FI Morning Grain Comments 02/10/21

PDF attached

 

Morning.

 

Lower
prices seen on slowing Chinese buying of major agriculture goods ahead of their long Chinese New Year holiday.  We heard they did buy one Brazilian June shipment and one March shipment.  Some follow through selling from the USDA report on Tuesday was also
noted.  Losses in soybean oil are limited from a 57 point rally in Malaysian palm futures (up 5 consecutive days) and a $20/ton higher cash trade. MPOB data had little influence in the higher trade. Trade was focused on very good Feb 1-10 palm exports. 

 

Funds
are still very long

 

 

 

 

 

 

 

Weather

 

A
close monitoring of the distribution of rain in Argentina is still warranted in the first week of the outlook due to moisture stress that will increase in some pockets of the nation. Rain will still be lowest in an area from La Pampa through southeastern Cordoba
and into Santa Fe. There will be some erratic rain in this part of Argentina through which will at least slow the drying a little. Critically dry conditions are still not expected through next Tuesday. This evening’s GFS model run suggested greater rainfall
in southern and central Argentina Feb. 19 – 22 due to a frontal boundary. This would fit World Weather, Inc.’s belief of some increase in rainfall in late February; though, amounts in this evening’s run may have been a little overdone. Conditions in Brazil
will continue to be favorable.

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

Wednesday,
Feb 10:

• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• Malaysian
  Palm Oil Board data on January palm oil end- stocks, output, exports
• Malaysia
  Feb. 1-10 palm oil export data from AmSpec, Intertek, SGS
• FranceAgriMer
  monthly grains report
• HOLIDAY:
  Vietnam

Thursday,
Feb 11:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Conab’s
  data on yield, area and output of corn and soybeans in Brazil
• Russian
  consultant IKAR holds agricultural conference, day 1
• Port
  of Rouen data on French grain exports
• HOLIDAY:
  China, Japan, South Korea, Vietnam

Friday,
Feb 12:

• 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
• Russian
  consultant IKAR holds agricultural conference, day 2
• New
  Zealand Food Prices
• HOLIDAY:
  China, Hong Kong, Indonesia, Malaysia, South Korea, Singapore, Vietnam, Thailand, Philippines

Source:
Bloomberg and FI

 

 

 

 

Macros

 

Corn.

• Corn
  futures are leading the ag markets lower.  Follow through selling from a higher than expected US corn carryout reported yesterday was noted.  China has also slowed US feedgrain purchases.  The funds are still very long, but with a setback in price, look for
  potential bottom picking by the commercials. 
• On
  Thursday Conab will update Brazilian corn and soybean supply.  We expect them to start factoring a smaller corn area due to delayed second corn crop plantings. 
  
• Goldman
  roll – day 4. 
• A
  Bloomberg poll looks for weekly US ethanol production to be unchanged at 936,000 barrels (929-941 range) from the previous week and stocks up to 181,000 barrels to 24.497 million.
  
• Hong
  Kong reported a swine fever outbreak resulting in the loss of 3,000 pigs.

 

Corn
Export Developments

·        
None reported

 

 

Soybean
complex.  

• Lower
  prices seen today on slowing Chinese buying of major agriculture goods ahead of their long Chinese New Year holiday.  We heard they did buy one Brazilian June shipment and one March shipment.  Some follow through selling from the USDA report on Tuesday was
  also noted. 
• The
  March contract did trade above $14.00 overnight but lower corn dragged the contract down to $13.81.  
  
• Losses
  in soybean oil are limited from a 57 point rally in Malaysian palm futures (up 5 consecutive days) and a $20/ton higher cash trade.
  
• Malaysian
  palm exports for the Feb 1-10 period were up 47 percent, according to AmSpec, to 399,529 tons.  ITS reported a 54 percent increase from the same period a month ago. 
  
• India
  exported 336,390 tons of soybean meal during the month of January, a 484% increase from January year ago from higher demand by Asia and Europe. Soybean meal process globally hit a 6-1/2 year high last month and importers are seeking cheaper origins.  India’s
  soymeal exports more than tripled to 950,134 tons in the first four months of the 2020-21 marketing year (Oct-Sep). 
  
• Offshore
  values are leading soybean oil 32 points lower and soybean meal $4.30 lower. 
  
• China
  cash crush margins were 146 cents on our calculation (142 previous), compared to 203 at the end of last week and to 147 year ago.
  

• Malaysian
  palm oil

 

Higher
than expected MPOB palm imports during Jan helped offset lower than expected exports.  End of Jan palm inventories rose more than expected.  Exports are near a 14-year low.  One factor to keep in mind is slowing production.  Labor shortages have also been
an issue this month. 

 

 

Soybean
Export Developments

• Egypt
  seeks at least 30,000 tons of soyoil and 10,000 tons of sunflower oil on Thursday for March 16-April 5 shipment.  They look for bids for payment with a 180 day letter of credit and at sight, allowing them to choose between both offers. 
  
• Turkey
  seeks 25,000 tons of sunflower oil on Feb 18.  Shipment is sought between Feb. 26 and March 20.
  

 

 

 

Wheat

• US
  wheat is lower following corn and soybeans. 
• EU
  March milling wheat was down 0.50 at 223.25 euros.
• The
  short term US weather forecast calls for some precipitation for the US western Great Plains. US temperatures will remain cold for the balance of the week, raising concerns over winterkill. 
  
• Ukraine
  and eastern Europe will also see very cold temperatures next week.  Commodity Weather Group noted about 15 percent of the wheat area is vulnerable to winterkill. 
  
• China’s
  wheat areas saw less than normal precipitation since January, 80 percent less for some areas relative to normal. 
  
• FranceAgriMer
  increased its forecast of French soft wheat exports outside the European Union this season to 7.45 million tons from 7.27 million tons last month, but well below the record 13.57 million tons in 2019-20.
• Ukraine
  grain exports are down 20 percent so far this season. 13.16 million tons of wheat, 12.21 million tons of corn and 3.96 million tons of barley had been shipped.
  

 

Export
Developments.

• Japan
  bought 86,845 tons of milling wheat this week.  Original details as follows:
  

• 4
  participants:  Jordan seeks 120,000 tons of wheat.  
• Japan
  seeks 80,000 tons of feed wheat and 100,000 tons of barley in a SBS import tender on February 16 for arrival by July 29. 
  

 

Rice/Other

·        
We see the 2021 US cotton area down 9 percent to 11.0 million acres from 12.093 million in 2020, a downward revision from 11.9 million we estimated late fall. 

·        
Results awaited: Syria is in for 25,000 tons of rice on February 9.