FW: FI Evening Grain Comments 01/06/20

PDF attached

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Weather
conditions in many Brazil and Argentina crop areas will be favorable over the next two weeks, although a close watch on the rain distribution is warranted. A few pockets could be a little too dry. Northern Argentina and a few areas in Paraguay and southern
Brazil will be drier biased for a while this week, but relief should come around in time. A greater soaking of rain will be needed. Today’s rain in southwestern Argentina will maintain excellent crop conditions in that region.

            South
Africa summer crop conditions should be largely beneficial over the next couple of weeks. Australia crops will continue hot and too dry for change, although it would not be surprising to see some rain in eastern parts of the nation later this month.

            India’s
winter crops are in very good condition and should remain that way for the next two weeks. Summer crop harvesting will continue around brief periods of rain.

            China
rapeseed conditions will have potential for improvement in the spring after this week’s storm system impacts the production region. A follow up storm system will see to it the region is plenty moist in the spring.

            Europe
and the southwestern parts of the CIS will dry out for a while, but winter crops are dormant or semi-dormant and will not be bothered. A boost in precipitation will be needed in the late winter prior to the start of spring growth.

            Overall,
weather today will likely provide a mixed influence on market mentality with a slight bearish bias.

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Winter
crop conditions around the world are either fair to good or improving. Recent moisture in the United States will be good for spring crop development. Snow will develop in the northwestern U.S. Plains before bitter cold conditions evolve in the next week to
ten days.

            There
is no risk of crop threatening cold in Russia, Europe or most of China’s key winter crop production areas for the coming week to ten days. Winter crops are not as well established as they should be in some areas of southeastern Europe, southern Russia or Kazakhstan.
Weekend precipitation in eastern China will improve wheat establishment in the spring.

India’s
winter crops are poised to perform quite well this year and rain in Pakistan will improve the outlook there as well. China’s precipitation today and that coming over the next week will improve spring crop development potential.

            Dryness
in northern Africa will be closely monitored with southwestern Morocco the only area at risk of lower production today but drying in northern Morocco and northwestern Algeria will continue for a while.

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

Source:
World Weather Inc. and FI

 

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

MONDAY,
JAN. 6:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• EU
  weekly grain, oilseed import and export data
• CFTC
  COT – after the close
• Ivory
  Coast cocoa arrivals

TUESDAY,
JAN. 7:

• New
  Zealand global dairy trade auction

WEDNESDAY,
JAN. 8:

• Conab
  releases 4th estimate for Brazil’s soy, corn crops

THURSDAY,
JAN. 9:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, 8:30am
• Port
  of Rouen data on French grain exports
• United
  Nation’s FAO Food Price Index
• Australia’s
  Bureau of Meteorology releases climate statement
• New
  Zealand commodity price

FRIDAY,
JAN. 10:

• USDA’s
  monthly World Agricultural Supply and Demand (WASDE) report, noon
• Malaysia
  end-2019 palm oil stocks, production, export numbers; Jan. 1-10 palm oil export data from AmSpec, Intertek and SGS
• U.S.
  winter wheat seeding forecast
• USDA
  quarterly wheat, barley, corn, soybean stocks, noon
• ICE
  Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions ~1:30pm (~6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm

Source:
Bloomberg and FI

 

 

 

 

 

 

Bloomberg:

U.S.
corn production seen 159m bu lower, yields seen a point lower at 166 bu/acre

Dec.
1 corn stocks seen at 11.47b bu, 465m less than in Dec. 2018

Soybean
ending stocks seen down 44m bu to 431m

Soybean
production seen down 37m bu, yield seen at 46.5 bu/acre vs 46.9

Dec.
1 soybean stocks seen at 3.19b bu, 555m less than in Dec. 2018

U.S.
2020 winter wheat planting seen at 30.64m acres vs 31.16m in 2019

 

 

 

USDA
inspections versus Reuters trade range                                            

Wheat      
345,109     versus  300000-500000           range

Corn         
550,930     versus  400000-600000           range

Soybeans  
963,830     versus  500000-1000000         range

 

 

 

GRAINS
INSPECTED AND/OR WEIGHED FOR EXPORT

                 
REPORTED IN WEEK ENDING JAN 02, 2020

                    
       — METRIC TONS —

————————————————————————-

                                                  
CURRENT     PREVIOUS 

             ———–
WEEK ENDING ———-  MARKET YEAR  MARKET YEAR

 
GRAIN      01/02/2020  12/26/2019  01/03/2019    TO DATE     TO DATE  

 

BARLEY             
0           0           0       16,760        6,191 

CORN         
550,930     408,946     501,565    8,601,828   18,474,243 

FLAXSEED           
0         100           0          396          218 

MIXED              
0           0           0            0            0 

OATS               
0           0           0        1,918        1,693 

RYE                
0           0           0            0            0 

SORGHUM       
67,388       4,049      31,803      937,362      490,515 

SOYBEANS     
963,830     991,801     682,518   21,744,427   17,309,583 

SUNFLOWER          
0           0           0            0            0 

WHEAT        
345,109     312,090     263,918   14,846,048   12,940,992 

Total      
1,927,257   1,716,986   1,479,804   46,148,739   49,223,435 

————————————————————————-

CROP
MARKETING YEARS BEGIN JUNE 1 FOR WHEAT, RYE, OATS, BARLEY AND

FLAXSEED; 
SEPTEMBER 1 FOR CORN, SORGHUM, SOYBEANS AND SUNFLOWER SEEDS.

INCLUDES
WATERWAY SHIPMENTS TO CANADA.

 

CFTC
Commitment of Traders

 

 

 

 

 

Corn.

·        
Corn futures ended 0.75-1.75 cents lower on uncertainty over Middle East tensions and slow export inspections. 

·        
Funds sold an estimated net 5,000 corn.

·        
USDA US corn export inspections as of January 02, 2020 were 550,930 tons, within a range of trade expectations, above 408,946 tons previous week and compares to 501,565 tons year ago. Major countries included
Mexico for 257,383 tons, Colombia for 156,462 tons, and Japan for 89,779 tons.

·        
Brazil and Argentina saw good rain over the weekend but not all areas were wet. Northern Argentina dried down along with southern Brazil. There is concern over the state of the summer corn and soybean crops
for southern Brazil.   

·        
FC Stone estimated Brazil corn production at 97.7 million tons.  Conab is at 98.4 million tons. 

·        
Baltic Dry Index fell another 7 percent or 63 points to 844.

·        
Gold was up about $15 as of 2:00 pm CT. 

·        
USD was 16 points lower.  

 

Franken,
J. "2020 Hogs: More Supply, Profitable Prices?." farmdoc daily (10):1,  Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, January 6, 2020.

https://farmdocdaily.illinois.edu/2020/01/2020-hogs-more-supply-profitable-prices.html?utm_source=farmdoc+daily+and+Farm+Policy+News+Updates&utm_campaign=ab2c85ce22-EMAIL_CAMPAIGN_2018_09_04_04_03_COPY_01&utm_medium=email&utm_term=0_2caf2f9764-ab2c85ce22-17364946

 

Jan
10 reports.  For the upcoming USDA S&D and production update, we are assuming a 400,000 lower US corn planted area than USDA’s October estimate, and for the harvested area to decline 511,000 acres. Our 2019 US corn yield is 0.2 bushel higher than USDA, resulting
in a 13.594 billion production estimate, 67 million below current USDA.  Our first quarter feed estimate is 2.280 billion bushels, about 18 million above our calculated Q1 2018 corn for feed use. 
Our working December 1 corn ending stocks is 11.489 billion bushels, well below 11.665 billion University of Ill projected. 
Our
2019-20 US ending stocks estimate is 1.862 billion bushels, with a bias for it to go lower. USDA is currently at 1.910 billion bushels. Our estimate for USDA’s January update is 1.848 billion bushels, 62 million below December. 

 

Export
Developments

• India’s
  MMTC delayed their import tender for 50,000 tons of non-GMO corn from Jan 2 to January 7,
  for shipment by February 10. Another source put shipment by Jan 22. 

 

 

Updated
12/17/19

• Our
  CBOT March corn trading range is $3.80 and $4.10

 

Soybean
complex.

·        
March soybeans rebounded to settle 3.25 cents higher at $9.4475, March meal up $1.70 at $302.90/short ton, and March soybean oil down 56 points at 34.52 cents.  The soybean crush fell hard with March down
1.0150 at 94.46 cents.

·        
A Chinese trade delegation plans to travel to Washington next week to sign the Phase 1 trade deal.

·        
Fundamental news was light.  Soybeans started the day lower on Middle East tensions and sharply lower palm oil weighing on US soybean oil.  Soybean inspections improved but take away China and shipments to
other countries are still slow (see table below) Malaysia plans to reinstate their palm export duty for crude palm oil and the market dropped 74 MYR despite traders seeing a decline in end of December palm oil stocks.

·        
December 23 March soybean oil high was 34.25. Since then March soybean oil has yet to close the gap higher between December 23 and December 25. Today’s low toughed a resistance level of 34.48. Any trade below
34.48 could be perceived as shot-term bearish.  We are short term bearish soybean oil but medium and long term bullish global vegetable oils.

·        
Funds bought an estimated net 4,000 soybeans, bought 2,000 soybean meal and sold 4,000 soybean oil. 

·        
USDA US soybean export inspections as of January 02, 2020 were 963,830 tons, high end a range of trade expectations, below 991,801 tons previous week and compares to 682,518 tons year ago. Major countries
included China Main for 353,715 tons, Egypt for 128,501 tons, and Indonesia for 93,074 tons.  Crop year to date (September – January 3) inspections for soybeans are running near 22.2 million tons, above 17.5 million tons year ago and 29.8 million tons during
the same period in 2017-18.  If you take out China, shipments to other countries fell 26 percent from the same period year earlier.  Shipments to China total 9.6 million tons, up from 475,000 year ago and below 20.5 million tons during the same period in 2017-18.

·        
Brazil December soybean exports to China fell to 3.05 million tons from 3.93 million in 2018.  2019 soybean exports to China dropped 15% from the previous year to 57.96 million tons. 

·        
China Plans to Send Team to U.S. for Jan. 15 Deal Signing
https://www.bloomberg.com/news/articles/2020-01-05/china-delegation-may-travel-to-washington-on-jan-13-scmp-says 

 

Oilseeds
Export Developments

• USDA
  CCC seeks 14,650 tons of packaged vegetable oils for export to Yemen on January 7 with shipment February 1-29 (Feb. 16-Mar. 15 for plants at ports). 
  

 

On
January 10, there is a possibility USDA may increase their Brazil soybean production after the country saw favorable weather over the past couple of weeks.  South Brazil is still dry and remains a concern, but overall production is still expected to be a record. 
US 2020 soybean exports are uncertain as China committed a large amount of FH 2020 from Brazil.  USDA is at 123 million tons for Brazil soybean production, compared to 117 million tons last year. FC Stone on Monday estimated the Brazil soybean crop at 121.76
million tons.  Conab is at 121.1 million tons.  We are near 123 million tons. 

 

 

 

China’s
soybean yield is gradually rising.  A boost in GMO soybean plantings could increase production 4-5 million tons over the next 5 years, making China less reliant on soybean imports. 

 

 

 

 

Updated
12/27/19

• CBOT
  March soybeans are seen in a $9.00-$9.60 range
• March
  soybean meal is seen a $285 and $310 range
• March
  soybean oil 33.00-36.00 range
• Upside
  in oil share is seen limited at 37.5 percent, for the short term.  Eventually it could rally to 38.5-39.0 percent.
  

 

Wheat

·        
US wheat futures ended
mixed. March Chicago was down 4.50 cents, March KC up 2.25 cents, and March Minn up 0.50 cent. 

·        
Funds sold an estimated net 4,000 Chicago wheat. 

·        
March Paris wheat futures closed 0.25 euro lower at 188.25.

·        
Weekly EU trade data was delayed on Monday due to technical issues.  It was not published last week due to the holiday. 

·        
USDA US all-wheat export inspections as of January 02, 2020 were 345,109 tons, within a range of trade expectations, above 312,090 tons previous week and compares to 263,918 tons year ago. Major countries
included Nigeria for 74,002 tons, Philippines for 64,255 tons, and Malaysia for 54,209 tons.

 

Export
Developments.

• Results
  are awaited on Ethiopia in for 80,000 tons of durum wheat and another 75,000 tons of soft wheat.
  
• Jordan
  seeks 120,000 tons of wheat on January 7.
• Morocco
  seeks to import about 354,000 tons of US durum wheat on January 9 for arrival by May 31.
  
• Mauritius
  seeks 95,000 tons of optional origin wheat flour on Jan. 10, 2020, for shipment between July 1, 2020, and June 20, 2021. 
  
• Turkey
  seeks 550,000 tons of red milling wheat on January 14, minimum protein content of 13.5% for January 21-February 15 shipment. 
  
• Turkey
  seeks 100,000 tons of durum wheat on January 14 for Jan 25-Feb 25 shipment.
  

·        
Syria seeks 200,000 tons of soft wheat from Russia on January 20, 2020. 

 

Rice/Other

• Results
  awaited: Syria seeks 45,000 tons of white rice on Jan. 6, 2020.  (Reuters) Short grain white rice of third or fourth class was sought. No specific country of origin was specified in the tender, traders said.  Some 25,000 tons was sought for supply 90 days
  after confirmation of the order and 20,000 tons 180 days after supply of the first consignment.  The rice was sought packed in bags and offers should be submitted in euros.  A previous tender from the agency for 45,000 tons of rice with similar conditions
  had closed on Nov.
  13.
• South
  Korea seeks another 30,764 tons of rice on Jan 7 for Sep-Oct arrival. 

Details
of the new tender are as follows:

   
TONNES(M/T)  GRAIN TYPE      ARRIVAL/PORT

       
20,000   Brown Medium    Sept.1-Oct.31,2020/Busan

       
10,764   Brown Medium    Sept.1-Oct.31,2020/Gwangyang

 

Updated
12/27/19
(high end increased)

·       
CBOT Chicago March wheat is seen in a $5.40-$5.80 range

·       
CBOT KC March wheat is seen in a $4.70-$5.00 range

·       
MN March wheat is seen in a $5.50-$5.75 range

·       
We like KC wheat over Chicago wheat.