FI Morning Grain Comments 06/01/22

PDF attached

 

Good
morning.

 

The
US weather forecast is mostly unchanged. Argentina turns drier through Sunday. Brazil will see favorable corn harvest progress this week before slowing next week from rain. News is light this morning. Futures prices are stabilizing in grains. Egypt is in for
wheat. Soybeans and meal are rebounding on technical buying. Soybean oil is under light pressure despite higher WTI crude oil. The USD is higher.
India lowered their base import price of crude and refined palm oil and raised the price of crude soyoil. Duty free imports 2 million tons of soybean oil still stand. Jordan bought 60,000 tons of feed barley at $445/ton c&f for shipment
first half of September. USDA crop conditions were as expected for winter wheat conditions while US spring wheat seedings advanced more than expected (6 points above the trade average). US corn plantings were up 14 points to 86 percent, just below its 5-year
average. US soybean plantings were up 16 points to 66 percent, also slightly below average.

 

 

 

 

Weather

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR JUNE 1, 2022

• West
  Texas cotton areas are still expected to get rain over the next three or four nights with all crop areas getting moisture at one time or another
• Much
  needed and welcome drying will occur in eastern Canada’s Prairies and North Dakota during the next few days; however, temperatures will be mild to cool keeping evaporation rates low and that might prolong the need for drying beyond this break period leaving
  “some” of the wettest areas with a limited opportunity to plant
• Drought
  stricken areas of southern Alberta, Canada may get some rain late this weekend and early next week, but west-central Saskatchewan and east-central Alberta will be left dry and in a serious need for rain
• A
  good mix of weather is expected elsewhere in the U.S.
• Germany
  and France will get some needed moisture in the coming week to ease persistent dryness, but follow up moisture will be needed and some dry and warm weather may return later this month
• Coffee
  areas in Brazil are NOT expected to see any threatening cold weather during the next ten days. Some cooling is expected, but temperatures will not fall low enough to be a threat
• Some
  rain in Mato Grosso during the coming week will be good for a few Safrinha cotton crops, but no serious change in crop conditions production potential is expected. 
  
• Safrinha
  corn in Brazil is too far advanced to benefit from rain
• China’s
  North China Plain will continue to dry down, despite a few showers in this coming week to ten days
• southeastern
  Ukraine, Russia’s Southern Region and western Kazakhstan are expected to dry down over time as well
• Overall,
  the changes today are not likely to be huge market influences, but rain is needed in Europe and will get some and drying is needed in eastern Canada’s Prairies and North Dakota and “some” is expected, but more will be needed. 

Source:
World Weather Inc.

 

Bloomberg
Ag Calendar

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

 

 

 

 

 

USDA
inspections versus Reuters trade range

Wheat                 
343,927                 versus   250000-500000  range

Corn                     
1,390,851             versus   1000000-1800000             range

Soybeans           
378,262                 versus   300000-800000  range

 

Macros

US
MBA Mortgage Applications May 27: -2.3% (prev -1.2%)

–
US 30-Year Mortgage Rate: 5.33% (prev 5.46%)

 

 

Corn

·        
US corn futures
are moderately higher tracking strength in wheat.

·        
Although US planting progress increased last week, keep an eye on North Dakota and Minnesota where corn and soybean plantings are lagging well behind normal. The next 5 days looks drier for this area so this week will be a critical
time for producers to get spring grains into the ground for the northern states. We are already hearing up to 1 million corn acres could be lost to prevented plantings.

·        
USDA NASS reported US corn planting progress at 86 percent, 1 point above trade expectations, above 72 week earlier and compares to 94 percent year ago and 87 for the five-year average.

·        
There was no corn rating. We were looking for 70 percent good/excellent for initial 2022 ratings, same as the 5-year average and down from 76 year ago.

·        
The Biden Administration will announce today more than $2.1 billion in funding for the US food supply system.

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

·        
China corn prices closed 1.3 percent lower. September corn is trading at its lowest level since February 2022. China hog prices are hanging around multi month highs, leading us to believe inventories will build second half 2022.

·        
USDA US corn export inspections as of May 26, 2022 were 1,390,851 tons, within a range of trade expectations, below 1,752,461 tons previous week and compares to 2,104,363 tons year ago. Major countries included China for 268,818
tons, Japan for 263,701 tons, and Mexico for 238,624 tons.

 

Export
developments.

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

 

U
of I – Are Long-Run Prices Still $4 for Corn, $10 for Soybeans, and $5.50 for Wheat?

Schnitkey,
G., C. Zulauf, N. Paulson, K. Swanson and J. Baltz. “Are Long-Run Prices Still $4 for Corn, $10 for Soybeans, and $5.50 for Wheat?” farmdoc daily (12):79,  Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, May 31,
2022.

https://farmdocdaily.illinois.edu/2022/05/are-long-run-prices-still-4-for-corn-10-for-soybeans-and-5-50-for-wheat.html

 

 

 

 

 

Soybeans

·        
CBOT soybeans
and meal are higher on technical rebound while soybean oil is softer despite higher WTI crude oil.

·        
India lowered their base import price of crude and refined palm oil and raised the price of crude soyoil.  Duty free imports 2 million tons of soybean oil still stand.

    Commodity            
New price in $         Old price in $

   
Crude palm oil         1,625                 1,703

   
RBD palm oil           1,733                 1,765

   
RBD palmolein          1,744                 1,771

   
Crude soya oil         1,866                 1,827

   
Gold                   597                   592

   
Silver                 721                   687

·        
Covid restrictions continues to ease in China.

·        
USDA NASS reported US soybean planting progress at 66 percent, 1 point below trade expectations, above 50 week earlier and compares to 83 percent year ago and 67 for the five-year average.

·        
EIA reported US soybean oil used for biodiesel for the month of March at 908 million pounds, 30 million below our expectations. We will likely lower our SBO for biodiesel use for the current crop year post USDA NASS crush report.

·        
August Malaysian palm oil ended 52 ringgit per ton higher and cash was up $12.50/ton at $1,542.50 ton.

·        
China September soybean futures were down 0.3%, meal off 1.5%, SBO 0.2% lower and China palm oil down 0.1%.

·        
Offshore values were leading SBO 388 points higher and meal $2.10 short ton higher. 

·        
Rotterdam vegetable oil prices were 30-50 euros lower from this time yesterday morning. Rotterdam meal when imported from SA were 13-18 euros lower. 

·        
USDA US soybean export inspections as of May 26, 2022 were 378,262 tons, within a range of trade expectations, below 581,067 tons previous week and compares to 205,108 tons year ago. Major countries included China for 63,585 tons,
Egypt for 60,492 tons, and Mexico for 58,313 tons.

 

Export
Developments

·        
Today China planned to sell about 505,000 tons of imported soybeans from reserves. We heard 36,300 tons of soybeans were sold.

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

 

 

 

Wheat

·        
Wheat futures are mostly higher led by KC type wheat. While US weather conditions are improving for the central and upper Great Plains, last week’s rains were too late to boost crop ratings for the southwestern states. 

·        
Egypt seeks wheat and lowest offer was $438.86/ton Russian origin. They last bought wheat April 13. Lowest offer was $460/ton.

·        
September EU wheat futures were up 2.25 euros per ton at 394.50 euros.

·        
Manitoba, Canada, “provincial seeding progress sits at 40% completion, behind the 5-year average of 91% for Week 21. Progress remains highly variable within each region, and even from farm to farm, depending on localized rainfall
and soil conditions.”

·        
USDA NASS reported US spring planting progress at 73 percent, 6 points above trade expectations, above 49 week earlier and compares to 97 percent year ago and 92 for the five-year average.

·        
US winter wheat crop conditions increased one point to 29 percent G/E, at trade expectations. This was the lowest rating for this week since 2006. Below is what we predict USDA will report next week for US wheat by class.

·        
US winter wheat harvest was not reported.

 

 

·        
USDA US all-wheat export inspections as of May 26, 2022 were 343,927 tons, within a range of trade expectations, above 275,541 tons previous week and compares to 317,278 tons year ago. Major countries included Nigeria for 78,726
tons, Philippines for 64,999 tons, and Mexico for 58,763 tons.

 

Export
Developments.

·        
Egypt seeks wheat. Shipping for fob offers will be from July 20-31 and/or August 1-10, while shipping for c&f will be from August 1-20, it added.

·        
Jordan bought 60,000 tons of feed barley at $445/ton c&f for shipment first half of September.

·        
The Philippines are in for 55,000 tons of feed wheat on June 1 for July 15 through September 27 shipment.

·        
Algeria seeks optional origin wheat 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

·        
None reported