FI Evening Grain Comments 03/10/21

Mar 10, 2021







PDF attached

 

Funds
were big sellers today in a widespread ag commodity risk off session. 

 

 

FI
updated US soybean balance sheets will be sent Thursday morning

 

Weather

 

World
Weather Inc.

WORLD
WEATHER THAT IS MOST IMPORTANT

  • Argentina
    rainfall will be greatest next week from Tuesday through Thursday when most of the nation will get rain

o  
Relief from persistent dryness and crop stress will occur at that time

o  
Rain totals of 0.50 to 2.00 inches will result and some of the model data today suggests greater rainfall in Cordoba

o  
Only the far eastern part of Buenos Aires is missed by the rain or gets minimal amounts

o  
Confidence in the increase in rainfall is high

  • Argentina’s
    upper air wind flow pattern is changing, and next week’s precipitation will be followed by additional opportunities for rain a little later in the month after a brief period of drier biased conditions
  • Crop
    stress in Argentina is reaching a seasonal peak and the next several days will hurt the most immature crops in the driest areas

o  
Soil moisture is becoming seriously short in much of the nation from parts of La Pampa and western Buenos Aires into the heart of Santa Fe and southern Entre Rios.

o  
Chaco is still suffering from serious dryness as are some grain, oilseed and cotton areas in Formosa

o  
Relief for all of these areas will occur next week, but until then stress will continue high enough to reduce some potential yield

  • Little
    change was noted in Brazil’s weather overnight

o  
The nation will continue to experience net drying in the south over the coming week while periodic showers and thunderstorms maintain a challenging environment for soybean harvesting and Safrinha planting farther to the north

o  
Less intensive and less significant rain, though, will help progress increase

  • Brazil
    weather was drier biased again Tuesday helping to improve topsoil conditions for some better harvest and planting progress, but the risk of more showers and thunderstorms periodically will continue

o  
The excesses of rain noted in the past couple of weeks should be a thing of the past, though

  • U.S.
    weather is still looking wet for the central states this weekend into next week

o  
Snow will fall today from southwestern South Dakota to Minnesota with 2 to 6 inches and local totals to 8 inches

      • Moisture
        totals will vary up to 0.50 inch

o  
Stormy weather in the central two-thirds of the Great Plains Friday through Monday will generate moisture totals of 0.20 to 0.80 inch and local amounts to 1.25 inches in Texas, 0.50 to 2.50 inches in Oklahoma with some local totals
to 3.00 inches “possible” and 0.75 to 3.00 inches and locally more in Kansas, northeastern Colorado and Nebraska

o  
Snowfall will range from 12 to 34 inches in eastern Wyoming, far northeastern Colorado, extreme western Nebraska and in the southwest corner of South Dakota (this occurs Saturday into Monday)

o  
Snowfall in other areas of Nebraska and southern South Dakota will range from 4 to 10 inches

  • U.S.
    Livestock will be threatened in Wyoming, southwestern South Dakota, western Nebraska and northeastern Colorado due to very heavy snow during the calving season
  • Travel
    in the heavy snowfall areas of the U.S. will be shut down for a little while

o  
This might include Denver and Cheyenne, Wyoming and Rapid City, South Dakota areas

  • Severe
    thunderstorms will impact the southern U.S. Plains late this week and into the weekend
  • Some
    of the rain from the central Plains will move to the Midwest, Delta and southeastern states next week, but it will be less intensive
  • Missouri,
    southern Illinois and eastern Kansas may experience the greatest flooding this weekend
  • Another
    storm is possible in the Midwest, Delta and southeastern states in the second week of the forecast, March 20-23
  • Freezes
    returning to the central and southern Plains late this weekend and next week will not cause any permanent damage to wheat that is greening
  • Drought
    in the northwestern U.S. Plains and Canada’s Prairies will not be significantly changed by brief periods of light precipitation in this coming week to ten days

o  
The pattern of weather in the central and eastern United States, however, does suggest improved weather will come to these drought stricken areas later this spring

  • U.S.
    southeastern states will experience net drying and warmer temperatures that will support more aggressive corn planting and other farming activities through the weekend

o  
Rain will evolve next week

  • U.S.
    lower Delta will experience favorable rice and corn planting conditions for a little while in the coming week, but showers late this week and into the weekend will interrupt some fieldwork
  • U.S.
    northern Delta crop areas will stay quite wet over the coming week to ten days and drying will be needed before fieldwork can begin this spring
  • U.S.
    South Texas and the Texas Coastal Bend is still too dry with little rain potential for a while

o  
Unirrigated crops in the region may not get planted as aggressively as usual and will need moisture for seed germination and plant emergence

o  
Planting in irrigated areas will increase while the weather is dry and soil temperatures are rising

  • U.S.
    west Texas precipitation will be welcome this weekend, but it is not likely to be great enough to seriously change soil conditions and long term planting prospects are not very good without greater precipitation

o  
Planting is still several weeks away leaving time for improvement

o  
The high Plains region will get less than 0.50 inch

o  
The Low Plains will receive 0.25 to 0.80 inch with local totals over 1.00 inch

o  
The Rolling Plains will receive 0.50 to 1.50 inches

  • U.S.
    Midwest field moisture will remain adequate to abundant over the next ten days to two weeks
  • Canada’s
    eastern Prairies received some significant snow Tuesday

o  
Accumulations varied up to 8 inches and moisture totals reached close to 0.50 inch in some areas

o  
Bitter cold followed the snow into west-central Manitoba

o  
The moisture was good for the areas impacted, but much more precipitation is needed before drought is significantly eased

o  
Much of Saskatchewan is still quite dry along with southern Alberta

o  
Not much follow up precipitation is expected for a while

  • Southeast
    Canada will experience near to below average precipitation and near to above average temperatures during the coming week to ten days
  • North
    Africa rainfall Tuesday was light and erratic, but still welcome

o  
This week’s precipitation has been welcome, but more will be needed to ensure the best yields later this spring

o  
Drier weather is expected for a while

  • Ivory
    Coast, Ghana, Benin and southern Nigeria received another round of rain Tuesday and more is expected over the coming ten days

o  
New rain totals will vary from 0.50 to 3.00 inches and locally more will be supportive of coffee and cocoa flowering and help increase soil moisture for future rice, sugarcane and cotton production

  • East-central
    Africa rainfall will continue greatest in Tanzania this week and probably next week, as well

o  
A more erratic and light precipitation pattern is expected elsewhere with net drying in Ethiopia, northern Uganda and in a few southwestern Kenya locations

  • South
    Africa will experience an erratic rainfall pattern through the next week with temperatures mostly a little warmer than usual

o  
The drying trend will encourage early season crop maturation, but subsoil moisture and irrigation will support late season crops

o  
Summer crop conditions will remain favorably rated, although there will be a growing need for showers by mid-March

      • Some
        increase in precipitation is expected next week
  • India
    was mostly dry Tuesday

o  
Rain will be mostly limited to the extreme north, extreme south and far Eastern States during the coming week leaving most key crop areas in a net drying mode

  • China
    weather over the next ten days will continue dry in Yunnan while periodic rain and thunderstorms occur near and south of the Yangtze River

o  
Rainfall will be greatest in Guizhou, Hunan and northern Guangxi where 2.00 to 4.00 inches and locally more will result

o  
Other showers and thunderstorms will occur in east-central China periodically during the next ten days, but periods of sunshine will also occur and rain totals will be mostly under 1.00 inch

      • Northeastern
        Sichuan and immediate neighboring areas will receive 1.00 to 3.00 inches of rain

o  
Northeastern China and the Yellow River Basin will see alternating periods of precipitation and sunshine through the next two weeks maintaining a very good outlook for winter crop development when seasonal warming begins

      • Spring
        planting prospects remain exceptionally good. but seasonal warming is needed in many areas

o  
Temperatures will be above normal in most of the nation during the coming week to ten days

      • Winter
        crops will continue to come out of dormancy in the central and south. Spring planting will advance around periods of rain in the south
  • Australia
    weather in the coming week is expected to bring back scattered showers and thunderstorms to northeastern New South Wales and southern Queensland

o  
The precipitation will be good for late season crops and for improving topsoil moisture for autumn planting

o  
Early maturing cotton might not welcome the precipitation and could become a little too wet

  • Mexico
    drought conditions are still prevailing, although the impact on winter crops is low due to irrigation

o  
Water supply is low in some areas and a notable improvement in rainfall is needed, but not very likely

o  
Dryland winter crops are stressed and will yield poorly

o  
Freeze damage is common in northern parts of the nation due to a couple of cold surges this winter

o  
Rain in the coming week will be mostly confined to the east coast and temperatures will be seasonable with a slight warmer bias in the driest areas

  • Central
    America precipitation will continue greatest along the Caribbean Coast and in Guatemala while the Pacific Coast receives the lightest and most erratic rainfall, but some precipitation will fall especially in Costa Rica and Panama.
  • Southeast
    Asia rainfall will occur relatively normally over the next two weeks

o  
Mainland areas will experience few showers periodically in the next week to ten days

      • The
        resulting rainfall will be sporadic and light with net drying probably continuing in many areas for a while longer

o  
Philippines rainfall will be scattered and mostly light to moderate until late this week when a boost in precipitation is expected due to a tropical disturbance impacting the nation

o  
Indonesia and Malaysia weather during the next two weeks will bring rain to most crop areas maintaining a very good outlook for crop development

      • A
        boost in precipitation is expected and will be welcome
  • Indonesia
    and Malaysia rainfall will occur frequently over the next two weeks
  • New
    Zealand weather over the next ten days will include a mix of sunshine and rain while temperatures are a little cooler than usual

o  
The nation’s soil moisture has drifted below average especially in the north

  • Southern
    Oscillation Index has been falling and was at +5.50 this morning. The index is expected to continue to fall for a little longer, but will soon start to level off a bit
  • Europe
    weather will be mixed over the next two weeks with periods of rain, mountain snow and sunshine occurring while temperatures are seasonable

o  
The environment will be good in maintaining moisture abundance in much of the continent and seasonal warming will bring more winter crops out of dormancy in parts of the west and south

o  
Net drying is expected in Spain and Portugal

  • Western
    CIS temperatures will be cooler than usual this week while waves of snow and rain prevail

o  
The environment will be good for spring crop development, but for now there will not be much greening or crop development for a while longer

o  
Too much moisture is also present in the soil in western Russia and flooding may be an issue for a while this spring as a deep layer of snow melts while new precipitation falls

Source:
World Weather inc.

 

Bloomberg
Ag Calendar

Wednesday,
March 10:

  • EIA
    weekly U.S. ethanol inventories, production
  • Malaysian
    Palm Oil Board data on February palm oil end-stockpiles, output, exports
  • China
    National People’s Congress in Beijing
  • Malaysia’s
    March 1-10 palm oil export data
  • ISO
    sugar conference
  • FranceAgriMer
    monthly grains report

Thursday,
March 11:

  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
  • Port
    of Rouen data on French grain exports
  • China
    National People’s Congress in Beijing
  • New
    Zealand Food Prices
  • Conab’s
    data on yield, area and output of corn and soybeans in Brazil
  • HOLIDAY:
    India, Indonesia

Friday,
March 12:

  • ICE
    Futures Europe weekly commitments of traders report (6:30pm London)
  • CFTC
    commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
  • FranceAgriMer
    weekly update on crop conditions

Source:
Bloomberg and FI

 

 

 

Macros

US
CPI (M/M) Feb: 0.4% (est 0.4%; prev 0.3%)

US
CPI Ex Food, Energy (M/M) Feb: 0.1% (est 0.2%; prev 0.0%)

US
CPI (Y/Y) Feb: 1.7% (est 1.7%; prev 1.4%)

US
Core CPI Index (feb) actual:  vs 270.03 previous

US
CPI Ex Food, Energy (Y/Y) Feb: 1.3% (est 1.4%; prev 1.4%)

US
Real Avg Weekly Earnings (Y/Y) Feb: 4.1% (prevR 5.7%; prev 6.1%)

US
Real Avg Hourly Earnings (Y/Y) Feb: 3.4% (prevR 3.9%; prev 4.0%)

 

US
DoE Crude Oil Inventories (W/W) 05-Mar: 13798K (est 2500K; prev 21563K)

–
Distillate Inventories (W/W): -5504K (est -3100K; prev -9719K)

–
Cushing OK Crude Inventories (W/W): 526K (prev 485K)

–
Gasoline Inventories (W/W): -11869K (est -2900K; prev -13624K)

–
Refinery Utilization (W/W): 13.00% (est 5.50%; prev -12.60%)

 

Corn

 

“The
Environmental Protection Agency
is considering issuing proposals for U.S. biofuel blending obligations for both 2021 and 2022 at the same time, two sources familiar with the matter said, after the coronavirus pandemic delayed rulemaking….The agency has previously combined proposals for multiple
years of requirements after missing deadlines, most recently in 2015, when it dealt with 2014, 2015 and 2016 at the same time.” (Reuters)

Opinion
– Combining two years would make sense given the sharp drop in gasoline consumption during Covid-19 restrictions, that has still a long way to recover.  As noted below, more than 90% of finished motor gasoline included ethanol blend, but production of ethanol
is still down 10 percent from this time year ago.  Diesel on the other hand faired ok during 2020 as more trucks delivering goods were on the US roads, IMO. 

 

Weekly
US ethanol production
came in better than expected at 938,000 barrels per week, highest rate since mid-Jan, up 89,000 barrels, versus a
Bloomberg poll looking for a 57,000 barrel increase and stocks came in 355,000 barrels below the previous week to 22.425 million BB poll @ 22.433 million).  US ethanol stocks are lowest since November 20, 2020.  Ethanol production is still down about 10 percent
from around this time year ago, and the September to date ethanol production combined is running 10.2 percent below the same period a year earlier.  They have not been any reported imports since early December.  UUS gasoline stocks of 231.6 million barrels
are down 12 million from the previous week and demand (product supplied) increased for the second week in a row to 8.726 million, highest weekly rate since early November.  Using the latest gasoline demand for the week ending March 5th, its down
7.7 percent from about the same period a year earlier.  Ethanol blended into finished motor gasoline was running at 94 percent, down from 96 percent week earlier.  We raised our US 2020-21 corn for ethanol usage to 4.970 billion bushels from 4.962 billion
previously on US economic recovery and states loosening restrictions.  USDA is at 4.950 billion bushels. 

 

 

 

Export
developments.

  • Turkey
    seeks 115,000 tons of corn for animal feed on March 18 for March 25-April 20 shipment.  

 

Updated
3/1/21

May
corn is seen in a $5.20 and $5.75 range.

July
is seen in a $5.00 and $6.00 range.

December
corn is seen in a $3.85-$5.50 range.

 

Soybean
Complex

  • The
    soybean complex     traded
    sharply lower     on
    widespread agriculture commodity selling and lower lead for products by offshore values.  Soybean oil paired losses bias the font month active contract.  Back months shed 25-37 points.  CBOT May soybeans were down sharply by 30.25 cents but remain above key
    MA support levels. 
  • Some
    bears were pointing to SA weather for the reason for the weakness in the CBOT complex. 
    Argentina
    will continue to see a drier bias into next week impacting yield potential, but rain is expected next Tuesday and Wednesday is expected to bring widespread relief (1-2+ inches).  Northern and central Brazil will remain active for at least the next week. 

 

 

  • Rosario
    grains exchange reported the Argentina soybean crop are seeing reduced yields from drought.  They are now at 45 million tons.  We are lower as well at 46 million tons from 46.5 million.  For Brazil we are using 133 million tons, around other trade expectations. 
  • Russia
    is considering imposing a formula-based export tax on sunflower oil.  This is not surprising as they are reviewing all other major exporting commodities amid rising domestic food prices. 
  • Malaysian
    palm oil rallied 59 MYR (hit a 13-year high) and cash was up $10/ton on tight stocks despite a poor start to March Malaysian palm exports.  China’s soybean market was down 1.7%, soybean off 0.2% and SBO down nearly 1%.  Rotterdam vegetable oil values are mixed
    and meal weaker. 
  • Malaysia’s
    palm oil stocks at the end for February were a much less than expected 1.301 million tons, 116,700 tons below expectations in part to February production hitting a nearly five-year low.  Imports were also less than expected.  Malaysian February palm exports
    were 895,556 tons, about 57,000 tons less than expected. 
  • AmSpec
    reported March 1-10 Malaysian palm exports fell 22.1 percent to 311,198 tons from 399,529 tons shipped during February 1 – 10.   ITS reported at 22.6% drop to 309,898 tons. 
  • China
    cash soybean crush margins on our analysis improved by a good amount to 146 cents from 105 previous, up from 113 cents late last week and compares to 128 cents year earlier. 
  • Poor
    China cash crush margins and upcoming arrivals of Brazilian soybeans have kept China away from purchasing soybeans.  They have inquired for February-April 2022 Brazilian shipment this week. 
  • Funds
    were net sellers of 14,000 soybean contracts, sellers of 7,000 soybean meal contracts and net sellers of 1,000 bean oil contracts.

 

Export
Developments

  • Pakistan
    bought 594,000 tons of soybean in recent weeks from Brazil and the US.  Pakistan is currently buying 200,000 to 250,000 tons of soybeans per month. 
  • The
    USDA CCC seeks 2,030 tons of packaged oil on March 16 for shipment Apr 16 – May 15.

 

 

May
soybean oil share

Source:
Reuters and FI

 

Updated
3/4/21

May
soybeans are seen in a $13.50 and $15.00 range.

May
soymeal is seen in a $400 and $460 range.

May
soybean oil is seen in a 49.00 and 54.00 cent range.

 

Wheat

 

Export
Developments.

  • Egypt
    announced after the Wednesday close they seek wheat for April 15-25 shipment. 
  • Algeria
    ended up buying between 450,000 and 510,000 tons of milling wheat at around $323 a ton c&f. 
  • Algeria
    seeks around 50,000 tons of feed barley on March 11 for shipment by April 25. 
  • The
    Philippines seek up to 385,000 tons of animal feed wheat, on March 11 for shipment between June to December.
  • Pakistan
    seeks 300,000 tons of wheat on March 16 for April-August shipment. 

 

Rice/Other

·        
Bangladesh seeks 50,000 tons of rice on March 18.

·        
Bangladesh recently got approval to import 150,000 tons of rice from India.  (3/10)

·        
Syria seeks 25,000 tons of white rice on March 29, from China or Egypt. 

 

Updated
3/9/21

May
Chicago wheat is seen in a $6.25‐$6.90 range

May
KC wheat is seen in a $5.75‐$6.75 range

May
MN wheat is seen in a $6.20‐$6.65 range

 

 

 

Terry Reilly

Senior Commodity Analyst – Grain and Oilseeds

Futures International
One Lincoln Center
18 W 140 Butterfield Rd.

Oakbrook Terrace, Il. 60181

W: 312.604.1366

treilly@futures-int.com

ICE IM: 
treilly1

Skype: fi.treilly

 

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