FI Evening Grain Comments 05/04/22

PDF Attached

 

Attached
is out updated US soybean complex balances.

• US
  crush was slightly adjusted to reflect March NASS figure.
• We
  increased soybean oil exports by 200 million pounds to 1.800. March exports of soybean oil were 266 million pounds, well above our previous working estimate of 170 million. SBO domestic use was lowered 50 million pounds.
  
• We
  decreased US soybean meal exports by 100,000 short tons to 14.300 million and made a slight decrease in domestic use.
  

 

 

Sharply
higher WTI crude oil and plunge in the USD supported commodities. Soybean oil led soybeans higher. Meal settled lower. Corn was slightly higher with gains limited on improving US wheat. Wheat rallied on technical buying and uncertainty over India’s export
potential after the AgMin slashed production.

 

Weather

 

 

World
Weather Inc.

WEATHER
EVENTS AND FEATURES TO WATCH

• Southern
  U.S. Plains temperatures will turn hot this weekend and that heat will prevail into the first half of next week      
  
• Extreme
  temperatures in Texas will reach the 90s to 106 degrees Fahrenheit during the weekend and early part of next week with the drought areas of West Texas hottest
• The
  heat will accelerate drying in the southern Plains
• The
  heat will stress livestock
• Recently
  planted and emerged corn, cotton, sorghum, peanuts and other crops will be stressed in this environment
• Wheat
  development will be accelerated by the heat at the expense of some yield, despite a little rain that will fall today and Thursday
  
• U.S.
  hard red winter wheat areas have experienced improved soil moisture sand crop conditions recently because of rain in Nebraska, northeastern Colorado, the northeast half of Kansas, and in a part of northeastern Oklahoma
• U.S.
  hard red winter wheat areas will get additional rain today and Thursday in many areas, although the southwestern Plains will be driest
  
• Additional
  improvements in pre-reproductive crop conditions are expected in the central Plains because of the rain
• A
  brief bout of hotter weather expected late this week and during the weekend will accelerate drying especially in the west-central and southern parts of the production region
• High
  temperatures in the 80s and 90s are expected
• Much
  warmer temperatures and less frequent and less significant rain is expected in the central and southern U.S. Midwest next week to accelerate drying rates
  
• Some
  fieldwork will be possible if the dry bias can last more than a few days
• Rain
  is expected in most of the Midwest the remainder of this week resulting in an expansion of saturated soil
  
• Fieldwork
  will remain on hold in many areas because of the rain and due to wet field conditions
• Excessive
  soil moisture remains in the eastern Dakotas and Minnesota southward into Illinois, parts of Indiana, Missouri and eastern Kansas because of recent rain
  
• Additional
  rainfall in these areas over the next few days will perpetuate the wet conditions and will prolong planting delays
• The
  greatest rainfall is expected from Kansas and eastern Nebraska into the heart of the lower Midwest while “some” drying occurs in the upper Midwest
• Northern
  U.S. Plains and upper Midwest will receive rain again this weekend with additional waves of moisture likely next week that will reverse the drying trend and maintain concern over poor spring planting conditions
  
• This
  will impact Manitoba, eastern most Saskatchewan, the Dakotas and Minnesota
  
• U.S.
  southeastern states will see a good mix of rain and sunshine over the next two weeks favoring crop development and some fieldwork.
• Southwestern
  U.S. will continue quite dry over the next ten days
• Southwestern
  Canada’s Prairies will also struggle with dryness along with north-central Montana during the next ten days.
  
• Ontario
  and Quebec will see less frequent and less significant rainfall for a while which may benefit the region as the planting season approaches.
  
• Winter
  crop conditions will improve with less precipitation and some warming
• Europe
  is expected to turn warmer next week and that will accelerate drying especially in France and Germany where the need for precipitation is expected to rise most significantly
• Europe
  precipitation will occur periodically through the weekend and into next week supporting spring and summer crop planting and winter crop development
• The
  precipitation should favor the south half of the continent this week
• Some
  disruption to fieldwork will be possible periodically
• Mato
  Grosso do Sul and Goias, Brazil drying is expected to continue over the next ten days leaving crops in those states stressed
• Safrinha
  corn has already lost some yield potential and cotton is becoming stressed
• Rain
  is needed immediately, but not likely in a significant manner anytime soon
• Interior
  southern Brazil, northeastern Argentina and southern Paraguay remain excessively wet and would benefit from a period of dry and warm weather
• Some
  drying is expected soon, but it will be a slow process
• Argentina
  precipitation will be minimal over the next ten days
• The
  environment will be good for summer crop maturation and harvest progress
• Wheat
  and barley areas will need significant moisture soon to support late month and June planting
• Frequent
  rain from the northern half of the Amazon River Basin through Colombia, western Venezuela and Ecuador to parts of Central America will induce local areas of flooding in the next ten days
• Mexico
  dryness will continue in the west and north which is not unusual for this time of year
• Drought
  has expanded  in Mexico in recent weeks due to La Nina and a general lack of rain
• Recent
  rain in the east was welcome
• Temperatures
  have been very warm as well
• Canada’s
  Prairies will turn quite warm and be dry during the balance of this week before rain and cooling evolve late this week and into the weekend
  
• Temperatures
  in the 50s and 70s Fahrenheit are expected with a few lower 80s
• India’s
  excessive heat has abated, but seasonably hot conditions are prevailing
• The
  recent heat pushed temperatures up beyond 115 degrees Fahrenheit causing stress to livestock and newly emerged cotton and other crops
• High
  temperatures Tuesday were mostly under 110
• Winter
  crops were already maturing and being harvested leaving little new damage
• Winter
  crop yields have come downward because of late February and March heat and dryness, but little change has occurred recently
• Livestock
  stress has been high due to excessive heat and farming activity may have slowed due to some of the heat
• Cooler
  weather during the remainder of this week and into the weekend will benefit many crops and livestock
• A
  tropical cyclone will form in the Bay of Bengal late this week and could move toward the upper east India and Bangladesh coasts with landfall possible next week
• Heavy
  rain, flooding and excessive wind speeds may accompany the storm inland
• Landfall
  is possible along the middle or upper east coast of India
• Temperatures
  in Europe and the western CIS are expected to be mild this week
• Warming
  is likely next week especially in Europe
• Russia
  will be coolest the remainder of this week
• Western
  Commonwealth of Independent States weather will include periodic bouts of rain, drizzle and some wet snow during the next ten days
• Soil
  moisture will continue rated adequate to excessive with areas from southern Belarus and northwestern Ukraine into the middle Ural Mountains region wettest and carrying the greatest need for drier weather
• Net
  drying is possible in the eastern Russia New Lands and in northern Kazakhstan into the weekend, but some rain will evolve next week
  
• Moisture
  is needed in this region
• Fieldwork
  will advance a little slower than usual in some western areas because of wet field conditions and some occasional precipitation. Drier and warmer weather would be best in promoting fieldwork, but big changes are not very likely for a while
• Southern
  portions of Russia’s Southern Region will get some needed rain varying from 1.00 to 3.00 inches in the next week to ten days
• Portions
  of Kazakhstan have need for more moisture and the region should be closely monitored for dryness later this growing season
• Not
  much rain will fall this week, but the weekend and next week could trend a little wetter
• North
  Africa rainfall over the next week will be sufficient to maintain a good outlook for winter crop development
• Wettest
  in northeastern Algeria and northern Tunisia
• Southwestern
  Morocco will be driest with only a few sporadic showers
• Conditions
  will be good for reproducing and filling winter crops
• West-central
  Africa rainfall is expected to be frequent over the next ten days maintaining a very good environment for coffee, cocoa, sugarcane, citrus and some cotton
• A
  boost in rainfall would be welcome in cotton areas
• South
  Africa rainfall should be infrequent and light over this coming week to ten days resulting in net drying conditions
• Too
  much moisture in recent weeks delayed harvesting and reduced cotton and some oilseed quality, but the situation has been and will continue improving
• Crop
  maturation and harvest conditions should improve
• China
  weather is expected to be relatively normal for this time of year, during the next ten days to two weeks
• Rain
  frequency will be greatest near and south of the Yangtze River
• Precipitation
  in the Yellow River Basin and North China Plain will be most limited, but some beneficial moisture is expected
  
• Heilongjiang
  will also be wetter biased with precipitation both early this week and again during the weekend
• Soil
  temperatures are warm enough to plant spring wheat and sugarbeets in the northeast of China and warm enough for some corn planting across east-central parts of the nation. Fieldwork should advance around anticipated rainfall.
  
• China’s
  rapeseed crops is in mostly good condition, but a close watch on rainfall is warranted because of the threat frequent rain might have on crop quality and harvest progress next month
• Rain
  in eastern Australia will occur periodically slowing some of the late harvest of cotton and sorghum,
• The
  moisture will be good for future wheat, barley and canola planting this autumn while not quite so welcome in summer crop areas where harvest progress is under way
• Next
  week will be wettest
• Xinjiang,
  China precipitation is expected to continue mostly in the mountains, but the precipitation will improve spring runoff potentials in support of better irrigation water supply
• Eastern
  Turkey, northern Iran and Turkmenistan and will be the wettest Middle East countries over the next ten days
• Rain
  is still needed in Syria, Iraq and neighboring areas to the south
• Southeast
  Asia rainfall is expected to be abundant in Indonesia, Malaysia and Philippines while a little erratic in the mainland crop areas during the next ten days
• Overall,
  crop conditions will remain favorable
• Eastern
  Mexico will receive sporadic showers over the coming week
• Western
  areas will be dry biased
• Recent
  rain in the east has improved soil moisture to some crop areas
• Central
  America precipitation will slowly increase during the next couple of weeks
  
• the
  moisture will be good for most crops
• Today’s
  Southern Oscillation Index was +19.93 and it has likely peaked and will slowly decline over the coming week
  
• New
  Zealand weather will be drier than usual during the coming week. Some rain will fall in the north next week
  

Source:
World Weather Inc.

 

Bloomberg
Ag Calendar

Wednesday,
May 4:

• US
  Trade Balance
• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• New
  Zealand commodity prices
• HOLIDAY:
  China, Japan, Malaysia, Indonesia, Thailand, Bangladesh, Pakistan

Thursday,
May 5:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• HOLIDAY:
  Japan, Indonesia, South Korea, Pakistan

Friday,
May 6:

• FAO
  World Food Price Index
• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• Statistics
  Canada releases stockpiles data for barley, canola and wheat
• FranceAgriMer
  weekly update on crop conditions
• HOLIDAY:
  Indonesia

Source:
Bloomberg and FI

 

 

 

Macros

FOMC
Raises Benchmark Interest Rate By 50Bps; Target Range Stands At 0.75% – 1.00%

–
Interest Rate On Reserves Balances Raised To 0.90% From 0.40%

 

Reuters
– US FED FUND FUTURES IMPLY TRADERS SEE ABOUT 77% CHANCE OF FED HIKING 50 BP AT JUNE MEETING, UP FROM 56% BEFORE MAY FOMC STATEMENT

U.S.
RATE FUTURES PRICE IN MORE THAN 200 BPS OF ADDITIONAL FED TIGHTENING IN 2022; IMPLY FED FUNDS RATE OF 2.9% THIS YEAR

 

US
Trade Balance Mar: -$109.8Bln (est -$107.1Bln; prev -$89.2Bln; prevR -$89.8Bln)

Canadian
International Merchandise Trade (CAD) Mar: 2.49Bln (est 3.90Bln; prev 2.66Bln; prevR 3.08Bln)

 

Corn

·        
Corn futures ended 0.75-2.75 cents higher (expiring May lower) on sharply higher WTI crude oil and spillover strength from wheat. Gains were limited on soybean/corn spreading and improving US weather.

·        
Funds bought an estimated net 1,000 contracts.

·        
The Midwest will see locally heavy rain this week which could continue to hinder fieldwork progress, but the 6-10 forecast calls for a considerable warmup that should promote fieldwork progress.

·        
We are hearing producers are rolling planters in western Tennessee.

·        
WTI crude oil was up $5.77 at the time this was written (2 pm CT), and USD was off 88 points. Talk of Europe placing restrictions on Russian oil imports supported WTI crude.

·        
APK-Inform estimated Ukraine’s grain exports could fall to around 923,000 tons in April from 2.8 million tons from year ago.

·        
The USDA Broiler Report showed eggs set in the US up 1 percent and chicks placed up 1 percent from the previous year.  Cumulative placements from the week ending January 8, 2022 through April 30, 2022 for the United States were
3.16 billion. Cumulative placements were down slightly from the same period a year earlier.

 

Weekly
ethanol production was up 6,000 barrels per day to 969,000, highest since early April. Trade was looking for a 3,000 increase. Stocks decreased for the fifth consecutive week by 78,000 barrels to 23.887 million. Trade was looking for a draw of 58,000 barrels.
Ethanol stocks are up about 17 percent from a year ago.  Early September 2021 crop year to date production is running about 9.3% above the same period a year ago, when gasoline demand was still weak. US gasoline stocks fell for the fifth consecutive week,
by 2.2 million to 228.6 million gallons. Gasoline demand was 8.856 million, up 117,000 barrels from week ago. Total gasoline blended with ethanol was 8.829 million barrels, or 90 percent ethanol blend rate. 

 

US
DoE Crude Oil Inventories (W/W) 29-Apr: +1303K (exp -600K; prev +691K)

–         
Distillate: -2344K (exp -1387K; prev -1449K)

–         
Cushing: +1379K (prev +1298K)

–         
Gasoline: -2230K (exp -800K; prev -1573K)

–         
Refinery Utilisation: -1.90% (exp 0.35%; prev -0.70%)

U.S.
Crude Stocks In SPR Fell Last Week To Lowest Since Dec 2001 – EIA

 

 

 

YTD
performance

 

 

Export
developments.

·        
Taiwan’s MFIG purchasing group bought about 55,000 tons of corn sourced from South Africa at a premium of 219.79 cents a bushel c&f over the September. The tender was for shipment between July 21 and Aug. 9.

 

Updated
4/22/22

July
corn is seen in a $7.25 and $8.65 range

December
corn is seen in a wide $5.50-$8.50 range

 

Soybeans

·        
CBOT soybeans traded 8.00-10.75 cents higher after soybean oil shot up 200-278 points from a strong rally in energy prices. Bull spreading was a feature. Soybean meal fell $3.60-$5.70/short ton. News and oilseeds export developments
are light. ICE July canola ended up $13.50 at $1,144.60 per ton.

·        
Funds bought an estimated net 7,000 soybeans, sold 3,000 soybean meal and bought 6,000 soybean oil.

·        
China and Malaysia were on holiday returning Thursday.

·        
Russia will raise its sunflower oil export duty for June by $153 or 41% to $525 per ton. 

·        
Consultancy Agrinvest Commodities estimated Brazil soybean producers will increase soybean plantings by 1.5% next season.  Other groups look for the same. Brazil planted 40.8 million hectares (100.8 million acres) in 2021.

 

Export
Developments

·        
China looks to sell another 500,000 tons of soybeans from reserves on May 6.

 

Updated
5/3/22

Soybeans
– July $15.75-$18.25

Soybeans
– November is seen in a wide $12.75-$16.50 range

Soybean
meal – July $400-$5.00

Soybean
oil – July 75-88

 

Wheat

·        
US wheat futures settled higher led by Chicago and KC type wheat from a weak US Dollar, technical buying and uncertainty over India’s export potential after the AgMin slashed production. 636 CBOT SRW wheat registrations were cancelled
in Ohio Tuesday night.

·        
Funds bought an estimated net 14,000 SRW wheat contracts. 

·        
Earlier this morning there was a headline that India is looking at restricting wheat exports as the current heat spell is impacting production. Later an agriculture official denied that statement. Regardless, there is still some
uncertainty over the new-crop export potential. 

·        
The month of March was the hottest in 122 years for India. Today India revised their crop estimate to 105 million tons for 2021-22, according to the food minister, compared to a record high of 111.32 million tons estimated earlier
this year, and 109.59 million tons year ago. India exported a record 7.85 million tons in the fiscal year to March, up 275% from the previous year. Before the hot spell India could have potentially exported 12 million tons of wheat for the 2022‐23 fiscal year.

 

 

·        
September Paris wheat futures were up 11.25 euros to 387.50.

·        
UkrAgroConsult estimates Russia’s wheat crop up 10 percent 83.5 million tons for 2022-23, versus 76.1 million tons last year.  Wheat exports are estimated at 39 million tons for 2022-23.

·        
The National Academy of Agrarian Sciences of Ukraine estimates 2022 Ukraine wheat production near 32 million tons, near unchanged from the previous year.

·        
Russian wheat export prices fell last week. 12.5% protein content were down by $10 to $370 FOB at the end of last week, according to IKAR. SovEcon.

 

Export
Developments.

·        
Tunisia state grain buyer seeks 100,000 tons of optional origin soft wheat and 75,000 tons of feed barley on Thursday, May 5 for June and July shipment, depending on origin.

·        
South Korea flour millers bought 50,000 tons of milling wheat from the US for shipment between June 16 and July 15. It included 11% soft white wheat at around $405.8 a ton, 9% soft white wheat at around $484.20 a ton, 11.5% hard
red winter wheat at an estimated $474.1 a ton and 14% northern spring/dark northern spring wheat at around $463.8 a ton.

·        
Jordan seeks 120,000 tons of feed barley on May 10 for Aug/Sep shipment.

·        
Jordan seeks 120,000 tons of wheat on May 11 for Jun/Aug shipment.

 

Rice/Other

·        
None reported

 

Updated
4/22/22

Chicago
– July $10.50 to $12.50 range, December $8.50-$12.50

KC
– July $10.25 to $12.50 range, December $8.75-$13.50

MN
– July $10.75‐$13.00, December $9.00-$14.00