FI Morning Grain Comments 05/23/23

PDF attached

 

Good
morning. 

 

WTI
crude oil was up 81 cents and US up a strong 39 points. Grains are higher on light fund buying led by the corn and MN wheat markets. US weather outlook has not changed much of that of yesterday and net drying is still seen for parts of the US Midwest. Soybeans
are mixed, soybean oil lower and meal little higher. US planting progress is moving along nicely and that could limit near term rallies but expect the trade to monitor US rainfall over the medium term. The ECB is in good shape, but the WCB needs precipitation.
The Philippines bought 40,000 tons of feed wheat. Reuters noted the US bought at least 210,000 tons of EU wheat over the past week for May and August shipment. We are unsure that includes the USDA 24-hour Poland sale.
Third
month (Aug) Malaysia palm futures fell to a three-week low. Offshore values were leading SBO lower by about 200 points this morning and meal $2.20 short ton higher.

 

 

Fund
estimates as of May 22

 

 

Weather

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR MAY 23, 2023

• Not
  many changes overnight
• Western
  Alberta, Canada has begun to receive significant rain, but the drought areas in the east have only reported light showers
• Saskatchewan,
  Canada rainfall advertised for Wednesday into Friday of this week has been increased while that which occurs in Manitoba is mostly unchanged
• Canada
  Prairies’ drought areas will get a few showers in the coming week, but no generalized soaking rain is likely
• Frost
  and freezes returned to Quebec, Canada overnight with limited impact other than to restrict wheat development
• U.S.
  Midwest is still expected to experience net drying over the coming week to ten days
• U.S.
  Southern Plains will experience frequent rain the remainder of this week and into next week raising some wheat quality concerns, but favoring summer crop development
• The
  moisture will be good for reproducing and filling wheat in Nebraska, Kansas and Colorado
• Northern
  U.S. Plains will experience a good mix of rain and sunshine, although frequent precipitation in North Dakota may slow planting progress
• Brazil’s
  Safrinha corn areas will get some timely rain late in this coming weekend and early next week ensuring good crop development in the late planted areas of Parana, Mato Grosso do Sul and Sao Paulo
• Some
  of Brazil’s rain will briefly reach sugarcane, citrus and coffee areas in Minas Gerais and Sao Paulo this weekend slowing crop maturation and harvesting
• Argentina’s
  western wheat areas need more rain and showers expected will be limited in the next ten days
• Eastern
  Russia’s New Lands will dry down over the next week to ten days and temperatures will become very warm
• China
  weather will be favorably mixed
• Northern
  India will become wetter than usual later this week and into the weekend, though the moisture will be good for early season cotton development
• Australia
  will continue to get periodic rain near the southern coast while interior Western and South Australia are dry biased over the next ten days along with Queensland and northern New South Wales
• Typhoon
  Mawar will damage Guam and the southern Mariana Islands later today and Wednesday with sustained wind speeds to 155 mph and stronger gusts possibly approaching 190 mph. A huge storm surge is expected too and rainfall of 10-20 inches.
  
• Northern
  Europe will be drying down as will western Ukraine, Belarus and the Baltic States

Source:
World Weather, INC.

 

 

Bloomberg
Ag calendar

Tuesday,
May 23:

• EU
  weekly grain, oilseed import and export data
• Cane
  crush and sugar production data by Brazil’s Unica (tentative)

Wednesday,
May 24:

• EIA
  weekly US ethanol inventories, production, 10:30am
• US
  cold storage data for beef, pork and poultry
• EARNINGS:
  Sime Darby Plantation

Thursday,
May 25:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Port
  of Rouen data on French grain exports
• Malaysia’s
  May 1-25 palm oil exports
• US
  poultry slaughter, red meat output, 3pm
• EARNINGS:
  IOI
• HOLIDAY:
  Argentina

Friday,
May 26:

• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various US futures and options, 3:30pm
• FranceAgriMer’s
  weekly crop condition report
• EARNINGS:
  Select Harvests
• HOLIDAY:
  Hong Kong

Source:
Bloomberg and FI

 

 

 

 

USDA
inspections versus Reuters trade range

Wheat                 
407,682                 versus   100000-350000  range

Corn                     
1,323,117             versus   700000-1425000                range

Soybeans           
155,051                 versus   100000-500000  range

 

 

Macros

US
Philadelphia Fed Non-Manufacturing Activity May: -16.0 (prev -22.8)

Canadian
Industrial Product Price (M/M) Apr: -0.2% (exp 0.1%; prev 0.1%)

Canadian
Raw Materials Price Index (M/M) Apr: 2.9% (exp 0.7%; prev -1.7%)

 

 

Corn

·        
CBOT corn futures
are higher from short covering as concerns mount over net drying for selected parts of the US Midwest for the remainder of the week.  Both US corn and soybean planting progress is moving along nicely, including the Dakota’s, an area that was in question earlier
this season over local flooding issues.

·        
South Korea resumed German pork imports. ASF prompted a September 2020 ban.

·        
USDA US corn export inspections as of May 18, 2023 were 1,323,117 tons, within a range of trade expectations, above 1,173,783 tons previous week and compares to 1,752,461 tons year ago. Major countries included Mexico for 386,488
tons, Japan for 233,545 tons, and Morocco for 153,330 tons.

 

 

 

Export
developments.

• Taiwan’s
  MFIG is in for 65,000 tons of corn on Wednesday for Aug/early Sep shipment.
  

 

 

Soybeans

·        
Soybeans are lower bias the nearby contracts on slowing US exports and expectations for many domestic crush plants to take downtime. A stronger USD is adding to the negative undertone.

·        
A Reuters poll calls for India May palm oil imports (about 450k) to fall to a 27 month low as soybean oil and sunflower oil imports increase.

·        
Third month (Aug) Malaysia palm futures decreased 50 ringgit to 3378, a three week low, and Aug. cash decreased $17.50 to $805.00/ton.

·        
China May soybean futures were down 0.3%, meal up 1.0%, SBO down 0.6% and palm oil futures up 0.1%.

·        
Nearby Rotterdam vegetable oils were mixed from this time yesterday morning and meal also mixed.

·        
Offshore values were leading SBO lower by about 200 points this morning and meal $2.20 short ton higher.

·        
USDA US soybean export inspections as of May 18, 2023, were 155,051 tons, within a range of trade expectations, below 186,787 tons previous week and compares to 582,340 tons year ago. Major countries included Japan for 56,140
tons, Mexico for 52,364 tons, and Colombia for 18,392 tons.

 

 

Export
Developments

·        
None reported.

 

Wheat

·        
US wheat is higher on short covering and higher EU wheat futures. News was light. As expected, US winter wheat conditions increased 2 percentage points for the combined good and excellent categories but are still near historically
low levels for this time of year. Abandonment is a wild card this year as many KS producers clear fields to make way to plant summer crops. 10 percent of the KS crop was rated good/excellent.

·        
September Paris wheat are up 4.25 euros to 225.75 per tons.

·        
Matif Paris wheat options were active overnight.

·        
A higher USD and slowing US wheat shipments may cap gains.

·        
Reuters noted US wheat purchases from the EU amounted to around 210,000 tons over the past week for May and August shipment. We are uncertain additional purchases will be conducted.

·        
USDA US all-wheat export inspections as of May 18, 2023, were 407,682 tons, above a range of trade expectations, above 263,439 tons previous week and compares to 275,541 tons year ago. Major countries included Mexico for 87,936
tons, China for 68,931 tons, and Philippines for 66,000 tons.

 

Export
Developments.

·        
The Philippines about 40,000 tons of feed wheat on May 17 for July shipment.

·        
Results awaited: South Korean flour millers seek 135,000 tons of wheat from US, Canada, or Australia for Aug shipment.

·        
Taiwan seeks 56,000 tons of US wheat on May 26 for LF July shipment.

 

Rice/Other

·        
None reported