FI Evening Grain Comments 06/01/20

PDF attached

 

US
weather looks good this week with heat aiding corn.  Black Sea region will see more rain.  China asked state owned companies to halt purchases of US soybeans and pork, but China ended up buying US soybeans.  There was also talk China may cancel pork purchases. 
Many countries in Europe were on holiday. 

 

 

Weather

 

 

 

 

 

 

 

Source:
World Weather Inc.

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:  U.S.
crop weather should be mostly good this week with warmer temperatures and less rain occurring to spur on faster crop development while stimulating late season planting. Timely rainfall will become very important later in June.  A close watch on the tropics,
near the Yucatan Peninsula and Gulf of Campeche, is warranted this week where a tropical cyclone may evolve later this week and could move toward the United States.

           
China weather is a concern in some of the dry areas in east-central parts of the nation, although up until now the dryness has been great for promoting aggressive spring planting. Limited rainfall over the next ten days will raise concern over crop development
and the region will need to be closely monitored. Northeastern China may be a little wetter than usual for a while slowing some of its planting.

           
India’s monsoon is expected to perform well this year, although initial rainfall will be erratic over the next ten days.

           
Oil palm and coconut production in Southeast Asia looks to be advancing normally with little change likely.

           
Canola planting is moving along in Australia, but there is need for greater rainfall in many areas. There is plenty of time for the greater rain to fall, however.

           
Brazil’s Safrinha corn crop is finishing favorably after rain fell during the weekend before last, but some production cut did occur earlier this month because of dryness especially in eastern production areas.

           
Argentina’s harvest is moving along well as is South Africa’s harvest.

           
Most of Eastern Europe’s crop weather has improved with recent rainfall, although the precipitation came a little late to seriously turn around winter rapeseed production. Corn, sunseed and soybean planting should be advancing well with favorable emergence,
but warming is needed to stimulate better crop development from Eastern Europe into the western CIS.

           
Rapeseed production will be down in Western Europe because of poor weather last autumn and earlier this spring, but corn, soybean and sunseed planting and establishment will be largely dependent on weather in the next few weeks. Northern France, the U.K. and
northwestern Germany need some moisture already.

           
Overall, weather today is likely to have a mixed influence on market mentality.

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Frost
and freezes in eastern Canada’s Prairies and in a part of Ontario and Quebec, Canada during the weekend had no significant impact on coarse grain, oilseeds or canola. Dryness remains a worry in parts of eastern Saskatchewan and west-central Manitoba, although
rain is expected by this time next week. Western Alberta is still too wet and moving slowly in its spring planting.

           
U.S. northern Plains spring wheat planting and emergence should be advancing well, although parts of the region (mostly in North Dakota) are becoming too dry and this week’s heat and dryness will exacerbate the situation. Timely rain should come along for
this region next week.

           
U.S. hard red winter wheat production areas will be experience net drying this week, despite a few showers and thunderstorms because of very warm to hot temperatures. However, much of the crop has reproduced and is filling with crops in the south maturing.
The limited rainfall and heat will stress a few crops, but Nebraska and northern Kansas crops are most immature while having the best soil moisture. The bottom line to net drying is not expected to be very great on crop conditions or production, although maturation
will be rushed.

           
U.S. soft wheat conditions in the Midwest will improve with this week’s decreasing rain frequency and rising temperatures.  Dryness in the northwestern states remains a concern and weekend heat did not help the situation.

           
Northwestern Europe dryness will continue a concern for this week. Crops elsewhere in Europe and the western CIS will experience a more favorable mix of weather, although production will not be restored in areas that had inclement conditions last autumn and
earlier this spring to harm production.

           
China’s winter wheat crop is rated favorably, although drying now may be stressing a few of the more immature crops. Spring crops are favorably moist and expected to perform well.

           
India’s harvest should be complete and Australia’s planting of small grains as advanced well. There is still need for greater rain in many of Australia’s winter crop areas. Queensland, northern and western New South Wales and parts of South Australia and northern
Western Australia crop areas need more rain. South Africa and western Argentina also need more rain.

           
Overall, weather today will likely contribute a mixed influence on market mentality with a bullish bias.

Source:
World Weather Inc. and FI

 

Seven-day
outlook:

 

Bloomberg
Ag Calendar

MONDAY,
June 1:

• International
  Coffee Organization to hold virtual meeting of International Coffee Council, June 1-5
• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  crop progress — corn, soybean plantings, winter wheat conditions, 4pm
• International
  Cotton Advisory Committee releases monthly market balance outlook
• USDA
  soybean crush, DDGS production, corn for ethanol, 3pm
• Honduras
  and Costa Rica May Coffee Exports
• Malaysia
  palm oil export data for May 1-31
• Australia
  Commodity Index
• Ivory
  Coast cocoa arrivals
• Brazil
  soybean exports
• HOLIDAY:
  Germany, Italy, Belgium, New Zealand

TUESDAY,
June 2:

• U.S.
  Purdue Agriculture Sentiment, 9:30am
• New
  Zealand global dairy trade auction
• EU
  weekly grain, oilseed import and export data (delayed because of holiday)

WEDNESDAY,
June 3:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• China’s
  CNGOIC to publish monthly forecast on crop output, supply and demand
• EARNINGS:
  Tereos

THURSDAY,
June 4:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
• FAO
  world food price index, 4am
• Port
  of Rouen data on French grain exports
• New
  Zealand commodity price

FRIDAY,
June 5:

• 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
• Malaysia’s
  palm oil export data for June 1-5

Source:
Bloomberg and FI

 

USDA
inspections versus Reuters trade range                                            

Wheat      
499,353     versus  350000-600000           range

Corn         
1,128,091  versus  800000-1200000         range

Soybeans  
396,387     versus  350000-600000           range

 

 

 

GRAINS
INSPECTED AND/OR WEIGHED FOR EXPORT

                 
REPORTED IN WEEK ENDING MAY 28, 2020

                           
— METRIC TONS —

————————————————————————-

                                                  
CURRENT     PREVIOUS 

             ———–
WEEK ENDING ———-  MARKET YEAR  MARKET YEAR

 
GRAIN      05/28/2020  05/21/2020  05/30/2019    TO DATE     TO DATE  

 

BARLEY             
0           0         637       30,548       10,625 

CORN       
1,128,091   1,097,249     744,840   28,484,807   39,327,338 

FLAXSEED           
0           0           0          520          462 

MIXED              
0           0           0            0            0 

OATS               
0           0         499        3,343        3,491 

RYE                
0           0         100            0          200 

SORGHUM      
125,119     188,078      64,035    3,317,783    1,413,253 

SOYBEANS     
396,387     342,571     510,482   35,407,043   34,234,984 

SUNFLOWER          
0           0           0            0            0 

WHEAT        
499,353     464,857     593,137   24,895,770   24,795,126 

Total      
2,148,950   2,092,755   1,913,730   92,139,814   99,785,479 

————————————————————————-

CROP
MARKETING YEARS BEGIN JUNE 1 FOR WHEAT, RYE, OATS, BARLEY AND

FLAXSEED; 
SEPTEMBER 1 FOR CORN, SORGHUM, SOYBEANS AND SUNFLOWER SEEDS.

INCLUDES
WATERWAY SHIPMENTS TO CANADA.

 

Macros

US
ISM Manufacturing May: 43.1 (est 43.8; prev 41.5)

–
ISM New Orders May: 31.8 (prev 27.1)

–
ISM Prices Paid May: 40.8 (est 40.0; prev 35.3)

–
ISM Employment May: 32.1 (prev 27.5)

US
Construction Spending (M/M) Apr: -2.9% (est -7.0%; prev 0.9%)

 

Corn.

·        
Corn futures
ended lower on improving US weather and fears the Phase One trade deal between US and China could be in jeopardy. Temperatures will warm up to above normal this week across the Corn Belt this week which is what the corn crop needs for establishment and growth. 

·        
Funds were net sellers of 9,000 corn contracts on the session. 93 percent of the US corn crop had been planted. 

·        
USDA reported US corn conditions at 74 percent, up 4 points from the previous week, 3 points above an average trade guess and 3 points above average. 

·        
USDA US corn export inspections as of May 28, 2020 were 1,128,091 tons, within a range of trade expectations, above 1,097,249 tons previous week and compares to 744,840 tons year ago. Major countries included
Japan for 443,160 tons, Mexico for 226,930 tons, and Korea Rep for 136,964 tons.

 

USDA
NASS
reported the April corn for ethanol use at 245 million bushels during April, below 410 million during the month of March, and also well below 410 million during April 2019.  DDGS production dropped to 1.014 million short tons from 1.858 million year earlier. 
Sorghum use was about halved from a year ago. 

 

 

US
ethanol production in March was slightly above expectations. 

 

Corn
Export Developments

• None
  reported

 

Updated
5/28/20

• July
  corn is seen in a $3.10 and $3.50 range.  December lows could reach $2.90 if US weather cooperates. 
  

 

Soybean
complex

• US
  soybeans ended mixed. They started lower on news China
  asked state owned buyers to stop buying US soybeans and pork, then
  recovered after the trade learned China bought US soybeans over the weekend.  Soybean meal was moderately lower and soybean oil was up 24-32 points.  Soybean oil could shed value on Tuesday after USDA reported soybean oil stocks at their highest level since
  April 2018. 
• The
  USD traded sharply lower but recovered. 
• Funds
  were net sellers of 1,000 soybeans, 1,000 soymeal, bought 2,000 soybean oil on the session.
• USDA
  reported initial soybean conditions at 70 percent, 2 points above average.  75 percent of the soybeans have been planted. 
  
• China
  told state buyers to stop buying US soybeans and pork early on Monday, but we heard private crushers were inquiring for US soybeans out of the Gulf for September shipment Friday and Monday.  Meanwhile state crushers were price checking Brazil soybeans for
  September shipment.  China was thought to have bought 25-29 cargoes of soybeans last week of which about half were of US origin, according to AgriCensus.  There were no USDA 24-hour announcements on Monday but later in the day News outlets ran stories that
  they picked up 180,000 tons of US soybeans, which got traders excited. 
• Europe
  was on holiday and price action was choppy. 
• The
  US will see a drier bias in many areas over the coming week with temperatures warmer than usual.
  

·        
USDA US soybean export inspections as of May 28, 2020 were 396,387 tons, within a range of trade expectations, above 342,571 tons previous week and compares to 510,482 tons year ago. Major countries included
Egypt for 136,878 tons, Indonesia for 72,619 tons, and Japan for 64,903 tons.

• US
  soybean meal basis firmed at Decatur, Indiana and Mankato, MN. 
• APK-Inform
  reported Ukraine exported 4.148 MMT of sunflower oil since September, on track to surpass the entire 2018-19 crop year of 6.063 million tons. 
  
• Strategie
  Grains lowered their outlook for EU rapeseed production from 17.02 million tons to 16.68 million tons, a 1.5 percent decrease.  2019-20 production was 16.92 MMT and 19.97 MMT year before. 
  
• Bloomberg
  noted Brazil’s basis for the port of Paranagua in September rose 46% during May to $1.33 a bushel. 
  
• The
  Canada-China dispute is likely to continue after last week the Canadian court ruled against Huawei’s CFO, awaiting extradition from China. 
  
• The
  Canadian canola crush for April was 845,500 tons versus 881,400 tons in March and compares to 808,900 tons in April 2019.  August 2019 through April 2020 crush stands at 7.598 million tons, up from 6.892 million for the same period in 2018-19. 
  

·        
AmSpec: May palm exports were up 8.4 percent to 1.266 MMT versus 1.169 MMT previous months.  ITS up 7.0 percent to 1.256 MMT. 

• India
  was said to be looking for more palm oil from Malaysia after buying 200,000 tons last week. 
  

·        
Malaysian palm:
Export tax goes to zero percent this month.  Prices still near 2-month high. 

 

Oilseeds
Export Developments

• The
  CCC under the PL 480 program seeks 5,000 tons of vegetable oils in 4-liter cans for July-September shipment on June 3. 
  
• USDA
  seeks 12,500 tons of packaged vegetable oil on June 2 for July shipment. 
  

 

NASS
crush report

• USDA
  reported the April 2020 soybean crush at 183.4 million bushels, 0.4 bushel below trade expectations, below 192.1 million during March and above 171.5 million for April 2019.  The daily crush rate was 6.11 bushels per acre, second largest behind the record
  established during March of 6.20 million bushels per day.
• US
  soybean oil stocks at the end of April were reported at a very large 2.602 billion pounds, 190 million above trade expectations, 274 million above the previous month and 344 million above April 2019.  Last month US soybean oil stocks were near this level were
  April 2018 of 2.869 billion bushels.  The April soybean oil yield was 11.45, up from 11.46 pounds previous month.  Implied soybean oil use during April, even with the extra day, was much less than expected. 
  
• US
  soybean meal stocks at the end of April fell to 386,000 short tons from 415,000 short tons.  The meal yield was unchanged from the previous month at 47.03 pounds per bushel from the previous month and compares to 46.90 pounds a year ago. 
  

 

 

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 following Paris wheat and improving weather.  Rain will continue to impact many areas across Europe and the western CIS maintaining a favorable environment for crop development.
  
• USDA
  reported winter wheat conditions declined 3 points and initial spring wheat ratings were 80 percent, 7 points above average. 
  
• After
  the close Egypt announced they are in for wheat for July 10-25 shipment. 
  
• Funds
  were net sellers of 4,000 wheat contracts on the session.

·        
USDA US all-wheat export inspections as of May 28, 2020 were 499,353 tons, within a range of trade expectations, above 464,857 tons previous week and compares to 593,137 tons year ago. Major countries included
China Main for 189,001 tons, Philippines for 79,745 tons, and Nigeria for 38,502 tons.

• APK-Inform
  reported Ukraine exported 1.13 MMT of grain during the second half of May, down from 2.02 million tons for the first two weeks and brings crop-year to date grain exports to 52.7 million tons, up from 42.1 million tons in 2018-19. 
  
• SovEcon
  reported Russian wheat export prices for July at $202/ton fob, unchanged from the week earlier.  IKAR is at $200, up $1.00.
  
• India’s
  monsoon rain season was projected at 102 percent of the long-term average. 
  
• Paris
  December wheat futures ended down 1.50 euros at 188.75 euros.

 

Export
Developments.

• Syria
  looks to sell 100,000 tons of feed barley.  Offers are due June 23. 

 

Rice/Other

• Iraq
  said they have 190,000 tons of rice for its food program.  Annual consumption is around 1.0-1.25 million tons. 
  
• The
  Philippines seeks 300,000 tons of rice on June 8. 

 

Updated 5/28/20

• Chicago July is seen in a $5.00-$5.31 range
• KC July $4.50-$4.80
• MN July $5.10-$5.40