FW: FI Evening Grain Comments 03/10/20

PDF attached

 

Boom! WTI 10% higher. But we are not going to get excited just yet.

 

USDA: Not much in the way of changes for US balance sheets.  USDA did take SBO for biodiesel down 200 million pounds but raised exports by 200.  No sign seen for China to buy massive amounts of corn according to the balance sheets. 

Initial reaction:

Bearish soybeans and neutral corn and wheat.  USDA took Brazil and Argentina soybean production up by one million tons each. 

 

USDA NASS and OCE executive summaries

https://www.nass.usda.gov/Newsroom/Executive_Briefings/index.php

https://www.usda.gov/oce/commodity/wasde/Secretary_Briefing/index.htm

 

Weather

·         Japan’s weather department said there is a 60 percent of El Nino / La Nina occurring through the summer.

·         World Weather Inc. warned the SST outlook will help promote wet weather for the lower eastern Midwest and mid-south regions during the spring. 

 

MARKET WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Worry over U.S. wet weather will begin to rise as an active weather pattern further delays early-season planting of corn in the Delta and interior southeastern parts of the nation.

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. Recent flooding and that expected to continue in northwestern Europe could damage a few crops in low-lying areas.

China winter crops along with those in India will perform well this winter with good yields.

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. 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 this week, but some rain may fall this weekend into next week to offer a little relief.

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

Source: World Weather Inc. and FI

 

 

Bloomberg Ag Calendar

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

 

 

Macros

·         Turnaround Tuesday

·         US Crude Oil Futures Settle At $34.36/Bbl, Up $3.23 Or 10.38%

·         The US started rolling out plans for federal aid for selected energy companies/sectors. 

 

Corn.

·         Corn futures ended higher led by the May contract as fund buying propped up prices.  A reversal in outside commodity market was seen as supportive for agriculture futures.  USDA reported a neutral monthly US S&D update.  Crude oil (WTI) was up about 10 percent. 

·         We will have updated S&D’s out Wednesday or Thursday.  Not much is going to change to our outlooks, and will note changes, if any.  World balance sheets will be released later this week or early next week. 

·         Argentina will see rain in its central growing region which will be beneficial for late planted corn. 

·         USDA estimated US corn stocks at 1.892 billion bushels, unchanged from the previous month. 

·         Conab lowered their corn production estimate for Brazil by 0.4 million tons to 100.1 million, 1.2 million tons below a Bloomberg trade estimate. 

 

 

Export Developments

• None reported

 

 

Updated 3/9/20

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

 

Soybean complex.

• CBOT soybeans ended up 6.25 cents basis the May and 5.25 cents higher basis July.  A rebound in crude oil was friendly for soybeans.  Soybeans held gains despite USDA’s outlook for a higher SA soybean crop.  USDA’s Chief Economist Robert Johansson in a testimony to the House said China’s purchases of U.S. agriculture products will be “shifted out further.” (Bloomberg)
• May soybean oil ended 13 points higher and May soybean meal $1.50 higher. 
• USDA made little changes to their updated S&D estimate for US corn, soybeans and wheat.  They adjusted soybean oil for biodiesel use lower by 200 million pounds and took exports up by the same amount.  They lowered the price target for soybeans by 5 cents to 8.70/bu (farm price) and took SBO down to 31.50 cents from 33.50 last month.  The two cent move for SBO is hefty, in our opinion, but might reflect the recent moves in WTI crude oil.  SBM price target was left unchanged from the previous month at $305/short ton. 
• The March report was perceived to be slightly bearish in that USDA raised global soybean and corn stocks higher.  With little changes to go on, traders should move forward monitoring US export developments and currency fluctuations. 
• The upward revision to Argentina and Brazil soybean production by one million tons each could limit upside potential for the soybean complex. 
• US soybean stocks were estimated at 425 million bushels, unchanged from the previous month and near trade expectations. 
• USDA raised their soybean for seed estimate by 3 million bushels to 99 million, up from 88 million last year.  This is an indication USDA looks for a large US soybean area for 2020 plantings. 

 

• Conab increased their Brazil soybean production estimate by 1 million tons to 124.2 million, 9.2 million tons above 2019. 
• Argentina is expected to get some rain relief over the next few days bias the central growing regions.  Rosario Grain Exchange has a 55 million ton estimate for soybeans and 50-million-ton corn crop. 
• AgRural reported Brazil’s soybean harvest at 50 percent as of March 5, compared to 40 percent a week earlier and 57 percent year earlier. 

·         MPOB reported Malaysian soybean oil stocks 49,400 tons below trade expectations, which was seen a slightly supportive for global vegetable oils. 

·         AmSpec reported 1-10 March pam oil shipments at 351,874 tons, down 3.5 percent from the previous month.  SGS reported 351,874 tons, down 3.5 percent.  ITS is at 335,155 tons, down 2.4%.

• Ukraine sunflower exports so far in 2019-20 were 2.64 million tons, up 73 percent from year earlier, according to APK-Inform. 

 

 

Oilseeds Export Developments

• Under the 24-hour reporting system, US exporters sold 123,000 tons of soybeans to unknown for the 2019-20 marketing year.  Yesterday they reported 123,500 tons of soybeans to unknown.

 

SBO, Palm and ICE Brent Crude

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

·         May Chicago wheat ended 3.50 cents higher, KC May 3.75 higher and May MN 2.25 cents lower.  Steady global import tender announcements supported wheat. 

·         May Paris wheat futures settling down 0.25 at 178.00 euros. 

·         There were no surprises in USDA’s monthly S&D update and global stocks remain abundant. 

·         USDA estimated US wheat stocks at 940 million bushels, unchanged from the previous month. 

·         Russia is preparing to add grain export controls, if needed, aiming at phytosanitary quality/requirements to comply with importing country rules. 

·         SovEcon reported Russian 12.5% wheat export prices fell to $213/ton fob, down $1/ton from the previous week.  New crop was quoted at $192-$193/ton.  IKAR quoted $212/ton for March delivery, down $1.00. 

 

Export Developments.

• Jordan bought 60,000 tons of wheat at $219/ton for LH Sep shipment.  
• Tunisia seeks 100,000 tons of milling wheat and 75,000 tons of barley on March 11. 
• 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 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
• USDA lowered its outlook for US sugar stocks and…

 

USDA Statement on U.S. Sugar Market

 

(Washington, D.C., March 10, 2020) – Consistent with the Commerce Department’s Agreement Suspending the Countervailing Duty Investigation on Sugar From Mexico (the Agreement), the U.S. Department of Agriculture (USDA) today notified the Department of Commerce (Commerce) of an additional need for sugar in the U.S. market of 200,000 short tons raw value (STRV) of refined sugar. Consequently, Commerce has increased the quantity of Mexican refined sugar permitted to be exported by 200,000 STRV for the October 1, 2019 through September 30, 2020 period. Commerce previously increased Mexico’s refined sugar export limit by 100,000 STRV, also at the request of USDA, on November 25, 2019. In the same way as the November request, today’s increase in Mexico’s refined sugar export limit will only change the mix between refined and other sugar.

 

Current market conditions point to a sugar shortage. This action is a further step in ensuring an adequate supply of sugar to the U.S. market, given the terms of the U.S. sugar program and the Agreement Suspending the Countervailing Duty Investigation on Sugar from Mexico.

USDA will continue to monitor the market to assess whether supplies are adequate.

 

*Refined sugar of a polarity of 99.2 and above, as produced and measured on a dry basis.

 

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