FI Morning Grain Comments 05/26/23

PDF attached

 

Good
morning. 

 

The
USD was down 26 points earlier and WTI crude up $1.00. A
stronger pre-holiday trade. CBOT markets will reopen Monday evening. US weather concerns and Black Sea shipping uncertainty continues to support CBOT agriculture markets. The Russian/Ukraine conflict intensified. Blasts damaged buildings in Russia’s southern
city of Krasnodar. USDA will update crop progress on Monday. We look for a good jump in planting progress, a slight increase in US winter wheat conditions, and near average for US corn conditions, although drought conditions across the WCB could drag the US
aggregate below the 71 percent 5-year average. Malaysian palm ended the week 2.1% higher on long term weather concerns (El Nino) and talk of increasing demand by China and India. Third month (Aug) Malaysia palm futures increased 66 ringgit to 3559 and Aug.
cash increased $7.50 to $827.50/ton. Offshore values were leading SBO higher by about 27 points this morning (145 points lower for the week to date) and meal $2.50 short ton lower ($8.10 lower for the week).

 

 

Fund
estimates as of May 25

 

 

Weather

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR MAY 26, 2023

• Not
  many changes overnight
• Frost
  and freezes occurred in the Great Lakes region this morning with temperatures to 28 Fahrenheit in central Michigan
• Alberta
  Canada’s drought region and western Saskatchewan may have an opportunity for rain during the last part of next week and into the following weekend – that would prove to be a very important event since some of that region missed the significant rain of earlier
  this week and many emerged crops are struggle with the dryness
• Other
  areas in Canada’s Prairies either have already received significant rain this week or soon will.
  
• U.S.
  Midwest will continue drier than usual over the next ten days with the heart of the Midwest possibly receiving minimal amounts of moisture for two full weeks
• The
  U.S. National Climate Center believes a “flash drought” is possible from Illinois into parts of Ohio and Kentucky as time moves along in these next few weeks
• U.S.
  Midwest and Great Plains temperatures will reach the 80s Fahrenheit frequently in the next week to ten days and some eventual lower 90-degree readings will be possible – that will accelerate the drying even if a few showers pop up periodically
• Rain
  will continue to fall frequently in the U.S. west-central and southwestern Plains during the next ten days with some of that expected to expand northwest into Montana, Alberta and southwestern Saskatchewan in time
• Improving
  rainfall is expected in Idaho, Montana, Wyoming and northeastern Colorado impacting dry bean and sugarbeet areas as well as other crops
• Argentina
  soil moisture is more favorable for wheat planting and additional rain in the next two weeks will perpetuate the favorable environment except in the southwest where net drying is still possible
• Northern
  Europe will continue drier than usual for at least the next ten days, although temperatures will not be excessively warm
• Southern
  Europe will continue to receive frequent rain along with parts of North Africa
• Eastern
  Russia’s New Lands will be dry biased and warm for one more week and then some showers and a chance for rain will scatter across parts of the region in the second week of the outlook
• Western
  Ukraine, Poland, Belarus and the Baltic States will continue dry biased during the next ten days, although soil moisture is still sufficient to carry on normal crop development
• No
  big changes were noted for India, China or Australia
• Northern
  India will be wetter than usual while early monsoonal precipitation in the south is limited for a while
• All
  of China will get rain periodically; Xinjiang temperatures will remain milder than usual
• Southern
  Australia will receive periodic rain, but interior areas of South Australia, northeastern Western Australia crop areas and areas from northern New South Wales to Queensland will experience net drying
• Mainland
  areas of Southeast Asia will trend wetter
• Today’s
  forecast for Malaysia and Indonesia is a little wetter than that of earlier this week in the second week of the forecast

Source:
World Weather, INC.

 

Bloomberg
Ag calendar

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

Monday,
May 29:

• Vietnam’s
  coffee, rice and rubber exports in May
• HOLIDAY:
  US, UK, France, Germany

Tuesday,
May 30:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• US
  planting data for corn, cotton, spring wheat and soybeans, 4pm
• US
  cotton and winter wheat condition, 4pm
• EU
  weekly grain, oilseed import and export data
• EARNINGS:
  FGV

Wednesday,
May 31:

• US
  agricultural prices paid, received
• Malaysia’s
  May palm oil exports

Thursday,
June 1:

• EIA
  weekly US ethanol inventories, production, 11am
• USDA
  soybean crush, corn for ethanol, DDGS production, 3pm
• Port
  of Rouen data on French grain exports
• HOLIDAY:
  Indonesia

Friday,
June 2:

• FAO
  food price index, monthly grains report
• USDA
  weekly net- export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• 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
• HOLIDAY:
  Italy, Indonesia

Source:
Bloomberg and FI

 

 

 

 

 

 

Macros

US
Personal Income Apr: 0.4% (est 0.4%; prev 0.3%)

US
Personal Spending Apr: 0.8% (est 0.5%; prev 0.0%)

US
PCE Core Deflator (M/M) Apr: 0.4% (est 0.3%; prev 0.3%)

US
PCE Core Deflator (Y/Y) Apr: 4.7% (est 4.6%; prev 4.6%)

US
Wholesale Inventories (M/M) Apr P: -0.2% (est 0.0%; prevR -0.3%)

US
Advance Goods Trade Balance Apr: -$96.8B (est -$85.9B; prevR -$82.7B)

US
Retail Inventories (M/M) Apr: 0.2% (est 0.2%; prevR 0.5%)

US
Durable Goods Orders Apr P: 1.1% (est -1.0%; prevR 3.3%)

US
Durables Ex Transportation Apr P: -0.2% (est -0.1%; prevR 0.3%)

US
Cap Goods Orders Nondef Ex Air Apr P: 1.4% (est -0.1%; prevR -0.6%)

US
Cap Goods Ship Nondef Ex Air Apr P: 0.5% (est 0.1%; prevR -0.2%)

 

Corn

·        
Corn futures are higher led by new crop on net drying across the heart of the Midwest over the next week. Temperatures across the Midwest began to rise back to normal to above normal levels yesterday and that will last until at
least early next week. July/September corn spread is weaker today on profit taking. Week to date, July corn appreciated 7.4% as of this morning. With US corn supplies getting tighter, July corn may have upside of another 25 cents by First Notice Day. However,
additional cancellations by China could keep nearby prices in check.

·        
USDA initial corn conditions will be released Thursday afternoon and we look for a tentative 70 percent for the combined good and excellent categories, below a 5-year average of 71 percent.

·        
France is close to rolling out a bird flu vaccine. Southwestern France has seen an increase in cases over the past month. Other countries are testing vaccines.

·        
CME pork futures hit a record low Thursday on poor US demand.

 

Export
developments.

• None
  reported

 

Soybeans

·        
Soybeans are sharply higher from a rebound in soybean meal prices, higher soybean oil, and strength in grains. A week to date decline in soybean meal prices have been limiting gains earlier this week for soybeans. Soybean oil
is higher following overseas markets and higher WTI crude oil.

·        
Malaysian palm ended the week 2.1% higher on long term weather concerns (El Nino) and talk of increasing demand by China and India.

·        
Third month (Aug) Malaysia palm futures increased 66 ringgit to 3559 and Aug. cash increased $7.50 to $827.50/ton.

·        
China May soybean futures were down 1.0%, meal down 0.5%, SBO up 2.0% and palm oil futures up 1.5%.

·        
Nearby Rotterdam vegetable oils were up 10 to 17.50 euros from this time yesterday morning and meal mixed.

·        
Offshore values were leading SBO higher by about 27 points this morning (145 points lower for the week to date) and meal $2.50 short ton lower ($8.10 lower for the week).

·        
China’s crush expanded for the week ending May 19 by 9 percent to 1.89 million tons, 2 percent below year earlier.

 

Export
Developments

·        
None reported

 

Wheat

·        
US wheat is higher on Black Sea shipping concerns as the Ukraine/Russia conflict intensified. US weather concerns are noted.

·        
French wheat crop conditions for the week ending May 22 were steady at 93 percent and compares to 69 percent year earlier. 93 percent is highest for this time of year since 2011. Winter and spring barley were unchanged from the
prior week, at 90% and 95% respectively.

·        
September Paris wheat are up 2.50 euros to 224.75 per tons.

·        
Germany’s association of farm cooperatives estimated the Germany 2023 wheat crop at 22.31 million tons, a 0.9% decline from 2022. The 2023 winter rapeseed crop was pegged at 4.28 million tons, about unchanged from year ago. 

·        
India’s weather department expects normal monsoon rains this season. If realized this would be the fifth straight year. They did warn El Nino could hinder output.

·        
Russia’s wheat export tax for the week ending June 6 will decline 2.6% from the current week.

 

 

Export
Developments.

·        
Taiwan Flour Millers Association bought an estimated 56,000 tons of various types of milling wheat from the US for July 12 and July 26 shipment from the PNW.

 

Rice/Other

·        
None reported