FI Morning Grain Comments 06/22/23

PDF attached

 

Good
morning.

 

WTI
crude oil was down $1.57 earlier, USD up 6 points and equities lower. The Bank of England raised interest rates by a larger than expected half a percentage point. Lower trade across the soybean complex and grains on improving US weather for the second week
of the forecast and follow through selling in soybean oil. Lower Brent and WTI crude oil is adding to the negative sentiment. Traders are mulling over the possibility of a smaller than expected US soybean crush next season after advanced biofuel mandates saw
a slight increase from the December proposal and recent decline new-crop crush margins. Yesterday evening’s GFS model run was wetter for the northwestern (50%) Corn Belt and eastern half of the Northern Plains July 1-3. If verified, dryness relief would occur
across Iowa, southern Minnesota, northern Illinois, and Wisconsin. Time will tell. The morning forecast didn’t offer too much in the way of overall changes. Warmer than expected temperatures are seen for Kansas, Missouri and Illinois. China is on holiday,
returning Monday. Third month Malaysian palm oil futures decreased 52 ringgit to 3562, and cash decreased $10 to $817.50/ton. Offshore values were leading SBO higher by about 344 points this morning and meal $28.20 short ton higher. A Bloomberg poll looks
for weekly US ethanol production to be up 5,000 thousand barrels to 1028k (1002-1035 range) from the previous week and stocks off 92,000 barrels to 22.134 million.

 

 

Fund
estimates as of June 21 (net in 000)

 

Weather

7-day

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR JUNE 22, 2023

• A
  boost in predicted rainfall was noted overnight in the northern Midwest, especially in Wisconsin and Michigan with some increase in shower activity suggested for the drier areas in Illinois, Indiana and Iowa over the coming ten days
• However,
  the increase in shower activity in the “I” states has already been advertised in previous model runs and confidence is still not high that these areas will get enough rain to seriously change the moisture profile for any great length of time
• Be
  watchful for surprisingly greater rainfall in a few of the driest areas during the coming week, but that kind of event will only impact a very small part of the overall driest region
• Very
  warm to hot air from Texas may be briefly drawn northward into the southwestern U.S. Corn Belt inducing warmer than expected temperatures in Kansas, Missouri and Illinois
  
• This
  will occur briefly this weekend and possibly again briefly during mid-week next week
  
• Overall,
  though, the dry biased areas in Illinois and immediate neighboring areas are not likely to be seriously altered despite a few showers in the coming week to ten days or the brief insurgence of hotter weather from the southwest
• U.S
  Delta weather will be favorable while the southeastern states see some improvement after recent heavy rain
• The
  northern U.S. Plains will experience significant rain along with a part of the upper Midwest, but Canada’s eastern Prairies will not see much significant rain
• Cool
  weather occurred again overnight from southwestern Alberta, Canada into the U.S. Pacific Northwest and the northwestern U.S. Plains, but no more than a few patches of light frost resulted without any serious crop impact
  
• Excessive
  heat in Texas will continue for another week stressing livestock and zapping moisture from the soil the increase dryland crop stress in cotton, sorghum, soybean, rice and corn production areas
• Some
  rain will occur briefly into Saturday morning from the Texas Panhandle and southwestern Oklahoma into the Texas Blacklands, but West Texas and South Texas will be hot and dry.
  
• Rain
  from eastern France through Germany to western Poland over the next few days will bring temporary relief from recent dryness, but another week of dry weather will follow maintaining some concern about the big picture for crops
• No
  excessive heat is expected, though, and that will help limit the impact of dry weather
• No
  changes in Russia, China, Australia, South America or India weather was noted overnight
• China’s
  crop region north of the Yellow River into Mongolia will be dry and warm biased for a while
• India’s
  monsoon rainfall will increase during the weekend and next week as a monsoon depression moves across the nation
• Maharashtra
  into Tamil Nadu and Andhra Pradesh will be driest in India for the next couple of weeks
• Southern
  China’s early rice crop will be subjected to excessive rain resulting in harvest delays and a quality decline
• Western
  Thailand dryness will continue, although some rain will fall periodically
• Tropical
  Depression Four and Tropical Storm Bret will both dissipate this weekend and next week respectively without directly impacting land

Source:
World Weather, INC.

 

Bloomberg
Ag calendar

Thursday,
June 22: 

• Port
  of Rouen data on French grain exports
• EIA
  weekly US ethanol inventories, production, 10:30am
• Grain
  and Oilseeds MENA conference in Cairo, day 2
• Brazil
  Unica cane crush, sugar production (tentative)
• USDA
  Red Meat Production, 3pm
• HOLIDAY:
  China,
  Hong Kong

Friday,
June 23:

• 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
• US
  Cattle on Feed, 3pm
• US
  cold storage data for beef, pork and poultry
• HOLIDAY:
  China

Source:
Bloomberg and FI

 

 

 

 

Canada
plantings. June 28 release (7:30 am CDT)

 

Macros

US
Initial Jobless Claims Jun 17: 264K (est 259K; prevR 264K)

US
Continuing Claims Jun 17: 1759K (est 1785K; prevR 1772K)

US
Current Account Balance Q1: -$219.3B (est -$217.1B; prevR -$216.2B)

US
Chicago Fed Nat Activity Index May: -0.15 (est -0.10; prevR 0.14)

The
Bank of England raised interest rates by a larger than expected half a percentage point.

 

Corn

·        
US corn is under pressure from a sharply lower US soybean complex, possible improvement for US weather for early July and lower energy markets.

·        
The USDA Broiler report showed eggs set in the US up slightly from a year ago and chicks placed down slightly.

·        
We are hearing Argentina producers sold about 850,000 tons of corn last week, bringing sales to about 14 million tons (down from 28.4 million year ago). That could leave at least another 10 million tons left to sell.

·        
There is chatter Argentina could roll out a corn dollar.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 5,000 thousand barrels to 1028k (1002-1035 range) from the previous week and stocks off 92,000 barrels to 22.134 million.

 

Due
out Friday

 

 

Export
developments.

• Algeria
  seeks 120,000 tons of corn on June 22 for shipment during July shipment and potentially another for FH August shipment.
  

 

Soybeans

·        
Lower trade across the soybean complex on improving US weather for the second week of the forecast and follow through selling in soybean oil.

·        
Yesterday evening’s GFS model run was wetter for the northwestern (50%) Corn Belt and eastern half of the Northern Plains July 1-3. If verified, dryness relief would occur across Iowa, southern Minnesota, northern Illinois, and
Wisconsin.

·        
China is on holiday, returning Monday.

·        
A Reuters poll sees India June palm oil imports increasing 46 percent from May after palm oil imports of 439,173 tons fell to a 28-month low.

·        
Third month Malaysian palm oil futures decreased 52 ringgit to 3562, and cash decreased $10 to $817.50/ton.

·        
Nearby Rotterdam vegetable oils were 10-25 euros lower from this time yesterday morning and meal 9-14 euros higher.

·        
Offshore values were leading SBO higher by about 344 points this morning and meal $28.20 short ton higher.

 

 

Export
Developments

• China
  will auction off 306,700 tons of imported soybeans from state reserves on June 27.
  

 

 

 

Wheat

·        
US wheat is lower on weakness in corn and rain forecast for the upper Great Plains over the next week. PNW will remain dry. Harvest pressure should be noted for winter wheat areas.

·        
Ukraine said they are 99.9% certain Russia may not extend the grain deal next month, because it no longer needs Ukrainian ports to export ammonia. (Reuters)

·        
September Paris wheat futures were down 0.75 euro at 246.25 per ton.

 

Export
Developments.

·        
Japan bought 92,529 tons of milling wheat this week for Aug shipment.

 

Rice/Other

·        
South Korea bought an estimated 16,800 tons of rice from Vietnam at an estimated $674.00 a ton c&f for arrival around Sept. 30, 2023.