

Soybeans

• The
  US soybean complex is mostly lower on improving US weather despite a 2-point decline in US soybean conditions (in line with expectations).  Argentina is back from holiday.  Palm oil was nearly flat overnight and China futures vegetable oil 1.0-1.7% higher. 
  
• We
  are using a 51.4 yield (51.7 previous) and 4.552 billion production (down 27 million from previous). 
  
• USDA
  US soybean export inspections as of June 17, 2021 were 175,359 tons, within a range of trade expectations, above 129,536 tons previous week and compares to 255,810 tons year ago. Major countries included Indonesia for 68,599 tons, Japan for 50,121 tons, and
  Mexico for 26,060 tons.
• Reuters
  in a story covering US and Brazil ethanol markets noted Brazil ethanol prices at mills “are near their highest ever at over 3.40 reais per liter ($2.55 per gallon), according to the University of Sao Paulo (USP). Since fuel distributors need to add 27% of
  ethanol to gasoline, that has driven up prices.”
• Funds
  on Monday bought an estimated net 7,000 soybean contracts, sold 1,000 soybean meal and bought 9,000 soybean oil contracts. 
  
• Offshore
  values are leading SBO 130 points lower and meal $2.00/short ton higher. 
• China
  cash crush margins eroded when using the imported price of US soybeans. 
• Rotterdam
  rapeseed and soybean oil prices were 15-22 euros higher, and meal unchanged to 3 euros lower. 
  
• China:
  

• Malaysia
  overtook Indonesia to become the largest supplier for India so far in 2020-21.  Crop year started November 1.  Malaysian palm exports hit 2.42 million tons to India, up 238% from the same period a year ago.  Indonesia exports were 2 million tons, down 32%. 
  Note Indonesia raised export taxes in December. 
• Malaysian
  palm oil:  

• (Bloomberg)
  — China’s customs confiscated about 215 kilograms of cocaine buried in a vessel, which was carrying soybeans from South America, the department said in a report Tuesday.
  

 

Export
Developments

• Lowest
  offer for Egypt seeking soybean oil was $1,185 per ton and sunflower oil at $1,133 per ton for September 5-30 arrival. 
  

 

Wheat

• US
  MN wheat futures are sharply higher following a 10-point drop in spring wheat ratings.  KC and Chicago are following MN higher.   84% of SD’s subsoil moisture was less than adequate according to the latest USDA crop progress report. 
  
• September
  Paris wheat was up 1.00 euro.  Yesterday it tested a 3-week low.  
• Russia
  stated they plan to supply Algeria with up to 1 million tons of new-crop wheat (July-June 2021 season).  Russia has not supplied much wheat to Algeria over the past four years, in fact a small cargo was recently sold and this could be first shipment in four
  years.  
• Pakistan
  plans to import up to 4 million tons of wheat, up 1 million from previously planned.  
  
• Funds
  on Monday
  bought
  an estimated net 1,000 SRW wheat contracts. 
• USDA
  US all-wheat export inspections as of June 17, 2021 were 548,578 tons, above a range of trade expectations, above 499,774 tons previous week and compares to 686,036 tons year ago. Major countries included Philippines for 99,821 tons, Mexico for 81,670 tons,
  and Nigeria for 80,963 tons.
• US
  spring wheat conditions were down 10 points, 8 points lower than what was expected. 
  
• US
  winter wheat conditions were up 1 point, one point above an average trade guess.
  
• US
  winter wheat harvest was reported at 17 percent, one point above expectations. 
  
• Expect
  US winter wheat harvesting progress to peak in about 2 weeks, weather permitting. 
  
• We
  left our US winter wheat production estimate unchanged at 1.325 billion, above 1.309 USDA June. 
  
• Our
  US spring wheat production was lowered to 448 million (478 previous) and durum to 47 million (51 previous.  Combined OS and durum is 495 million, below 529 previous and well below USDA’s working estimate of 589 million. 
  

 

Export
Developments. 
*NEW

• *Japan
  seeks 159,665 tons of food wheat later this week. 

• *Cancelled:
  Jordan seeks 120,000 tons of wheat on June 22 for December shipment. 
• Jordan
  is back in for feed barley on June 23 for Nov/Dec shipment. 

 

Rice/Other

• None
  reported