FI Morning Grain Comments 06/03/21

PDF attached

 

Good
morning.

 

Higher
trade in all major CBOT markets on forecasts for hot and dry conditions for the US.  US and Brazil weather is mostly unchanged.  Rain fell across the ECB over the past day and now that event is wrapping up, the majority of the US Midwest will be mostly dry
over the next week.  The southern Great Plains and parts of the Delta are still slated to see heavy rain.  There will be a heat advisory for the PNW and upper Great Plains over the next few days. 

 

 

 

 

Weather

Source:
World Weather, Inc.

 

Last
day

 

World
Weather, Inc.

WORLD
HIGHLIGHTS FOR JUNE 3, 2021

• Russia’s
  second week outlook today is not quite as threatening as suggested Wednesday
• No
  ridge building was noted and periods of light precipitation and milder temperatures were suggested today
• China’s
  east-central crop areas are still advertised to be drier than usual over the next two weeks
• Some
  increase in rainfall was suggested for areas near and north of the Yellow River late this weekend into next week
• Areas
  from northeastern Sichuan to Shandong have been advertised to be driest for at least ten days and perhaps longer
• Northeastern
  China stays moist with frequent bouts of rain and some brief periods of sunny weather
• Temperatures
  will be cooler than usual into the weekend and then more seasonable readings are expected next week
• India’s
  first week of the monsoon will result in less than usual rainfall for many areas
• A
  boost in rainfall is expected in eastern and some central parts of the nation June 11-17
• Temperatures
  may not be as hot as usual
• Eastern
  Australia rainfall is projected to be a little lighter next week than previously suggested, but additional rain is expected
• Rain
  Wednesday in New South Wales and Queensland was highly variable, but beneficial
• Brazil’s
  forecast is a little wetter in the second week of the outlook today in southern Minas Gerais, Sao Paulo, northeastern Mato Grosso do Sul and Goias
• The
  wetter bias occurs because of a colder airmass suggested which may be overdone
• Further
  adjustments to the forecast may occur in the next day or two
• Colder
  air brings a risk of frost to grain areas of Parana in the second weekend of the outlook, but the cold may be overdone
• North
  America Rainfall was increased in a part of the Northern Plains and upper Midwest in today’s forecasts
• The
  European model run reduced rain in southeastern Saskatchewan
• GFS
  model remains wetter in the northern Plains than the European model, but both models offer rain for portions of Canada’s Prairies
• GFS
  and European models all have a little tendency for the ridge axis in North America during days 11-15 to be more in the western Plains and near the front Range of the Rocky Mountains which induces a northwesterly wind flow aloft over a part of the Midwest
• This
  scenario would reduce rain in Canada’s Prairies and the northern U.S. Plains while allowing some showers in the eastern and southern Midwest into the southeastern states with temperatures very warm to hot in the Rocky Mountain region and high Plains region
  into a part of western Canada
• Less
  rain will impact hard red winter wheat and West Texas cotton areas during the coming two weeks with the second week driest

Source:
World Weather, Inc.

 

Bloomberg
Ag Calendar

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

 

 

 

 

Macro

US
Initial Jobless Claims May 29: 385K (est 387K; prevR 405K; prev 406K)

US
Continuing Claims May 22: 3771K (est 3614K; prevR 3602K; prev 3642K)

US
Nonfarm Productivity Q1 F: 5.4% (est 5.5%; prev 5.4%)

US
Unit Labour Costs Q1 F: 1.7% (est -0.4%; prev -0.3%)

US
ADP Employment Change May: 978K (est 650K; prevR 654K; prev 742K)

 

 

Corn

• US
  corn futures are higher following double digit gains in soybeans and higher wheat.  Overnight call spread volume for soybeans and corn was decent. 
  
• Datagro:
  Brazil corn crop 101.65 million tons versus 105.46 million previous.  This is considered large.  USDA is at 102 million tons while some groups are below 90 million. 
  
• Some
  traders are starting to get concerned over Brazil producer sales contract defaults. 
  
• The
  drought in Brazil, worst in 98 years, has also affected river navigation, driving up transportation costs.  With fuel costs rising, using more trucks will be more expensive. 
  
• Argentina
  meat producers are continuing talks with Argentina officials over the one-month beef export ban (mid-May through mid-June). 
  
• The
  weekly USDA Broiler Report showed eggs set up 2 percent and chicks placed up 4 percent.  Cumulative placements from the week ending January 9, 2021 through May 29, 2021 for the United States were 3.93 billion. Cumulative placements were up 1 percent from the
  same period a year earlier.
• A
  Bloomberg poll looks for weekly US ethanol production to be up 11,000 barrels (1015-1040 range) from the previous week and stocks down 29,000 barrels to 18.951 million.
  

 

Export
developments.

• None
  reported

 

 

U
of I: The Weather Risk Premium in New-Crop Corn Futures Prices

Janzen,
J. “The Weather Risk Premium in New-Crop Corn Futures Prices.” farmdoc daily (11):88,  Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, June 2, 2021.
https://farmdocdaily.illinois.edu/2021/06/the-weather-risk-premium-in-new-crop-corn-futures-prices.html 

 

Soybeans

• The
  soybean complex is higher led by soybean oil, up 100+ points earlier this morning.  Aside from heat and dryness for the oilseeds crop forecast for North America for the remainder of the week, tight ending stocks projected for US soybeans and Canadian canola
  are bullish. 
• Global
  vegetable oil demand is supporting SBO, along with rising prices in related markets.  EU soybean oil when imported into Rotterdam was up 60 euros from yesterday.  Malaysian palm was up 66 MYR to 4,158 and cash climbed $10/ton to $1,065. 
  
• After
  the sharply higher move in SBO futures yesterday, we saw only a 747 contract decline in CBOT SBO open interest. 
  
• India
  is considering reducing edible import taxes to cool rising cooking oil prices.  India relies on imports to meet consumption requirements for 2/3 of their edible oil.  Reuters noted the average landed price of crude palm oil at Indian ports was $1,173 per ton
  in April 2021 compared to $599 a year ago, via Solvent Extractors’ Association of India (SEA). 
  
• Indonesia’s
  producers’ association showed Jan-Apr biodiesel demand fell 8.2 percent from the previous year due to a reduction in transportation demand. 
  
• USD
  was 33 higher and WTI slightly higher as of 7:31 am CT.
• There
  were no change to CBOT registrations. 
• China
  National Grain and Oils Information Center in a report picked up by Bloomberg reported China soybean purchases slowed due to poor margins.  They have been very quiet when inquiring for US soybeans. 
  
• Datagro:
  Brazil soybean crop 136.96 million tons versus 136.34 million previous. 

 

 

• Offshore
  values were leading CBOT SBO 137 points lower and meal $2.10 higher. 
• Rotterdam
  vegetable oil prices for soybean oil and rapeseed oil were mostly 2-60 euros higher (SBO 60 higher, RSO much less) and Rotterdam meal was mostly 2-4 euros lower. 
  
• China:
  

• Malaysian
  palm oil: (uses settle price). 
  

 

Export
Developments

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

 

Wheat

• Weather
  heat advisories for at least today across the PNW and upper Great Plains is lifting US wheat futures higher, led by MN.  It’s going to be hot for the next few days, with possible triple-digit temperatures. 
  
• We
  are hearing some of China’s wheat crop has a very high level of vomitoxin. 
  
• The
  FAO Food Price Index, up 12 consecutive months, averaged 127.1 points in May, 4.8 percent higher than in April and 39.7 percent higher than in May 2020. Attached are selected charts.  The FAO Vegetable Oil Price Index gained 7.8 percent in May. 
  
• September
  Paris wheat market basis September was up 4.25 euros at 219.25.
• Russia’s
  AgMin left their 2021 wheat crop estimate of 81 million tons unchanged from previous. 
  

 

Source:
World Weather, Inc.

 

Export
Developments.

• Indonesia
  passed on 240,000 tons of feed wheat for August through November arrival.
• Jordan
  seeks 20,000 tons of wheat bran on June 15 for July/August shipment. 
• Results
  awaited: 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. 

 

Rice/Other

·        
South Korea bought an estimated 94,400 tons of rice out of 134,994 tons sought, on May 13, at $986.00 and $989.00 a ton c&f from China and at $572.00 and $578.50 a ton c&f from Vietnam.   Arrival is for between September 2021
and January 2022. 

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

·        
Pakistan received offers for white sugar, with lowest at $533.90/ton c&f.