FI Morning Grain Comments

PDF attached

 

Morning. 
FI export sales estimates are attached.  Soybean complex continues to gain on strength in global vegetable oils, US export demand for meal and China buying of US soybeans.  The USD is weaker.  BRL continues to rally. Rains are improving in southern France.

 

 

 

Weather

UNITED
STATES

• No
  general theme changes were noted overnight
  • Tropical
    Storm Cristobal will reach the central Louisiana coast Sunday and it moves from there into Missouri and Illinois during mid-week next week as a mid-latitude frontal system moves across the Midwest enhancing rainfall
  • Cooler
    air follows the storm and frontal system into the eastern U.S. briefly during the second half of next week with becoming more limited once again
  • Temperatures
    are very warm to hot into this weekend in the Plains and warmer than usual in the Midwest and then the cooling occurs from the northern Plains into the Midwest while warm weather is still prevailing in the southwestern Plains
• The
  06z GFS model run shifted some of its western Corn Belt rainfall slightly to the east as Tropical Storm Cristobal’s path was shifted a little to the right of its previous advertised track

 

The
bottom line remains quite favorable for crops in the Midwest where a good mix of rain, sunshine, warm and cool weather is expected over the next two weeks. A mix of rain and sunshine is also expected in the Delta and southeastern states with the Delta getting
a little more rain from the tropical storm making it wetter biased relative to that of the interior southeastern states where net drying may occur, despite some showers. The southern Plains will continue drier biased (especially in the southwest) during the
coming ten days along with much of the southwestern United States and in some of the valleys in the Pacific Northwest. The northern Plains will experience a good mix of rain while a part of Canada’s western Prairies will become a little too wet.

 

SOUTH
AMERICA

• Not
  much change occurred in Argentina or Brazil weather overnight

 

EUROPE/BLACK
SEA

• Net
  drying is still expected in southeastern Ukraine and parts of Russia’s Southern Region over the next ten days
  
• Temperatures
  will trend a little warmer especially in the second week of the outlook when drying is expected to become more significant
• Western
  and central Europe will experience frequent showers and thunderstorms during the next ten days along with northwestern Russia and northwestern Ukraine where soil and crop conditions will either remain good or improve
• Temperatures
  may be a little cooler than usual in parts of northwestern and central Europe

 

The
change toward drier weather in the black Sea region was a needed change and will prove beneficial for those areas that have seen significant rain recently. Portions of southeastern Europe and the western CIS have been cooler than usual long enough that summer
crop development has not likely advanced very well and this period of warmer and drier weather (especially next week) will stimulate more aggressive development. The need for rain is expected to rise for the second half of this month in some of these areas
where soil moisture is a little light, like southeastern Ukraine and parts of Russia’s Southern Region. These drier areas will be closely monitored as time moves along to make sure that timely rain returns before the region gets too dry.

 

EASTERN
CIS NEW LANDS

• Today’s
  ten-day outlook maps are still limiting rainfall from the Ural Mountains east toward West Siberia, although some showers are expected
  • The
    outlook did not change much overnight
• Temperatures
  are advertised to be seasonable

 

There
is some ongoing concern about soil moisture in southern portions of the eastern New Lands. The region continues to dry down and the outlook does not provide a significant amount of rainfall for a while. Crop moisture stress could raise production concerns
later this summer if the recent warm and dry trend prevails too long. The driest areas have been mostly near the Kazakhstan border from eastern portions of Russia’s Southern region through southern portions of some important spring wheat and sunseed areas
in the eastern New Lands.

 

CHINA

• Scattered
  showers and thunderstorms are still advertised for the North China Plain and Yellow River Basin during mid-week next week
  • The
    precipitation is advertised to be erratic with the 06z GFS model run wetter today from Shaanxi and Shanxi into parts of Henan for early next week relative to the 00z model run; Shandong , northern Jiangsu and northeastern Henan do not get much moisture through
    this time next week
  • Canadian
    model run is also not as generous with rainfall in the dry areas of Henan, Shandong, northern Anhui, northern Jiangsu or Hebei in this first week of the outlook.
    
  • The
    European model run is a good compromise between the GFS and Canadian runs with “some” scattered showers reaching the driest areas
    
• A
  second wave of scattered showers moves through China’s driest areas during the latter part of next week in the Yellow River Basin and parts of the North China Plain adding a little more relief for the driest areas
  • World
    Weather, Inc. is not convinced that the rainfall expected next week will be good enough for a full restoration in soil moisture, but some short term benefit to crops and field conditions will be possible
    
• Not
  much follow up rain occurs in the dry region suggesting  the area from Henan, northern Anhui and northwestern Jiangsu to western Inner Mongolia may experience a return of dryness in the June 13-17 period
• Temperatures
  are still advertised to be warmer than usual in most of the dry biased region

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Seven-day
outlook:

 

Bloomberg
Ag Calendar

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

 

 

 

 

Macros

US
ADP Employment Change May: -2760K (est -9000K; prev -20236K)

;
prevR -19557K; prev -20236K)

 

 

 

Corn.

·        
Corn futures
eased on good US weather prospects. Heat followed by rain  later this week for the US Midwest is seen ideal for early development. 

·        
CBOT corn open interest was up 15,663 contracts on Tuesday.  Yesterday funds bought 2,000 lots.  Corn OI is up about 53,200 contracts since last Tuesday.

·        
Newswires are collecting information for the USDA June S&D update.  

·        
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. 

·        
USDA’s Broiler Hatchery Report will be out after the close. 

·        
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 bought 65,000 tons of optional origin corn (US, Brazil, Argentina or South Africa) for Sep shipment at 124.57 cents over the December CBOT contract.
  

• Syria
  will retender for 50,000 tons of soymeal and 50,000 tons of corn on June 24 for delivery within four months of contract.

 

 

Soybean
complex.

• Follow
  through buying was again seen in the soybean complex today as Chinese private buyers turn to cheaper US soybeans.  We heard late Tuesday a China state buyer bought one cargo of Brazilian soybeans for October shipment and two September US cargoes were purchased
  by private buyers.
• The
  BRL was up 1.6% against the USD at the time this was written at 5.1190.

• The
  July soybean oil contract traded up to 24.14, its April high. If it breaks above that level today, it will trade at early March levels and look technically bullish. 
  
• CNGOIC
  estimated China 2019-20 soybean imports at 91MMT, up 1MMT from previous and compares to 82.5MMT in 2018-19.  2020-21 was estimated at 92MMT. 
  
• The
  US will see a drier bias in many areas over the coming week with temperatures warmer than usual.
  
• Rotterdam
  values this morning showed soybean oil up 10 euros, rapeseed oil up 5-10, and soybean meal when imported from South America mixed. 
  
• Offshore
  values this morning were leading CBOT soybean oil 13 points higher and meal $0.30 lower. 
  

·        
China

·        
China cash crush margins as of this morning, using our calculation, were 64 cents per bushel (76 previous session) and compares to 67 cents a week ago and 79 cents around this time last year.

·        
Malaysian palm:
2-month high. Smaller than expected May production estimates.

·        
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

• Syria
  will retender for 50,000 tons of soymeal and 50,000 tons of corn on June 24 for delivery within four months of contract.
• Under
  the 24-hour announcement system private exporters sold 186,000 tons of soybeans to unknown, of which 66,000 tons for old crop and 120,000 tons for new crop. 
  
• Today
  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. 
  

 

Wheat

• Wheat
  traded higher after being down over the past two days.  Short-term charts still indicate an upward trend. The recent rise in Russian local wheat prices to a record high has slowed export interest and this might be helping US wheat futures. 
  
• Paris
  December wheat futures were up 0.50 euro early this morning at 187.25 euros.

·        
Rabobank: Australia wheat production 26MMT

·        
Kazakhstan’s AgMin expects to harvest 18.0-18.5 million tons of grain this year and export 7.0-7.5 million tons.

·        
APK-Inform reported Ukraine export wheat prices are up $3-$4 per ton over the past week.  Milling wheat from the new 2020 harvest was quoted at $172-174 per ton CPT (Carriage Paid To) in small Ukrainian Black Sea ports compared with around
$168-170 a week earlier.

·        
Southern France will see additional rain today. 

·        
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.

• Japan received no offers for feed wheat and feed barley. They
  were in for 80k wheat and 100k barley for arrival by November 26.  They are in for the same amount on June 10. 
  
• 4 participants: Jordan’s state grains buyer seeks 120,000 tons
  of optional origin hard milling wheat on June 3.
• Indonesia millers bought 35,000 tons of Black Sea wheat for around
  $225 a ton C&F for August shipment.
• The Philippines bought 60,000 tons of feed wheat last week at
  around $215 a ton C&F for September shipment.
• Reuters: Black Sea wheat prices were quoted at around $230 a
  ton, C&F to Asia, up from $225 a ton last week.
• Yesterday Egypt bought 120,000 tons of Ukraine wheat for July
  10-25 shipment at $210.00/ton.   
• Syria looks to sell 100,000 tons of feed barley.  Offers are
  due June 23. 

 

Rice/Other

• CBOT rice hit another 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.