FW: FI Morning Grain Comments 06/01/20

PDF attached

 

Morning.
China asked state owned companies to halt purchases of US soybeans and pork.  There was also talk China may cancel pork purchases.  Many countries in Europe are on holiday.  US protests over the weekend have shut down many business centers across the country. 
US weather looks good this week.  Black Sea region will see more rain. 

 

 

 

Weather

 

UNITED
STATES

• Drier
  biased conditions are expected in many areas over the coming week with temperatures warmer than usual
  • Totally
    dry weather is unlikely, but many areas will experience net drying
• A
  possible tropical cyclone may evolve from near the Yucatan Peninsula and move northward toward the U.S. later this week and during the weekend
  • Today’s
    three global models favor Texas landfall next week, but the 00z  GFS Ensemble favors the southeastern U.S.
    
  • There
    is limited confidence in today’s solution, although with more agreement in the forecast models that may be changing; however, until the storm actually evolves predicting where it will go will still be a difficult challenge
  • There
    is potential that if the tropical cyclone moves into Texas the moisture from that system will feed up into the Midwest to help enhance rainfall next week
• Next
  week’s weather will also trend a little cooler in the U.S. for a little while

 

EUROPE/BLACK
SEA REGION

• Rain
  will continue to impact many areas across Europe and the western CIS maintaining a favorable environment for crop development
  • There
    has been a little too much cool air over eastern Europe and the western CIS recently and crops need more sunny and warm weather
• Northwestern
  Europe is still advertised to receive some showers this week, but the amount of rain that falls in northwestern France and the U.K. will be limited, some relief to dryness is expected. Northwestern France may be least likely to get rain for a while

 

EASTERN
RUSSIA NEW LANDS

• Showers
  will be limited and temperatures mild during the next ten days maintaining a greater need for rainfall in some of the driest sunseed and spring wheat areas near the northeastern Kazakhstan border
  • The
    situation is not a crisis, but if temperatures were to suddenly trend warmer than usual it would not take long for moisture stress to have a negative impact on some crops in the region
  • A
    little rainfall is expected this week along with some colder temperatures for a little while late this week and into the weekend; that should translate into some temporary improvement, but more rain will be needed and is not likely to come for a while

 

CHINA

• Net
  drying is still expected from areas between the Yellow and Yangtze Rivers northwest across the Central Yellow River Basin to western Inner Mongolia for another week
  • Temperatures
    will also be quite warm to hot in this region and additional drying will further stress unirrigated crops
• Rain
  is possible during the middle part of next week that will prove to be extremely important in perking up crop and soil conditions for a little while. The drier bias is expected to resume again later in the week next week and into the following weekend
• Southern
  China will remain excessively wet this week after some flooding rain occurred during the weekend
• Northeast
  China will continue to experience periodic showers and seasonable temperatures
  

 

SOUTH
AMERICA

• No
  big changes from Sunday’s forecasts were noted overnight, although a little more rain occurs a little farther to the northeast from southern Mato Grosso to Goias and Sao Paulo in today’s model run for later this week and that was overdone.
  

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

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

 

 

 

 

 

Commitment
of Traders

 

Traditional
funds in corn posted a record net short position as of May 26 at 220,075 contracts.  Managed money funds for corn were net short 276,203 contracts, short of the record 322,215 contracts April 2019. 

 

 

 

 

 

 

As
of Friday:

 

 

 

Macros

 

 

Corn.

·        
Corn futures
are lower on fears the Phase One trade deal between US and China could be in jeopardy.

• CFTC
  Commitment of Traders Report showed that corn speculators increased their net short position by 22,355 contracts to 312,459 for the week ending May 26.

 

 

US
ethanol production in March was slightly above expectations. 

 

Corn
Export Developments

• None
  reported

 

Soybean
complex.

• China
  asked state owned buyers to stop buying US soybeans and pork.  Soybeans are lower on this headline.  The USD is lower. 
  
• The
  US will see a drier bias in many areas over the coming week with temperatures warmer than usual.
  
• CFTC
  Commitment of Traders Report revealed that soybean speculators increased their net short position by 9,677 contracts to 14,060 for the week ending May 26.
• Reuters
  estimates differ from Bloomberg.  Reuters shows the USDA Fats & Oils report is expected to show an April soybean crush of 181.5 million bushels and end-of-month soyoil stocks of 2.532 billion lbs. If realized, it would be a record crush for the month of April
  and a two-year high in oil stocks.  Bloomberg estimates are below.
• 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. 
  
• Last
  we heard crude oil basis levels were a little firmer at the end of last week, with IL nominally 25 under, the East nominally option, and the West nominally 75 under. Gulf increased 30 points from the previous week to 200 over.  Brazil degummed was last 130
  over and Argentina 100 over. 
• India
  was said to be looking for more palm oil from Malaysia after buying 200,000 tons last week. 
  
• 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. 
  
• No
  Rotterdam quotes this morning due to holiday across parts of the EU. 
• Offshore
  values this morning were leading CBOT soybean oil 24 points higher and meal $2.40 higher. 
  

·        
China

·        
China cash crush margins as of this morning, using our calculation, were 67 cents per bushel and compares to 67 cents a week ago and 79 cents around this time last year. 

·        
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. 

·        
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. 
  

 

Uses
Bloomberg estimates.  Reuters noted at the bottom of the table. 

 

 

Wheat

• US
  wheat futures are 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.
  
• CFTC
  Commitment of Traders Report showed that wheat speculators decreased their net short position by 10,756 contracts to 43,317 for the week ending May 26.
• 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 were down 2.25 euro early this morning at 188.00 euros.

 

Export
Developments.

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

 

 

Taken from a note from the US Wheat Associates…

 

HARD RED WINTER

The 2020 HRW wheat harvest is nearly complete in southern and central Texas with 29% harvested for the state. Intermittent
showers have slowed harvest progress in north central Texas and southern Oklahoma, but warmer, drier weather is expected next week. Early sample cutting has indicated good quality with average yields and test weights. USDA estimates 54% of the winter wheat
crop is in good to excellent condition. 

The HRW wheat planted area forecast is estimated to be 21.7 million acres (8.79 million hectares), down from last year’s
22.4 million acres (9.07 million hectares). USDA estimates total HRW production at 733 million bu or about 19.94 million metric tons (MMT), down 12% from last year. The industry anticipates the first HRW data will be available in mid-June.

 

SOFT RED WINTER

The 2020 SRW wheat harvest has had a slow start due to a cool, wet spring. The entire sampling region experienced rainy
conditions this week, which are expected to continue through the weekend, but combines were able to begin rolling in Alabama, with 21% harvested. 

USDA estimated that farmers planted 5.64 million acres (2.2 million hectares) of SRW last fall, an 8% increase over
last year. As of May 19, USDA estimates a crop of 297 million bu, an increase of 24% over last year with 74% of the crop in good to excellent condition. The first samples from Alabama are expected in the lab next week.

https://ourstory.uswheat.org/

 

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.