FW: FI Morning Grain Comments 05/01/19

PDF attached

 

Weather

・         6-10 day was wetter for the southern Midwest.

・         Light to heavy rain will continue to impact the US Midwest through second half of May.  The first week will be wetter than that of the second week. Wettest areas will be from eastern KS to southern WI, central OK and central TX.  Southeastern states will see best fieldwork.

・         China’s Yangtze River Basin needs rain. Conditions improved for North China Plains.

・         Argentina will see favorable conditions through May 10. Brazil is favorable with mix of rain & sunshine. 

・         Australia will see rain from South Australia through NSW, parts of Queensland and Victoria. W.A. C dry.

・         EU: pockets of dryness will add crop stress, but cooler temperatures may slow damage, is any.

・         Western CIS will see mild to warm temps with on and off rain events.

Source: World Weather Inc. and FI

 

Source: World Weather Inc. and FI

 

Source: World Weather Inc. and FI

 

Bloomberg Ag Calendar

TUESDAY, APRIL 30:

• African swine fever forum in Ottawa. Authorities and industry leaders discuss the threat of ASF to the Americas
• U.S. agricultural prices for March
• Cargo surveyors AmSpec, Intertek and SGS release their respective data on Malaysia’s April palm oil exports
• Polish statistics office to issue assessment of 2019 winter crops
• Holiday in Japan

WEDNESDAY, MAY 1:

• Labor Day holiday in many parts of world, including China, Russia, France, India, Brazil, Argentina, Indonesia, Malaysia, Singapore, Thailand. Japan also on holiday
• EIA weekly U.S. ethanol inventories, output, 10:30am
• USDA soybean crush and corn for ethanol, 3pm
• Food & Ag symposium in Omaha, Nebraska, day 1

THURSDAY, MAY 2:

• USDA weekly crop net-export sales for corn, soybeans, wheat, 8:30am
• Food & Ag symposium in Omaha, Nebraska, day 2
• Brazil soybean, coffee, sugar and corn exports for April, 2:20pm
• Port of Rouen data on French grain exports
• Bloomberg weekly survey of analysts’ expectations on grain, sugar prices
• Holiday in Japan, China

FRIDAY, MAY 3:

• FranceAgriMer weekly update on French crop conditions
• ICE Futures Europe commitments of traders weekly report on coffee, cocoa, sugar positions, ~1pm (~6pm London)
• CFTC commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• Holiday in Japan, China

Source: Bloomberg and FI

 

 

 

 

Macros

・         US ADP Employment Change Apr: 275K (exp 180K; prev 129K)

・         USD 32 points lower (7:37 am CT)

・         US DOW +95

・         Crude -$.41

・         Gold -$4.10

 

Corn.

・         US corn futures are higher on ongoing US corn planting delays.  

・         CBOT corn prices averaged about 3.58 in April, down from 3.71 in February.

・         Baltic Dry Index was up 20 points to 1,031, a two percent increase.

• USDA FAS Attaché on Argentina grain https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Grain%20and%20Feed%20Annual_Buenos%20Aires_Argentina_4-25-2019.pdf
• MPI: U of I college of AG presented a paper yesterday suggesting excessive early rains can cause equal yield losses as compared with extreme drought. "The study found that during some years, excessive rainfall reduced U.S. corn yield by as much as 34% relative to the expected yield. Data suggest that drought and excessive heat caused a yield loss of up to 37% during some years. The findings are published in the journal Global Change Biology.". https://news.illinois.edu/view/6367/781555#image-2 Its worth a read.
• A Bloomberg survey looks for this week’s US ethanol production to end up near 1.036 million barrels per day and stocks at 22.868 million barrels.

・         February US ethanol production was a little higher than our estimate.  At 28.576 million barrels, it below 31.601 for January and 29.519 million for February 2018.  We are using 5.550 billion bushels for US corn for ethanol use, unchanged from previous, and same as USDA. 2017-18 use was 5.605 billion.

 

 

Export Developments

• India’s MMTC seeks an unspecified amount of corn on May 8, valid until May 26 for shipment until May 29 and June 20.

 

 

 

Soybean complex.

• Soybean complex is under light pressure this morning on ongoing US corn planting delay concerns.
• USD is slightly lower. There is no lead from outside ag markets as many countries are on holiday.

・         CBOT soybean prices averaged about 8.83 in April, down from 9.02 in February.

・         No offshore values this morning as markets overseas are closed.

・         Our China cash crush margin calculation were last negative 62 cents and compares to negative 62 cents late last week and positive 110 cents year ago.

• China markets: CLOSED

・         Malaysian palm markets: CLOSED

• Malaysia will not impose its export duty on crude palm oil until December 31 and leave it at zero percent.
• India increased its base import price on crude palm oil to $545/ton from $540/ton.  They have a 40 percent import duty on crude palm oil. 
• Argentina Crop Exporters Sold $1.9b on FX Market in April (Bloomberg)
• USDA FAS Attaché on China ag policy https://gain.fas.usda.gov/Recent%20GAIN%20Publications/China’s%202019%20No.1%20Agricultural%20Document%20Doubles%20Down_Beijing_China%20-%20Peoples%20Republic%20of_3-21-2019.pdf
• We are hearing several crush plants this week are shut down from routine maintenance.
• White House Says Ready to Walk If No China Trade Deal Soon https://www.bloomberg.com/news/articles/2019-04-30/us-china-trade-deal
• White House chief of staff Mick Mulvaney believe the trade talks between the US and China could conclude in two weeks. https://www.reuters.com/article/us-milken-conference-mulvaney/u-s-china-trade-talks-will-likely-conclude-in-next-two-weeks-mulvaney-idUSKCN1S61ZD
• A Bloomberg survey calls for the March US crush trade average at 179.8, compares to 182.2 in March 2018.  Reuters has 179.9.  Traders are looking for about a 150-million-pound increase in soybean oil stocks.  We think it will be much higher.

• EIA reported February US biodiesel feedstock use at 985 million pounds, less than expected, but up from 953 million last year and down from 1.114 billion in January 2019.  Soybean oil use was 560 million pounds, only 4 million pounds above our estimate, up from 496 million in February 2018 and down from 623 million in January 2019.
• We left our 8.300 billion pounds soybean oil for biodiesel use in 2018-19 unchanged from previous. This is 50 million pounds below USDA and compares to 7.134 billion used in 2017-18.
• US production of biodiesel was 131 million gallons in February 2019, 13 million gallons lower than production in January 2019.
• Us consumption of biodiesel has been on the decline over the past two years. Exports are helping offset the rise in production, but remember, the US basically cut off Argentina imports. 

 

 

Export Developments

• None reported

 

Wheat

・         US wheat futures are higher on short covering.  New contract lows were established on Tuesday.

・         The US 2019 winter wheat crop tour started, and yields are looking better than last year for Kansas. 

• Bloomberg: The first day of the KS wheat tour suggests record yields in northwest KS. “Winter wheat yield potential in northwest Kansas was estimated at 46.9 bu/acre, according to results from the first day of the Wheat Quality Council’s annual crop tour. * That compares to the tour’s findings last year of 38.2 bu/acre and is the highest since 47.1 bu/acre in 2016 * Crop scouts sampled 240 fields in Kansas * In Nebraska, winter wheat yields were estimated at 44 bu/acre, up from 43 last year”. –

・         CBOT SRW wheat prices averaged about 4.51 in April, down from 4.57 in February.

・         On Tuesday, May 7, StatsCan will release Canadian crop stocks.

 

Export Developments.

・         Results awaited: Ethiopia seeks 600,000 tons of wheat on April 30.

 

Rice/Other

• None reported