MORNING GRAINS COMMENTS

MORNING GRAINS COMMENTS

Jack Scoville

Friday, June 05, 2020

Price Futures Group, CBOT

Chicago, IL

(312) 264-4322

jscoville@pricegroup.com

JSL, SA de CV

San Salvador, El Salvador (503) 2260-7806 jslsadecv@comcast.net

JSL, SA

San José, Costa Rica (506) 2282-7024 

jslsa@comcast.net

WHEAT:                                                                                                

General Comments:   Wheat markets finished higher as Black Sea prices are holding stronger as Russia has run out of old crop Wheat to sell into the world market.  Any sales by producers will be in the domestic market where the prices are higher.  Russia got good rains in just about all areas but parts of Europe and the western Great Plains of the US stayed dry.  The weather is also good in Australia and has been good for planting in Argentina although Argentina has also been drier than normal.  The big weather feature is the dry weather in Europe and the US and this dry weather has been supporting world prices and futures price action.  Competition for sales is expected to be tough even with less in the US and Europe as Australia is coming back after years of drought and as Russia has better weather and improved production prospects.  The harvest, small or big, is coming and prices usually start to move lower soon and remain down through the harvest.  Any rally at this time might not go much farther.

Overnight News:  The southern Great Plains should get dry conditions.  Temperatures should be near normal.  Northern areas should see scattered showers.  Temperatures will average near to below normal.  The Canadian Prairies should see mostly dry conditions.  Temperatures should average below normal.  

Chart Analysis:  Trends in Chicago are mixed to up with objectives of 537 and 559 July.  Support is at 522, 515, and 507 July, with resistance at 529, 535, and 546 July.  Trends in Kansas City are up with objectives of 473. 483, and 486 July.  Support is at 460, 457, and 441 July, with resistance at 477, 486, and 489 July.  Trends in Minneapolis are mixed.  Support is at 526, 521, and 514 July, and resistance is at 534, 538, and 548 July.

RICE

General Comments:  Rice was mixed to a little higher in new crop months and limit up in old crop July.  The funds are buying the old crop futures on ideas of supply tightness and there is little old crop Rice left in first hands to temper the rally.  Mills are also not selling July although they own Rice and neither are exporters.  The buying inside the US due to the Coronavirus has made the market short Rice.  There are ideas that the mills are well covered into new crop, but little Rice is available from producers.  Most of the unsold Rice is in Arkansas.  The crops are in very good condition in the south and near the Gulf Coast but planting has been problematic in parts of Mississippi, Arkansas, and Missouri.  However, USDA data shows that these crops are getting planted and are thriving.  Ideas are that the long grain will get planted and producers will not plant medium grain if some prevent planting is needed.  There are still ideas that the US will have a much bigger crop to harvest this Fall.  July appears destined to test the highs made by the May contract and could have a final objective of $23.50 based on the monthly chart patterns. 

Rice was mixed to a little higher in new crop months and limit up in old crop July.  The funds are buying the old crop futures on ideas of supply tightness and there is little old crop Rice left in first hands to temper the rally.  Mills are also not selling July although they own Rice and neither are exporters.  The buying inside the US due to the Coronavirus has made the market short Rice.  There are ideas that the mills are well covered into new crop, but little Rice is available from producers.  Most of the unsold Rice is in Arkansas.  The crops are in very good condition in the south and near the Gulf Coast but planting has been problematic in parts of Mississippi, Arkansas, and Missouri.  However, USDA data shows that these crops are getting planted and are thriving.  Ideas are that the long grain will get planted and producers will not plant medium grain if some prevent planting is needed.  There are still ideas that the US will have a much bigger crop to harvest this Fall.  July appears destined to test the highs made by the May contract and could have a final objective of $23.50 based on the monthly chart patterns. 

Overnight News:  The Delta should get scattered showers. Temperatures should be generally above normal. 

Chart Analysis:  Trends are up with no objectives.  Support is at 2192, 2180, and 2156 July, with resistance at 2208, 2220, and 2232 July.

CORN AND OATS                    

General Comments:  Corn was higher on big fund buying but could not take out resistance at 330 July.  An above trend yield is being forecast by many analysts as the growing season is off to a good start in many areas.  Meats processors are back and are aiming to restore 80% to 85% of capacity kill rates in their plants.  The backlog of Cattle and Hogs will slowly disappear under this scenario and meats wholesale and retail prices will fall.  This will take some time, but it is starting to come to pass especially in the wholesale meats trade.  Ethanol demand is also improving as lockdown orders are lifted in most states and in Europe.  Demand for gasoline and ethanol has gotten a little stronger and should continue to improve over time.  All this still implies that ending stocks for Corn as projected by USDA can increase, but the increase should not be as great as originally thought.  Export demand is becoming more difficult with US prices quoted above those in Argentina and Ukraine.  Corn can rally a little more before the current seasonal rally runs out of steam and as the funds still hold a significant short position and as farmers are scale up selling into the rally. 

Overnight News: 

Chart Analysis:  Trends in Corn are mixed.  Support is at 324, 321, and 319 July, and resistance is at 330, 332, and 340 July.  Trends in Oats are up with objectives of 346 and 358 July.  Support is at 335, 329, and 326 July, and resistance is at 350, 352, and 356 July.

SOYBEANS AND PRODUCTS 

General Comments:  Soybeans were higher on Chinese demand and big fund buying as the market broke out to the upside.  During the day the wires said that unknown destinations had bought 120,000 tons of US beans.  China is looking to curb the dissent in Hong Kong over moves to bring the city more under central government control from Beijing.  The world has objected and the US has now imposed some additional sanctions on the country.  The sanctions seem designed to keep trade flowing between the countries.  China has remained a very active buyer in South America even as it has increased Soybeans buying here in the US, so the overall amount taken from the US might not match the hopes of the trade.  Brazil prices have been creeping higher for the rest of the world as it starts to run out of Soybeans to export, so China and the rest of the world will look to the US and Argentina for additional supplies.

Overnight News:  Unknown destinations bought a total of 588,000 tons of US Soybeans.

Chart Analysis:  Trends in Soybeans are up with objectives of 879, 883, and 889 July.  Support is at 861, 852, and 846 July, and resistance is at 877, 881, and 896 July.  Trends in Soybean Meal are up with objectives of 292.00 and 298.00 July.   Support is at 286.00, 282.00, and 280.00 July, and resistance is at 294.00, 286.00, and 298.00 July.  Trends in Soybean Oil are mixed to up with objectives of 2840 and 3020 July.  Support is at 2750, 2720, and 2690 July, with resistance at 2820, 2860, and 2960 July.

CANOLA AND PALM OIL        

General Comments:  World vegetable oils markets were higher.  Palm Oil closed higher on ideas of reduced production and reports of better export demand. Palm Oil has been hoping for better demand from importers as world economies slowly open after being closed by the Coronavirus epidemic.  A government change in Malaysia helped open the Indian market to Malaysian imports again.  China is also buying.  Southern Malaysia producers reported a sharp drop in production and there are ideas that all of Malaysia will come in below previous months.  Indonesia continues to focus its Palm Oil on internal demand for bio fuels.  Canola closed a little higher on Chicago and despite improved growing conditions in the Canadian Prairies.  Canola has found support from the recent recovery in Soybeans and Soybean Oil along with a weaker Canadian Dollar.  Canola is more of a food oil than the others, although it also has bio fuels uses.  A BC judge ruled against the release of the Huawei executive last week and this renewed trade tensions between Canada and China.  The weather has been warmer the past couple of weeks after weeks of cold and wet weather. 

Overnight News:    

Chart Analysis:  Trends in Canola are mixed.  Support is at 461.00, 459.00, and 456.00 July, with resistance at 468.00, 470.00, and 472.00 July.  Trends in Palm Oil are mixed to up with objectives of 2340 August.  Support is at 2280, 2240, and 2230 August, with resistance at 2400, 2510, and 2590 August.

DJ Canadian Grain Handling Summary – Jun 4

     WINNIPEG–The following are Canadian grain handling summary

statistics for the week ended May 31, 2020. Figures in thousands of metric

tons.

Source: Canadian Grain Commission.

                  Durum

           Wheat  Wheat  Oats  Barley  Flax  Canola   Peas   Corn  Total*

COMMERCIAL STOCKS

This Week 2189.6  575.6  218.4  338.0  69.7   872.9  222.9  106.5  5058.7

Week Ago  2208.1  558.7  224.8  341.5  58.9   815.2  200.0  103.9  5006.1

Year Ago  2067.0  576.4  184.3  246.3  61.7   794.5  236.6  345.3  5155.6

PRODUCER DELIVERIES

This Week  607.6  123.0   32.4   48.9   8.4   398.0   50.1    3.4  1346.7

Week Ago   203.8   50.9   20.0   37.1   4.3   223.6   23.8    0.8   619.5

To Date  17796.0 4219.4 2174.7 3332.9 308.2 16556.8 3357.3  303.1 51359.0

Year Ago 17666.8 3670.1 1841.5 3002.9 338.3 14913.2 2799.8  469.8 47987.5

TERMINAL RECEIPTS

This Week  536.1  122.8    6.0   37.0   5.7   158.0   41.0   36.2  1015.0

Week Ago   565.1  123.6    1.0   24.1  25.2   218.7   67.5   24.7  1114.3

To Date  16199.5 5118.7  400.0 1762.2 162.7  8991.2 2229.5  303.4 39798.9

Year Ago 17060.2 4107.1  356.5 1867.5 120.7  8236.8 1657.6 1188.7 40360.8

EXPORTS

This Week  450.1  106.3   25.4   23.7  25.6   224.4   43.5   51.5   954.4

Week Ago   549.8   67.5    7.0   12.3  19.4   288.3   97.5   21.0  1064.9

To Date  14078.2 4288.5 1399.9 1790.4 159.8  8356.4 2247.2  163.4 35959.1

Year Ago 15243.0 3644.1 1298.9 2031.8 209.6  7746.3 1698.7 1434.6 37436.1

DOMESTIC DISAPPEARANCE

This Week  116.7    2.9   16.5   26.0   0.7   171.1    4.7    6.2   392.9

Week Ago    38.2    7.1   25.5   26.2   0.5   176.7    2.7    4.3   304.8

To Date   3255.0  364.3  628.2 1351.2  44.2  8663.0  195.0  563.0 16510.0

Year Ago  3356.8  285.8  256.5  951.6  47.9  7802.2  176.5  953.8 15713.5

*Totals include data from other crops not shown including rye, soybeans,

canaryseed, mustard seed, beans, lentils and chickpeas. 

Source: Commodity News Service Canada (news@marketsfarm.com, or 204-414-

9084)

Midwest Weather Forecast:   Scattered showers this week with best amounts and coverage tomorrow.  Temperatures should average above normal

US Gulf Cash Basis
CornHRWSRWSoybeansSoybean MealSoybean Oil
June+46 July+133 May+50 July+57 JulyN/AN/A
July+46 July+53 July+60 July
August+41 Sep+65 Aug
  [JS1]   

DJ ICE Canada Cash Grain Close – Jun 4

WINNIPEG — The following are the closing cash

canola prices from ICE Futures.

Source: ICE Futures

                     Price     Basis     Contract     Change

CANOLA

*Par Region          447.90    -13.00    Jul 2020     up 1.10

Basis: Thunder Bay   478.60     15.00    Jul 2020     up 4.70

Basis: Vancouver     488.60     25.00    Jul 2020     up 2.70

All prices in Canadian dollars per metric tonne.

*Quote for previous day 

Source: Commodity News Service Canada

(news@marketsfarm.com, 204-414-9084, or cell

204-782-5944)

DJ Malaysian PM Cash Market Prices for Palm Oil – June 5

  The following are prices for Malaysian palm oil in the cash market at 1000 GMT Friday, supplied by commodity broker Matthes & Porton Bhd.

  Prices are quoted in U.S. dollars a metric ton, except for crude palm oil and palm kernel oil, which are in ringgit a ton. Palm kernel oil prices are in ringgit a pikul, a Malaysian measurement equivalent to 60 kilograms.

Refined, bleached and deodorized palm oil, FOB, Malaysian ports

              Offer      Change      Bid        Change   Traded

June           595.00    +05.00      Unquoted   –        –

July           587.50    +07.50      Unquoted   –        –

Aug/Sep        577.50    +05.00      Unquoted   –        –

Oct/Nov/Dec    572.50    +05.00      Unquoted   –        –

RBD palm olein, FOB, Malaysian ports

              Offer      Change      Bid        Change   Traded

June           597.50    +05.00      Unquoted   –        –

July           590.00    +07.50      Unquoted   –        –

Aug/Sep        580.00    +05.00      Unquoted   –        –

Oct/Nov/Dec    575.00    +05.00      Unquoted   –        –

RBD palm stearin, FOB, Malaysian ports

              Offer      Change      Bid        Change   Traded

June          577.50       0.00      Unquoted   –        –

Palm Fatty Acid Distillate, FOB Malaysian ports

              Offer      Change      Bid        Change   Traded

June          530.00     +05.00      Unquoted   –        –

Crude palm oil, Delivered Basis, South Malaysia

              Offer      Change      Bid        Change   Traded

June          2,420.00   +10.00      Unquoted   –        –

Palm kernel oil, Delivered Basis, South Malaysia

              Offer      Change      Bid        Change   Traded

June          181.00       0.00      Unquoted   –        –

($1=MYR4.2655)

DJ China Dalian Grain Futures Closing Prices, Volume – Jun 05

Soybean No. 1

Turnover: 307,794 lots, or 13.48 billion yuan

        Open    High    Low  Close   Prev.  Settle  Ch.      Vol      Open

                                    Settle                        Interest

Jul-20  5,034  5,058  5,008  5,008   5,033   5,027   -6      240     1,413

Sep-20  4,459  4,464  4,344  4,349   4,449   4,394  -55  295,487   129,553

Nov-20  4,118  4,118  4,045  4,075   4,078   4,078    0       32       501

Jan-21  4,033  4,055  4,026  4,035   4,027   4,037   10   11,843    19,648

Mar-21  –          –      –  4,019   4,016   4,019    3        0        42

May-21  4,023  4,035  4,019  4,024   4,016   4,027   11      192     1,827

Corn

Turnover: 392,464 lots, or 8.15 billion yuan

        Open    High    Low  Close   Prev.  Settle  Ch.      Vol      Open

                                    Settle                        Interest

Jul-20  2,038  2,048  2,032  2,044   2,035   2,039    4    6,905    19,724

Sep-20  2,063  2,075  2,056  2,073   2,059   2,066    7  293,781   674,946

Nov-20  2,082  2,097  2,081  2,096   2,082   2,089    7   15,030    34,325

Jan-21  2,106  2,121  2,103  2,118   2,105   2,114    9   61,702   245,073

Mar-21  2,127  2,137  2,120  2,134   2,123   2,130    7    2,738     3,731

May-21  2,142  2,157  2,137  2,153   2,141   2,149    8   12,308    33,067

Soymeal

Turnover: 1,579,464 lots, or 45.12 billion yuan

        Open    High    Low  Close   Prev.  Settle  Ch.        Vol       Open

                                    Settle                           Interest

Jul-20  2,680  2,703  2,671  2,675   2,665   2,685   20      8,753     33,964

Aug-20  2,810  2,844  2,810  2,824   2,803   2,827   24     19,463     31,998

Sep-20  2,836  2,868  2,831  2,842   2,825   2,848   23  1,128,270  1,586,044

Nov-20  2,873  2,905  2,868  2,882   2,859   2,886   27     28,826     38,585

Dec-20  2,897  2,920  2,886  2,902   2,871   2,904   33      2,972      2,669

Jan-21  2,891  2,932  2,886  2,911   2,878   2,911   33    339,511    705,412

Mar-21  2,779  2,808  2,779  2,797   2,771   2,797   26        100      1,583

May-21  2,694  2,713  2,686  2,707   2,685   2,701   16     51,569    133,343

Palm Oil

Turnover: 875,189 lots, or 42.79 billion yuan

        Open    High    Low  Close   Prev.  Settle   Ch.      Vol      Open

                                    Settle                         Interest

Jun-20  –          –      –  4,770   4,770   4,770     0        0         0

Jul-20  4,850  4,998  4,850  4,998   4,948   4,948     0        4         9

Aug-20  –          –      –  4,940   4,940   4,940     0        0         2

Sep-20  4,870  4,920  4,862  4,912   4,896   4,892    -4  802,316   395,668

Oct-20  4,714  4,756  4,714  4,756   4,754   4,742   -12       45       338

Nov-20  4,738  4,762  4,732  4,762   4,736   4,734    -2       15       176

Dec-20  4,746  4,778  4,734  4,778   4,760   4,754    -6        5       185

Jan-21  4,828  4,896  4,818  4,896   4,844   4,856    12   72,259   100,766

Feb-21  4,688  4,918  4,688  4,918   4,942   4,822  -120        3       114

Mar-21  4,958  4,978  4,958  4,978   4,976   4,968    -8        2        16

Apr-21  –          –      –  4,906   4,912   4,906    -6        0       154

May-21  4,958  5,010  4,958  5,010   4,972   4,990    18      540     3,179

Soybean Oil

Turnover: 368,276 lots, or 20.92 billion yuan

        Open    High    Low  Close   Prev.  Settle  Ch.      Vol      Open

                                    Settle                        Interest

Jul-20  –          –      –  5,600   5,590   5,600   10        0         5

Aug-20  –          –      –  5,646   5,646   5,646    0        0         2

Sep-20  5,630  5,694  5,622  5,682   5,650   5,668   18  315,455   404,448

Nov-20  5,692  5,752  5,692  5,740   5,766   5,716  -50       15       393

Dec-20  5,736  5,766  5,734  5,742   5,690   5,740   50        8        20

Jan-21  5,698  5,760  5,686  5,758   5,704   5,736   32   50,171   142,573

Mar-21  –          –      –  5,760   5,760   5,760    0        0        11

May-21  5,724  5,812  5,722  5,806   5,728   5,788   60    2,627     5,729  

Notes:

1) Unit is Chinese yuan a metric ton;

2) Ch. is day’s settlement minus previous settlement;

3) Volume and open interest are in lots;

4) One lot is equivalent to 10 metric tons.

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