FW: FI Evening Grain Comments 02/14/20

PDF attached

 

 

US
is on holiday Monday.  Positioning seen today.  Covid-19 continues to hang over the grain markets. 

 

USDA
released its 2020:

·       
Agriculture projections

https://www.ers.usda.gov/publications/

·       
Agriculture Baseline Database

https://www.ers.usda.gov/calendar/?month=2&year=2020&day=14

 

Agriculture
Baseline https://www.ers.usda.gov/webdocs/publications/95912/oce-2020-1.pdf?v=1705.6

 

2020
US GDP was estimated at 1.9% versus 2.5% in 2019

 

2020
US Acreage: (table 4)

·        
Corn 94.5 versus 89.9 in 2019

·        
Soybeans 84.0 versus 76.5 in 2019

·        
All-Wheat 45.0 versus 45.2 in 2019

 

2020-21
US carryout

·        
Corn 2.754 billion versus USDA Feb. WOB of 1.892 billion for 2019-20

·        
Soybeans 518 million versus USDA Feb. WOB of 425 for 2019-20

·        
All-Wheat 950 million versus USDA Feb. WOB of 940 for 2019-20

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Not
much has changed overnight. Favorable soil moisture is present in Argentina, Brazil, South Africa, India and some eastern Australia locations which should support crop development.  There is still some concern over harvest conditions in early season soybean
areas of Goias and southwestern Minas Gerais which may lead to more delay in second season corn planting, but progress is being made every day and it looks as though the pace is not far from the five year average even though much slower than last year. Good
field working conditions have been occurring in other areas and that should minimize the amount of crop that will be later planted.

           
Too much rain in northeastern South Africa in the past week has resulted in some flooding. Crop damage has not been assessed, but the region impacted is a minor production region in eastern Limpopo and northeastern Mpumalanga. Other areas in South Africa have
ideal crop development conditions.

More
rain will fall this week in northern and eastern Europe and from there to Ukraine and that will improve early season crop development potentials for areas that were too dry last autumn.

China’s
winter crops are still rated favorably with a big potential for improving rapeseed conditions in the early weeks of spring after recent weeks of rain.

India’s
winter crops are still poised to perform quite favorably, despite a drier biased outlook for the next ten days.

Southeast
Asia crops are still rated well, despite erratically distributed rainfall in recent weeks.

Eastern
Australia sorghum conditions have improved, but drought remains in key production areas and much more rain will be needed before winter planting of canola begins in late April. Summer crop development has improved, but it will still be a very small crop.

           
Today’s weather will have a mixed influence on market mentality.

 

MARKET
WEATHER MENTALITY FOR WHEAT: 

Many
of the winter crop areas in the world that experienced poor crop establishment because of dryness last autumn have seen some timely precipitation in recent weeks. The moisture should help improve winter crop establishment prior to reproduction this spring.
There has also been very little winterkill this year and that should be supporting larger crops. With that said there may have been some damage in a few minor wheat areas in central Nebraska Thursday morning when temperatures fell near slightly below zero
Fahrenheit while snow cover was minimal. Today’s bitter cold in the Midwest occurred in mostly snow covered areas.

            The
biggest dry concern today is in North Africa and in particular southwestern Morocco where durum wheat and barley production has been cut. There is potential for larger small grain production losses from North Africa if improved rainfall does not occur soon.
Spain and Portugal are also drying out, but have adequate subsoil moisture for now. The outlook leaves most of these areas dry or mostly dry for the next ten days and perhaps longer.

            Overall,
weather today will continue to provide a mixed influence on market mentality.

Source:
World Weather Inc. and FI

 

 

Bloomberg
Ag Calendar

FRIDAY,
FEB. 14:

• 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
• FranceAgriMer
  crop conditions – French crops office expected to resume crop-conditions reports after winter break
• New
  Zealand food prices
• Biosev
  holds analyst conference call to discuss 4Q earnings.

MONDAY,
FEB. 17:

• MARS
  bulletin – monthly report on Europe crop conditions
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• Cosan
  Earnings Conference Call, Sao Paulo
• HOLIDAY:
  U.S. (President’s Day)

TUESDAY,
FEB. 18:

• Australian
  crop report from Abares, Canberra
• USDA
  weekly corn, soybean, wheat export inspections, 11am
• New
  Zealand global dairy trade auction

WEDNESDAY,
FEB. 19:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• EARNINGS:
  Marfrig

THURSDAY,
FEB. 20:

• USDA
  Agricultural Outlook – corn, wheat, soy, cotton acreage, 8:20am
• USDA
  milk, read meat production, 3pm
• Malaysia’s
  Feb. 1-20 palm oil exports data
• EARNINGS:
  Wilmar

FRIDAY,
FEB. 21:

• USDA
  outlook — corn, soy, wheat cotton end-stockpiles
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, 8:30am
• 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
• FranceAgriMer
  weekly update on crop conditions
• U.S.
  Cattle on Feed, 3pm
• EARNINGS:
  Pilgrim’s Pride

Source:
Bloomberg and FI

 

 

Macros

·        
US Retail Sales Advance (M/M) Jan: 0.3% (est 0.3% ; prevR 0.2% ; prev 0.3%)

·        
US Import Price Index (M/M) Jan: 0.0% (est -0.2% ; prevR 0.2% ; prev 0.3%)

·        
US Industrial Production (M/M) Jan: -0.3% (est -0.2% ; prevR -0.4% ; prev -0.3%)

·        
US Capacity Utilization Jan: 76.8% (est 76.8% ; prevR 77.1% ; prev 77.0%)

·        
US Manufacturing (SIC) Production Jan: -0.1% (est -0.1% ; prevR 0.1% ; prev 0.2%)

·        
US Univ. Of Michigan Sentiment Feb P: 100.9 (est 99.5; prev 99.8)

–
Univ. Of Michigan Conditions Feb P: 113.8 (est 114.0; prev 114.4)

–
Univ. Of Michigan Expectations Feb P: 92.6 (est 90.0; prev 90.5)

–
Univ. Of Michigan 1-Year Inflation Feb P: 2.5% (est 2.4%; prev 2.5%)

–
Univ. Of Michigan 5-10 Year Inflation Feb P: 2.3% (prev 2.5%)

·        
Canadian Existing Home Sales (M/M) Jan: -2.9% (est -0.1% ; prev 0.9%)

 

Corn.

·        
March corn futures ended 1.75 lower, in a quiet trade, on waning US export demand. China was a big buyer of Ukraine corn this week.

·        
March corn traded in a 3-penny range by mid-morning and ended up in a 5.25 cent range for the day.

·        
$3.80 March corn traded at least once over the last 12 sessions. 

·        
Reuter reported cargos of US chicken bound for China have been rerouted to nearby countries because of the coronavirus outbreak. 

·        
High water levels for lower Midwestern rivers are slowing barge traffic. 

·        
1500+ deaths and nearly 66,500 cases of coronavirus were recorded as od Sat. morning.

·        
The Baltic Dry Index increased 4 points on Friday to 425.  Capesize remains negative at 294.

Export
Developments

• Algeria’s
  ONAB bought about 35,000 tons of optional origin corn between $194.75 a ton c&f and $201 a toe c&f for shipment in the second half of March

·        
China sold 1.32 million tons of reserve corn to feed users across the southern provinces last week.   

·        
China’s state reserve held an auction on Friday to sell 20,000 tons of frozen pork. 
They apparently sold 14k.

 

Soybean
complex.

·        
Soybeans trended lower on Friday, taking a breather after rallying mid-week.  Soybean meal was leading soybeans lower during the session on Friday but ended off $0.80-$1.00 short ton, while soybean oil, in
a two-sided trade, finished 9-15 points lower, despite the rebound in palm oil and talk of US domestic soybean oil end user demand by biofuel companies.  Pricing of soybean oil was evident late in the trading week.  COT didn’t appear to have any major surprises. 
Traders should watch the short positions as positioning could kick in from now until early March, ahead of northern hemisphere planting decisions. 

• US
  markets are closed for holiday on Monday. 
• CNGOIC:
  Feb imports of China soybeans 4.8MMT
• AmSpec
  reported 1-15 Feb exports of palm oil at 511,629 tons, down from 569,260 tons during Jan 1-15. ITS was at 541,444 tons, down 6.7% from 580,421 tons in FH Jan.  
  
• NOPA
  will issue its US January crush on Tuesday (Monday in the US is a holiday).
  Reuters trade average is 173.7 million bushels,
  down from 174.8 in December.  End of Jan. stocks are seen at 1.782 billion pounds, above 1.757 billion at the end of December 2019. 
  
• Abiove
  estimated the Brazil soybean crop at 123.7 million tons, up from 122.8 previously.  Exports were seen at 73.5 million tons, down from 75 million projected in January.  They look for the crush to end up near 44.5 million tons, up 500,000 from their January
  projection.  Separately, Agroconsult is at 126.3 million tons. 
• USDA
  baseline has a 2020-21 US soybean crush of 2135.  For 2021-22 they pegged it to grow to 2170.   That’s a lot of expansion they have penciled in.
  

·        
China cash crush margins as of this morning, using our calculation, were 147 cents per bushel (150 previous), compared to 139 cents more than a week ago and 40 cents around this time last year. 

• The
  USDA February Outlook Forum starts on Thursday. 

 

Oilseeds
Export Developments

• None
  reported

 

 

 

Wheat

·        
Chicago wheat prices tried to rally early Friday on technical buying but finished lower. Back month KC and MN were unchanged to higher. March settled 1.50 lower for Chicago, 0.50 lower for KC and 1.25 cent
lower for Minn.  

·        
USD was higher. 

·        
News was light and lack of US export developments sent a negative undertone to the grain markets. 

·        
March Paris wheat futures increased 1.25 at 194.00 euros.

·        
France began planting barley with 16 percent complete by Feb 10, above last year and average. 

 

Export
Developments.

• A
  Thailand feed mill bought a cargo of feed wheat at around $244.50/ton for May shipment.  Origin was optional. 
  
• Syria
  seeks 200,000 tons of wheat from Russia on February 17 for shipment within 60 days of contract signing. 
  
• Turkey
  seeks 25,000 tons of barley on Feb. 18 for 2/26-3/15 loading. 
• Jordan
  seeks 120,000 tons of wheat, optional origin, on Feb 18.
• Jordan
  seeks 120,000 tons of feed barley on Feb 19. Possible shipment periods are May 1-15, May 16-31, June 1-15 and June 16-30.

• Turkey’s
  TMO seeks around 250,000 tons of wheat and 50,000 tons of durum on Feb. 18 for March shipment.
  
• Japan
  in an SBS import tender seeks 120,000 tons of feed wheat and 200,000 tons of feed barley for arrival in Japan by July 30, on Feb. 19. 
  

 

Rice/Other

·        
Results awaited: Mauritius has delayed the deadline for to buy up to 6,000 tons of long grain white rice to Feb. 10, for delivery between May 1 and July 31.

·        
Results awaited: Turkey’s TMO seeks 20,000 tons of rice on Feb. 12 for shipment between Feb. 19 and April 6.