FW: FI Morning Grain Comments 05/28/20

PDF attached

 

Morning.
China approved the national security law. 

 

 

Weather

UNITED
STATES

• No
  general theme change occurred overnight, but the first week of the outlook was wetter from South Dakota into Iowa while less rain was suggested in parts of central Nebraska and from northern Illinois to Ohio
  
  • Most
    of the changes noted above occur during the middle part of next week
• Rain
  was reduced in western Canada’s Prairies and the northern U.S. Plains June 4-6
  • Some
    of this change was needed
• A
  boost in rainfall occurred from eastern New Mexico into the Texas Panhandle June 4-6
  • Some
    rain is possible, but the model may be a little too aggressive
• GFS
  moved the tropical cyclone from the north-central Gulf of Mexico on June 9 to a position near Jamaica
  
  • The
    cyclone is still too far out in the forecast to have much confidence, although the odds are very good that a tropical disturbance will evolve this weekend and next week near the Caribbean Coast of Central America
  • GFS
    brings the tropical cyclone to the central Gulf of Mexico by June 11
• GFS
  removed widespread rain from the Delta to the western Corn Belt June 10-11 due to the delayed landfall of the tropical cyclone in the Gulf of Mexico through the Delta and into the western Corn Belt during this period of time
  • This
    model run ends with the storm still in the Gulf of Mexico
• GFS
  reduced rain from South Dakota and southern North Dakota into Wisconsin June 7-9
  • Some
    of this reduction was needed
• GFS
  increased rainfall in portions of the lower Midwest
  • The
    change was needed, although not necessarily properly placed in the region; the previous model run was too dry in the Midwest

 

GFS
operational model and Ensemble take the ridge of high pressure that is expected over the Plains and western Corn Belt during mid-week next week and pushes it a little farther into the Midwest late next week and during the following weekend. The model dues
not return the ridge to the Plains as suggested yesterday. World Weather, Inc. believes the model run is still pushing the ridge too far to the east and that it should return the southern Plains while a quasi-zonal (west to east) flow of air occurs in the
northern Plains and northern Midwest during the latter part of the second week.  Confidence in the second week outlook is low because of the model inconsistency with the tropical cyclone. Further changes are likely.  For now, the expectation is that rainfall
this weekend and out for the following ten days will trend drier and warmer across the Midwest, Delta and Tennessee River Basin along with the central and southern Plains. Weather in the northwestern States, across the northern Plains into the northern Midwest
will be better mixed over the next two weeks with very warm and dry conditions next week to be followed by some rain and a little cooling in the June 6-11 period.

 

SOUTH
AMERICA

• No
  significant changes were noted in the first ten days of the outlook, although heavy rain in far southern Argentina was pushed farther to the south and reduced
  

 

EUROPE/BLACK
SEA

• GFS
  model continue to insist on scattered showers in northwestern Europe during mid-week next week
  • The
    moisture advertised is light, but there is some moisture for the U.K., France and a few areas east into Germany
  • The
    model is still considered to be too wet with 0.20 to 0.75 inch and locally more in France and the U.K.
    
• No
  change was noted for eastern Europe or the Black Sea region in the first week of the outlook
• GFS
  increased rainfall in western Europe June 4-6 while reducing it in central and eastern Europe
  • The
    precipitation was overdone, although some increase in rainfall may occur in southern France and northern Spain
• GFS
  reduced rain in the North Sea region and increased it in eastern France, Germany and northern Italy; rain was also reduced in the Iberian Peninsula
  • These
    changes were needed
• GFS
  increased rainfall in eastern Europe from the Balkan Countries to Belarus
  • Some
    of this increase was needed
• Rain
  was increased June 10-11 from the Balkan Countries into Belarus and reduced in northern Italy and areas north into eastern France and western Germany
  • Some
    of these changes were needed

 

The
bottom line remains as it has been. Northwestern Europe will have the biggest ongoing dryness problem over the next ten days to two weeks as advertised by the Europe and Canadian Models. Rain is expected in parts of southern Europe into the Black Sea region
with the second week of the outlook a little drier in the eastern half of the Black Sea region.  Some net drying is expected in northwestern Russia

 

RUSSIA
EASTERN NEW LANDS

• Little
  change was noted this morning for the eastern New Lands where scattered showers are expected in the coming first week of the outlook and temperatures will trend mild to cool
• The
  second week still generates periods of rain and temperatures are advertised to be mild to cool

 

The
bottom line is one of limited concern. Timely precipitation and seasonably mild to cool temperatures will impact the eastern New Lands minimizing concern over soil moisture, although the southeastern parts of the region will likely keep its low soil moisture
for a while in this first week of the outlook.

 

CHINA

Concern
continues to build over drying in China from Henan and Anhui along with some neighboring areas north through the central Yellow River Basin to western Inner Mongolia. This region does not seem to get much relief over the next ten days to two weeks. Net drying
is expected, and parts of the region are already getting too dry. Temperatures will be seasonably warm.

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Seven-day
outlook:

 

Bloomberg
Ag Calendar

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

 

 

 

 

Macros

 

 

Corn.

·        
Corn futures
were mixed earlier this morning on lower soybeans and higher wheat.  We see corn remaining in a two-sided trading range with a possibility for a break down if US weather remain very good.  Years US producers see rapid plantings there tends to be an expansion
in the corn area.  With 70 percent combined good/excellent, the US corn crop is looking up above 16 billion bushels, versus 13.663 billion for 2019. 

·        
July corn support is seen at $3.15. 

·        
A Bloomberg survey looks for US ethanol production to increase to 720,000 from 663,000 last week and stocks to decrease to 23.330 million from 23.626 million previous week. 

·        
China sold all of its 4 million tons of corn from state reserves.  This was the first auction of the season.  3.66 million tons of corn is from 2015.  Average price was 1,765 yuan per ton. 

·        
China’s Heilongjiang increased its corn crop planting area, to 14.37 million hectares, 33,333 hectares more than last year.

·        
USDA Export sales are delayed until Friday morning. 

 

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. 
  

 

 

 

Soybean
complex.

• Soybeans
  are lower, meal higher and soybean oil lower.  WTI was mixed as of 6:45 am CT. 
  
• COVID-19
  virus continues to threaten Brazil exports and meat industry. Yesterday Brazil reopened a port after a worker tested positive earlier this week.  The virus is not slowing down business.  China has been a buyer of Brazilian Q4 soybeans this week and that is
  not sitting well with US soybean bull traders.  At least ten cargoes traded hands this week. 
  
• Ukraine
  imported 20,000 tons of Brazilian soybeans, first import for the commodity in years, according to APK-Inform.  2020 plantings are expected to decline to 1.4 million hectares from 1.6 million in 2019.  2019 soybean production of 3.7 million tons was down 17
  percent from previous year.
• Rotterdam
  vegetable oil prices were mixed, and meal 1-4 euros lower from the previous session.
  
• Offshore
  values this morning were leading CBOT soybean oil 46 points lower and meal $0.20 higher. 
  

·        
China

·        
China cash crush margins as of this morning, using our calculation, were 87 cents per bushel (87 previous session) and compares to 68 cents a week ago and 100 cents around this time last year. 
Early
April crush margins were over $2.00.

·        
Malaysian palm:

 

Oilseeds
Export Developments

• USDA
  seeks 12,500 tons of packaged vegetable oil on June 2 for July shipment. 
  

 

Wheat

• US
  wheat futures are higher on short covering and lower USD. 
• Paris
  December wheat futures were down 0.25 euro early this morning at 188.50 euros.
• A
  FC Stone survey estimated the Russian wheat crop at 76.4 million tons (75-81 range), up from 73.6 million tons last year.
  
• Western
  Australia received enough rain last week to boost production. 
• India
  is battling locusts in 4 states by applying chemicals. 
• India
  is set to see its annual monsoon rains arrive near on time around June 1, rather than previous forecast of June 5. 
  

 

Export
Developments.

• Japan bought 112,109 tons of food wheat from the US, Canada and Australia.
  
• 3 participants: Jordan seeks 120,000 tons of wheat for October through November shipment. 
  
• 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.