FW: FI Evening Grain Comments 03/12/20

PDF attached

 

As
you most likely heard, the CME has suspended floor trading for options at the conclusion of Friday’s session. As we all deal with the uncertainty of this unknown virus and attempt to navigate the unknowns, we wanted to give an overview of what avenues for
trading of options are available. Futures International LLC is and will remain one of the largest liquidity providers for agricultural products, having access to the world’s largest liquidity pools available.  We have all the systems already in place to access
these markets through block trades, cross trades, Globex and OTC if desired.  Our liquidity pool includes, but not limited to, hedge funds, market makers, locals, and money managers that make markets.  Futures International LLC has already been practicing
execution during non pit hours for several years, so we are more than ready for this transition.  As one of the largest options companies at the CBOT, we can provide the service needed both through execution and discovery.

 

FI
US corn and wheat balances are included in this comment. Global market selloff continues.  

 

Chicago
Board of Trade will close its trading floors as a precaution. 

https://www.prnewswire.com/news-releases/cme-group-to-close-chicago-trading-floor-as-a-precaution-301021935.html

 

Weather

CPC
forecast
a neutral El Nino/La Nina for the spring Northern Hemisphere season. 

 

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
has fallen significantly in parts of central Argentina the past two days and more rain is coming for much of the nation over the next four days bolstering topsoil moisture for improved crop conditions after several weeks of dry and warm weather.

            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. Relief next week may be temporary with additional drying coming a little later in the month.

Europe
is plenty moist and poised for good early spring crop development, although moisture is needed in the southeastern and southwestern corners 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 early season 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

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
export sales

·        
Net reductions for 26,600 tons for pork sales was the biggest surprise today.  China cancelled 44,500 tons. 

·        
Sorghum sales were 260,200 tons and included 175,500 tons for China and 71,000 tons for unknown. 

·        
Soybean export sales were poor, meal low end of expectations (shipments of 341.5k were good), and soybean oil sales were ok.  Shipments of soybean oil were more than half of last week. 

·        
Corn export sales were robust at 1.471 million tons, up from 769,200 tons last week. 

·        
All-wheat sales of 452,300 tons were within expectations. 

 

 

 

 

Macros

·        
The Federal Reserve Bank of New York said it will increase Treasury purchases and introduce new repo operations.

·        
US Crude Oil Futures Settle At $31.50/Bbl, Down $1.48 Or 4.49%

·        
US PPI Final Demand (M/M) Feb -0.6% (est -0.1%; prev 0.5%)

·        
US Initial Jobless Claims Mar 7 211K (est 218K; prevR 215K; prev 216K)

-Continuing
Claims Feb 29 1.722 Mln (est 1.733 Mln; prevR 1.733 Mln; prev 1.729

 

Corn.

·        
May corn ended 8.75 cents lower on weaker energy prices and another large drop in US equities.  USDA export sales for corn and sorghum were excellent but the trade ignored fundamentals.  It was all about the
outside markets. 

·        
China reported a new African swine fever case in Sichuan.  It was a small quantity of infected pigs that were transported from other regions.  This is a reminder the disease is still around, but conditions
have improved. 

·        
US gasoline futures fell to its lowest level since 2008. 

·        
Ethanol futures were also sharply lower.  The decline in energy prices is straining the US ethanol industry. 

 

Export
Developments

• South
  Korea’s NOFI group bought 280,000 tons of corn for July-Sep arrival at $192-$205.50/ton. 
  
• China
  plans to auction 20,000 tons of pork on March 13. 

 

 

Updated
3/9/20

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

 

Soybean
complex.

• CBOT
  soybeans
  were again sharply lower led by outside markets. May soybeans traded 13.75 cents lower, soybean oil 115 points lower, but nearby May meal ended $1.20 . Oil share got hammered.  Soybean and meal spreads have tightened recently.  There was talk lack of US producer
  selling is creating this environment.  With all the recent action in registration changes in soybean meal, the K/N soybean meal spread moved from $4.30 at the close February 28th to around $1.50.  February was not a great month for US crushers in terms to
  margins, but US soybean meal export demand was good and domestic use was good.  Note we included our February NOPA estimates below. 
  
• China
  may have picked up 2-5 Brazilian soybean cargos this week for 2020 shipment.  China was also looking at Argentina quotes for summer shipment. 
  
• This
  was the fourth and last day for the Argentina producer strike.  We heard crush operations were lightly impacted by the lack of producer selling. 
  
• Argentina’s
  BA Grains Exchange lowered its projection for soybeans to 52 million tons, from 54.5 million tons.  They are not the only local group to lower Argentina’s soybean production.  Argentina’s Rosario Stock Exchange this morning unexpectedly projected lower to
  51.5 million tons from 55 million tons. They cited a drop in soybean yields due lack of rains over the past few days. 
  

 

Weekly
continuation soybean oil share – rolling second month

Source:
Reuters and FI

 

 

Oilseeds
Export Developments

• There
  were no 24-hour announcements this morning. 

 

 

 

Updated
3/12/20 – revised lower

• May
  soybeans are seen in a wide $8.25-$9.00 range.
• May
  meal is seen in a $285 to $320 range
• May
  soybean oil range is 26.00 to 30.00

 

Wheat

·        
US wheat traded lower.  Losses were limited after Algeria bought about 680,000 tons of wheat. 

·        
Ethiopia looks to start buying wheat directly from governments and bypass private importers to ensure no problems with import tenders.  Ethiopia is experiencing a severe food shortage. 

·        
Russia’s AgMin said a significant increase in domestic grain prices is unlikely due to a weaker ruble and sees no reason to impose an export tariff, currently at zero percent.  

·        
APK-Inform raised their Ukraine export forecast by 4.3% to 2.4 million tons from 2.3 million tons.  They lowered rapeseed exports to 2.92 million tons, a 2.7 percent decline from previous. 

·        
May Paris wheat futures were up 1.00 euro at 177.75.

·        
Strategie Grains increased EU soft wheat export projection outside the EU by 600,000 tons to 31.2 million tons. 

·        
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. 

 

 

Export
Developments.

• Algeria
  bought 680,000 tons of milling wheat, optional origin, for April and/or May shipment depending on origin.  Prices were thought to be $226 and $227/ton. 
  
• Results
  awaited: Syria seeks 200,000 tons of wheat from Russia, Bulgaria, or Romania, on March 11. 
  
• 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. 
  
• 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

• Volatile
  markets

 

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

 

 

 

USDA Export Sales Highlights   

This summary is based on reports from exporters for the period February 28 – March 5, 2020.

 

• Wheat:  Net sales of 452,300 metric tons for 2019/2020 were down 17 percent from the previous
  week and 6 percent from the prior 4-week average.  Increases primarily for South Korea (144,600 MT, including 11,400 MT switched from unknown destinations), the Philippines (111,900 MT, including decreases of 3,200 MT), Japan (77,400 MT, including decreases
  of 400 MT), Mexico (43,400 MT, including decreases of 300 MT), and Nigeria (35,000 MT), were offset by reductions for unknown destinations (33,200 MT).  For 2020/2021, net sales of 28,500 MT were primarily for Honduras (23,500 MT).  Exports of 447,300 MT were
  down 31 percent from the previous week and 17 percent from the prior 4-week average.  The destinations were primarily to Japan (96,400 MT), South Korea (82,200 MT), Mexico (81,200 MT), Bangladesh (58,600 MT), and the Philippines (57,900 MT). 
  
• Corn:  Net sales of 1,471,200 MT for 2019/2020 were up 91 percent from the previous week and 53 percent
  from the prior 4-week average.  Increases primarily for Japan (750,500 MT, including 37,100 MT switched from unknown destinations and decreases of 11,600 MT), South Korea (198,400 MT, including decreases of 1,900 MT), unknown destinations (178,800 MT), Mexico
  (163,800 MT, including 26,000 MT switched from unknown destinations and decreases of 1,100 MT), and Colombia (56,200 MT, including decreases of 300 MT), were offset by reductions primarily for Peru (50,000 MT).  For 2020/2021, net sales of 128,100 MT were
  for Mexico (90,000 MT) and Japan (38,100 MT).  Exports of 851,700 MT were down 4 percent from the previous week, but up 4 percent from the prior 4-week average.  The destinations were primarily to Mexico (368,200 MT), Japan (192,300 MT), Chile (84,600 MT),
  South Korea (66,800 MT), and Costa Rica (66,600 MT). 
• Optional Origin Sales:  For 2019/2020, options were exercised to export 68,000 MT to South Korea from the United States.  The current outstanding balance of 711,000 MT is
  for South Korea (651,000 MT) and Israel (60,000 MT). 
• Barley: There were no sales or exports reported during the week.
• Sorghum:  Net sales of 260,200 MT for 2019/2020 were up noticeably from the previous week and
  78 percent from the prior 4-week average.  Increases were for China (175,000 MT), unknown destinations (71,000 MT), Japan (12,000 MT), Mexico (2,100 MT), and South Korea (100 MT).  Exports of 13,200 MT were down 86 percent from the previous week and 80 percent
  from the prior 4-week average.  The destinations were Mexico (13,100 MT) and South Korea (100 MT). 
  
• Rice: 
  Net sales of 42,500 MT for 2019/2020 were up 11 percent from the previous week, but down 47 percent from the prior 4-week average.  Increases primarily for Japan (27,600 MT, including decreases
  of 500 MT), Mexico (8,700 MT), Saudi Arabia (2,900 MT), Canada (2,300 MT), and Israel (1,100 MT), were offset by reductions primarily for Guatemala (1,000 MT) and Haiti (500 MT). 
  Exports of 62,300 MT were unchanged from the previous week, but down 12 percent from the prior 4-week average.  The destinations were primarily to Haiti (30,100 MT), Mexico (16,700 MT), Saudi
  Arabia (3,200 MT), South Korea (2,300 MT), and Canada (2,300 MT).
• Soybeans:  Net sales of 302,800 MT for 2019/2020–a marketing-year low–were down 12 percent from the previous week and 34 percent from
  the prior 4-week average.  Increases primarily for Japan (120,000 MT, including 61,000 MT switched from unknown destinations and decreases of 600 MT), Indonesia (95,400 MT, including 68,000 MT switched from unknown destinations and decreases of 2,600 MT),
  the Netherlands (64,700 MT, including 65,000 MT switched from unknown destinations and decreases of 300 MT), Colombia (33,700 MT), and Mexico (22,000 MT, including decreases of 900 MT), were offset by reductions primarily for China (90,300 MT).  For 2020/2021,
  total net sales of 1,400 MT were for Japan.  Exports of 567,600 MT were down 18 percent from the previous week and 21 percent from the prior 4-week average.  The destinations were primarily to China (139,700 MT), Japan (118,300 MT), Indonesia (92,400 MT),
  the Netherlands (64,700 MT), and Mexico (54,400 MT). 

Exports for Own Account:  For 2019/2020, the current exports for own account outstanding balance is 2,100 MT, all Canada.

• Soybean Cake and Meal:  Net sales of 171,800 MT for 2019/2020 were down 46 percent from the previous week and 22 percent from the prior
  4-week average.  Increases primarily for Vietnam (41,000 MT), Canada (38,700 MT), Peru (18,100 MT), El Salvador (18,000 MT), and Honduras (14,800 MT, including decreases of 200 MT), were offset by reductions primarily for Ecuador (1,200 MT).  For 2020/2021,
  total net sales of 100 MT were for Canada.  Exports of 341,500 MT–a marketing-year high–were up 1 percent from the previous week and 22 percent from the prior 4-week average.  The destinations were primarily to the Philippines (93,300 MT), Canada (45,900
  MT), Mexico (36,400 MT), Peru (32,200 MT), and Israel (32,000 MT).
• Soybean Oil: 
  Net sales of 24,700 MT for 2019/2020 primarily for Morocco (20,000 MT switched from unknown destinations), South Korea (10,000 MT), Jamaica (3,500 MT), Mexico (3,300 MT), and El Salvador (2,000 MT), were offset
  by reductions for unknown destinations (20,000 MT).  Exports of 13,900 MT were down 61 percent from the previous week and 64 percent from the prior 4-week average.  The destinations were primarily to South Korea (12,000 MT), Mexico (1,400 MT), Canada (300
  MT), and Honduras (200 MT). 
• Cotton:  Net sales of 484,200 RB for 2019/2020–a marketing-year high–were up 22 percent from
  the previous week and 62 percent from the prior 4-week average.  Increases primarily for Pakistan (161,600 RB), China (90,900 RB, including decreases of 900 RB), Turkey (84,100 RB), Vietnam (47,400 RB, including 700 RB switched from Japan), and Bangladesh
  (32,800 RB), were offset by reductions primarily for Japan (3,900 RB) and Thailand (1,200 RB).  For 2020/2021, net sales of 160,400 RB were primarily for Mexico (91,600 RB), Turkey (20,100 RB), China (15,900 RB), Pakistan (11,400 RB), and Honduras (6,100 RB). 
  Exports of 424,600 RB were down 11 percent from the previous week, but up 8 percent from the prior 4-week average.  Exports were primarily to Vietnam (94,600 RB), Pakistan (86,200 RB), Turkey (60,400 RB), China (55,100 RB), and Bangladesh (34,800 RB).  Net
  sales of Pima totaling 17,300 RB were up 91 percent from the previous week and 20 percent from the prior 4-week average.  Increases were primarily for Vietnam (6,600 RB), Bangladesh (3,600 RB), China (2,200 RB), El Salvador (1,000 RB), and Bahrain (900 RB). 
  Exports of 14,800 RB were down 6 percent from the previous week, but up 15 percent from the prior 4-week average.  The destinations were primarily to Pakistan (4,200 RB), India (4,100 RB), Vietnam (1,600 RB), Egypt (900 RB), and Bahrain (900 RB). 
  

Exports for Own Account:  For 2019/2020, new exports for own account totaling 18,700
RB were to Indonesia (17,900 RB) and Pakistan (800 RB).  Exports for own account totaling 6,500 RB to Indonesia (5,200 RB), Pakistan (800 RB), and Vietnam (500 RB) were applied to new or outstanding sales.  Decreases were reported for India (800 RB).  The
current exports for own account outstanding balance of 39,400 RB is for Indonesia (28,800 RB), Bangladesh (5,300 RB), China (2,500 RB), India (1,700 RB), South Korea (400 RB), Malaysia (400 RB), and Vietnam (300 RB).

·        
Hides and Skins: Net sales of 356,000 pieces for 2020 were up 5 percent from the previous
week and 19 percent from the prior 4-week average.  Increases primarily for China (173,600 whole cattle hides, including decreases of 5,800 pieces), South Korea (53,900 whole cattle hides, including decreases of 1,300 pieces), Mexico (46,700 whole cattle hides,
including decreases of 1,600 pieces), Thailand (26,200 whole cattle hides, including decreases of 2,100 pieces), and Indonesia (18,900 whole cattle hides, including decreases of 500 pieces), were offset by reductions for Canada (3,200 kip skins).  Exports
of 373,700 pieces reported for 2020 were up 16 percent from the previous week, but down 4 percent from the prior 4-week average.  Whole cattle hide exports were primarily to China (182,200 pieces), South Korea (66,100 pieces), Mexico (54,900 pieces), Thailand
(34,000 pieces), and Taiwan (17,000 pieces).  Whole kip skins exports of 6,800 pieces were primarily to Belgium (5,500 pieces).

·        
Net sales of 100,000 wet blues for 2020 were down 14 percent from the previous week
and 9 percent from the prior 4-week average.  Increases were primarily for Vietnam (42,600 unsplit, including decreases of 500 grain splits), China (28,200 unsplit and 6,600 grain splits), Italy (10,900 unsplit and 3,200 grain splits), Thailand (7,900 unsplit),
and Mexico (1,100 grain splits).  Exports of 129,600 wet blues for 2020 were down 3 percent from the previous week and 12 percent from the prior 4-week average.  The destinations were primarily to Vietnam (40,600 unsplit), China (23,900 unsplit and 5,700 grain
splits), Italy (25,000 unsplit and 2,000 grain splits), Thailand (26,800 unsplit), and South Korea (3,700 grain splits).  Net sales of 16,500 splits resulting in increases primarily for Italy (12,100 pounds) and Vietnam (4,100 pounds), were offset by reductions
for South Korea (3,200 pounds).  Exports of 248,700 pounds were to Vietnam (200,900 pounds), Italy (42,600 pounds), South Korea (3,600 pounds), and China (1,600 pounds).

·        
Beef:
Net sales of 17,700 MT reported for 2020 were up 38 percent from the previous week and 11 percent from the prior 4-week average.  Increases primarily for Japan (5,000
MT, including decreases of 600 MT), South Korea (4,300 MT, including decreases of 300 MT), Taiwan (2,300 MT, including decreases of 100 MT), Mexico (1,500 MT, including decreases of 100 MT), and Hong Kong (1,100 MT, including decreases of 100 MT), were offset
by reductions primarily for Honduras (100 MT).  Exports of 16,200 MT were down 2 percent from the previous week and 6 from the prior 4-week average.  The destinations were primarily to Japan (5,300 MT), South Korea (4,500 MT), Mexico (1,600 MT), Taiwan (1,400
MT), and Canada (1,000 MT).

• Export Adjustments:
   Accumulated exports of beef to Honduras were adjusted down 89 MT and Bahamas were adjusted down 18 MT for week ending February 27^th. 
  These exports were reported in error.
• Pork:
  For 2020, net sales reductions of 26,600 MT–a marketing-year low–were down noticeably from the previous week and the prior 4-week average.  Increases primarily for Canada (6,700 MT), Mexico (5,800 MT),
  Japan (4,200 MT), Australia (700 MT), and Colombia (600 MT), were more than offset by reductions primarily for China (45,200 MT).  Exports of 44,500 MT–a marketing-year high–were up 2 percent from the previous week and 4 percent from the prior 4-week average. 
  The destinations were primarily to China (16,100 MT), Mexico (10,700 MT), Japan (5,300 MT), South Korea (4,100 MT), and Canada (2,600 MT).

 

 

U.S. EXPORT SALES FOR WEEK ENDING 3/5/2020

	CURRENT MARKETING YEAR						NEXT MARKETING YEAR
COMMODITY	NET SALES	OUTSTANDING SALES		WEEKLY EXPORTS	ACCUMULATED EXPORTS		NET SALES	OUTSTANDING SALES
		CURRENT YEAR	YEAR AGO		CURRENT YEAR	YEAR AGO
	THOUSAND METRIC TONS
WHEAT
HRW	169.3	1,779.4	2,425.4	165.5	6,993.6	5,538.2	5.0	100.1
SRW	6.7	336.8	881.3	26.6	1,964.1	2,121.1	3.5	81.7
HRS	171.6	1,606.9	1,373.9	139.3	5,369.5	5,000.0	20.0	142.0
WHITE	104.6	1,046.0	1,037.1	115.8	3,707.2	3,997.6	0.0	20.9
DURUM	0.0	148.4	109.9	0.0	679.8	360.3	0.0	111.0
TOTAL	452.3	4,917.3	5,827.6	447.3	18,714.2	17,017.1	28.5	455.6
BARLEY	0.0	14.9	27.7	0.0	34.3	32.5	0.0	31.0
CORN	1,471.2	12,881.3	13,842.5	851.7	15,231.9	27,055.1	128.1	1,601.7
SORGHUM	260.2	915.9	173.7	13.2	1,083.1	708.7	0.0	33.0
SOYBEANS	302.8	4,167.5	13,804.5	567.6	30,200.7	27,301.8	1.4	344.8
SOY MEAL	171.8	3,252.0	3,618.7	341.5	5,078.9	5,329.8	0.1	100.8
SOY OIL	24.7	257.1	157.4	13.9	500.1	373.4	0.0	0.5
RICE
L G RGH	-1.3	376.7	374.9	15.7	879.6	669.5	0.0	0.0
M S RGH	8.1	50.9	15.9	0.0	17.5	24.6	0.0	0.0
L G BRN	0.2	13.2	6.7	1.3	35.0	28.4	0.0	0.0
M&S BR	0.3	69.6	83.3	2.4	38.1	57.9	0.0	0.0
L G MLD	3.7	60.7	64.1	34.7	647.2	574.1	0.0	0.0
M S MLD	31.5	194.0	172.0	8.2	385.4	322.4	0.0	0.0
TOTAL	42.5	765.1	716.9	62.3	2,002.8	1,676.8	0.0	0.0
COTTON		THOUSAND RUNNING BALES
UPLAND	484.2	7,057.0	6,225.6	424.6	7,470.1	5,996.0	160.4	1,696.5
PIMA	17.3	232.8	221.5	14.8	271.7	340.2	0.0	35.3