FW: FI Evening Grain Comments 03/23/20

PDF attached

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:

Argentina
is expecting to receive some important rainfall at timely intervals to help minimize the return of crop moisture stress. Brazil, however, continues to be on a watch list for dryness in some southern second season corn production areas. Dryness is not an issue
today, but it could evolve in the next few weeks without greater rain and this may catch the attention of the market place this week depending on how each computer forecast model run handles the situation.

            U.S.
planting delays are expected to prevail through the first week of April due to wet field conditions and additional precipitation in the Delta and Tennessee River Basin with areas that are usually planted in early April also being impacted.

            India,
China and Australia weather is mostly good for this time of year. Rain will have to fall in southern Australia by May to support autumn canola planting.

            Rain
in southern Europe will be good for early corn planting in Spain, Portugal, Italy and eventually in the southern Balkan Countries, although warming is needed.

            Southeast
Asia oil palm production areas are favorably moist in many areas, but greater rain is needed in parts of the northern and eastern Philippines and in northern Sumatra as well as the Malay Peninsula.

            South
Africa summer crops are developing favorably.

            Overall,
weather today will likely provide a mixed influence on market mentality with a slight bullish bias.

 

MARKET
WEATHER MENTALITY FOR WHEAT: 

Winter
crop development prospects are favorable in portions of Europe, the CIS, India and China, although some of these regions did not experience good weather for establishment last autumn and it will be important that ideal weather and soil conditions are present
this spring to induce improvement prior to reproduction. More moisture is needed in the southern CIS, Romania and parts of Spain while less rain is needed to the north and that is exactly what should evolve this week, although Kazakhstan and Russia’s Southern
Region will stay too dry.

            North
Africa rain during the weekend was good for late developing wheat and barley, but much of the lost production in Morocco because of dryness was permanent.

            Australia
needs rain to bolster soil moisture prior to planting in late April and May, but there is plenty of time for weather changes to evolve.

            Middle
East wheat areas will soon need drier weather to support grain maturation and the same will be true in Morocco.

            U.S.
small grain production areas are poised to develop favorably in this early spring, but greater moisture is needed in the west-central high Plains and less rain in the Midwest and Delta. Warming is needed too in some areas.

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

Source:
World Weather Inc. and FI

 

 

 

 

 

Source:
World Weather Inc. and FI

 

 

 

Bloomberg
Ag Calendar

MONDAY,
MARCH 23:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• China
  grains, meat import data
• Monthly
  MARS bulletin on crop conditions in Europe
• EU
  weekly grain, oilseed import and export data
• U.S.
  cold storage data for beef, pork, poultry, 3pm
• Ivory
  Coast cocoa arrivals

TUESDAY,
MARCH 24:

• U.S.
  poultry slaughter, 3pm
• Brazil’s
  Unica may release sugar report (tentative)
• EARNINGS:
  WH Group

WEDNESDAY,
MARCH 25:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• Malaysia’s
  palm oil export data for March 1-25
• China
  Soy import numbers
• EARNINGS:
  JBS

THURSDAY,
MARCH 26:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
• POSTPONED:
  Cocoa Association of Asia’s International Cocoa Conference and Dinner in Singapore postponed to June 1-2
• International
  Grains Council monthly supply & demand report
• Port
  of Rouen data on French grain exports
• USDA
  hogs and pigs inventory, 3pm

FRIDAY,
MARCH 27:

• ICE
  Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions ~2:30pm (~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            
349,369           versus  350000-600000           range

Corn               
816,634           versus  700000-1050000         range

Soybeans        
570,642           versus  450000-650000           range

 

China
took 71.5k of sorghum. 

 

 

 

GRAINS
INSPECTED AND/OR WEIGHED FOR EXPORT

                 
REPORTED IN WEEK ENDING MAR 19, 2020

                           
— METRIC TONS —

————————————————————————-

                                                  
CURRENT     PREVIOUS 

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

 
GRAIN      03/19/2020  03/12/2020  03/21/2019    TO DATE     TO DATE  

 

BARLEY             
0       1,197           0       30,328        7,810 

CORN         
816,634     985,206     996,165   16,749,635   28,420,738 

FLAXSEED           
0           0           0          520          366 

MIXED              
0           0           0            0            0 

OATS               
0         100           0        2,866        2,093 

RYE              
  0           0           0            0            0 

SORGHUM      
101,053      77,271       3,235    1,638,712      977,936 

SOYBEANS     
570,642     494,612     859,953   31,202,613   28,567,923 

SUNFLOWER          
0           0           0            0            0 

WHEAT        
349,369     468,588     384,943   20,091,160   18,396,030 

Total      
1,837,698   2,026,974   2,244,296   69,715,834   76,372,896 

————————————————————————-

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.

 

Macros

・        
Canadian Wholesale Trade Sales (M/M) Jan: 1.8% (prev 0.9%)

 

Corn.

• Corn
  prices ended mixed, with May down 0.25 cent, July unchanged and September up 0.50 cent.  Prices were suppressed to the upside on s/c and w/c spreading, and also waning US corn for industrial demand.  There were no 24-hour USDA announcements. 
  

・        
Late last week it was rumored China bought more US corn than what showed up in Friday’s 24-hour announcement system. 

・        
USDA US corn export inspections as of March 19, 2020 were 816,634 tons, within a range of trade expectations, below 985,206 tons previous week and compares to 996,165 tons year ago. Major countries included
Japan for 257,475 tons, Mexico for 171,937 tons, and Colombia for 142,937 tons.

・        
We look for the US weekly ethanol production to fall 20,000 barrels from the previous week to 1.035 million barrels. 

・        
Energy Census noted (some) EU ethanol producers were switching production to disinfectants.  Could we see this happen across the US?

・        
AgRural reported Brazil’s second crop reached 96 percent for the Center-South through last Thursday, compared to 100 percent last year and 97 percent average.  66 percent of the soybean crop had been harvested,
one point below the previous year. 

・        
Ukraine’s economic minister upward revised their 2020 corn planting area to 5.4 million hectares from 5.2 million previously. 

・        
Germany confirmed a case of H5N8 bird flu on a farm in the northern state of Lower Saxony, Germany. 

 

University
of Illinois: Hubbs,
T. "Corn and Soybean Acreage in 2020." farmdoc daily (10):53,  Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, March 23, 2020.
https://farmdocdaily.illinois.edu/2020/03/corn-and-soybean-acreage-in-2020.html

 

FI’s
estimates for March USDA Prospective Plantings as follows:

・        
Corn 92.5 million, up from 89.7 in 2019

・        
Soybeans 87.1, up from 76.1 in 2019

Recall
prevented plantings for corn and soybeans combined in 2019 was 15.9 million acres.  Attached is our US acreage table.  This is subject to change based on prices, weather and CRP enrollment. 

 

Export
Developments

• None
  reported

 

Updated
3/19/20

• CBOT
  May is now seen in a $3.10 and $3.70 range.  December $2.85-$3.95.   

 

Soybean
complex.

• CBOT
  soybeans
  ended
  20.75-21.50 cents higher in the nearby 2 front positions, its 5^th consecutive session increase.  The strength was led by meal (+$7.70 May) amid logistical problems in Argentina and good US meal demand. Soybean oil ended 50 points higher on a late
  session rally.  CBOT crush ended at 136.50 basis the May, up 1.50 cents.  Managed money going home tonight should be now net long soybeans. They were already net long meal and oil. 
  
• May
  soybeans and meal broke above our high end of the expected trading ranges. See our updated ranges below. 
  
• The
  SMK/SMN traded as high as +11.80 and settled at .+9.60. 

• CBOT
  soybean meal slightly broke after the open after another headline said Brazil adverted a Santos port strike.  Brazil is no longer a very large exporter of soybean meal. 
  

・        
USDA US soybean export inspections as of March 19, 2020 were 570,642 tons, within a range of trade expectations, above 494,612 tons previous week and compares to 859,953 tons year ago. Major countries included
Egypt for 127,808 tons, China T for 80,558 tons, and China Main for 70,540 tons.

• Argentina
  is on holiday Monday and Tuesday for public holiday.  We heard they may have a strike on Wednesday, but no confirmation could be found.  Over the weekend a Bloomberg headline said the Argentina government stepped in to stop a grain inspector strike. 
  
• Timbues,
  Argentina, reopened its port to cargo after the government stepped in to issue guidelines. 
  
• Paraguay’s
  Chamber noted the 1^st soybean harvest could be above 10 million tons.  That would be fairly large given the recent dryness the country experienced in recent weeks. 
  
• Rondonópolis
  in Brazil’s Mato Grosso state is on lockdown due to coronavirus crisis.  Cofco and Bunge have plants there.
• Last
  we heard Gulf basis increased 25 points to 200 over. 
• Ukraine
  sunflower oil exports so far for 2019-20 were up 72 percent to 2.878 million tons (Aug-Sep) from 1.671 million tons during the same period a year ago. 
  

・        
Despite improving crush margins, Chinese crushers only operated at 39.8% of capacity last week, according to Cofeed.  China crushed around 1.387 million tons of soybeans last week, down 5.7% from the previous
week, and the lowest since 2016. 

• The
  European Union reported soybean import licenses since July 1 at 10.213 million tons, below 10.591 million tons a year ago, a 4 percent decrease. European Union soybean meal import licenses are running at 12.816 million tons so far for 2019-20, above 12.641
  million tons a year ago. EU palm oil import licenses are running at 4.025 million tons for 2019-20, down from 4.698 million tons a year ago, or down 14 percent.
• European
  Union rapeseed import licenses since July 1 were 4.754 million tons, up 45 percent from 3.270 million tons from the same period a year ago.

 

 

Oilseeds
Export Developments

• Last
  week the USDA bought 310 tons of packaged vegetable oil for export at $952.96 to $1053.93 per ton. 
  

 

Updated
3/23/20

• May
  soybeans are seen in a $8.40-$9.10 range.
• May
  meal is seen in a $305 to $360 range
• May
  soybean oil range is 24.25 to 28

 

Wheat

・        
Chicago May wheat ended 23.25 cents higher at $5.6250, KC May up 20.50 cents at $4.8950, and MN May up 9.25 cents at $5.3025.  Prices broke through the upper range of our trading ranges for May Chicago and
KC wheat.  Strong
global demand for milling wheat and feed grains continue to support prices.  Chicago wheat was higher for the 5^th consecutive session. 

・        
We increased our estimate for the combined US other spring and durum wheat planted area by 300,000 acres from previous to reflect the increase in demand for global milling wheat.  Some of the area that could
be planted to corn across the northwestern Corn Belt and northern Great Plains might be diverted to wheat.   Out other spring wheat area is estimated at 13.2 million acres, up from 12.660 million in 2019.  Durum was taken up 100,000 acres to 1.800 million,
above 1.339 million acres in 2019.  Attached is our updated 2020 US planted area table, reflecting what we think USDA may report at the end of the month. 

・        
USDA US all-wheat export inspections as of March 19, 2020 were 349,369 tons, slightly below a range of trade expectations, below 468,588 tons previous week and compares to 384,943 tons year ago. Major countries
included China T for 54,761 tons, Indonesia for 53,792 tons, and Malaysia for 42,634 tons.

・        
USDA announced a 24-hour sales correction.  Private exporters sold 340,000 tons of wheat, previously announced all to China for the current marketing year, was changed to 55,000 tons for 2019-20 and 285,000
tons for 2020-21. 

・        
Russia suspended exports of buckwheat and some other processed grains for 10 days beginning on March 20.  Russia’s Prime Minister said Russia was considering limiting some medicine exports. 

・        
Russian weather forecaster Hydrometcentre said rain was needed for the Russia growing areas that reside on the European side. 

・        
SovEcon and IKAR reported Russian wheat with 12.5% protein content unchanged at $207 a ton fob.

・        
APK-Inform reported March 1 Ukraine’s grain stocks at 17.9 million tons, down from 20.8 million tons year earlier.  Ukraine harvested a record 75 million tons of grain in 2019.

・        
Over the weekend Turkey and Algeria announced wheat import tenders.  Saudi Arabia bought a large amount of barley. 

・        
May Paris wheat was up 5.25 euros at 196.50 euros a ton, a more than 2.5 percent increase. 

・        
MARS estimated EU soft wheat yields could decline 2.1% to 5.88 tons per hectare, down from 6.01 in 2019.

・        
The European Union granted export licenses for 330,000 tons of soft wheat exports, bringing cumulative 2019-20 soft wheat export commitments to 23.209 MMT, up from 13.501 million tons committed at this time
last year, a 72 percent increase.  Imports are down 54 percent from year ago at 3.487 million tons.

・        
On March 21 the FOA warned panic buying may drive world food inflation, but mentioned the world has ample grain and oilseed supplies.  The inflation was tied to government lockdowns as countries issued large
tenders for milling wheat and flour.  Chicago wheat futures were up 6 percent for the week.  Meanwhile, some countries are suffering from the pandemic.  Some European countries closed borders meaning food imports have stopped. 
https://fingfx.thomsonreuters.com/gfx/ce/7/9160/9141/GlobalStocksofFoodStaples.png

・        
Morocco will extend its suspension of soft wheat import duty until June 15.  They also suspended duties on durum and grains.  Not only they have restricted movement, Morocco is facing a significant rainfall
deficit, with rainfall down 40 percent from last year.  Morocco has about three months of supplies for grains. 

・        
Saudi Arabia has 81,000 tons of flour in storage, the state grain buyer SAGO said.  They can produce 15,150 tons per of flour per day.

 

 

Export
Developments.

・        
USDA announced a 24-hour sales correction.  Private exporters sold 340,000 tons of wheat, previously announced all to China for the current marketing year, was changed to 55,000 tons for 2019-20 and 285,000
tons for 2020-21. 

• Saudi
  Arabia bought 1.2 million tons of barley (in for 720,000 tons) for arrival during May and June.  The average price was $201.04/ton/ 
  
• Algeria
  seeks 50,000 tons of milling wheat, optional origin, on March 24 for May or June shipment, depending on origin. 
  
• Turkey’s
  TMO seeks 200,000 tons of red milling wheat for shipment during April 7-27 on March 27. 
  
• 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

• On
  a monthly chart, cotton (ICE) is trading at its lowest level since 2009. 
  
• Mauritius
  bought 6,000 tons of rice from India and Pakistan at an average price of $394/ton c&f. 
  
• South
  Korea seeks 20,000 tons of rice from China on March 25 for arrival around July 30. 
  
• South
  Korea seeks 73,664 tons of rice on March 25 for arrival around end of Sep. to Oct 31. 
  

 

Updated 3/23/20

• CBOT Chicago May wheat is seen in a $5.20-$5.80 range
  

・       
CBOT KC May wheat is seen in a $4.45-$5.25 range

・       
MN May wheat is seen in a $5.10-$5.60 range