FW: FI Evening Grain Comments 03/02/20

PDF attached does not include daily estimate of funds

 

COVID-19:
88,000+ infected and 3,300+ deaths.

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

The
South America weather outlook might be a little more of a concern today. Argentina will continue to progressively become too dry while a net drying trend impacts some western and southern Brazil locations. Argentina will see excessive heat as well while temperatures
in Brazil are more seasonable. Wet weather will continue in Goias, Minas Gerais and Tocantins. The situation may not be critical enough to move markets in a big manner, but there might be some bullish influence from the weather amidst a huge array of other
market concerns that may counter any influence from the weather.

           
India’s and China’s winter crop outlooks are still good, and improvement has occurred in recent weeks across parts if Europe. South Africa’s weather has not changed from that of late last week and the U.S. outlook has shifted the greatest rainfall out of the
lower Midwest, northern Delta and Tennessee River Basin for this week and shifted it farther south. The southward shift will lead to delays in early season corn planting.

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Warming around the world will stimulate earlier than usual winter crop development in China, Europe and the United States. There is no risk of damaging cold, but a close watch for such a threat will be made for later this spring.

            Northwest
Africa dryness remains a concern for the next two weeks. Southern Parts of the Middle East are now drying out, as well. India, meanwhile, is still anticipating very high yields this year and a big crop of wheat. China’s wheat size should expand as well due
to greater winter precipitation than usual. Rain in Australia may improve topsoil moisture for some winter grain production areas, but planting is still a couple of months away. Drought remains in place across most of the nation, despite some rain in the east
recently.

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

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

MONDAY,
MARCH 2:

• AmSpec,
  Intertek, SGS palm oil export data for Feb. 1-28
• USDA
  weekly corn, soybean, wheat export inspections, 11am
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• Australia
  commodity index, 12:30am
• Brazil
  soybean, sugar, corn and coffee exports, 1:15pm
• USDA
  soybean crush, DDGS output, corn for ethanol, 3pm
• SGS
  palm oil export data for Feb. 1-29

TUESDAY,
MARCH 3:

• Abares
  agriculture outlook conference, Canberra
• Purdue
  Agriculture Sentiment, 9:30am
• BRF
  4Q19 earnings before market open, Sao Paulo

WEDNESDAY,
MARCH 4:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• New
  Zealand commodity price
• Abares
  agriculture outlook conference
• CNGOIC’s
  monthly supply/demand report on China soy, corn

THURSDAY,
MARCH 5:

• FAO
  world food price index, 4am
• Day
  1 of three-Day National Coffee Association USA Annual Convention
• Intertek
  Malaysia palm oil export data for March 1-5
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, 8:30am
• Port
  of Rouen data on French grain exports

FRIDAY,
MARCH 6:

• 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

SATURDAY,
MARCH 7:

• China
  soybean import volume data

Source:
Bloomberg and FI

 

 

USDA
inspections versus Reuters trade range                                            

Wheat      
654,097     versus  350000-600000           range

Corn         
896,221     versus  800000-1100000         range

Soybeans  
670,608     versus  500000-800000           range

 

 

 

GRAINS
INSPECTED AND/OR WEIGHED FOR EXPORT

                 
REPORTED IN WEEK ENDING FEB 27, 2020

                           
— METRIC TONS —

————————————————————————-

                                                  
CURRENT     PREVIOUS 

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

 
GRAIN      02/27/2020  02/20/2020  02/28/2019    TO DATE     TO DATE   

 

BARLEY           
699           0         122       29,131        6,974 

CORN         
896,221     912,922     865,617   14,117,930   25,818,110 

FLAXSEED           
0           0         100          520          342 

MIXED              
0           0           0            0            0 

OATS               
0           0           0        2,766        1,993 

RYE                
0           0           0            0            0 

SORGHUM       
73,207      16,661      58,736    1,401,677      885,024 

SOYBEANS     
670,608     596,274     848,895   29,556,691   25,969,580 

SUNFLOWER          
0           0           0            0            0 

WHEAT        
654,097     436,937     488,829   18,825,725   17,010,229 

Total      
2,294,832   1,962,794   2,262,299   63,934,440   69,692,252 

————————————————————————-

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.

 

Brazil
February selected commodity exports:

Commodity                   
February 2020      January 2020      February2019

COFFEE(60
KG BAG)              2,810,200          2,724,800         3,092,500

CRUDE
OIL (TNS)                6,064,000          4,292,600         3,819,400

ETHANOL
(LTR)                  164,200,000        78,100,000       112,000,000

SOYBEANS
(TNS)                 5,115,700          1,488,300         5,267,200

IRON
ORE                       22,100,200         26,787,000        28,925,000

FROZEN
ORANGE JUICE (TNS)      29,000             27,700            22,400

NON-FROZEN
ORANGE JUICE (TNS)  115,100            131,400           194,100

SUGAR
RAW (TNS)                1,119,700          1,415,700         1,011,700

Source:
Reuters and FI

 

USDA
ERS update on the farm economy

https://www.ers.usda.gov/publications/pub-details/?pubid=96956

12.9
percent of US household expenditures was spent on food

 

Macros

·        
USD was down sharply. 

·        
US Treasury prices were up on Monday, pressuring long-dated yields to record lows. 

·        
Money markets are pricing in a half-point cut in U.S. central bank interest rates

·        
U.S. crude oil production grew 11% in 2019, surpassing 12 million barrels per day
https://www.eia.gov/todayinenergy/detail.php?id=43015&src=email

 

Corn.

·        
CBOT corn futures traded
higher following a turnaround in outside commodity and equity markets.  May corn advanced 7.25 cents to $3.7550.  It hit a contract low last week. 

·        
WTI crude oil was up more than $2.00 as of 1:25 om CT, which lent strength to the CBOT corn market.  A US economic stimulus is perceived as positive for commodity prices.  There is speculation the US will
lower interest rates to stabilize the economy, due to face company earning headwinds from logistical problems from coronavirus outbreaks.  Commodity money inflow and bottom picking for feed products overall supported prices today.

·        
A sharply lower USD added to the supportive undertone. It was down 79 points.

·        
USDA export inspections showed one cargo of sorghum for China. 

·        
Cure to ASF? https://www3.nhk.or.jp/nhkworld/en/news/20200302_11/

·        
China is preparing for a potential locust invasion.  Last week they said ducks released could help combat the infestation.

·        
USDA NASS reported the January corn for ethanol use at 469 million bushels, 1 million below the average trade guess. 

 

 

U.S.
Farmers and Shippers Face Huge Losses From Flooding Again

https://www.bloomberg.com/news/articles/2020-02-28/u-s-heartland-once-again-faces-multi-billion-dollar-flood-costs

 

Export
Developments

·        
None reported

 

 

Updated
2/24/20

• CBOT
  May is seen in a $3.50 and $3.90 range.  If corn trades below $3.60, we see this as a buying opportunity.    
  

 

Soybean
complex.

• May
  soybeans ended 8.25 cents higher, May meal $3.30 higher, and May soybean oil 23 points higher.
  
• CBOT
  soybeans hit a 5-week high.  May soybean meal is up $18.20 over the past week ($290.70 from last Monday’s low). Soybean oil traded higher as Malaysian palm oil stabilized.  India will not extend their 5 percent import duty on palm oil as tensions ease. 
  
• USDA’s
  NASS crush report is supportive for meal and soybeans.
• The
  higher trade in the soybean complex was due in part to Argentina’s suspension to export registrations and speculation US interest rates will be lowered.  Outside markets were also helping US commodity prices today.  Coronavirus concerns limited gains.
  
• Eyes
  should turn to Argentina as they are a key exporter of soybean meal and soybean oil.  Any increase in export taxes could shift business to the US. The Argentina AgMin confirmed they will alter the soybean export tax.  The trade has penciled in a 3-point increase
  from 30 to 33 percent.   
• China
  soybean meal was up on Monday after it was reported the country had developed a vaccine to deter the spread of African swine fever. 
  

·        
Rabobank: FH 2020 China soybean oil consumption projected 7 percent lower to 3 million tons. Soybean meal consumption projected 44 percent lower to 13 million tons. 

• CBOT
  meal deliveries included Bunge stopping 143. 
• Strategie
  Grains estimated EU rapeseed production at 17.85 million tons, down from 18.05 previously and above 16.89 million tons from their 2019 forecast. 
  

·        
Cargo surveyor SGS reported February Malaysian palm exports at 1,075,954 tons, 144,530 tons below the same period a month ago or down 11.8%, and 155,904 tons below the same period a year ago or down 12.7%.

·        
USDA NASS reported monthly crush statistics. The US crushed 188.8 million bushels of soybeans in January, a record for any month and 1.7 million above trade expectations.  Soybean meal demand was robust during
January as stocks fell to 335,000 short tons from 377,000 at the end of December.  Soybean oil stocks increased to 2.352 billion pounds from 2.134 billion month earlier and was 38 million pounds above the average trade guess.  We may see meal/oil spreading
continue into Tuesday’s trade.  Note the following table does not include 2019 annual revisions, if any.  We will release updated 2019 data on Tuesday. 

 

 

EU
trade

·        
The European Union reported soybean import licenses since July 1 at 9.241 million tons, below 9.680 million tons a year ago, a 5 percent decrease. European Union soybean meal import licenses are running at
11.762 million tons so far for 2019-20, below 11.783 million tons a year ago. EU palm oil import licenses are running at 3.620 million tons for 2019-20, down from 4.383 million tons a year ago, or down 17 percent.

·        
European Union rapeseed import licenses since July 1 were 4.253 million tons, up 40 percent from 3.034 million tons from the same period a year ago.

 

 

 

Oilseeds
Export Developments

• Egypt
  seeks 30k of soybean oil and 10k of sunflower oil on Wed. for arrival around 1-20. 
  

 

 

 

Updated
2/28/20

• May
  soybeans are seen in a wide $8.65-$9.15 range.
• May
  meal is seen in a $280 to $3.05 range
• May
  soybean oil range is 28.00 to 31.00 (lowered 50)

 

Wheat

·        
CBOT May Chicago wheat ended
down
1.75 cents, May KC 4.50 cents higher and May MN 0.75 cent higher. 
Chicago
wheat is now down four consecutive session.   Despite a sharply lower USD, Chicago wheat futures were under the defensive from unwinding of wheat/corn and wheat soybean spreading. Wheat was the crutch over the past week for longs against declines in other
agriculture commodity markets, so today’s trade reflects positioning, in our opinion.  Note the fund position estimates as of going home on Friday were net long about 30,000 contracts while net short 125,000 for corn and net short 68,000 for soybeans.

·        
USD was lower by 79 points as of 1:05 PM CT.

·        
The European Union granted export licenses for 174,000 tons of soft wheat exports, bringing cumulative 2019-20 soft wheat export commitments to 19.114 MMT, up from 11.941 million tons committed at this time
last year, a 60 percent increase.  Imports are down 55 percent from year ago at 3.351 million tons.

·        
Ukraine’s 2020 wheat crop was estimated at 25.8 million tons by UGA, down from 28.2 million tons year ago.  They estimated the corn crop at 34.3 million tons, down from 35.2 million last year.

·        
Russia exported 28.6 million tons of grain from July1, 2019 to February 27, 2020, down from 35 million tons during the same period a year earlier. 

·        
French soft  wheat shipments outside the EU during the month of February reached their highest level for that month in at least 10 years at 1.46 million tons, based on Refinitiv analysis.  This is up from
1.2 million tons for December and January, a time when strikes slowed transportation. 

·        
May Paris wheat futures were down 1.25 at 183.00 euros.

·        
The European Commission left its 2019-20 EU soft wheat export forecast unchanged at 28 million tons, up from 21.5 million in 2018-19. 

 

 

Export
Developments.

• Turkey
  seeks 305,000 tons of wheat on March 11 for late March and/or early shipment. 
  
• Thailand
  seeks 240,000 tons of feed wheat on March 2 for June-Sep. shipment.
• Jordan
  seeks 120,000 tons of wheat on March 3. 
• Jordan
  seeks 120,000 tons of feed barley on March 4. 
• 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 March 4. 
  
• Morocco
  seeks 354,000 tons of US durum wheat on March 5 for arrival by May 31.
• Syria
  seeks 200,000 tons of wheat from Russia by March 23.  No purchase was made that closed on February 17. 
  

 

Rice/Other

• None
  reported

 

 

Updated 2/28/20

·       
CBOT Chicago May wheat is seen in a $5.00-$5.60 range

·       
CBOT KC May wheat is seen in a $4.35-$4.85 range

·       
MN May wheat is seen in a $4.95-$5.50 range