FI Morning Grain Comments 06/16/21

PDF attached

 

Good
morning.

 

Soybean
oil in on the defensive again creating a negative undertone for soybeans.  Meal is higher. US corn futures are catching a bid in the nearby contracts on Brazil opening doors to US GMO corn imports (reported by AgriCensus) and WCB crop growing concerns.  US
wheat is higher as Egypt retenders. Iran is in for 60,000 tons of wheat.  Japan received no offers for food wheat.  SK’s KFA bought 60,000 tons of corn.  A Bloomberg poll looks for weekly US ethanol production to be down 4,000 barrels (1050-1077 range) from
the previous week and stocks up 189,000 barrels to 20.149 million. Malaysian palm futures traded sharply lower.  Outside markets are mixed.  Traders will be watching for comments stemming from the Biden-Putin meeting this morning.

 

 

Weather

The
short term GFS weather outlook also looks wetter for key summer growing states experiencing drought.  Second day of the US precipitation outlook (Friday) increased rain into the upper Midwest.  1-7 day precipitation is not as wet as yesterday’s forecast. 
Day 2 precipitation below.  Note the European models are drier. 

 

1-7
DAY VALID THURSDAY…

 

 

…VALID
WEDNESDAY (released yesterday)

 

 

World
Weather, Inc.

WORLD
WEATHER HIGHLIGHTS FOR JUNE 16, 2021

• U.S.
  weather expectations remain mostly the same as Wednesday – as far as this forecaster is concerned
• Rain
  is expected in much of the Midwest Corn Belt over the next ten days with western and far northern areas seeing the lightest precipitation with the most limited benefit
• Areas
  from eastern Iowa and southern Wisconsin into Ohio may experience the greatest rainfall during this period of time
• Temperatures
  will be cool enough to reduce evaporative moisture losses and support crops favorably
• However,
  the western fringes of the Corn Belt, the northern Plains and far northernmost Corn Belt may not do nearly as well with rainfall as other areas
• Canada’s
  western and northern Prairies will be in the best condition for a while, but rain will be needed in the south soon
• Western
  India should be on everyone’s radar if limited rainfall prevails into July as suggested
• Areas
  from Gujarat and Rajasthan into Maharashtra and western Madhya Pradesh can be drier biased in June and not be a huge deal, but continued poor monsoon performance in July would be interpreted differently for many producers and traders following cotton, soybeans
  and groundnuts
• Interior
  Western India has not seen good rainfall very often this month, but it is still early
  
• Concern
  about Sukhovei conditions in western Kazakhstan, eastern portions of Russia’s Southern Region and lower Volga River Basin remains today
• The
  Sukhovei that occurs in this first week of the outlook is weak and impacts a small part of the region’s crops
  
• The
  real concern is over the potential for the hot, dry, wind to persist into a second week – that would result in a larger area being potentially impacted and a greater impact for those dealing with warm and dry conditions in this first week of the forecast
• Relief
  from dryness in southeastern Russia’s New Lands and eastern portions of northern Kazakhstan’s wheat and sunseed areas is still expected in this coming week, but western parts of the region will not get as much relief
• China
  weather is looking very good with most of the dryness from earlier this month now relieved
• Australia
  will see a good mix of weather during the next ten days, especially in the eat bringing support for better wheat, barley and canola establishment in New South Wales, Victoria and South Australia as well as some southeastern Queensland locations
•  Greater
  rain is still needed though in Queensland and South Australia in particular
• Western
  Russia, Ukraine and Europe weather still looks to be good over the next ten days
• No
  threatening cold is expected in Brazil’s grain, sugar or coffee production areas during the next two weeks
• Rain
  is needed in greater quantities in east-central Africa coffee and cocoa production areas
• Southeast
  Asia weather has been mostly favorable of late and little change is expected
• Argentina
  still needs rain in wheat production areas, although crops are in much better shape than last year

Source:
World Weather, Inc.

 

Bloomberg
Ag Calendar

Wednesday,
June 16:

• EIA
  weekly U.S. ethanol inventories, production
• FT
  Commodities Global Summit, day 2
• Australia’s
  Abares to release agricultural commodities report
• Brazil’s
  Unica may release cane crush, sugar production data (tentative)
• CNGOIC
  oilseed conference, Chengdu, China, Day 1

Thursday,
June 17:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports
• Itau
  webinar on agribusiness outlook, Sao Paulo, Brazil
• CNGOIC
  oilseed conference, Chengdu, China, Day 2

Friday,
June 18:

• 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
• China
  customs to publish trade data, including imports of corn, wheat, sugar and pork
• World
  coffee market report by USDA’s Foreign Agricultural Service, 3pm
• FranceAgriMer
  weekly update on crop conditions
• USDA
  Total Milk Production

Source:
Bloomberg and FI

 

 

 

 

Macros

 

US
Housing Starts May: 1572K (est 1630K; prevR 1517K; prev 1569K)

US
Housing Starts (M/M) May: 3.6% (est 3.9%; prevR -12.1%; prev -9.5%)

US
Building Permits May: 1681K (est 1730K; prevR 1733K; prev 1760K)

US
Building Permits (M/M) May: -3.0% (est -0.2%; prevR -1.3%; prev 0.3%)

 

Corn

• US
  corn futures are catching a bid in the nearby contracts on Brazil opening doors to US GMO corn imports (reported by AgriCensus) and WCB growing concerns, specifically western IA where some are removing rain out of the maps.  Talk of a high pressure ridge returning
  to the Midwest in July is adding support. 
• Outside
  markets are mixed.  Traders will be watching for comments stemming from the Biden-Putin meeting this morning.
  
• Brazil’s
  AgMin said they will open their doors to US GMO corn for feed purposes if the second crop is not large enough to meet consumption needs.   (AgriCensus)   How much and when TBD.  Timing of this might be key.  US corn exports this summer need to increase.  Yesterday’s
  inspections report came in at the low end of expectations and 67 million bushels are needed to be shipped in order to reach USDA’s 2.850 billion bushel crop year export projection.
  
• Reuters
  noted China’s pig herd is up 23.5% in May from a year ago and the sow herd up 19.3% (reaching 97.4% of the stocks at the end of 2017).  Recall 2019 hog herd fell about 40%. They mentioned China met its target to restore pig production.  Note hog futures in
  China this week fell to a record low and cash prices remain depressed. 
• (Bloomberg)
  — China’s economic planning agency urges hog producers to keep “reasonable” hog production after recent pork price decline, according to a statement on NDRC website. 
  
• (Reuters)
  – China should keep grain prices at reasonable levels and curb rising prices of agricultural materials, the country’s Premier Li Keqiang said during his inspection tour in northeastern Jilin Province on June 15-16.  Li said now was a critical time for grain
  production, and effective measures should be taken to stabilize the price of agricultural materials.  China should protect black soil and cultivate more fine grain varieties, Li added.
• USD
  was 4 points lower as of 7:40 am CT and WTI up $0.25. 
• USDA
  announced they plan to allocate $700 million in aid to biofuel producers to assist industries recovering from pandemic repercussions in the next 60 days.  Reuters: “USDA is honoring its commitment to get financial assistance to producers and critical agricultural
  businesses, especially those left out or underserved by previous COVID aid.”
  
• Argentina
  is close in talks with producers on re-opening beef exports. 
• A
  Bloomberg poll looks for weekly US ethanol production to be down 4,000 barrels (1050-1077 range) from the previous week and stocks up 189,000 barrels to 20.149 million.
  

 

Export
developments.

• South
  Korea’s KFA bought about 60,000 tons of South American corn at $315.00/ton for arrival in South Korea around Sept. 30.
  
• China’s
  Sinograin plans to sell or auction off 37,126 tons of imported Ukrainian corn on June 18 to replenish tightening supplies and alleviate high prices.

 

Soybeans

• The
  US soybean complex is mixed.  Soybean oil in on the defensive again creating a negative undertone to soybeans.  Meal is higher on spreading.  Palm oil fell about 4% overnight. 
  
• Before
  the electronic break: SX 1500/ 1600cs this morning bot 1,400x paid 17
• There
  is chatter US officials may propose to leave unchanged or lower the upcoming 2021 (2021 biomass) EPA biofuel mandates, set to be released around this time of year.  We are looking for unchanged.  Link to current mandates
  https://www.epa.gov/renewable-fuel-standard-program/renewable-fuel-annual-standards
  
• Offshore
  values are leading soybean oil 38 points lower and meal $2.30 higher. 
• Rotterdam
  rapeseed and soybean oil prices were 20-30 euros lower, and meal mixed. 
• China:
  

• Malaysian
  palm oil:  

• Yesterday
  NOPA reported a lower
  than expected US May soybean crush and a decline in end of May soybean oil stocks.  Look for USDA to leave its US crush estimate unchanged next month and possible take SBO down 25-50 million pounds if they decide to again upward revise domestic demand. 
  

 

Renewable
Fuel Annual Standards – EPA Annual Volume Standards

We
are under the opinion proposed and final (set later this year) will be mostly unchanged for diesel and conventual.

https://www.epa.gov/renewable-fuel-standard-program/renewable-fuel-annual-standards

 

Export
Developments

• There
  is talk of US soybean meal business yesterday, but no confirmation. 
• USDA’s
  CCC program seeks 25,000 tons of soybean meal for Bangladesh and 8,000 tons for Cambodia on June 17 for July 15-25 shipment.
  
• Today
  USDA seeks 1,180 tons of packaged vegetable oil for export donation for July 16-Aug 15 shipment. 
  

 

Wheat

• US
  wheat futures are higher on technical buying and Egypt retendering for wheat. The European weather model this morning turned drier relative to the GFS model.  
  
• Russia’s
  Deputy Prime Minister Viktoria Abramchenko – wheat crop is seen at more than 81 million tons (Bloomberg). 
  
• September
  Paris wheat is 1.50 euros higher at 207.25.

 

Export
Developments. 
*NEW

• *Egypt
  retendered for wheat that includes shipment bids after cancelling their import tender yesterday.  Lowest offer yesterday was $250.88 a ton for 60,000 tons of Russian wheat but it was cancelled due to high freight prices.  There were at least 19 offers on Tuesday. 
  
• *Iran
  seeks 60,000 tons of milling wheat for July and August shipment. 
• *The
  lowest offer for Bangladesh in for 50,000 tons of wheat was $335/ton CIF.
• *Japan
  received no offers for 80,000 tons of feed wheat and 100,000 tons of barley under its SBS import system, for arrival in Japan by November 25. 
  
• Japan
  seeks 207,472 tons of food wheat. 

• The
  Philippines seeks 205,000 tons of milling wheat for Aug/Sep shipment. 
• Jordan
  seeks 120,000 tons of wheat on June 22 for December shipment. 
• Jordan
  is back in for feed barley on June 23 for Nov/Dec shipment. 

 

Rice/Other

·        
(Bloomberg) — National Food and Strategic Reserves Administration will release state reserves of metals including copper, aluminum and zinc in batches, according to a statement from the administration.