FI Morning Grain Comments 06/02/21

PDF attached

 

Good
morning.

 

Higher
trade for most CBOT agriculture futures on follow through buying.  Higher than expected initial corn conditions are weighing on corn and meal.  Weather remain the driver in these markets.  US weather forecast is largely unchanged.  Southern OK and Texas will
see rain through the weekend.  Rain will be restricted for the US Midwest, with southeastern areas receiving rain through Thursday followed by the northwest & southwestern areas this weekend. 

 

 

 

Weather

 

Last
day

 

Next
7 days

 

World
Weather, Inc.

WORLD
WEATHER HIGHLANDS FOR JUNE 2, 2021

• Today’s
  market trade will be mostly focused on the northern U.S. Plains, southern Canada’s Prairies and the upper U.S. Midwest where excessive heat and dryness are expected this week.
  
• A
  poor rain distribution will occur over an extended period of time.
• U.S.
  hard red winter wheat areas will see improving weather over time after recent moisture excesses. 
• West
  Texas will see additional rain into early next week and then trend drier thereafter
• A
  ridge of high pressure will be returning to the Russian New Lands next week restoring a dry and warm bias after this week’s moisture and temperature relief. 
  
• Eastern
  Australia is still expecting some rainfall periodically this week and next week
• China’s
  weather will be mixed with dryness in east-central areas and plenty of rain in the northeast and far south.
  
• No
  changes were noted in South America today
• Rain
  will continue in southern Safrinha corn areas, but Mato Grosso, Goias, southwestern Minas Gerais, northern Sao Paulo and northern Mato Grosso do Sul will remain dry
  
• Argentina
  weather will be good for late season harvest progress of summer crops and aggressive wheat planting
• Europe’s
  drying in the Baltic Plain this week will be followed by timely rain in the second week of the outlook
• India’s
  monsoonal rainfall will be lighter than usual in this next ten days, but some increase in rainfall is expected over the interior west and south next week
• Eastern
  India will also turn wetter next week

Source:
World Weather, Inc.

 

Bloomberg
Ag Calendar

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

 

 

 

 

Brazil’s
commodities exports for May – Reuters News

 Commodity                     
May 2021           May 2020

CRUDE
OIL (TNS)                5,296,342             8,256,987

IRON
ORE (TNS)                 26,662,421            21,459,428

SOYBEANS
(TNS)                 16,403,387            14,108,152

CORN
(TNS)                     13,919                24,933

GREEN
COFFEE(TNS)              190,118               215,689

SUGAR
(TNS)                    2,697,844             2,583,479

BEEF
(TNS)                     126,763               154,973

POULTRY
(TNS)                  383,191               372,373

PULP
(TNS)                     1,446,254             1,530,816

Source:
Reuters and Brazil’s AgMin

 

USDA
Export Inspections

USDA
inspections versus Reuters trade range                                                     

Wheat                 
256,496                 versus   250000-625000  range

Corn                     
2,049,217             versus   1500000-2000000             range

Soybeans           
192,221                 versus   90000-400000                     range

 

Macro

Canadian
MLI Leading Indicator (M/M) Apr: 1.2% (prevR 1.3%; prev 1.4%)

Canadian
Building Permits (M/M) Apr: -0.5% (est -5.0%; prev 5.7%)

 

 

Corn

• A
  much higher than expected US corn crop condition is limiting upside for corn and soybean meal futures this morning, but don’t discount a higher trade based on dry weather for the US Midwest over the next week.  The ECB will see light rain and WCB will be mostly
  dry.  The southeast will be wet. 
• In
  addition, Brazil’s second corn crop may not see much rain over the balance of this week.  Yesterday we saw two agencies cut that crop to 60 and 62 million tons. 
  
• We
  don’t see China returning to the market for large amounts of corn anytime soon after the rebound in new-crop futures.  December corn is about 78.50 cents higher from its recent absolute low established May 26. 
  
• Meat
  company JBS resumed operations in the US and Australia after the weekend cyber-attack.     
  
• US
  initial G/E corn condition of 76 percent was 6 points above a Reuters trade guess.  This was the highest rating in at least three years, and we can only think that ratings will turn lower from here going forward. 
  
• USDA
  US corn export inspections as of May 27, 2021 were 2,049,217 tons, above a range of trade expectations, above 1,746,162 tons previous week and compares to 1,192,384 tons year ago. Major countries included China for 1,035,384 tons, Mexico for 353,203 tons,
  and Japan for 232,581 tons.
• We
  see US corn exports at 2.850 billion versus 2.775 USDA. 

 

EIA:
Agricultural feedstock costs drive RIN prices to all-time highs

https://www.eia.gov/todayinenergy/detail.php?id=48196&src=email

 

Export
developments.

• None
  reported

 

 

 

 

Soybeans

• Soybeans
  are higher led by a surge in soybean oil.  Soybean meal is on the defensive from product spreading and weakness in most corn contracts.  Weather is a major factor for upside in soybeans while soybean oil is seeing support from outside markets.  Malaysian palm
  surged 5 percent overnight, up 201 points and cash was up $62.50/ton.  Note the palm futures market traded lower Monday and Tuesday and after yesterday’s rally in SBO, traders reversed direction.  Palm is now at a two-week high.  European vegetable oil prices
  increased about 30 to 60 euros from the previous day. 
• Yesterday
  NASS crush report confirmed US SBO stocks are shrinking. 
• We
  are hearing Brazil fob soybean prices are about 91 cents cheaper than US Gulf. 
  
• US
  soybean plantings came in 3 points below an average trade guess and at 84% we see no issues. Look for USDA to report Initial ratings next week, at around 73 percent G/E.   
  
• 35
  SBO registrations were cancelled out of Decatur, IL (Bunge) and now stand at 968 lots. 
  
• Argentina
  2020-21 soybean sales reached 20 million tons as of May 26, up 606k from the previous week and compare to 23.8MMT year ago.  
  
• Offshore
  values were leading CBOT SBO 44 points higher and meal $0.20 lower. 
• Rotterdam
  vegetable oil prices for soybean oil and rapeseed oil were mostly 30-60 euros higher and Rotterdam meal was mostly 4-5 euros higher. 
  
• China:
  

• Malaysian
  palm oil: (uses settle price). 
  

• USDA
  US soybean export inspections as of May 27, 2021 were 192,221 tons, within a range of trade expectations, below 222,107 tons previous week and compares to 451,878 tons year ago. Major countries included Mexico for 89,446 tons, Japan for 29,662 tons, and Indonesia
  for 25,732 tons.
• April
  US soybean crush fell short of expectations to 169.8 million bushels (170.9 average), 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 2.178 billion pounds (at trade expectations), down
  from 2.245 billion at the end of March and 2.601 billion at the end of April 2020.  We will not make any adjustments to our crush estimates.  Look for updated S&D’s later this week. 
  

 

Export
Developments

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

 

 

 

Wheat

• US
  wheat is higher again led by the MN spring wheat contract. 
• US
  spring wheat ratings fell 2 points from the previous week, unexpected.  Dry conditions across the northern Great Plains and Canadian Prairies are starting to show their colors. 
  
• Black
  Sea wheat prices remain firm and we are hearing trades could end up 1.50-2.00 higher today for spot. 
  
• Ukraine
  ports have restricted loadings due to poor weather.  They include Odessa, Chornomorsk, Mykolayiv, Kherson and Olvia.
  
• Ukraine
  grain exports fell 22.3 percent so far for the 2020-21 season, set to wrap up at the end of this month.  They include 16 million tons of wheat, 21.5 million tons of corn and 4.1 million tons of barley.
  
• Rabobank
  estimated the Australian winter grain planted area at 22.93 million hectares, up 2 percent, and near its respected record. 
  
• September
  Paris wheat market basis September was up 1.00 euros at 219.75.
• US
  spring wheat ratings slid 2 points to 43 percent, lowest since 1988 per DTN. Winter wheat conditions were up one point.   73% of the ND topsoil moisture was rated less than adequate. 
  
• USDA
  US all-wheat export inspections as of May 27, 2021 were 256,496 tons, within a range of trade expectations, below 598,941 tons previous week and compares to 555,500 tons year ago. Major countries included Mexico for 89,935 tons, Korea Rep for 57,651 tons,
  and Italy for 30,624 tons.

 

Export
Developments.

• Japan
  bought 4,400 tons of wheat under its SBS import tender program.  They were in for 80,000 tons of feed wheat and 100,000 tons of barley. 
  
• Results
  awaited: Iran seeks 60,000 tons of milling wheat on June 2 for June/July shipment. 
  
• Results
  are awaited on Indonesia seeking 240,000 tons of feed wheat for Aug/Nov arrival.
  
• Jordan
  seeks 120,000 tons of feed barley on June 9 for Lat Oct/Nov shipment. 

 

Rice/Other

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