FI Morning Grain Comments 02/22/21

PDF attached

 

Morning.

 

Mixed
trade today in the US soybean complex on lack of direction.  Grains are higher from a lower USD, higher WTI, fresh wheat import announcements, and follow through buying in corn.  China is expected to step up on food security, a hint they may buy additional
agriculture products. 

 

 

Weather

 

 

 

 

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:  No major trend changes were suggested this evening for Argentina or Brazil. That will leave some market concern over long term crop development potential in both countries. However, World Weather, Inc. still urges
some caution in long term market positioning because of the potential for some surprisingly well-timed rainfall in early March that could ease the level of concern over Argentina dryness. Confidence is still low based on recent model wavering, but our Trend
Model still points to the potential for some timely relief. In Brazil, good weather is expected in the south from southernmost Mato Grosso to southwestern Sao Paulo and into Rio Grande do Sul and Paraguay while there will be some ongoing concern about field
progress and general crop and field conditions in northern and eastern Mato Grosso and a few areas in Tocantins, Goias and Minas Gerais.

            Weather
in the rest of the world is mostly not adverse enough to have much sway on market mentality. India will trend dry and warmer this week into next week and China’s southern rapeseed will continue breaking dormancy while experiencing a wetter bias in soil conditions
for a while.

            Overall,
weather today will likely generate a mixed influence on market mentality with a bullish floor remaining for support, but model interpretations tonight could sway trade a little one way or the other.  The evening GFS model run is wetter for March 2-4 in Cordoba,
San, Luis, Santa Fe and La Pampa which may tilt the trade a little lower for a while.

 

MARKET
WEATHER MENTALITY FOR WHEAT AND OTHER SMALL GRAINS:  No crop damaging cold is expected around the world in the next ten days. Bitter cold is likely later this week in Russia’s southern region, but snow will precede the event tonight into Tuesday with Wednesday
the coldest morning.

            China
precipitation in the coming ten days will be good for future wheat development. Recent rain in India was good for minor wheat areas in the south, but the north still needs more moisture to induce the best yields.

            Middle
East weather looks favorable while North Africa will still need a more generalized rain after sporadic showers occur this week.

            Europe
crop areas will dry down for a while this week and that will help reduce flood potentials.

            U.S.
hard red winter wheat areas may get a little more precipitation later in the week and next week, but it will be light.

            U.S.
Midwest, Delta and southeastern wheat areas will stay plenty wet as will southeastern Canada.

            Overall
weather today will likely produce a mixed influence on market mentality.

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

Monday,
Feb 22:

• USDA
  Export Inspections – corn, soybeans, wheat, 11am
• EU
  weekly grain, oilseed import and export data
• MARS
  crop bulletin
• Ivory
  Coast cocoa arrivals
• EARNINGS:
  Wilmar
• HOLIDAY:
  Russia

Tuesday,
Feb 23:

• USDA
  Milk production, 3pm
• U.S.
  pork, beef, poultry cold storage data, 3pm
• U.K.
  National Farmers Union virtual annual conference to discuss the future of agriculture, horticulture
• EARNINGS:
  IOI Corp.
• HOLIDAYS:
  Japan, Russia

Wednesday,
Feb 24:

• EIA
  weekly U.S. ethanol inventories, production
• Amsterdam
  sustainable cocoa conference (Feb 24-26)
• U.S.
  poultry slaughter, 3pm
• MPOB
  palm oil prices seminar

Thursday,
Feb 25:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports
• International
  Grains Council monthly report
• Malaysia’s
  Feb. 1-25 palm oil export data
• USDA
  red meat production, 3pm
• EARNINGS:
  Minerva, BRF, FGV (tentative), Golden Agri

Friday,
Feb 26:

• 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
• U.S.
  agricultural prices paid, received, 3pm
• Earnings:
  Olam
• HOLIDAY:
  Thailand

Source:
Bloomberg and FI

 

 

CFTC
Commitment of Traders Report

 

 

 

 

 

 

 

 

Macros

 

Corn.

• Corn
  futures traded higher overnight on technical buying and expectations US corn shipments will increase after February on slowing Black Sea exports.  Slow Mato Grosso, Brazil, corn plantings was also seen supportive. 
  
• On
  Friday funds sold an estimated net 17,000 contracts. 
• Last
  week Mexico said they are going ahead with their plan to phase out GMO corn. 
  
• CBOT
  corn open interest was up about 14,500 contracts on Friday. 
• Ukraine
  corn exports during February were estimated at 2.8 million tons by UGA, about as expected/ 
  
• China’s
  AgMin said hog inventories are expected to return to end-2017 levels by around June.  Officials also said they will enhance its ability to secure supplies of grains and other agricultural products, and support companies to integrate into supply chains of global
  agricultural products.
• US
  DDGS exports could slow over the next 1-2 months over container shortages and rising freights rates along with slowing US ethanol production and high soybean meal prices that make the commodity attractive for domestic feeding. 
  
• USDA
  US Cattle on Feed as of February 1 was 0.7 percentage point above trade expectations and placements were also higher than expectations. 
  

 

 

Corn
Export Developments

·        
South Korea’s NOFI passed on 69,000 tons of corn for arrival in South Korea around June 20. Prices were too high.  Lowest price offered was $298.02 a ton c&f.

 

Source:
Reuters

 

Soybean
complex.  

• CBOT
  soybean futures are
  mostly higher this morning on follow through buying form USDA’s tight outlook for US new-crop stocks.  Mixed trade in products on lack of direction. China cash crush margins eroded from the previous week.  Argentina saw an improvement in rain over the weekend
  that could boost late crop conditions. 
• Argentina
  will be very warm to hot and experience net drying conditions in many areas during the coming ten days after a few early week thunderstorms.  Restricted rainfall is expected from Mato Grosso and southwestern Sao Paulo to Rio Grande do Sul and Paraguay. 
  
• Argentina’s
  soybean crush is starting to pick up.  It hit a five-year high during January at 3.22 million tons, up nearly 900,000 tons from a year earlier and up sharply from 808,200 tons during December.  2020 crush stood at 35.9 million tons.  AgriCensus calculated
  that was the lowest crush since 2013.
• On
  Friday funds bought an estimated net 3,000 soybean contracts, sold 2,000 soybean meal and bought an estimated 4,000 soybean oil. 
  
• ICE
  canola March futures were 2.50 lower at 771/ton. May was up 2.70 at 738.20.

• APK-Inform:
  Ukrainian-origin sunoil prices rose to a range of $1,395 to $1,415 per ton FOB Black Sea with delivery in March-April.

• India
  exported 498,060 tons of oilmeal during the month of January, up from 169,397 tons year ago.  (oilmeal includes all major meals). 
  
• Offshore
  values are leading soybean oil 38 points lower and soybean meal $0.40 higher. 
  
• We
  heard China bought at least one Brazilian soybean cargo since Friday, for March shipment. 
  
• China
  cash crush margins on our analysis were 113 cents versus 140 cents last week and compares to 126 cents around this time last year. 
  
• China
  

• AmSpec
  reported February 1-20 palm oil exports at 697,794 tons, up 10.3 percent from the same period last month.  ITS reported Feb 1-20 shipments up 14.9% at 698,380 tons. 
  
• Malaysian
  palm oil:

 

Soybean
Complex Export Developments

• Turkey’s
  TMO only bought 5,000 tons of sunflower oil, not 25,000 as thought, at an average price of $1,394/ton for shipment between Feb. 26 and March 20.
  

 

Wheat

• Wheat futures are higher after Algeria bought barley and Saudi Arabia secured wheat.  The USD is lower. 
  
• On Friday funds sold an estimated 8,000 soft red winter wheat contracts. 
  
• US current snow overage is starting to recede: 47% Mon. (66% on Sat) versus 26% month ago.  
  
• EU March milling wheat was up 0.25 euros at 239.00 euros. 
  
• APK-Inform: Ukrainian-origin 12.5% protein wheat stood at $278 to $285 per ton FOB Black Sea. 
  
• SovEcon reported Black Sea export prices for wheat unchanged from a week ago at $248 per ton while IKA reported
  12.5% protein at $283/ton fob, up $5.50 from the previous week. 
• Russian weekly wheat exports doubled to 1.6 million ton as of Feb 11.  The increase in exports reflects
  exports scrambling to move wheat ahead of the tax of €25/ton sets in. 

 

 

Export Developments.

• Algeria bought about 150,000 tons of feed barley for LH March shipment. 
  
• 30,000 tons at about $277 a ton c&f
  
• 120,000 tons at about $281 a ton c&f
• Saudi Arabia’s SAGO plans to import 355,000 ton of wheat at an average price of $330.04 per ton from farms
  from in Australia, Canada and Ukraine for delivery from May to December 2021.
• Jordan seeks 120,000 tons of wheat on February 24.
  
• Japan seeks 57,331 tons of Australian milling wheat this week. 
  

• Syria seeks 200,000 tons of wheat for shipment within 60 days of contract signing. 
  
• Jordan seeks 120,000 tons of barley on February 23.
  

 

Rice/Other

·        
Copper futures hit a 9 year high.

·        
Mauritius seeks 4,000 tons of long grain white rice, optional origin, on March 2, for delivery between April 15 and June 15.