FW: FI Evening Grain Comments 05/19/20

PDF attached

 

US
ag markets were mixed. USD traded lower. US stocks fell towards the end of the session.  WTI traded higher. Jordan passed on wheat.  Japan is in for food wheat this week. 

 

 

USDA
announced their Coronavirus Food Assistance Program

https://www.farmers.gov/cfap

https://www.farmers.gov/cfap/non-specialty

 

 

Threat
of La Nina occurring during the Northern Hemisphere summer growing season remains low. 

SST’s
were near zero by the beginning of May. 

 

 

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

           
A little more delay is expected in the eastern U.S. Midwest planting this week due to rain and mild temperatures. Rain a part of the northwestern Corn Belt during the weekend was good for areas that had been drying out, but more rain is needed in those areas.

Better
than expected rainfall in a part of the southeastern U.S. states this week will improve crop conditions in many areas.

Rain
in western Canada’s Prairies this week will stall spring fieldwork Wednesday into Friday while weather in the east will be dry and warm favoring spring planting progress.  More rain in Ontario, Canada this week will keep fieldwork on hold for corn and soybean
production areas. Next week looks drier and warmer.

Brazil
and Argentina weather will not change much over the coming ten days and that should translate into ongoing good western Safrinha crop conditions in Brazil while conditions in the east are quite varied leaving many areas in need of rain. Harvesting in Argentina
may be briefly delayed by rain Wednesday and Thursday.

Good
harvest weather is expected in South Africa and India. Crop planting and establishment in China is expected to advance favorably.

Hot
and dry weather in the southern Balkan Countries during the weekend stressed some corn and soybean crops by depleting soil moisture. Temperatures were cooler Monday, but conditions were still dry.

Rain
in Ukraine and a part of Russia’s Southern region this week will be welcome, but more rain will be needed near the Black and Caspian Seas

Western
and northern Europe will be drying out this week. Crop stress is expected in Germany, northern France, the United Kingdom and parts of western Spain.

Overall,
today will likely provide a mixed influence on market mentality. 

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Weather
conditions around the world changed little overnight. Dryness remains in the southwestern U.S. Plains and in some areas near the Black Sea and developing in northern Europe. Dryness was also continuing in Western and South Australia with little potential for
greater rainfall this week.

           
Some showers may impact Queensland and far northern New South Wales, Australia briefly this week, but much more rain will be needed to induce the best autumn planting. Western Australia may receive some rain Sunday into Monday and that too will be welcome.

           
Small grain crops in Europe and the western CIS vary greatly from one location to another. Crops in northern France, the United Kingdom, Germany and the Balkan Countries need more rain. Portions of Kazakhstan, parts of Russia’s Southern region and areas near
the Black Sea in southern Ukraine also need rain along with the southwestern U.S. high Plains region.

           
Canada’s Prairies planting has been advancing favorably while wheat development in Quebec and Ontario should begin improving this week due to warmer temperatures. A storm in Alberta and western Saskatchewan Wednesday into Friday will stall farm progress.

           
Rain is needed in Argentina and South Africa to support planting.

           
Overall, weather today is expected to have a mixed influence with some bullish bias.

Source:
World Weather Inc. and FI

 

Seven-day
outlook:

 

Bloomberg
Ag Calendar

TUESDAY,
May 19:

• Brazil’s
  Conab releases 2nd estimate for 2020 coffee crop, Sao Paulo
• Deadline
  for the Australian government to deliver its final defense against a Chinese anti-dumping probe into the country’s exports of barley
• New
  Zealand global dairy trade auction

WEDNESDAY,
May 20:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• EU
  set to present its Farm to Fork strategy for sustainable food
• New
  Zealand food prices, 6:45pm ET Tuesday
• Malaysia’s
  palm oil export data for May 1-20
• USDA
  milk production, 3pm

THURSDAY,
May 21:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
• Port
  of Rouen data on French grain exports
• USDA
  red meat production, 3 pm
• U.S.
  cold storage – pork, beef, poultry
• HOLIDAY:
  France, Germany, Belgium, Indonesia

FRIDAY,
May 22:

• ICE
  Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• FranceAgriMer
  weekly update on crop conditions
• U.S.
  cattle on feed, poultry slaughter, 3 pm
• Shanghai
  exchange’s weekly commodities inventory, 15.30
• EARNINGS:
  Sime Darby Plantation

SATURDAY,
May 23:

• China
  May trade data, including agricultural imports

Source:
Bloomberg and FI

 

Macros

·        
US Housing Starts Apr: 891K (exp 900K; prev 1216K)

–         
Housing Starts (M/M) Apr: -30.2% (exp -26.0%; prev -22.3%)

–         
Building Permits Apr: 1074K (exp 1000K; R prev 1350K)

–         
Building Permits (M/M) Apr: -20.8% (exp -25.9%; R prev -5.7%)

 

Corn.

·        
Corn futures ended higher from ongoing short covering and lower USD.  At the open we heard there was some algo corn buying and short covering.  Prices ended off their contract day highs.  July corn took out
its last week’s high of $3.24 but failed to find much support above that level.  Futures are up three consecutive days, leaving some to think of a slight correction on Wednesday. 

·        
Funds bought an estimated net 5,000 corn contracts. 

·        
US corn plantings reached 80 percent complete, up 13 points from the previous week, one point below an average trade guess, well up 44 percent from last year and above 71 percent 5-year average. 

·        
A Bloomberg poll looks for weekly US ethanol production to be up 54,000 at 671,000 barrels (621-762 range) from the previous week and stocks to decrease 275,000 barrels to 23.915 million.

 

Corn
Export Developments

• None
  reported

 

 

 

Updated
5/11/20

• July
  corn is seen in a $2.90 and $3.35 range.  December lows could reach $2.90 if US weather cooperates. 
  

 

Soybean
complex

• CBOT
  July soybean futures contract fell 2.50 cents to $8.4250.  Meal was off $0.50 basis July and July soybean oil down 23 points. 
  Soybean
  oil was on the defensive after rallying Monday, in our opinion. 
• We
  saw a two-sided trade from a weaker USD and improving prospects for US soybean sales to increase for the October through January period to China. Lack of Chinese interest today appeared to have pressured prices. 
  
• US
  offers for soybeans for late 2020 are competitive versus Brazil after the real weakened on Monday.  We didn’t hear of any fresh China state buying for old-crop US soybeans, but they were in looking at prices for PNW on Monday.  Brazil sold 80% of their 2019-20
  soybean crop and already 28% of their 2020-21 (3-12% normally for this time of year). 
  
• Funds
  sold an estimated net 2,000 soybeans, sold 1,000 soybean meal and sold an estimated net 3,000 soybean oil. 
  

·        
US soybean plantings reached 53 percent complete, up 15 points from the previous week, three points below an average trade guess, well up 16 percent from last year and above 38 percent 5-year average. 

·        
Palm futures were up 40MYR or 1.9%. India has resumed buying Malaysian palm oil with at least 200,000 tons trading hands after India took a four-month break.  Malaysia plans to restart their B20 biodiesel
program in September.

·        
Anec estimated Brazil second half soybean exports at a record 7.2 million tons, which could bring May exports to 14-15 million tons. 

·        
A private Argentina vessel lineup shows nothing booked for SME exports for the months of May and June compared to 236,000 tons for those combined months a year ago.   

 

Oilseeds
Export Developments

• Today
  USDA was seeking 17,840 tons of packaged soybean oil for June 16 to July 15 shipment. 
  

 

Updated
5/18/20

• July
  soybeans are seen in a $8.25-$8.75 range. 
• July
  soybean meal is seen in a $280 to $310 range. 
• July
  soybean oil range is now seen in a 26.00 to 28.50 range. 

 

Wheat

• CBOT
  July Chicago wheat ended 1.75 cents higher. July KC 4.75 cents lower and July MN 3.50 cents lower. 
  
• Funds
  bought an estimated net 1,000 Chicago wheat contracts. 
• USD
  was supportive for US wheat futures but HRW fell on improving US weather and advancing harvest progress across TX. 
  
• Jordan
  passed on wheat and Japan is in for food wheat this week.  US spring row crop plantings advanced slightly below what the trade expected but corn & soybeans are above their respected 5-year average while spring wheat is lagging.  Going forward this week, eyes
  will be focused on US weather and trade tensions between Australia and China. 
  

·        
US spring wheat plantings reached 60 percent complete, up 18 points from the previous week, at an average trade guess, below 63 percent from last year and below 80 percent 5-year average.  US winter wheat
conditions declined 1 point to 52 percent from the previous week, below 66 percent year ago and same as its 5-year average. 

·        
December Paris milling wheat officially closed up 0.25 euro, or 0.1%, at 187.00 euros a ton ($204.80).

 

2020
Kansas Wheat Tour is now underway

http://kswheat.com/harvest/hrw-virtual-wheat-tour

#wheattour20

 

Export
Developments.

• 3
  offers received but passed: Jordan seeks 120,000 tons wheat on May 19 for October and November shipment. 
  
• Japan
  seeks 110,573 tons of food wheat on Thursday.

• Syria
  seeks 200,000 tons of soft wheat on May 20.

• Japan’s
  AgMin seeks 80,000 tons of feed wheat and 100,000 tons of feed barley to be loaded by August 31 and arrive in Japan by October 29, in its weekly (SBS) tender system on May 20.

 

Rice/Other

• None
  reported

 

Updated 5/18/20

• Chicago July is seen in a $4.75-$5.20 range. 
  
• KC July $4.20-$4.80.
• MN July $4.85-$5.25.