FI Morning Grain Comments 05/16/22

PDF attached

 

Good
morning.

 

US
agricultures futures are higher led by a surge in wheat. USD was 15 points lower and WTI off 65 cents. The morning weather forecast turned slightly unfavorable from Friday with a wetter bias for the northern Great Plains Tuesday through Friday. The Midwest
saw good planting weather over the weekend despite rains across many states. Rain this week for the Midwest will slow planting progress but some areas will be able to get plantings done.

 

India
announced an export ban on wheat, excluding selected countries such as Egypt. After five years of bumper crops, a heatwave this season has cut production. US and European wheat markets were rattled from this news and wheat futures jumped about 6 percent Sunday
into early Monday but have come off those highs. India will honor an Egyptian purchase of 500,000 tons of Indian wheat. France received from relief from weekend rains. We look for US wheat ratings this afternoon to be worst since 1996. Egypt was also considering
importing wheat from Pakistan and Mexico. Pakistan seeks 500,000 tons of wheat on May 25.
Later
today NOPA will release its April US crush data and the trade looks for 172.4 million bushels, down from 181.8 million during March and up from 160.3 million year ago. End of April soybean oil stocks are seen at 1.839 billion pounds, a five-month low, down
from 1.908 billion at the end of March and up from 1.702 billion year earlier. Offshore values are leading SBO 20 points lower and meal $3.10 short ton lower. 

 

 

 

 

Weather

Past
7-days

 

 

World
Weather Inc.

• Frost
  and freezes are still expected in southern Brazil grain areas late this week and early in the weekend that could harm immature summer grains
• No
  coffee damage is expected from the cold, but there is some concern that high wind speeds Tuesday and Wednesday might knock some beans to the ground
• Argentina
  and both Mato Grosso and Goias, Brazil will stay dry for the next ten days
• U.S.
  spring wheat areas in the northern Plains and Canada’s Prairies will not dry down very well this week despite less precipitation through mid-week
  
• A
  new storm is expected Thursday night into Saturday that may bring some relief to dryness in southern Alberta, but could add more grief to the wet situation in the eastern Prairies and northern U.S. Plains
• Frost
  and freezes in Canada and the northern Plains this weekend could help induce better drying conditions at that time and for a while next week
• U.S.
  Midwest corn and soybean areas will see alternating periods of rain and sunshine this week for “some” fieldwork, but it may not be aggressive
  
• next
  week looks wetter
• West
  Texas cotton areas will not get much rain for a while, but rain Monday night and Tuesday into the Texas Panhandle will benefit cotton, corn and sorghum in those areas
• Western
  Europe will continue to dry out over the next ten days due to limited rain and warmer than usual temperatures 
• Eastern
  Europe will see a better mix of weather than western Europe
• Western
  and northern Russia will be wet in the coming ten days while Ukraine dries out
• China
  will continue to dry out over the North China Plain and it may extend into the Korean Peninsula
• Flooding
  in Southern China should ease off this week
• Australia
  will see less rain through mid-week this week and then see increases in rainfall late this week into next week favoring soil moisture increases for autumn planting

Source:
World Weather Inc.

 

Bloomberg
Ag Calendar

Monday,
May 16:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• U.S.
  crop progress and planting data for corn, soybeans, spring wheat and cotton; winter wheat conditions, 4pm
• HOLIDAY:
  India, Indonesia, Malaysia, Singapore, Thailand

Tuesday,
May 17:

• EU
  weekly grain, oilseed import and export data
• New
  Zealand global dairy trade auction
• GrainCom
  conference in Geneva, May 17-19

Wednesday,
May 18:

• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• China’s
  second batch of April trade data, incl. corn, wheat, sugar and pork imports
• USDA
  total milk production, 3pm
• HOLIDAY:
  Argentina

Thursday,
May 19:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• USDA
  red meat production, 3pm
• International
  Grains Council’s monthly report

Friday,
May 20:

• 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
• China’s
  third batch of April trade data, including soy, corn and pork imports by country
• FranceAgriMer
  weekly update on crop conditions
• Malaysia’s
  May 1-20 palm oil export data
• U.S.
  cattle on feed
• EARNINGS:
  IOI Corp

Source:
Bloomberg and FI

 

 

 

 

CFTC
Commitment of Traders

Funds
were less long for all major agriculture commodities with exception of soybean oil. The combined net position for managed money futures and options combined is down again this week, along with the combined net index fund position. Funds still hold a good amount
of net long positions.

 

 

 

 

 

Macros

 

Corn

·        
Corn are
futures are sharply higher from influence in the wheat futures after India announced a near complete ban on wheat exports.

·        
Late planted Brazil second crop corn is seeing stress from lack of rainfall and the forecast will remain mostly dry this week.

·        
Mexico will temporarily exempt import duties on selected commodities. The list includes corn oil, rice, tuna, pork, chicken, beef, onion, jalapeño pepper, beans, corn flour, wheat flour, egg, tomato, milk, lemon, white corn, apple
, oranges, wheat, and carrots.

 

Export
developments.

·        
Taiwan’s MFIG seeks up to 65,000 tons of corn from the US and/or SA on May 18 for August shipment.

 

Soybeans

·        
Soybeans, meal and soybean oil are all higher, in part to spill over strength in wheat and some other selected outside commodity markets. The USD is lower and WTI lower. July crush is higher this morning, near $1.80.

·        
US weather calls for rain this week that could slow US Midwest plantings, but fieldwork should still get done.

·        
Later today NOPA will release its April US crush data and the trade looks for 172.4 million bushels, down from 181.8 million during March and up from 160.3 million year ago. End of April soybean oil stocks are seen at 1.839 billion
pounds, a five-month low, down from 1.908 billion at the end of March and up from 1.702 billion year earlier.

·        
Offshore values are leading SBO 20 points lower and meal $3.10 short ton lower. 

·        
Rotterdam meal was mostly 3-25 euros higher from this time Friday morning and vegetable oils mixed.

·        
Cargo surveyor ITS reported May 1-15 Malaysian palm oil shipments at 569,233 tons, up from 472,181 tons during the April 1-15 period.

·        
Malaysia’s financial markets are closed Monday, May 16 for a public holiday.

·        
China September soybean futures were up 0.9%, meal up 2.2%, SBO 1.2% higher and China palm oil up 0.2%.

·        
Safras & Mercado estimated 2022 soybean exports at 71.5 million tons versus 78 million previous and crush at 47.9 million tons versus 47.5 million previous.

·        
Egypt said they have enough vegetable oils in reserves to last 5 months.

 

 

Export
Developments

·        
China plans to sell another 500,000 tons of soybeans from reserves on May 20.

·        
The USDA seeks 550 tons of vegetable oils under its PL 480 program on May 17 for late June/FH July shipment.

 

Wheat

·        
New contract highs for some wheat future contracts.

·        
India announced an export ban on wheat, excluding selected countries such as Egypt. After five years of bumper crops, a heatwave this season has cut production.

·        
US and European wheat markets were rattled from this news and wheat futures jumped about 6 percent Sunday into early Monday, but since then have come off those highs.

·        
India will honor an Egyptian purchase of 500,000 tons of Indian wheat.

·        
About 1.8 million tons of wheat might be stuck at posts. (Reuters)

·        
India exported a record 1.4 million tons of wheat in April (the first month of the fiscal year). India exported a record 7 million tons of the grain in fiscal 2021-22.  Exports were originally estimated between 8 and 11 million
tons for 2022-23, but that figure is likely lower after the ban. India 10 days ago had a target of 10 million tons. 

·        
France received from relief from weekend rains.

·        
We look for wheat ratings this afternoon to be worst since 1996.

·        
September Paris wheat futures hit a fresh record high, currently up 20.25 euros at 436.25 at the time this was written.

·        
Egypt produced 1.75 million tons of local wheat since the start of the season.

·        
Egypt is looking to expand its list for wheat importing countries and is holding talks with France, Argentina and the United States. Egypt was also considering importing wheat from Pakistan and Mexico.

·        
Russia’s export tax for wheat as of May 13 was set at $114.30 per ton from $120.10 per ton in the previous period, first reduction since March 16. The export duty on barley was raised to $74.10 per ton from $73.50 per ton, and
the export duty on corn will rise to $77 per ton from $58.30 per ton, all valid through May 17.

·        
Morocco expects their cereal harvest at 3.2 million tons for 2022, down 69 percent from last year. Soft wheat was projected at 1.76 million tons and durum at 0.75 million tons.

·        
The Wheat Quality Council 2022 Hard Red Winter Wheat Tour will take place May 16-19 (#wheattour22 on Twitter).

·        
FI estimates the Kansas wheat tour crop and yield at 262.2 million bushels and 38.0 bushels per acre. That is predicated on a harvested area of 6.90 million acres, 50,000 less than USDA’s May estimate.  This would compare to USDA’s
May estimate of 271.05 million bushels and 39.0 yield, and 2021 production of 364.0 million and 52.0 yield. Note USDA’s production estimate is lowest since 2014.  The Kansas winter wheat 30-year trend yield is 45.6 bushels per acre. 

 

 

Export
Developments.

·        
Pakistan seeks 500,000 tons of wheat on May 25. Bulk shipment is sought to Pakistan in June to July 2022.

·        
Japan seeks 70,000 tons of feed wheat and 40,000 tons of barley on May 18 for arrival by October 27.

·        
Jordan seeks 120,000 tons of barley on May 18 for Aug/Sep shipment.

·        
Bangladesh seeks 50,000 tons of wheat on May 23 for shipment within 40 days of contract signing.

 

Rice/Other

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

·        
Egypt’s GASC seeks at least 25,000 tons of white rice for July and August arrival.