FI Evening Grain Comments 05/10/22

PDF Attached

 

Funds will be emailed when they are available.

 

Attached
are our updated US corn and wheat balance sheets. This Thursday, we will see USDA estimating initial US and global S&D’s for 2022. Day after most US commodity and equity markets sold off (fund selling), US agriculture markets traded mostly higher on Tuesday.
Technical buying was a factor for the price increase for wheat, corn and soybeans. Not to mention US spring crop plantings as of Sunday fell short of expectations. The US weather
outlook
has a little more precipitation for the Midwest during the back end of the seven day outlook. US temperatures will remain very warm and provide a good opportunity for producers to plant spring grains this week. The Biden Administration is looking to tame inflation
by possibly removing China import tariffs.

 

Weather

 

 

World
Weather Inc.

WEATHER
EVENTS AND FEATURES TO WATCH

• U.S.
  temperatures were heating up across the western Midwest Monday and stayed very warm to hot in the central and southern Plains
• Warm
  weather will overspread all of the U.S. Midwest and impact the Delta, southeastern states and southern Plains during the next few days
• The
  heat will accelerate drying rates and rainfall will be minimal in the key corn and soybean areas of the Midwest and Delta resulting in much better planting conditions later this week
• Rainfall
  next week in the U.S. Midwest, Delta and southeastern states will resume a more normal weather pattern with alternating periods of rain and sunshine expected favoring fieldwork and crop development
• Southern
  Georgia, northern Florida and parts of Alabama will continue drying out and crop moisture stress is expected over time
• Subsoil
  moisture is still favorable, but topsoil conditions are becoming very short of usable moisture which may impact recently planted crops.
  
• Repeating
  thunderstorms tonight through Friday night from western Texas to the central U.S. Plains will offer some improved topsoil moisture
• The
  precipitation will be erratic each day and temperatures will be warm to hot keeping evaporation rates high and making it tough for a lasting increase in topsoil moisture to take place
• Some
  increase in dryland planting and germination may occur as a result of this week’s showers and thunderstorms, although the majority of the rain will not be great enough to seriously change the moisture profile and drought status is unlikely to change
• U.S.
  hard red winter wheat conditions and production potentials are unlikely to change much as a result of this week’s showers and thunderstorms or the warm bias
• North
  Dakota, Manitoba and eastern Saskatchewan are still facing significant field working delays during the coming week due to wet fields and additional precipitation
• Some
  neighboring areas will also be impacted, although the moisture situation may not be quite as serious
• An
  extended period of dry weather is needed to get fields to dry down so that planting can take place
• Snow
  fell Monday in western Alberta, Canada, although it had a low impact
• Western
  and some northern Alberta locations are still too wet and need to dry down to support improved planting conditions
• Less
  precipitation is expected, but the environment will not bring on dramatic improvement in field conditions for a while leaving spring planting progressing slowly
• Brazil’s
  Mato Grosso and Goias states will continue dry biased for the next ten days maintaining short to very short soil moisture and stressing Safrinha corn and cotton
• Lower
  production is expected because of dryness in these states this year
• However,
  good Safrinha crop development has occurred from Mato Grosso and parts of Paraguay into Parana and Sao Paulo where yields should be good
• Argentina
  will continue to see little to no rain, but the environment is great for late season crop maturation and harvest progress
• Some
  rain will be needed late this month and in June to support wheat, barley and canola planting
• Tropical
  Cyclone Asani was located 67 miles southeast of northeastern Andhra Pradesh coast or 577 miles southwest of Kolkata, India at 15.1 north, 82.1 west moving westerly at 13 mph and producing maximum sustained wind speeds of 74 mph near the center of the storm
• Hurricane
  force wind was occurring out 25 miles from storm center while tropical storm force wind was occurring out 135 miles
• Asani
  will make landfall along the central Andhra Pradesh coast Wednesday
• Very
  heavy rain and some coastal flooding is expected along with some damaging wind and rough seas as the storm moves inland
• Rainfall
  could range from 5.00 to 15.00 inches near the point of landfall and the storm’s movement once over the coast could become very sluggish allowing hear rain will prevail for a while
• Winter
  rice and some sugarcane could be negatively impacted
• Europe
  is expected to continue drying down due to limited rainfall and mild to warm temperatures
• France,
  Germany, southern parts of the U.K.  and Spain will become driest as time moves along, although drying is also expected in Poland and Czech Republic
• Any
  rain that occurs after May 20 will be light and not well distributed, but a little relief is expected
• Western
  and northern Russia will receive waves of rain in the coming week to ten days maintaining or inducing wet field conditions and delaying spring fieldwork
• Rain
  in western Kazakhstan Montana and early today was ideal in lifting topsoil moisture for improved spring wheat and sunseed planting and establishment conditions
• North
  Africa is drying out, but mostly to the benefit of winter crop filling, maturation and early harvesting
• The
  region will be dry for a while
• India’s
  far Eastern States may get too much rain in the coming week resulting in some flooding
• Most
  of India will continue to experience warm to hot temperatures and sporadic rainfall during the next ten days resulting in a little less than usual pre-monsoonal rainfall
• South
  Africa will experience net drying over the next ten days in many areas and that will prove ideal for summer crop maturation and harvest progress.
  
• Some
  winter crop planting is also expected during this period of drier weather
• Ontario
  and Quebec weather will be dry biased most of this week and the temperatures will trend warmer
• This
  will result in better field working opportunity for corn and other crops
• Wheat
  development will be accelerated as well
• Next
  week’s weather may trend a little wetter
• Mexico
  rainfall is expected to support isolated to scattered showers and thunderstorms in southern and eastern parts of the nation this week
• Most
  of the rain is not expected to be enough to counter evaporation and more rain will be needed in time
• Central
  America will see periodic rain in the coming ten days with some of it to become heavy this weekend and next week from Costa Rica into Panama.
  
• Northern
  South America will experience frequent rain and thunderstorms over the next ten days resulting in some local flooding
  
• Colombia
  and Venezuela as well as Ecuador and the northern Amazon River Basin will be most vulnerable to the heavy rainfall and flooding
• Xinjiang,
  China rainfall will be greatest in the mountains where a boost in water supply for irrigation is expected
  
• Planting
  of cotton and corn as well as other crops is well under way and the outlook is favorable for most irrigated areas
• Mainland
  areas of China will be wettest south of the Yangtze River during the next two weeks, although there will be some other bouts of rain periodically in other areas in the nation and all of it will be welcome
• Net
  drying is possible in east-central parts of the nation and in Liaoning which may raise a little concern about dryness in time
• Rain
  is expected in the Yellow River Basin where an improvement in winter and spring crop conditions are expected after recent drying
  
• South
  Korea rice production areas are too dry and little change is expected over the next ten days
• Some
  of this dryness may expand northward into North Korea
• Southeast
  Asia rainfall will be abundant to excessive in the next ten days from Myanmar into Thailand, Laos and Cambodia as well as from eastern parts of Borneo into the southern Philippines and Papua New Guinea
• Some
  flooding is expected in many areas
• Southwest
  monsoon rainfall in Myanmar could become excessive later this week with 10.00 to 20.00 inches of rain possible over the southern most parts of the nation and into the northern Malay Peninsula
• Tropical
  Cyclone Karim poses no threat of land from a position in the central Indian Ocean
• Eastern
  Australia will be rainy this week
• Amounts
  of 1.50 to 4.00 inches will occur in central and northern New South Wales and southern Queensland by Friday while 3.00 to 12.00 inches are expected along the central and lower Queensland coast
  
• Damage
  to sugarcane is possible and some unharvested cotton quality will decline
• Sorghum
  should not be harmed, although harvest delays are likely
• Canola,
  wheat and barley planting potentials will increase greatly following this period of rainy weather
• Western
  Australia will get some beneficial rain in the southwest during mid- to late week this week
  
• The
  moisture will help improve planting for some areas, but more rain will be needed
• Some
  follow up rain is expected next week
• South
  Australia and Victoria rainfall will be most limited over the next two weeks
• West-central
  Africa will experience frequent rainfall over the next ten days supporting coffee, cocoa, sugarcane and rice development
• Some
  northern cotton areas need greater rain
• East-central
  Africa rainfall will be most significant in southwestern Ethiopia, southwestern Kenya and Uganda during the next ten days while Tanzania begins to dry down seasonably
• Today’s
  Southern Oscillation Index was +19.50 and it has likely peaked, but will remain strongly positive for a while this 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

Tuesday,
May 10:

• Malaysian
  Palm Oil Board’s data for April output, exports and stockpiles
• EU
  weekly grain, oilseed import and export data
• Globoil
  International 2022 in Dubai, day 2
• Innovation
  Forum’s virtual Future of Food conference, May 10-12
• New
  York sugar seminar hosted by StoneX Financial
• France
  agriculture ministry’s monthly grains report
• Brazil’s
  Unica may release cane crush and sugar output data during the week (tentative)
• Holiday:
  Russia

Wednesday,
May 11:

• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• Globoil
  International 2022 in Dubai, day 3
• France
  AgriMer monthly grains outlook
• Annual
  New York Sugar Conference, hosted by Datagro and International Sugar Organization

Thursday,
May 12:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• USDA’s
  monthly World Agricultural Supply and Demand (WASDE) report, 12pm
• China’s
  agriculture ministry (CASDE) releases monthly report on supply and demand for corn and soybeans
• Brazil’s
  Conab releases data on area, yield and output of corn and soybeans
• New
  Zealand food prices

Friday,
May 13:

• 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
• FranceAgriMer
  weekly update on crop conditions

Source:
Bloomberg and FI

 

Reuters
estimates for USDA

 

US
production

 

US
wheat production

 

Global
stocks

 

SA
production 2021-22

 

 

Corn

·        
Corn futures were higher on technical buying, higher wheat and rebound in selected outside related markets.  WTI traded sharply lower, but equities were higher. Only 22 percent of the US corn crop had been planted as of Sunday,
below expectations and well behind average.

·        
President Biden said their Administration is discussing dropping US trade tariffs on China. No decision has been made. If true, that could open a large market for imports, reducing inflation.

·        
The Baltic Dry Index increased 3.8 percent or 108 points, near a 5-month high.

·        
France is projected to plant less corn this year. The AgMin estimated the corn area at 1.37 million hectares, down 6.1% from 2021.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 7,000 barrels to 976 thousand (972-979 range) from the previous week and stocks down 151,000 barrels to 23.736 million.

·        
A Reuters poll calls for Brazil corn production for 2021-22 to be a record 115 million tons, up from 87.09 million for 2020-21.  Note the area expanded about 7 percent from last season. Yet, traders look for Conab to reduce their
estimate when released Thursday due to recent unfavorable weather. USDA last month increased their Brazil corn estimate by 2 million tons to 116 million. It will be interesting to see what they do on Thursday.  A Reuters trade guess for USDA calls for 114.12
million tons.

·        
Brazil has plenty of corn supply and we look for them to export more corn and less soybeans, by mid-July, IMO.

 

Export
developments.

·        
(New 5/10) South Korea’s KFA bought 65,000 tons of corn at an estimated $379.95 a ton c&f for arrival in South Korea around Aug. 20.

·        
China plans to buy 40,000 tons of pork for reserves on May 13.

 

 

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

 

July
oats have really taken a tumble

 

Soybeans

·        
The soybean complex was mixed, with soybeans and soybean oil higher on technical buying and a rebound in outside related markets coupled with slow US spring plantings pace. Soybean meal was lower. Some speculate it’s about time
producers switch from corn to soybeans, but we think there is at least a 2-week window before that happens. 

·        
Soybean oil share rose back above 50 percent during the session. Several questions were asked why soybean oil was very strong today given that WTI crude oil was down more than $3.00 by 2 pm CT.  One thought is that palm oil prices
could appreciate as export demand increases (Malaysia) over the next few weeks. In addition, we have not heard any chatter so far this week if Indonesia will soon drop their export ban.

·        
The increase in oil share was also puzzling today as Reuters noted crush downtime in the eastern US reflected an increase in soybean meal basis.  This may have limited losses in soybean meal futures on Tuesday.  Chicago and Decatur
(IL) meal basis was up $3/short ton. Fostoria, OH increased $3. But Mankato, MN, fell $5/short to 15 under.

·        
China import demand has been questionable recently as 24-hour announcements have been slow. Also slowing are Brazilian soybean exports.

·        
Abiove: Brazil soybean production 125.4 MMT, up 100,000 from previous and exports at 77.2 million tons. We are now 2 million tons below their Brazil export projection. Crush was left unchanged at a record 48 million tons.

·        
Anec: Brazil May soybean exports are seen at 10.615 million tons versus 8.075 million previous week, a large upward revision but suggests exports are lagging from year earlier. The May soybean figure is well down from 16.4 million
tons for May 2021. That would put Brazil January – May soybean exports at only 42.2 million tons, down from 50.2 million tons exported during the same period a year ago. Soybean meal exports are seen reaching 1.919 million tons versus 1.679 million previous
week. Brazil corn exports are seen at 927,209 tons versus 737,487 tons previous week.

·        
Given our pessimistic soybean export outlook for Brazil for the remainder of the season, which could prompt USDA to increase US soybean exports by 50 million bushels (might not be all at one time), but we need to monitor US commitments
which are lagging for China.

 

AgriCensus
Brazil soybean exports by month, FI forecast for May 2022 through December 2022.

 

 

·        
France’s AgMin looks for the sunflower area to increase 8.5% to 758,000 hectares from 2021.

·        
(Reuters) – India’s edible oil imports are set to fall for the third year in a row on a rise in local oilseed supplies and as a rally in vegetable oil prices to a record high dented demand, an industry official said on Tuesday.
The world’s biggest importer of edible oils is likely to make overseas purchases of 12.9 million tons in the 2021/22 marketing year ending on Oct. 31, down from 13.13 million tons a year earlier, B.V. Mehta, executive director of Solvent Extractors’ Association
of India, said.

·        
Malaysia is considering cutting its palm oil export tax and slow its biodiesel mandate to facilitate exports from the shortage of Indonesian palm oil and other global vegetable supplies. A 4 percent to 6 percent export tax was
considered, down from current 8 percent. That would benefit India import margins. Palm oil represents about a 60 percent market share for all global vegetable oils.

·        
(Reuters) – Malaysia’s production and exports of palm oil are expected to rise 30% by the end of this year, amid increased demand after neighboring Indonesia banned exports and following the re-entry of plantation workers from
abroad, a minister said.

·        
ITS: May 1-10 Malaysian palm exports 390,938 tons, up 40 percent from 278,621 previous period prior month. AmSpec reported a 39 percent increase to 376,573 tons.

·        
April Malaysian palm oil stocks grew from March.

 

 

Export
Developments

·        
The USDA seeks 550 tons of vegetable oils under its PL 480 program on May 17 for late June/FH July shipment.

5/6
– China looks to sell 314,000 tons of soybeans from reserves on May 13.

 

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 were higher on global supply uncertainty and slow US spring wheat planting progress coupled with unfavorable US southern (hot) weather lowering winter wheat yield potential for the southern Great Plains.

·        
July spring wheat is trading near a 14 year high.

·        
An additional 147 CBOT SRW wheat registrations were cancelled in Ohio Monday night. A total of 1,019 SRW receipts were cancelled over a five-day period.

·        
Hot temperatures over the next few days will be unfavorable for US winter wheat yields (except for protein content) bias southern and parts of the west-central Great Plains.

·        
India wheat exports could amount to 1.5 million tons for May, up from 1.4 MMT during April (Reuters via trade sources).

·        
Pakistan will allow 3 million tons of wheat imports for state reserves, according to AgriCensus. TCP currently looks to import 400 to 500 thousand tons of wheat for June – July shipment.

·        
Tunisia’s grain harvest is expected to increase 30-40% from year ago, according to a Reuters article citing a senior farmers union. That would ease import requirements. They had an average grain harvest of about 1.5 million tons
over the past ten year with consumption around 3.4 million tons.

·        
September Paris wheat futures were up 2.00 euros to 396.50. Earlier it hit a contract high of 405 euros.

 

US
PNW wheat basis increased from late last week

 

Export
Developments.

·        
Algeria seeks 50,000 tons of wheat for July shipment.

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

·        
Bangladesh seeks 50,000 tons of wheat on May 23 for shipment within 40 days of contract signing.

·        
Japan seeks 196,560 tons of food wheat later this week.

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

·        
Taiwan Flour Millers’ Association seeks 40,000 tons of US milling wheat on May 13 for shipment from the U.S. Pacific Northwest coast between June 26 and July 10.

 

Rice/Other

·        
South Korea seeks 136,000 tons of rice on May 12 for Sep-Dec arrival.

·        
South Korea is expected to dry down, threating rice production.

 

 

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