FI Morning Grain Comments 06/20/23

PDF attached

 

Good
morning.

 

Mixed
to lower trade this morning from profit taking after prices hit multi-month highs overnight. The weather forecast calls for rain bias WCB this week but not all areas will see rain. US temperatures will be warmer this week, facilitating net drying. Lower WTI
crude oil, weakness in equities, and slightly higher USD are also weighing on commodities. We look for a 2-point decline in G/E soybean and corn crop ratings and steady for spring and winter wheat when update by USDA this afternoon.
Over
a 2-day period, September Malaysia palm futures traded 32 ringgit lower to 3727 and Sep. cash decreased $5.00/ton to $855.00/ton. Offshore values were leading SBO lower by 105 points this morning and meal $10.00 higher. By June 21, the EPA will roll out final
decisions for US mandates (RFS) for 2023, 2024 and 2025. Perception is for higher advanced fuels partially offset by lower conventional fuel versus December proposal.

 

 

Fund
estimates as of June 16 (net in 000)

 

Weather

7-day

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR JUNE 20, 2023

• Northern
  Europe rainfall is expected to increase later this week into next week easing long term dryness over time
• Eastern
  Russia’s New Lands will experience cooler than usual temperatures and periods of rain later this week into next week improving soil moisture and crop conditions
  
• India’s
  monsoon is expected to start performing better late this week and most of next week easing dryness in much of the nation and supporting a better environment for planting of summer crops
• Recent
  rain in western and central Alberta, Canada soaked the ground and induced some local flooding
• Partial
  relief occurred to a portion of Alberta’s dry region in the southeast during the weekend, but many areas still need greater rain and not much is expected for a while
• Manitoba,
  Canada and the U.S. Dakotas as well as parts of Minnesota and western Nebraska will get waves of rain during the next ten days improving soil moisture that has been limited at times recently
• Too
  much rain has fallen recently from southeastern Mississippi through southern Alabama, southern Georgia and northern Florida with 2.00 to 7.00 inches common and local totals over 10.00 inches
• The
  U.S. Carolinas and Virginia will be wettest this week while the Delta and other areas in the southeastern U.S. dry down for a little while
• Lower
  eastern U.S. Midwest crop areas are expected to be a little wetter in the coming week to ten days
• The
  heart of the U.S. Midwest will get some rain next week, but amounts are still advertised to be light leaving crop moisture stress an ongoing concern
• U.S.
  Midwest temperatures will not be hot enough to induce serious crop stress, but until greater rain falls plant stress will continue in central parts of the region
• Rain
  during the long U.S. holiday weekend was beneficial in Iowa and Nebraska as well as some immediate neighboring areas
• Saskatchewan,
  Canada will be drying down over this coming week to ten days, although soil moisture is still rated good enough to protect many crops from the drier bias
• Mexico
  drought remains quite serious and unchanging over the next ten days

Source:
World Weather, INC.

 

Bloomberg
Ag calendar

Tuesday,
June 20:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• US
  corn, cotton, soybean, spring wheat and winter wheat condition, 4pm
• China’s
  3rd batch of May trade data, including country breakdowns for commodities
• US
  planting data for cotton, spring wheat and soybeans, 4pm
• New
  Zealand global dairy trade auction
• EU
  weekly grain, oilseed import and export data
• HOLIDAY:
  Argentina

Wednesday,
June 21:

• Grain
  and Oilseeds MENA conference in Cairo, day 1
• SIIA
  Haze Outlook 2023 in Singapore
• USDA
  Total Milk Production

Thursday,
June 22: 

• Port
  of Rouen data on French grain exports
• EIA
  weekly US ethanol inventories, production, 10:30am
• Grain
  and Oilseeds MENA conference in Cairo, day 2
• Brazil
  Unica cane crush, sugar production (tentative)
• USDA
  Red Meat Production, 3pm
• HOLIDAY:
  China,
  Hong Kong

Friday,
June 23:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• 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
• US
  Cattle on Feed, 3pm
• US
  cold storage data for beef, pork and poultry
• HOLIDAY:
  China

Source:
Bloomberg and FI

 

 

 

 

CFCT
Commitment of Traders

The
trade really missed it with the estimated net long position for the traditional and managed money net long position for corn.

 

 

 

 

Soybean
and Corn Advisory

2023
U.S. Corn Yield Lowered 1.0 bu. to 177.0 bu/ac

2023
U.S. Soybean Yield Lowered 0.5 bu. to 51.0 bu/ac

2022/23
Brazil Soybean Estimate Unchanged at 155.0 Million Tons

2022/23
Brazil Corn Estimate Increased 1.0 mt to 130.0 Million

2022/23
Argentina Soybean Estimate Lowered 1.0 mt to 21.0 Million

2022/23
Argentina Corn Estimate Unchanged at 35.0 Million Tons

 

Macros

US
Housing Starts May: 1631K (est 1400K; prev 1401K)

US
Building Permits May: 1491K (est 1425K; prevR 1417K)

US
Housing Starts (M/M) May: 5.2% (est 0.6%; prevR -1.4%)

US
Building Permits (M/M) May: 21.7% (est -0.1%; prevR -2.9%)

US
Philadelphia Fed Non-Manufacturing Activity Jun: -16.6 (prev -16.0)

 

 

Corn

·        
Widespread commodity selling, uncertainty over a mixed US weather forecast, and lower equity markets are sending corn futures mostly lower. Soon to expiring July and July 2024 are higher. Look for a two-sided trade today for 2023
new-crop contracts.  We have a bias for a higher trade this week as many parts of the US will see restricted rain this week.

·        
We will likely lower our US corn yield this afternoon from the initial 180.5 reading.

·        
December corn traded above $6.00 overnight and that may have triggered new-crop profit taking.

·        
President Biden and China’s Xi are set to meet today. China lowered rates earlier this week by 10 basis points. Interest rates have been slowly ticking lower in China since at least 2020.

·        
Mexico reached a deal with domestic food manufactures to use non-GMO corn.

·        
We look for a decline in US soybean and corn ratings
to
decline 2 points.

·        
By June 21, the EPA will roll out final decisions for US mandates (RFS) for 2023, 2024 and 2025. Perception is for higher advanced fuels partially offset by lower conventional fuel versus December proposal.

 

Export
developments.

• Iran
  was thought to have passed on 120,000 tons of corn.
• Taiwan’s
  MFIG seeks up to 65,000 tons of corn on June 21.

 

Soybeans

·        
CBOT soybeans, soybean meal and soybean oil were mostly lower from profit taking as traders digest upcoming weather forecasts for the US and Europe. By the electronic close, prices turned mixed for soybeans and soybean meal (bull
spreading).

·        
Concerns over China’s economic health is contributing to a lower trade in the soybean complex.

·        
ITS reported Malaysian June 1-20 palm oil shipments at 632,345 tons, down 17% from the previous period month earlier. AmSpec reported 624,306 tons, down from 716,760 tons previous period during May.

·        
Over a 2-day period, September Malaysia palm futures traded 32 ringgit lower to 3727 and Sep. cash decreased $5.00/ton to $855.00/ton.

·        
Over a 2-day period, China September soybean futures were up 1.9%, meal up 3.0%, SBO higher by 2.5% and palm oil futures increased 3.0%.

·        
Nearby Rotterdam vegetable oils were mixed from this time Friday morning and meal mostly 13-25 euros higher.

·        
Offshore values were leading SBO lower by 105 points this morning and meal $10.00 higher.

 

For
reference below, Monday (only) price action. The above reflects a 2-day period.

 

 

 

Export
Developments

• China
  will auction off 306,700 tons of imported soybeans from state reserves on June 27.
  
• Iran
  was thought to have passed on 120,000 tons of soybean meal but are back on Wednesday for the same amount.
  

 

 

Wheat

·        
US wheat futures are lower on widespread commodity selling and a US weather forecast calling for additional beneficial rains for the central and northern Great Plains.  Canada saw some relief over the weekend. Our bias is for
a steady combined G/E crop ratings for spring and winter wheat when update this afternoon for the US.  EU weather still looks unfavorable for the near term.

·        
Russia sees the Black Sea grain deal ending by July 18 but left the door open for additional talks.

·        
September Paris wheat futures were down 3.50 euros earlier at 237.50 per ton after trading higher on Monday.

 

Export
Developments.

·        
Algeria bought at least 630,000 tons of wheat.

·        
Japan passed on wheat and barley in a SBS import tender.

·        
Japan seeks 92,529 tons of milling wheat later this week for Aug shipment.

·        
Saudi Arabia snapped up 350,000 tons of wheat from overseas farms.

 

 

Rice/Other

·        
Mauritius bought 6,000 tons of rice.