FI Morning Grain Comments 06/07/23

PDF attached

 

Good
morning. 

 

US
energies are higher this morning and USD about 15 points lower. The Goldman Roll starts today, lasting for 5 business days. US agriculture futures are mixed with light bull spreading in play. US weather, slowing US export demand, and Black Sea supply concerns
were noted this morning. The Great Plains will see rain over the next week. The heart of the US will see rain Friday through Sunday. The northwestern Midwest will turn drier next week while the southeast turns wetter. Black Sea grain export deal talks resume
Friday in Geneva. Earlier this week Russia said it saw no prospects to extend the deal. China May soybean imports jumped to a record 12.02 million tons despite tighter inspection protocols. Offshore values were leading SBO lower by about 107 points this morning
and meal $1.70 short ton lower. A Bloomberg poll looks for weekly US ethanol production to be up 13,000 thousand barrels to 1017k (1000-1026 range) from the previous week and stocks up 72,000 barrels to 22.404 million.

 

 

Fund
estimates as of June 6 (net in 000)

 

Weather

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR JUNE 07, 2023

• Cooler
  temperatures in U.S. crop areas of the Midwest during the coming week will help conserve soil moisture, although anticipated rainfall will be restricted
• Most
  areas will get “some” rain, but a general soaking will elude the key production areas
• The
  environment will help keep crops viable, but in need of more rain
• Drought
  in eastern and southern Alberta and some neighboring areas of western Saskatchewan continues and is not likely to be seriously eased for a while, but the high  pressure ridge over the heart of Canada’s Prairies is expected to abate this weekend and next week
  which will raise the potential for rain in the driest areas, but there is no guarantee that enough rain will fall to begin supporting crops better
• Northern
  Europe is still quite dry, and the Baltic Sea region is not likely to see much rain for another week; some rain is expected in the North Sea region, especially in the U.K. and parts of northern France within the next week
• Eastern
  Russia New Lands and neighboring Kazakhstan will receive some needed shower and thunderstorm activity in this coming week and the rain distribution will have to be closely monitored because of the potential for erratic rainfall and only partial relief from
  dryness
• India’s
  monsoon will continue to perform poorly because of a tropical cyclone in the Arabian Sea disrupting the normal southwest monsoon flow that brings rain to the nation.  This problem will continue for another five to six days
• Northeast
  and southern China will remain plenty wet over the next ten days while some drying occurs in the Yellow River basin and North China Plain
• Australia
  weather will remain largely good as it will be in Brazil; Rain is needed in Argentina especially in the west

Source:
World Weather, INC.

 

Bloomberg
Ag calendar

Wednesday,
June 7:

• China’s
  1st batch of May trade data, including soybean, edible oil, rubber and meat & offal imports
• EIA
  weekly US ethanol inventories, production, 10:30am
• Russia
  grain union conference in Gelendzhik, day 2

Thursday,
June 8:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Port
  of Rouen data on French grain exports
• Russia
  grain union conference in Gelendzhik, day 3
• HOLIDAY:
  Brazil

Friday,
June 9:

• USDA’s
  World Agricultural Supply & Demand Estimates (WASDE), 12pm
• China’s
  agriculture ministry (CASDE) releases monthly supply and demand report
• Sustainable
  World Resources conference in Singapore
• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various US futures and options, 3:30pm
• FranceAgriMer’s
  weekly crop condition report
• Russia
  grain union conference in Gelendzhik, day 4

Source:
Bloomberg and FI

 

 

 

 

Macros

US
Trade Balance Apr: -$74.6B (est -$75.8B; prevR -$60.6B)

Canadian
Int’l Merchandise Trade Apr: C$1.94B (est C$0.55B; prevR C$0.23B)

Canadian
Labour Productivity (Q/Q) Q1: -0.6% (prev -0.5%)

U.S.-China
April Trade Deficit $20.28 Bln VS March Deficit $16.61 Bln

U.S.
Crude Oil Exports Fell To 4.00 Million Barrels Per Day In April (VS 4.83 million BPD In March) – U.S. Census

 

Corn

·        
Corn futures are lower on improving rain prospects for parts of the Midwest through early next week.

·        
News is light.

·        
Traders are losing confidence that the national US corn yield will end up above trend this year, but on our corn crop condition weighted basis, the national yield as of August 1 is currently projected above a 15 and 30-year trend.
Our bias is for US corn conditions to decline over the next few weeks given the dryness across the majority of the belt. It’s early though.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 13,000 thousand barrels to 1017k (1000-1026 range) from the previous week and stocks up 72,000 barrels to 22.404 million.

 

University
of Illinois: Perspectives on Non-decreasing National Yield Trends

Schnitkey,
G., C. Zulauf, N. Paulson and J. Baltz. “Perspectives on Non-decreasing National Yield Trends.”
farmdoc daily (13):103, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, June 6, 2023.

https://farmdocdaily.illinois.edu/wp-content/uploads/2023/06/fdd060623.pdf

 

Export
developments.

• Algeria
  seeks up to 140,000 tons of corn on June 8 for July-Aug 15 shipment.

 

 

Soybeans

·        
Soybeans and meal are mixed with light bull spreading while soybean oil is lower following weakness in offshore values, currency adjusted. Yesterday there was a rumor a large commercial is looking to buy back soybean oil receipts.
There were no SBO registration cancelations, but more meal came out.

·        
Nearby soybeans are seeing follow through bull spreading in part of the USDA old crop sales announcement to Spain. Additional US soybean purchases by EU crushers should not be ruled out despite the large Brazil crop.

·        
China May soybean imports jumped to a record 12.02 million tons despite tighter inspection protocols and were up 24 percent from year ago and compares to 7.26 million tons during April. Higher soybean product prices in China drew
stocks lower by the end of April, prompting a boost in May arrivals. One trader expects June China soybean arrivals to reach 13 million tons. January-May China soybean imports were 42.31 million tons, up 11.2 percent from the same period year ago.

·        
August Malaysia palm futures increased 4 ringgit to 3320 and Aug. cash fell $5.00 to $775/ton.

·        
China July soybean futures were up 1.0%, meal down 0.7%, SBO unchanged and palm oil futures down 0.4%.

·        
Nearby Rotterdam vegetable oils were 15-20 euros higher from this time yesterday morning and meal down 4-7 euros.

·        
Offshore values were leading SBO lower by about 107 points this morning and meal $1.70 short ton lower.

·        
European Union soybean imports so far this season (July-June) reached 12.03 million tons by June 4, against 13.60 million a year earlier. EU rapeseed imports reached 7.15 million tons, compared with 5.14 million tons a year earlier.
Soybean meal imports were 14.64 million tons, down from 15.25 million tons previous period.

 

Export
Developments

·        
Iran seeks 120,000 tons of soybean meal from Brazil for July and/or August shipment.

·        
Algeria seeks 35,000 tons of soybean meal on June 8 for July 1-15 shipment.

 

Reuters
MPOB estimates

 

 

Wheat

·        
US wheat futures are higher for Chicago and near unchanged to lower for high protein wheat. Slow US export demand is limiting grains for Chicago.

·        
Traders will be monitoring wheat production areas for southeast Ukraine after the dam breach.

·        
The US Great Plains will see rain one time or another over the next seven days.

·        
China’s largest wheat producing province of Henan saw heavy rains over the past 14 days, potentially lowering quality. About 30 million tons is grown in that province.

·        
It remains dry across the Canadian Prairies.

·        
Black Sea grain export deal talks resume Friday in Geneva. Earlier this week Russia said it saw no prospects to extend the deal.

·        
December Paris wheat futures are up 0.50 euro earlier at 230.75 per ton.

·        
EU soft wheat exports so far this season reached 28.88 million tons by June 4, up from 25.93 million during the same period year earlier.

 

Export
Developments.

·        
Egypt was thought to have bought about 55,000 tons of wheat at maybe $229/ton fob (lowest offer earlier) from Russia for July 21-31 shipment. Freight was $15.50/ton.

·        
Taiwan seeks about 56,000 tons of US wheat from the US on June 14 for July 31-August 14 shipment off the PNW.

·        
Japan seeks 86,922 tons of food wheat later this week for August shipment.

·        
Morocco seeks 500,000 tons of feed barley on June 14.

 

Rice/Other

·        
South Korea seeks about 62,200 tons of rice, 44,400 tons from China and rest from Vietnam, on June 8, for arrival between September 1-30.