FW: FI Evening Grain Comments 03/11/20

PDF attached

 

Dow index fell 1,465 points.  This spilled over into agriculture futures.  Coronavirus fears are driving markets crazy.  WTO declared a pandemic. Several US sporting events will now be without fans and attendance will be limited to essential staff and families. 

 

FI changes to US soybean complex balances (attached)

• US soybean exports – unchanged at 1.850 billion bushels
• Soybean seed 100 to 100
• Soybean oil imports 435 to 430 million pounds
• Soybean oil exports 8175 million pounds to 8150 million
• Soybean meal imports 475 thousand short tons to 500
• Soybean meal exports 13,400 thousand short tons to 13,350
• Soybean meal domestic use 36,900 to 37,000
• Product crush unchanged at 2.116 billion bushels (above USDA’s 2.105)

 

Weather

 

 

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.

Rain fell significantly overnight in northwestern Argentina bolstering topsoil moisture for improved crop conditions after several weeks of dry and warm weather. The moisture will shift slowly to the north over the next few days and much of the dryness present Tuesday will be replaced by a more favorable environment for crop development – at least in some of the more important production areas. Dryness in the north will be slower easing.

            Dryness in southern Brazil will stress some crops and threaten a little production since there will not be much relief prior to early next week.

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 with a slight bearish bias due to rain in Argentina.

 

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

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

·         US Crude Oil Futures Settle At $32.98/Bbl, Down $1.38 Or 4.02%

·         WTO upgraded coronavirus to a pandemic. 

·         Bank of England cut interest rates by 50 points. 

·         World Meteorological Organization’s annual State of the Global Climate report said a projected 22m people were displaced by extreme weather in 2019, up from 17.2m the year before (Bloomberg). 

·         New York Fed Accepts All $132.38 BLn Of Bids At Overnight Repo Operation

·         US CPI (M/M) Feb 0.1% (est 0.0%; prev 0.1%)

-US CPI (Y/Y) Feb 2.3% (est 2.2%; prev 2.5%)

-US Core CPI (M/M) Feb 0.2% (est 0.2%; prev 0.2%)

-US Core CPI (Y/Y) Feb 2.4% (est 2.3%; prev 2.3%)

·         US Real Weekly Earnings (M/M) Feb 0.5% (prev 0.1%)

-US Real Average Weekly Earnings (Y/Y) Feb 0.7% (prev 0.0%)

-US Real Average Hourly Earnings (Y/Y) Feb 0.6% (prevR 0.5%; prev 0.6%)

·         Canadian Capacity Utilization Q4 81.2% (est 81.1%; prevR 81.5%; prev 81.7%)US recession odds increased to 53 percent, highest since 2009 (Bloomberg). 

·         UK Sees 2020 GDP Growth 1.1% Vs 1.4% Previously

                  -Sees 2021 GDP Growth 1.8% Vs 1.6% Forecast Previously 

 

Corn.

·         May corn ended 3.00 cents lower on weaker energy prices and big drop in US equities.  US export developments remain light. 

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

·         Brazil’s Parana is 84 percent complete with second crop corn plantings.  Ideal plantings occur before March 10, the pivot date for yield vulnerability. 

·         US ethanol production declined 35,000 barrels and could have added to the negative undertone for corn futures.   

·         Rabobank estimates China pork production to decline 15-20 percent in 2020 after falling 20 percent in 2019.  We thought pig numbers were increasing in early 2020. 

·         (Bloomberg) — U.S. seaports could see a slowdown of as much as 20% in February, March and much of April as the coronavirus outbreak cancels cargo sailings and some dock and warehouse workers are sent home. 

·         The USDA Broiler Report showed eggs set in the US up 4 percent and chicks placed up 3 percent.  Cumulative placements from the week ending January 4, 2020 through March 7, 2020 for the United States were 1.91 billion. Cumulative placements were up 4 percent from the same period a year earlier.

 

Export Developments

• None reported

 

US weekly ethanol production declined 35,000 barrels to 1.044 million, first weekly decline since early February.  A Bloomberg survey called for production to increase 19,000 barrels.  Ethanol stocks decreased 630,000 barrels to 24.334 million barrels, largest weekly decline since last week of January.  A survey looked for a 16,000-barrel increase.  We expected the decrease in ethanol production due to weakening margins.  Corn crop year (Sep-Aug) to date ethanol production is running 0.3% above the same period year earlier. 

 

 

 

Updated 3/9/20

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

 

Soybean complex.

• CBOT soybeans, meal and oil started the day higher but ended lower after wheat and energy prices dropped.  Losses in soybeans were limited after a combined 194k current and new crop soybean sale was announced by USDA.  This brings soybean sales announcements this week to 440.5k. May soybeans may still have a chance over the next week to fill its recent down gap ($8.8500-$8.8850), but something positive needs to develop, such as US sales to China. 
• Brazil’s soybean basis popped overnight. We are hearing there was a lot of business done yesterday for April-August 2020 and April-July 2021.  There were rumors soybean cargos were sold out of the PNW but can’t be confirmed. If they did, it should be immediate shipment. 

• Dryness is stressing crops in southern Brazil.  Paraguay is also on the drier side. 
• Third day out of four for the Argentina producer strike.  Sales are expected to increase on Friday. 

·         Malaysia would like to resolve the palm oil trade spat with India within a month. 

·         Malaysian palm stocks at the end of Feb are lowest since June 2017. 

 

• 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. 
• Argentina soybean crusher Vicentin may resume crush operations during second half March.  They offered a 50% of the value owed to producers. It’s unknown if any producers took that option. 

 

U of I: Schnitkey, G. "Profitability and Acreage Shifts between Corn and Soybeans in Illinois." farmdoc daily (10):44,  Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, March 10, 2020.  https://farmdocdaily.illinois.edu/2020/03/profitability-and-acreage-shifts-between-corn-and-soybeans-in-illinois.html

 

Oilseeds Export Developments

• Under the 24-hour reporting system, US exporters sold 194,000 tons of soybeans for delivery to unknown destinations. Of the total, 126,000 tons is for delivery during the 2019/2020 marketing year and 68,000 tons is for delivery during the 2020/2021 marketing year
• Yesterday USDA reported 123,000 tons of soybeans to unknown, and on Monday 123,500 tons of soybeans to unknown.

 

 

 

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 9.50 cents lower, KC May down 9.25 and May MN off 6.75. 

·         Several wheat import tenders didn’t slow the selling in US futures.  Wheat was lower to start the day but selling accelerated after US equities turned sharply lower. 

·         The southern Great Plains wheat development is expected to increase over the next few weeks and that area has an opportunity for rain one time or another over the next two weeks.  The US southern Plains need moisture.  The Northern Great Plains may see rain on and off over the next two weeks, but temperatures will be mainly below normal. 

·         Australia wheat exports hit a record for the month of January at 1.3 million tons, up 41 percent from December and 52 percent higher than January 2019.  On Tuesday USDA lowered Australia wheat production by 400,000 tons to 15.2 million tons and cut exports to 8.0 million tons from 8.2MMT. 

·         FranceAgriMer estimated soft wheat exports outside the EU to 12.7MMT from 12.6MMT previously. 

·         May Paris wheat futures traded 0.50 euro lower to 177.25 euros. It’s at a 6-month low. 

·         Ukraine grain exports so far this season were 42.3 million tons, up 24.5 percent from the same period year ago, according to the Ministry for Development of Economy, Trade and Agriculture. 

 

Export Developments.

• Turkey bought 305,000 tons of wheat at $211.80 to $230.50 per ton.  They were in late March and/or April early shipment. 
• Jordan bought 120,000 tons of feed barley.  Original tender called for June-FH Aug. shipment. 
• Tunisia bought 125,000 tons of milling wheat at $206.74-222.34/ton c&f. 
• Tunisia bought 75,000 tons of barley at $189.25-192.80/ton c&f. 
• Japan in an SBS import tender received no offers for 120,000 tons of feed wheat and 200,000 tons of feed barley for arrival in Japan by Aug 27. 
• Japan in a new 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 18. 
• Results awaited: Syria seeks 200,000 tons of wheat from Russia, Bulgaria, or Romania, on March 11. 
• Results awaited: 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. 
• 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
• Malaysia imported 324,405 tons of sugar from India so far in 2020, well up from 110,000 tons and compares to the 2008 record of 313,406 tons.  Malaysia imported 1.95 million tons of raw sugar in 2019.

 

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