FW: FI Morning Grain Comments 01/02/20

PDF attached

 

Morning. 

 

 

Opening
calls:

·        
Soybeans 5-7 higher

·        
Soybean meal: $0.50-$1.50 higher

·        
Soybean oil: 30-40 points higher

·        
Corn: 2-3 higher

·        
Chicago wheat: 3-5 higher

 

 

Weather

Argentina
saw much needed rain through Tuesday but turned and will remain drier into the weekend.  There is some opportunity for rain Sunday and early Monday for southern Argentina, but the rest of the country will remain dry through at least Wednesday. 

 

 

From
World Weather Inc.

• Northern
  Argentina
  is drying out and may experience some crop stress through the coming week
  • Temperatures
    will be quite warm to hot through the weekend with daily highs in the 90s and over 100 degrees Fahrenheit
  • Some
    showers will occur Monday, but rainfall will rarely reach as much as 0.60 inch and most amounts will be too light to counter evaporation
  • Showers
    will return late next week and occur over multiple days bringing the best opportunity for relief
    
  • Warm
    conditions will continue on the drier days next week
  • The
    bottom line is one of increasing concern over crop conditions, although if rain develops in the January 10-16 period there would likely be some relief to help curb stress and protect production, but rain needs to be significant at that time

 

• Southern
  Argentina
  will continue to dry down over the next few days, but rain Saturday night and Sunday will offer some short term relief with rainfall of 0.50 to 2.00 inches occurring from southern Cordoba into Buenos Aries and impacting a few immediate neighboring areas
  • Net
    drying will resume after that and could prevail for a while as rainfall becomes erratic and light
  • Temperatures
    will continue to have a near to above average bias during much of the coming week to ten days keeping evaporation rates high when rain is not falling
    
  • The
    bottom line should remain favorable for key summer crops from southern Cordoba to Buenos Aires, but areas from northern Cordoba to northern Entre Rios may need greater rain like that of northern Argentina as time moves along

 

• Argentina
  rainfall Tuesday and Wednesday
  was quite limited with most of the nation experiencing net drying
  • Temperatures
    were seasonable

 

• Northeast
  Brazil
  will experience crop improvements through the weekend and into early next week due to much needed rainfall
  
  • The
    region has been much too dry in recent weeks and this precipitation will be sufficient to offer some relief, but follow up rain will be very important
  • World
    Weather, Inc. believes the drier bias will return next week and it may prevail in the Jan. 10-16 period.
  • The
    bottom line will be one of temporary improvement with cotton planting and establishment in western Bahia to benefit greatly. Some improvement in coffee, cocoa, corn, soybeans, rice, sugarcane and other crops is expected, but follow up rain will be imperative
    for a more notable improvement in production potential.

 

• Southern
  Brazil and Paraguay will dry out through Tuesday
  with slowly increasing showers and thunderstorms during the second half of next week
  • The
    best rainfall will occur at the end of next week
  • Crop
    moisture stress will be significant from southern Paraguay into Rio Grande do Sul and may also impact western Parana, western Santa Catarina and southwestern Mato Grosso do Sul until the latter part of next week due to dryness
  • Relief
    from dryness may occur late next week, but it will be temporary and more drying is expected to follow which will place much pressure on the rain that falls to be sufficient for improved crop conditions and soil moisture to carry crops further into January
    without a threat to production
  • The
    bottom line in southern and southern Paraguay Brazil is one of concern because parts of the region are already dry and warm temperatures coupled with limited rainfall bound to induce some crop moisture stress. Relief late next week of be great importance to
    protect production potentials

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

THURSDAY,
Jan. 2:

• Australia
  commodity index
• USDA
  Soybean crush, DDGS production, corn for ethanol, 3pm

FRIDAY,
Jan. 3:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, 8:30am
• EIA
  U.S. weekly ethanol inventories, production, 11am
• ICE
  Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions ~1:30pm (~6:30pm London)

Source:
Bloomberg and FI

 

 

 

 

Macros.

·        
The People’s Bank of China said they will lower the reserve requirement ratio for all banks by 0.5 percentage point on January 6. This would release more than 800 billion yuan ($114.9 billion) into the financial
system, according to Market Watch.  We view this supportive for both equities and commodities.

·        
U.S. President Donald Trump said he will sign the first phase of a trade deal with China on Jan. 15.

·        
On January 10 USDA will release S&D data and Crop Production.

 

 

Corn.

·        
Opening calls: corn: 2-3 higher

·        
USD was 30 points higher as of 6:49 CT.

·        
Soybean and Corn Advisory predicted that Brazil will overtake the US as the top corn exporter in 2020.

·        
South Korea reported its 56^th case of ASF near the North Korean border.

·        
On Wednesday China lowered import tariffs on over 850 commodities, including pork.

·        
China plans to sell 30k frozen pork from reserves on Jan 3.

·        
Baltic Dry index resumed trading and it fell nearly 10.5 percent to 976, or 114 points. 

·        
October US ethanol production ended up at 30.941 million barrels, slightly above expectations and below 32.358 million for October 2018. 

 

Export
Developments

• India’s
  MMTC delayed their import tender for 50,000 tons of non-GMO corn from Jan 2 to January 7,
  for shipment by February 10.

 

 

 

 

Soybean
complex.

·        
Opening calls: soybeans 5-7 higher, soybean meal $0.50-$1.50 higher and soybean oil 30-40 points higher.

·        
We get NASS US soybean crush later.

·        
CBOT soybean meal registrations were up 200.  FCS issued the 1215 meal that they stopped on Tuesday.

• October
  US EIA soybean oil for biodiesel production came in well below our expectations at 558 million pounds, well below 699 million in October 2018 and represents a low 50.9 percent of total feedstock used for biodiesel (1.096 billion in October, down from 1.292
  billion year ago). 
• Rotterdam
  vegetable oils this morning were down 2 euros for nearby soybean oil positions and 7 higher for rapeseed oil. Rotterdam meal when imported from SA were mostly higher. 
  

·        
Offshore values are leading CBOT soybean oil 86 points higher and meal $1.50 lower.  

·        
China cash crush was last 139 cents per bushel (141 prev.), compared to 131 on Friday and 11 cents year ago. 

·        
China:

·        
3-year high: Malaysian palm markets:
 

 

Oilseeds
Export Developments

• USDA
  CCC seeks 14,650 tons of packaged vegetable oils for export to Yemen on January 7 with shipment February 1-29 (Feb. 16-Mar. 15 for plants at ports). 
  

 

 

 

Wheat

·        
Chicago wheat is expected to open 3-5 cents higher, KC 4-6 higher and MN 4-7 higher.

·        
Global import tender developments remain steady with Turkey seeking high protein wheat.

·        
March Paris wheat futures earlier were up 0.50 at 189.00 euros.

·        
Northeast Ukraine and Russia’s central region and Volga Valley will see snow over the next few days.

 

Export
Developments.

• Turkey seeks 550,000
  tons of red milling wheat on January 14, minimum protein content of 13.5% for January 21-February 15 shipment. 
  
• Turkey seeks 100,000 tons of
  durum wheat on January 14 for Jan 25-Feb 25 shipment.
• Results are awaited on Ethiopia
  in for 80,000 tons of durum wheat and another 75,000 tons of soft wheat after awarding 600,000 tons of wheat earlier this week.
  
• Jordan seeks 120,000 tons of wheat on January 7.
  
• Morocco seeks to import about 355,000 tons of US durum wheat on January
  9 for arrival by May 31.
• Mauritius seeks 95,000 tons of optional origin wheat flour on Jan.
  10, 2020, for shipment between July 1, 2020, and June 20, 2021. 

·        
Syria seeks 200,000 tons of soft wheat from Russia on January 20, 2020. 

 

Rice/Other

• South Korea bought 22,222 tons of rice for June arrival and
  seeks another 30,764 tons of rice on Jan 7 for Sep-Oct arrival. 

Details of the new tender are as follows:

    TONNES(M/T)  GRAIN TYPE      ARRIVAL/PORT

        20,000   Brown Medium    Sept.1-Oct.31,2020/Busan

        10,764   Brown Medium    Sept.1-Oct.31,2020/Gwangyang

• Syria seeks 45,000 tons of white rice on Jan. 6, 2020.  (Reuters)
  Short grain white rice of third or fourth class was sought. No specific country of origin was specified in the tender, traders said.  Some 25,000 tons was sought for supply 90 days after confirmation of the order and 20,000 tons 180 days after supply of the
  first consignment.  The rice was sought packed in bags and offers should be submitted in euros.  A previous tender from the agency for 45,000 tons of rice with similar conditions had closed on
  Nov. 13.