FW: FI Evening Grain Comments 04/08/20

PDF attached includes US cash crush, snapshot for USDA, and US broiler charts. 

 

EIA
reported a stunning ethanol production number.  Brazil soybean shipments for the week ending April 4 were very robust.  USD was higher.  Sinograin is releasing 500,00 tons of soybeans to Cofco from state reserves.  SK bought more corn. 

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Some
temporary relief from dryness occurred in some Safrinha crop areas in Brazil in the past day or two 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. Some new production forecasts will be released from Brazil Thursday and the impact of drought in Rio Grande do Sul will be
further enlightened.

            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. Warming under way now will accelerate a decrease in soil moisture and raise the need for rain. However, aggressive spring planting will begin while soil moisture is still marginally favorable, and rain is absent.
Soil temperatures are rising quickly.

            U.S.
planting conditions may improve for another day or two in areas that are not bothered with wet soil or rainfall as very warm temperatures prevail. Field progress will advance most significantly from the lower Delta to northern Florida, Georgia and South Carolina
over the next couple of days and then rain this weekend will shut everything down again. South Texas rainfall recently has improved sorghum and corn conditions, but more is needed especially in the far south of Texas. Precipitation periodically in the eastern
Midwest and developing cool weather this weekend into next week will limit fieldwork.

            China
is warming up briefly, but it too will be cooling off soon slowing the prospects for spring planting, but rapeseed development in the key production areas will advance favorably.

            Oilseed
in Philippines is still struggling with dryness and significant rain is needed for its coconut and oil palm crops.

            Overall,
weather today may have a mixed influence on market mentality.

Source:
World Weather Inc. and FI

 

MARKET
WEATHER MENTALITY FOR WHEAT:

Concern
in the marketplace 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. However, a burst in spring planting is expected in Europe because
of warm and dry conditions. It will not be long before complaints about poor emergence conditions will evolve because of dryness.

China
wheat development will advance a little faster briefly because of warmer weather, but expected cooling will slow things down a bit for a while. India’s harvest will begin to increase. Australia’s recent rain in New South Wales and that expected through Thursday
will be 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 southern Plains east through the lower Midwest and southeastern states. Cooling is expected again during the late week and weekend with frost and freezes likely next week deep into the Plains and eventually
across the Midwest. Permanent crop damaging conditions are unlikely, but some vegetative development in the Plains may get burned back by frost and freezes. There will be some concern over permanent damage in southern Oklahoma, Texas and the Delta if temperatures
get much colder in the forecast.

            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 bullish bias.

Source:
World Weather Inc. and FI

 

Seven-day
outlook:

 

 

 

 

 

 

 

Bloomberg
Ag Calendar

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

 

 

 

 

 

 

 

 

 

 

 

Corn.

·        
Corn ended moderately lower after EIA reported a huge decline in weekly ethanol production.  They started higher on SE Asian corn interest.  Funds sold an estimated net 5,000 corn contracts.  We will see if
corn prices can stabilize after the USDA report on Thursday.  Parana, Mato Grosso do Sul, Sao Paulo and Mato Grosso’s south may not see rain until April 14. 

·        
US ethanol production plummeted 407,000 barrels per day to 672,000 since late February, a 38 percent drop. 

·        
We lowered our con for ethanol use, for the 5^th time in over two weeks, by 50 million bushels today to 4.950 billion, and compares to USDA’s March estimate of 5.425 billion and 5.378 billion during
2018-19.  This puts our 2019-20 US corn carryout to 2.020 billion bushels, compared to USDA’s 1.892 billion.  This assumes we see ethanol production start to rebound in May.  Next week will likely be down again for the daily ethanol rate, but we should be
nearing a bottom. 

·        
Goldman Roll – second day. 

·        
China plans to increase domestic of agriculture goods. 

• The
  US court rejected a refiner waiver for EPA biofuel waivers. 
• The
  EU awarded 480,000 tons of corn imports and 270,000 tons of barley under its duty-free quota program. 
  
• Brazil
  farm lobby CAN mentioned Q1 Brazil corn exports fell 51 percent due to strong domestic demand. 
  
• The
  USDA Broiler Report showed eggs set in the US up 2 percent from year ago (slowing) and chicks placed up slightly.  Cumulative placements from the week ending January 4, 2020 through April 4, 2020 for the United States were 2.67 billion. Cumulative placements
  were up 3 percent from the same period a year earlier.
• More
  and more meat processing plants are closing due to coronavirus outbreaks.  At least three American meal workers have passed from the disease. 
  

 

US
ethanol production
declined a large 168,000 barrels per day to 672,000 for the week ending 4/3/2020 and is down 407,000 barrels per day over the past five weeks.  Going back to June 2010, when EIA started to record the weekly data, this week marks the lowest in recorded history,
and the largest weekly drop on record.  Ethanol stocks were a record 27.091 million barrels, up 1.374 million from the previous week and up 2.951 million barrels over the last two weeks.  We are wondering where they are storing the excess ethanol.  The decline
in ethanol production below 700,000 barrels signals the distress in the industry is larger than thought.  September 2019-April 3 combined ethanol production is running 1.1 percent below the comparable period year ago.  Annualized corn use at 672,000 barrels
per day implies 3.7 billion bushels of corn per year, down from 5.9 billion as of late February.  Ethanol blending into conventional gasoline fell to 86 percent from 86.3% previous week and compares to 92.3 percent 4-weeks ago. 

 

 

 

 

Corn
Export Developments

• Taiwan’s
  MFIG bought 65,000 tons of corn at 149.70 cents over the September contract for June 3-June 22 shipment. 
  
• Algeria
  seeks 40,000 tons of corn from Argentina for FH May shipment. 
• South
  Korea’s FLC bought 58,000 tons of corn at $184.98/ton for arrival around September 10. 
  
• South
  Korea’s MFG bought 138,000 tons of corn at $181.49/ton for arrival in October. 
  
• 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
  and soybean meal ended mixed to near unchanged while soybean oil fell on positioning ahead of the USDA report due out on Friday.  We also get MPOB palm data.  News was very thin other than a record-breaking decline in corn for ethanol use, which we think spilled
  over into soybean oil amid expectations for a slowdown in biodiesel production.  With that said, the majority of diesel engines on US roads are trucks, which are moving at the moment. 
  
• Robust
  Brazil soybean exports may continue to limit any short-term gains in the Brazil soybean market.  ANEC reported March 29 through April 4 Brazil soybean exports totaled 3.2 million tons, with no corn shipped.  51 boats were filled during that time. 
  
• An
  Argentina export lineup shows nearly 450,000 tons of crude soybean oil to be shipped during the month of April, up from 205,000 tons reported for March and compares to 329,000 tons for April 2019. 
  
• Water
  levels for Argentina’s Parana River are at a 11-year low, limiting the amount of grain and oilseed shipments. 
  

·        
China was back in buying Brazilian soybeans for May and June shipment. We heard 3-4 cargoes trade on Tuesday. 

·        
Brazil’s Abiove mentioned exports of soybeans to China are largely unaffected by Covid-19. 

·        
Correction to palm oil comment.  Yesterday we mentioned 500,000 tons of palm fruit yields about 100,000 tons of palm oil.  This is not correct.  MPOA estimates about 189,000 tons of crude palm oil, which was
confirmed by Reuters. 

 

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 were higher led by MN spring wheat on strong global import demand and positioning ahead of the USDA report.
  
• Paris
  May milling wheat futures settled
  1.75 euros higher at 197.25 euros a ton.
• Kazakhstan
  plans to increase wheat and flour export quotas.  They recently set them at 200,000 tons for wheat and 70,000 tons for flour. 
  
• Ukraine
  grain exports reached 47 million tons so far in 2019-20, up 21 percent from the previous year.  This includes 18.1 million tons of wheat and 24 million tons of corn. 
  

 

Export
Developments.

• In
  an SBS import tender, Japan bought 26,000 tons of feed wheat and no barley for arrival in Japan by July 31. 
  
• Lebanon
  maybe in soon for wheat.
• 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. 
  
• 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. 
  

 

Rice/Other

• 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