FW: FI Morning Grain Comments 01/06/20

PDF attached

 

Morning. 

 

CFTC
will be out later today

 

 

 

Weather

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Weather
conditions in many Brazil and Argentina crop areas will be favorable over the next two weeks, although a close watch on the rain distribution is warranted. A few pockets could be a little too dry. Northern Argentina and a few areas in Paraguay and southern
Brazil will be drier biased for a while this week, but relief should come around in time. A greater soaking of rain will be needed. Today’s rain in southwestern Argentina will maintain excellent crop conditions in that region.

            South
Africa summer crop conditions should be largely beneficial over the next couple of weeks. Australia crops will continue hot and too dry for change, although it would not be surprising to see some rain in eastern parts of the nation later this month.

            India’s
winter crops are in very good condition and should remain that way for the next two weeks. Summer crop harvesting will continue around brief periods of rain.

            China
rapeseed conditions will have potential for improvement in the spring after this week’s storm system impacts the production region. A follow up storm system will see to it the region is plenty moist in the spring.

            Europe
and the southwestern parts of the CIS will dry out for a while, but winter crops are dormant or semi-dormant and will not be bothered. A boost in precipitation will be needed in the late winter prior to the start of spring growth.

            Overall,
weather today will likely provide a mixed influence on market mentality with a slight bearish bias.

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Winter
crop conditions around the world are either fair to good or improving. Recent moisture in the United States will be good for spring crop development. Snow will develop in the northwestern U.S. Plains before bitter cold conditions evolve in the next week to
ten days.

            There
is no risk of crop threatening cold in Russia, Europe or most of China’s key winter crop production areas for the coming week to ten days. Winter crops are not as well established as they should be in some areas of southeastern Europe, southern Russia or Kazakhstan.
Weekend precipitation in eastern China will improve wheat establishment in the spring.

India’s
winter crops are poised to perform quite well this year and rain in Pakistan will improve the outlook there as well. China’s precipitation today and that coming over the next week will improve spring crop development potential.

            Dryness
in northern Africa will be closely monitored with southwestern Morocco the only area at risk of lower production today but drying in northern Morocco and northwestern Algeria will continue for a while.

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

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

MONDAY,
JAN. 6:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• EU
  weekly grain, oilseed import and export data
• CFTC
  COT – after the close
• Ivory
  Coast cocoa arrivals

TUESDAY,
JAN. 7:

• New
  Zealand global dairy trade auction

WEDNESDAY,
JAN. 8:

• Conab
  releases 4th estimate for Brazil’s soy, corn crops

THURSDAY,
JAN. 9:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, 8:30am
• Port
  of Rouen data on French grain exports
• United
  Nation’s FAO Food Price Index
• Australia’s
  Bureau of Meteorology releases climate statement
• New
  Zealand commodity price

FRIDAY,
JAN. 10:

• USDA’s
  monthly World Agricultural Supply and Demand (WASDE) report, noon
• Malaysia
  end-2019 palm oil stocks, production, export numbers; Jan. 1-10 palm oil export data from AmSpec, Intertek and SGS
• U.S.
  winter wheat seeding forecast
• USDA
  quarterly wheat, barley, corn, soybean stocks, noon
• ICE
  Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions ~1:30pm (~6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm

Source:
Bloomberg and FI

 

FI
estimates for Jan 10 reports (uses Bloomberg template)

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Macros.

·        
NY Fed Accepts $76.90Bln Of $76.90Bln In Bids At O/N Repo Operation

 

Corn.

·        
Corn futures are lower on uncertainty over Middle East tensions. 

·        
Brazil and Argentina saw good rain over the weekend but not all areas were wet. Northern Argentina dried down along with southern Brazil. 

·        
Baltic Dry Index fell another 7 percent or 63 points to 844.

·        
Gold was up about $23 as of 7:50 pm CT and Dow futures down 184 points. 

·        
USD was 23 points lower as of 7:50 pm CT and WTI up 70 cents. 

 

Jan
10 reports.  For the upcoming USDA S&D and production update, we are assuming a 400,000 lower US corn planted area than USDA’s October estimate, and for the harvested area to decline 511,000 acres. Our 2019 US corn yield is 0.2 bushel higher than USDA, resulting
in a 13.594 billion production estimate, 67 million below current USDA.  Our first quarter feed estimate is 2.280 billion bushels, about 18 million above our calculated Q1 2018 corn for feed use. 
Our working December 1 corn ending stocks is 11.489 billion bushels, well below 11.665 billion University of Ill projected. 
Our
2019-20 US ending stocks estimate is 1.862 billion bushels, with a bias for it to go lower. USDA is currently at 1.910 billion bushels. Our estimate for USDA’s January update is 1.848 billion bushels, 62 million below December. 

 

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. Another source put shipment by Jan 22. 

 

Soybean
complex.

·        
Soybeans are
backing off on lack of fundamental news, Middle East tensions and sharply lower palm oil weighing on US soybean oil.  Meal was up a touch on product spreading.  Malaysia plans to reinstate their palm export duty for crude palm oil and the market dropped 74
MYR despite traders seeing a decline in end of December palm oil stocks.

·        
China Plans to Send Team to U.S. for Jan. 15 Deal Signing
https://www.bloomberg.com/news/articles/2020-01-05/china-delegation-may-travel-to-washington-on-jan-13-scmp-says 

·        
Rotterdam vegetable oils this morning were unchanged for nearby soybean oil positions and 5 euros higher for rapeseed oil. Rotterdam meal when imported from SA were unchanged to 3 euros lower. 

·        
Offshore values are leading CBOT soybean oil 16 points higher and meal $2.00 higher.  

·        
China cash crush was last 139cents per bushel, compared to 145 on Friday and 24 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

·        
US wheat futures are
lower on technical selling and lack of fresh news. 

·        
March Paris wheat futures earlier were down 0.25 at 188.25 euros as of early this morning.

 

 

Export
Developments.

• Results
  are awaited on Ethiopia in for 80,000 tons of durum wheat and another 75,000 tons of soft wheat.
  
• Jordan seeks 120,000 tons of wheat on January 7.
  
• Morocco seeks to import about 354,000 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. 
  
• 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.

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

 

Rice/Other

• Results awaited: 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.
• South Korea 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