FW: FI Morning Grain Comments 01/08/20

PDF attached

 

Morning. 

 

 

 

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. Rio Grande do Sul will get some relief from dryness Thursday
with follow up showers next week. Some areas in Paraguay received needed rain overnight and far southern areas will get rain Thursday. Parts of Argentina’s north need timely rainfall will get some, but additional moisture will be needed.

            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 in the south will continue around brief periods of rain.

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

            Southern
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 in fair to good condition or poised for improvement. 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 to prevent winterkill.

Ukraine,
southern Russia and Kazakhstan are still snow free and some winter crops are not well established due to dryness and change is needed by spring to improve crops. 

            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 locations or in parts
of China, but recent rain and snow in eastern China will see to it that big improvements occur prior to the start of aggressive crop development in the spring.

India’s
winter crops are poised to perform quite well this year and rain in Pakistan Sunday into Monday will improve the outlook there as well.

            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

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

 

 

 

 

 

 

Macros.

US
ADP Employment Change Dec: 202K (exp 160K; prev 124K)

 

 

Corn.

·        
Corn futures are slightly weaker following a higher USD, lower crude oil, positioning ahead of the USDA reports and China ethanol developments.   Conab reported Brazil corn production (98.71) below a Bloomberg
average but the trade appears to be shrugging off the update. 

·        
Baltic Dry Index fell another 2.3 percent or 18 points to 773. Lowest since April 2017 and down 20 consecutive sessions. 

·        
Gold was down about $3.80 as of 7:27 am CT and Dow futures up 9 points. 

·        
USD was 20 points higher as of 7:27 am CT and WTI down 88. 

·        
China suspended its initiative to boost national ethanol blending targets due to tight supply of corn stocks. 

·        
China reported a bird flu outbreak in Xinjiang (H5N6). 

·        
China sow herd increased 2.2 percent in December from November and is up 7 percent since September. 

 

Export
Developments

• Under
  the 24-hour reporting system, exporters sold 207,000 tons of corn to unknown for 2020-21 delivery. 
  
• Revised:
  India’s MMTC delayed their import tender for 175,000 tons (50k previously) of non-GMO corn from Jan 7 to January
  14,
  valid until January 22, for shipment by February 10. Another source put shipment by Jan 22. 
  

 

 

Soybean
complex.

·        
Soybeans are
unchanged to slightly lower on lack of direction. The products are seeing a reversal with meal higher and soybean oil lower.    Conab reported Brazil soybean production (122.23) below a Bloomberg trade guess but the trade seems to be ignoring the number. 

·        
India banned imports of refined palm oil.  This should be negative for global vegetable oils. 

·        
USDA is set to release their annual crop production report on Friday. 

·        
Rotterdam vegetable oils this morning were down 8 for nearby soybean oil positions and 4 euros higher for rapeseed oil. Rotterdam meal when imported from SA were unchanged to down 1.50. 

·        
Offshore values are leading CBOT soybean oil 30 points lower and meal $0.30 higher.  

·        
China cash crush was last 136 cents per bushel (139 previous), compared to 145 on Friday and 24 cents year ago. 

·        
China:

·        
Malaysian palm markets:
 

·        
Argentina producers continue to stage protests over higher export taxes. 

 

Oilseeds
Export Developments

• None
  reported

 

Wheat

·        
US wheat futures are
mixed.  We think they would be lower if Egypt had not tendered for wheat. 

·        
March Paris wheat futures earlier were up 0.75 at 189.25 euros as of early this morning.

·        
Russian wheat export prices were a little softer on Tuesday. 

 

Export
Developments.

• Egypt’s
  GASC seeks wheat and lowest offers was $231.77/ton for Ukrainian wheat. 
  
• Thailand
  passed on feed wheat and barley due to high prices for March-May shipment.
  
• Japan
  seeks 120,000 tons of feed wheat and 200,000 tons of feed barley on January 15 for arrival by March 19. 
  
• China
  sold 104,034 tons of wheat or 3.36 percent of what was offered out of auction at an average price of 2,287 yuan per ton. 
  
• Jordan
  seeks 120,000 tons of wheat on January 14.
• Japan
  seeks 106,125 tons of wheat on Thursday.

• Results
  are awaited on Ethiopia in for 80,000 tons of durum wheat and another 75,000 tons of soft wheat.
  
• 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.
• Results awaited:
  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