US agriculture markets were higher from short covering, Black Sea shipping concerns and renewed US weather concerns. The US weather forecast turned slightly negative for the US Midwest. The northern Midwest and western IA will see rain through Friday. Overall, the US Midwest will dry down over the next ten days with temperatures above normal. US Great Plains will continue to improve with precipitation over the next week. China’s largest producing state of Henan is forecast to receive additional rain over the next week. The US debt ceiling deal heading to the Senate after passing the House added support for commodities.
World Weather Inc.
WEATHER TO WATCH
- Northern Europe’s soil moisture continues in decline, but temperatures have not been excessively warm which has kept most crops in favorable condition
- Rain will continue to elude the region for ten more days and temperatures may rise slightly, but crops will likely stay in favorable condition for a while longer
- Southern Europe continues to experience frequent rain and thunderstorm activity maintaining wetter biased soil conditions
- There is a risk of local flooding in many areas and some flooding has already occurred periodically in a few areas
- The next ten days do not offer a serious change in the moisture situation
- Eastern CIS New Lands soil conditions have dried out more notably in the past week with topsoil moisture now rated short to very short east of the Ural Mountains and into northern Kazakhstan
- The heat and dryness will last another few days and then the opportunity for scattered showers and thunderstorms and gradual cooling is expected
- Relief will evolve, but it is still questionable how significant that will be
- China’s wheat harvest area is drying out after last weekend’s heavy rainfall
- The production area was impacted by significant rain during the weekend of May 22 and this past weekend resulting in some wheat quality declines
- The weather is expected to be much improved over the next ten days which should help to dry out the crop and limit grain quality losses
- Some of east-central China’s summer crops may have to be replanted after the recent bout of extreme rainfall
- Canada’s drought region of eastern and southern Alberta will not get significant relief anytime soon
- Saskatchewan, Canada will receive frequent rain over the next week to ten days resulting in wetter biased field conditions
- The exception will be in the far southeast of the province and in neighboring areas of southern Manitoba where it will remain dry
- Relief from drought is expected, albeit temporarily and more rain will be needed.
- Other areas in the Prairies will experience some timely rainfall during the next ten days and the resulting precipitation will be welcome, although briefly disrupting to farming activity.
- Portions of southern Manitoba have been trending a little dry recently and greater rain is needed, despite the fact that some rain occurred earlier this week
- Ontario and Quebec weather has improved with warmer temperatures and limited rainfall in recent days
- A trend change back to cooler conditions and some periodic rain is needed and expected this weekend and especially next week that will maintain favorable crop and field conditions
- U.S. rain will fall frequently from western Texas to Montana for another ten days
- Some of the crop areas in this region are becoming too wet and flooding has already occurred in several localized areas
- The worst flooding known is near Herford, Texas where 11 inches of rain fell earlier this week resulting in serious flooding in a couple of feedlots resulting in animal deaths
- Some wheat quality declines are under way in the central and southwestern Plains where drier weather is needed to protect the quality and overall production of this year’s crop which has already been reduced by drought
- West Texas cotton, corn and sorghum production areas (including those in the Texas Panhandle) are experiencing delays to planting because of frequent rain and wet field conditions
- These delays could continue for another week to ten days as daily showers and thunderstorms impact portions of the region
- The earliest that a drier weather pattern can evolve is June 10
- U.S. Delta drying is expected through the next ten days and that will raise the need for rain by the end of this forecast period, but crops are mostly in good shape today
- U.S. southeastern states are expecting a mix of rain and sunshine during the next ten days with more sun than rain
- The environment will be most welcome in the Carolinas and Virginia where rainy weather occurred this past weekend
- U.S. Midwest drying has left topsoil moisture rated short to very short and subsoil moisture marginally adequate to short
- Rain is needed, but unlikely to occur for another ten days – at least significant rain
- Gulf of Mexico moisture is still unavailable for to crops in the Midwest because of weather systems near the Gulf of Mexico coast that are preventing moisture inflows from the water to the land
- This pattern will prevail for another ten days which is why the Midwest fails to get a good drink of water
- Weather disturbance in eastern Gulf of Mexico is being monitored by the National Hurricane Center, but it is unlikely to develop into a tropical cyclone
- The system will bring rain to Florida and possibly parts of Cuba
- U.S. Pacific Northwest will continue to dry out with the Yakima Valley of Washington and neighboring areas of north-central Oregon in need of rain
- Irrigation is used extensively in the region and will support many crops
- Temperatures will rise above normal next week and that will accelerate the need for irrigation and raise crop stress for unirrigated areas
- Mexico’s drought is not likely to improve for the next two weeks
- Rain will occur periodically in eastern and far southern portions of the nation, but seasonal rains are expected to be delayed starting by at least two more weeks
- Seasonal rains in India will also be delayed during the first half of June
- The lack of rain will raise much worry over the general performance of the summer monsoon on India
- Northern India and northern Pakistan will continue to receive showers and thunderstorms for a little while longer
- The precipitation reported in the past week was greater than usual and an anomaly resulting from a more southward extent of the mid-latitude westerly winds aloft
- This pattern will continue for another ten days
- North Africa will continue to receive frequent rain through the next week to ten days
- The rain comes late in the growing season and may be threatening durum wheat quality in Morocco and northwestern Algeria while crop areas to the east may have benefited from recent rain.
- China’s excessive rain between the Yellow and Yangtze Rivers during the weekend ended earlier this week
- Drier weather is expected for a while
- Fieldwork was delayed, but the moisture should prove to be good for summer crop development in areas that were not flooded
- Wheat areas need to dry down to protect grain quality
- Some wheat quality has already declined with head sprouting confirmed in Henan
- Some of the flooded areas likely had recently planted crops damaged and replanting is necessary
- Xinjiang, China will continue cooler than usual
- Degree day accumulations are well below normal and cotton, corn and other crops are not developing normally
- Warming is needed
- The next ten days will continue cooler than usual
- Thailand, Cambodia and Laos rainfall in this coming week will be lighter than usual
- Some beneficial rain fell during the weekend
- Typhoon Mawar was downgraded to tropical storm status southeast of Taiwan Wednesday and the storm will continue to move east northeasterly away from major agricultural areas
- Taiwan and Luzon Island, Philippines are not likely to be impacted by the storm
- The Ryukyu Islands will experience heavy rain and some windy conditions as the storm passes by
- Australia weather during the next ten days should be unsettled enough to produce rain in some of the more important winter crop areas to help get winter crops better established
- Resulting rainfall will be light, though, leaving need for much more away from the coast
- Western Australia received some needed rain overnight with moderate to heavy rain in southern production areas
- South Africa rainfall in the coming week will not be very great, though winter crops will continue to germinate, emerge and establish on previous rainfall
- Some summer crop harvest delays are likely and some interruption to late season winter crop planting is also expected
- The moisture will help winter crops become better established
- Argentina rainfall will be restricted in this next ten days, but last week’s rain has soil moisture looking very good for planting from Santa Fe and Entre Rios into central and eastern Buenos Aires
- Western Buenos Aires and Cordoba still have a big need for rain and they may have to wait for a while
- Brazil recent rain in Mato Grosso do Sul, Parana and immediate neighboring areas was good for Safrinha crops – especially those planted so very late
- The moisture was also good for wheat establishment
- Drier weather is now expected for a while
- Brazil sugarcane, citrus and coffee harvest delays occurred briefly Tuesday and will continue today, but drier weather will be quick enough to resume to prevent any negative impact
- Central America rainfall is expected frequently over the next ten days supporting improved soil moisture and some better runoff after a slow start to the rainy season
- Indonesia and Malaysia rain frequency and intensity has been and is expected to continue better than advertised last week
- The pattern will perpetuate favorable crop conditions from rice and sugarcane to oil palm, coconut and rubber development
- Philippines rainfall will remain well mixed with sunshine over the next ten days
- West-central Africa will continue to receive periodic rainfall over the next two weeks and that will prove favorable for main season coffee, cocoa and sugarcane
- Some cotton areas would benefit from greater rain, though the precipitation that has occurred has been welcome
- East-central Africa rainfall has been favorable for coffee, cocoa and other crops in recent weeks with little change likely
- Central Asia cotton and other crop weather has been relatively good this year with adequate irrigation water and some timely rainfall reported
Source: World Weather, INC.
Bloomberg Ag calendar
Thursday, June 1:
- EIA weekly US ethanol inventories, production, 11am
- USDA soybean crush, corn for ethanol, DDGS production, 3pm
- Port of Rouen data on French grain exports
- HOLIDAY: Indonesia
Friday, June 2:
- FAO food price index, monthly grains report
- USDA weekly net- export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
- ICE Futures Europe weekly commitments of traders report
- CFTC commitments of traders weekly report on positions for various US futures and options, 3:30pm
- FranceAgriMer’s weekly crop condition report
- HOLIDAY: Italy, Indonesia
Source: Bloomberg and FI
US ADP Employment Change May: 278K (exp 170K; prevR 291K)
US Initial Jobless Claims 27-May: 232K (exp 235K; prevR 230K)
US Continuing Claims 20-May: 1795K (exp 1800K; prevR 1789K)
US Nonfarm Productivity Q1 F: -2.1% (exp -2.4%; prev -2.7%)
US Unit Labor Costs Q1 F: 4.2% (exp 6.0%; prev 6.3%)
· USDA reported 415.7 million bushels of corn used for fuel alcohol in April, down from last year’s 416.0 million bushels.
· Corn for ethanol use of 416 million bushels was below a 423 million average estimate, and hints USDA is too high on their current crop year industrial figure.
· USDA said DDGS produced for April was at 1.62 million tons, down from 1.795 million bushels a year ago.
· US Midwest weather concerns are starting to gain momentum again with most of the Midwest expected to see net drying over the next 7 days.
· StoneX estimated the second Brazil corn crop (harvesting just getting underway) at 102.9 million tons versus 100.8 million previous. The total crop is seen at 133.8 million tons versus 131.6 prior estimate. USDA is at 130.0 million tons (where most of the trade is at) versus 116.0 million tons for 2021-22.
· USDA will update their S&D estimates on June 9. We expect no change to US corn or soybean harvested & yields from May.
Weekly EIA US ethanol production was up 21,000 barrels per day to 1.004 million barrels, highest since 4/14, and stocks increased for the first time in 6 weeks by 291,000 barrels to 22.332 million. For reference, a Bloomberg poll looked for weekly US ethanol production to be up 15,000 thousand barrels and stocks down 63,000 barrels. Sep 2022 to date ethanol production is running 3.2 percent below the same period last season. US gasoline stocks of 216.1 million barrels were down marginally from the previous week, and down five consecutive weeks. Implied US gasoline demand was 9.098 million barrels, down 339,000 barrels. Total ethanol blended to finished motor gasoline was 9.125 million barrels, a 91.1 percent blend rate.
EIA’s Weekly Petroleum Status Report (WPSR) is now showing Fuel Ethanol and Total Motor Gasoline (sum of Finished Motor Gasoline and Motor Gasoline Blending Components) estimates separate from Other Oils exports estimates starting with data for the week ending May 26, 2023. Table 9, tab 8. There were no imports and 54,000 barrels per day of exports. https://www.eia.gov/petroleum/supply/weekly/
US DoE Crude Oil Inventories (W/W) 26-May: +4.488M (est -1.500M; prev -12.456M)
– Distillate Inventories: +985K (est +1.000M; prev -561K)
– Cushing OK Crude Inventories: +1.628M (prev +1.762M)
– Gasoline Inventories: -207K (est -1.100M; prev -2.053M)
– Refinery Utilization: +1.40% (est +0.50%; prev -0.30%)
University of Illinois: Is the U.S. Renewable Fuel Standard in Danger of Going Over a RIN Cliff?
Gerveni, M., T. Hubbs and S. Irwin. “Is the U.S. Renewable Fuel Standard in Danger of Going Over a RIN Cliff?” farmdoc daily (13):99, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, May 31, 2023.
July corn $5.25-$6.25
September corn $4.25-$5.50
December corn $4.25-$5.75
· Malaysian palm futures ended higher on technical buying after dropping more than 10 percent during the Monday-Wednesday period.
· European Union’s EWABA said the increase in China biodiesel imports from China could trigger a collapse in the EU biofuels industry. They noted 11 EU biodiesel plants have already halted production and another 10 reduced capacity.
· USDA reports an April soybean crush of 5.61 million tons or 187 million bushels.
· As a result of a higher-than-expected crush, crude oil stocks are highest since at least 2015. Soybean meal stocks were also well above not only this time of year, but for any month.
· Egypt pushed back their vegetable oils import tender to June 6 (30k soybean oil & 10k sunflower) for July 11-25 arrival. They are also in for local oils for July 1-31 arrival.
· USDA seeks 1,140 tons of packaged vegetable oil on June 6 for July shipment.
Second month rolling oil share
Source: Reuters and FI
Soybeans – July $12.75-$14.00, November $11.00-$14.50
Soybean meal – July $370-$450, December $290-$450
Soybean oil – July 44-50, December 43-53, with bias to upside
· Ukraine said the Black Sea grain export deal had been halted again because Russia had blocked ship registrations to all Ukrainian ports.
· China’s largest producing state of Henan is forecast to receive additional rain over the next week. They were hit by damaging rain last week, prompting the government to encourage rapid harvest progress and/or drain water from fields.
· September Paris wheat futures were up 2.50 euros earlier to 220.75 per ton.
· UGA estimates Ukraine’s grain and oilseed production for 2023 at 68 million tons, down from 73.8 million tons for 2022. This includes 17.9 million tons of wheat and 23.3 million tons of corn.
· President Zelenskiy is asking the EU Commission to remove all export restrictions on Ukraine agricultural products.
· Saudi Arabia seeks 480,000 tons of wheat on June 5 for September through October delivery. On March 13 they purchased 1.043 million tons for July through August arrival at an average price of $316.86/ton c&f.
- South Korea’s FLC bought 64,000 tons of feed wheat at $258.70/ton c&f, optional origin, for arrival around November 5. They rejected a cargo for October arrival. Yesterday FLC bought 55,000 tons at $261.25 and MFG 55,000 tons at $263.90.
· Nearby rice supplies are tightening, as indicated by registration cancellations over past month.
Chicago Wheat – July $5.50-$6.50
KC – July $7.50-$8.75
MN – July $7.25-$8.75
September – same ranges as July
Senior Commodity Analyst – Grain and Oilseeds
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