FW: FI Evening Grain Comments 05/27/20

PDF attached

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

           
Relief to dryness came to some of Brazil’s Safrinha corn production area during the weekend while U.S. weather was mixed with some field progress occurring around showers and thunderstorms. Canola planting and emergence conditions improved in Western Australia
while northwestern Europe failed to get much moisture in key rapeseed areas. Northwestern Europe will continue to dry out for the next ten days.

           
Rain in the Black Sea region was good for summer crops while dryness in the eastern New Lands could prove stressful for sunseed. Additional rain in the Black Sea countries will further reduce concern over soil moisture and near term crop development.

           
Argentina dryness is good for harvesting summer crops and improved U.S. weather late this week and into next week will help get more fieldwork completed for its corn and soybean crop.

India’s
monsoon may start erratically, especially if a tropical cyclone evolves in the Arabian Sea late in the coming weekend or early next week as advertised.

Recent
rainfall in southeastern Europe has improved summer grain and oilseed production potentials and the same is expected in a part of Russia’s Southern Region and portions of Ukraine.

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

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Concern
about Black Sea and eastern CIS New Lands’ dryness continues to ease today. The only areas that will experience serious dryness will be in Kazakhstan and the lower Volga River Valley, although some areas in the southeastern New Lands will also experience some
crop moisture stress until greater rain evolves.

           
Northwestern Europe’s dry bias remains a concern for some of its small grain crops and a close watch on the situation is warranted. Little to no rain is expected in the U.K., northern France and Germany for at least another week. Rain in Eastern Europe and
the western CIS will be great for their small grains.

           
Rain in Western Australia, South Australia and Victoria during the weekend improved small grain prospects at least some and a few additional showers will impact some of these areas over the coming week. South Africa still needs rain and parts of western Argentina
are considered too dry.

           
Some wheat damage may have occurred from flooding rain in interior southern Brazil late last week, but the lighter rain in Sao Paulo, Paraguay and Mato Grosso do Sul during the weekend was very good for those crops. Conditions are expected to improve in southern
Brazil.

           
China’s winter wheat crop is still poised to perform well with dryness occurring now expected to spur on fast crop maturation and eventual harvesting. Spring grains in northeastern China have benefited greatly from recent rain and crop conditions have improved.

           
Canada’s Prairies have become too wet in the west and a little too dry in portions of the central and east. Changes in Canada are at least a full week away with rising crop stress in the dry areas of Saskatchewan and west-central Manitoba. Ontario and Quebec
are experiencing better wheat development conditions.

           
Heat and dryness are now slated for the western U.S. high Plains region through the next week to ten days. This will stress immature crops that are unirrigated resulting in some lower yield and grain quality. The more mature crops will be sped faster to full
maturity by the heat.  Recent rain in Nebraska and northern Kansas was good for wheat development and yield. 

           
U.S. spring wheat planting and establishment is advancing well. Some rain would be welcome, but the drier areas may not get much until late next week.

           
Overall, weather today may provide a mixed bias to market mentality.

Source:
World Weather Inc. and FI

 

Seven-day
outlook:

 

Bloomberg
Ag Calendar

WEDNESDAY,
May 27:

• AmSpec,
  Intertek release Malaysia’s palm oil export data for May 1-25
• EARNINGS:
  Nordzucker, IOI Corp
• HOLIDAY:
  Pakistan

THURSDAY,
May 28:

• EIA
  U.S. weekly ethanol inventories, production, 11:00am
• International
  Grains Council monthly report
• Port
  of Rouen data on French grain exports
• Poland
  crop plantings report
• EARNINGS:
  Sanderson Farms

FRIDAY,
May 29:

• 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
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
• U.S.
  Agricultural prices paid, received, 3pm
• Vietnam’s
  General Statistics Office releases data on coffee, rice, rubber exports in May
• Shanghai
  exchange’s weekly commodities inventory

Source:
Bloomberg and FI

 

Corn.

·        
Corn futures traded higher
basis the nearby contracts on a weaker USD.  Light frost risk for Brazil’s second corn crop overnight is seen supportive.  We think second corn crop damage was already widely realized from loss of yields from dry weather of over 10 percent from last year. 

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

·        
July corn support is seen at $3.15. 

·        
River terminal corn basis firmed again at Davenport IA, by 3 cents to 2 under.  It was also up at Savana IL by 2 cents to 6 under. 

·        
Zambia corn production was estimated at 3.4 million tons, up from 2 million previous year. 

·        
South Africa’s CEC updated their corn production estimate to 15.589 million tons, up from 15.221 million tons previous (April), and well above 11.275 million tons year ago.  Broken down, 9.075 million tons
is of white corn and 6.515 million tons of yellow corn. 

 

Corn
Export Developments

• Results
  awaited: Syria seeks 50,000 tons of soymeal and 50,000 tons of corn on May 24, for delivery within four months of purchase. 
  

·        
China plans to sell 4 million tons of corn from state reserves on May 28.  This would be the first auction of the season.  3.66 million tons of corn is from 2015. 

 

 

Updated
5/21/20

• July
  corn is seen in a $3.00 and $3.35 range.  December lows could reach $2.90 if US weather cooperates. 
  

 

Soybean
complex

• Soybeans
  traded higher on follow through buying from higher outside markets and weaker USD.  Palm oil, after two days of holiday, rallied more than 5 percent overnight in part to comment that the countries relations with India is improving.  Traders will continue to
  monitor US-China tensions.  Soybean meal fell on product spreading.
• Funds
  bought an estimated net 2,000 soybeans, sold 2,000 soybean meal and bought an estimated net 3,000 soybean oil.
  

• Selected
  COVID cases discovered at Brazilian ports are slowing soybean loadings.  Meanwhile one berth was reopened Tuesday into Wednesday. 
  https://af.reuters.com/article/commoditiesNews/idAFL1N2D82PB
  
• China
  is still buying Brazilian soybeans for September shipment. At least 6 cargoes were bought by Cofco. 
  
• We
  heard the US sold more soybean meal to the Philippines. 
• US
  soybean meal basis was largely unchanged except Council Bluffs, IA, where offers fell by $5.00/short ton to option. 
  
• Traders
  are still assessing the US-China tension over Hong Kong.  Bloomberg noted as estimated 38 billion USD in trade between Hong Kong and the US could be jeopardized.  Hong Kong is very important for the US as companies use the financial hub to access mainland
  China. 

·        
SGS – Malaysian palm oil May 1-25 exports increased 5.1 percent to 1.014MMT versus 965,025 tons previous April 1-25.  AmSpec showed a 9.8% increase to 1.035MMT.   

 

Oilseeds
Export Developments

• USDA
  seeks 12,500 tons of packaged vegetable oil on June 2 for July shipment. 
  
• Under
  the 24-hour reporting system, private exporters reported to the U.S. Department of Agriculture changes in destination of 138,000 metric tons of soybean cake and meal from unknown destinations to the Philippines during the 2019/2020 marketing year.

 

 

 

Updated
5/21/20

• July
  soybeans are seen in a $8.15-$8.65 range. 
• July
  soybean meal is seen in a $270 to $305 range. 
• July
  soybean oil range is now seen in a 26.00 to 28.50 range. 

 

Wheat

• US
  wheat futures traded lower basis Chicago, higher KC and lower MN.  The morning session opened in the opposite direction for KC and Chicago.  Lack of direction should be noted.  After the close USDA showed an increase in US wheat conditions.  Global weather
  is improving.
• Funds
  sold an estimated net 3,000 Chicago wheat contracts. 
• July
  Chicago wheat dropped below a $5.0550 support level. 
• The
  Black Sea region is slated to get rain this week, but eastern Ukraine and parts of southern Russia remain in question if those areas will see less frequent rainfall.  That should be monitored.  Eastern Europe will see scattered rainfall. Other areas of Europe
  may see limited precipitation.

 

Export
Developments.

• Japan
  bought 220 tons of feed barley and passed on feed wheat.  They were in for 80k feed wheat and 120k barley.  -SBS
• Japan
  seeks 112,109 tons of food wheat from the US, Canada and Australia on Thursday.
  
• Jordan
  seeks 120,000 tons of wheat on May 25 for October through November shipment. 
  
• Japan
  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 27.
• Syria
  looks to sell 100,000 tons of feed barley.  Offers are due June 23. 

 

Rice/Other

• The
  Philippines seeks 300,000 tons of rice on June 8. 
• South
  Korea plans to donate 50,000 tons of rice to Africa and the Middle East. 
  

 

Updated 5/21/20

• Chicago July is seen in a $5.00-$5.31 range
• KC July $4.40-$4.70
• MN July $5.05-$5.30