From: Terry Reilly
Sent: Wednesday, May 27, 2020 7:21:05 AM (UTC-06:00) Central Time (US & Canada)
Subject: FI Morning Grain Comments 05/27/20

PDF attached

 

Morning.
USD turned higher early this morning. BRL was nearly unchanged after strengthening yesterday.  Ag markets are mostly higher on follow through strength from optimism over China buying and higher outside markets.  WTI is lower and palm oil rallied more than
5 percent.  News is light.  US corn conditions were initially reported at 70 percent, a very good rating for this time of year. 

 

 

Weather

UNITED
STATES

  • No
    significant changes to the general forecast theme were noted in the first week of the outlook today

    • A
      high pressure ridge will build up over the western states late this week and into the weekend raising temperatures well above average
    • Rain
      and thundershowers will occur often in the eastern half of the nation through the end of this workweek with net drying expected during the weekend and next week

      • Totally
        dry weather is not expected next week, but a net decline in soil moisture is expected and an excellent opportunity for farming activity
    • Temperatures
      will become excessively warm to hot in the Plains during the late weekend and especially during early to mid-week next week
  • Some
    of the warmth from the Plains will shift briefly into the eastern United States later next week, but the base of the ridge will remain over the central and southern Plains keeping those areas drier biased; some cooling will occur in the northern Plains and
    Canada later next week as well
  • Rain
    late next week in the northern Plains was shifted a little farther to the west in Montana and the western Canada Prairies

    • Some
      of this change was needed
  • A
    tropical cyclone continues to be advertised for the Gulf of Mexico June 6-8 and it moves into central and northern Florida June 10-11 and impacts Georgia and South Carolina June 11-12, according to the 06z GFS model run

    • The
      previous model run moved the storm to the central Gulf of Mexico coast June 12 with no landfall quite yet
    • The
      tropical cyclone is still advertised too far out in time to have much confidence, although support for some kind of a tropical system in the Caribbean Sea is rising for next week and its movement from there will be better determined later this week and during
      the weekend
  • Rainfall
    was increased in Florida and southern Georgia June 8-10 because of the change in the tropical cyclone forecast
  • Rain
    was also increased in South Dakota, northern Iowa, southern Minnesota, northern Illinois and southern Wisconsin during the June 8-10 period, but this event may be overdone

 

Confidence
is high that rain will diminish late this week and into the weekend in the Midwest, Delta and southeastern states and that net drying will begin during the weekend continue for many areas next week. Temperatures will be hot in the Plains and very warm and
humid in the Midwest. Net drying will be a great opportunity for fieldwork to advance swiftly. Concern about dryness and heat stress will rise in the west-central and southwestern Plains during the coming ten days to two weeks with some livestock stress as
well. Rain should increase in the northern Plains and Canada’s Prairies as the high pressure ridge breaks down in those areas late next week and into the following weekend.

 

 

EUROPE/BLACK
SEA

  • Not
    much change occurred in the first week of the outlook today
  • Rain
    was increased in France, Germany and northern Italy late next week while rainfall was reduced in eastern Europe and a small part of western Russia

    • Some
      of this increase was overdone
  • Central
    Europe rainfall was increased by the 06z GFS model June 6-8 while it was slightly reduced in eastern Europe and the western CIS

    • Some
      of the advertised rain was overdone, but the decrease in rain for eastern Europe was needed
  • Some
    reduction in rainfall occurred in Ukraine and Belarus June 9-10 while it was increased in Germany and Poland

 

World
Weather, Inc. still believes the running theme for the next ten days will be limited rainfall for France, the United Kingdom, Germany, Netherlands and Belgium while rain scatters about in eastern Europe and in a few locations in the south. There will be some
potential for showers in Germany during the June 5-10 period, but confidence in the amount of rain that falls is low. Rain in northwestern Europe will remain below average in the June 5-10 period, although some showers may evolve briefly. The Black Sea region
will experience frequent showers and thunderstorms during the next ten days, although eastern Ukraine and Russia’s Southern region may experience less frequent and less significant rainfall in the June 6-10 period.  The bottom line will be good for most of
eastern Europe and the western CIS and a little dry for Russia’s Southern region and Kazakhstan where temperatures will be warmer biased. Temperatures should be below average in eastern Europe and the western CIS during the next week with some warming expected
in the June 5-10 period.

 

 

SOUTH
AMERICA

  • 06z
    GFS model run reduced rain in interior southern Brazil for early next week with rainfall reduced from 0.50 to 2.00 inches down to less than 0.0.75 inch except in a narrow band in southern Mato Grosso and northern Mato Grosso do Sul where up to 1.00 inch was
    suggested

    • The
      reduction in rainfall was needed
  • Rain
    was reduced in Sao Paulo and immediate neighboring areas of Parana and Mato Grosso do Sul June 6-8

    • The
      reduction was needed
  • Some
    increase in scattered showers was noted in southeastern Argentina June 9-10

    • The
      moisture was needed, but confidence in the event is low because it is so far out in time

 

The
bottom line has not changed much with net drying in Argentina except in the far south where some rain is expected late Thursday through Friday and into Saturday morning in southern Buenos Aires and southern La Pampa. The drying bias will support summer crop
harvesting and wheat planting, but rain is needed to support better wheat emergence and establishment especially in the west where it is driest. Brazil weather will be good for filling and maturing Safrinha corn and for the harvest of other crops with limited
rainfall during the next couple of weeks. Rain is most likely in the south and the reduction in that rainfall this morning was needed.

 

 

EASTERN
RUSSIA NEW LANDS

  • A
    small reduction in rainfall occurred in the eastern New Lands during the late weekend and early part of next week

    • This
      change was needed
  • High
    pressure ridge aloft over the eastern New Lands today and Thursday will break down completely over the end of this week and weekend with some opportunity for rainfall occurring along with milder temperatures next week
  • GFS
    reduced rain in eastern New Lands late next week

    • Some
      of the reduction was needed, but too much rain was removed
  • GFS
    reduced rain June 6-8 as well

    • Some
      reduction was needed, but a little too much rain may have been removed
  • GFS
    reduced rain Jun 9-10, but a little too much was removed

 

The
early morning GFS model run suggest less precipitation would impact the eastern New Lands during most of the second week outlook. The reduction was needed, but the model may be erring a little too dry. Cooler temperatures and showers are expected during the
second week of the outlook with some of that change coming as early as this weekend. The moisture and temperature change will be good for long term crop development and may ease some of the dryness that remains in southeastern spring wheat and sunseed production
areas.

 

Source:
World Weather Inc. and FI

 

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

 

 

 

Seven-day
outlook:

 

Bloomberg
Ag Calendar

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

 

 

 

 

USDA
inspections versus Reuters trade range                                                    

Wheat         
457,777         versus   400000-600000                  range

Corn             
1,091,972     versus   1000000-1400000             range

Soybeans   
333,127         versus   350000-600000                  range

 

 

Macros

 

 

 

 

Corn.

·        
Corn futures are
higher
on a weaker USD.  Light frost risk for Brazil’s second corn crop overnight is seen supportive.  We think second corn crop damage was already widely realized from loss of yields from dry weather of over 10 percent from last year. 

·        
USDA US corn export inspections as of May 21, 2020 were 1,091,972 tons, within a range of trade expectations, below 1,182,471 tons previous week and compares to 1,108,727 tons year ago. Major countries included Mexico for 282,799 tons,
Japan for 259,949 tons, and Colombia for 119,093 tons.

·        
USDA reported US corn planting progress at 88 percent, an 8-point increase, just below trade expectations.  SD was 86 percent planted, above 74 percent average. 

·        
Initial US corn conditions were released, and USDA reported 70 percent good/excellent, a great start to the season and implies a very large production with the possibility of a 170+ corn yield. 

·        
Zambia corn production was estimated at 3.4 million tons, up from 2 million previous year. 

 

 

Corn
Export Developments

  • Results
    awaited: Syria seeks 50,000 tons of soymeal and 50,000 tons of corn on May 24, for delivery within four months of purchase.