FW: FI Evening Grain Comments 09/18/19

PDF attached

 

US FMOC cut key interest rate 25 points, as expected (7-3 vote).  They are split on what to do with rates going forward. 

 

 

Weather

5-day outlook

・         The upper Great Plains saw rain Tuesday into Wednesday, and those rains are now moving into the WCB. 

・         Over the next two weeks, the US Midwest will see daily shower activity, but showers are expected to be on the lighter side.  The temperature outlook for the remainder of the month is non-threatening. 

・         Net drying is expected in the west-central high Plains, including western hard red winter wheat production areas.

・         West TX will see rain Friday and Saturday. 

・         Monsoon rains in India in the week through to 9/17 were above average-third straight week, at 38% more than the 50-year average. Central India saw too much rain- 63% above average.  Overall, India has received 5% more rain than average since the start of the monsoon season on June 1.

・         Western Argentina will remain dry through the rest of the month.   

・         Frost could occur soon for Buenos Aires province and in eastern La Pampa and southern Entre Rios.

・         Eastern Australia will see some rain this week disrupting barley and wheat harvest progress.  Western Australia rainfall is not likely to be very great during the coming week.

・         Western Russia frost and freezes will occur more often in the coming week.

Source: World Weather Inc. and FI

 

Bloomberg Ag Calendar

WEDNESDAY, Sept. 18:

• EIA U.S. weekly ethanol inventories, production, 10:30am ET
• USDA total milk production, 3pm

THURSDAY, Sept. 19:

• USDA weekly crop net-export sales for corn, soybeans, wheat, 8:30am
• Port of Rouen data on French grain exports
• USDA red meat production, 3pm ET
• Palm Oil Economic Colloquium, Kuala Lumpur
• Japan milling wheat tender result, 3am (4pm Tokyo)

FRIDAY, Sept. 20:

• US Cattle on Feed, 3pm
• ICE Futures Europe commitments of traders weekly report on coffee, cocoa, sugar positions, ~1pm (~6pm London)
• CFTC commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• Russia’s Agroinvestor magazine holds annual conference on Russian crop production
• FranceAgriMer weekly crop conditions
• AmSpec, Intertek to release Malaysia’s Sept 1-20 palm oil export data, 11pm ET Thursday (11am KL); SGS palm shipment figures, 3am ET (3pm KL)

Source: Bloomberg and FI

 

 

Macros

・         FOMC Cuts Benchmark Rate By 25Bps; Target Range Stands At 1.75% – 2.00%

・         FOMC Cuts Interest Rate On Excess Reserves To 1.80% From 2.10%

・         USD:  +19 (2:47 p, CT)

・         US DOW: +25

・         Crude:  -$1.14 

・         Gold:  -$14.40

・         US Housing Starts Aug 1.364 Mln (est 1.250 Mln; prevR 1.215 Mln; prev 1.191 Mln)

                  -US Building Permits Aug 1.419 Mln (est 1.300 Mln; prevR 1.317 Mln; prev 1.336 Mln)

・         Canadian CPI (Y/Y) Aug 1.9% (est 2.0%; prev 2.0%)

                  -Canadian CPI (M/M) Aug -0.1% (est -0.1%; prev 0.5%)

 

Corn.

・         US corn ended 0.50-3.25 cents higher led by the December on light technical buying, despite a 19-point increase in the USD.  

・         President Trump plans to meet with US senators on Thursday to discuss biofuel policies.  

・         Funds bought an estimated net 7,000 corn contracts after selling 15k yesterday. 

・         Parts of IL are harvesting corn, and some are concerned the short-term weather maps that are wet will delay early harvesting. 

・         A Reuters poll calls for the 2019-20 Brazil corn crop to end up near 102.3 million tons, 2.3 percent higher than Conab. 

・         Global AgriTrends warned China’s 2019 herd loss could end up at 60%.

・         Ukraine corn export prices are trading at their cheapest level in more than a decade.

・         The USDA Broiler Report showed eggs set up 5 percent from year ago and placements up 2 percent.  Cumulative placements from the week ending January 5, 2019 through September 14, 2019 for the United States were 6.91 billion. Cumulative placements were up 1 percent from the same period a year earlier

 

In the weekly DOE ethanol update, US production declined 20,000 barrels to 1.003 million barrels (a Bloomberg poll called for production to end up at 1.013 (1.023 last week).  Stocks increased 739,000 barrels versus an average called for a slight increase.  The report was perceived slightly bearish for corn. 

 

 

 

Export Developments

・         China will auction 10,000 tons of pork from reserves on September 19.  It will include pork imports from Denmark, Germany, France and the United States.

• China sold about 21.5 million tons of corn since the start of year’s reserve sale campaign.

 

 

 

Updated 9/6/19

• Our Dec corn trading range is $3.40 and $3.90

 

Soybean complex.

・         CBOT soybeans and soybean meal ended lower on lack of US export developments, weaker energy complex and light fund selling.  The lower trade in WTI crude oil and lower lead by outside vegetable oil markets did not weigh on soybean oil like we originally thought.  December soybean oil ended 1 point higher. December soybean oil share settled at 33.68 percent. 

・         Traditional funds were net sellers of 4,000 soybeans, sellers of 3,000 soymeal, and buyers of 2,000 soybean oil.

・         Soybean basis was largely unchanged to higher basis for US export at the Gulf and slightly firmer for barge. This may indicate little in way of Chinese buying.  FOB and PNW were steady, so traders believe China took a break from the US market. 

・         Traders are still waiting for details on the Trump plan to increase biofuel use. A final ruling from the EPA is expected this November. 

・         USDA Attaché pegged 2019-20 EU rapeseed production at 17.8 million tons.  USDA is at 18.0 million tons versus 20.066 million tons for 2018-19. 

https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Oilseeds%20and%20Products%20Update%20-%20Lowest%20Rapeseed%20Crop%20in%20Over%20a%20Decade_Vienna_EU-28_9-12-2019.pdf

• Cargo surveyor SGS reported month to date September 15 Malaysian palm exports at 700,935 tons, 51,535 tons below the same period a month ago or down 6.8%, and 76,114 tons below the same period a year ago or down 9.8%.   ITS: 715,215 tons of Malaysian palm exports, down 5.5% mom.  AmSpec: 669,709 tons, down 12.5%.

・         There is no weather threat for the US through the end of the month.

 

Oilseeds Export Developments

• There were no 24-hour reporting system announcements.   USDA recently reported combined soybean sales to China of 460,000 tons, bringing cumulative sales over a 3-day business period to 720,000 tons (12-60k cargos). 

 

 

Updated 9/16/19

• Nov soybeans are seen in a $8.60-$9.25 range;
• Dec soybean meal $280-$320 range
• Dec soybean oil 29.00-30.50 range

 

Wheat

・         US wheat ended higher on technical buying even though the USD was higher.  US dryness concerns over part of US HRW country and increase in global export developments underpinned prices. The USD is higher.

・         Egypt bought 180,000 tons of Russian wheat. 

・         Prior to the Egypt announcement, it was said Russia’s wheat exports since July 1 were running 9% below last year. SovEcon Black Sea wheat prices below.

・         Funds were net buyers of 3000 Chicago wheat.

・         December Paris was up 0.50 to 171.50 euros. 

・         Austria’s short wheat crop is starting to gain attention.  Last week there was talk Australia bought 300,000 tons of Canadian wheat.

 

 

Export Developments.

• Egypt seeks wheat for late October / early November shipment.  Reuters breakdown:
  • 60,000 tons of Russian wheat at $194.13 and $16.60 freight equating to $210.73
  • 60,000 tons of Russian wheat at $194.50 and $16.60 freight equating to $211.10
  • 60,000 tons of Russian wheat at $194.60 and $16.60 freight equating to $211.20 

・         Turkey is near in buying 250,000 tons of red milling wheat. Lowest price was $202/ton, optional origin, for October 15 through November 6 shipment. 

• Algeria bought up to 650,000 tons of milling wheat at about $211 a ton c&f for November 1-15 and November 16-30 shipment. 
• Tunisia seek 42,000 tons of soft milling wheat and 50,000 tons of feed barley on Sept. 19 for October, November, and December shipment.  The lowest price for Turkey to buy 250,000 tons of red milling wheat was $202 a ton c&f for shipment between Oct. 15 and Nov. 6.
• Japan received no offers for feed-quality wheat or barley under its SBS import tender.  
• Japan seeks 120,000 tons feed wheat and 200,000 tons of barley on September 25 for arrival by February 27, 2020. 
• Japan seeks 127,893 tons of food wheat on Thursday.

• Taiwan seeks 110,300 tons of US wheat from the US on September 24 for November and early December shipment. 
• Qatar is seeking to buy 90,000 tons of wheat bran in an import tender on September 24.
• Jordan seeks 120,000 tons of wheat, optional origin, on September 24.  Possible shipment periods are Dec. 1-15, 2019, Dec. 16-31, 2019, and Jan.1-15, 2020.
• Ethiopia seeks 400,000 tons of milling wheat on October 23 for shipment with shipment within two months after contract signing. 

 

Rice/Other

• None reported

 

Updated 9/10/19

・        Chicago Dec wheat is seen in a $4.60-$5.05 range

・        KC Dec wheat is seen in a $3.80-$4.20 range

・        MN Dec wheat is seen in a $4.80-$5.20 range