by ADMIS Research Team
Overnight trade has SRW down roughly 3 cents, HRW down 4; HRS Wheat down 3, Corn is down 1 cents; Soybeans down 1, Soymeal mixed/steady, and Soyoil up 10 points.
Chinese Ag futures (Sep) settled unchanged in Soybeans, up 3 yuan in Corn, down 2 in Soymeal, up 16 in Soyoil, and down 2 in Palm Oil.
Malaysian palm oil prices were up 12 ringgit at 2,006 (basis July) at midsession on ideas of slower May output but, higher April stocks caps gains.
U.S. Weather Forecast
A ridge of high pressure is still likely to build into the Hard Red Winter Wheat and Corn Belt regions Sunday into next Tuesday causing above average temperatures and drier-biased conditions
The Northern Plains will be near the northern edge of the ridge where more shower and thunderstorm activity will occur; the ridge will likely break down May 20 – 23 which will likely lead to heavier rain and some severe weather in the Hard Red Winter Wheat Region and central and northwestern parts of the Corn Belt.
The southwestern Hard Red Winter Wheat Region still need more rainfall; last night’s GFS model run and midday GFS model run both showed significant rain in this part of the region in the second week of the outlook; some erratic showers and thunderstorms will occur in the Texas and Oklahoma Panhandles and southwestern Kansas with locally meaningful rain in the next two weeks; however, the ridge early next week will cause faster drying rates
South America Weather Forecast
A round of beneficial rain will occur in Mato Grosso do Sul, Parana, Sao Paulo, and southwestern Mato Grosso, Brazil tonight through Thursday; the rain will be good for some improvement of soil moisture for Safrinha corn
Black Sea/Europe region
Confidence is still high that rainfall will be greatest in this first ten days of the outlook (through May 22) from Spain and France to northern and central Ukraine and parts of Western Russia while net drying occurs to the north and south; the drying areas will include the North and Baltic Sea regions as well as areas from southern parts of the Balkan region through southern Ukraine to Russia’s Southern region; any rain that occurs in these areas will not likely be significant enough to make much difference to crop or field conditions
Temperatures in this first week of the outlook will be cooler biased in the northern and eastern parts of Europe into the western CIS; temperatures will trend a little warmer in the following week especially in the southwestern CIS
The player sheet had funds net sellers of 2,000 contracts of SRW Wheat; net bought 15,000 Corn; net sold 1,000 Soybeans; net bought 2,000 lots of Soymeal, and; net sold 2,000 Soyoil.
We estimate Managed Money net short 2,000 contracts of SRW Wheat; net short 170,000 Corn; net long 25,000 Soybeans; net short 10,000 lots of Soymeal, and; net short 7,000 Soyoil.
Preliminary Open Interest saw SRW Wheat futures up roughly 7,300 contracts; HRW Wheat down 1,600; Corn up 24,600; Soybeans up 6,800 contracts; Soymeal up 4,700 lots, and; Soyoil up 3,300.
Deliveries were 20 Soymeal; 121 Soyoil; 7 Rice;
ZERO Corn; 1 HRW Wheat; ZERO Oats;
1 Soybean, and; 3 SRW.
There were changes in registrations (SRW Wheat up 3; Corn down 7)—Registrations total 16 contracts for SRW Wheat; ZERO Oats; Corn ZERO; Soybeans 221; Soyoil 3,495 lots; Soymeal 547; Rice 233; HRW Wheat 17, and; HRS Wheat 488 contracts.
TODAY—WEEKLY ETHANOL STATS—
Tender Activity—Algeria bought 600,000t optional-origin wheat—Jordan passed on 120,000t optional-origin wheat—S. Korea bought 67,000t optional-origin feed wheat—
U.S. corn supplies will rise to their highest in 33 years due to massive plantings and what is expected to be a record crop – a bounty so big that it will outweigh export demand and increased ethanol usage as the biofuel sector recovers from the impact of the coronavirus pandemic, the U.S. government said; the U.S. Agriculture Department, in its first forecast for the 2020/21 marketing year based on its March plantings outlook of 97 million acres, pegged corn stocks at a massive 3.318 billion bushels; if realized, that will be the fourth biggest ever and the largest stockpile since the 1987/88 marketing year.
Some farmers are shifting acres from corn to soybeans this year, a reversal that reflects the coronavirus pandemic’s broad impact on demand for many agricultural products; U.S. farmers grow corn and soybeans to feed people and livestock, and corn for the same reasons as well as to make ethanol; demand for ethanol has evaporated as energy prices have plummeted, with people staying home around the world; a corn byproduct of ethanol production is also a top livestock feed, prompting some hog-and-cattle farmers to buy more soybeans instead
—As a result, some farmers who had favored corn in recent years after the trade war with China curbed soybean exports are switching back; the Department of Agriculture said Tuesday that it expects higher export demand for soybeans this year and for U.S. exports of the crop to rise by 375 million bushels to over two billion bushels.
The USDA says corn used for ethanol and red meat and poultry production are expected to increase in 2020/2021 from 2019/2020 Covid-19-reduced levels
— USDA says corn used for ethanol should increase based on expectations of a rebound in US motor gasoline consumption
—For red meat and poultry, total production is projected to be above 2020 as the sector continues to recover from the effect of Covid-19; for 2020, the total red meat and poultry production forecast is reduced from last month as the sector adjusts to Covid-19 and economic uncertainty; while beef and pork carcasses are heavier, production has been slowed
—Broiler and turkey production are lowered from last month as producers respond to weaker demand and adjustments to the pace of slaughter due to Covid-19, USDA says, and egg production for 2020 is also reduced from last month
USDA NASS to Re-Survey North Dakota Operators with Previously Unharvested Corn and Soybeans
In May, USDA’s National Agricultural Statistics Service (NASS) will contact survey respondents in North Dakota who previously reported unharvested corn and/or soybean acreage. If the newly collected data justifies any changes, NASS will update the Jan. 10 estimates in the June 11 Crop Production report. Stocks estimates are also subject to review since unharvested production is included in the estimate of on-farm stocks.
When NASS surveyed producers in December for the Crop Production 2019 Summary, there was significant unharvested acreage of corn in Michigan, Minnesota, North Dakota, South Dakota, and Wisconsin; and unharvested soybean acreage in Michigan, North Dakota, and Wisconsin. The unharvested area and expected production were included in the totals released on Jan. 10.
NASS announced plans to re-survey producers in January; however, due to the uncertainty of when producers would be able to complete harvest, specific dates were not available. NASS contacted operators in Michigan, Minnesota, South Dakota, and Wisconsin in April and published updates in the May 12 Crop Production report. Because there was significant acreage still standing for harvest in North Dakota, NASS waited until now to re-contact producers there.
Manitoba crop report
2019 overwintered crops harvest has progressed, where crop value remains; stubble burning has occurred in all regions to manage excess residue; field pea, spring wheat, barley, favabean and grain corn have had seeding progress in all regions; canola and sunflower planting has begun in the Northwest and Eastern regions.
China is committed to its Phase 1 trade deal with the United States and is working towards meeting its promise to boost U.S. purchases, even though the pace of buying has been restrained by the coronavirus outbreak; under the Phase 1 deal signed in January, Beijing pledged to buy at least $200 billion in additional U.S. goods and services over two years and Washington agreed to roll back tariffs in stages on Chinese goods; but U.S. President Donald Trump has threatened to terminate the deal if China fails to meet its purchase commitments; China’s April imports of U.S. goods slumped 11.1% in dollar terms from a year earlier, weighed by weaker domestic demand because of the epidemic.
China has not responded to a request for urgent talks after Australia’s key agriculture exports were hit with suspensions and tariff threats, said Australia’s trade minister, as ties strain over Canberra’s call for a coronavirus pandemic inquiry; Australia is pushing for an independent inquiry into the coronavirus outbreak to help prevent future pandemics, but the move has angered China, its largest trading partner, which believes such a call is anti-China propaganda.
Brazilian crop agency Conab cut its estimate for soybean production for the 2019-2020 growing season as productivity declined amid dry weather in some of the country’s southern states
—Brazilian farmers produced 120.3 million metric tons of soybeans for this season, still a record for the country, as harvesting work came to an end
—In April, the agency estimated a crop of 122.1 million tons
—Brazil produced 115 million tons of soybeans in 2018-2019, after setting the previous record of 119.3 million tons in 2017-2018
BRAZIL SOY EXPORTS SEEN AT BETWEEN 75 MLN TNS AND 77 MLN TNS IN 2020; SOY CRUSH SEEN AT 44.5 MLN TNS -CONAB
BRAZIL SOY EXPORTS SHOULD REMAIN STRONG IN THE COMING MONTHS, SHIP SCHEDULES INDICATE 12 MLN TONS IN EXPORTS IN MAY -CONAB
—Brazil’s corn production is forecast to rise from a year ago, to 102.3 million tons from the record of 100.04 million tons in 2018-2019
—In April, Conab had forecast a crop of 101.9 million tons
BRAZIL’S SECOND CORN HARVEST 2019/2020 SEEN AT 75.9 MLN TNS COMPARED TO APRIL FORECAST OF 75.4 MLN TNS -CONAB
A big part of Brazil’s winter corn was planted outside the ideal weather period in the 2019-2020 growing season, so the rain in May will be important to the crop’s development
BRAZIL CORN EXPORTS SEEN AT 34.5 MLN TNS IN THE CURRENT HARVEST, BUT THERE IS ROOM TO GROW WITH FAVORABLE EXCHANGE RATE -CONAB
—BRAZIL WHEAT HARVEST IN 2020 SEEN AT 5.4 MLN TNS, SAME AS APRIL FORECAST –CONAB
A net importer of wheat, Brazil will buy more of it than ever as the global COVID-19 pandemic increases domestic appetite for bread and other flour-based products, Conab said; final 2020 wheat stocks in Brazil are estimated at 170,000 tons, the lowest in history, while imports into Brazil, mainly from neighboring Argentina, are expected to reach the hitherto unseen level of 7.3 million tons in 2020
- BRAZIL WHEAT IMPORTS IN 2020 EXPECTED TO REACH HISTORICAL RECORD OF 7.3 MLN TNS – GOVT AGENCY CONAB
- BRAZIL 2020 WHEAT CONSUMPTION SEEN AT RECORD OF 12.513 MLN TNS
- FINAL 2020 WHEAT STOCKS IN BRAZIL ESTIMATED AT 170,000 TNS, THE LOWEST IN HISTORY ON STRONG DOMESTIC DEMAND
- SOCIAL ISOLATION MEASURES AMID COVID-19 OUTBREAK INCREASED DOMESTIC DEMAND FOR FLOUR AND DERIVATIVES
- BRAZIL APRIL WHEAT IMPORTS REACH RECORD OF 747,800 TNS, UP FROM 619,000 TNS IN APRIL 2019
- BRAZIL WHEAT IMPORTS FROM ARGENTINA TOTALED 705,000 TNS IN APRIL
Recent rains across almost all of Ukraine are likely to improve the state of grain crops and this year’s harvest forecast could be raised, the Prime Minister said; we will get a normal crop (this year) – it has rained and we expect an improvement in the (grain) crop forecast; the economy ministry said last month that the 2020 grain crop could fall sharply to 60 million tons from 75 million tons in 2019 due to severe drought in most regions
Ukraine’s 2020 grain harvest is likely to fall by 3.5% to 72.52 million tons because of a smaller yield caused by poor weather despite a larger sowing area, analyst ProAgro said
—The consultancy forecast in a report that the 2020 wheat harvest down by about 11% to 25.4 million tons
—Wheat export was likely to fall to 17 million tons in the 2020/21 July-June season from 20.2 million tons in 2019/20
—Corn output could rise by 4% to 37.3 million tons
—Corn exports might rise to 32 million tons from 30.5 million in 2019/20
Ukraine is likely to cut its grain export in the 2020/21 July-June season by 8.9% to 49 million tons due to an expected fall in the harvest, APK-Inform agriculture consultancy said
—The consultancy last month lowered Ukraine’s 2020 grain crop outlook to 68.6 million tons from a previous estimate of 72.2 million tons citing poor weather
—It cut its wheat harvest outlook to 24.5 million tons from 26.7 million and reduced its corn crop forecast to 35.1 million tons from 36 million tons
—Ukraine harvested a record 75 million tons of grain in 2019
Kazakhstan plans to abolish quotas on its exports of wheat and flour as well as all other restrictions on food product exports from June, the agriculture ministry said
Farm office FranceAgriMer raised its forecast of French soft wheat exports outside the European Union this season to 13.3 million tons from 13.2 million estimated last month; that marked the eighth consecutive monthly increase to the office’s forecast and confirmed its expectation of a record volume in 2019/20
—projected soft wheat stocks at the end of the 2019/20 season on June 30 at 2.9 million tons, up from 2.6 million forecast in April, due mainly to lower projected use in animal feed and exports within the EU
—The farm office lowered its monthly estimate of French 2019/20 grain maize ending stocks to 2.2 million tons from 2.4 million tons
Australian grain continues to trade above international benchmarks, although the gap has been closing via higher global prices, the associate director of economics at the National Bank of Australia; he notes there are some signs in global markets that the stockpiling-induced rally of March and April is unwinding somewhat as many consumers have stocked up on staples, and these purchases will effectively unwind future demand; NAB still expects prices in AUD terms at higher levels than had Covid-19 not occurred; ASX Eastern Wheat closed Tuesday at A$318 a metric ton.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.