FI Morning Grain Comments 03/10/21

PDF attached

 

Morning.
 

 

US
CPI (inflation) was as expected.  USD was down slightly and WTI 44 higher at the time this was written. Lower trade for CBOT agricultural futures across the board as we see risk off post USDA report and lower lead by the overnight outside markets.  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.  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.  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. 

 

 

 

 

 

 

 

Weather

 

 

World
Weather Inc.

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Crop
stress in Argentina is very serious in some areas and rain must fall immediately to stop the decline in late season yields. Rain next week will bring on some relieve and will be a trend changing event that will set the stage for improved field and crop conditions,
but additional yield and quality declines may occur until then.

Southern
Brazil will dry down, but subsoil moisture will carry on favorable crop development for a while. Weather elsewhere in Brazil will be typical of this time of year which may still be a little disruptive to the late harvest of soybeans and planting of Safrinha
crops. Soybean production in Brazil is not likely to change much, but corn production is still vulnerable to a more notable decline depending on when the summer monsoon will end. World Weather, Inc. expects the monsoon to end in April.

            U.S.
planting will occur more aggressively in the southeastern states during the coming week with some fieldwork increasing in the lower Delta while continuing in southern Texas. Parts of South Texas and the Texas Coastal Bend will continue too dry for unirrigated
crops.

            Early
season planting in southwestern Europe and southern China will be a little sluggish for a while. Farming activity in India will include winter crop filling and maturation. Some of India’s winter crops have yielded a little below that of last year, but a good-sized
crop is still expected.

            Eastern
Australia will receive periods of rain through the next ten days resulting in some slower early season crop maturation while the moisture will be good for late season crops. South Africa will experience net drying for a while, but rain next week should help
maintain a good finish for late season crops.

            Overall,
weather today will likely continue to keep a solid floor underneath soybean and corn futures prices due to concern in Brazil.

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Rain and snow in the central and southern U.S. Plains Friday through Monday will ensure a better environment for crop recovery in areas damaged by February’s bitter cold. New tiller setting is expected and some production potential
may be regained over time.

            Portions
of Canada’s eastern Prairies received some much needed snowfall Tuesday and the moisture from that event will improve topsoil conditions for use in the spring. More precipitation is needed throughout the Prairies, especially the central and east before planting
begins in April.

            Winter
crops in Europe and the western CIS are in mostly good shape. Winterkill has been minimal this year, but flooding may be a potential problem in western Russia over the next few weeks as snow melt occurs while new precipitation falls.

            China
winter crops are poised for good development and some improved rainfall in the Middle East recently has improved crops in that region. North Africa will get some welcome rain this week as well.

            India’s
wheat is filling and would still benefit from a little rain, but it is getting late enough in the season to minimize the change rain would have on production.

            Overall,
weather today will support a bearish bias to market mentality.

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%)

 

 

Corn

• Lower
  trade for CBOT agricultural futures across the board as we see risk off post USDA report and lower lead by the overnight outside markets.  The USD was down slightly and WTI up 48 cents at the time this was written.  US CPI came in at expectations. 
  
• Corn
  is pressured by slowing US export commitments, lower trade in China corn futures and expectations for soil moisture across the western Corn Belt to improve later this week. 
  
• Dalian
  corn hit its lowest level in at least 5 weeks as supply concerns eased and expectations for the China corn area to increase this planting season.
  
• Another
  African Swine Fever case was reported in Sichuan province.  China soybean meal fell 1.7% overnight. 
  
• Yesterday
  funds
  were net sellers of 8,000 corn contracts on the session. 
• A
  Bloomberg poll looks for weekly US ethanol production to be up 57,000 barrels (876-935 range) from the previous week and stocks up to 8,000 barrels to 22.433 million.
  

 

Export
developments.

• None
  reported

 

 

Soybeans

• The
  soybean complex is
  trading lower on
  widespread agriculture commodity selling and lower lead for products by offshore values.  CBOT May soybeans are down sharply but remain above key MA support levels.  Some traders are getting bearish soybean oil citing overbought conditions, but as long as
  hedge funds remain bullish and EU vegetable oil price hold high levels, we don’t see a significant setback. 
  
• Some
  are 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. 
  

 

 

• 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. 
  
• Yesterday
  the were net buyers 4,000 soybean contracts, buyers of 1,000 soybean meal contracts and net buyers of 6,000 bean oil contracts.
  
• ICE
  May canola was down 14.10 as of 7:30 am CT to 782.10.
• Rotterdam
  vegetable oil prices were unchanged to 10 euros higher from this time yesterday and meal 1-5 euros lower. 
  
• Offshore
  values are leading CBOT SBO 96 points lower and meal $4.50 short ton lower.
  
• China
  cash crush margins on our analysis were 146 cents (105 previous), up from 113 cents late last week and compares to 128 cents year earlier. 
  

China
futures:

Malaysian
palm oil:

 

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.

 

Wheat

• US
  wheat futures are down 6-12 cents but a pickup in global export developments reported so far this week may limit losses. 
  
• FranceAgriMer
  raised its French soft wheat stocks for the end of 2020-21 season by about tons to 2.7 million tons.
• Yesterday
  funds were net buyers of 6,000 net soft wheat contracts on the session.
• EU
  May milling wheat was down 1.25 at 228 euros as of 7:10 am CT. 
• Ukraine’s
  grain exports fell 21.5% to 32.9 million tons so far this season.  They included 13.85 million tons of wheat, 14.53 million tons of corn and 3.97 million tons of barley.  The 13.85 million tons of wheat represents about 80% of the total export quota of 17.5
  million tons for the July-June season.
• UkrAgroConsult:
  Russian wheat exports are estimated at 36 million tons in the 2021-22 season, versus 38 million tons year earlier. 
  

 

Export
Developments.

• 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.

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