FI Evening Grain Comments 06/02/20

PDF Attached

 

Rice
hit a fresh 11-year high.  China bought at least three cargoes of US soybeans Monday for Q4 out of the Gulf and PNW.  Taiwan is in for corn and Jordan for wheat.  Prices below are NA. See attached last trade chain after the wheat section.

 

 

Weather

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 and is likely to occur.  Tropical Depression Three in the Bay of Campeche will become a tropical storm and should bring moisture to the U.S. lower Midwest next week. The moisture should be timely after net drying this week and help maintain moisture
abundance for long term crop development.

           
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 and very warm to hot temperatures over the next week will raise
concern over crop development and the region will need to be closely monitored. Some rain is possible in the driest areas during mid-week next week, but it may be light and sporadic. Northeastern China may be a little wetter than usual for a while slowing
some of its planting, but most crops in the region are suspected of being in good condition.

            India’s
monsoon is expected to perform well this year, although initial rainfall will be erratic over the next ten days. A small tropical cyclone will move through northern Maharashtra into western Madhya Pradesh today and Wednesday with very little negative impact.

            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. Canola in Canada’s Prairies has been planted in many areas, but rain is needed in parts of the central
and east to stimulate germination, emergence and improved establishment.

            Brazil’s
Safrinha corn crop is finishing favorably after rain fell in late May. Some production cut did occur earlier in the month because of dryness especially in eastern production areas.

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

           
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. Rain is needed in northwestern Europe and some of that may occur in the coming week to ten days.

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

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Dryness remains a worry in parts of southern and 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 dryness will exacerbate the situation. Timely rain should come along for this region during
the weekend and 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 a little while longer this week. Rain is expected later in the week and into next week. Crops elsewhere in Europe and the western CIS will experience a 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 has 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.

Source:
World Weather Inc. and FI

 

Seven-day
outlook:

 

Bloomberg
Ag Calendar

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

 

Corn.

·        
Corn futures
closed 1.0-3.0 cents higher (bear spreading) on higher soybeans. With July soybeans higher than November, soybean/corn spreading could be justified. The improvement in US corn conditions and improving US weather failed to send prices lower.   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. 

·        
FC Stone lowered their Brazil winter corn crop estimate to 71.4 million tons from 72.6 million last month. Total production was seen at 98.8 million tons, down 1.2 percent from their May estimate. 

·        
Funds bought an estimated net 2,000 corn. 

·        
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. 

·        
Soybean and Corn Advisor:

o  
2019/20 Brazil Corn Estimate Unchanged at 96.0 Million Tons

o  
2020 Argentina Corn Estimate Unchanged at 49.0 Million Tons

·        
A Bloomberg poll looks for weekly US ethanol production to be up 60,000 at 784,000 barrels (744-802 range) from the previous week and stocks to decrease 130,000 barrels to 23.176 million.

 

Corn
Export Developments

• Taiwan’s
  MFIG seeks up to 65,000 tons of corn (US, Brazil, Argentina or South Africa) on June 3 for Sep-Oct shipment.
  

 

 

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

• Follow
  through buying was seen in the soybean complex today after China bought at least three cargoes of US soybeans and US soybean planting pace of 75 percent as of Sunday came in 4 points below expectations.  Then USDA announced 132,000 tons of soybeans were sold
  to China for new-crop.  We thought soybean oil would be lower today after USDA reported soybean oil stocks at their highest level since April 2018.  Soybean oil held gains all day and July traded through key resistance levels.  Vegetable oil prices in general
  are higher. Argentina soybean oil reached $653/ton, a three-month high. India continues to support palm oil, up over 2% basis the futures today.  Lower crush estimates for SA are supporting the CBOT complex in general.  July soybeans ended 10.0 cents higher,
  July meal $0.60 higher and July soybean oil 34 points higher. 
• Funds
  bought an estimated net 10,000 soybeans, 1,000 soybean meal and 3,000 soybean oil. 
  
• USDA’s
  24-hour reporting system reported sales of 132,000 tons of new crop soybeans for delivery to China. Overnight we heard China was looking for new-crop. However, November soybeans weakened against the July, perhaps from a very good initial US soybean rating
  published by USDA and the BRL trading down to 5.1996 from 5.3633 yesterday.  We note that during the month of April, China and unknown sales amounted to 846,000 tons (old and new), and the price of July soybeans closed at $8.5525 on April 30, down 34.25 cents
  from March 31.  During the month of May, China and Unknown sales amounted to 1.882 million tons.  Today July ended at $8.5050.
  

 

 

• The
  US will see a drier bias in many areas over the coming week with temperatures warmer than usual.
  

·        
Brazil May soybean exports reached 15.5 million tons versus 10 million for May 2019. 

·        
India’s Indian Vegetable Oils Producers’ Association (IVPA) projected vegetable oil imports in June could rise to 1.14 million tons, up from an average of 865,000 tons during April-May.

·        
Malaysian palm
ended higher on expectations for May production of palm oil to decline from April. 

·        
Soybean and Corn Advisor:

o  
2019/20 Brazil Soybean Estimate Unchanged at 121.0 Million Tons

o  
2020 Argentina Soybean Estimate Unchanged at 50.0 Million Tons

·        
The European Union reported soybean import licenses since July 1 at 13.833 million tons, below 13.863 million tons a year ago. European Union soybean meal import licenses are running at 16.462 million tons
so far for 2019-20, above 16.302 million tons a year ago. EU palm oil import licenses are running at 5.246 million tons for 2019-20, down from 5.891 million tons a year ago, or down 11 percent.

·        
European Union rapeseed import licenses since July 1 were 5.594 million tons, up 50 percent from 3.911 million tons from the same period a year ago.

 

 

Oilseeds
Export Developments

• Under
  the USDA 24-hour reporting system, private exporters reported to the U.S. Department of Agriculture export sales of 132,000 tons of soybeans for delivery to China during the 2020-21 marketing year. 
  

• Today
  the USDA seeks 12,500 tons of packaged vegetable oil for July shipment. 
  
• 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. 
  

 

Renewable
diesel drives growth in 2019 biomass-based diesel imports

U.S.
imports of biomass-based diesel, which include biodiesel and renewable diesel, grew 26% in 2019 to more than 27,000 barrels per day (b/d), reversing three years of decline. Imports of biomass-based diesel increased in 2019 because of the increase in renewable
diesel imports from Singapore…

https://www.eia.gov/todayinenergy/detail.php?id=43935&src=email

 

 

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

• Wheat
  ended lower led by the KC contracts on a weather forecast calling for more rain this week across the Black Sea region and lower Paris wheat.  Crop concerns for Canada’s wheat crop also weighed in.  Parts of Manitoba saw frost lasting for more than 4 hours
  on May 30^th, according to the week Manitoba Crop Weather Report. 
  
• Funds
  sold an estimated net 5,000 SRW contracts. 
• Egypt’s
  bought 120,000 tons of Ukraine wheat at $210/ton for July 10-25 shipment.  
  
• Federal
  Customs Service data showed Russia exported 600,000 tons of wheat during May to bring season to date exports to 31.6 million tons. 
  
• ProAgro
  raised their Ukraine wheat crop to 26.65 million tons from 25.36 million and increased corn to 37.59MMT from 37.3MMT. 
  

·        
India started evacuating parts of the west coast as a cyclone approaches Mumbai.  Landfall is likely Wednesday afternoon. 

·        
Paris wheat ended down 2.25 euros or 1.2 percent at 184.25 ($206.70/ton). 

·        
The European Union granted export licenses for 285,000 tons of soft wheat exports, bringing cumulative 2019-20 soft wheat export commitments to 31.332 MMT, up from 19.239 million tons committed at this time
last year, a 63 percent increase.  Imports are down 49 percent from year ago at 3.822 million tons.

 

 

Export
Developments.

• Egypt
  bought 120,000 tons of Ukraine wheat for July 10-25 shipment at $210.00/ton.   
  
• Jordan’s
  state grains buyer seeks 120,000 tons of optional origin hard milling wheat on June 3.
• Syria
  looks to sell 100,000 tons of feed barley.  Offers are due June 23. 

 

Rice/Other

• CBOT
  rice hit a fresh 11 year high on lack of supplies across the US amid more and more people cooking from home. It’s very hard to find rice in grocery stores.
  
• 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