FW: FI Evening Grain Comments 04/14/20

PDF attached

 

Weather

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Concern
over U.S. planting progress will rise over the next couple of weeks due to cool temperatures at times and some precipitation. However, the environment may not be as bad as feared. Warming is certainly needed, but rainfall does not seem to be abnormally great
in very many Midwestern locations and many are expecting below average amounts. Fieldwork would advance quickly if temperatures would warm up but warming will be slow to come and may only be temporary for some areas.

            In
South America, conditions will remain favorable in Argentina over the next week to ten days, although soil moisture will decline in some areas and that may lead to some need for timely rain in a few of the very latest maturing crop areas. Brazil crop weather
will be favorably mixed for mostly good conditions during the next ten days, but greater rain may be needed in the drier pockets of the south.

            China
will see a good mix of rain and sunshine in east-central areas which may promote some planting, but it will be slow for a little while longer. Planting in southern China will remain very slow until better drying conditions evolve.

            India’s
weather will be good for winter oilseed maturation and harvest progress. South Africa weather will remain good for both late season crop development and early season harvesting, but it will not be long before the need for drier weather will evolve.

            Southeast
Asia oil palm and coconut production is advancing well except in parts of the Philippines where dryness is prevailing.

            Europe
dryness may raise some worry among a few coarse grain producers, but the areas that usually plant first have some moisture to work with. Rapeseed in France, Germany and the U.K. may need some moisture soon and they should get.

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

Source:
World Weather Inc. and FI

 

MARKET
WEATHER MENTALITY FOR WHEAT:

No
permanent crop damage is expected as a result of unusually cold air. Much of the U.S. hard red winter wheat production areas have either not been cold enough for permanent damage or have had some snow protection during the coldest periods. Cooling in the Midwest
will also have little to no impact on crop production.  Some vegetation burning is expected in both areas, however.

           
Dryness in parts of Europe and a few areas in Ukraine, southern Russia and Kazakhstan will continue a concern, but there is still plenty of time for improved weather before crops are at risk of a change in production potential. Temperatures have been cool
which has kept the need for greater moisture low, but as seasonal warming occurs the need for moisture will rise. Some light rain will bring temporary relief to Ukraine and northern parts of Russia’s Southern Region during the next few days.

            China
and India wheat production potentials still look very good as do yields in Pakistan. Southern Australia’s long range outlook is also improving for planting conditions late this month and especially in May and June, but the next ten days will be dry biased.

            Planting
in South Africa may get off to a better than usual start this year because of recent precipitation and that which is coming. Planting usually begins in May.

Some
areas in southern Brazil will need rain soon for planting and establishing its winter wheat.

            Overall
weather today will have a mixed influence on market mentality.

Source:
World Weather Inc. and FI

 

 

Seven-day
outlook:

 

Bloomberg
Ag Calendar

TUESDAY,
April 14:

• China
  soybean import data
• Vietnam
  trade data for rice, rubber and coffee
• HOLIDAY:
  India, Bangladesh

WEDNESDAY,
April 15:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• AmSpec,
  Intertek palm oil export data for April 1-15
• FranceAgriMer
  monthly cereals balance sheet
• New
  Zealand food prices
• Malaysia
  CPO export tax
• India
  monsoon forecast (tentative)

THURSDAY,
April 16:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
• Port
  of Rouen data on French grain exports
• EARNINGS:
  Barry Callebaut half-yearly results

FRIDAY,
April 17:

• 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

Source:
Bloomberg and FI

 

Macros

·        
IMF Sees World GDP Shrinking 3% In 2020, Growing 5.8% In 2021

-Sees
China Economy Expanding 1.2% In 2020, 9.2% In 2021

·        
NY Fed Accepts $23.5B Of $23.5B In Bids At Overnight Repo Operation

·        
US Import Price Index (M/M) Mar: -0.1% (est -0.2%; prev 0.2%)

US
Import Price Index (Y/Y) Mar: -4.1% (est -5.0%; prev -1.2%)

US
Export Price Index (M/M) Mar: -1.6% est -1.9%; prev -1.1%)

US
Export Price Index (Y/Y) Mar: -3.6% (prev -1.3%)

 

Corn.

·        
Feed and industrial demand destruction continues to pressure futures prices.  A Bloomberg poll looks for another large decline in US ethanol production when updated on Wednesday.  The poll looks for weekly
US ethanol production to be down 63,000 at 672,000 barrels (569-642 range) from the previous week and stocks to increase 464,000 barrels to 27.555 million.

·        
May corn futures fell 5.50 cents to nearly a contract low.  The session low failed to breach a ParaUp Sar of $3.2575. 

·        
Cattle markets rallied and hogs were mixed.  The National Pork Producers Council asked the Trump administration to purchase more than $1 billion in pork to help food banks facing increasing demand during the
coronavirus outbreak. 

·        
WTI fell led by bear spreading. 

·        
Cold weather for the US for the remainder of the week will slow evaporation rates. 

·        
US meat processing plant closures continue to weigh on prices.  Recall cold storage inventory remains high, but logistical problems could create a short-term storage depending on retail locations. 

·        
China March pork imports were 391,000 tons, up from 127,218 tons in March 2019.  Q1 imports were 951,000 tons, nearly double than Q1 2019.  Imports of beef in the first quarter reached 531,000 tons, up 65%. 

• China
  announced more cases of ASF this week in two separate provinces.
• The
  EU awarded 750,000 tons of duty-free corn imports, from Ukraine. 
• Kazakhstan
  exported 6.4 million tons of grain and flour since July 1, 2019, just short of their 7-million-ton target for the crop year. 
  

·        
Corn and Soybean Advisory:

o  
2019/20 Brazil Corn Estimate Unchanged at 98.0 Million Tons

o  
2019/20 Argentina Corn Estimate Unchanged at 49.0 Million Tons

 

Corn
Export Developments

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

 

 

Updated
4/9/20

• May
  corn is seen in a $3.15 and $3.65 range.  July could reach below $3.00 if we ongoing US industrial demand destruction. December is seen in a $2.85-$3.95 range. 
  

 

Soybean
complex

• CBOT
  soybeans,
  meal and soybean oil opened and ended lower.  July soybean oil gained on meal by a slight amount, a signal the trade may believe the carnage in the soybean meal market but be slowing down.  May soybean meal below $288/short ton at a fresh contract low, but
  well off its session low.  Argentina soybean meal and Brazilian soybean exports continue to flow although Argentina producer selling slowed for the first week of April, according to government data that was delayed due to the Eastern holiday.  Brazil soybean
  exports are on fire.  Brazil premiums are favorable for Chinese buyers over the US by $5-$10/ton.  Santos premiums declined about $7/ton since late last week in large part to the decline in futures.  Cash markets were quiet on Tuesday. 
  
• Using
  technical analysis, May and July soybeans look a touch oversold.  The decline in futures may attract global tender business. 
  
• US
  cash soybean meal basis was mostly unchanged. 

·        
China March soybean imports were 4.28 million tons, down from 4.91 million a year ago and lowest since February 2015.  April imports are expected to increase on a daily adjusted basis with SA arrivals.  Q1
2020 China soybean imports were 17.8 million tons, or 71.2MMT annualized, up 6.2 percent from a year ago. 

·        
China agriculture imports from the US were up 110 percent from year ago but that is not saying much as both countries were at the height of the trade spat. 

• Brazil
  soybean exports during the first 12 days of April were 6.1 million tons, up from 5 million during the April 1-14 period year ago.  Brazil is over 90 percent complete for its soybean harvest by today, in our opinion.
  

·        
Argentina grain inspectors are working shorter hours, causing loading delays in Bahia Blanca, according to Ciara-Cec. Inspectors and exporters are in labor talks over working conditions.

·        
Corn and Soybean Advisory:

o  
2019/20 Brazil Soybean Estimate Unchanged at 121.0 Million Tons

o  
2019/20 Argentina Soybean Estimate Unchanged at 50.0 Million Tons

·        
The Trump Administration may announce their coronavirus phase one farm aid of $15.5 billion this week. 

 

 

Oilseeds
Export Developments

• On
  April 21 the USDA seeks 1,510 tons of vegetable oils under its PL480 program. 
  
• Results
  awaited:  Syria seeks 50,000 tons of soybean meal in a combo with 50,000 tons of corn on May 12.
  

 

Updated
4/13/20

• May
  soybeans are seen in a $8.40-$8.80 range.  July $8.45-$8.95 range.
• May
  soybean meal is seen in a $283 to $310 range.  July $285-$320 range. 
• May
  soybean oil range is 26.00 to 28.50.  July 26.00-30.00 range. 

 

Wheat

• Chicago
  wheat finished 6.25 and 5.75 cents lower basis the Chicago May and July SRW wheat contracts, respectively. Egypt bought only two cargos of wheat today, Russian origin. 
  Egypt
  may tender again soon to fulfill a previous import tender for a Romanian wheat cargo what is being held up from setting sail after Romania banned grain exports late last week. 
  US
  winter wheat conditions were unchanged from the previous week. 
• US
  weather for the northern Great Plains is set to improve by the end of April and after ample soil moisture fell this past week across high protein wheat country, we think other spring wheat seedings could end up higher than USDA’s 12.590 million acres.  We
  are at 13.0 million, above 12.660 million for 2019. 
• Unrelated,
  we lowered our price range for May and July based on the recent downtrend in spring type wheat futures.  In our opinion we think KC and MN wheat prices have upside potential as major importers have only begun stockpiling reserves. 
  
• US
  HRW wheat producer movement was slow.  July KC wheat futures were down 9.75 cents today. 
  
• Russia
  sold 132,648 tons of grain from reserves, most of it wheat, after selling 121,416 tons on Monday, out of the 1.5 million tons they planned to sell in total. 
  
• EU
  wheat May futures settled
  down 1 euro, or 0.5%, at 197.00 euros ($216.01) a ton.
• EU
  2019-20 soft wheat exports as of April 12 were 26.71 million tons, up from 15.86 million tons during the same period year ago.  Barley exports hit 5.95 million tons, up 63 percent from year ago.  Corn exports are down 16 percent at 16.30 million tons. 
  

 

Source:
World Weather Inc. and FI

 

Export
Developments.

• Egypt
  bought 120,000 tons of Russian wheat.  The Tender was held on an FOB basis with a separate tender for freight. 
  
  • 60,000
    tons at $239.95 FOB and $9.50 freight equating to $249.45 C&F for shipment May 15-25
  • 60,000
    tons at $243.00 FOB and $9.50 freight equating to $252.50 C&F for shipment May 26-June 5

• Jordan
  passed on 120,000 tons of barley. 
• Results
  awaited: Jordan received offers for 120,000 tons of wheat. 
• Ethiopia
  postponed their import tender for 400,000 tons of wheat until April 23. 
  
• Ethiopia
  postponed their import tender for 200,000 tons until April 30 in a separate tender. 
  

 

Rice/Other

• Results
  awaited: South Korea seeks 35k rice from China on April 14 for arrival around end of Aug.
  

 

Updated 4/14/20

• May Chicago $5.25 and $5.70 range.  July (new-crop) $5.00-$5.75. 
  
• May KC $4.65 and $5.05 range.  July $4.50-$5.80
• May MN $5.00 and $5.35 range.  July $5.20-$5.55.