FW: FI Evening Grain Comments 03/03/20

PDF attached includes updated US soybean complex S&D’s

 

9:02:05 am livesquawk FOMC Lower Target Range For The Federal Funds Rate By 1/2 Percentage Point, To 1 To 1 1/4 Percent.

– Closely Monitoring Developments And Their Implications For The Economic Outlook And Will Use Its Tools And Act As Appropriate To Support The Economy.

– Fundamentals Of The U.S. Economy Remain Strong

 

G-7 made statement that they stand ready combat any significant downturn in global economy. Specifically, the International Monetary Fund and the World Bank said they are ready to help member nations. 

 

COVID-19: 90,000+ infected and 3,300+ deaths.  Total Number Of Cases In Italy Rises To 2502 From 2036 On Monday – RTRS Citing Document

 

Weather

MARKET WEATHER MENTALITY FOR CORN AND SOYBEANS: 

The South America weather outlook remains 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. Some relief advertised for central Argentina early next week would be extremely well timed in limiting the amount of serious crop stress that has occurred. Wet weather will continue in Goias, Minas Gerais and Tocantins.

The situation in South America 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: 

Earlier than usual crop development is expected for many production areas around the world, but as long as there is no threatening cold coming up the situation is not likely to be significant. Huge crops are still expected from India and China will end up with a big crop as well. North Africa production is destined to be low based mostly on dryness in Morocco and northwestern Algeria. Europe winter crops are in mostly good shape, although rain is still needed in the southeast.

            U.S. wheat is expected to remain in favorable shape, but greening and early season development in the southern Plains could be aggressive for a while due to unusually warm weather.

            Overall, weather today may produce a neutral bias on market mentality.

Source: World Weather Inc. and FI

 

 

Bloomberg Ag Calendar

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

 

Macros

·         9:02:05 am livesquawk FOMC Lower Target Range For The Federal Funds Rate By 1/2 Percentage Point, To 1 To 1 1/4 Percent.

– Closely Monitoring Developments And Their Implications For The Economic Outlook And Will Use Its Tools And Act As Appropriate To Support The Economy.

– Fundamentals Of The U.S. Economy Remain Strong

·         USD was lower by 28 points as of 1:24 pm CT.   

 

Corn.

·         Fund buying continued Tuesday as traders noted the Fed rate cut to stimulate the economy and weather forecasts for spring US planting delays.  The bounce from recent contract lows set up light corn/soybean spreading, along with expectations that any delay in corn sowings could lead to a higher US soybean area.  WTI crude was near flat by the time the Chicago grain markets closed.   

·         CBOT May corn advanced an impressive 5.75 cents to $3.8125.  Yesterday it was up more than 7 cents.  It hit a contract low last week. 

·         Early US spring weather forecasts are calling for a soggy planting season.  While the 6-10 day for the US looks wet, we warn that the extended forecasts can easily change. 

·         PNW corn is thought to be the cheapest worldwide, or at least competitive, unless sourced from Ukraine. 

·         Argentina is expected to leave corn and wheat export taxes unchanged at 12 percent, but they have an emergency law to increase taxes to 15 percent if needed. 

·         Nutrien Ltd.’s CEO said “there’s a concern whether China has enough fertilizer to get the spring crop going. Any shortfall could lead to more imports as food demand will likely be sustained.” – Bloomberg

·         Platts: Mato Grosso corn plantings at 92 percent by Feb 28, above 5-year average of 88%. 

·         China reported a new ASF case in a wild boar in Hubei. 

·         A Bloomberg poll looks for weekly US ethanol production to be down 8,000 at 1.046 million barrels from the previous week and stocks to increase 89,000 barrels to 24.807 million.

 

Export Developments

·         South Korea’s MFG bought 131,000 tons of corn, optional origin, at $207.25 and $207.50/ton, for arrival around June 25 and July 3, respectively. 

·         South Korea’s KFA passed on 68,000 tons of corn.  Lowest offer was $208.98/ton c&f-PNW, $209.92/ton c&f worldwide. 

 

 

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.

• CBOT soybeans hit a one week high (looking at the May position).  We were surprised to see meal make small gains bias the nearby contracts (lower in the back months) despite a bullish meal stocks figure from yesterday’s NASS crush report.  Argentina will turn drier over the next two weeks bias southern areas.  This is seen supportive for soybeans.
• May soybeans ended 2.50 cents higher, May meal $1.20 higher, and May soybean oil 25 points higher. September and October meal ended lower. 
• US soybean meal basis firmed across many locations.  Chicago was up $6, Decatur up $4 and Morristown (IN) up $4.  CBOT meal deliveries of 922 included Bunge stopping 563.  JP Morgan issued 1,000 soybeans with Term stopping 138.   SBO deliveries were 343 with no apparent commercial stoppers. 
• Malaysian palm oil was higher on Tuesday. 

·         Our combined US corn and soybean area for 2020 is 179.6 million acres versus 165.8 for 2019 and 178.0 for 2018.  A Reuters poll last month, for the purpose of the USDA outlook forum, had an average of 178.2 million acres for combined corn and soybeans. 

·         Argentina plans to increase meal, oil and soybean taxes by 3 points each, according to Bloomberg. Later in the day the Argentina CRA rural confederation said soybeans were going to increase to 33 percent from 30 percent, but fell short on mentioning products.  

·         AgRural estimated Brazil’s soybean harvest at 40 percent as of February 27, compared to 31 percent week earlier and 52 percent year ago. 

·         Brazil raised the B11 mandate to B12. The higher use should result in lower soybean oil exports during 2020.  

·         IEG Vantage: Brazil 128 million tons for 2019 soybeans and 55 million tons for Argentina, according to floor traders.  EU 2020 rapeseed production reduced 1.25 million tons to 17.5 million (0.5MMT above their 2019 forecast).

·         Meanwhile FC Stone estimated the Brazil soybean crop at 124.2 million tons, up 200,000 from their previous projection.  Mato Grosso was noted to be in great shape while RGDS had some problems.

 

 

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

·         US wheat futures ended higher led by the higher protein classes.  US winter wheat conditions for selected key US states improved from the previous week, which limited gains in KC type wheat.  There wasn’t much going on in news for wheat.  South Korea did buy US high protein wheat, which was supportive. 

·         CBOT May Chicago wheat ended up 4.00 cents, May KC 0.50 cent higher and May MN 6.25 cents higher. 

·         USD was lower by about 28 points by the time US wheat futures closed.

·         US PNW wheat basis collapsed by 30-38 cents from Monday to around $6.00/bu. 

https://www.ams.usda.gov/mnreports/jo_gr110.txt

·         Australia’s wheat production for 2020-21 was estimated by ABARES at 21.3 million tons, up from 15.17 million for 2019-20. 

·         APK-Inform estimated 11 percent Ukraine’s winter grains are in weak condition.  They pegged that area at 800,000 hectares. 

·         May Paris wheat futures were up 1.50 at 184.50 euros.

 

(Reuters) – The U.S. Department of Agriculture’s (USDA) National Agricultural Statistics Service in a weekly crop report on Monday rated 43% of the Kansas winter wheat crop in good to excellent condition, up from 35% a week earlier.

·         Kansas is the biggest U.S. winter wheat producer. The USDA reported surplus moisture in 16% of Kansas topsoil, down from 17% a week ago.

·         For Texas, the No. 2 winter wheat state by planted area, the USDA rated 36% of the crop as good to excellent, up from 31% the previous week.

·         The Texas corn crop was 12% planted, ahead of the state’s five-year average of 6%.

·         For Oklahoma, the USDA rated 57% of the winter wheat crop in good to excellent condition, up from 46% a week earlier.

 

Export Developments.

• South Korea bought 90,000 tons of US wheat, various types, at an average $226.60/ton for June through FH August loading. 
• Thailand bought 60,000 (originally in for 240,000 tons) feed wheat at $213/ton c&f for July shipment.
• Ethiopia seeks 400,000 tons of wheat on April 7.  IN a separate tender, they seek 200,000 tons of wheat on April 1.  Both are optional origin. 
• Japan seeks 117,389 tons of food wheat late Wednesday. 

• Jordan passed on 120,000 tons of wheat. 
• 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.
• Turkey seeks 305,000 tons of wheat on March 11 for late March and/or early shipment. 
• Syria seeks 200,000 tons of wheat from Russia by March 23.  No purchase was made that closed on February 17. 

 

Rice/Other

• India’s Jan rice exports fell 12 percent from a year earlier to 908,492 tons due to weak demand for non-basmati from African and Asian countries. 

 

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