FI Evening Grain Comments 05/27/22

PDF Attached includes Friday OI and Option volume plus update weather maps. FI US CP and inspections included.

 

Grains
ended Friday higher. Several countries warned of potentially restricting rice exports and one staple for replacement is wheat. Soybeans ended mixed. Soybean meal was higher while soybean oil sold off from increasing Indonesia export prospects for palm oil.
Expect good US Midwest plantings next week, similar to the past week as we predict for the upcoming USDA crop progress released Tuesday afternoon, per US holiday. Opening calls look for Monday night look unchanged to higher per global inflationary measures,
but we need to soak in outside related markets when that time comes.

 

CME

https://www.cmegroup.com/tools-information/holiday-calendar.html

 

 

 

 

Weather

Past
7 days (Sunday morning)

 

 

Sunday
7-day

 

 

World
Weather Inc. –
Friday

WEATHER
EVENTS AND FEATURES TO WATCH

• U.S.
  weather looks to be very well mixed over the next ten days to two weeks in the Midwest, Delta, southeastern states and a part of the Great Plains
• Additional
  relief is expected in West Texas cotton areas during the second half of next week with the Texas Panhandle and some central and northern counties of West Texas cotton country most impacted
• Warmer
  temperatures in key U.S. crop areas this weekend through mid-week next week will prove to be ideal in spurring on better drying for those areas still a little wet and aggressive early planted summer crop development is likely
• Too
  much rain will be returning to the northern U.S. Plains, Manitoba and eastern Saskatchewan, Canada this weekend and early next week
  
• The
  returning wet weather will stop the drying trend that has occurred this week
• Some
  of the wettest areas will continue too wet into the first full week of June because of the coming rain
• The
  potential for some abandonment is rising for crops in North Dakota, Manitoba and east-central and southeastern Saskatchewan, but there is still time for improvement if the rains would only stop
• The
  longer range outlook does not favor a prolonged period of drying in these wetter areas
• Drought
  remains a  concern in southwestern parts of Canada’s Prairies, although recent light rain has helped to keep crops viable
• The
  need for rain is tremendous in east-central and southern Alberta and west-central and southwestern Saskatchewan
• These
  areas will get some showers periodically, but resulting rainfall will continue lighter than usual leaving drought in place and maintaining concern for the future
• Summer
  rainfall is still expected to occur more routinely in these drier biased areas
• France
  has a better potential for greater rainfall next week and into the following weekend relative to that of Thursday’s forecast
• Both
  the European and GFS models have turned wetter, but some of the moisture may be a little overdone
• Additional
  drying is expected in June
• Other
  areas in western Europe will also get some needed moisture in the coming week to ten days offering some improvement from the recent drier biases, but much more rain will be needed
• Eastern
  Europe will continue plenty moist through the next ten days with dryness in Romania and immediate neighboring areas to be relieved additionally over time
• Western
  Russia, Belarus and the Baltic States will be plenty wet over the next ten days slowing fieldwork and crop development
• If
  the pattern lasts much longer there will be a risk of wet weather disease.
  
• Net
  drying is expected from Russia’s Southern region into southeastern Ukraine and western Kazakhstan during the next ten days
• The
  area will be closely monitored since it is a region that can turn dry during multi-year La Nina events that occur in this 22-year solar cycle
  
• Ontario
  and Quebec rainfall is expected to diminish next week as ride building begins in the U.S. Midwest
  
• The
  drier and warmer weather will be good for advancing spring and summer crop planting and supporting winter wheat planting
• U.S.
  Pacific Northwest precipitation will continue restricted over the next two weeks, although not completely absent
  
• The
  moisture will be good for crops when it occurs, but the  precipitation frequency and amounts will be a little low to fix long term moisture deficits
• Argentina
  rainfall is expected to be greatest in the northeastern one-third to one-half of the nation over the next ten days
• Most
  of the  expected rain will be outside of key wheat production areas
• Rain
  is needed in western wheat areas to bolster soil moisture for planting, emergence and establishment. Other winter crop areas are seeing very good conditions for planting, emergence and establishment
• Cooler
  temperatures are returning to Argentina resulting in slower drying rates, but no crop damaging temperatures are expected
• Brazil
  weather will turn wetter in the southwest and far southern parts of the nation late this week into the weekend
• The
  moisture will be good for future winter crop development and for late filling and maturing Safrinha crops
• Ongoing
  dryness in Mato Grosso and Goias will continue to threaten late season corn development
• There
  is some potential for heavy rain that may result in some concern for crops in low-lying areas
• Brazil
  temperatures will be warmer than usual nationwide during the weekend and early part of next week and then turn cooler air in the south later next week while the northeast is warmest
• The
  cold will spread into Parana and Mato Grosso do Sul in the second weekend of the two-week outlook, but there is no sign of damaging frost or freezes in late season crop areas
  
• Brazil’s
  bottom line remains good for early maturing Safrinha crops and for coffee, citrus and sugarcane as they mature and are harvested. Rain would not likely benefit many crops other than late maturing summer crops, some citrus and sugarcane.
  
• Little
  to no rain will fall in the North China Plain for the next week
• The
  region has already been drying out and this pattern will continue for a while longer
• Temperatures
  will be seasonable
• Rain
  is possible during the latter part of next week and especially in the following weekend
• Other
  areas in eastern China will see a mix of rain and sunshine during the next two weeks.
  
• Xinjiang,
  China weather will include some showers in the northeast and across the mountainous areas, but no serious bolstering in soil moisture is expected
• Planting
  progress in corn and cotton areas will advance normally
• Water
  supply has been increasing with improved mountainous rainfall this spring, but reservoir levels may still be below normal.
  
• India
  will receive pre-monsoonal showers and thunderstorms over the next week to ten days resulting in some moistening in the topsoil, but greater rain will be needed
• Monsoonal
  precipitation will begin a little earlier than usual, but the precipitation will be mostly confined to the lower west coast and in the far Eastern States
• The
  monsoonal rainfall is advertised to be lighter than that suggested for the region last week
• Temperatures
  will be seasonable
• South
  Africa is trending drier
• The
  recent rain was great for bolstering topsoil moisture in favor of winter grain and oilseed planting, although Western Cape was largely missed by the greater rain
• Both
  the harvest of summer crops and the planting of winter grains will advance well in the drier weather this week
• Temperatures
  will be near to above normal this week
• Australia
  will experience a light mix of rain and sunshine over the next two weeks. Soil conditions will slowly become wetter favoring autumn planting of wheat, barley and canola, but grater rainfall will be needed outside of Victoria, southern New South Wales and southeastern
  South Australia where the greatest rain is expected. Far southwestern parts of South Australia will also be favorably moist
• Temperatures
  will be seasonably warm (near to above normal)
• All
  of Southeast Asia will get rain at one time or another over the next couple of weeks.
• The
  precipitation will be good for most crop needs; however, it will be heavy along the Myanmar lower coast and in parts of both Laos and Vietnam into Cambodia
• Northwestern
  Luzon Island, Philippines and Taiwan will also be wet
• Thailand
  may not be included in the heavier rainfall that other Southeast Asia nations will experience for a while, but scattered showers and thunderstorms are still expected
• West-central
  Africa rainfall during the next ten days will be favorable for coffee, cocoa, sugarcane, rice and cotton
  
• East-central
  Africa rainfall will be most significant in Ethiopia, southwestern Kenya and Uganda during the next ten days while Tanzania’s Pare region dries down seasonably
• North
  Africa rainfall will be limited in the next two weeks, although some rain is expected very lightly
• Most
  wheat and barley in the region is maturing and being harvested keeping the need for rain very low
• Most
  of the rain expected will be limited and should not adversely impact crop conditions or field progress
• Northern
  and some eastern Turkey crop areas will be the only ones in the Middle East nation to get significant 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
  
• These
  areas may experience a decline in wheat, rice and cotton production this year – at least in unirrigated areas
• Mexico
  rainfall is expected to slowly increase in central and southern parts of the nation during the next ten days
• The
  moisture will be welcome and should be a part of the developing monsoon season
• A
  small tropical cyclone may form off the upper west coast of Central America and near the Mexico lower west coast today and Saturday
• The
  storm could bring heavy rain to a part of southern Mexico in Chiapas and especially Oaxaca as landfall takes place early next week
• 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 +17.98 and it will steadily decline over the next few weeks
• New
  Zealand rainfall will be trending wetter over the next week
  

Source:
World Weather Inc.

 

Bloomberg
Ag Calendar

Monday,
May 30:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• Vietnam
  General Statistics office to release May coffee, rice, rubber exports data
• HOLIDAY:
  US

Tuesday,
May 31:

• U.S.
  crop planting data for corn, soybeans, spring wheat and cotton; winter wheat harvesting; cotton, corn winter wheat condition, 4pm
• EU
  weekly grain, oilseed import and export data
• Malaysia’s
  May palm oil export data
• U.S.
  agricultural prices paid, received
• EARNINGS:
  FGV

Wednesday,
June 1:

• USDA
  soybean crush, DDGS production, corn for ethanol, 3pm
• Global
  Food Forum 2022 in Melbourne
• Australia
  Commodity Index
• HOLIDAY:
  Indonesia, Korea

Thursday,
June 2:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• HOLIDAY:
  Italy, UK

Friday,
June 3:

• 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
• FranceAgriMer
  weekly update on crop conditions
• HOLIDAY:
  China, Hong Kong, Thailand, UK

Source:
Bloomberg and FI

 

 

 

CFTC
COT

Fund
position for wheat was a shock as funds futures old was much more long than estimated, a complete reversal from that we saw from large selling for the previous week pushing then into a thought of net negative position. With wheat net long again, we think the
funds were bottom picking as prices fell. Add that to countries to look at restricting rice exports, wheat may have opportunity for another upside run.

 

 

 

 

 

As
of Friday

 

Reuters
table

SUPPLEMENTAL     
Non-Comm               Indexes                  Comm

             
          Net        Chg        Net        Chg        Net        Chg

Corn              
204,496    -46,229    476,780     -6,169   -635,698     62,432

Soybeans           
90,022      7,779    189,481      8,056   -249,177    -12,620

Soyoil             
48,512    -13,886    110,215     -2,377   -178,261     18,232

CBOT
wheat         -31,578        494    153,343     -2,860   -119,848      1,397

KCBT
wheat          12,371         50     63,869     -1,271    -77,351      2,367

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

 

FUTURES
+ OPTS     Managed                 Swaps              Producer

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
291,469    -48,242    284,369     -5,293   -635,456     58,078

Soybeans          
163,067     15,732    105,815      4,035   -245,822    -12,294

Soymeal            
49,154     13,232     90,026       -888   -190,331    -10,254

Soyoil             
68,994    -17,242     86,374        872   -184,801     17,881

CBOT
wheat          22,254     -4,331     60,766     -6,086    -92,019      3,374

KCBT
wheat          44,546     -2,244     27,183       -624    -68,785      2,710

MGEX
wheat          15,231     -2,943        830         67    -26,987      3,175

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

Total
wheat         82,031     -9,518     88,779     -6,643   -187,791      9,259

 

Live
cattle         16,314     -9,315     70,752        730   -103,972      8,466

Feeder
cattle       -8,996     -2,262      5,196       -119      5,418      1,132

Lean
hogs           14,881      4,318     51,643      1,064    -61,611       -922

 

                     
Other             NonReport                  Open

             
          Net        Chg        Net        Chg   Interest        Chg

Corn              
105,197      5,490    -45,578    -10,035  2,188,145    -68,143

Soybeans            
7,263     -4,257    -30,325     -3,216    932,993     12,745

Soymeal            
21,596       -805     29,554     -1,285    405,915     -7,352

Soyoil              
9,900        459     19,533     -1,969    436,457    -10,627

CBOT
wheat          10,916      6,076     -1,917        969    453,693    -29,741

KCBT
wheat          -4,053      1,303      1,110     -1,147    203,755       -878

MGEX
wheat           5,162       -525      5,762        225     78,292       -689

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

Total
wheat         12,025      6,854      4,955         47    735,740    -31,308

 

Live
cattle         21,741     -2,988     -4,835      3,106    365,006     -1,735

Feeder
cattle         -297        550     -1,321        699     63,381      2,238

Lean
hogs            1,442     -3,116     -6,355     -1,345    266,011     -8,119

 

 

 

 

 

Macros

99
Counterparties Take $2.007 Tln At Fed Reverse Repo Op (prev $2.008 Tln, 95 Bids)

 

US
PCE Deflator (M/M) Apr: 0.2% (est 0.2%; prev 0.9%)

–
PCE Deflator (Y/Y) Apr: 6.3% (est 6.2%; prev 6.6%)

–
PCE Core (M/M) Apr: 0.3% (est 0.3%; prev 0.3%)

–
PCE Core (Y/Y) Apr: 4.9% (est 4.9%; prev 5.2%)

–
Personal Income (M/M) Apr: 0.4% (est 0.5%; prev 0.5%)

–
Personal Spending Apr: 0.9% (est 0.8%; prev 1.1%; prevR 1.4%)

US
Advance Goods Trade Balance (USD) May: -$105.9B (est -$114.8B; prevR -$127.1B)

–
Wholesale Inventories (M/M) Apr: 2.1% (est 2.0%; prev 2.3%; prevR 2.7%)

–
Retail Inventories (M/M) Apr: 0.7% (est 2.0%; prev 2.0%; prevR 3.0%)

 

US
Univ. Of Michigan Sentiment May F: 58.4 (est 59.1; prev 59.1)

–
Current Conditions: 63.3 (est 63.6; prev 63.6)

–
Expectations: 55.2 (est 56.3; prev 56.3)

–
1-Year Inflation: 5.3% (est 5.4%; prev 5.4%)

–
5-10 Year Inflation: 3.0% (prev 3.0%)

 

 

 

Corn

·        
US corn futures
were higher on Friday from fund buying of an estimated net 13,000 contracts. Positioning ahead of the holiday weekend and lower USD was noted.

·        
US markets will resume trading Monday evening (CT).

·        
We expect good planting progress across the US Midwest later this weekend well into next week.

·        
USDA could possibly issue their initial US corn crop condition on Tuesday. Corn emerged generally needs to be around 50 percent for conditions to be reported and as of May 22, corn was at 39 percent. We are eying 70 percent good/excellent
for initial 2022 ratings, same as the 5-year average and down from 76 year ago.

·        
Brazil corn exports for 2022 were estimated by Safras & Mercado at 37-40 million tons, well up from 2021 (20.7MMT) when drought reduced availability.

·        
Brazil is expected to take some market share away from the US during LH 2022.

 

Export
developments.

·        
None reported

 

Updated
5/24/22

July
corn is seen in a $7.40 and $8.40 range

December
corn is seen in a wide $5.50-$8.00 range

 

Soybeans

·        
Nearby soybeans rose on Friday (all ended mixed) ahead of the long holiday weekend from talk China bought US soybeans and strength in soybean meal.  Funds bought 3,000 soybeans, bought 3,000 meal and sold 3,000 soybean soil. CBOT
Soybean oil traded lower. Russia announced they will increase sunflower export duty and Indonesia announced they will allocate 1 million tons of palm oil for the export market, but no details or timeline were provided for that move. Higher grain prices also
lent support to soybeans.

·        
There were no USDA 24-hour sales announcements.

·        
Russia will increase its sunflower oil export quota by 400,000 tons up until August 31. The end of the Russia marketing year for sunflower oil is Aug 31. Sunflower meal was increased by 150,000 tons.

·        
Sunseed prices for FOB Ukraine fell from the week earlier as stocks are ample, according to AgriCensus.

·        
Expect good US Midwest plantings next week. 

 

Export
Developments

·        
China plans to sell 500,000 tons of soybeans from reserves on June 1. We heard a little more than 363,000 tons were sold on Friday, with prices higher than the 9^th auction held week before. 

·        
The USDA seeks 5,710 tons of packaged veg oil for use in export programs for shipping July 1-25 on June 1, with notice following day.

 

 

 

Updated
5/24/22

Soybeans
– July $15.75-$18.00

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

Soybean
meal – July $375-$465

Soybean
oil – July 77-84

 

 

 

 

Wheat

·        
Chicago wheat futures ended Friday higher on bottom picking and several countries warning they may restrict or increase prices on rice exports. Wheat is a good replacement for rice. Funds bought an estimated net 6,000 contracts
on Friday in the Chicago market.

·        
After local Indian traders said no rice export ban would be considered Thursday, on Friday India’s government said they are again mulling over banning it.  Russia is also now considering banning rice exports from July 1 until
the end of the year. We interpret this as supportive for the wheat market as importing nations may need replacement. And Thailand along with Vietnam are looking to raise their prices to support domestic producers.

·        
Russia will increase their export tax on wheat for the May 27-June 2 timeframe from $110.50/ton to $121.20/ton.

·        
South Korea bought a variety of 124,700 tons of wheat from Canada, US, and Australia.

·        
Iraq reported severe water shortages for their wheat crop.

·        
French wheat conditions again deteriorated. French soft wheat was rated 69% G/E versus 73% previous week and 80% year ago. The rating is down 20 points over the past three weeks.

·        
September Paris wheat was up 5.50 euros after trading unchanged mid-session, at 414.75 euros a ton.

·        
Argentina’s BA Grain Exchange reported 5.3 percent out of the 6.6 million hectares projected for wheat has been sowed.

·        
We look for USDA to report 2 percent of the US winter wheat to be harvested if initially reported next week.

·        
US wheat associates: “Sporadic rains across the HRW growing region slowed harvest progress in Texas and Oklahoma, and aided crop development in unharvested areas. In Alabama, 10% of the SRW crop is now harvested. Planting of the
HRS and durum crops continues to lag due to a cool, wet spring. SW in the Pacific Northwest remains in good to excellent condition.”

 

 

Export
Developments.

·        
Pakistan bought 500,000 tons of wheat, optional origin, over the weekend, at an estimated $515.49/ton c&f, for shipment for June/July.

·        
South Korea bought a variety of 124,700 tons of wheat from Canada, US, and Australia.

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

 

Rice/Other

·        
India trade sources said the country has no plans to curb rice exports.

·        
Russia is also looking to ban rice exports from July 1 through December 31. 

·        
Vietnam and Thailand are looking to increase their export prices on rice exports to help their domestic producers earn more income to cover rising input costs.  Reuters – Vietnam and Thailand account for roughly 10% of global
production of rough rice, and about 26% of global exports, according to the U.S. Department of Agriculture.

 

Updated
5/24/22

Chicago
– July $10.50 to $13.00 range, December $8.50-$12.50

KC
– July $11.50 to $13.75 range, December $8.75-$13.50

MN
– July $11.75‐$14.00, December $9.00-$14.00