FI Evening Grain Comments 01/06/21

PDF Attached

 

Under
the USDA 24-hour reporting system, private exporters sold 102,616 tons of corn to unknown.  We are eyeing $14.50 soybeans, $5.25 corn, and now $7.00 wheat. 

 

CME
Margin Changes per Reuters:

• CME
  RAISES WHEAT FUTURES (W) MAINTENANCE MARGINS BY 10% TO $1,650 PER CONTRACT FROM $1,500 FOR MARCH 2021
• CME
  RAISES SOYBEAN FUTURES (S) MAINTENANCE MARGINS BY 14.6% TO $2,750 PER CONTRACT FROM $2,400 FOR JAN. 2021
• CME
  RAISES CORN FUTURES (C) MAINTENANCE MARGINS BY 12.9% TO $1,100 PER CONTRACT FROM $975 FOR MARCH 2021
• CME
  LOWERS CRUDE OIL FUTURE NYMEX (CL) MAINTENANCE MARGINS BY 4.7% TO $4,525 PER CONTRACT FROM $4,750 FOR FEB. 2021
• SAYS
  INITIAL MARGIN RATES ARE 110% OF THESE LEVELS
• SAYS
  RATES WILL BE EFFECTIVE AFTER THE CLOSE OF BUSINESS ON JAN. 6, 2021

 

USD
Index

Source:
Reuters and FI

 

Weather

Greatest
World Weather Interests of The Day

• China’s
  coldest temperatures of the season are expected tonight with extreme lows falling into the negative and positive single digits Fahrenheit in the Yellow River Valley and areas to the north
• Very
  little snow cover is present which may raise the potential for a little crop damage
• Wheat
  is favorably established and may withstand the cold after recent hardening, but some temperatures could be low enough to induce some negative impact
• Beneficial
  rainfall has occurred central and southern Buenos Aires and from northwestern Santiago del Estero into Salta Tuesday and overnight
• Rainfall
  was heavy in parts of southern Buenos Aires where generalized 1.00 to 2.00 inch totals were noted
• Local
  extremes reached 5.48 in the far southeast of Buenos Aires and 3.30 inches in interior southwestern Buenos Aires.
  
• Net
  drying occurred elsewhere
• Temperatures
  were mild to cool in the southwest with highs in the 60s and 70s Fahrenheit while readings in the northeast were in the 80s and lower to a few middle 90s
• Argentina’s
  weather still looks unsettled enough for late this coming weekend through next week to raise the potential for some additional relief for parts of the nation’s drier areas
• However,
  relief is not likely to be very great in southern Santa Fe, Entre Rios or north-central into northeastern Buenos Aires where crop stress may worsen in the coming week and then only get partial relief after that
• Timely
  rain may occur in many other areas next week to restrict the worse crop conditions to smaller portions of the nation, but ongoing
  
• Speculation
  over possible returning dry and hot weather in Argentina is in the marketplace for later this month
• World
  Weather, Inc. believes there will be a period of less rain and warmer temperatures, but the impact of that on crops will be largely determined by the rain distribution next week and into the following weekend
• Brazil
  rainfall Tuesday and early today was greatest in Mato Grosso do Sul, western Parana, Santa Catarina and neighboring areas
• Amounts
  reached nearly 3.00 inches in central Mato Grosso do Sul and 1.00 to 2.14 inches in southwestern Parana while amounts to 0.70 inch occurred often in other areas
• The
  remainder of Brazil was left in a net drying mode.
• High
  temperatures Tuesday were mostly in the seasonable range with a slight cooler bias in the interior south
• Brazil’s
  weather outlook today has not changed much from that of Tuesday
• Sufficient
  rain will fall to support crops in nearly all areas allowing the improving trend for pod setting and filling in soybean production areas to continue
• Recent
  dryness and that expected periodically in the next few days will not last long enough to seriously raise crop moisture issues
• The
  mix of sunshine, rain, seasonable temperatures and mostly good soil conditions will support normal crop development
• There
  are some pockets of dryness remaining, but the majority of the nation is seeing much better conditions over those of earlier this growing season
• Coffee,
  citrus, rice, cotton corn, soybeans, cocoa and other crops will all benefit from a good distribution of rain
• Morocco
  will receive waves of rain over the coming week bolstering soil moisture for improved wheat and barley establishment
  
• This
  is the beginning of the third year of drought in southwestern Morocco making the coming week of rain extremely important and welcome
• Some
  rain began in a part of the nation Tuesday, but amounts were light in the southwest
• Northwestern
  Algeria has also been drier biased this season and some rain will fall there as well
  
• Most
  of the Mediterranean Sea region of southern Europe will receive frequent rainfall resulting in greater soil moisture, but also inducing some potential for flooding
• Rainfall
  will be greatest in eastern Spain, Italy, the eastern Adriatic Sea nations and from parts of Greece and Bulgaria to Russia’s Southern Region
• Waves
  of rain and snow will impact Russia’s Southern Region through the next ten days resulting in a welcome boost to soil moisture in areas that have no frost in the ground
• Snow
  will pile up on top of the ground in areas where temperatures are coldest, but the snow will melt during the warmer days and weeks ahead in late winter and early spring to improve soil conditions for better winter crop establishment
• Additional
  rain fell in northern India Tuesday resulting in further improvement in topsoil moisture
• Additional
  moisture totals varied from 0.20 to 0.75 inch with local totals to 2.00 inches in the far north of the nation
• Recent
  precipitation from eastern Rajasthan and northern Uttar Pradesh into Jammu and Kashmir has bolstered soil moisture for improved winter crop conditions
• Dry
  weather will return to northern India today and will prevail for a while
• Some
  rain will fall in central India Thursday and Friday of this week with amounts of 0.20 top 0.75 inch and a few totals over 1.00 inch
• Madhya
  Pradesh and Maharashtra will be most impacted
• Some
  areas in Maharashtra will receive 1.00 to 2.00 inches of rain as will Karnataka and Tamil Nadu where delays to late season summer crop harvesting is expected
• Precipitation
  in these more southern locations in India will last more than Thursday and Friday with some areas getting rain well into next week
• Too
  much rain is expected in far southern India and flooding may result; rice, sugarcane, unharvested cotton and some groundnuts may be negatively impacted by the moisture
• Waves
  of rain will impact the Philippines starting late this week and lasting a full week
• Excessive
  moisture is expected resulting in new flooding for parts of the nation especially in eastern most islands
• Flooding
  has already been an issue for the nation at times in recent months and additional damage to crops and property will be possible
• Frequent
  rain in Indonesia and Malaysia will eventually result in some new flooding
• Recent
  flooding in Peninsular Malaysia caused damage to crops and personal property, although that situation will improve before new excessive rain and flooding impacts a part of the region in the coming week to ten days
• Other
  areas in Indonesia and Malaysia are likely to become too wet over time with Java and northern Borneo as well as peninsular Malaysia impacted from time to time.
  
• Mainland
  areas of Southeast Asia will be dry over the next ten days except coastal areas of Vietnam where waves of rain are expected
• Eastern
  Australia received additional showers Tuesday in northern New South Wales and southern Queensland
• Amounts
  varied from 0.05 to 0.71 inch with a few totals to 1.47 inches
• Greater
  rain fell near the Townsville area of Queensland where more than 5.00 inches occurred Tuesday and flooding in that area is far more serious because of multiple days of heavy rain
• Eastern
  Australia will receive additional showers and thunderstorms into Friday and then net drying is expected for a while in key grain and cotton production areas
• Another
  0.50 to 2.50 inches of rain and locally more will occur by Saturday morning in southeastern Queensland
• Not
  much other precipitation is expected there or in New South Wales for a full week
• Southern
  parts of the Cape York Peninsula and the upper Queensland, Australia coast will experience frequent waves of rain through the next ten days resulting in more flooding
  
• The
  area near Townsville, Queensland has received excessive rainfall in the past week and will be getting much more resulting in damage for sugarcane and some other agriculture
• South
  Africa will receive frequent showers and thunderstorms over the next ten days bringing rain to most summer crop areas and ensuring aggressive crop development
• Western
  areas may be wettest for a while
• U.S.
  weather Tuesday was dry except for a little rain and snow mix in the Missouri River Valley and in random locations in the eastern states
• The
  Pacific Northwest was wettest as it has been with the Puget Sound getting waves of rain
• Temperatures
  were a little warmer than usual in many areas across the nation
• U.S.
  weather changes were minor overnight
• Rain,
  snow and a little freezing rain will occur today from the eastern Dakotas and western Minnesota into Missouri and eastern Kansas
  
• Moisture
  totals will vary from 0.05 to 0.40 inch and locally more
• Snowfall
  of 1 to 4 inches is most likely, but a few areas could receive locally more
  
• The
  storm system responsible for rain and snow in the western Corn Belt today will also produce widespread rainfall across the Delta and into the southeastern states late today into early Friday
• Hard
  red winter wheat areas will receive their greatest precipitation during the weekend as snow and rain fall from Colorado to western and northern Texas
  
• Moisture
  totals will vary from 0.10 to 0.35 inch with local totals of 0.35 to 0.75 inch and possibly more
  
• Some
  significant snowfall is possible in the high Plains region
• Rain
  this weekend in the heart of Texas will move too far to the south to bring much moisture to the Delta or southeastern states, but some of the Gulf of Mexico coast and Florida will get rain Sunday into early next week
• Waves
  of rain and mountain snow will impact the Pacific Northwest throughout the coming two weeks maintaining wet conditions in some of those areas
• Colder
  air moving into North America near mid-month may drop a cold front through the north-central and eastern U.S. with a little snow and rain accompanying it
• Additional
  waves of cool air and brief bouts of snow will move from northwest to southeast across the central and eastern United States in the third week of this month and progressive cooling is expected
• Some
  of the bitter cold impacting China this week will reach North America  near mid-month and will prevail into the end of January with Canada Prairies, the U.S. northern Plains and Midwest all experiencing notably colder weather over time. Temperatures may not
  fall far below average outside of these areas and most of these areas will experience a more seasonably cool temperature bias
• West
  Africa rainfall will remain mostly confined to coastal areas while temperatures in the interior coffee, cocoa, sugarcane, rice and cotton areas are in a seasonable range for the next ten days
• East-central
  Africa rainfall will continue limited in Ethiopia as it should be at this time of year while frequent showers and thunderstorms impact Tanzania, Kenya and Uganda over the next ten days
• Southern
  Oscillation Index remains very strong during the weekend and was at +18.64 today which is the highest this index has been in the current La Nina episode
• Mexico
  and Central America weather will continue to generate erratic rainfall
• Far
  southern Mexico and portions of Central America will be most impacted by periodic moisture
• Canada
  Prairies will remain unseasonably warm this week and warmer than usual through day ten before cooling occurs during the weekend and next week
• Southeast
  Canada will receive less than usual precipitation this week and temperatures will continue a little warmer than usual

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

Wednesday,
Jan. 6:

• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• China’s
  CNGOIC to publish soy and corn reports
• HOLIDAY:
  Russia, Poland

Thursday,
Jan. 7:

• FAO
  World Food Price Index
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports
• HOLIDAY:
  Russia, Ghana, Egypt

Friday,
Jan. 8:

• ICE
  Futures Europe weekly commitments of traders report, 1:30pm (6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• Trading
  of China’s hog futures to begin on Dalian Commodity Exchange
• HOLIDAY:
  Russia

Source:
Bloomberg and FI

 

 

Macros

US
jobless claims report will be out on Thursday and monthly unemployment on Friday. 

US
ADP Employment Change Dec: -123K (est 75K; prevR 304K; prev 307K)

 

US
DoE Crude Oil Inventories (W/W) 01-Jan: -8010K (est -2700K; prev -6065K)

–
Distillate Inventories: +6390K (est 1200K; prev 3095K)

–
Cushing Crude Inventories: +792K (prev 27K)

–
Gasoline Inventories: +4519K (est -900K; prev -1192K)

–
Refinery Utilization: 1.30% (est 0.40%; prev 1.40%)

 

OPEC
December Oil Output Up 280,000 Bpd Month On Month To 25.59 Mln Bpd, 6th Monthly Gain In A Row – RTRS Survey

OPEC
Oil Output Rise Led By Higher Supply From Libya And UAE

OPEC
States’ Compliance To OPEC+ Output Cut Pledges 99% In December, Down From 102% In November

Saudi
Arabia Keeps Oil Supply Steady In December At Just Below 9 Million Bpd

 

US
Factory Orders Nov: 1.0% (est 0.7%; prev 1.0%)

–
Factory Orders Ex-Transportation Nov: 0.8% (prev 1.0%)

–
Durable Goods Orders Nov F: 1.0% (est 0.9%; prev 0.9%)

–
Durable Goods Ex-Transportation Nov F: 0.4% (est 0.4%; prev 0.4%)

–
Cap Goods Ship Nondef Ex-Air Nov F: 0.5% (prev 0.4%)

 

EIA-U.S.
WEEKLY ETHANOL OUTPUT UP 1,000 BPD TO 935,000 BPD

EIA-U.S.
WEEKLY ETHANOL STOCKS OFF 220,000 BBLS TO 23.28 MLN BBLS

 

FI
Estimates for USDA Grain Stocks

 

Corn.

• CBOT
  corn
  ended higher despite some negative sentiment CBOT futures are overbought and the fund position is increasingly in a danger zone on the long side after no fresh bullish news hit the markets this week other than a couple confirmed cargo private sales were reported
  over the tapes. Argentina’s restrictions of corn export commitments go only beyond February.  We feel US export demand for US corn exports will remain strong after that date, but price advantage and currency values will dictate origin (US/Argentina).  Ukraine,
  we see knocked out by then. 
• EIA’s
  weekly US ethanal production and stocks update had little impact on market prices today. 
  
• On
  Wednesday, funds bought an estimated net 13,000 contracts. 
• Hungary
  plans to cull 90,000 turkeys amid bird flu. 
• Germany
  will cull 62,000 poultry after discovering H5N8 bird flu. 
• The
  story that came out late Sunday on Bloomberg mentioning Mexico’s initiative to phase out GMO corn imports has created a stir in the market, but many believe it will not become a reality unless some extreme measures takes place such as a dramatic shift in global
  trade flows (where they source non GMO) and/or domestic planting expansion.  We think it’s more geared for white corn human consumption.  Livestock producers tend to import and feed yellow corn.  Bottom line is Mexico depends on at least 16 plus million tons
  of corn imports every year for domestic feed and industrial consumption, and much of the corn imports come from the United States.  We applaud that Mexico aims to become self-sufficient but achieving this over a three year period with what land may be available
  to expand farmland, might be out of reach.  

 

 

EIA
weekly ethanol data

US
ethanol production unexpectedly expanded 1,000 barrels to 935,000 barrels, still 12 percent below this time a year ago.  Traders were looking for a 7,000 decline.  Corn crop year to date (September through early January) is running 7.3 percent below the same
period a year earlier.  There were no ethanol imports. US ethanol stocks declined 220,000 barrels to 23.284 million.  Traders were looking for an increase of 241,000.  This was the first decrease in stocks in ten weeks.  US gasoline demand fell 687,000 barrels
to 7.441 million, down 8.5 percent from a year ago.  The refinery and blender net input of oxygenates fuel ethanol (blender input) was 719,000 barrels, down 99,000 from the previous week and 10.2 percent below year ago.  The percent of ethanol blended into
finished motor gasoline was 89.5 percent. 

 

 

 

Corn
Export Developments

• Under
  the USDA 24-hour reporting system, private exporters sold 102,616 tons of corn to unknown. 
  
• Turkey
  seeks 155,000 tons of corn on January 12 for Jan 25-Feb 15 shipment.

• Qatar
  seeks 100,000 tons of bulk barley on January 12.

• Qatar
  seeks 640,000 cartons of corn oil on January 12.

 

 

Below
is wheat the managed money futures and options position may look like when update on Friday

 

Updated
1/5/20

March
corn is seen
trading in a $4.50 and $5.25 range

 

Soybean
complex.
 

• CBOT
  soybean complex ended higher led by soybeans and soybean meal, not oil as indicated at the beginning of the session after palm futures were up 122 points.  News has not changed the theme of the bullish undertone.  This week the situation in Argentina turned
  south again as producers planned a strike set for January 11-13.  Either way, vegetable oil premiums are again on the rise across the Black Sea and South America, Malaysia and EU as global stockpiles dwindle ahead of Southern Hemisphere harvest.  Feed grain
  supplies are not in question as much as vegetable oil abundancy headed into second half 2021. 
  
• We
  are hearing US soybean end users have bought a lot of soybeans this week as elevators selling soybeans to meet margin calls.  A raise in CME margins again will likely shake out more shots in the market. 
  
• CBOT
  crush was active and there are indications commercials are covered through first half April.  Rolling of the March Crush to May was noted today. 
  
• Meanwhile,
  someone was active trading SA soybean futures.  A graph of Santos Platts versus rolling Chicago futures shows a good correlation.  We eventually would like to see the exchanges embrace several more cash settled OTC global locations to entice superior hedging. 
  
• China’s
  Sinograin was seeking US soybeans for October and November shipments and at least one cargo was bought.  China also bought at least one Brazilian soybean cargo for March shipment. 
  
• On
  Wednesday, funds bought an estimated 13,000 soybean contracts, 5,000 soybean meal and 4,000 soybean oil lots. 
  

 

Oilseeds
Export Developments

• None
  reported

 

MPOB
Jan. 11 palm estimates:

           
Range  Median

Production      
1,296,000-1,386,000   1,326,283

Exports
           1,272,000-1,650,000   1,500,000

Imports
          60,000-150,000           100,000

Closing
stocks 1,107,000-1,477,200   1,218,535

 

Palm
futures – nearby rolling third month

Source:
Reuters and FI

 

Argentina
Oilseeds and Products Update

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Oilseeds%20and%20Products%20Update_Buenos%20Aires_Argentina_12-31-2021

 

 

Updated
1/05/20

March
$12.50 and $14.50 range

March
$415 and $480 range

March
is expected to trade in a 42.50 and 46.00 cent range

 

Wheat

• US
  wheat futures traded in par with movement with the USD, and EU wheat futures that with that said we think had more influence over CBOT price action as there was not much news to trade with. Euronext wheat futures sank after hitting a 2-year high, natural as
  that contract sees less volatility, long term, versus the US markets over recent years. 
  
• On
  Wednesday funds sold an estimated net 5,000 Chicago SRW wheat contracts. 
• Ukraine
  grain exports were 26.4 million tons so far in 2020-21, down from 31.49 million at the same date in 2020-economy ministry. Ukraine winter grain crops remain in good conditions. 
  
• EU
  March milling wheat was down 1.75 at 175.00 euros. 
• China
  was set to sell another, or at least offer, 4
  million tons of wheat from reserves, so this may have dampened bull trader optimism. 
  
• Looking
  at the larger picture, we see no major draw in global wheat stocks over the next 12-24 months, so bull traders in soybeans and corn must be aware that sometimes a huge upswing in commodity agriculture futures is predicated on movement on all aspects of the
  industry, not just a hiccup in one or two of the major commodities.  Weather is good across the Black Sea and we see not major setback to winter grain/oilseed production across the rest of the northern hemisphere.  But it only takes two major back to back
  weather events to send off an unpresented price event, IMO. 

 

Export
Developments.

• Japan
  this week seeks 120,228 tons of food wheat from the United States, Canada and Australia in a regular tender.
  
• Turkey
  seeks 155,000 tons of feed barley on January 12. 
• Ethiopia
  canceled an import tender for 600,000 tons of wheat that was set to close back on November. 
  
• Bangladesh
  seeks 50,000 tons of wheat in January 13 for shipment within 40 days of contract signing. 
  
• Bangladesh
  also seeks 50,000 tons of wheat in January 18 for shipment within 40 days of contract signing. 
  

 

Rice/Other

·        
Cotton futures are on track for their longest rally in 11 years. 

 

Updated
1/6/20

March
Chicago wheat is seen in a $5.90‐$7.00 range (top up from $6.65)

March
KC wheat is seen in a $5.70‐$6.20 range

March
MN wheat is seen in a $5.75‐$6.15 range