FI Evening Grain Comments 05/18/21

PDF Attached

 

Attached
are our China, Brazil and Argentina corn balance sheets. 

 

WASHINGTON,
May 18, 2021—Private exporters reported to the U.S. Department of Agriculture export sales of 1,360,000 metric tons of corn for delivery to China during the 2021/2022 marketing year.

 

SBO
sold off by mid-session on profit taking, pressuring old crop soybean prices while meal was mixed (bear spreading).  Corn and wheat traded higher on some US weather forecasts calling for a drier outlook through Monday and ongoing Chinese demand. 

 

 

Weather

Next
7 days

 

World
Weather, Inc.

MOST
IMPORTANT WEATHER IN THE WORLD

• Brazil’s
  Safrinha corn areas are expecting more rain in a couple of waves Friday into Sunday and again next week and possibly one more at the end of this month
• World
  Weather, Inc. believes the greatest losses for Mato Grosso do Sul and Parana have already occurred and the late crop could benefit from this moisture, but not so much for the early crop
• Farther
  north, crops in Goias, southwestern Minas Gerais and eastern Mato Grosso may not get much rain and will experience ongoing downward production potential
• The
  late crop will need rain to fall routinely over the next few weeks to ensure no further losses
• Argentina
  weather will be very good for maintaining good soil moisture for future wheat planting
  
• Rain
  expected should not seriously delay crop maturation and harvest progress
• No
  crop quality issues are expected because of rain this week
• Canada’s
  Prairies and the northern U.S. Plains as well as the upper Midwest will receive some badly needed moisture during the next ten days, although the precipitation will not be uniformly distributed
• Some
  areas will get more rain than others, but every drop of moisture will be welcome and good for seed germination, crop emergence and early season growth in the Prairies and North Dakota where the driest conditions are prevailing
• Excessive
  heat occurred in Canada’s Prairies and the far northern Plains Monday with afternoon temperatures in the 80s and lower 90s Fahrenheit
• The
  heat occurred while strong wind speeds occurred and humidity was very low
• Considerable
  losses in soil moisture resulted
• The
  same will occur today, but Canada’s Prairies will trend cooler from northwest to southeast over the next few days and some cooling will eventually spread across the northern Plains, but only after a few more warm days
• Rain
  and snow will fall across Alberta and northwestern Saskatchewan over the next couple of days, although southern Alberta will not get much meaningful moisture
• The
  precipitation will maintain moisture abundance in parts of western Alberta and increase topsoil moisture in the northeast part of the province
• Far
  northwestern Saskatchewan will also see some relief from dryness
• Friday
  into the weekend will bring waves of rain and some wet snow from eastern Montana through the southeast half of Saskatchewan to Manitoba, the Dakotas and parts of Minnesota
• Some
  crop areas will get more rain than others, but it all will be welcome
• A
  second wave of rain will impact some of these areas and other locations in the Prairies next week
• U.S.
  southeastern states will trend much drier over the coming week to ten days, but some break from the trend will occur in a part of the region late this month
• Some
  crop moisture stress is expected since some areas are already a little too dry
• U.S.
  central and southern Plains will continue to receive rain frequently over the coming week to nearly ten days, although its intensity has been reduced today
• Concern
  over wet weather disease and early maturing grain quality will continue, although World Weather, Inc. does not expect much damage
• Favorable
  lower U.S. Midwest and Delta weather is expected over the next ten days
• West
  Texas rainfall is expected to erratic over the next week to ten days, but more rain is expected in the production region
• Subsoil
  moisture will not be restored keeping the concern about long term crop development moderately high
• The
  moisture has been and will continue to be good for planting, but additional rain is needed
• Oregon
  and a few Idaho crop areas may get some beneficial moisture soon, but the Yakima Valley in Washington will continue quite dry
• Irrigated
  crops are in favorable condition
• Dryland
  winter crops need moisture and some of that which occurs in Oregon will benefit those dryland crops
• Southeast
  Canada corn, soybean and wheat production areas are experiencing good crop weather
• Tropical
  Cyclone Tauktae moved inland Gujarat, India Monday and will move across northern India today and Wednesday producing heavy rain and windy conditions.
  
• Very
  little crop damage is expected, but some unharvested winter crops and early season cotton will be influenced by the storm and/or its remnants
• Considerable
  property damage has likely occurred in southern Gujarat because of the storm and its torrential rainfall and excessive wind

The
storm was located 325 miles north northwest of Mumbai, India at 1315 GMT today and was moving northeasterly at while producing heavy rainfall and strong wind speeds from central Gujarat into southwestern Rajasthan

• Australia
  will receive a few showers late this week through next week as a frontal system or two moves across the southern parts of the nation
• Resulting
  rainfall will be erratic and light, but all of it will be welcome and will contribute to a better future for planting
• More
  rain will be needed in many areas before fieldwork and crop development becomes aggressive
• Late
  summer crop harvesting will proceed with little delay for the next ten days
• Mexico
  drought remains quite serious, but there is some rain and thunderstorms advertised for southern and eastern parts of the nation during the next two weeks
• The
  precipitation will be erratic
• Water
  supply is quite low and winter crops in a few areas have not performed well
• The
  moisture will help improve planting, emergence and establishment conditions for most summer crops in the wetter areas, but the west-central and northwest parts of the nation will continue quite dry.
  
• South
  Africa will be dry and warm biased over the coming two weeks
• Southern
  Oscillation Index is mostly neutral at +7.63 and the index is expected to fall over the next few days.
• North
  Africa rainfall was minimal during the weekend and is expected to be minimal for a while
• Temperatures
  will be warmer than usual
• Winter
  small grains will be rushed toward maturation faster than usual without much moisture
• West-central
  Africa will see a mix of rain and sunshine through the coming week.
• Temperatures
  will be near to above average and rainfall will be below average in this coming week
  
• A
  boost in precipitation will be needed later this month to ensure soil moisture stays as good as possible and crop development continues normally
• A
  boost in rainfall is expected for some areas next week
• East-central
  Africa rainfall will be erratic over the next two weeks. Crop conditions are rated favorably, but greater rain will be needed in late May and June to maintain the best possible crop environment
• Southeast
  Asia rainfall will be favorably distributed in Indonesia, Malaysia and most of the mainland areas during the next two weeks
• However,
  the mainland areas are reporting below to well below average rainfall recently and a boost in rain is needed in Vietnam’s Central Highlands and neighboring areas
  
• Thailand
  may receive the least rain over the next ten days
• Greater
  rain is also needed in the northern and western Philippines
• Luzon
  Island, Philippines will be last to get significant rain
• New
  Zealand precipitation for the next week to ten days will be periodic, but a little lighter than usual while temperatures are slightly cooler biased.
  

Source:
World Weather, Inc.

 

Bloomberg
Ag Calendar

Tuesday,
May 18:

• China
  customs to publish trade data, including imports of corn, wheat, sugar and cotton
• New
  Zealand global dairy trade auction
• Brazil’s
  Conab releases cane, sugar and ethanol production data
• International
  Sugar Organization and Datagro to hold New York sugar & ethanol conference

Wednesday,
May 19:

• EIA
  weekly U.S. ethanol inventories, production
• BMO
  Farm to Market Conference, day 1
• International
  Sugar Organization and Datagro to hold New York sugar & ethanol conference
• HOLIDAY:
  Hong Kong

Thursday,
May 20:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• China
  customs to release trade data, including country breakdowns for commodities such as soybeans
• BMO
  Farm to Market Conference, day 2
• Black
  Sea Grain conference
• Port
  of Rouen data on French grain exports
• Malaysia
  May 1-20 palm oil export data
• USDA
  total milk, red meat production, 3pm
• EARNINGS:
  Suedzucker

Friday,
May 21:

• ICE
  Futures Europe weekly commitments of traders report (6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• FranceAgriMer
  weekly update on crop conditions
• Black
  Sea Grain conference
• U.S.
  Cattle on Feed, 3pm

Source:
Bloomberg and FI

 

 

U
of I

Zulauf,
C. “On-Going World Crop Prosperity and US Crop Agriculture.” farmdoc daily (11):79, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, May 17, 2021.

https://farmdocdaily.illinois.edu/2021/05/on-going-world-crop-prosperity-and-us-crop-agriculture.html

 

Macro

US
Housing Starts Apr 1.569M (est 1.702M; prevR 1.733M; prev 1.739M)

US
Building Permits Apr 1.760M (est 1.770M; prevR 1.755M; prev 1.766M)

 

Corn

• Chinese
  buying, drier than expected weather for the start of the week for the upper Midwest and drier forecast for this weekend along with slightly lower than expected US corn planting progress lifted CBOT corn higher.
• A
  large turnaround in WTI crude oil (lower) did little to slow the upside in US corn futures.   
  
• Funds
  were net buyers of 4,000 corn.
• The
  trade should monitor the rain event for the US Midwest across the WBC.  1-3 inches is expected to fall across eastern KS through MN and WI through the weekend. 
  
• Talk
  of ridging across the US during the remainder of this month is gaining traction.  It will start to build across the SE then shift west.  ISO bars – 115HR valid 5/23 Sunday
  

• A
  sharply lower USD (near a 4-month low) added to the positive sentiment. 
• China
  bought another 1.36 million tons of corn after picking up 1.7MMT on Monday 1.36 million tons of new-crop corn per USDA on Friday.  So far during the month of May China bought 8.16 million tons of new-crop corn under the 24-hour reporting system.
  
• April
  China corn imports reached a large 1.85 million tons, up 109% from a year ago.  YTD stand at 8.58 million tons, up 301% from previous year. 
  
• Parana,
  Brazil, second corn crop conditions fell again from the previous week to 23% good from 25% and compares to 62% month ago.  We lowered our Brazil corn production forecast to 96.5 million tons vs. USDA of 102 million tons (see attached balance sheet).  The weather
  outlook for Brazil’s second corn crop is still hot and dry.  
• Argentina
  plans to implement a 30-day ban on meat exports to cool inflation.   We are unsure if they will increase export taxes on corn and wheat at this time but there is still talk of it.   Argentina beef exports hit a record during the Jan-Feb period. 
  
• US
  ethanol plant margins improved from the previous week according to Iowa State University’s CARD to 50.3 cents for dry plants, up 25 cents from previous week.  Average Iowa ethanol price last week was up 10 cents to around $2.53/gallon.  (RFA)
• Bloomberg
  cattle survey: U.S. Cattle on Feed Placements Seen Up 21% Y/y & April placements onto feedlots seen rising y/y to 1.728 million head.
  
• A
  Bloomberg poll looks for weekly US ethanol production to be up 4,000 barrels (965-1003 range) from the previous week and stocks up 120,000 barrels to 19.519 million.
  

 

Export
developments.

• WASHINGTON,
  May 18, 2021—Private exporters reported to the U.S. Department of Agriculture export sales of 1,360,000 metric tons of corn for delivery to China during the 2021/2022 marketing year.
  

 

 

 

Average
U.S. retail gasoline price exceeds $3.00 for the first time since late 2014

https://www.eia.gov/todayinenergy/detail.php?id=47996&src=email

 

Updated
5/7/21

July
is seen in a $6.00 and $7.75 range

December
corn is seen in a $4.75-$7.00 range.

 

Soybeans

• CBOT
  soybean oil flipped in part to profit taking after July topped 70 cents earlier today and large reversal (lower) in WTI crude oil.  This and some talk of US soybean basis easing pressured nearby soybean spreads.  Decatur, IL soybean basis fell 10 cents to
  40 over the July and Sidney was off 10 cents to 40 over N.  Toledo dropped 10 cents to 20 over N.  We heard some crushers are well covered through the July position. 
  
• The
  earlier rally in SBO was due in part to Malaysian palm futures rallying 5 percent overnight in part to higher China futures and rally in CBOT soybean oil on Monday.  Reuters noted the Southern Peninsula Palm Oil Millers’ Association estimated palm production
  during the first 15 days of May in some parts of Malaysia likely fell 18% month-on-month.  As Mentioned yesterday, NOPA’s April soybean oil stocks were tighter than expected in part to a good slowdown in crush rates. 
  
• Old/new
  crop soybean meal spreads were also on the defensive today. 
• The
  USD was 37 lower, WTI crude oil lower and US equities mostly lower.   
• Funds
  were net sellers of 9,000 soybeans, sold 6,000 meal and sold,000 soybean oil. 
  
• Reuters:
  CANOLA FUTURES DAILY PRICE LIMIT REVERTS TO $30.00 PER TONNE EFFECTIVE MAY 19, 2021
• Brazil
  soybean exports for the week ending May were 4.1 million tons, higher end of expectations and above 3.4 million tons for the comparable week a year ago.  FH May soybean exports are around 8.8 million tons, unchanged from year ago.  Oil World looks for May
  exports to fall short of last year due to slowing China imports, and for June-September arrivals to fall from year earlier.  Canola arrivals during April were a new monthly high of 0.34MMT. 
  
• Argentina
  plans to vote on new biofuel legislation this week by Congress then pass to the Senate.  They may cut the admixture mandate by half from current 10 percent, allowing for more SBO available for export.  China and India have been large buyers of Argentina soybean
  oil this year.  Meanwhile there is talk Argentina could increase export taxes of grains and oilseeds & products after banning meat exports for 30 days. (Oil World). 
  
• Reuters
  – Exports of Malaysian palm oil products for May. 1-15 rose 22.3 percent to 714,014 tons from 583,875 tons shipped during Apr. 1-15, cargo surveyor Societe Generale de Surveillance said on Tuesday.  The other two reporting forms showed a 17% and nearly 19%
  rise. 
• Bloomberg
  – Australia’s canola production is expected to hit a record 4.7 million tons in 2021-22 as strong global prices and “optimal” moisture profiles in some states encourage farmers to plant more, IKON Commodities. 
  
• Record
  India soybean prices may allow India producers to expand their soybean plantings by over 10%, according to a Reuters story. Indian farmers planted soybean on 11.83 million hectares in 2020 and produced 10.4 million tons, according to SOPA.

 

Aug
palm futures

 

Export
Developments

• Today
  USDA seeks a total of 4,770 tons of packaged oil for use in Title II, PL480 and the McGovern-Dole Food for Education export programs. Shipment was set for June 16-July 15 (July 1-31 for plants at ports).

 

Updated
5/14/21

July
soybeans are seen in a $15.00-$16.50; November $12.75-$15.00

Soybean
meal – July $400-$460; December $380-$460

Soybean
oil – July 64-70; December 48-60 cent range

 

 

Wheat

• CBOT
  wheat prices tracked corn higher only to ended lost lower after the annual US wheat crop tour called for above average yields across central Kansas.  Prices started the day higher after yesterday USDA reported a decline in US winter wheat conditions by one
  point to 48 percent G/E. Sharply lower USD added early support.
• Funds
  sold an estimated 2,000 Chicago wheat contracts. 
• Wheat
  Quality Council’s annual Kansas tour showed yields above average for central Kansas, but some fields had rust disease.  2020 tour was cancelled. Dickinson, Saline, Ottawa, Cloud, Mitchell and Osborne counties in north-central Kansas projected an average yield
  of 60.5 bushels per acre (bpa). The figure compares to the tour’s 2019 average for cars of 41.5 bpa. A second car traveling another calculated an average yield of 57.6 bpa after five stops, well above the tour’s 2019 average on the same route of 47.8 bpa. 
  A third car traveling south of the other two routes, crossing the center of the state, made three stops and calculated yield potential at 54, 74 and 61 bpa. (Reuters)
• Central
  and Volga areas in Russia will see above normal temperatures this workweek but no major impact to the crop is expected. 
  
• Coceral
  raised its forecast of the EU-27 soft wheat production to 130.9 tons from 126.6 million estimated in March (10% higher than last season).  Barley was raised to 55.4MMT from 54.5, corn 64.7 from 63.5, and they left rapeseed unchanged at 16.6 million tons. 
  
• Bloomberg: 
  Canadian Prairies (Canola/Spring Wheat) – Alberta, Saskatchewan, Manitoba Summary: Isolated showers. Temperatures above to well above normal. Forecast: Days 1-3: Isolated showers through Wednesday. Temperatures above to well above normal Monday-Tuesday, below
  normal west and above normal east Wednesday. Days 4-5: Scattered showers Thursday-Friday.
  
• September
  Paris milling wheat settled up 0.50 euros, or 0.2%, at 215.00 euros ($262.64) a ton.
• USDA
  made some big upward adjustments to cash wheat quotes for the PNW.

 

 

Export
Developments.

• Bangladesh
  seeks 50,000 tons of milling wheat on May 30. 
• Japan
  seeks 121,501 tons of food wheat this week.

• Japan
  seeks 80,000 tons of feed wheat and 100,000 tons of feed barley on May 19 for arrival by October 28. 
  

 

Rice/Other

·        
Mauritius seeks 4,000 tons of rice, optional, origin, for delivery Aug – Sep, on June 1. 

·        
Results awaited: 
South
Korea’s Agro-Fisheries & Food Trade Corp seeks 134,994 tons of rice from Vietnam, China, the United States and Australia, on May 13, for arrival between September 2021 and January 2022.

 

Updated
5/17/21

July
Chicago wheat is seen in a $6.60-$8.00 range

July
KC wheat is seen in a $6.20-$7.25

July
MN wheat is seen in a $6.75-$7.50
(NA rains are breaking the MN market)