From: Terry Reilly
Sent: Thursday, May 21, 2020 2:47:44 PM (UTC-06:00) Central Time (US & Canada)
Subject: FI Evening Grain Comments 05/21/20

PDF attached

 

 

Weather

The
US CPC looks for above normal temperatures for June-August period for the US west, Gulf Coast, and East Coast. 

U.S. Drought Monitor Change Map

 

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:
 

           
Periodic rain delays are expected in U.S. planting during the next ten days, but some fieldwork is expected. The wettest conditions are expected this weekend into early next week. A very good environment will remain for emerging and establishing spring and
summer crops.

Rain
in western Canada’s Prairies this week will stall spring fieldwork through the weekend while weather in the east will be dry and warm favoring spring planting progress.  More rain in Ontario, Canada Friday into early next week will keep fieldwork for corn
and soybean areas advancing slowly. Next week will perpetuate some of the delays in southeastern Canada with rain expanding into Quebec after the weekend.

Brazil
and Argentina weather will not change much over the coming ten days and that should translate into ongoing good western Safrinha crop conditions in Brazil while conditions in the east are quite varied leaving many areas in need of rain. Harvesting in Argentina
may be briefly delayed by rain today and Thursday.

Good
harvest weather is expected in South Africa and India. Crop planting and establishment in China is expected to advance favorably, although the North China Plain and Yellow River Basin will be drying out.

Rain
is expected over the next few days in southeastern Europe brining some needed relief to dryness in the Balkan Countries. In the meantime, Western Europe will be drying out with northern France, the United Kingdom, Belgium, Netherlands and Germany becoming
too dry soon.

Rain
in Ukraine and a part of Russia’s Southern region in the coming week will be welcome, but more rain will be needed near the Black and Caspian Seas.

Southeast
Asia still needs greater rain in Thailand and portions of the Philippines while conditions in Indonesia and Malaysia are mostly good.

Overall,
today will likely provide a mixed influence on market mentality. 

Source:
World Weather Inc. and FI

 

MARKET
WEATHER MENTALITY FOR WHEAT:
 Russia’s
spring wheat region has been making the news recently with an erratic rainfall distribution in the southeastern New Lands and some very warm to hot temperatures that occurred in the past week. Rainfall will continue sporadic and more warm-biased conditions
are likely. The area of concern is near the northeastern border of Kazakhstan.

Dryness
remains in the southwestern U.S. Plains and in some areas near the Black Sea and developing in northern Europe. Dryness was also continuing in Western and South Australia. Rain chances are improving for some of these drier areas with rain in the Balkan Countries
over the next few days, some scattered showers in Russia and Ukraine and some rainfall in the southwestern U.S. Plains.

           
Some showers impacted Queensland and far northern New South Wales, Australia recently, but much more rain will be needed to induce the best autumn planting. Western Australia may receive some rain Sunday into Monday and that too will be welcome.

           
Canada’s Prairies planting has been advancing favorably while wheat development in Quebec and Ontario should begin improving this week due to warmer temperatures. A storm in Alberta and western Saskatchewan today into Friday will stall farm progress.

           
Spring wheat planting in the northern U.S. Plains should be advancing favorably.

           
Rain is needed in Argentina and South Africa to support planting.

           
Overall, weather today is expected to have a bullish bias to market mentality.

Source:
World Weather Inc. and FI

 

Seven-day
outlook:

 

Bloomberg
Ag Calendar

THURSDAY,
May 21:

  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
  • Port
    of Rouen data on French grain exports
  • USDA
    red meat production, 3 pm
  • U.S.
    cold storage – pork, beef, poultry
  • HOLIDAY:
    France, Germany, Belgium, Indonesia

FRIDAY,
May 22:

  • 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
  • U.S.
    cattle on feed, poultry slaughter, 3 pm
  • Shanghai
    exchange’s weekly commodities inventory, 15.30
  • EARNINGS:
    Sime Darby Plantation

SATURDAY,
May 23:

  • China
    May trade data, including agricultural imports

Source:
Bloomberg and FI

 

 

USDA
Export Sales

  • US
    pork export sales slumped to 5,800 tons. 
  • Soybeans
    were above expectations at 1.205 million tons. China was the dominant buyer of soybeans at 737,400 tons (decrease of 600 tons).  Meal was 198,800 tons with shipments at 208,900 tons and soybean oil export sales at a very good 62,100 tons with shipments at
    11,700 tons.
  • All-wheat
    export sales were 175,800 tons. New-crop was better at 252,400 tons. Combined they were within expectations. 
  • Corn
    export sales came in at 884,200 tons, within expectations. 
  • US
    sorghum export sales were 83,100 tons. 

 

 

 

 

Macros

·        
US Initial Jobless Claims May-16: 2438K (exp 2400K; prev 2981K)

–         
Continuing Claims May-9: 25073K (exp 24250K; prev 22833K)

·        
US Philadelphia Fed Business Outlook May: -43.1 (exp -40.0; prev -56.6)

 

Corn.

·        
Corn futures ended
0.50-1.75
cents lower led by bear spreading on favorable US weather to allow producers to near finish plantings within the next two weeks and China’s announcement to start releasing corn from state reserves.  July corn settled near its 20-day MA.

·        
Funds sold an estimated net 8,000 contracts. 

·        
EIA reported US generation of D6 ethanol blending credits during April at 645 million RINs, down from 1.14 billion in March.

·        
With wheat on the tear higher over the past couple days, this has brought into question whether or not short covering in the corn market is overdue.  Managed money futures and options position in corn as of
week ago Tuesday was net short 214,054 contracts, compared to net short about 29,500 contracts back in January.  Note prices back in January were around $3.90.  We are unsure a short covering rally will be last long given expectations for the 2021-22 US carryout
to rise above 3.0 billion bushels.  Note it wasn’t too long ago the trade saw a record net short position for managed money corn, at 322,219 contracts established April 2019.  So, we can’t rule out additional shorts added on over the next few months if US
weather remains favorable. 

·        
Some sections of the northern IL river are closed due to flooding. 

·        
China is expected to receive around 9,000 tons of US ethanol after the country waived tariffs. 

·        
US crop year to date commitments to China amount to just over 1.250 million tons so far this season, thanks to China granting reduced import tariffs for the US corn.  Hard to imagine this is the largest amount
committed from the US since the 2013-14. The landed import price of corn into southern China has been at a discount to local cash prices for a few years. But China corn production has grown, and US landed corn prices during most of that time has been uncompetitive
to Ukrainian corn. In addition, China has been an aggressive seller of corn reserves, which brings us to think there is an opportunity for China to eventually restock state reserves to ensure long term food security.  

 

 

Source:
Reuters and FI

 

Corn
Export Developments

·        
China plans to sell 4 million tons of corn from state reserves on May 28.  This would be the first auction of the season.  3.66 million tons of corn is from 2015. 

 

 

 

Updated
5/21/
20

 

Soybean
complex

·        
EIA reported US generation of D4 ethanol blending credits at 357 million biodiesel credits during April, down from 371 million in March.

  • APK-Inform
    reported Ukrainian sunflower oil export prices rose to $725-$735 per ton FOB Black Sea from $700-$705 a week earlier.

·        
CNGOIC reported China bought 10 cargoes of palm oil for June-October loading. 

·        
Malaysia said they are committed to maintaining good relations with India. Recently Indian buyers purchased up to 200,000 tons of Malaysian palm oil for June and July.

·        
Malaysian palm plantations continue to see a worker shortage.  They rely on foreigners for 70 percent of the plantation workforce.  

 

University
of Illinois
Hubbs,
T. and S. Irwin. “The Impact of Late Planting on U.S. Average Soybean Yield.”
farmdoc daily
(10):93,  Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, May 20, 2020.

https://farmdocdaily.illinois.edu/2020/05/the-impact-of-late-planting-on-u-s-average-soybean-yield.html?utm_source=farmdoc+daily+and+Farm+Policy+News+Updates&utm_campaign=b6d7df2591-FDD_RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_2caf2f9764-b6d7df2591-173649469

 

Oilseeds
Export Developments

  • None
    reported
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