From: Terry Reilly
Sent: Friday, May 22, 2020 8:39:04 AM (UTC-06:00) Central Time (US & Canada)
Subject: FI Morning Grain Comments 05/22/20

PDF attached

 

Morning
and happy Friday.  US, UK
,
Singapore,
India, Indonesia, Malaysia, Pakistan are all on holiday Monday. 

US
ag futures are lower early Friday on renewed US-Chine tensions. China confirmed on Friday that they intend to bypass Hong Kong’s legislature to launch national security laws.  New protests and lower MSCI index (down 5.5%), among other reactions followed suit.
WTI crude was down about $1.00 this morning and US stocks lower.  USD was up 47 points.  China bought 2-4 US soybean cargoes on Thursday.  China cash crush margins, on our calculation, continue to erode and are lowest since August 2019.  US crop tour KS yield
was 44.5 bu/ac vs. USDA May 47.0.  Jordan and the Philippines seeks wheat. French soft wheat ratings improved. Syria is in for soybean meal and corn.  Cattle on Feed is due out after the close. 

 

 

 

Weather

Source:
World Weather Inc. and FI

 

UNITED
STATES

  • No
    major theme changes are advertised out over the next ten days
  • Most
    models bring some cooler air into the eastern United States during the latter part of next week and into the second weekend of the outlook
  • GFS
    model run is quick to bring a high-pressure ridge into the middle of the U.S. following the cool surge in the first days of June

    • This
      advancing ridge and ridge intensity seems too great; a weaker ridge that comes a little slower would make more sense
  • Rain
    falls frequently in the Midwest through the end of next week with drier conditions expected after the cool air arrives in the second weekend of the two-week outlook
  • A
    reinforcing shot of cool air brings some showers back to the Great Lakes region and lower eastern Midwest June 2-3
  • All
    of this is very similar to the scenario presented Thursday
  • 06z
    GFS model run has reduced rainfall in the west-central high Plains for this first week of the outlook and the change was needed
  • The
    GFS brings a tropical cycle into the Gulf of Mexico June 4-6 with a threat to the southeastern states June 7

    • This
      feature is not expected to verify

 

Overall,
fieldwork will not advance very well over the coming week across the Midwest because of frequent showers and thunderstorms, although some progress is expected. Cooling in the second week will only be temporary, but it will bring a break from the wet bias and
provide an opportunity for improved field working conditions. Rain will also fall in the central and southern Plains during the coming week and that will bring some needed moisture to parts of hard red winter wheat country and West Texas cotton, corn and sorghum
areas, but the high Plains region may not do as well as areas a little farther east with expected rainfall.  A good mix of sun and rain will occur in the northern Plains, Delta and southeastern states as well as parts of Canada’s Prairies. Alberta will remain
too wet, but some of the drier areas in southwestern Manitoba may get some needed rain.

 

SOUTH
AMERICA

  • Greater
    rain has been suggested for today and Saturday for Sao Paulo and some immediate neighboring areas of Parana and Mato Grosso do Sul

    • Some
      of this increase was needed because of the excessive rain event that occurred overnight and was still under way this morning
  • Rain
    in the May 31-June 2 period in interior southern Brazil was increased and that may not verify very well

    • The
      model was too wet
  • Argentina
    rainfall for late next week and into the following weekend was reduced this morning

    • This
      change was badly needed

 

Overall,
flooding rain in interior southern Brazil was a surprise this morning and the heavier rainfall will continue for a while today while lifting to the north; however, the precipitation should diminish quickly tonight and Saturday and some of the increased rainfall
in Sao Paulo may be overblown.  A welcome return of showers to parts of Argentina late next week and into the following weekend will be very important for wheat planting and it will be closely monitored.

 

EUROPE/BLACK
SEA

  • Both
    the GFS and European models are in good agreement across Europe and the Black Sea region for the coming ten days

    • Brief
      periods of rain and thunderstorms are expected in most areas, although some areas in Ukraine and a few in northwestern Russia may not get good amounts of moisture, but no critically dry conditions are expected
    • Beneficial
      rainfall should impact the Balkan Countries portions of Ukraine and portions of Russia’s Southern Region resulting in greater soil moisture and improved crop conditions
  • No
    serious changes were noted overnight, although the 06z GFS model did increase rain in parts of southwestern Russia and eastern Ukraine while reducing it in central Ukraine

    • Most
      of these changes occur at the end of next week and into the following weekend

  • The
    GFS model run ends with a deepening low-pressure trough aloft over western Europe that results in cooler and wetter conditions in central and western Europe which is not likely to verify
  • The
    changes in western Europe also force a ridge of high pressure over the western CIS which ends rainfall over those areas and starts a more notable warming trend.

    • These
      feature changes are all exaggerated and unlikely to verify
  • The
    European model brings a high-pressure ridge to central Europe limiting rainfall in western Europe to the United Kingdom and northwestern France while drying out some of the eastern parts of Europe and the westernmost parts of the western CIS

    • This
      solution is much more likely to verify than that of the GFS

 

The
bottom line is still one of improvement for the Black Sea region over the coming week to nearly ten days. However, drying will come to eastern Europe and areas from western Ukraine into far northwestern Russia in the first week of June. Temperatures will be
a little warmer at that time, but not excessively warm. Crop development and fieldwork will advance better with less cloudiness, less showers and less coolness during this period of time. Western Europe, in the meantime, is still a worry because of developing
dryness in France, the United Kingdom, Germany, Belgium and Netherlands and those areas will be closely monitored with little rain and mild to warm weather expected for the next ten days.

 

EASTERN
RUSSIA NEW LANDS

  • Not
    much change has been made to the general weather pattern over the next ten days

    • A
      ridge of high pressure builds through Kazakhstan this weekend and into parts of eastern Russia’s New Lands
    • This
      will squelch rainfall and bring on warmer temperatures
    • The
      ridge breaks down gradually next week as two frontal systems move over the top of the system. Not much rain comes from these frontal systems – at least not according to the European model
    • The
      GFS model, however, does bring some rain to the drier areas of the southeastern New lands during the second weekend of the outlook with additional showers through the week of June

      • This
        precipitation seems to be a little overdone and not likely to verify
      • Some
        showers are expected, but with limited impact on the region’s dryness

 

Concern
about the southeastern CIS New Lands will continue for a while and crop and field conditions will deteriorate. There may be some expansion of dryness to the northwest over the coming week, as well.  The breakdown of the high-pressure ridge will bring some
cooler temperatures and a little shower activity, but not enough rain is expected to make a big difference.

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Seven-day
outlook:

 

Bloomberg
Ag Calendar

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

MONDAY,
May 25:

  • China
    April trade data, including country breakdowns for commodities (tentative)
  • EU
    weekly grain, oilseed import and export data
  • HOLIDAY:
    U.S., U.K., Singapore, India, Indonesia, Malaysia, Pakistan

TUESDAY,
May 26:

  • USDA
    weekly corn, soybean, wheat export inspections, 11am
  • U.S.
    crop progress — corn, soybean plantings, winter wheat conditions, 4pm
  • Ivory
    Coast cocoa arrivals
  • HOLIDAY:
    Malaysia, Pakistan, Bangladesh

WEDNESDAY,
May 27:

  • AmSpec,
    Intertek release Malaysia’s palm oil export data for May 1-25
  • EARNINGS:
    Nordzucker, IOI Corp
  • HOLIDAY:
    Pakistan

THURSDAY,
May 28:

  • EIA
    U.S. weekly ethanol inventories, production, 11:00am
  • International
    Grains Council monthly report
  • Port
    of Rouen data on French grain exports
  • Poland
    crop plantings report
  • EARNINGS:
    Sanderson Farms

FRIDAY,
May 29:

  • 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
  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
  • U.S.
    Agricultural prices paid, received, 3pm
  • Vietnam’s
    General Statistics Office releases data on coffee, rice, rubber exports in May
  • Shanghai
    exchange’s weekly commodities inventory

Source:
Bloomberg and FI

 

 

 

 

 

 

Macros

Canadian
Retail Sales (M/M) Mar: -10.0% (exp -10.5%; prev 0.3%)

–         
Retail Sales Ex-Auto (M/M) Mar: -0.4% (exp -4.8%; prev 0.0%)