FW: FI Evening Grain Comments 03/25/20

PDF attached

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:

Rain
from Buenos Aires to Cordoba and San Luis overnight occurred as advertised and has ensured abundant moisture for late season grain and oilseed crops throughout the region. Drier biased conditions are expected to prevail farther north for a while, but the most
important production areas in the nation are poised to finish out the growing season favorably, despite drying in early April.

            Brazil
soil moisture is still quite favorable for maintaining good crop conditions. There is need for greater rain in the south and some timely moisture will occur to ensure there is no serious stress to crops outside of Rio Grande do Sul where production cuts have
already occurred.

            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. Less rain and some
warming will occur for a little while in early April, but how significant that drying is remains to be seen.

           
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 has been and will continue to 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 bearish 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.

            Recent
North Africa rain was good for late developing wheat and barley, but much of the lost production in Morocco because of dryness was permanent. Additional rain is expected over the next few days with drying this weekend.

           
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. Some rain is expected in New South Wales next week, but confidence is low on its significance.

           
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

 

 

Bloomberg
Ag Calendar

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

 

Macros

・        
US Crude Oil Futures Settle At $24.49/Bbl, Up $0.48 Or 2.00%

・        
US Durable Goods Orders Feb P: 1.2% (exp -1.0%; prev -0.2%)

 

Corn.

• Corn
  prices ended higher on bottom picking, higher wheat and hopes US export demand could partially offset the industrial demand destruction.  Under the 24-hour reporting system, US exporters sold 138,000 tons of corn to unknown for 2019-20 delivery.  China was
  said to be in for US corn, sorghum and DDGS on Tuesday. 
• The
  near-term weather outlook calls for limited rainfall over the next six says for the southeast but for precipitation to return again April 1-7 that may end up above normal. 
  
• The
  US Senate coronavirus stimulus Bill adds $14 billion to the USDA CCC program, replenishes $30 billion trade aid for US producers (initiated last year) and provides $9.5 billion for producers impacted by the virus, including meat, dairy, and farmer markets.
   
• USDA
  Attaché estimated 2020-21 Japan corn imports at 16.0 million tons, unchanged from 2019-20. 
  

・        
China looks to sell 20,000 tons of pork from reserves on March 27. 

・        
South Africa’s Crop Estimates Committee (CEC) in its second crop production report of the season, estimated corn at 14.809 million tons, compared with 11.275 million tons last year.  It included 8.523 million
tons of white and 6.286 million tons of yellow.  A Reuters survey was at 14.959 million tons (8.672 white and 6.287 yellow).

・        
The weekly USDA Broiler Report showed eggs set up 3 percent and chicks placed up 4 percent.  Cumulative placements from the week ending January 4, 2020 through March 21, 2020 for the United States were 2.29
billion. Cumulative placements were up 4 percent from the same period a year earlier.

 

 

US
ethanol. US
production of ethanol declined 30,000 barrels from the previous week to 1.005 million, and stocks fell 458,000 barrels.  The decline in production was much less than trade expectations.  Bloomberg estimate was expecting a 56,000-barrel declined and stocks
to decrease 59,000 barrels. Next week look for a greater decrease in weekly ethanol production as plants shutter operations.  

・        
 (Bloomberg) — The Trump admin. did not appeal a federal court ruling that limits its power to exempt oil refineries from biofuel-blending requirements, a decision that could mean only a handful of the facilities
are eligible for those valuable waivers in the future.

・        
CBOT ethanol margins were increased 
https://www.cmegroup.com/content/dam/cmegroup/notices/clearing/2020/03/Chadv20-128.pdf

 

 

 

Export
Developments

• Under
  the 24-hour reporting system, US exporters sold 138,000 tons of corn to unknown for 2019-20 delivery. 
  
• South
  Korea’s MFG seeks 66,000 tons of corn on Wed. for arrival around October 10.
  

 

 

 

 

Updated
3/24/20

• CBOT
  May is seen in a $3.10 and $3.70 range.  July could touch $3.00 if we see a major reduction in US ethanol production.  December is seen in a $2.85-$3.95 range.   
  

 

Soybean
complex.

• CBOT
  soybeans
  were
  under considerable pressure basis the nearby positions while the back months ended higher.  The soybean meal spreads collapsed for the K/N and N/Q positions.  K/N meal went out at $3.40, down $4.10 from yesterday.  There was talk of soybean selling out of
  Brazil and hedging of meal out of Argentina.  SMK-SMN spread below…

• Soybean
  oil ended higher on product spreading and higher WTI.  Price gains were limited on eroding global demand. 
  
• India
  will go on lockdown for 21 days. They have 1.3 billion people.  Indian edible oil processors are scrambling to meet demand, according to Solvent Extractors’ Association of India. They estimate India’s edible oil imports could decline by 500,000 tons to 700,000
  tons in 2019-20 from 14.9 million tons a year earlier on demand destruction. November-October 2019-20 consumption could end up flat from last season at 23 million tons.  India is not the only country to scale back on vegetable oil imports.  Yesterday China’s
  National Bureau of Statistics reported vegetable oil imports for the first two months of 2020 down 12 percent to 1.22 million tons.  Palm oil imports were 610,000 tons, down 28 percent. 
  
• China
  was quiet despite healthy crush margins.  They may have bought one cargo for May shipment on Wednesday and one shipment for 2021. 
  
• China
  imports of US soybeans for the first two months of 2020 were 6.1 million tons, up significantly from year ago period.  China imported 5.1 million tons during the Jan-Feb period, down 26 percent from 6.9 million tons a year ago.  Soybean imports from Argentina
  amounted to 1.8 million tons, about unchanged from a year earlier. 
• Brazil’s
  town of Canarana will amend its coronavirus lockdown by allowing grain traders to ship good out. 
  
• South
  America looks a little drier for the next ten days.  Rain is forecast for Cordoba, southern Santa Fe, northern Buenos Aires today. Amounts will be light.  Brazil will be wet for many winter crop locations by the end of the end of this weekend. 
  
• Argentina
  was back from holiday.  There was producer selling.  Earlier soybean supplies were labeled scarce according to the export chamber.  More than 70 municipalities throughout the country are enforcing anti-coronavirus measures. 
  

・        
Russia’s vegetable oil lobby group is looking to limit sunflower seed exports for 6 months. 

・        
The significant slowdown in EU rapeseed oil use for biodiesel production has caused unquoted imported values for Rotterdam.  Meanwhile, Dutch prices have fallen to a 5-year low, according to AgriCensus. 

・        
The USDA Attaché estimated Indonesia palm oil production to reach 43.5 million tons in 2020-21, up from 42.5 million tons in 2019-20 and 41.5 million tons in 2018-19.  Exports are expected to increase to 28.5
million tons from 27.0 million tons for 2019-20. 

• Palm
  oil plantations in Malaysia are starting to slow production as coronavirus is affecting operations. 
  

・        
ITS reported Malaysian palm oil exports during the March 1-25 period at 838,793 tons, down 13.6 percent from the same period last month.  AmSpec reported 866,270 tons of palm oil shipped, off 12 percent from
previous month. 

・        
Malaysian palm futures
traded higher for the fourth consecutive day. 

 

Oilseeds
Export Developments

• Under
  the 24-hour reporting system, US exporters sold 20,000 tons of soybean oil to South Korea for 2019-20 delivery. 
  

 

 

 

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 wheat
spreads widened by a large  amount today. The WK0/WN0 spread widened to 12.25 cents, a 6.0 cent move,
on a shortage of old crop high quality soft wheat (upper ECB).  Chicago wheat registrations are at only 11 contracts.   North American flour millers are going full out.  Be careful if you’re long the Chicago May/July wheat spread as HRW
wheat may find its way into the upper Midwestern region. 

• Chicago
  May wheat settled 18.50 cents higher at $5.80 and July up 12.50 cents to $5.6775.
  
• KC
  wheat ended 10.25 and 9.50 cents higher, for May and July, respectively.  May MN was up 3.50 cents from the Algeria import tender. Algeria bought 240,000 tons of milling wheat.  MFG passed on feed wheat due to high prices.
  
• Global
  wheat flour demand is through the roof.  Kazakhstan recently banned flour exports. They are one of the largest exporters of flour. 
  
• US
  southern Plains will see rain through Saturday and HRW wheat country is wetter for the 6-10 day and 11-15 day. 
  
• Iraq’s
  trade ministry mentioned they need a million tons of wheat and 250,000 tons of rice to satisfy nearby domestic consumption. 
  

・        
May Paris wheat ended 3.00 higher at 197.75 euros a ton.

 

 

CBOT
May wheat/corn spread

Source:
Reuters and FI

 

Export
Developments.

• Algeria
  in a tender for 50,000 tons of milling wheat, bought 240,000 tons optional origin, for May or June shipment, depending on origin, at prices averaging $242.50/ton to $243.00/ton. 
  
• South
  Korea’s MFG passed on 68,000 tons of feed wheat due to high prices for arrival in October.  Lowest offer was $213.65/ton c&f. 
  
• Results
  awaited: Syria
  seeks 200,000 tons of wheat from Russia by March 23.  No purchase was made that closed on February 17. 
  
• Taiwan
  seeks 99,450 tons of US milling wheat on March 27 for shipment between May 13 through May 27, and May 29 through June 12. 
  
• Turkey’s
  TMO seeks 200,000 tons of red milling wheat for shipment during April 7-27 on March 27. 
  
• 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

• Vietnam
  has no plans to cut off rice exports as coronavirus spreads. 
• 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