FI Evening Grain Comments 05/22/22

PDF Attached

 

Early
calls: Grains lower and soybean complex steady. Will need to monitor the USD, equities and WTI crude oil later this afternoon.  Those markets could have influence on soybean oil in turn spill over into soybeans.

 

Indonesia
will now limit the amount of palm exports after announcing earlier this week that they were lifting the export ban. Rain fell across the Midwest over the weekend and more rain is seen this week bias eastern TX & OK, Delta, heart of the Midwest and Southeast.
Grains were lower on Friday and soybean complex higher. Argentina increased its cap on corn exports.
The USD was 30 points higher and WTI crude ended nearly 50 cents higher. USDA cattle on feed was slightly supportive for corn. 

 

 

 

 

 

Weather

Last
seven days

 

 

World
Weather Inc.

WEATHER
EVENTS AND FEATURES TO WATCH

• Frost
  and freeze conditions occurred in southern Brazil this morning with most of the hard freezes in Santa Catarina and parts of Rio Grande do Sul
• Lighter
  freezes occurred in southern Parana – mostly in wheat country where the impact was minimal.
  
• No
  Safrinha crop area was negatively impacted
• Frost
  was reported in a few Sul de Minas coffee production areas this morning, but the impact should have been minimal
• One
  location north of Tres Pontas reported a near dawn temperature of -1 Celsius or 30 degrees Fahrenheit
• Most
  lows were 2 to 6 Celsius or 35-43F
• Cool
  weather will continue in Brazil through the weekend, but temperatures should not be any cooler than they were today except in a couple of Parana locations where readings may be a degree or two lower Saturday
• No
  freeze will occur in Safrinha corn areas Saturday, but there could be a few patches of frost in minor production areas.
  
• Argentina’s
  second week outlook has potential for rain in wheat areas, but the latest model run of the GFS this morning minimized some of that potential once again
• The
  00z GFS and 00z European model runs had more moisture for the last days of May and first days of June
• World
  Weather, Inc. believes some rain will fall, but it is questionable how generalized and beneficial it will be
  
• Follow
  up moisture will be imperative
• No
  relief from dryness is expected in Mato Grosso or Goias Safrinha corn production areas during the next two weeks – which is normal for this time of year, but crop stress while grain filling is expected to continue threatening some of the late season yields
  
• West
  Texas rainfall Monday through Wednesday of next week may vary from 0.35 to 1.00 inch with local totals of 1.00 to 2.00 inches;
  
• The
  lighter amounts will occur in the west near the New Mexico border.
• The
  precipitation will be welcome, but not uniform and mostly light leaving a big need for more moisture
• The
  Rolling Plains will be much wetter than the high Plains
• Significant
  rain will fall in the Texas Blacklands during mid-week next week possibly resulting in some local flooding
• The
  moisture will be good for developing corn, sorghum and cotton, although if the GFS mode is correct flooding could damage a few fields
• The
  GFS model is likely overdoing some of the predicted rain
• U.S.
  Midwest rainfall will be greatest during the middle part of next week slowing or stalling fieldwork for a little while
• A
  better mix of rain and sunshine should occur before and after that period of time supporting some fieldwork during the drier days
• Southeastern
  portions of the U.S will see some timely rainfall, to prevent dryness from festering into a problem during the next ten days
• U.S.
  Delta weather will be favorable for summer crops, although there will be enough rain to slow farming activity for a while next week
• U.S.
  northern and west-central Plains will experience  frost and freezes this weekend with temperatures falling to the upper 20s and 30s Fahrenheit
• Permanent
  crop damage is possible in a few early planted spring crop areas, but most of those early crops can handle the cold without a problem for no further advanced than they are
• U.S.
  hard red winter wheat areas in western Nebraska, northwestern Kansas and northeastern Colorado will see frost and freezes Saturday and Sunday that may burn back some of the crop and could negatively impact production in a few of the more advanced counties
  
• Northwestern
  Kansas reports 14% of the wheat headed as of last Sunday and low temperatures there may slip near or slightly below freezing along the Colorado and southwestern Nebraska border
• Snow
  is still expected to fall in eastern Colorado tonight with some significant accumulations in east-central parts of the state – mostly near the mountains
• Cold
  in Canada’s Prairies and the U.S. northwestern Plains should not seriously impact any crop this weekend
• U.S.
  spring wheat and Canada’s eastern Prairies will see instability showers of rain and snow today and Saturday before dry weather finally settles in
  
• Other
  showers of limited significance will occur next week, but the moisture will slow or completely disrupt the region’s drying trend
• World
  Weather, Inc. believes net drying will occur for about ten days in the eastern Canada Prairies, northern North Dakota and northern Minnesota, despite the showers suggested and “some” farming activity will eventually take place
• Returning
  stormy weather in the last days of May or early days of June will impact planting once again
• Drought
  in the southwestern Canada Prairies will prevail over the coming week, but there will be “some” potential for rain in the last days of May and first days of June
• Light
  rain this week has temporarily moistened the topsoil for crop support, but dryness deep in the ground remains a big concern and significant rain must fall soon
• Ontario
  and Quebec weather will be mostly well mixed for spring and summer crop planting and winter crop development
• U.S.
  Pacific Northwest crops need greater precipitation to improve dryland crop development potentials
• Northern
  France, Germany and Poland are poised to receive rain periodically in the coming ten days
• The
  moisture will help ease long term dryness, but other areas in Europe will not likely get enough rain to counter evaporation and net drying may continue
• Crop
  moisture stress has already been rising across the continent and there is a drier bias for June in western areas similar to that which has been occurring recently
• Russia,
  Ukraine and northern Kazakhstan are expecting waves of light precipitation during the next ten days supporting spring fieldwork and crop development
• Ukraine
  could run a little drier than usual in June and should be closely monitored, but the outlook currently is not bad for the nation
• Eastern
  China dryness in the North China Plain will continue for the next ten days, but there will be some shower activity and that will translate into a better environment  for a few crops
• The
  situation is not critical today, but another ten days of drying for some areas might lead to greater stress for unirrigated spring and summer crop
• Most
  of the winter crop is irrigated, but any dryland crop might run a risk of lower production
• Southern
  China will trend much wetter next week and into the early days of June resulting in some potential for additional flooding
• Guangxi,
  Guangdong, Fujian and a few bordering areas to the north will be vulnerable to flooding eventually, but drier biased conditions will occur through the weekend
• 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
• Southern
  India, southern Myanmar, other portions of mainland Southeast Asia and the northwestern Philippines will receive frequent rain this weekend through all of next week resulting in a rising potential for flooding.
  
• This
  precipitation is associated with a strong southwest monsoon flow
• The
  lower coast of Myanmar will receive 10-20 inches of rain over the next ten days beginning this weekend
• Thailand
  may not be included in the wetter weather that other Southeast Asia nations experience for a while
• A
  tropical cyclone “may” evolve in South China Sea next week and could bring a risk of heavy rain, flooding and windy conditions to portions of Taiwan and indirectly to Luzon Island, Philippines
• The
  storm forms around mid-week and may threaten Taiwan at the end of the week
• Australia
  precipitation will be restricted through the weekend allowing autumn planting of wheat, barley and canola to advance along with the harvest of cotton and sorghum
• A
  wetter second week of the forecast will slow fieldwork, but improve winter crop emergence and establishment potentials
• Rain
  in South Africa over the next few days will disrupt fieldwork, but the moisture will be ideal for wheat, barley and canola planting and establishment
• Drier
  weather will return next week favoring fieldwork once again
• West-central
  Africa rainfall during the next ten days will be favorable for coffee, cocoa, sugarcane, rice and cotton
  
• There
  is need for greater rainfall farther north in cotton areas where recent rain has been a little restrictive at times
• 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
• North
  Africa weather will be mostly dry and warm for wheat and barley maturation and harvest progress
• Turkey
  will be the only Middle East nation getting rainfall during the next week to ten days
• A
  boost in rain is needed in many areas, but Syria, Jordan and Iraq have been and will continue driest hurting winter grain production and raising some worry over irrigated cotton and rice development
• Mexico
  rainfall is expected to increase in the east next week as pre-monsoonal moisture builds up
  
• 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.
  
• Today’s
  Southern Oscillation Index was +19.18 and it will remain near its peak intensity for a little while longer, but there is strong evidence for weakening soon
• New
  Zealand weather will trend drier for a while

Source:
World Weather Inc.

 

Bloomberg
Ag Calendar

Monday,
May 23:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• MARS
  monthly EU crop conditions report
• U.S.
  crop planting data for corn, soybeans, spring wheat and cotton; winter wheat conditions, 4pm
• U.S.
  cold storage data for beef, pork and poultry, 3pm
• HOLIDAY:
  Canada

Tuesday,
May 24:

• Grain
  & Maritime Days conference in Istanbul, May 24-25
• Russian
  Meat & Feed Industry conference in Moscow
• EU
  weekly grain, oilseed import and export data
• Brazil’s
  Unica may release cane crush and sugar output data during the week (tentative)

Wednesday,
May 25:

• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• Malaysia’s
  May 1-25 palm oil export data
• U.S.
  poultry slaughter, 3pm
• HOLIDAY:
  Argentina

Thursday,
May 26:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• USDA
  releases World Sugar Markets and Trade outlook
• Russian
  grain forum starts in Sochi
• HOLIDAY:
  France, Germany, Indonesia

Friday,
May 27:

• 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

 

 

CFTC
COT

Chicago
wheat fell way short of expectations, and after Friday, traditional funds are thought to be net short!  All other major commodity net long positions were also less than expected, an indication funds were not as aggressive in buying for the week ending May
17 than expected. 

 

 

 

 

 

Reuters
table

 

SUPPLEMENTAL     
Non-Comm               Indexes                  Comm

              
         Net        Chg        Net        Chg        Net        Chg

Corn              
250,724      1,392    482,949      1,186   -698,130    -13,087

Soybeans           
82,242     16,375    181,425     -8,219   -236,558     -9,527

Soyoil             
62,398     -1,853    112,592     -1,205   -196,493        -18

CBOT
wheat         -32,072      3,631    156,203      2,451   -121,245     -6,943

KCBT
wheat          12,322      2,849     65,140        579    -79,718     -2,793

=================================================================================

 

FUTURES
+ OPTS     Managed                 Swaps              Producer

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
339,711      1,149    289,662      7,273   -693,535    -21,881

Soybeans          
147,335     16,674    101,780    -14,874   -233,528     -4,133

Soymeal            
35,923    -16,391     90,914     -2,494   -180,077     10,450

Soyoil             
86,237     -2,139     85,501        -87   -202,683       -847

CBOT
wheat          26,586     11,038     66,852        404    -95,392     -6,607

KCBT
wheat          46,790      3,876     27,807         52    -71,495     -2,596

MGEX
wheat          18,175        -82        763         26    -30,162        187

                
———- ———- ———- ———- ———- ———-

Total
wheat         91,551     14,832     95,422        482   -197,049     -9,016

 

Live
cattle         25,628     -4,320     70,022        692   -112,439      3,597

Feeder
cattle       -6,734     -3,813      5,315        -42      4,286      1,523

Lean
hogs           10,563    -10,045     50,578        661    -60,689      8,070

 

                     
Other             NonReport                  Open

       
                Net        Chg        Net        Chg   Interest        Chg

Corn               
99,706      2,950    -35,543     10,508  2,256,288     87,700

Soybeans           
11,521        964    -27,109      1,369    920,248     24,425

Soymeal         
   22,400      4,232     30,840      4,203    413,267      3,408

Soyoil              
9,441         -4     21,503      3,076    447,084      9,502

CBOT
wheat           4,840     -5,697     -2,886        861    483,434     59,434

KCBT
wheat          -5,357       -697      2,256       -634    204,633      7,044

MGEX
wheat           5,687       -579      5,538        449     78,982      1,790

                
———- ———- ———- ———- ———- ———-

Total
wheat          5,170     -6,973      4,908        676    767,049     68,268

 

Live
cattle         24,728       -818     -7,940        849    366,741     -6,851

Feeder
cattle         -847     -1,233     -2,021      3,565     61,143      5,600

Lean
hogs            4,557        504     -5,009        810    274,130    -11,880

 

 

Macros

China’s
Beijing reported 94 new local covid cases on Sunday.

 

Corn

·        
July corn ended Friday 4.50 cents lower and for the week was down 2 percent. US corn planting pressure and uncertainty over US corn exports for second half 2022 weighed on prices. Technical selling was noted.

·        
Argentina is going to raise export availability of corn by 5 million tons to 35 million tons that could cut into US exports.

·        
Brazil saw mild frost events last week, easing trade concerns over the late planted Brazil second corn crop currently in the pollination stage.

·        
Kenya will allow duty free corn imports of 540,000 tons.

·        
Baltic Dry Index increased 1.7% or 55 points on Friday to 3,344 points, up 7.7% for the week. It’s up six consecutive days.

·        
USDA Cattle on Feed was seen slightly supportive for corn feed demand and bearish for cattle based on higher than expected May 1 cattle on feed.

 

 

Export
developments.

·        
Turkey’s TMO seeks 175,000 tons of feed corn on May 26 for shipment between June 7 and June 30.

 

Updated
5/12/22

July
corn is seen in a $7.50 and $8.75 range

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

 

Soybeans

·        
The soybean complex ended the week on a higher note on talk of China buying US soybeans and Indonesia announcing requirements to fulfill the domestic market for palm oil, leading some to think exports will again be curtailed.
Vegetable oil traders took note and bought soybean oil. Meal ended higher and soybeans rallied led by the nearby contracts. 

·        
Indonesia will start exporting palm oil on May 23, but don’t expect a surge in shipments. According to AgriCensus, Indonesia will reinstate the Domestic Market Obligation (DMO) and Domestic Price Obligation (DPO) scheme to ensure
continued supply of domestic cooking oil. This was introduced earlier this year and dropped March 17. Eight million tons of cooking oil will be set aside for the domestic market and another 2 million tons for reserves.

·        
July Board soybean crush settled 8.50 cents higher at $1.2850, but well off its April 29^th high of $2.15.

·        
The USD was stronger on Friday that could have limited gains in soybeans.

·        
SGS: Malaysian 1-20 palm exports 838,692 tons versus 632,588 tons same period month earlier.

·        
Malaysia’s June crude export duty will remain at 8 percent. 

·        
Attended FastMarkets biofuel conference last week. 
So many uncertainties for the expansion of renewable fuel was largely talked about.  Uncharted territory is what I would describe it.  The general consensus was renewable fuel production will expand, but how we get there over the next
few years remains challenging.  For example, the renewable diesel price is currently high, and a hard sell for current trucking companies.  And will the government cut mandates to ease prices for food end users?  Stay tuned.
 Very impressed over the amount of oil companies breaking into this space.

 

Export
Developments

·        
China sold about 34 percent out of the 500,000 tons of soybeans offered from reserves on May 20.

·        
China plans to offer to sell another 500,000 tons of soybeans from reserves on May 27.

 

Canada:
Outlook For Principal Field Crops – May 20, 2022

 

 

Updated
5/17/22

Soybeans
– July $15.50-$18.00

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

Soybean
meal – July $350-$450

Soybean
oil – July 78-86

 

Wheat

·        
CBOT wheat fell sharply lower on Friday, for the third day in a row, on talk of improving global grain flows, higher USD, and improving US weather outlook. Technical selling was a key feature over the past few business sessions,
and we now estimate the funds net short (by a small amount) as of the end of Friday.

·        
India is studying requests from wheat traders to allow for more exports.

·        
The White House is looking into increasing grain shipment aid for countries in need of food commodities.

·        
The French wheat crop was rated 73 percent G/E versus 82% previous week and 89% two weeks ago. 

·        
The Wheat Quality Council 2022 Hard Red Winter Wheat Tour on Thursday reported the KS yield at 39.7 bushels per acre, down from 58.1 bushels in 2021 and compares to a five-year average of 47.4 bushels per acre. This was the lowest
yield since 2018. Production was estimated at 261 million bushels, below USDA’s 271 May estimate.  We were looking for a yield of 38.0 bushels and 262.2 million bushel production. 

·        
CBIT wheat abandonment and OTM exercise: 157 June 1170 puts were abandoned, and 500 June 1170 calls were exercised.
https://www.cmegroup.com/delivery_reports/OptionExceptionSummaryReport_OPINS_CME_7.pdf

·        
September Paris wheat closed down 0.25 euro at 420.75 euros a ton.

·        
Again, Paris wheat option activity was large at the end of the week, with 33,857 lots trading hands.

·        
Egypt’s local wheat procurement hit 2.5 million tons so far for this year’s harvest, a signal imports are not immediately needed over the short term. 

 

 

Canada:
Outlook For Principal Field Crops – May 20, 2022

 

 

Export
Developments.

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

·        
Jordan issued a new import tender for 120,000 tons of wheat set to close May 24 for Aug/Sep shipment.

·        
Pakistan seeks 500,000 tons of wheat on May 25. Bulk shipment is sought to Pakistan in June to July 2022.

·        
Jordan seeks on 120,000 tons of barley on May 26 for Aug/Sep shipment.

·        
Bangladesh seeks 50,000 tons of wheat on May 29 for shipment within 40 days.

 

Rice/Other

·        
None reported

 

Updated
5/17/22

Chicago
– July $11.00 to $13.50 range, December $8.50-$12.50

KC
– July $12.00 to $14.50 range, December $8.75-$13.50

MN
– July $12.00‐$15.00, December $9.00-$14.00