FW: FI Evening Grain Comments 03/09/20

PDF attached

 

WTI
in focus today as Saudi Arabia and Russia agree to disagree. WTI and Brent crude fell around 20 percent.   US stocks sold off.  The widespread selling spilled over into the ag markets. 

 

Tuesday:
USDA, Conab and MPOB will have updated supply and demand figures. 

 

Yellow=
U.S. productivity and costs report versus WTI

Source:
Bloomberg and FI

 

USD
at around 1:00 pm CT

Source:
Reuters and FI

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Some
needed rain will fall in some very important Argentina crop areas this week to help curb moisture stress and to protect production potentials. Greater rain will be needed in the north and far south. Brazil weather should be mostly good with some relief from
recent drying in the west and south next week. South Africa will experience a few showers and thunderstorms with some net drying. Europe is plenty moist and poised for good early spring crop development, although moisture is needed in the southeast corner
of the continent. China winter crops along with those in India will perform well this winter with good yields. U.S. planting concerns will slowly rise over the next few weeks as the wet biased pattern from the southeastern Plains to the lower eastern Midwest
and Tennessee River Basin prevails.

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

 

MARKET
WEATHER MENTALITY FOR WHEAT: 

Recent
weather and that which is coming this week will continue to promote earlier than usual winter crop development in the U.S. central and southern Plains, Delta and southeastern states as well as southern Russia, southern Ukraine and parts of China. Moisture
in Canada’s Prairies will improve spring planting conditions when seasonal warming begins. North Africa will continue struggling for moisture in Morocco and northwestern Algeria as well as in parts of Spain.

            Overall
weather today will likely provide a neutral to bearish bias to market mentality.

Source:
World Weather Inc. and FI

 

 

 

Bloomberg
Ag Calendar

MONDAY,
MARCH 9:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals

TUESDAY,
MARCH 10:

• USDA’s
  monthly World Agricultural Supply and Demand (WASDE) report, noon
• Brazil
  Conab soybean and corn yield, area and production, 8am
• China
  agriculture ministry (CASDE) supply & demand monthly report
• AmSpec,
  Intertek, SGS release palm oil export data for March 1-10
• Malaysian
  Palm Oil Board data on palm production, exports, stocks
• Ros
  Agro 4Q results

WEDNESDAY,
MARCH 11:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• Santander
  and Datagro hold sugar, ethanol conference, Sao Paulo
• FranceAgriMer
  monthly cereals balance sheet

THURSDAY,
MARCH 12:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
• Port
  of Rouen data on French grain exports
• New
  Zealand food prices, 5:45pm

FRIDAY,
MARCH 13:

• 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

Source:
Bloomberg and FI

 

 

 

 

 

USDA
inspections versus Reuters trade range                                            

Wheat      
415,548     versus  400000-700000           range

Corn         
829,865     versus  800000-1100000         range

Soybeans  
572,416     versus  500000-800000           range

 

 

 

GRAINS
INSPECTED AND/OR WEIGHED FOR EXPORT

                 
REPORTED IN WEEK ENDING MAR 05, 2020

                           
— METRIC TONS —

————————————————————————-

                                                  
CURRENT     PREVIOUS 

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

 
GRAIN      03/05/2020  02/27/2020  03/07/2019    TO DATE     TO DATE  

 

BARLEY             
0         699           0       29,131        6,974 

CORN         
829,865     896,221     793,570   14,947,795   26,611,680 

FLAXSEED           
0           0           0          520          342 

MIXED              
0           0           0            0            0 

OATS               
0           0         100        2,766        2,093 

RYE                
0           0           0            0            0 

SORGHUM       
58,711      73,207      64,158    1,460,388      949,182 

SOYBEANS     
572,416     672,174     888,690   30,130,673   26,858,270 

SUNFLOWER          
0           0           0            0            0 

WHEAT        
415,548     656,160     615,715   19,228,487   17,625,944 

Total      
1,876,540   2,298,461   2,362,233   65,799,760   72,054,485 

————————————————————————-

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.

 

 

Farmland
values have stabilized since 2014

 

Macros

·        
Covid-19 is certainly testing economic fears. 

·        
US White House advisers announced TARP might be implemented for travel related companies such as airlines, hotels and cruise lines.  Also included energy companies. 

·        
US crude oil futures settled at $31.13/Bbl, down $10.15 or 24.6%.

·        
US central bank stimulus is expected this week. 

·        
Focus may shift to not allowing businesses to fold. 

 

Corn.

·        
Corn futures ended lower by 3.25 cents basis May and 4.25 for the July position.  Losses could have been much worse. Higher trade in Chicago wheat limited losses in corn. Also, we saw South Korea buy corn
over the weekend which was a refreshing reminder that import tenders continue to go on.  

·        
December corn hit a contract low today but settled 2.25 cents off its session low. 

·        
Crude oil launched the widespread selling for most commodities on Monday after Saudi Arabia and Russia created a trade war.  Oil prices fell 20 percent and US stock markets dropped hard.  The threat in global
oil supply trigged market fears that spilled over into US agriculture commodities.  Both countries stated they will increase oil production.  The trade tends to associate a drop in crude oil will result in a drop in economic productivity.  US crude oil futures
settled at $31.13/Bbl, down $10.15 or 24.6%.

·        
Gulf corn basis slipped 3-4 cents. 

·        
USDA US corn export inspections as of March 05, 2020 were 829,865 tons, within a range of trade expectations, below 896,221 tons previous week and compares to 793,570 tons year ago. Major countries included
Mexico for 315,139 tons, Japan for 201,200 tons, and Chile for 84,562 tons.

·        
There was talk the US White House would like to extend the time to comment on biofuel waivers (SRE appeal) by 15 days. 

·        
China is looking to set up 29 locust monitoring sites along the border by the end of March. 

 

Export
Developments

• South
  Korea’s KFA bought 65,000 tons of corn from South America at around 206/ton c&f for arrival around July 10.  They paid 208/ton on Friday for one cargo. 
  
• South
  Korea’s MFG bought 135,000 tons of, optional origin at $204.50 and $207.01/ton, for arrival in July. 
  

 

Updated
3/9/20

• CBOT
  May is seen in a $3.45 and $4.00 range. 

 

Soybean
complex.

• CBOT
  soybeans
  ended 15.50-21.25 cents lower on weakness in the Brazilian real and widespread commodity selling amid economic fears over coronavirus.  CBOT soybean oil was on the defensive, ending 64-121 points lower, bias nearby contracts to the downside, from sinking energy
  prices and weaker offshore values.  Soybean meal fell $1.80-4.70, also bias nearby contracts to the downside.  ICE canola dropped 4.50 to 455.20. 
  
• We
  like owning soybeans and products but like to wait to see if there is more selling pressure to come.  Note we revised lower our trading ranges for the soybean complex, wheat and corn.
  
• Today
  we saw 123,500 tons of soybeans sold to unknown.  With today’s price declines, look for additional sale announcements during the week.  
  
• Currency
  fluctuations was a big factor in today’s trade.  USD was down 105 points.  BRL was sharply lower at 4.7470 and the Argentina peso declined to 62.5250.  (2:15 pm CT)
• Soybean
  inspections came in at a marketing year low.

·        
USDA US soybean export inspections as of March 05, 2020 were 572,416 tons, within a range of trade expectations, below 672,174 tons previous week and compares to 888,690 tons year ago. Major countries included
China Main for 139,721 tons, Japan for 123,777 tons, and Indonesia for 81,268 tons.

• Argentina
  producers started their 4-day strike, protesting against the recent rise in export taxes on soybeans.  Daily deliveries of soybeans arriving at terminals along the Parana River have increased to 4,800 trucks today from 3,100 week earlier.  That figure may
  drop to little on Tuesday. 
• Argentina
  exported 1.3 million tons of soybean meal in February, up 13 percent from January but 32 percent below a four-year average and 12 percent below February 2019. 
  
• A
  Bloomberg article mentioned an interesting fact that exporters well aware of. The Brazilian soybean fields appear to be one of the few safe havens during, what some call, the global economic crises.  As we mentioned last week, producers in Brazil could see
  a profit north of 100 percent.  Sorriso, Mato Grosso, soybean prices are around $7.06/bu.  Ponta Grossa, Paranagua, is around $8.33/bu.  MG price is for wheat producers receive. 
  

• China
  imported 13.51 million tons of the oilseed in January and February, up from 11.83 million tons a year earlier and compares to 9.54 million tons in December. 
  

·        
The European Union reported soybean import licenses since July 1 at 9.500 million tons, below 10.024 million tons a year ago, a 5 percent decrease. European Union soybean meal import licenses are running at
12.296 million tons so far for 2019-20, below 12.043 million tons a year ago. EU palm oil import licenses are running at 3.706 million tons for 2019-20, down from 4.484 million tons a year ago, or down 17 percent.

·        
European Union rapeseed import licenses since July 1 were 4.333 million tons, up 41 percent from 3.068 million tons from the same period a year ago.

 

 

 

U
of I: Hubbs,
T. "The Pace of Soybean Use." farmdoc daily (10):43,  Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, March 9, 2020.
https://farmdocdaily.illinois.edu/2020/03/the-pace-of-soybean-use.html?utm_source=farmdoc+daily+and+Farm+Policy+News+Updates&utm_campaign=e9f7d62305-EMAIL_CAMPAIGN_2018_09_04_04_03_COPY_01&utm_medium=email&utm_term=0_2caf2f9764-e9f7d62305-173649469

 

Oilseeds
Export Developments

• Under
  the 24-hour reporting system, US exporters sold 123,500 tons of soybeans to unknown for the 2019-20 marketing year. 
  

 

Brazilian
Real as of 1:26 pm CT

Source:
Reuters and FI

 

 

 

Updated
3/09/20 – revised lower

• May
  soybeans are seen in a wide $8.65-$9.25 range.
• May
  meal is seen in a $285 to $320 range
• May
  soybean oil range is 26.50 to 31.00

 

Wheat

·        
Chicago wheat ended 1.00-3.00 cents higher on a sharply lower USD and bottom picking by investment funds. However, KC and MN grinded lower, led by MN, in part to May Paris wheat futures settling down 3.25
at 178.25 euros.  May KC was off 5.25 cents and MN wheat basis May down 4.50. 

·        
US selected state crop conditions will be released a little later today.   

·        
There was talk China was inquiring for PNW spring wheat.  If they do decide to buy spring wheat, this should be supportive for futures, regardless the amount committed. 

·        
USDA US all-wheat export inspections as of March 05, 2020 were 415,548 tons, within a range of trade expectations, below 656,160 tons previous week and compares to 615,715 tons year ago. Major countries included
Korea Rep for 82,229 tons, Mexico for 73,272 tons, and Japan for 72,567 tons.

·        
The European Union granted export licenses for 451,000 tons of soft wheat exports, bringing cumulative 2019-20 soft wheat export commitments to 21.223 MMT, down from 12.461 million tons committed at this time
last year, a 70 percent increase.  Imports are down 54 percent from year ago at 3.393 million tons.

 

 

Export
Developments.

• Syria
  seeks 200,000 tons of wheat from Russia, Bulgaria, or Romania, on March 11. 
  
• Algeria
  seeks 50,000 tons of milling wheat, optional origin, on March 11, valid until March 12, for April and/or May shipment depending on origin. 
  
• Jordan
  seeks 120,000 tons of wheat on March 10.  Sep-Oct shipment. 
• Jordan
  seeks 120,000 tons of feed barley on March 11.  June-FH Aug. 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 Aug 27, on March 11. 
  
• 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. 
  
• 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. 
  

 

Rice/Other

• Outside
  markets remain primary focus

 

Updated 3/9/20

·       
CBOT Chicago May wheat is seen in a $4.90-$5.50 range

·       
CBOT KC May wheat is seen in a $4.25-$4.75 range

·       
MN May wheat is seen in a $4.95-$5.40 range

 

From Friday evening – CBOT will update Monday evening