FW: FI Evening Grain Comments 03/17/20

PDF attached

 

USD surges.  WTI crude sells off.  Dow stocks increase.  Argentina is seeing export delays.  Another leading analyst slashes SA soybean and corn production.  Egypt is in for vegetable oils and SK bought a couple cargos of corn overnight.  Wheat import tenders continue to develop. 

 

Weather

 

MARKET WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Today’s weather will not provide much bullish support except from the United States where a wet bias will continue in the Delta and Tennessee River Basin as well as in parts of central and eastern crop areas of Texas. South Texas moisture will be welcome and dry conditions in the far southeastern U.S. will support planting.

South America weather is still advertised to be mostly good for Argentina and southern Brazil, although the distribution of rain over the next two weeks will have much to say about late season corn, soybean and peanut production.

South Africa rainfall will be good for production and drier weather in eastern Australia will be supportive of early season sorghum and other coarse grain and oilseed crops.

India winter crops are still poised for excellence this year and drier weather will be needed in late March and especially April to protect crop quality.         

China’s winter weather has spring planting prospects looking very good. Rain in Spain and Portugal will improve spring planting potentials and support improved winter crop conditions.

Rain is still needed throughout Southeast Asia, but mostly in the mainland areas and in some of the northern palm oil and coconut production areas.

Overall, weather today will maintain a neutral to bearish bias to market mentality

 

MARKET WEATHER MENTALITY FOR WHEAT: 

Cooling in southern Russia and southern Ukraine this week will help keep winter crop development in check after recent greening. Winter crop development potential in China remains very good and India is experiencing some fine filling conditions after a successful reproductive season. Europe wheat small grain production potential continues to improve and rain in North Africa and Spain this week may bring on some improvement for those areas as well.

            U.S. winter crops are in mostly good shape, although drier weather is needed in the Delta. Southeastern Canada and the heart of the Midwest also need some drier weather.

            Overall, weather today will maintain a neutral to bearish bias to market mentality.

Source: World Weather Inc. and FI

 

Bloomberg Ag Calendar

TUESDAY, MARCH 17:

• New Zealand global dairy trade auction

WEDNESDAY, MARCH 18:

• EIA U.S. weekly ethanol inventories, production, 10:30am

THURSDAY, MARCH 19:

• USDA weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
• Port of Rouen data on French grain exports
• USDA total milk, red meat production, 3pm

FRIDAY, MARCH 20:

• 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
• AmSpec, Intertek, SGS release palm oil export data for March 1-20
• U.S. cattle on feed, 3pm

Source: Bloomberg and FI

 

Corn.

·         May corn ended 10.75 cents lower at $3.44 and July down 8.50 cents to $3.50 on eroding US demand for corn. 

·         We are hearing some US ethanol plants are shutting down and/or ethanol producers have been unwinding hedges in corn since Friday, another sign of slowing ethanol production down.  They are keeping pressure on corn.  Realistically we would think ethanol companies would slow at rates that coincide with the demand destruction in US gasoline demand.  Last we heard US gasoline demand could drop 20 percent over the next month.  In regard to DDGS production, look for meal and corn for feed demand to see an uptick over the medium term. 

·         A Bloomberg poll looks for weekly US ethanol production to be down 2,000 at 1.042 million barrels (1.030-1.058 range) from the previous week and stocks to increase 18,000 barrels to 24.352 million.

·          (Reuters) – French sugar group Cristal Union will stop producing ethanol biofuel at one of its plants to switch it to alcohol. 

·         In addition,  Goldman Sachs report recommended shorting corn.  This report picked up by Bloomberg, was seen bearish. 

·         South Korea was active overnight picking up a couple cargos. 

• Soybean and Corn Advisor:

2019/20 Brazil Corn Estimate Lowered 2.0 mt to 98.0 Million Tons

2019/20 Argentina Corn Estimate Unchanged at 49.0 Million Tons

 

Export Developments

• South Korea’s NOFI bought 60,000 tons of corn at $190.23/ton c&f for August 15 arrival. 
• South Korea’s FLC bought 66,000 tons of corn at $199.98/ton c&f for July 15 arrival. 

 

 

Updated 3/9/20

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

 

Soybean complex.

• CBOT soybeans traded mixed led by bull spreading, meal mostly lower and SBO about 25 points higher.  May CBOT soybeans rebounded off a 10-month low on dryness in southern Brazil and parts of Argentina.  Meanwhile, offshore values were friendly for soybean oil. 
• 2 cargos of Brazilian soybeans were booked to China this morning. 
• Brazil exported 4.3 million tons of soybeans during the first 15 days of March, down from 4.8 million during the first 17 days of March in 2019.  February-March shipments of soybeans are expected to end up below expectations.  Port congestion was to blame. 
• Brazil’s Rio Grande do Sul remains the wildcard for the size of the countries soybean crop.  Drought considerable lowered yields this season.  The local state agriculture department initially estimated the RGDS soybean crop at 19.7 million tons, but since then reduced it to their last of 13.3 million tons. 
• Anec looks for 73-74 million tons of soybeans to be exported this season. 
• RGDS is little more than 10 percent complete for soybean harvest progress.  Rain will increase this week across southern Brazil and Paraguay, temporally boosting soil moistures.  The rain will not end the drought conditions but should improve yields.  Paraguay and southern Brazil will turn dry again Monday through Thursday next week. 
• A local association lowered Brazil soybean production to 120.6 million tons from 123 in February.  Aprosoja said China will continue to buy soybeans and looked for a record for March shipments (see above). 
• Soybean and Corn Advisor:

2019/20 Brazil Soybean Estimate Lowered 2.0 mt to 123.0 Million

2019/20 Argentina Soybean Estimate Lowered 3.0 mt to 51.0 Million

• Argentina’s export chamber noted export delays out of Rosario as the government attempts to contain coronavirus. 
• Argentina will see rain across much of its growing regions through Wednesday.  Tuesday’s weather forecast was wetter for next week. 

 

Oilseeds Export Developments

• Egypt seeks 30,000 tons of soybean oil and 10,000 tons of sunflower oil for May 20/June 10 and June 15/July 5 arrival. 

 

Updated 3/16/20

• May soybeans are seen in a wide $7.75-$8.50 range.
• May meal is seen in a $280 to $315 range
• May soybean oil range is 24.00 to 28.00

 

Wheat

·         US wheat traded mixed.  Chicago ended higher in the nearby contracts and lower in the back months.  MN was lower but bull spreading limiting losses in the May and July contracts.   KC wheat ended 8.50 cents higher basis the May, a strong move in the spread against Chicago and MN.  Why?  Funds might be unwinding long Chicago and short KC spreads.  As of 3/10 managed money F&O were net long 16,700 Chicago wheat and net short 14,600 KC. 

·         Egypt will temporarily suspend wheat inspections until March 31. 

·         May Paris wheat futures were up 4 euros to 179.25, a 2.3% increase.  

·         We updated our wheat by class export projection for 2019-20 and 2020-21 for the US. 

 

 

(Reuters) – The U.S. Department of Agriculture’s (USDA) National Agricultural Statistics Service in a weekly crop report on Monday rated 46% of the Kansas winter wheat crop in good to excellent condition, down from 47% a week earlier.  Kansas is the biggest U.S. winter wheat producer. The USDA reported surplus moisture in 18% of Kansas topsoil, up from 7% 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 26% the previous week.

·         The Texas corn crop was 29% planted, up from 28% a week earlier and ahead of the state’s five-year average of 16%.

·         For Oklahoma, the USDA rated 67% of the winter wheat crop in good to excellent condition, up from 58% a week earlier.

·         The USDA said 10% of Oklahoma’s winter wheat had reached the jointing stage of growth, compared with the five-year average of 20%.

·         For Colorado, the USDA rated 46% of the winter wheat as good to excellent, a decline from 59% in the state’s previous report, released at the end of February.

·         Farmers in the Plains state grow hard red winter wheat, the largest U.S. wheat class, which is milled into flour for bread.

·         In Arkansas, where farmers grow soft red winter wheat used to make cookies and snack foods, the USDA rated 39% of the state’s wheat as good to excellent,

·         The USDA on Jan. 10 said U.S. farmers planted 30.804 million acres of winter wheat for 2020 harvest, down 1% from a year earlier and the fewest since 1909. (Full Story)

 

Export Developments.

• Algeria bought 50,000 tons of feed barley at $194-$195/ton c&f for April shipment. 
• Japan seeks 90,311 tons of food wheat from the US and Canada on Thursday.

• Tunisia’s state grains agency bought at least 67,000 tons of durum wheat.  Lowest price offered was $326.00 a ton c&f. Tunisia also bought 25,000 tons of optional origin soft milling wheat at an estimated $220.94 a ton c&f. They last picked up soft wheat on March 11 at $206.74/ton.  The durum is for April 10-May 25 shipment, depending on origin, and soft wheat for April 1-10 shipment. 
• Jordan received no participants for milling wheat.  They were in for 120,000 tons. 
• Jordan seeks 120,000 tons of feed barley on March 18. 
• 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 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

• South Korea seeks 73,664 tons of rice on March 25 for arrival around end of Sep. to Oct 31. 

 

Updated 3/16/20

·        CBOT Chicago May wheat is seen in a $4.75-$5.40 range

·        CBOT KC May wheat is seen in a $4.00-$4.65 range

·        MN May wheat is seen in a $4.90-$5.35 range