FI Morning Grain Comments 06/01/21

PDF attached

 

Good
morning.

 

Spring
wheat is leading the charge higher.  Several CBOT contracts appear to have or will soon test key technical points early this week.  Weather is in focus this morning ahead of a busy Tuesday.  Inspections, NASS reports, and initial US corn conditions are on
deck today. We look for a strong US G/E corn condition (77) this afternoon but note some are looking for sub 70.  Cold weather kicked off the long US holiday weekend followed by good rains across the ECB then southern Great Plains.  Looking forward, the upper
Great Plains & Canadian Prairies will dry down and temperatures will be warm, above normal for much of the region.  A high pressure ridge in central North America will develop by mid-week, shifting east late this week and during the weekend but should break
down by early next week.  The longer term forecast calls for net drying across the upper Great Plains and upper Midwest and should be monitored through at least mid-summer. 

 

 

Weather

 

Last
7 days 

 

Next
7 days

 

World
Weather, Inc.

WORLD
WEATHER HIGHTLIGHTS FOR JUNE 1

• The
  northern U.S. Plains were advertised wetter today by the European model after it predicted dryness for that region, Canada and upper U.S. Midwest Monday.
  
• Today’s
  forecast may be a little too wet, but yesterday’s outlook was too dry.
• Weather
  in the U.S. looks to be favorably mixed over the next couple of weeks with a high pressure ridge moving from west to east this week and then back to the west again next week.
  
• Excessive
  heat is expected in the northern Plains and Canada’s Prairies from Wednesday into Saturday
• Concern
  remains over dryness in Canada’s Prairies and there are new worries about China’s crop country from Jiangsu to northeastern Sichuan and northward to Inner Mongolia with up to ten days of net drying expected.
  
• No
  changes were noted for South America in today’s outlook. 
• Southern
  Brazil (Rio Grande do Sul to Parana and southern Mato Grosso do Sul) will receive periods of rain while areas to the north are relatively dry
• Coffee
  areas of Sul de Minas received significant weekend rain
• Eastern
  Australia is wetter today with rain likely in New South Wales, southern Queensland, Victoria and parts of South Australia during mid-week this week and again early to mid-week next week
• Winter
  crop planting, emergence and establishment will improve
• Rain
  in Western Australia during the weekend was significant and welcome to wheat, barley and canola
• India’s
  Monsoon rainfall will begin a little lighter than usual, but rain is expected

Source:
World Weather, Inc.

 

Source:
World Weather, Inc.

 

Bloomberg
Ag Calendar

Tuesday,
June 1:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• U.S.
  crop condition and planting — corn, cotton, soybeans, wheat, 4pm
• Honduras
  and Costa Rica monthly coffee exports
• International
  Cotton Advisory Committee updates world outlook for fiber market
• Australia
  Commodity Index
• Purdue
  Agriculture Sentiment
• New
  Zealand dairy trade auction
• U.S.
  corn for ethanol, DDGS production, 3pm
• USDA
  soybean crush, 3pm
• HOLIDAY:
  Indonesia

Wednesday,
June 2:

• Nothing
  major scheduled

Thursday,
June 3:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• FAO
  World Food Price Index
• EIA
  weekly U.S. ethanol inventories, production
• Port
  of Rouen data on French grain exports
• New
  Zealand Commodity Price
• HOLIDAY:
  Brazil, Thailand

Friday,
June 4:

• ICE
  Futures Europe weekly commitments of traders report (6:30pm London)
• 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

 

 

Registrations
– Friday NO CHNAGES

 

 

 

CFTC
Commitment of Traders

As
expected, the net long corn futures only position was much longer than expected, and was also net long guesses for soybeans, wheat and soybean oil.  Given the volatile trade so far this month, we don’t think the discrepancies in end of Tuesday’s fund positions
will have an impact when the market opens back up Monday evening. 

 

 

 

 

 

 

 

Macro

Canadian
GDP (M/M) Mar: 1.1% (est 1.0%; prev 0.4%)

Canadian
GDP (Y/Y) Mar: 6.6% (est 6.5%; prev -2.2%)

Canadian
Quarterly GDP Annualized Q1: 5.6% (est 6.8%; prevR 9.3%; prev 9.6%)

Canadian
GDP Contracts 0.8% In April – StatsCan Flash Estimate

 

 

Corn

• CBOT
  corn is
  higher on weather.  July is currently hovering around its 20-day MA and we think some buying will kick in if we move above that level.  Testing contract highs looked out of reach last week but the long term story with forecasts for dry weather across the upper
  Midwest and upper Great Plains appear to be generating a second wave of weather premium buying.  Don’t discount +$7.00 July corn and +$6.00 December corn if weather outlooks fail to improve over the next week. 
  
• We
  look for a strong US G/E corn condition (77) this afternoon but note some analysts are looking for sub 70.  Initial ratings should not be taken literally but they do give us a preview of what soybeans will look like. Either way we look for end of season corn
  yields to be at the high end.  Look for an update US corn balance sheet later this week.
  
• Keep
  an eye on Argentina river levels as they continue to affect barge movement. 
  
• Last
  week Brazil’s government issued several warnings this week linked to the drought, viewed as worst in 91 percent, from hydroelectric power generation to agriculture and fire risks.  Below 7-day map is one of the driest we have seen for combined SA countries
  in a while.  Brazil may not climb out of drought conditions until at least September.  Brazil sugar and coffee (4-1/2 year high) production should be monitored, along with early plantings of the 2021-22 Brazil soybean season post US summer growing season. 
  
• Last
  Friday EIA reported a slightly lower March US ethanol production versus our working March estimate. 
  
• Reuters:
  (Reuters) – Ukraine’s grain exports have fallen by 23% in the first 11 months of the 2020/21 July-June season to 41.85 million tons, agriculture ministry data showed on Monday.  The volume included 15.88 million tons of wheat, 21.14 million tons of corn and
  4.17 million tons of barley.  Ukraine, which harvested around 65 million tons of grain in 2020, plans to export around 45.8 million tons this season.

 

Export
developments.

• None
  reported

 

 

 

 

 

Soybeans

• Soybeans,
  meal and soybean oil are all higher on forecasts for adverse weather bias the western and upper Midwestern US growing areas.  Cold weather kicked off the long US holiday weekend followed by good rains across the ECB then southern Great Plains. 
  
• Late
  last week Malaysia announced a full nationwide lockdown from June 1-14. 
  The
  impact on palm exports was large for late May.   ITS
  reported a 1.5% increase in May shipments to 1.419 million tons were as third week of the month they were running 17.1% ahead for the 1-20 days of April.  Past two days aggregate palm futures fell 119 points and cash was down $27.50/ton. 
  
• CBOT
  SBO upside could be limited if palm futures continue to trend lower this week. 
  
• There
  were no changes in CBOT registrations across the board Friday evening. Registrations for soybeans now stand at 13. 
  
• A
  Reuters poll calls for the April US soybean crush to be reported at 171.1 million bushels (170.0-173.0 range), down from 188.2 million bushels in March and below 183.4 million in April 2020.  US soybean oil stocks as of April 30 were estimated at 2.171 billion
  pounds (2.150-2.200 range), down from 2.245 billion at the end of March and 2.602 billion at the end of April 2020.  Below table uses Bloomberg estimates with Reuters averages in the footnotes. 
  
• Reuters: 
  Egypt has raised the price of subsidized vegetable oils by 23.5% to 21 Egyptian pounds ($1.34) per one liter bottle effective June 1 following a jump in raw material costs globally, the Supply Ministry said on Sunday.
• 2
  day period: Offshore values were leading CBOT SBO 55 points higher and meal $0.10 lower for the week). 
  
• Rotterdam
  vegetable oil prices for soybean oil and rapeseed oil were mostly 5-18 euros higher and Rotterdam meal was about 5 euros higher. 
  
• 2
  days: China:

• 2-days:
  Malaysian palm oil: (uses settle price). 
  

 

Export
Developments

• Iran
  seeks 30,000 tons of each soybean oil and sunflower oil on June 2 for June/July shipment.
  

 

NOTE
EIA DOES NOT REPORT TOTAL FEEDSTOCKS AND BREAKDOWN BY DIESEL TYPE USE – we use this for reference only

 

 

 

 

 

Wheat

• This
  morning we are seeing a sharply higher trade led by the spring wheat MN contract on talk of dry and warm weather during FH June for the upper Great Plains and Canadian Prairies.  
  
• September
  Paris wheat market basis September was up 2.75 euros at 216.50.
• SovEcon
  lowered its Russian wheat export forecast to 36.6 million tons for the 2021-22 season from 37.7 million tons current (2020-21) season.  SovEcon estimated Russia’s 2021 wheat crop at 80.9 million tons, down from 81.7 million tons due to a slightly smaller winter
  wheat area and weather problems. 
• IKAR:
  Russia 2021 wheat production 79.5MMT, up 0.5 previous.  80.7MMT comparison for this year. 
  
• Last
  week Russia wheat prices dipped $4/ton to around $256 fob, according to IKAR, based on high pro 12.5%. 
  
• India
  looks for a marginally above normal monsoon season.  101% is expected with a range of 96-104% over a 50-year average.  This is up from 98% forecast in April. 
  

 

Export
Developments.

• Bangladesh
  saw offers for 50,000 tons of wheat, lowest $339.33/ton, for shipment within 40 days of contract signing. 
  
• Iran
  seeks 60,000 tons of milling wheat on June 2 for June/July shipment. 
• Jordan
  seeks 120,000 tons of feed barley on June 9 for Lat Oct/Nov shipment. 
• Results
  are awaited on Indonesia seeking 240,000 tons of feed wheat for Aug/Nov arrival.
  
• Algeria
  bought at least 200,000 tons of durum wheat last week at $380-$385/ton c&f for late July shipment. 
  
• Saudi
  Arabia SAGO bought 562,000 tons of wheat, less than expected, at $299.55/ton for Aug/Sep delivery (average price).  They were in for 720k 12.5% protein. 
  

 

Rice/Other

·        
Egypt seeks 100,000 tons of raw cane sugar on June 5.