FI Evening Grain Comments 06/22/21

PDF Attached

 

Improving
US weather continues to pressure back month corn and soybeans.  Chicago and KC wheat were lower on US harvest pressure and China buying Australian wheat.  MN wheat rallied as expected from poor US spring wheat crop conditions. 

 

 

Weather

1-7
DAY

 

WORLD
WEATHER INC.

WORLD
WEATHER HIGHLIGHTS FOR JUNE 22, 2021

• Frost
  and freezes occurred north of grain and oilseed areas in Michigan this morning possibly impacting some fruits and vegetable crops.
  
• Torrential
  rain event still advertised for Missouri, Illinois and neighboring areas in both southeastern Iowa and Indiana for Thursday and Friday.
  
• This
  event should not be ignored.
• There
  is potential for serious flooding with rainfall of 4.00 to 10.00 inches occurring in some very important crop areas over a relatively short period of time.
  
• There
  is also a rumor in marketplace about a ridge of high pressure coming into the central U.S. during the July 4 U.S. holiday weekend, but the ridge is more likely to be farther to the west keeping most of the Midwest away from the heat.
  
• Make
  sure to see our special situation story on the coming summer dryness written  last night.  We have attached that article to this email
• In
  Russia, the heat and dryness event under way now will begin to break down during the weekend and especially next week offering cooler temperatures and some rain for areas north of Russia’s Southern Region.
• Until
  then highs in the 80s and 90s Fahrenheit and now rain will  maintain aggressive drying
• Extreme
  highs near and above 100 will occur in Russia’s Southern Region and western Kazakhstan
• No
  change in South America
• Argentina’s
  summer harvest is going well along with winter wheat planting
• A
  little moisture would be good for drier areas in the west
• Brazil
  rain will be mostly in the far south
• Good
  harvest weather for Safrinha corn
• Safrinha
  cotton is still struggling with dryness resulting in smaller bolls
• Australia
  will see a good mix of weather during the next ten days favoring winter crop establishment
• China
  weather will remain good, although a little wet in the south and net drying from Jiangsu to Shaanxi and Shanxi for the next ten days
• India’s
  interior west and northwest will see well below average rainfall into early July
• Concern
  will be slowly rising over future crop development in those areas
• Thailand
  will be drying down for a while especially in the west and south (north of the Malay Peninsula)
  
• Europe
  weather will remain well mixed
• Russia’s
  Spring wheat and sunseed in the southeastern New Lands and northern Kazakhstan will get some needed rain

Source:
World Weather, Inc.

 

Bloomberg
Ag Calendar

Tuesday,
June 22:

• Copersucar,
  one of Brazil’s top sugar and ethanol exporters, holds presser on the market’s outlook
• Future
  Food-Tech’s Alternative Proteins Summit, day 1
• OECD
  to release agricultural policy evaluation report
• U.S.
  cold storage data – pork, beef, poultry, 3pm

Wednesday,
June 23:

• EIA
  weekly U.S. ethanol inventories, production
• Future
  Food- Tech’s Alternative Proteins Summit, day 2

Thursday,
June 24:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• International
  Grains Council monthly report
• Port
  of Rouen data on French grain exports
• USDA
  hogs and pigs inventory, poultry slaughter, red meat production, 3pm

Friday,
June 25:

• 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
• Malaysia
  June 1-25 palm oil export data
• U.S.
  cattle on feed, 3pm

Source:
Bloomberg and FI

 

Macros

US
Existing Home Sales May: 5.80M (est 5.72M; prev 5.85M)

–
Existing Home Sales (M/M) May: -0.9% (prev -2.70%)

 

US
Philly Fed Non-Manufacturing Regional Business Activity Index Jun: 59.6 (prev 36.9)

US
Philly Fed Non-Manufacturing Firm Level Business Activity Index Jun: 56.7 (prev 22.1)

US
Philly Fed Non-Manufacturing New Orders Index Jun: 27.4 (prev 16.5)

US
Philly Fed Non-Manufacturing Full Time Employment Index Jun: 4.3 (prev 24.0)

US
Philly Fed Non-Manufacturing Wage & Benefit Cost Index Jun: 42.6 (prev 30.8)

 

74
Counterparties Take $791.605 Bln At Fixed-Rate Reverse Repo (prev $765.141 Bln, 68 Bidders)

 

Corn

• July
  corn rallied against the September and new-crop contracts on same fundamentals –  lack of US producer selling, improvement in corn for ethanol use, and tight spot US supplies (will be verified at the end of this month with
  Grain Stocks report).  July settled 0.50 cent higher and December down 18 cents.  New-crop corn futures were mainly lower on a favorable US weather outlook.   Selected corn basis weakened from Monday.  Lincoln, NE, was down 10 cents to 10 under the July. 
  
• July
  options expire Friday. 
• US
  corn conditions were down 3 points, one point lower than expected, but the trade widely ignored this by focusing on precipitation forecast.  Cooler US temperature this week should slow evaporation rates for parts of the US WCB.  
  
• Funds
  sold an estimated net 15,000 corn contracts on Tuesday. 
• A
  Bloomberg poll looks for weekly US ethanol production to be up 6,000 barrels (1010-1045 range) from the previous week and stocks up 59,000 barrels to 20.661 million.
  
• US
  ethanol RINs were up 13 cents earlier to around $1.58.  Biodiesel was up 8 cents to $1.67. 
  
• Reuters
  in a story covering US and Brazil ethanol markets noted Brazil ethanol prices at mills “are near their highest ever at over 3.40 reais per liter ($2.55 per gallon), according to the University of Sao Paulo (USP). Since fuel distributors need to add 27% of
  ethanol to gasoline, that has driven up prices.”
• In
  a Reuters poll, Brazil’s corn production was estimated at 93.93 million tons, 8.5% below year ago.  Lowest estimate was 88 million tons (IHS Markit) and highest 104.1 million tons (Safras & Mercado).  USDA is 98.5 million tons.  Conab at 96.4 million. 
  
• (Bloomberg)
  — China’s hog population rose 24% in the year through May. 
• A
  Bloomberg poll calls for June 1 hog inventory at 75.551 million head vs 77.364 million last June, 2.3% decline.  The breeding inventory seen down 1.2% y/y, and market hogs seen falling 2.5% y/y. 
  
• A
  Bloomberg poll calls for June 1 cattle inventory at 1.96 million, down 4.6%. 
  
• Reuters:
  
• U.S.
  FROZEN BEEF STOCKS 414.047 MLN LBS MAY 31 -USDA
• U.S.
  FROZEN PORK BELLY STOCKS 36.208 MLN LBS MAY 31 -USDA
• U.S.
  FROZEN ORANGE JUICE STOCKS 0.736 BLN LBS MAY 31 -USDA

 

Export
developments.

• China’s
  Sinograin plans to auction off 18,207 tons of imported Ukraine corn on June 25. 
  

 

 

Updated
6/22/21

July
corn seen in a $6.00 (up 50) and $7.00 range

September
$5.00 and $6.75

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

 

Soybeans

• The
  US soybean complex started lower but soybean oil rallied and closed higher for the 2021 positions.  Soybeans were under a considerable amount of pressure on improving US weather despite a 2-point decline in US soybean conditions (in line with expectations). 
  July dropped 20.50 cents and November off 17 cents.  Nearby demand is slowing.  We lowered our US soybean crop year crush by 11 million bushels to 2.168 billion (USDA @ 2.280 billion).  Only problem with this revision is we will now see a tighter US soybean
  oil carryout due to lower crush.  There was talk China was back in looking for US soybeans off the PNW, but that rumor died off early.  There were no 24-hour sales announcements.  Argentina was back from holiday. 
  
• Soybean
  oil stayed strong during the day session in part to Egypt buying a combined 73,500 tons of imported vegetable oils.  Egypt’s strategic reserves are now at 6-1/2 months.  
  
• December
  meal ended $8.20 short ton lower. It tested the 200-day MA today.  The trade may see sell stops if its trades and closes below the $3.6475 level.  Next level of support is seen around 362, a 50 percent retracement going back to mid-Aug 2020, then 347, a 61.8
  retracement for the same timeframe.  The managed money position for soybean meal could turn negative if another $20 is taken out of the current $366.70 per short ton December price. 
  

• US
  soybean meal basis was largely unchanged. 
• Funds
  on Tuesday sold an estimated net 13,000 soybean contracts, sold 5,000 soybean meal and sold 2,000 soybean oil contracts. 
  
• Malaysia
  overtook Indonesia to become the largest supplier for India so far in 2020-21.  Crop year started November 1.  Malaysian palm exports hit 2.42 million tons to India, up 238% from the same period a year ago.  Indonesia exports were 2 million tons, down 32%. 
  Note Indonesia raised export taxes in December. 
• (Bloomberg)
  — China’s customs confiscated about 215 kilograms of cocaine buried in a vessel, which was carrying soybeans from South America, the department said in a report Tuesday.  We are unsure what will happen to the boat and/or crew. 
  

 

Export
Developments

• Egypt
  bought 63,000 tons of soybean oil and 10,500 tons of sunflower oil for September 5-30 arrival.  Reuters provided a breakdown of the 73,500 tons:
  
• 30,000
  tons of soyoil at $1,184.00 for payment at sight
• 30,000
  tons of soyoil at $1,184.00 for payment at sight
• 10,000
  tons of sunflower oil at $1,133.00 for payment at sight

 

Updated
6/17/21

July
soybeans are seen in a $12.50-$15.50; November $12.00-$15.00

Soybean
meal – July $320-$400; December $320-$460

Soybean
oil – July 50.00-65.00; December 45-65 cent range

 

Wheat

• US
  MN wheat futures ended sharply higher following a 10-point drop in spring wheat ratings.  KC and Chicago failed to follow MN higher and fund selling coupled with US harvesting pressure pulled these contracts lower.  Chinese demand for US wheat could be absent
  for a while as they are sourcing from other countries, including Australia. 
  
• China
  bought 250,000 tons of Australian wheat for Aug and Sep shipment between $285 and $300 per ton.  Unlike barley, China never really cut off Australia with taking in wheat to begin with.  Australia shipped about 1.3 million tons to China during the Dec-Apr period. 
  
• Money
  managers are thought to hold an estimated net short position for Chicago wheat.  Funds on Tuesday sold an estimated net 6,000 SRW wheat contracts. 
  
• *84%
  of SD’s subsoil moisture was less than adequate according to the latest USDA crop progress report. 
  
• September
  Paris wheat was up down 0.25 euro at 207.  Yesterday it tested a 3-week low.  
  
• Russia
  stated they plan to supply Algeria with up to 1 million tons of new-crop wheat (July-June 2021 season).  Russia has not supplied much wheat to Algeria over the past four years, in fact a small cargo was recently sold and this could be first shipment in four
  years.  
• Pakistan
  plans to import up to 4 million tons of wheat, up 1 million from previously planned.  
  

 

Export
Developments. 
*NEW

• *China
  bought 250,000 tons of Australian wheat for Aug and Sep shipment between $285 and $300 per ton, according to AgriCensus.  Unlike barley, China never really cut off Australia with taking in wheat to begin with.  Australia shipped about 1.3 million tons to China
  during the Dec-Apr period. 
• *Thailand’s
  TFMA booked 60,000-65,000 tons of feed wheat for August shipment at paid $289.50/mt CFR LO, according to AgriCensus.  Black Sea was thought to be the origin. 
  
• *Japan
  seeks 159,665 tons of food wheat later this week. 

• *Jordan
  retendered for 120,000 tons of wheat set to close July 6 for Jan/Feb 2022 shipment. 
  
• *Cancelled:
  Jordan seeks 120,000 tons of wheat on June 22 for December shipment. 
• Jordan
  is back in for feed barley on June 23 for Nov/Dec shipment. 

 

Rice/Other

• None
  reported

 

Updated
6/15/21

September
Chicago wheat is seen in a $6.00-$7.00 range

September
KC wheat is seen in a $5.60-$6.70

September
MN wheat is seen in a $6.90-$8.50