FI Morning Grain Comments 05/03/21

PDF attached

 

Good
morning.

 

Higher
trade on Brazil crop concerns, lower USD, and follow through buying. US planting was very good last week.  

 

Reminder:

CME
is resetting price limits for grain, soybean complex and lumber futures on May 2. For example, corn to 40 cents, soybeans to 1.00, wheat to 45. 
https://www.cmegroup.com/content/dam/cmegroup/notices/ser/2021/04/SER-8761.pdf

 

CME
Margin changes:

RAISES
SOYBEAN FUTURES (S) MAINTENANCE MARGINS BY 7.2% TO $4,100 PER CONTRACT FROM $3,825 FOR MAY 2021

SAYS
INITIAL MARGIN RATES ARE 110% OF MAINTENANCE MARGIN RATES

SAYS
RATES WILL BE EFFECTIVE AFTER THE CLOSE OF BUSINESS ON APRIL 30, 2021

 

 

Weather

 

Next
7 days

 

World
Weather, Inc.

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:  U.S. Planting weather should be mostly good, but there will be a higher level of frequency for rain in the lower Midwest and some returning wet weather to the Delta. These areas will need some drier weather soon. The
lower Midwest has likely had better planting conditions than the Delta in recent weeks.

            A
good mix of weather is expected in the southeastern U.S. over the next two weeks. The upper Midwest, however, may continue to experience less than usual precipitation for a while. Iowa rainfall tonight and Monday will be very helpful in easing dryness, but
more will be needed after extreme temperatures during the weekend accelerated drying in the state.

            Brazil
Safrinha corn areas will continue to dry down raising crop stress over time. Portions of Mato Grosso will experience the best weather while temperatures in some southern corn areas may be mild enough to keep drying rates and crop stress a little lower.

            Argentina
and South Africa late season crops are expected to continue performing well with some harvest progress occurring between rain events.

            Rain
in Western Australia this week will help improve canola planting conditions. Similarly rain in Western Europe will improve soil moisture for both winter and spring oilseeds and early season corn planting.

            Some
planting will begin soon in southern Russia and Ukraine while planting is expected to expand across east-central China and the North China Plain over the next two weeks. India’s harvest is progressing well.

            Overall,
weather today will likely provide a mixed influence on market mentality.

 

 

MARKET
WEATHER MENTALITY FOR WHEAT AND OTHER SMALL GRAINS:  Western Australia rainfall this week will improve planting moisture. Drying in the North China Plain will dry down the soil raising need for rain in unirrigated production areas later this month.

            India’s
harvest is advancing well with little change likely in crop conditions, despite a few showers periodically.

            Europe’s
greater rainfall in the west-central and north will help replenish soil moisture for improved winter crop development and spring planting. Additional warming is needed in some areas, although southeastern Europe turned much warmer during the weekend.

           
Canada’s Prairies may get a little moisture boost this coming week and into next week, but confidence is low on the significance of the moisture expected. A more generalized precipitation is needed to more significantly change field conditions and soil moisture.
Concern about Canada and parts of the northern Plains will continue for a while, despite some computer forecasts suggesting greater rain.

            South
Africa early planting conditions will be good. Southern Brazil wheat conditions should be good as well.

            U.S.
hard red winter wheat areas will see a favorable mix of weather, although the southwestern Plains will struggle for significant moisture.  The U.S. Pacific Northwest will also stay rather dry, but irrigated fields have plenty of water supply to support the
region’s crop needs. Some rain will evolve in the northern Plains during the weekend into next week and that will be welcome, although it is unclear how significant that may be.

            Overall,
weather may contribute a mixed influence on market mentality.

Source:
World Weather, Inc.

 

Bloomberg
Ag Calendar

Monday,
May 3:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• U.S.
  crop plantings – corn, wheat, cotton; winter wheat condition, 4pm
• EU
  weekly grain, oilseed import and export data
• U.S.
  corn for ethanol, soybean crush, DDGS production, 3pm
• Honduras,
  Costa Rica monthly coffee exports
• International
  Cotton Advisory Committee updates world supply and demand outlook
• Australia
  Commodity Index
• Ivory
  Coast cocoa arrivals
• HOLIDAY:
  U.K., Japan, China, Vietnam, Thailand

Tuesday,
May 4:

• Purdue
  Agriculture Sentiment
• New
  Zealand global dairy trade auction
• EARNINGS:
  Bunge, Andersons, Minerva
• HOLIDAY:
  Japan, China, Thailand

Wednesday,
May 5:

• EIA
  weekly U.S. ethanol inventories, production
• Malaysia
  May 1-5 palm oil export data
• New
  Zealand Commodity Price
• HOLIDAY:
  Japan, China

Thursday,
May 6:

• FAO
  World Food Price Index
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports

Friday,
May 7:

• China
  customs publishes trade data, including imports of soy, edible oils, meat and rubber
• 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
• CNGOIC
  monthly report on Chinese grains & oilseeds
• Canada’s
  Statcan to issue wheat, canola, barley and durum stockpile data
• FranceAgriMer
  weekly update on crop conditions

Source:
Bloomberg and FI

 

DELIVERIES

 

 

 

 

 

 

 

 

 

CFTC
Commitment of Traders

There
were no notable record positions last week.  SBO prices have managed to climb substantially despite the net fun position unable to test its record long position established 2016. Managed money for corn is near a recent record.  Managed money for Chicago wheat
ticked higher with nearby prices at highs not seen since 2012.  As we said in the past, we caution taking the daily estimate of funds literally, rather look at the momentum of buying.  Funds estimates missed the corn position by most for the week ending April
27 in our recorded history dating back to 2012. 

 

 

 

 

 

Macro

 

Corn

• CBOT
  corn
  is trading sharply higher allowing the S/C November/December price ratio to decline to its contract low not seen since June 2020. 
  
• Talk
  of sub 100 million ton Brazil corn crop and follow through bullish momentum is supporting prices.  US weather was very good over the past week with exception of some dry areas out west. 
  
• Traders
  are going to keep an eye on corn margins after they increased 35 percent since April 22. 
  
• Producers
  were busy planting corn over the weekend including northern Il were some fields were complete.  US corn plantings could end up over 50 percent complete when updated later today.  We are at 42 percent. 
  
• Safras
  & Mercado estimated the Brazil corn crop at 104.1 million tons, 8% below their previous forecast.  Second crop corn was pegged at 70.7 million tons. 
  
• On
  Friday, the funds bought an estimated net 55,000 corn contracts.

 

Export
developments.

• South
  Korea’s KFA bought 65,000 tons of corn, optional origin, at $319.35/ton C&F for November arrival. 
  

 

 

 

Soybeans

• CBOT
  soybeans
  are sharply higher, and meal is on the defensive after a commercial squeeze in the May soybean oil contract fueled a rally to 71.59¢ per lb., which is the highest ever for a front-month contract.
• China
  will be on holiday through Wednesday for Labor Day.
• Malaysian
  palm oil appreciated a large 193 points to 4061 and cash palm was up $32.50/ton to $1,017.50.  EU veg oils and meal were mostly higher. 
  
• Cargo
  surveyor SGS reported month to date April Malaysian palm exports at 1,413,094 tons, 102,757 tons above the same period a month ago or up 10.1%, and 157,831 tons above the same period a year ago or up 16.5%.  AmSpec reported April Malaysian palm exports increased
  9.7% to 1.4 million tons.
• A
  Reuters poll calls for the March crush to be reported near 188.4 million bushels (5.94 mil bu per day), up from 164.3 million in February (5.87 mil/d) and below 192.1 million in March 2020 (5.85 million/day).  Soybean oil stocks were estimated at 2.317 billion
  pounds, up from 2.306 million in February and below 2.327 billion at the end of March 2020. 
  
• Funds
  on Friday bought an estimated net 18,000 soybean contracts, bought 3,000 soybean meal and bought 11,000 soybean oil. 
  
• Offshore
  values were leading CBOT SBO 76 points lower and meal $2.20 short ton higher. 
  
• Rotterdam
  vegetable oil values were about 10-55 euros higher from this time previous session and Rotterdam meal mostly 5-10 euros higher.  Some months were lower for meal. 
  
• China
  cash crush margins on our analysis were 178 cents vs. 1178 cents late last week and compares to 132 cents year earlier. 
  
• China:
  

Holiday

• Malaysian
  palm oil: (uses settle price).
  

 

 

 

Export
Developments

• Results
  awaited: Algeria
  seeks 30,000 tons of soybean meal on April 29 for shipment by June 15.
• Results
  awaited: Tunisia seeks 27,000 tons of soybean oil and/or rapeseed oil for late June / early July shipment. 
  

 

 

Wheat

• US
  wheat appreciated Monday morning from strength in corn and a lower USD (-17 as of 8:06 am CT). 
  
• September
  Paris wheat was up 3 euros to 222.25 as of around 8 am CT. 
• We
  may see a 2 point decline in US winter wheat ratings and a slowdown in spring wheat planting progress due to dry conditions across the northern Great Plains. 
  
• Funds
  on Friday bought an estimated net 5,000 CBOT SRW wheat contracts.

 

Export
Developments.

• The
  Philippines seeks up to 185,000 tons of wheat on May 4 for shipment in June, July and August depending on origin.
  
• Bangladesh
  seeks 50,000 tons of milling wheat on May 6. 

 

Rice/Other

·        
Results awaited: Bangladesh seeks 50,000 tons of rice on May 2.