FI Morning Grain Comments 05/31/22

PDF attached

 

Good
morning.

 

WTI
crude oil was up nearly $4.00 earlier this morning and USD up 43 points. The European Union will impose a partial ban on Russian oil from the invasion of Ukraine. Pipeline crude will be exempt, but sea shipments are banned. Russia advanced on Ukraine in the
east over the weekend. The soybean complex is higher on strength in soybean oil, rapid US planting progress leading some to think a less than expected US soybean crop will be planted, offshore values leading the CBOT products higher, and Malaysia mulling over
banning palm kernel cake meal to ensure domestic feed supplies. Grains are lower in part to Russia announcing they will allow Ukraine to export grains, improving US weather, and lack of US export developments. 
The weather forecast improved for the Great Plains, Delta and again South America. Showers this week is wetter bias southern Midwest and may cause some disruptions to planting progress. Other areas of the Midwest will see light showers
benefiting germination / early growth. 

 

 

 

 

Weather

Past
7 days

 

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR MAY 30, 2022

•            
Drier in eastern Canada’s Prairies after Tuesday morning

•            
Drying will continue in the southwestern Canada Prairies

•            
Tropical cyclone possible near Yucatan Peninsula may impact Florida

•            
Good mix of weather for U.S. Midwest

•            
West Texas crop areas may get wave of rain Tuesday night into Friday night

•            
SE Canada (Ontario and Quebec) will trend wetter

•            
S. Midwest to see alternating periods of rain and sunshine

•            
Mexico to turn wetter

•            
Europe rainfall to increase this weekend into next week, but mostly in the north

•            
France received some dryness relief late last week and more likely this weekend

•            
CIS plenty wet

•            
China too wet in the south and more flooding likely

•            
North China Plain too dry and will stay that way until the weekend; then partial relief

•            
Western Argentina wheat areas still too dry

•            
Southern Brazil, southern Paraguay becoming too wet

•            
Argentina and far southern Brazil will be cold this week

•            
No weather threat to coffee, citrus or sugarcane in Brazil this week

Source:
World Weather Inc.

 

Bloomberg
Ag Calendar

Tuesday,
May 31:

• USDA
  export inspections – corn, soybeans, wheat, 11am

• U.S.
  crop planting data for corn, soybeans, spring wheat and cotton; winter wheat harvesting; cotton, corn winter wheat condition, 4pm
• EU
  weekly grain, oilseed import and export data
• Malaysia’s
  May palm oil export data
• U.S.
  agricultural prices paid, received
• EARNINGS:
  FGV

Wednesday,
June 1:

• USDA
  soybean crush, DDGS production, corn for ethanol, 3pm
• Global
  Food Forum 2022 in Melbourne
• Australia
  Commodity Index
• HOLIDAY:
  Indonesia, Korea

Thursday,
June 2:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• HOLIDAY:
  Italy, UK

Friday,
June 3:

• 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
• FranceAgriMer
  weekly update on crop conditions
• HOLIDAY:
  China, Hong Kong, Thailand, UK

Source:
Bloomberg and FI

 

 

 

 

CFTC
COT

Fund
position for wheat was a shock as funds futures old was much more long than estimated, a complete reversal from that we saw from large selling for the previous week pushing then into a thought of net negative position. With wheat net long again, we think the
funds were bottom picking as prices fell. Add that to countries to look at restricting rice exports, wheat may have opportunity for another upside run.

 

 

 

Macros

US
Oil Seen Averaging $97.82 In 2022 And $87.18 In 2023 (prev $96.21 And $85.04) – Reuters Poll

Canadian
GDP Annualized Q1: 3.1% (est 5.2%; prev 6.7%; prevR 6.6%)

Canadian
GDP (M/M) Mar: 0.7% (est 0.5%; prev 1.1%; prevR 0.9%)

–
Canadian GDP (Y/Y) Mar: 3.5% (est 3.7%; prev 4.5%)

 

 

Corn

·        
US corn futures
are lower on good US weather, slowing US export developments and Ukraine potentially resuming corn exports.

·        
Earlier, WTI crude oil was up nearly $4.00 earlier this morning and USD up 43 points. The European Union will impose a partial ban on Russian oil from the invasion of Ukraine.

·        
Mexico plans to buy 521,000 tons of corn to help ease rising inflation.

·        
China will buy 40,000 tons of frozen pork for reserves on June 2, tenth round of procurement.

·        
Brazil second corn crop harvest pace is off to a good start with IMEA reporting 2.4 percent of the crop collected across Mato Grosso.

·        
China will see heavy rain across the southern growing areas this week.

·        
The Philippines approved a cut to their corn import tariff from 35 percent to 5 within the countries current quota and from 50% to 15 for volumes outside the quota.

·        
USDA NASS is expected to report a good advancement to US plantings when updated later today.

·        
USDA could possibly issue their initial US corn crop condition later today. Corn emerged generally needs to be around 50 percent for conditions to be reported and as of May 22, corn was at 39 percent. We are eying 70 percent good/excellent
for initial 2022 ratings, same as the 5-year average and down from 76 year ago.

 

Export
developments.

·        
None reported

 

U
of I – Wet, Cold, & Gloomy: Comparing Early Spring 2022

Ford,
T. “Wet, Cold, & Gloomy: Comparing Early Spring 2022.” farmdoc daily (12):78,  Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, May 27, 2022.

https://farmdocdaily.illinois.edu/2022/05/wet-cold-gloomy-comparing-early-spring-2022.html

 

Soybeans

·        
The CBOT soybean complex is higher on strength in soybean oil (spill over strength in WTI crude oil), rapid US planting progress leading some to think a less than expected US soybean crop will be planted, offshore values leading
the CBOT products higher, and Malaysia mulling over banning palm kernel cake meal to ensure domestic feed supplies.

·        
Expect good US Midwest plantings this week.

·        
ICE canola and Paris rapeseed futures were higher earlier this morning.

·        
The Indonesian government resumed palm oil export permits to exporters. Up to 1.0 million tons will be allowed for export over an unspecified period.

·        
Ukraine crop year to date sunflower oil exports are 3.53 million tons, 20 percent below the same period year ago of Sep-May, according to AgriCensus.

·        
Coceral look for 2022 EU rapeseed production to end up near 18.4 million tons from 17.7 million previous, a 4 percent increase over the previous year. Sunflower seed production was seen at 10.7 million tons, a 700,000-ton increase
from previous and up 6.9% from last year.

·        
Meanwhile, Strategie Grains looks for EU sunflower production to reach 10.9 million tons, up 200,000 tons estimated last month and about 5 percent above their 2021 forecast.

·        
Indonesia set the June crude palm oil reference export prices at $1,700.12 per ton, up from $1,657.39/ton for May.

·        
Malaysia palm oil exports during May were 1.362 million tons, according to AmSpec, up from 1.113 million tons month earlier, a 22.4 percent increase. ITS reported a 24.6 percent increase to 1.416 million tons.

·        
Over a two-day period, August Malaysian palm oil ended 49 ringgit per ton lower and cash was down $25/ton at $1,530 ton.

·        
Over a two-day period, China September soybean futures were down 0.1%, meal up 0.8%, SBO 0.2% higher and China palm oil down 2.2%.

·        
Offshore values were leading SBO 67 points higher and meal $3.90 short ton higher.  

·        
Over a 2-day period Rotterdam vegetable oil prices were unchanged to lower. Rotterdam meal when imported from SA were 5-11 euros higher. 

 

(Tuesday
Changes)

 

 

(Monday
Changes)

 

Export
Developments

·        
China plans to sell 500,000 tons of soybeans from reserves on June 1.

·        
The USDA seeks 5,710 tons of packaged veg oil for use in export programs for shipping July 1-25 on June 1, with notice following day.

 

 

Wheat

·        
Wheat futures are lower on improving US weather and higher USD.

·        
September EU wheat futures were down 3.75 euros per ton from improving weather. France will see showers this week.

·        
Coceral increased its EU soft wheat production estimate to 127.4 million tons from 126.8 million in March.

·        
Russia said again they are ready to facilitate more grain export from Ukraine’s ports and will coordinate with Turkey.

·        
Russia will increase their export tax on wheat for the May 27-June 2 timeframe from $110.50/ton to $121.20/ton.

·        
Ukraine May grain exports reached 1.06 million tons, down from 2.8 million during May 2021.

·        
A 55,600-ton Indian wheat cargo was rejected by Turkey back earlier this month due to kernel bunt.

·        
India was asked to supply more than 1.5 million tons of wheat from several countries in effort to ease global grain shortages.

·        
India’s monsoon weather forecast was seen “normal” for 2022, according to the state-run weather office.

·        
Jordan’s wheat reserves are sufficient for 13 months.

·        
We look for USDA to report 2 percent of the US winter wheat to be harvested if initially reported.

 

Export
Developments.

·        
Jordan bought 60,000 tons of wheat at $499.50/ton c&f for shipment during the second half of August.

·        
Bangladesh seeks 50,000 tons of wheat for shipment within 40 days and lowest offer over the weekend was $464.55 per ton.

·        
Algeria seeks optional origin wheat on Tuesday for July/August shipment. Algeria looks for wheat production to end up between 3.0-3.2 million tons. They also said they have enough wheat stocks to last over the next 10 months,
and they have imported 3.0 million tons of wheat so far this year.

·        
Pakistan’s TCP bought 500,000 tons of milling wheat for June-July shipment at $515.49/ton, C&F. Over the weekend Pakistan’s government agreed to buy 2.0 million tons of Russian wheat in a government-to-government transaction.
This comes after Russia wheat shipments have slowed as export quotas are exhausting. The quota terminates at the end of June.  Russia did export 329,000 tons of wheat last week, up nearly 8%. 

 

Rice/Other

·        
After local Indian traders said no rice export ban would be considered Thursday, on Friday India’s government said they are again mulling over banning it.  Russia is also now considering banning rice exports from July 1 until
the end of the year. We interpret this as supportive for the wheat market as importing nations may need replacement. And Thailand along with Vietnam are looking to raise their prices to support domestic producers.

·        
Russia is also looking to ban rice exports from July 1 through December 31. 

·        
Vietnam January through May rice exports were 2.86 million tons, up 10.3 percent from same period year ago.