FW: FI Evening Grain Comments 02/18/20

PDF attached

 

 

Wheat
was the leader today.  Locust swarms with a 40-mile reach (length) that have been destroying farm crops Africa could now threaten Southwest Asian countries.  Coronavirus continues to hit selected markets, such and India chicken demand and Indonesia palm export
shipments to China.  SA soybean crops are getting larger. 

 

Weather

·        
Flooding remains a serious issue across the far southern Delta and Southeast.  

·        
Snow and rain will develop in the southern U.S. Plains Wednesday and Thursday with accumulations of 1 to 4 inches.

·        
A larger central U.S. storm is expected during mid- to late-week next week that will bring significant moisture to the upper Midwest, northern Plains and a part of the western Corn Belt. 

·        
Argentina’s Chaco saw flooding over the weekend where more than 14 inches fell. 

·        
Argentina’s bottom line is mostly favorable.

·        
Brazil crops will all received rain at one time or another during the next two weeks.

Source:
World Weather Inc. and FI

 

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

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

 

USDA
inspections versus Reuters trade range                                            

Wheat      
501,990     versus  400000-600000           range

Corn         
795,228     versus  600000-800000           range

Soybeans  
992,294     versus  700000-1250000         range

 

 

 

GRAINS
INSPECTED AND/OR WEIGHED FOR EXPORT

                 
REPORTED IN WEEK ENDING FEB 13, 2020

                           
— METRIC TONS —

————————————————————————-

                                                  
CURRENT     PREVIOUS 

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

 
GRAIN      02/13/2020  02/06/2020  02/14/2019    TO DATE     TO DATE  

BARLEY           
144       8,830           0       28,432        6,852 

CORN         
795,228     788,549     941,811   12,308,616   24,190,837 

FLAXSEED           
0          24           0          520          242 

MIXED              
0           0           0            0            0 

OATS               
0         100           0        2,766        1,993 

RYE                
0           0           0            0            0 

SORGHUM       
74,141      77,577     118,255    1,300,785      799,017 

SOYBEANS     
992,294     640,620   1,083,567   28,277,053   23,812,175 

SUNFLOWER          
0           0           0            0            0 

WHEAT        
501,990     567,349     363,523   17,730,804   15,753,830 

Total      
2,363,797   2,083,049   2,507,156   59,648,976   64,564,946 

————————————————————————-

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.

 

USDA
Outlook forum Bloomberg trade estimates:

 

Macros

·        
Euro hit a 34-month low. 

·        
Canada Manufacturing Sales (M/M) Dec: -0.7% (est 0.7% ; prevR -1.0% ; prev -0.6%)

·        
(Reuters) – China will cut some pension contributions and insurance fees to help companies cope with the coronavirus, while firms in Hubei province, the epicenter of the outbreak, won’t have to pay pensions,
jobless and work-injury insurance until June.

·        
China also lowered one key interest rate to pump more funds into their system. 

 

Corn.

·        
March corn futures ended 5.25 cents higher in part to a strong rally in soybeans and renewed hopes China will buy US agriculture products by March 15. 

·        
CH traded at $3.80 every trading day since January 27. 

·        
USDA US corn export inspections as of February 13, 2020 were 795,228 tons, high end of a range of trade expectations, above 788,549 tons previous week and compares to 941,811 tons year ago. Major countries
included Mexico for 257,628 tons, Japan for 233,306 tons, and Colombia for 134,864 tons.

·        
Rallies maybe limited on PNW corn tender woes.  Platts reported two South Korean firms (MFG and NOFI) stopped taking offers for US PNW corn due to quality problems.  High levels of broken corn foreign material
(BCFM) was noted. 

·        
High water levels for lower Midwestern rivers continue to slow barge traffic. 

• As
  of Tuesday morning, China put the overall death toll at 1,868 and 72,436 infections.
  
• Brazil’s
  Mato Grosso was 63 percent complete on corn plantings, above 52 percent for the 5-year average. 
  
• Soybean
  and Corn Advisory:  Estimated the Argentina corn crop at 49.0 million tons, up 1.5 million, and left Brazil unchanged at 100.0 million tons.
  

·        
General Administration of Customs: China removed import restrictions on U.S. poultry and poultry products that were imposed in 2013, 2014 and 2015.  (Bloomberg)

·        
China warned the poultry and product industry may take a hit from coronavirus.  Poultry prices are down hard this year as demand eroded. 

·        
Bulgaria reported a bird flu outbreak (N5N8) at a duck farm in the southern part of the country. 

·        
India officials mentioned demand for chicken dropped over the past three weeks after social media reports speculated the coronavirus was thought to be spread through chickens.  Broiler chicken prices have
fallen to 35 rupees a kg from around 70 rupees in January. 

·        
Zimbabwe plans to import Uganda to make up for a shortfall in consumption. 

 

Export
Developments

·        
South Korea’s MFG bought 135,000 tons of optional origin corn at $211.79/ton c&f for arrival around June 11 and $211.78 for arrival around June 18.  One more cargo may have traded.

·        
South Korea’s NOFI bought 66,000 tons of optional origin corn at $212.30/ton c&f for arrival around May 20. 

 

 

Updated
2/11/20

• CBOT
  March corn is seen in a $3.75 and $3.90 range. 

 

Soybean
complex.

·        
Soybeans ended 1.0-1.75 cents lower despite a 24-cent rally in wheat. Lack of China buying and large SA production estimates along with corn/soybean spreading limited upside in soybeans.  Brazil should see
needed rain across the southern growing areas later today into Wednesday that will help reduce some areas with short topsoil moisture.  China said they will but some US agriculture products by early March.  Traders will likely believe it when they see it. 
China is not completely avoiding US soybeans. The long vessel lineup in Brazil may entice China buying from the US. 

·        
March soybean meal ended $1.10 higher and soybean 9 points lower. 

• NOPA
  US January crush came in well above an average trade guess at 176.9 million bushels, a record for any month, and soybean oil stocks were 2.013 billion pounds, 231 million pounds above the trade, and well above 1.757 billion pounds at the end of December. 
  
• Soybean
  and Corn Advisory:  Increased 2019-20 Brazil soybean crop by 1 million tons to 125 million tons.  Argentina was increased 1 million tons to 54 million. 
  

·        
China lifted import restriction on US poultry and poultry products. 

·        
USDA US soybean export inspections as of February 13, 2020 were 992,294 tons, within a range of trade expectations, above 640,620 tons previous week and compares to 1,083,567 tons year ago. Major countries
included Mexico for 216,873 tons, China Main for 203,165 tons, and Egypt for 121,471 tons.

·        
China’s central bank on Monday lowered a key interest rate (one-year rate) and injected more liquidity into the system.

• Ukraine
  sunflower exports since August are running at 2.225 million tons, up 61 percent yoy, according to APK Inform. 
  
• Cargo
  surveyor SGS reported month to date February 15 Malaysian palm exports at 529,191 tons, 56,060 tons below the same period a month ago or down 9.6%, and 144,938 tons below the same period a year ago or down 21.5%.  Shipments to the EU were 139,696 tons (167.6k
  Jan 1-15) and China 108,150 tons (68.3k Jan 1-15). 
• 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

• NOPA
  crush, daily adjusted, was record for any month.  176.9 million bushels ended up 3.2 million bushels above an average trade guess. 
  
• Soybean
  oil stocks were unusually large at 2.013 billion pounds, 231 million above a trade estimate. 
  
• Soybean
  oil stocks for the southwest swelled to 545.7 million pounds from 399.7 million at the end of December.  Note the record for the southeast stocks was 615 million pounds at the end of January 2013.  Back then exports were robust, presumably out of the Gulf.
  Jan-Mar 2013 exports were 736 million pounds.  This Jan-Mar 2020 quarter we have penciled in 394 million pounds.  The increase in stocks across the southeast, due in part to a record crush for that region, leads us to believe there is a possibility we could
  see a pop in US soybean oil exports, or increase in demand by biodiesel plants.  Keep in mind 100,000 tons of soybean oil equates to about 220 million pounds. 
  
• SBM
  exports for the month of January of 931,100 tons were highest since 2015. 
  
• The
  January soybean oil yield ended up 11.50 pounds per bushel versus 11.51 in December, and lowest for the month of January since 2015. 
  

 

 

Brazil

• Major
  Brazilian ports were scheduled to ship 8.66 million tons of soybeans as of Feb. 14, up from 8.58 million tons a week earlier – Williams via Bloomberg.  6.4 million tons were scheduled to be shipped at this time last year. 
  
• AgRural
  estimated the 2019-20 Brazil soybean production at 125.6 million tons, upward revised from 123.9 million tons in January.  21 percent of the crop had been collected, below 36 percent a year ago and near its 5-year average. 
  
• Soybean
  and Corn Advisory:  increased 2019-20 Brazil soybean crop by 1 million tons to 125 million tons.  Argentina was increased 1 million tons to 54 million. 
  
• Last
  week 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. 
• Brazil’s
  economic policy manager estimated a long-term coronavirus outbreak could have an economic impact on Brazil but maintained a 2.4 percent growth for 2020. 
  
• Brazilian
  truck strike on Monday over high diesel prices crippled port operations in Santos. 
  

 

University
of IL: 2020 Soybean Price Prospects Hubbs,
T. "2020 Soybean Price Prospects." farmdoc daily (10):29,  Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, February 17, 2020. farmdocdaily.illinois.edu/wp-content/uploads/2020/02/fdd170220.pdf

 

Oilseeds
Export Developments

• Egypt’s
  GASC seeks 30,000 tons of soybean oil and 10,000 tons of sunflower oil on Thursday for arrival April 10-30. 
  

 

 

Updated
2/14/20

• CBOT
  March soybeans are seen in a $8.70-$9.00 range  
• March
  soybean meal is seen a $285 and $300 range
• March
  soybean oil 30.10-31.90 range   

 

Wheat

·        
Chicago wheat prices hit a one-month high on technical buying (20- and 50-day MA’s), locust problems in Africa and renewed hopes China will buy US agriculture products after announcing over the weekend they
plan to buy goods from the US by early March.  There were also several new import tenders, including two large ones of US origin.  Not all news was bullish. India estimated a record wheat production for 2019-20 which will keep their imports at zero. 

·        
March Chicago was up 24.0 cents, March KC up 20.25, and March MN up 14.50 cents. 

·        
USDA US all-wheat export inspections as of February 13, 2020 were 501,990 tons, within a range of trade expectations, below 567,349 tons previous week and compares to 363,523 tons year ago. Major countries
included Mexico for 79,105 tons, Thailand for 57,839 tons, and Philippines for 57,200 tons.

·        
ABARES updated their Australia 2019-20 wheat crop to 15.17 million tons, down from 15.85 million tons at the end of 2019, but still above some private estimates.  15.17 million tons puts the crop lowest in
12 years.  Australia has lost export market share over the past decade. 

·        
Meanwhile, India projected a record 2019-20 wheat crop of 106.21 million tons, well above the 99-100 benchmark traders see as a break-even.  Domestic wheat consumption for India may end up near 98 million
tons in 2019-20, a record, according to USDA.  2019-20 production was estimated by USDA at 102 million tons, 4.2 million below the India government estimate.  If 106.2 million tons is realized, India could potentially export 2.0-2.5 million tons but only if
they subsidized it, which is unlikely. At most we think India will export 1 million tons, which could leave the 2019-20 carryout at around 24.2 million tons, matching the record carryout for 2012-13. 

·        
Attached is our updated Australia and India balance sheets. 

·        
March Paris wheat settled at 196.00 euros, up 2.00 euros. 

·        
Ukraine grain exports are running at 38.4 million tons, up 24.5 percent from the same period a year ago, according to the Ministry of Economic Development.  State statistical service office at the end of the
year pegged the Ukraine grain crop at 75.1 million tons. 

·        
APK-Inform has the Ukraine grain crop at 75.08 million tons. 

·        
Russian 12.5 percent protein wheat prices fell to $220/ton, down $6 from the previous week, according to SovEcon.  IKAR showed a $3/ton decrease to $192.00/ton. 

 

 

 

Export
Developments.

• Jordan
  passed on 120,000 tons of wheat, optional origin.  Four offers were received. 
  
• Bangladesh
  seeks 50,000 tons of wheat by February 27. 
• Japan
  seeks 93,100 tons of milling wheat on Thursday. 

• Morocco
  seeks 354,000 tons of US durum wheat on March 5 for arrival by May 31.
• Taiwan
  seeks 102,525 tons of US wheat on February 21 for April and/or early May shipment. 
  
• Turkey
  bought 250,000 tons of soft wheat.  Lowest offer $222.77/ton c&f for March shipment.
  
• Turkey
  bought 25,000 tons of barley for 2/26-3/15 loading.  $200.88 c&f was noted. 
  
• Turkey
  bought 50,000 tons of durum for March 1-20 shipment.  $314.00 and $325.75/ton c&f was noted. 
  
• Results
  awaited: Syria seeks 200,000 tons of wheat from Russia on February 17 for shipment within 60 days of contract signing. 
  
• 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.

• 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

·        
None reported

 

 

Updated 2/11/20

·       
CBOT Chicago March wheat is seen in a $5.30-$5.65 range

·       
CBOT KC March wheat is seen in a $4.55-$4.80 range

·       
MN March wheat is seen in a $5.20-$5.45 range