FI Morning Grain Comments 06/13/23

PDF attached

 

Good
morning.

 

US
crop concerns are supporting corn and soybeans. Funds are thought to be getting back into the long side of the market, especially for corn. Wheat is mixed with Chicago higher and KC lower. The US Midwest weather outlook still calls for below normal rainfall
over the next ten days. The decline of three points in US soybean and corn ratings are supportive, despite the fact it is early in the crop season. However, the sharp early declines in G/E conditions is kicking up memories from the 2012 crop year.  EPA is
set to release mandates either today or tomorrow.  We don’t expect any fireworks from this announcement but a less than expected advanced volume could trigger short-term selling in soybean oil. Remember economics will drive production. See EPA’s December announcement
here. https://www.epa.gov/renewable-fuel-standard-program/news-notices-and-announcements-renewable-fuel-standard
August Malaysia palm futures traded 67 ringgit higher to 3416 and Aug. cash increased $10/ton to $790/ton. Offshore values were leading SBO higher by 97 points this morning and meal $0.70 higher.

 

No
surprises for Conab Brazil supply

 

Fund
estimates as of June 12 (net in 000)

 

 

Weather

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR JUNE 13, 2023

• No
  excessive heat is likely in U.S. Midwest, although the region will trend a little warmer later this week and stay seasonably warm into next week
• U.S.
  Midwest precipitation remains limited for many areas in the coming week, although showers and thunderstorms do occur
• Western
  and central Midwest will remain driest with an ongoing need for greater rain
• U.S.
  high pressure ridge never becomes very strong, but it will be over a part of the Midwest from late this week through the first half of next week before shifting to the Plains and staying weak during the final days of the second week outlook
• Alberta,
  Canada is still expecting relief from chronic dryness later this week with some follow up moisture in the following week
• Saskatchewan
  and portions of Manitoba, Canada also get some beneficial rainfall, although its distribution is not as good as in Alberta, especially not in Manitoba
• U.S.
  hard red winter wheat areas see a good mix of weather next ten days
• West
  Texas will remain in a drying mode for the next ten days
• U.S.
  Delta and southeastern states will experience some heavy rainfall periodically over the next ten days
• Northern
  U.S. Plains and upper Midwest will get some timely rainfall Friday into the weekend, although more may be needed in some areas
• Northern
  Europe rainfall will slowly improve this weekend and especially next week
• Eastern
  Russia New Lands and northern Kazakhstan will receive a restricted amount of Rainfall during the next ten days; temperatures will be mild to cool
• Some
  dryness expansion from eastern Inner Mongolia to the northern Yellow River Basin is expected over the next few weeks
• Rainy
  weather will continue in far southern China resulting in flooding for rice and sugarcane areas
• Tropical
  Cyclone Biparjoy will move through northwestern Gujarat, India and southeastern Sindh, Pakistan late this week before moving across northern India producing heavy rain that should be of use to the planting of summer crops once flooding subsides
• Little
  change in Australia, South Africa or the tropics

Source:
World Weather, INC.

 

Bloomberg
Ag calendar

Tuesday,
June 13:

• France
  agriculture ministry’s report on field crops
• IGC
  grains conference, London, day 2
• EU
  weekly grain, oilseed import and export data
• Brazil’s
  Conab issues production, area and yield data for corn and soybeans

Wednesday,
June 14:

• FranceAgriMer
  monthly grains balance sheet
• New
  Zealand food prices
• EIA
  weekly US ethanol inventories, production, 10:30am

Thursday,
June 15:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Port
  of Rouen data on French grain exports

Friday,
June 16:

• 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

Source:
Bloomberg and FI

 

 

 

 

 

Macros

US
CPI was near expectations. A rate hike is unlikely.

 

Corn

·        
US weather remains a concern and that is reflected in the early morning as funds are starting to get back into building a net long position. Note as of last night money managers were thought to still hold a net short position,
so there is upside potential for the corn market if the US weather pattern does not improve. 

·        
USDA rated 61% of the U.S. corn crop in good-to-excellent condition in its weekly crop progress report on Monday, down 3 percentage points from a week ago and below the average of estimates in a Reuters poll. (Reuters)

·        
Final day of the Goldman roll.

 

Export
developments.

• Iran
  seeks 120,000 tons of soybean meal and 120,000 tons of corn on June 14.
• Algeria
  passed on 35,000 tons of soybeans meal. 

 

Soybeans

·        
CBOT soybeans are higher from a sharp 3 point decrease in the US soybean G/E rating. At  59 percent, this was one point below expectations and well below average for this time of year.  Products are higher in part to strong soybean
oil ahead of EPA’s mandate announcement and higher palm oil futures.

·        
Expect nearby spreads to chop around headed into first notice day delivery.  We have a bias for soybean spreads to firm if crush margins hold onto high levels.

·        
August Malaysia palm futures traded 67 ringgit higher to 3416 and Aug. cash increased $10/ton to $790/ton.

·        
China September soybean futures were down 0.9%, meal up 0.1%, SBO down 0.5% and palm oil futures down 1.1%.

·        
Nearby Rotterdam vegetable oils were mixed from this time yesterday morning and meal mixed.

·        
Offshore values were leading SBO higher by 97 points this morning and meal $0.70 higher.

 

Export
Developments

• Egypt
  saw offers as low as $926 per ton c&f for 6000 tons of sunflower oil and $1075 per ton for 30000 soybean oil for arrival between August 20 and September 15.
  They
  are also in for a small amount of local vegetable oils.
• Iran
  seeks 120,000 tons of soybean meal and 120,000 tons of corn on June 14.

 

 

Wheat

·        
Chicago wheat is higher on light fund buying from a rally in corn and soybeans. KC wheat is lower after HRW wheat conditions have started to stabilize over the past two weeks. We see little by class US production changes in the
next USDA report if conditions remain near current levels.

·        
September Paris wheat futures are down 1.00 euro earlier at 237.25 per ton.

 

Export
Developments.

·        
Japan seeks 60,000 tons of feed wheat and 20,000 tons of barley.

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

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

 

Rice/Other

·        
Results awaited: 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.