FI Morning Grain Comments 05/04/22

PDF attached

 

Good
morning.

 

A
considerable rebound in WTI crude oil and lower USD is supporting commodities. Wheat is sharply higher on concerns over the India wheat crop. The market awaits news later today from the US Federal Reserve (1 pm CT) on a potential interest rate hike. China
Covid-19 lockdowns have not gone away but some regions have relaxed on rules to allow selected factories to resume production.  The US weather outlook is improving by the day and the 6-10 day for the US looks much warmer favoring planting progress. This morning
there was a headline that India is looking at restricting wheat exports as the current heat spell is impacting production.

 

 

 

Weather

 

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR MAY 4, 2022

• Warmer
  temperatures and less rain are advertised for the U.S. central and eastern Midwest for a while from Sunday of this week through Thursday or Friday of next week
  
• high
  temperatures in the central and southern Midwest should get into the 70s and 80s Fahrenheit and that should dramatically improve drying rates so that a firmer soil can evolve for planting progress
• U.S.
  hard red winter wheat areas will get another round of rain today and Thursday maintaining a better than expected moisture profile from Nebraska and northeastern Colorado to central Oklahoma
  
• Southwestern
  portions of the Plains are still quite dry, but will get some showers and thunderstorms over the next two days offering some temporary relief 
• Southwestern
  Canada’s Prairies will continue to struggle for meaningful rainfall and will have to wait longer for it, but there will be a few infrequent bouts of shower activity
• Manitoba,
  the eastern Dakotas and Minnesota are saturated with moisture and flooding is impacting parts of the region
  
• Limited
  precipitation over the next few days will help flood water recede, but more precipitation is expected during the weekend to reverse the improving trend
• West
  Texas cotton areas will get a few showers and thunderstorms today and a better chance for rain will evolve next week, although confidence is low
• Mato
  Grosso and Goias, Brazil continue to dry down and crop moisture stress is pressuring Safrinha corn and some cotton yields, although cotton is still in relatively good shape
  
• A
  single rain event producing 0.50 to 1.00 inch of rain could make a big difference in crop conditions, but no such event is anticipated anytime soon
• Argentina
  will continue to dry down and the need for moisture will be rising later this month and in June to support wheat, barley and other winter crop planting
  
• drying
  is good for summer crop maturation and harvest progress
• Europe
  will be drying out as temperatures turn much warmer during the weekend and especially next week 
• India
  has returned to a seasonably hot temperature regime
• Eastern
  Australia will be trending wetter again next week with a more limited rainfall pattern expected through this coming weekend
• Western
  Australia may get some welcome rain late next week as well
• A
  tropical Cyclone may evolve in the Bay of Bengal late this week and into the weekend with landfall along the upper India or Bangladesh Coast sometime next week

Source:
World Weather Inc.

 

Bloomberg
Ag Calendar

Wednesday,
May 4:

• US
  Trade Balance
• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• New
  Zealand commodity prices
• HOLIDAY:
  China, Japan, Malaysia, Indonesia, Thailand, Bangladesh, Pakistan

Thursday,
May 5:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• HOLIDAY:
  Japan, Indonesia, South Korea, Pakistan

Friday,
May 6:

• 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
• Statistics
  Canada releases stockpiles data for barley, canola and wheat
• FranceAgriMer
  weekly update on crop conditions
• HOLIDAY:
  Indonesia

Source:
Bloomberg and FI

 

 

 

 

Macros

US
Trade Balance Mar: -$109.8Bln (est -$107.1Bln; prev -$89.2Bln; prevR -$89.8Bln)

Canadian
International Merchandise Trade (CAD) Mar: 2.49Bln (est 3.90Bln; prev 2.66Bln; prevR 3.08Bln)

 

 

Corn

·        
Corn futures are higher on sharply higher WTI crude oil and spillover strength from wheat. 

·        
The Midwest will see locally heavy rain this week which could continue to hinder fieldwork progress, but the 6-10 forecast calls for a considerable warmup that should promote fieldwork progress. Traders are looking for the US
Fed to raise interest rates by 50 basis points.

·        
WTI crude oil was up $4.00 at the time this was written, and USD was off 25 points.

·        
Talk of Europe placing restrictions on Russian oil imports is supporting WTI crude.

·        
APK-Inform estimated Ukraine’s grain exports could fall to around 923,000 tons in April from 2.8 million tons from year ago.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 3,000 barrels to 966 thousand (952-975 range) from the previous week and stocks down 58,000 barrels to 23.907 million.

 

 

Export
developments.

·        
Taiwan’s MFIG purchasing group bought about 55,000 tons of corn sourced from South Africa at a premium of 219.79 cents a bushel c&f over the September. The tender was for shipment between July 21 and Aug. 9.

 

Soybeans

·        
The soybean complex is rallying in large part to higher WTI crude oil and strength in grains. News and oilseeds export developments are light. August Paris rapeseed was up 10.50 euros to 828.50 earlier this morning.

·        
China and Malaysia are on holiday returning Thursday.

·        
Offshore values are leading SBO 70 points lower and meal $1.00 short ton higher.

·        
Rotterdam meal was down 3-6 euros from this time yesterday morning and vegetable oils unchanged to 10 euros higher.

 

Export
Developments

·        
China looks to sell another 500,000 tons of soybeans from reserves on May 6.

 

Wheat

·        
US wheat futures increased this morning led by the KC market after India announced they are considering curbing wheat exports. A sharply higher crude oil market and lower USD is also supportive.

·        
636 CBOT SRW wheat registrations were cancelled in Ohio last night.

·        
Earlier this morning there was a headline that India is looking at restricting wheat exports as the current heat spell is impacting production. The month of March was the hottest in 122 years for India. Today they revised their
crop estimate to 105 million tons for 2021-22, according to the food minister, compared to a record high of 111.32 million tons estimated earlier this year, and 109.59 million tons year ago. India exported a record 7.85 million tons in the fiscal year to March,
up 275% from the previous year. Before the hot spell India could have potentially exported 12 million tons of wheat for the 2022‐23 fiscal year.

 

 

·        
September Paris wheat futures are up 11.25 euros to 388.50 at the time this was written.

·        
UkrAgroConsult estimates Russia’s wheat crop up 10 percent 83.5 million tons for 2022-23, versus 76.1 million tons last year.  Wheat exports are estimated at 39 million tons for 2022-23.

 

Export
Developments.

·        
Tunisia state grain buyer seeks 100,000 tons of optional origin soft wheat and 75,000 tons of feed barley on Thursday, May 5 for June and July shipment, depending on origin.

·        
South Korea flour millers bought 50,000 tons of milling wheat from the US for shipment between June 16 and July 15. It included 11% soft white wheat at around $405.8 a ton, 9% soft white wheat at around $484.20 a ton, 11.5% hard
red winter wheat at an estimated $474.1 a ton and 14% northern spring/dark northern spring wheat at around $463.8 a ton.

 

·        
Jordan seeks 120,000 tons of feed barley on May 10 for Aug/Sep shipment.

·        
Jordan seeks 120,000 tons of wheat on May 11 for Jun/Aug shipment.

 

Rice/Other

·        
None reported