FI Morning Grain Comments 06/17/22

PDF attached

 

Good
morning.

 

The
US will be on holiday Monday.

 

US
weather will remain unfavorable for the balance of June and any changes to the forecast should have influence on prices going forward. Soybeans and meal extended their rally Friday on US weather concerns, lack of US producer selling, and inflation/recession
fears. Soybean oil is weaker again on demand destruction. Corn futures reached a one-month high. Wheat is mixed. The USD is rebounding after a steep decline on Thursday. WTI crude is lower and US equities higher. Look for a choppy trade for CBOT agriculture
markets. Positioning ahead of the weekend is expected.

 

 

 

 

Weather

24-H

 

 

 

 

7-day

 

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR JUNE 17, 2022

• Today’s
  morning GFS model run reduced rain in Argentina during the two week outlook – the reduction returns a drier forecast for the second week 
  
• the
  European model still has some rain in the outlook for the end of next week, although it is mostly very light
• Both
  the GFS and European model runs have a little greater rainfall slated for Russia’s Southern Region during the middle to latter part of next week
• Both
  the GFS and European model runs continue trying to bring needed rain to the North China Plain in the second week of the outlook, but the models do not agree on the timing or significance of the rain and, to be honest, the models have been changing this outlook
  daily all week which leave the forecast of very low confidence
• This
  weekend’s heat wave in the central United States looks the same as it did Thursday with extreme highs of 95 to 105 degrees Fahrenheit from Texas to the Dakotas and Minnesota with some 90s in Canada’s eastern Prairies
  
• Extremes
  of 105 to 110 will be possible in a few central Plains locations with most of the extremes around 108
• U.S.
  hottest weather will settle into the Southern Plains, Delta and southeastern states during the middle to latter part of next week resulting in oppressive heat and humidity with highs in the upper 90s to 104 degrees Fahrenheit 
• U.S.
  week two weather will keep the high pressure ridge centered in the Great Plains with disturbances bringing some rain over the north of the system into the northern Plains, northern and eastern Midwest where some timely rainfall will help to slow drying rates
  with pockets of locally significant rain possible in week 2 of the outlook
• Canada’s
  Prairies are a little less wet today relative to Thursday morning, but timely rainfall is expected to support most crop needs
• India’s
  monsoon moisture is expected to spread across a larger part of the nation in this coming week, although resulting rain amounts will be less than usual
  
• Week
  two weather will continue to expand the rainfall  
• Enough
  rain will fall to improve soil moisture for planting and early crop development
• No
  change in Australia’s good looking weather pattern is expected during the next two weeks 
  
• Wheat,
  barley and canola planting will advance well with good establishment
• South
  Africa rainfall in this first week of the outlook will be ideal for wheat and canola planting and establishment 
• Europe
  weather is still expected to trend wetter next week after a couple of very warm and dry days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Friday,
June 17:

• 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

Saturday,
June 18:

• China’s
  second batch of May trade data, including corn, pork and wheat imports

Monday,
June 20:

• China’s
  third batch of May trade data, including soy, corn and pork imports by country
• MARS
  monthly EU crop conditions report
• Malaysia’s
  June 1-20 palm oil export data
• Olam
  holds extraordinary general meeting
• HOLIDAY:
  US, Argentina

Tuesday,
June 21:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• US
  crop planting data for soybeans and cotton; winter wheat condition and harvesting, 4pm
• US
  cotton, corn, soybean and spring wheat conditions, 4pm
• European
  Food Safety Authority’s One Conference on food safety, Brussels and online, June 21-24
• New
  Zealand global dairy trade auction
• USDA
  total milk production, 3pm
• EU
  weekly grain, oilseed import and export data

Wednesday,
June 22:

• Speciality
  & Fine Food Asia trade show June 22-24 in Singapore

Thursday,
June 23:

• EIA
  weekly U.S. ethanol inventories, production, 11am
• US
  cold storage data for beef, pork and poultry, 3pm
• USDA
  world coffee report
• International
  Grains Council’s monthly report
• USDA
  red meat production, 3pm

Friday,
June 24:

• 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
• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• FranceAgriMer
  weekly update on crop conditions
• Brazil’s
  Unica to release cane crush and sugar output data (tentative)
• US
  cattle on feed, poultry slaughter
• HOLIDAY:
  New Zealand

Source:
Bloomberg and FI

 

 

 

 

 

US
RIN DATA

U.S.
GENERATED 1.23 BLN ETHANOL (D6) BLENDING CREDITS IN MAY, VS 1.14 BLN IN APRIL -EPA

U.S.
GENERATED 513 MLN BIODIESEL (D4) BLENDING CREDITS IN MAY, VS 499 MLN IN APRIL -EPA

Year
ago…

U.S.
GENERATED 1.26 BLN ETHANOL (D6) BLENDING CREDITS IN MAY 2021, VS 1.14 BLN IN APRIL -EPA

U.S.
GENERATED 396 MLN BIODIESEL (D4) BLENDING CREDITS IN MAY 2021, VS 386 MLN IN APRIL -EPA

 

Macros

Canada
Industrial Product Price (M/M) May: 1.7% (est0.1%; prev 0.8%)

 

 

Corn

·        
US corn futures reached a one-month high on Friday from ongoing US weather concerns. US weather will remain unfavorable for the balance of June and any changes to the forecast should have influence on prices going forward. North
American summer official starts Tuesday.

·        
July corn hit a session high of $7.9975. Don’t rule out technical buying it breaks above $8.00. The absolute contract high is $8.2450.

·        
Positioning ahead of the US three day holiday weekend is expected. Look for a choppy trade.

·        
WTI crude oil was lower at the time this was written.

·        
On Thursday the US House passed a vote on the Lower Food and Fuel Cost Act that includes year round E15 ethanol blending and $200 million in additional funding for higher blends infrastructure.

·        
We look for a 2 point decline in US corn and soybean ratings when updated Tuesday afternoon, and for wheat ratings to be unchanged.

·        
There were no notable export developments on Friday.

 

Export
developments.

·        
China seeks to buy 40,000 tons of frozen pork for reserves on June 17.

 

Soybeans

·        
CBOT soybeans and soybean meal futures extended their rally Friday on US weather concerns, lack of US producer selling, and inflation/recession fears. Soybean oil was weaker. Malaysian palm oil futures were down 8 percent for
the week.

·        
Brazil is back from holiday.

·        
Argentina will be closed Friday and Monday for holiday.

·        
Malaysia will leave its CPO export tax unchanged at 8 percent for July. The government has set a reference price of 6,732.26 ringgit.

·        
As of Thursday afternoon, spot Gulf FOB soybean oil was running at about $333/ton premium to RBD palm oil. Below graph is the second month SBO and third month palm futures below overlaid with Brent crude oil futures.

 

 

·        
September Malaysia palm oil was down 19 points to 5454 and cash was down $15/ton to $1345.00 per ton.

·        
China soybean futures were up 0.5%, meal higher by 0.9%, soybean oil down 1.3% and palm shed 1.8%. 

·        
Rotterdam vegetable oils were 7-20 euros higher, and meal 5-13 euros higher.

·        
Offshore values are leading SBO about 123 points higher (253 higher for the week to date) and meal $3.30 lower (6.20 lower for the week).

·        
(Bloomberg) — Indonesia’s Palm Oil Exports Fall 66% M/m in May: Intertek…Palm oil exports dropped to 574,882 tons in May, a 65.9% fall from 1.69m tons a month earlier, according to cargo surveyor Intertek Testing Services.

 

Export
Developments

·        
China will be back next week selling a half a million tons of soybeans out of reserves but note over the past few weeks only a handful have been sold.

·        
Results awaited: China plans to sell another 500,000 tons of soybeans from reserves on June 17.

 

Wheat

·        
US wheat was mixed at the electronic close, with Chicago higher following good strength in corn futures.

·        
The USD was up an impressive 81 points as of 7:43 am CT, a rebound from a sharply lower trade on Thursday.

·        
Volatility in currency and equity markets are expected to continue to spill over into commodities. But the focus in wheat futures over the near term is expected to focus on weather. Hot and dry conditions for the US wheat areas
should limit downside risk over the short term.

·        
French wheat ratings for the soft wheat crop declined for the seventh consecutive week, by 1 point to 65 percent good/excellent for the week ending June 13, well below 81 year ago. Winter barley was also down on point to 63.

·        
Paris September wheat was up 1.25 euro earlier at 399 euros per ton. It traded two-sided.

·        
Russia will allow ships loaded with grain and metals to leave the Azov Sea port of Mariupol soon. The Kremlin is still in talks with Turkey to export grain from Ukraine. Meanwhile western leaders remain pessimistic exports from
key Ukraine Black Sea ports will resume over the short term.

·        
Ukraine June 1-16 grain exports were 695,000 tons (AgMin), down 43.5 percent from same period year ago.

·        
Russia raised the export duty on wheat to $131.60 per ton on June 16 from $129.20 per ton in the previous period.

·        
(Bloomberg) — China’s Wheat Imports Seen Shrinking 10% on High Global Prices…China’s wheat buying on the world market is set to decline in the coming year because of elevated prices and less demand for livestock feed after hog
producers cut capacity because of a market slump. Wheat imports may fall about 10% in the 2022-23 season, said Rosa Wang, a grain market analyst at consultancy Shanghai JC Intelligence Co.

 

Export
Developments.

·        
None reported

 

Rice/Other

·        
(Reuters) – China’s food reserves bureau said it will implement a minimum purchase price for early indica rice ahead of schedule, though did not specify an exact date. The National Food and Strategic Reserves Administration said
in a statement on Friday that it would implement the minimum purchase price ahead of the original start date of August 1.