FI Morning Grain Comments 05/09/22

PDF attached

 

Good
morning.

 

US
weather appears to be on track to favor spring plantings while parts of the southern and western Great Plains will see additional net drying that could impact winter wheat production potential. WTI crude oil is lower and USD slightly lower. US equities are
lower.
Reuters USDA trade estimates can be found below.

 

 

 

USD
vs. CRB

 

 

 

Weather

Past
7 days

 

 

World
Weather Inc.

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 
Dryness in Mato Grosso and Goias will continue to be a concern for Brazil corn production. Otherwise, rain expected in other Safrinha crop areas will prove to be beneficial.  Argentina’s harvest is expected to advance well and the same is expected in South
Africa. Australia, though, will experience a little too much rain this week delaying late season harvesting of sorghum and other crops.

           
The moisture in eastern Australia this week will be good for future canola planting in New South Wales and a boost in rainfall in southwestern Western Australia will have a similar impact.

           
U.S. planting in the eastern Midwest, Delta and southeastern states will improve for corn, soybean and peanut production areas.  Delays in spring fieldwork will continue in the upper Midwest and northern Plains as well as eastern Canada’s Prairies, although
some of these areas will have time for planting a little later this month into early June.

           
Europe weather will dry down and warm up which may favor corn, sunseed and other summer crop planting. Russia’s wetter weather next week will slow or stall fieldwork.

China’s
weather will be good for corn and soybean planting. Some rapeseed harvest delays are possible in southern China, but much of the crop will stay away from the wettest conditions. Too much moisture in China’s southern rapeseed areas could threaten its quality.
India’s winter harvest progress is moving along favorably with little change likely.

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

 

MARKET
WEATHER MENTALITY FOR WHEAT AND OTHER SMALL GRAINS: 
A mix of weather in U.S. hard red winter wheat production areas will maintain a mostly status quo situation, although recent rain will improve yields in some northern production areas. Similarly, drier and warmer weather in wheat areas of the Midwest will
lead to better crop development after a prolonged period of cool and wet conditions.  Spring wheat planting delays will continue in the northern U.S. Plains and eastern Canada’s Prairies over the next couple of weeks favoring North Dakota, Manitoba and eastern
Saskatchewan, but some neighboring areas will also be impacted.

           
Europe will be drying down for a while and this may raise a little concern over soil moisture in France, Germany, the southern U.K. and Spain. Crop weather elsewhere in Europe and the western CIS will stay mostly unchanged. Western Russia will turn much wetter
next week.

           
India’s harvesting is moving along without any new impact from hot and dry weather. China’s wheat crop should be improving, although yields may be down due to poor autumn establishment. Australia’s winter crop planting should move along well this year.

           
North Africa dry and warmer weather will soon induce better crop filling, maturation and harvest conditions.

           
South Africa planting conditions look favorable this year, but Argentina will need rain in western production areas in late May and June to induce the best planting conditions.

           
Overall, weather will continue to produce a mixed impact on market mentality today, but there may be some bullish biases because of spring planting delays in North America and developing dryness in Europe.

 

MARKET
WEATHER MENTALITY FOR COTTON: 
Cotton conditions in Mato Grosso and Goias, Brazil should slowly deteriorate during the next two weeks, but the impact of recent dryness may not be nearly as great as it has been on Safrinha corn. Cotton in Argentina is maturing and being harvested in good
weather and field conditions. Bahia, Brazil crop conditions are rated mostly good, despite some drying recently.

           
South Africa harvest weather has been improving with drier biased conditions and that will continue over the next couple of weeks.

           
India’s early season cotton is going in the ground well and the development of less oppressive heat has improved the early crop development.

           
U.S. West Texas rainfall this week will be closely monitored, but most likely it will be too sporadic to have a big impact even though some counties and parts of counties could receive significant rain Tuesday night into Friday. With temperatures warm all
week it will be difficult for enough rain to fall to counter the week’s evaporative moisture losses.

           
Net drying is also expected in the Blacklands, Coastal Bend and South Texas this week stressing dryland crops. The Delta weather will be mostly well mixed and the same will be true in the southeastern states, although greater rain will soon be needed in Georgia,
northern Florida, South Carolina and southeastern Alabama.

           
Northern cotton areas in West Africa need a boost in rainfall to induce ideal conditions. Some cotton areas in the Middle East are a little dry, but the outlook in Xinjiang, China will remain mostly favorable.

           
Overall, weather today will produce little change in market mentality, but concern over potential rainfall in West Texas may put a little caution in the day’s trade.

Source:
World Weather Inc.

 

Source:
World Weather Inc.

 

Source:
World Weather Inc.

 

Bloomberg
Ag Calendar

Monday,
May 9:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• China’s
  first batch of April trade data, including soybeans, edible oil, rubber and meat imports
• U.S.
  crop progress and planting data for corn, soybeans and cotton; winter wheat condition, 4pm
• Vietnam’s
  customs dept releases April coffee, rice and rubber export data
• Globoil
  International 2022 conference on vegetable oils and oilseeds in Dubai, day 1
• HOLIDAY:
  Hong Kong, Russia

Tuesday,
May 10:

• Malaysian
  Palm Oil Board’s data for April output, exports and stockpiles
• EU
  weekly grain, oilseed import and export data
• Globoil
  International 2022 in Dubai, day 2
• Innovation
  Forum’s virtual Future of Food conference, May 10-12
• New
  York sugar seminar hosted by StoneX Financial
• France
  agriculture ministry’s monthly grains report
• Brazil’s
  Unica may release cane crush and sugar output data during the week (tentative)
• Holiday:
  Russia

Wednesday,
May 11:

• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• Globoil
  International 2022 in Dubai, day 3
• France
  AgriMer monthly grains outlook
• Annual
  New York Sugar Conference, hosted by Datagro and International Sugar Organization

Thursday,
May 12:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• USDA’s
  monthly World Agricultural Supply and Demand (WASDE) report, 12pm
• China’s
  agriculture ministry (CASDE) releases monthly report on supply and demand for corn and soybeans
• Brazil’s
  Conab releases data on area, yield and output of corn and soybeans
• New
  Zealand food prices

Friday,
May 13:

• 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
• FranceAgriMer
  weekly update on crop conditions

Source:
Bloomberg and FI

 

 

 

 

 

Reuters
estimates for USDA

 

 

 

 

 

CFTC
Commitment of Traders as of 5/3/22

 

 

 

 

Macros

Canadian
Building Permits (M/M) Mar: -9.3% (prev 21.0%)

 

 

Corn

·        
Corn futures are lower on improving US weather for spring plantings.

·        
WTI crude oil was down $2.57 at the time this was written (7:33 am CT), and USD was down 15 points.

·        
Safras & Mercado projected Brazil’s corn crop at 118.13 million tons versus 118.16 million tons previously. USDA is at 116 million tons.

·        
The Baltic Dry Index hit a 7-week high on Friday of 2,718 points, up 2.8% from the previous day and up 13.1 percent for the week. Attached are a few graphs.

 

Export
developments.

·        
South Korea’s KFA bought 65,000 tons of corn at an estimated $384.21 a ton c&f for arrival in South Korea around Aug. 10. On Friday FLC bought 65,000 tons of corn at an estimated $384.39 a ton c&f for arrival in South Korea around
Aug. 30.

 

July
corn is trading near its rolling 2021-22 crop year high.

 

Soybeans

·        
The soybean complex eased on improving US weather and ongoing concerns over China Covid-19 lockdowns.

·        
China April soybean imports were 8.08 million tons, bringing Jan-Apr imports to 28.36 million tons, down 0.8 percent from year earlier. April was an improvement compared to Q1, despite in the increase in Covid-19 lockdowns that
continue to hamper economic growth. China is on track to import less than 98 million tons of soybeans during 2022.

·        
Offshore values are leading SBO 109 points higher and meal $4.40 short ton lower.

·        
Rotterdam meal was down mostly 5-9 euros from this time Friday morning and vegetable oils mixed.

·        
Traders are looking for April Malaysian inventories to rise from March despite the Indonesian export ban.

·        
Malaysian palm oil ended 9 ringgit per ton higher to 6,409, and cash was up $111/ton at $1,620 ton.

·        
China September soybean futures were near unchanged, meal down 2.5%, SBO 0.9% lower and China palm oil down 1.6%.

·        
Safras & Mercado lowered their Brazil soybean production estimate for 2021-22 to 122.3 million tons from previous 125.1 million. Conab’s April estimate was 122.43 million tons and USDA April at 125.0 million tons. We look for
USDA to lower its Brazil soybean production by at least 0.5 million tons when updated next week (Thursday).

·        
The FOA showed the food price index for the month of April eased from March, in part to the vegetable oil index falling 5.7% in April. Global vegetable oil prices continued to decline in early May. Oil World noted as of early
Friday, US Gulf soybean oil was down 9.3% from the previous week, Brazil and Argentina spot soybean oil down 8.3%, EU sunflower oil off 2.8%, and Dutch rapeseed oil down 5.3 percent. Vancouver canola oil softened 6.2% from a week earlier.

 

Export
Developments

·        
5/6 – China looks to sell 314,000 tons of soybeans from reserves on May 13.

 

 

USDA
Attaché – Malaysia palm & products

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Oilseeds%20and%20Products%20Annual_Kuala%20Lumpur_Malaysia_MY2022-0003.pdf

 

Wheat

·        
US wheat futures are higher on unfavorable weather for the US, parts of EU, and India.

·        
An additional 48 CBOT SRW wheat registrations were cancelled in Ohio Thursday night, and another 69 from the same area Friday evening. A total of 872 SRW receipts were cancelled over a four-day period.

·        
MN spring wheat futures hit their highest level since 2008.

·        
Hot temperatures are still in the near term forecast for the southern US Great Plains with limited precipitation.

·        
September Paris wheat futures are up 1.50 euros to 399.50 at the time this was written.

·        
Ukraine exported over 1 million tons of grain during the month of April. An estimated 25 million tons of Ukraine grain stocks are held up, according to the AgMin. Of that, 12 million tons is exportable surplus.

·        
Ukraine planted 6.1 million hectares of spring grains so far this season, about 50 percent of the planned 11.45 million area.  UGA noted that included 1.98 million hectares of corn, 2.4 million hectares of sunflower, 854,000 hectares
of barley, 336,000 hectares of soybeans and 186,000 hectares of spring wheat.

·        
The FAO food price index for the month of April average 157.5 points, down slightly from a revised 159.7 points in March (previous March 159.3). The vegetable oil index eased 5.7% in April.

·        
69% of the winter wheat crop is experiencing from type of drought conditions, unchanged from last week, down from 73% mid-March.
https://www.usda.gov/sites/default/files/documents/AgInDrought.pdf

 

Export
Developments.

·        
Taiwan Flour Millers’ Association seeks 40,000 tons of US milling wheat on May 13 for shipment from the U.S. Pacific Northwest coast between June 26 and July 10.

·        
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

·        
(Reuters) – Vietnam exported 2.06 million tons of rice valued at $1 billion in the first four months this year, up 4.8% in terms of volume but down 5.7% in terms of value from a year earlier, government data released on Monday
showed. Rice exports in April rose 4.6% from March to 555,769 tons, valued at $275 million, the Customs Department said in a report.

·        
South Korea seeks 136,000 tons of rice on May 12 for Sep-Dec arrival.