FI Mid Morning Grain Comments 06/21/22

PDF attached

 

Good
morning.

 

CBOT
agriculture markets are shrugging off another US heat wave and focusing on demand destruction along with improving weather for western Europe and US winter wheat harvesting pressure. The US ridge will shift west over the next couple of weeks, improving rainfall
changes. US weather going forward will be typical of summer. Palm oil rolled over on Monday (6-month low) in anticipation of improving production and slowing exports. This is pressuring soybean oil despite a rebound in WTI crude oil.  There are several import
tenders on deck with Japan in for food wheat, Tunisia in for soft wheat, and Jordan in for 120,000 tons of barley and wheat. Bangladesh seeks wheat.

 

Two
day period…

 

 

Interior
soybean meal basis was very firm for some US locations on Friday as lack of producer selling drove up local soybean costs.

 

 

 

 

Weather

 

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR JUNE 21, 2022

• North
  America high pressure ridge will shift to the west over the next couple of weeks 
  
• this
  change will “eventually” bring less heat to the central and eastern United States and may increase showers and thunderstorms from the northern Plains into the lower eastern Midwest
• The
  changes in North America will come slowly and most of this week will still be hot and dry in the southern Plains, Delta, Tennessee River Basin and lower Midwest
• Very
  little rain will occur this week in eastern Midwest, as well, although the region will cool down after mid-week
• Hot
  and dry weather during the weekend further depleted soil moisture across the Plains and western Corn Belt as well as the Delta and southeastern states
  
• Temperatures
  in the eastern Midwest were not warm enough to seriously threaten crops
• Weather
  in the coming week to ten days will also change for Europe where excessive heat and dryness occurred during the weekend
  
• High
  temperatures in the 90s to 106 degrees Fahrenheit occurred in France, Spain and parts of Germany with 90s in Poland
• Europe
  will be notably cooler and start receiving showers and thunderstorms this week ending the recent period of crop stress
• Western
  portions of Russia’s Southern Region and eastern Ukraine will get significant rain in the coming week to ten days easing long term dryness
• Portions
  of the North China Plain and Central Yellow River Basin will not get much rain into Saturday, but after that conditions will become more favorable for rain and dryness should be eased
• South
  Korea rice area dryness is also expected to be eased 
• India’s
  monsoon is expected to perform more favorably in this coming two week period, although rainfall will only be near to above normal in Maharashtra and Madhya Pradesh 
• Australia
  weather looks good for wheat, barley and canola planting, although the GFS model continues to insist that heavy rain will fall in Queensland and northeastern New South Wales next week
  
• The
  European model does not agree, but World Weather, Inc. believes at least some rain will impact the region
• Argentina’s
  outlook is still drier biased in many winter crop areas, especially in the west
• Southern
  Brazil will remain wet this week

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Monday,
June 20:

• China’s
  third batch of May trade data, including soy, corn and pork imports by country
• MARS
  monthly EU crop conditions report
• Malaysia’s
  June 1-20 palm oil export data
• Olam
  holds extraordinary general meeting
• HOLIDAY:
  US, Argentina

Tuesday,
June 21:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• US
  crop planting data for soybeans and cotton; winter wheat condition and harvesting, 4pm
• US
  cotton, corn, soybean and spring wheat conditions, 4pm
• European
  Food Safety Authority’s One Conference on food safety, Brussels and online, June 21-24
• New
  Zealand global dairy trade auction
• USDA
  total milk production, 3pm
• EU
  weekly grain, oilseed import and export data

Wednesday,
June 22:

• Specialty
  & Fine Food Asia trade show June 22-24 in Singapore

Thursday,
June 23:

• EIA
  weekly U.S. ethanol inventories, production, 11am
• US
  cold storage data for beef, pork and poultry, 3pm
• USDA
  world coffee report
• International
  Grains Council’s monthly report
• USDA
  red meat production, 3pm

Friday,
June 24:

• 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
• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• FranceAgriMer
  weekly update on crop conditions
• Brazil’s
  Unica to release cane crush and sugar output data (tentative)
• US
  cattle on feed, poultry slaughter
• HOLIDAY:
  New Zealand

Source:
Bloomberg and FI

 

 

 

 

 

 

CFTC
Commitment of Traders

Traditional
funds were more long than expected for soybeans by 23,100 contracts. At 182,700 net long, they added 6,000 from the previous week. The other major commodities also posted more than expected net long positions but were near expectations.

 

 

 

Macros

US
Existing Home Sales Change May: 5.41M (est 5.40M; prev R 5.60M)

–
Existing Home Sales (M/M): -3.4% (est -3.7%; prev R -2.6%)

–
Median Home Price (USD): 407.6K Or +14.8% (prev 391.2K Or +14.8%)

 

Canada
Retail Sales (M/M) Apr: 0.9% (est 0.8%; prev 0.0%)

–
Retail Sales Ex Auto (M/M) Apr: 1.3% (est 0.6%; prev 2.4%)

 

livesquawk
Philadelphia Fed Non-Manufacturing Regional Business Activity Index 4.6 In June VS 23.4 In May

–
Non-Manufacturing Firm-Level Business Activity Index 24.7 In June VS 22.8 In May

–
Non-Manufacturing New Orders Index 15.5 In June VS 3.9 In May

–
Non-Manufacturing Full-Time Employment Index 27.7 In June VS 15.3 In May

–
Wage And Benefit Cost Index 60.5 In June VS 56.8 In May

 

 

Corn

·        
US corn futures are lower after hitting a one-month high last week as concerns over extreme heat abating with a weather forecast calling for the US ridge to shift west over the next two weeks. Cooler temperatures and increasing
changes for rain should be good for the US corn crop.

·        
WTI crude oil was +$2.00 higher at the time this was written.

·        
We look for a 1 point decline in US corn and soybean ratings when updated Tuesday afternoon, and for wheat ratings to be unchanged for winter wheat and spring wheat to improve one point.

·        
China’s corn imports from Ukraine in May fell to only 126,727 tons, down from 1.26 million tons a year ago. China imported 695,585 tons of corn from Ukraine in April. China imported 1.9 million tons of corn from the US in May,
up slightly from 1.89 million tons a year ago.

·        
China January – May US corn imports: 6.37 (6.67 year ago) and Ukraine: 4.82 (4.99 year ago).

·        
The White House may roll out a US gas tax holiday, another move to ease high gas prices. Meanwhile gasoline demand has been falling over the past several weeks.

 

Export
developments.

·        
None reported

 

Soybeans

·        
CBOT soybeans, meal and oil started the shortened week lower from demand destruction, inflation concerns, improving US weather and technical selling. Palm oil was sharply lower at the start of the week from improving production
and Indonesia increasing CPO exports. The July soybean oil contract traded below its 100-day MA for the first time since December. Losses in meal picked up after the open on product selling despite firm US meal basis.

·        
July soybeans traded below its 50-day MA.

·        
We heard US soybean meal export business was conducted late last week out of the PNW.

·        
Malaysia will suspend subsidies for selected cooking oil products from July 1 to boost domestic supply and stabilize prices.

·        
AmSpec reported Malaysian June 1-20 palm oil exports down 17 percent to 659,768 tons from 794,527 tons previous month.  SGS reported a 12.5 percent decrease to 734,231 tons. ITS 738,368 tons, down 10.5 percent from 824,589.

 

Two
day period

·        
September Malaysia palm oil.

·        
China futures. 

·        
Rotterdam vegetable oils were 25-50 euros lower, and meal unchanged to 3 euros lower.

·        
Offshore values are leading SBO about 20 points lower and meal $9.00 lower.

 

Export
Developments

·        
China will be back late this week selling a half a million tons of soybeans out of reserves but note over the past few weeks only a handful have been sold.

 

Wheat

·        
US wheat futures are lower on improving Western European weather, prospects for a large Russian grain crop and US harvesting pressure. Chicago wheat is near its lowest level since early April.

·        
Parts of US spring wheat growing areas will see limited precipitation this week.

·        
Paris September wheat was down 7.25 euros earlier at 381 euros per ton.

·        
MARS estimated the European Union 2022 soft wheat yield at 5.76 tons per hectare, down from 5.89 forecast last month, 4.7% below 2021 and 1.3% below the five-year average.

·        
Egypt said they need to import 5 million tons of wheat for the 2022-23 year. Imports from Russia over the past three months are up more than 80 percent.

·        
SovEcon estimated Russia’s 2022 wheat crop could reach 89.2 million tons, up 0.6 million tons and a new record high.

 

Export
Developments.

·        
Jordan passed on 120,000 tons of wheat for LH Sep through FH November shipment.

·        
Jordan seeks 120,000 tons of feed barley on June 22 for Oct/Nov shipment.

·        
Tunisia seeks 75,000 tons of soft wheat and 50,000 tons of barley on June 22, optional origin, for shipments July 20-August 15.

·        
Bangladesh seeks 50,000 tons of wheat on July 5 for shipment within 40 days.

·        
Japan seeks 168,330 tons of food wheat later this week.

·        
Algeria seeks 50,000 tons of wheat on June 21, valid until next day, for August shipment.

·        
Kazakhstan will sell 1 million tons of grain from the upcoming harvest to Iran, the Kazakh government said on Monday (Reuters).

 

Rice/Other

·        
None reported