FW: FI Evening Grain Comments 04/07/20

Fund estimates & US cash crush will be sent later.

 

PDF attached

 

The
USDA will resurvey producer corn & soybean area and supply for Michigan, Minnesota, South Dakota and Wisconsin and publish adjustments in its
May 12 crop production report, if warranted.   North Dakota will be done at a later date.
https://www.nass.usda.gov/Newsroom/Notices/2020/04-07-2020.php

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Some
temporary relief from dryness occurred in some Safrinha crop areas in Brazil overnight and the region will continue to be closely monitored over the next few weeks for signs of dryness and crop stress. World Weather, Inc. anticipates at least a part of the
production region will struggle with dryness in May during reproduction, but it is unclear how widespread that will be.

            Argentina
crop areas will experience net drying for a while, but crops will be fine during much of the period. A few areas may become a little dry, but it is late enough in the growing season to limit the impact on production.

            South
Africa late season crop development will remain favorable and recent rain in eastern Australia along with that expected late this week will maintain better pre-planting soil conditions for canola. More rain will be needed throughout all of southern Australia
this month to more favorably moisten the soil for aggressive early season planting.

            India
weather remains very good for late season crop maturation and early harvest progress.

            Europe’s
recent cold has not seriously hurt rapeseed. This week will trend warmer but remain drier biased reducing soil moisture and raising the need for precipitation as seasonal warming continues.

            U.S.
planting conditions may improve for a little while this week as much warmer temperatures evolve and precipitation is more limited. Field progress will advance most significantly from the lower Delta to northern Florida, Georgia and South Carolina. South Texas
rainfall during the weekend will improve sorghum and corn conditions. More rain is needed especially in the far south of Texas. Precipitation periodically in the eastern Midwest and developing cool weather this weekend into next week may limit fieldwork.

            China
needs to warm up and dry down in the south to support corn planting, but rapeseed development in the key production areas will advance favorably.

            Overall,
weather today may have a neutral to slightly bearish bias.

Source:
World Weather Inc. and FI

 

MARKET
WEATHER MENTALITY FOR WHEAT:

Concern
in the market place may continue today over a broad based drying trend in Europe and limited soil moisture in Romania, southwestern Ukraine Kazakhstan and eastern parts of Russia’s Southern Region. China wheat development will advance slowly this week and
India’s harvest will begin to increase. Australia’s recent rain in New South Wales was good for lifting topsoil moisture, but follow up rain must occur prior to the planting season late this month. All of the remaining crop areas in southern Australia still
need a general soaking of rain before planting begins in late April and May.

            U.S.
weather will remain very warm to hot today in the central and southern Plains east through the lower Midwest and southeastern states the next couple of days. Cooling is expected again during the late week and weekend Permanent crop damaging conditions are
unlikely, but some vegetative development in the Plains may get burned back by frost and freezes.

            North
Africa wheat is still rated favorably in Tunisia and northeastern Algeria and the same is true in Spain. Morocco crop production is still expected to be down for the year because of persistent dryness.

            Wheat
in the Middle East will be frequent from Turkey through northern Iran to Afghanistan. Some of these areas need to start drying out to protect grain quality.

            Overall,
weather today is expected to have a mixed influence on market mentality with a slight bullish bias.

Source:
World Weather Inc. and FI

 

Seven-day
outlook:

 

Bloomberg
Ag Calendar

TUESDAY,
April 7:

• Purdue
  Agriculture Sentiment, 9:30 am
• France
  agriculture ministry to issue field-crop planting estimates for 2020 season

WEDNESDAY,
April 8:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• CNGOIC’s
  monthly report on China soy, corn supply and demand
• FranceAgriMer
  monthly cereals balance sheet

THURSDAY,
April 9:

• USDA’s
  monthly World Agricultural Supply and Demand (Wasde) report, noon
• China
  agriculture outlook committee (CASDE) to publish monthly supply/demand forecast for soybean, corn, cotton and sugar
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
• Port
  of Rouen data on French grain exports
• Brazil
  crop agency Conab posts 7th report on 2019-20 soy, grains output

FRIDAY,
April 10:

• ICE
  Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• FranceAgriMer
  weekly update on crop conditions
• Malaysian
  Palm Oil Board to release stockpiles, export and production data
• Cargo
  surveyors AmSpec and Interetk to release Malaysia’s April 1-10 palm oil export numbers

Source:
Bloomberg and FI

 

 

 

 

 

 

 

 

 

The
Purdue University/CME Group Ag Economy Barometer recorded
its largest one-month drop in sentiment during March. The barometer dipped 47 points to a reading of 121, as concerns over the impact of the global pandemic on the agricultural economy weighed heavily on farmers’ minds. The Ag Economy Barometer is based on
a mid-month survey of 400 U.S. agricultural producers and was conducted from March 16-20, 2020 as the coronavirus crisis escalated in the US and around the world.  Full report:
https://ag.purdue.edu/commercialag/ageconomybarometer/

 

Macros

·        
WH Econ Adv Kudlow: Trump Administration Looking To Reopen US Economy As Soon As Health Experts Give Greenlight

·        
NY Fed Accepts $1.50B Of $1.50B In Bids At O/N Repo Op

·        
US JOLTS Job Openings Feb: 6.882M (est 6.500M; prev R 7.012M)

 

Corn.

·        
Corn futures were higher by 2.25-3.75 cents, ending a seven-day losing streak, as SE Asian importers take advantage of nearby futures contract lows.  The USD fell 79 points by the ag close.  May corn ended
well off its high as WTI prices fell to end lower.   South Korea and Taiwan were in for corn.  Couple that with good export inspections with emphasis on SE Asian shipments and talk of China may have been a buyer of US pork this week, from what we are hearing,
brought spec longs back into the market.  Note the last time China bought corn from the US was April 3. This should be reflected in Thursday’s export sales report.  Latest 24-hour sales below.  Attached are our USDA export sales estimates. 

·        
Live cattle and feeder cattle futures were limit higher.  There are several meat packing plants shutting down across the country.  Many ramped up production over the past few weeks. 

·        
The Goldman Roll started today. 

• North
  Dakota: 2019 corn harvested was 81 percent, up from 75 last week. 
• Corn
  and Soybean Advisory:
  • 2019/20
    Brazil Corn Estimate Unchanged at 98.0 Million Tons
  • 2019/20
    Argentina Corn Estimate Unchanged at 49.0 Million Tons

·        
Brazil saw good rain across the majority of its southern second crop corn growing regions. 

·        
Argentina may issue a one-time tax to companies and individuals regardless if they are exempt from a 2017 Marci amnesty.  The country has been hemorrhaging money from a lockdown expected to last until at least
April 12. 

·        
US National Grain & Feed Association, along with 79 other groups representing U.S. food and agriculture interests, asked the Trump administration to ensure the “competitive, fluid movement of shipping containers
to international markets.”  -Bloomberg.  Earlier the US Farm Bureau in a letter to USDA that US producers are in financial need, stressing direct payments should be provided to cotton producers, livestock and cattle ranchers.

• African
  swine fever was discovered at a second pig farm in western Poland.

·        
ABPA group out of Brazil said Brazil chicken shipments totaled 349,500 tons in March, rising 2.6% from a year ago. 

• A
  Bloomberg poll looks for weekly US ethanol production to be down 62,000 at 930,000 barrels (700-825 range) from the previous week and stocks to increase 605,000 barrels to 26.322 million.   We are looking for US weekly ethanol production to declined 55,000
  barrels to 840,000 barrels and stocks to increase 450,000 barrels to a record 25.717 million. 
  

 

U
of I: Hubbs, T. "Implications of 97 Million Corn Acres." farmdoc daily (10):63,  Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, April 6, 2020.

https://farmdocdaily.illinois.edu/2020/04/implications-of-97-million-corn-acres.html?utm_source=farmdoc+daily+and+Farm+Policy+News+Updates&utm_campaign=f84b6474d4-FDD_RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_2caf2f9764-f84b6474d4-173649469

 

Export
Developments

• Algeria
  seeks 40,000 tons of corn from Argentina on April 8 for FH May shipment. 
  
• South
  Korea’s NOFI bought 131,000 tons (out of three sought) of optional origin corn for August shipment.
  
  • 65,000
    tons at $187.15 a ton c&f
  • 66,000
    tons at $184.99 a ton c&f
• South
  Korea’s KFA bought about 58,000 tons of optional origin corn at $181.82 a ton c&f for arrival in South Korea around Sept. 20.  It was thought it originates from SA. 
  
• Taiwan’s
  MFIG seeks 65,000 tons of corn on Wednesday for June 3-June 22 shipment. 
  
• Syria
  seeks 50,000 tons of soybean meal in a combo with 50,000 tons of corn on May 12.
  

 

 

Updated
3/24/20

• CBOT
  May is seen in a $3.10 and $3.70 range.  July could reach below $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 ended lower after a two-sided trade.  Soybean meal ended lower while soybean oil continued its rally by ending 65-66 points.  Higher palm oil and bottom picking lifted soybean oil higher.  The
May/July soybean meal spread continued to weaken, settling at $4.00 short ton July premium. 

• A
  Reuters article noted Malaysia was at risk losing 500,000 tons of palm fruit (5,000 trees based on 10 tons per tree) in the state of Sabah.  We calculate 100,000 tons of palm oil from 500,000 tons of palm fruit.
  
• China
  was is back from holiday and they are still buying soybeans all the way out to July. 
  
• Cofeed
  projected soybean cargo arrivals during the month of April at 105, or 6.9 million tons, down from 7.6 million in 2019.  Only 6-8 cargoes from the PNW were sold in recent weeks to China.  They estimated as of March 27, soybean inventories at China’s crushing
  plants (near ports) were seen at 2.5 million tons, 29.4% below same period last year and the lowest since late November 2013. 
  
• Corn
  and Soybean Advisory:
  • 2019/20
    Brazil Soybean Estimate Lowered 1.0 mt to 121.0 Million
  • 2019/20
    Argentina Soybean Estimate Lowered 1.0 mt to 50.0 Million

·        
Argentina soybean meal fob weakened since Friday while soybean oil was up about $5-$10/ton. 

·        
Ukraine sunflower oil export prices rose by 10-15 to $670-685 per ton FOB for Black Sea April-June delivery, according to APK-Inform.  Export demand is robust. 

 

Oilseeds
Export Developments

• Syria
  seeks 50,000 tons of soybean meal in a combo with 50,000 tons of corn on May 12.
  

 

 

Updated
4/1/20 (top end of range lowered)

• May
  soybeans are seen in a $8.40-$9.00 range.
• May
  meal is seen in a $305 to $340 range
• May
  soybean oil range is 24.50 to 27.50

 

Wheat

• US
  wheat futures traded lower on the better than expected US crop conditions. 
  
• Paris
  May milling wheat futures settled up 0.25 euros, or 0.1%, at 195.50 euros a ton.
• USDA
  initial 2020 US winter wheat ratings for the combined G/E were 62 percent versus 56% Reuters trade guess.  This was the best start for US early April winter wheat crop conditions since the 2010-11 marketing year (65). 
  
• The
  French AgMin expects 2020 soft wheat plantings down 7.5 percent to 4.6 million hectares and barley up 2.8 percent to 2.0 million.  Rapeseed is seen at 1.08 million hectares, down 2.8 percent from 2019. 
  
• Ukraine
  will slow daily export volume for grain exports to 14,000 per day from 44,000 tons during March to protect domestic supplies.  Ukraine had already exported 17.9 million tons of wheat so far in the 2019-20 (July-June) and sees an additional 2.3 million tons
  available for export.  We think this was as expected. 
• Russia
  sees their inflation rate increasing 2.7 percent in April if their currency stabilizes.  It was up 2.5 percent in March. 
  
• Egypt’s
  president mentioned they have no issues with strategic wheat reserves. 
• US
  temperatures will increase this early week before snapping back to below normal temperatures late this week through next week.  Winter wheat crop damage is unlikely, but some vegetative development in the Great Plains may get burned back.
  
• Europe,
  Romania and parts of the Black Sea region are trending drier.  Black Sea dryness may continue into this week for half of the winter grain areas of Ukraine and Russia. 
  

 

Export
Developments.

• Ethiopia
  postponed their import tender for 400,000 tons of wheat until April 23.  They are in for 200,000 tons on April 15 in a separate tender. 
  
• Lebanon
  maybe in soon for wheat.
• Jordan
  bought 60k barley.  Lowest offer was $199.00/ton for FH September shipment.
  
• Japan
  seeks 128,760 tons of food wheat from the US and Australia on Thursday. 
  

• Turkey
  seeks 250,000 tons of wheat on April 10 for April 20 and May 15 shipment, optional origin. 
  
• Yesterday
  Jordan’s state grains buyer bought 120,000 tons of hard milling wheat, optional origin.  One cargo was bought at 60,000 tons at $233.50 a ton c&f for shipment in the second half of June and another 60,000 tons at $226.50 a ton c&f for shipment in the first
  half of July.
• In
  an SBS import tender, Japan seeks 80,000 tons of feed wheat and 100,000 tons of barley on April 8 for arrival in Japan by July 31. 
  

 

Rice/Other

• Rice
  prices in the US are lower on Tuesday. 
• South
  Korea seeks 35k rice from China on April 14 for arrival around end of Aug.
  
• Vietnam
  plans to limit rice exports to 800,000 tons April through May, 40 percent lower than the same two months last year. 
  

 

Updated 4/2/20

• May Chicago $5.15 and $5.68 range
• May KC $4.40 and $4.90 range
• May MN $5.15 and $5.35 range