FI Morning Grain Comments 06/02/22

PDF attached

 

Good
morning.

 

WTI
crude and Brent oil futures were sharply lower earlier after at least two sources told news outlets that Saudi Arabia and other OPEC members may boost oil production to offset the loss in Russian supplies. But WTI paired some losses after a headline mentioned
another source sees OPEC+ increasing production by about 600K to 650k bd For July. Russia’s production has fallen by about 1 million barrels per day (bpd) due in large part to sanctions. OPEC may release a statement later today. The USD was lower at the time
this was written and US equities higher. US agriculture futures are in the green this morning led by wheat and soybeans after grain prices sold off hard yesterday. Doubts are increasing over whether Ukraine grain exports will ship over the near term. Drier
weather is seen over the short-term for the northern US Great Plains. Argentina turns drier through Sunday. Brazil will see favorable corn harvest progress this week before slowing next week from rain. Weekly ethanol data will be out at 10:00 am CT. A Bloomberg
poll looks for weekly US ethanol production to be up 3,000 barrels to 1017 thousand (1000-1028 range) from the previous week and stocks up 39,000 barrels to 23.754 million.

 

 

 

Weather

 

Bloomberg
Ag Calendar

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

 

 

 

 

Macros

OPEC+
Highly Likely To Agree Output Hike In The Range Of 600K BD For July – OPEC+ Source Via RTRS

OPEC
Discussions might be around a 650k increment for July and August – Energy Intel

OPEC+
Could Decide On July And August Output Hikes Today – Delegat

US
ADP Employment Change May: 128K (est 300K; prev 247K)

US
Initial Jobless Claims May 28: 200K (est 210K ; prev 210K; prevR 211K)

–
US Continuing Claims May 21: 1.309M (est 1.325M; prev 1.346M; prevR 1.343M)

US
Nonfarm Productivity (Q1 F): -7.3% (est -7.5%; prev -7.5%)

–
US Unit Labor Costs (Q1 F): 12.6% (est 11.6%; prev 11.6%)

Canadian
Building Permits (M/M) Apr: -0.6% (est 0.8%; prev -9.3%)

 

 

Corn

·        
US corn futures are higher on technical buying and Black Sea export uncertainty.

·        
The USD was 49 points lower at the time this was written.

·        
Doubts are increasing over whether Ukraine grain exports will ship over the near term. Russia is looking for some sanctions to be lifted, including food, but there are no deals on the table. Russia did remove some quotas (set
for July-December period) on some fertilizers.

·        
WTI crude and Brent oil futures were sharply lower earlier after at least two sources told news outlets that Saudi Arabia and other OPEC members may boost oil production to offset the loss in Russian supplies. But WTI paired some
losses after a headline mentioned another source sees OPEC+ increasing production by about 600K bd For July. Russia’s production has fallen by about 1 million barrels per day (bpd) due in large part to sanctions.

·        
Today China planned to buy 40,000 tons of frozen pork for reserves, tenth round of procurement.

·        
USDA reported April corn for ethanol use at 415 million bushels, below an average trade guess of 427 million, below 453 million during March but up from 408 million April 2021.

·        
StoneX estimated the Brazil 2021-22 total corn crop at 116.8 million tons, up from previous 116.45 million.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 3,000 barrels to 1017 thousand (1000-1028 range) from the previous week and stocks up 39,000 barrels to 23.754 million.

 

Export
developments.

·        
None reported 

 

 

 

Soybeans

·        
CBOT soybeans
are higher on follow through buying, lower USD and concerns MN and the Dakota’s could lose some soybean acres due to slow planting progress.

·        
For MN, the final planting date for soybeans is June 10. The late planting period runs from May 26 to June 19 for corn and June 11 to July 5 for soybeans. North Dakota, for most counties, the final planting date for soybeans is
June 10.

·        
Soybean meal is higher in part to higher soy and corn.

·        
USDA’s NASS crush report was viewed neutral for soybeans and slightly bearish for soybean oil. However, soybean oil is higher this morning following higher soybeans and outside related markets (not WTI).

·        
The US April soybean crush was reported at 180.9 million bushels, 0.4 million above trade expectations, below 192.9 million crushed during March and well up from 169.8 million during April 2021. On a daily adjusted basis, the
April crush was lowest since September 2021. End of April soybean oil stocks fell 10 million pounds from end of March and was 98 million pounds above an average trade guess. Soybean oil production of 2.143 billion fell 135 million pounds from March. Note the
yield was 11.85, up from 11.81 pounds per bushel previous month. Soybean meal stocks increased to 445,000 short tons at the end of April from 381,000 short tons at end of March.

·        
Indonesia has issued 160 palm oil export permits for 18 companies, but it covers only 179,464 tons.

·        
SGS reported May Malaysian palm exports increased 20.5 percent from April to 1.329 MMT.

·        
There is some uncertainty over upcoming Malaysian palm oil production.

·        
August Malaysian palm oil ended 112 ringgit per ton higher and cash was up $17.50/ton at $1,560 ton.

·        
China September soybean futures were up slightly, meal off 0.2%, SBO 0.3% higher and China palm oil up 1.1%.

·        
Offshore values were leading SBO 40 points lower and meal flat. 

·        
Rotterdam vegetable oil prices were 10-20 euros lower from this time yesterday morning. Rotterdam meal when imported from SA were 4.50-8.00 euros lower. 

·        
StoneX estimated the Brazil 2021-22 soybean crop at 124.4 million tons, up from previous 123.4 million.

 

Export
Developments

·        
China will offer another 500,000 tons of soybeans out of reserves on June 10.

 

 

Wheat

·        
Wheat futures are higher led by KC type wheat on improving global import demand interest and technical buying (correction) after futures plunged yesterday.

·        
Yesterday Egypt and Algeria bought wheat.

·        
India granted export permits for some wheat. About 470,000 tons has allowed to be shipped since the ban but another 1.7 million tons of wheat is still stuck at ports.

·        
A Reuters article noted traders are looking for Australia’s wheat production to end up between 30 and 35 million tons, just below the record 36 million tons collected for the 2021-22 crop year.

·        
Drier weather is seen over the short-term for the northern US Great Plains.

·        
September EU wheat futures were up 5.00 euros per ton at 385.50 euros.

 

Export
Developments.

·        
Algeria bought about 90,000 to 100,000 tons of wheat at $480/ton c&f. Shipment was originally for July/August shipment

·        
Egypt bought 465,000 tons of wheat consisting of 175,000 tons of Russian, 240,000 tons Romanian, and 50,000 tons of Bulgarian origin. Prices were thought to be $480/ton, C&f. Shipping will be from August 1-20.

·        
The Philippines bought 110,000 tons of Australian feed wheat at around $430 to $439/ton c&f for July 15 through September 27 shipment.

 

Rice/Other

·        
Indonesia rice production target for 2023 was set at 55.39 MMT, below 56.08 target set in March. 54.42 million tons was produced in 2021.