FI Evening Grain Comments 06/03/21

PDF Attached

 

Higher
trade to start but prices collapsed in part to a 63-point rally in the USD (1:00 CT) and general widespread commodity selling. 

 

Weather

Source:
World Weather, Inc.

 

 

 

Past
day

 

World
Weather, Inc.

WORLD
HIGHLIGHTS

• U.S.
  northern Plains, Canada’s southeastern Prairies and the upper U.S. Midwest will continue to experience below average precipitation through the next two weeks, despite a few showers and thunderstorms infrequently
• Excessive
  heat in the northern Plains and southeastern Canada’s Prairies will occur today and Friday and then slowly abate
  

o  
Extreme highs in the 90s to 104 degrees Fahrenheit will be possible today and Friday in the Dakotas, eastern Montana, western Minnesota, southern Manitoba and southern Saskatchewan

• Some
  cooling is expected in western and northern Canada’s Prairies this weekend into next week with a few showers and thunderstorms expected and more seasonable temperatures
• High
  pressure ridge aloft over North America will shift around during the next ten days moving from the western U.S. to the eastern U.S. and then back to the west into the Plains

o  
The ridge axis during mid-month will be in the western Plains and should extend northward into Canada once again

• Hot
  weather is expected again in the June 11-17 period in western Canada and portions of the western and north-central United States
• Some
  relief to dryness is occurring in the southeastern United States and additional showers and thunderstorms over the next two weeks will perpetuate the trend, although not all areas will be treated equally.
  
• West
  Texas weather will become less wet over time, but more storms are possible Sunday night into Monday and Monday night into Tuesday

o  
The second week of the forecast is advertised to be drier and warmer

o  
Recent rainfall has delayed fieldwork, but improved long term crop development potential

o  
A few dryland production areas in the far southwest of West Texas are still quite dry and need greater rain

• A
  favorable mix of weather is expected in U.S. lower and eastern Midwest and Delta as well as southeastern Canada’s grain, oilseed and wheat production region during the next ten days
• Far
  northwestern U.S. is expected to remain too dry hurting dryland winter crop production
  
• Serious
  drought conditions will prevail in California and the southwestern desert region as well as in the Great Basin with little to no rain for two weeks and hotter temperatures over time
• East-central
  China will continue drying out this week

o  
Below average precipitation and warm temperatures will prevail through the weekend, although there will be a few showers

o  
The environment will be good for winter wheat maturation and harvesting as well as late season planting of summer crops

o  
Some showers will occur near and north of the Yellow River next week offering some short-term relief

o  
Areas from northeastern Sichuan to Shandong will not see much rain for the next ten days to two weeks

• Crop
  moisture stress will begin this weekend and continue next week as the region starts to notably dry down in unirrigated areas
• Northeastern
  China will continue cooler biased and a little wet into next week

o  
The environment will be tough on soybean and late corn planting

o  
Warmer and drier weather would be best for spring and summer crop development as well as additional planting

• Some
  of that needed drier and warmer bias should evolve later next week and into the middle part of this month, although totally dry weather is unlikely
• Xinjiang
  China may cool down today into Saturday and keep its below average degree day accumulations for cotton and other crop areas into mid-month

o  
Showers will be restricted to the northeast late this week and into the weekend

•  A
  few strong thunderstorms will occur Friday

o  
A brief period of warming is expected early to mid-week next week and then more cooling will occur in the following weekend

• Rain
  is expected late next week and into the following weekend as well
• Less
  rain is expected in southeastern China late this week and into the weekend which will help flood water recede; however, there will still be periods of rain along in the southern coastal provinces today and rain will return next week suggesting improvement
  will come slowly for Fujian

o  
Fujian, China has been excessively wet recently as have a few areas west from Jiangxi into Huna

• Drying
  will be welcome throughout this region, although it may not last long
• Russia’s
  southern New Lands will be wetter biased and a little cooler into the weekend along with parts of Kazakhstan

o  
The moisture and temperature change will provide improvements for crop and field conditions after recent weeks of dry and warm conditions

• Russia’s
  New Lands will trend a little drier next week and into the following weekend, but temperatures will not turn excessively warm
  
• Western
  Australia will be drier biased for a while, but recent rain was welcome

o  
wheat, barley and canola establishment is improving after recent rain

o  
Additional planting will take place in this week’s drier weather

• Eastern
  Australia received some rain Wednesday into today and a little more is expected today

o  
New South Wales, southern Queensland and South Australia have been dry this autumn and the moisture boost will improve dryland planting

o  
Additional rain early to mid-week next week should prove very important and beneficial for crop planting, emergence and establishment

• India’s
  monsoon will produce below average rainfall for many areas in the coming week
  

o  
Monsoon performance will be a little sporadic for a while in early June, but some increase in rainfall is expected in the south and west-central parts of the nation to support early season planting of summer crops

o  
Rainfall will increase in eastern and some central crop areas June 10-17 while the west remains drier than usual

• Brazil’s
  weather outlook is a little wetter today in Minas Gerais, Sao Paulo and northern Mato Grosso do Sul for late next week and into the following weekend

o  
The precipitation event may be overdone

o  
Too much cool air has been advertised in southern Brazil for June 10-17 resulting in the greater rainfall farther to the north

• If
  the cold verifies Parana might experience a frost threat late next week and into the following weekend, but confidence is high for changes in the cold air intensity between now and then
• Tropical
  Depression Blanca west of Mexico will stay over open water and pose no threat to land
• Tropical
  Storm Choi-Wan  has moved through the Philippines the past two days and some lingering rain is expected into Friday

o  
The storm brought some beneficial moisture to some of the drier areas in the nation

o  
Crop damage was minimal

• Eastern
  and southern Mexico rainfall will continue for a few more days before trending drier again late this weekend into next week
  

o  
Drought will prevail in western parts of the nation, but dryness in the east is slowly easing

• Argentina’s
  weather over the next two weeks will be well mixed with sufficient drying time to support ongoing harvest progress while enough rain falls to ensure good wheat planting and emergence conditions

o  
Rain is needed in Cordoba, but most other wheat production areas have good planting moisture

• South
  Africa rain Wednesday was mostly limited to the southern parts of the nation

o  
Limited rainfall is expected over the next week

o  
Winter wheat planting and establishment will continue, although there is need for rain in Free State and other areas in the east

• West
  Africa rainfall will be erratic over the next ten days

o  
Greater rain is needed in many areas; including Ghana and some west-central Ivory Coast coffee, cocoa, rice, and sugarcane production areas

• A
  boost in cotton rainfall would also be welcome

o  
Rainfall will continue lighter than usual, but at least some showers will occur periodically

• East-central
  Africa has been drying down and needs greater rain soon to maintain the best coffee, cocoa, rice, sugarcane and other crop production potentials

o  
Rainfall will continue well below average during much of the next ten days

• Mainland
  areas of Southeast Asia rainfall continues lighter and more sporadic than usual and this trend will continue this week before increasing this weekend and next week
  
• Indonesia
  and Malaysia rainfall was sporadic and light Wednesday

o  
There is still a need for greater rainfall

o  
Rainfall is expected to be erratic and light at times during the next week to ten days, but all areas will get at least some rain at one time or another

• Philippines
  rainfall will increase in the north today and then diminish this weekend as Tropical Cyclone Choi-Wan moves away

o  
Recent rainfall has improved soil moisture for many areas, but parts of Luzon Island are still too dry

• Europe
  weather will improve this week because of greater rainfall in Spain, southern France, some areas in Italy and a part of the Balkan Countries

o  
Portions of each region has been a little drier than usual in recent weeks

o  
Crop moisture elsewhere should remain favorably rated, although net drying is expected in the Baltic Plain and neighboring areas of northeastern Europe

• Southern
  Oscillation Index is mostly neutral at +5.78 and the index is expected to move erratically over the next several days
• North
  Africa weather in the coming week will include a few showers and thunderstorms causing some disruption periodically to harvest progress for wheat and barley

o  
No winter crop quality issues are expected

• New
  Zealand weather during the coming week to ten days will be drier than usual with temperatures near to above average

o  
the exception will be along the west coast of South Island and in the far northwest tip of North Island where rain is expected this weekend into next week

Source:
World Weather, Inc.

 

 

Bloomberg
Ag Calendar

Thursday,
June 3:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• FAO
  World Food Price Index
• EIA
  weekly U.S. ethanol inventories, production
• Port
  of Rouen data on French grain exports
• New
  Zealand Commodity Price
• HOLIDAY:
  Brazil, Thailand

Friday,
June 4:

• 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

Source:
Bloomberg and FI

 

 

Macro

US
ISM Services Index May: 64.0 (est 63.2; prev 68.1)

US
Initial Jobless Claims May 29: 385K (est 387K; prevR 405K; prev 406K)

US
Continuing Claims May 22: 3771K (est 3614K; prevR 3602K; prev 3642K)

US
Nonfarm Productivity Q1 F: 5.4% (est 5.5%; prev 5.4%)

US
Unit Labour Costs Q1 F: 1.7% (est -0.4%; prev -0.3%)

US
ADP Employment Change May: 978K (est 650K; prevR 654K; prev 742K)

 

US
DoE Crude Oil Inventories (W/W) 28-May: -5079K (est -2533K; prev -1662K)

–
Distillate Inventories: 3720K (est -1700K; prev -3013K)

–
Cushing Crude Inventories: 785K (prev -1008K)

–
Gasoline Inventories: 1499K (est -1500K; prev -1745K)

–
Refinery Utilization: 1.70% (est 0.70%; prev 0.70%)

 

Corn

• US
  corn futures started higher following the lead in wheat but turned lower on a sharply higher USD (up 62 points by close) and general selloff in outside commodity markets.  The US drought monitor was a little drier western Belt but not much change to east. 
  
• SA
  grain dealers are starting to get concerned over Brazil producer sales contract defaults.  The drought in Brazil, worst in 98 years, has also affected river navigation, driving up transportation costs.  With fuel costs rising, using more trucks will be more
  expensive. 
• Argentina
  meat producers are continuing talks with Argentina officials over the one-month beef export ban (mid-May through mid-June). 
  
• US
  weekly ethanol production was up 23,000 barrels per day to 1.034 million (trade looking for up 11,000) and stocks increased 608,000 barrels to 19.588 million (trade was looking for down 29,000 barrels).  Corn crop year to date production turned a corner and
  is now running 0.2% ahead of the same period a year ago, versus 0.7% lower week earlier.  Much of the recovery is from a 21.2% year over year increase in US gasoline demand. 
  

 

 

 

Export
developments.

• None
  reported

 

U
of I: The Weather Risk Premium in New-Crop Corn Futures Prices

Janzen,
J. “The Weather Risk Premium in New-Crop Corn Futures Prices.” farmdoc daily (11):88,  Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, June 2, 2021.
https://farmdocdaily.illinois.edu/2021/06/the-weather-risk-premium-in-new-crop-corn-futures-prices.html 

 

Updated
5/24/21

July
is seen in a $6.00 and $7.25 range

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

 

Soybeans

• The
  soybean complex started higher led by soybean oil but fell on a higher USD and widespread commodity selling.  News was light.  Next week USDA will release an initial US soybean rating and we should see soybeans rated above average, similar to corn, IMO. 
  
• Global
  vegetable oil demand should continue to support SBO, along with rising prices in related markets.
  
• India
  is considering reducing edible import taxes to cool rising cooking oil prices.  India relies on imports to meet consumption requirements for 2/3 of their edible oil.  Reuters noted the average landed price of crude palm oil at Indian ports was $1,173 per ton
  in April 2021 compared to $599 a year ago, via Solvent Extractors’ Association of India (SEA). 
  
• Indonesia’s
  producers’ association showed Jan-Apr biodiesel demand fell 8.2 percent from the previous year due to a reduction in transportation demand. 
  
• China
  National Grain and Oils Information Center in a report picked up by Bloomberg reported China soybean purchases slowed due to poor margins.  They have been very quiet when inquiring for US soybeans.  Meanwhile AgriCensus noted CNGOIC reported China soybean
  stocks at a 11-week high of around 5.4 million tons.  Crush rates remain above average in China for this time of year despite hog futures hitting contract lows this week.  
  
• Brazil
  will revert back to 13 percent for their biodiesel mandate after relaxing to 10 percent back in April as the government attempted to control animal feed costs.  Brazil may go to 15 percent by the end of the year.  Brazil’s currency (BRL last 5.078) has been
  under pressure in a time energy prices have been rising. 

 

 

Export
Developments

• Results
  awaited: Iran seeks 30,000 tons of each soybean oil and sunflower oil on June 2 for June/July shipment.
  

 

Updated
6/2/21

July
soybeans are seen in a $14.75-$16.00; November $12.75-$15.00

Soybean
meal – July $360-$420; December $380-$460

Soybean
oil – July 67-72.50; December 55-68 cent range

 

Wheat

• US
  weather heat advisories over the next few days across the PNW and upper Great Plains initially lifted US wheat futures higher, led by MN type wheat, but a general selloff in commodities pulled wheat lower in part to a sharply higher trade.  It’s going to be
  hot for the next few days, with possible triple-digit temperatures bias the Dakotas.  Then the midday weather guidance came out for week one, suggesting a slightly wetter bias from east-central North Dakota into nearby Minnesota Saturday into Monday, and an
  increase in rain for the northern Plains Tuesday into next Thursday.   Losses in MN type wheat were limited.  Chicago and KC wheat looks cheap compared to spring wheat.  Overall, we remain bullish.  On Monday US spring wheat crop conditions could drop another
  2 points for the combined G/E categories.
• We
  are hearing some of China’s wheat crop has a very high level of vomitoxin. 
  
• The
  FAO Food Price Index, up 12 consecutive months, averaged 127.1 points in May, 4.8 percent higher than in April and 39.7 percent higher than in May 2020. Attached are selected charts.  The FAO Vegetable Oil Price Index gained 7.8 percent in May. 
  
• September
  Paris milling wheat settled up 0.50 euros, or 0.2%, at 215.50 euros ($261.16) a ton.
• Bloomberg
  reported Maxar looks for the western parts of Russia’s spring-wheat belt to get beneficial rains over the next week. 
  
• Russia’s
  AgMin left their 2021 wheat crop estimate of 81 million tons unchanged from previous. 
  

 

 

Source:
World Weather, Inc.

 

Export
Developments.

• Indonesia
  passed on 240,000 tons of feed wheat for August through November arrival.
• Jordan
  seeks 20,000 tons of wheat bran on June 15 for July/August shipment. 
• Results
  awaited: Iran seeks 60,000 tons of milling wheat on June 2 for June/July shipment. 
  
• Jordan
  seeks 120,000 tons of feed barley on June 9 for Lat Oct/Nov shipment. 

 

Rice/Other

·        
South Korea bought an estimated 94,400 tons of rice out of 134,994 tons sought, on May 13, at $986.00 and $989.00 a ton c&f from China and at $572.00 and $578.50 a ton c&f from Vietnam.   Arrival
is for between September 2021 and January 2022. 

·        
Egypt seeks 100,000 tons of raw cane sugar on June 5. 

·        
Pakistan received offers for white sugar, with lowest at $533.90/ton c&f.  

 

Updated
6/2/21

July
Chicago wheat is seen in a $6.30-$7.15 range

July
KC wheat is seen in a $5.95-$6.70

July
MN wheat is seen in a $7.50-$8.50