FW: FI Morning Grain Comments 01/24/20

PDF attached

 

Morning.
USDA export sales were very good. MPOB and CBOT ag futures are under pressure on Friday in large part over coronavirus outbreak fears. Agri Foods released initial Canadian 2020 production estimates and they look for lower canola and higher
wheat. Algeria passed on corn.

 

 

 

Weather

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Worry
in the market place over wet weather in parts of northern Brazil and drying in southern Brazil as well as Argentina will continue to direct the market from a weather perspective for a while. However, some caution is needed here because conditions in both countries
have been and still are extremely good. A week to ten days of these anomalies may not hinder crops as much as some folks want to believe and some caution is needed. The only states in Brazil that will become too wet are Goias and Minas Gerais and that will
only be the case for a week to maybe ten days. Most of the areas expected to dry out for a while will see subsoil moisture carry crops for a while limiting the period in which crop stress is expected to be a threat to production. The key to production will
be what happens late in the first week of February and on into the second week C if drying prevails there will be a threat to some crop yields. 

            In
the meantime, South Africa rainfall will be erratic for a while with eastern areas more favored for rain than the west. A greater need for moisture will soon evolve in the western production areas.

            Recent
rain in eastern Australia improved some of the irrigated summer crops and more rain is expected in eastern and northern Queensland and northeastern New South Wales through Saturday before the region dries out and heats up again.

           
India’s winter oilseed crop is suspected of being in better than usual condition and China will see improved establishment in the spring when seasonal warming occurs. China’s winter crops were not well established last autumn, but have experienced improved
precipitation in recent weeks that will be of use to establishment when it warms up once again.

            Overall,
weather today may provide a mixed bias to market mentality.

 

MARKET
WEATHER MENTALITY FOR WHEAT: 

Not
much has changed relative to that of Wednesday.

Little
to no winterkill has likely occurred in key wheat production areas in the Northern Hemisphere so far this winter, although a few crops in Montana might have been negatively impacted by recent cold weather.

            In
the meantime, India is poised to have a high yielding crop this year. Crops in the Middle East are expected to yield relatively well and China weather has improved in recent weeks and that should translate into better crop establishment during the spring.
Hebei, China still needs moisture.

            Southeastern
Europe crops are not as well established as they should be, but winter weather has been mild leaving very little threat of crop damage thus far. Much of Russia has snow on the ground, but temperatures are well above average and expected to stay warm minimizing
the threat of winterkill. Some snowmelt is expected in Russia, however.

            Overall,
weather today should have a neutral to slightly bearish bias on market mentality.

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

 

Bloomberg
Ag Calendar

FRIDAY,
JAN. 24:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, 8:30am
• 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
• U.S.
  poultry slaughter, cattle on feed (25 jan 1.30 am)
• HOLIDAY:
  China

MONDAY,
JAN. 27:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• MARS
  crop bulletin – monthly report on crop conditions in Europe.
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• HOLIDAY:
  China, Australia, Hong Kong, Malaysia, Singapore

TUESDAY,
JAN. 28:

• AmSpec,
  Intertek, SGS: Malaysia’s Jan. 1-25 Palm Oil Exports, Kuala Lumpur
• HOLIDAY:
  China, Hong Kong

WEDNESDAY,
JAN. 29:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• HOLIDAY:
  China

THURSDAY,
JAN. 30:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, 8:30am
• GUS
  Polish pig population data, Warsaw
• HOLIDAY:
  China

FRIDAY,
JAN. 31:

• 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
• U.S.
  agricultural prices paid and received, cattle inventory
• Paris
  Grain Day conference. Topics include outlook for Black Sea/Europe grains and challenges facing the oilseed market
• AmSpec,
  Intertek, SGS: Malaysia’s Jan. 1-31 Palm Oil Exports, Kuala Lumpur

Source:
Bloomberg and FI

 

No
changes in CBOT registrations

 

 

 

 

Weekly
Bloomberg Bull/Bear survey: taken Wed.

・        
Soybeans: Bullish: 3 Bearish: 12 Neutral: 8

・        
Corn: Bullish: 8 Bearish: 5 Neutral: 10

・        
Wheat: Bullish: 4 Bearish: 10 Neutral: 9

・        
Raw sugar: Bullish: 5 Bearish: 1 Neutral: 2

・        
White sugar: Bullish: 4 Bearish: 1 Neutral: 3

・        
White-sugar premium: Bullish: 2 Bearish: 1 Neutral: 5

 

 

USDA
US export sales.

・        
US soybean meal sales of 641,900 tons were robust with several countries booking the product, led by the Philippines, Mexico, Spain, and Germany. 

・        
Soybean export sales of 790,000 tons current crop and 120,700 tons new-crop were within expectations. 

・        
Soybean oil sales of 55,600 tons were well above expectations and the previous week. 

・        
Corn export sales of 1.007 million tons were above expectations.

・        
All-wheat export sales were good at 696,000 tons for 2019-20.

・        
Pork sales were over 30,000 tons and shipments were robust at 44,400. 

 

 

 

 

Macros

Canada
Retail Sales (M/M): 0.9% (est 0.6%, prev R-1.1%)

 

 

Corn.

・        
Corn futures are
lower, but losses may be limited today on robust export sales and another USDA 24-hour announcement system.  Despite widespread talk of US corn quality problems (northern US), US PNW exporters are still able to reach number 3 yellow corn minimum requirements,
but it’s difficult for number 2.  Remember, exporters can always still sell corn at a discount, and when the US is one of the last options to source spot corn in the world, when prices are competitive, importers will continue to take it. 

・        
The BA Grains Exchange reported Argentina corn plantings at 95 percent, up from 91 percent previous week and compares to 93 percent last year and 94 average. 

・        
Weekly US ethanol production declined by 46,000 barrels to 1.049 million, largest weekly decrease since September 20.  US weekly stocks increased by a large 1.025 million barrels to 24.031 million, largest
inventory since July 26, 2018.  Four weeks ago, stocks were at 21.034 million.  September 2018 to date US ethanol production is running 1.1 percent below the same period a year ago. 

・        
According to Twitter circulation, IEG Advantage apparently reported the following:

2020
Corn estimate

Acres
93.4

Yield
178

Output
15.3 billion

・        
USDA Attaché estimated Argentina corn production at 48 million ton, 2 MMT below official USDA s. The said “unexpected primary election defeat in August 2019 by former President Macri, farmers changed planting
intentions for 200-400,000 hectares from corn to soybeans in anticipation of a regime change.”

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Update_Buenos%20Aires_Argentina_01-16-2020

 

 

USDA
Attaché also has a lower corn production for South Africa at 13.340 million tons relative to USDA (14.0 million).

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Update_Pretoria_South%20Africa%20-%20Republic%20of_01-16-2020

 

Agriculture
and Agri-Food Canada (AAFC) released their 2020-21 Canada crop outlook: Lower canola, higher soybeans, higher wheat.

 

Export
Developments

• Under
  the 24-hour announcement system, private exporters reported export sales of 142,428 tons of corn for delivery to unknown destinations during the 2019-20 marketing year.

• Algeria
  rejected 20,000 tons of corn.  Lowest offer was said to be at $212.25/ton c&f (Ukraine).  Results are still awaited for Algeria in for 30,000 tons of soybean meal for February 10-25 shipment.

 

 

 

Soybean
complex.

・        
CBOT soybeans are lower on concerns over China domestic meat demand from repercussions from the coronavirus outbreak.  USDA export sales for the products were excellent.  See above corn comment.

・        
We like owning meal over oil. 

・        
China restricted travel to 10 major cities affecting 20 million people.  The lunar new year holiday started today. 

・        
In a down market on Thursday, CBOT soybean OI was up 10,500 contracts. 

・        
The BA Grains Exchange reported Argentina soybean plantings at 98 percent, up from 95 percent previous week and compares to 99 percent last year and 99 average. 

・        
Brazilian real was weaker at 4.1848.  USD was up 15.  

・        
Offshore values are leading CBOT soybean oil 5 points lower (9 lower for the week) and meal $1.50 higher ($4.10 higher for the week to date). 

・        
Rotterdam vegetable oils this morning were down 8 euros for nearby soybean oil positions and 8 euros lower for rapeseed oil. Rotterdam meal when imported from SA were unchanged to 5 euros higher. 

・        
China is on holiday until late next week.

・        
China cash crush was last 84 cents per bushel, compared to 98 late last week and 36 cents year ago. 

・        
Malaysian palm markets:
 

・        
According to Twitter circulation, IEG Advantage apparently reported the following yesterday:

2020
Soybeans estimate

Acres
86.5

Yield
51

Output
4.368 billion

・        
The BA Grains Exchange reported Argentina soybean plantings at 98 percent, up from 95 percent previous week and compares to 99 percent last year and 99 average. 

 

 

Agriculture
and Agri-Food Canada (AAFC) released their 2020-21 Canada crop outlook: Lower canola, higher soybeans, higher wheat.

 

 

Oilseeds
Export Developments

• Results
  are still awaited for Algeria in for 30,000 tons of soybean meal for February 10-25 shipment.

 

Wheat

・        
US and Paris wheat futures are lower this morning.  USDA export sales for all-wheat were good.

・        
March Paris wheat futures were down 0.50 at 195.75 euros as of early this morning. 

・        
French exporters are starting to feel the financial pain from the sporadic strikes.  We are hearing they may end by the end of next week. 

・        
Europe remains dry across parts of northern France into Germany and Poland. 

・        
Some of the winter wheat across TX and Kansas is slow to develop but in better shape than other recent years.  But we are hearing some wheat across western 1/3 of Kansas south to Amarillo is in poor to worse
shape.  There is still plenty of time for the crop to develop and improve but something to monitor when USDA issues state stories a week from Monday (crop condition updates). 

 

Agriculture
and Agri-Food Canada (AAFC) released their 2020-21 Canada crop outlook: Lower canola, higher soybeans, higher wheat.

 

Export
Developments.

・        
Results awaited: Saudi Arabia’s Saudi Grains Organization (SAGO) seeks 900,000 tons of animal feed barley.  660,000 tons are for Red Sea ports and 240,000 tons Gulf.  On Nov. 18, 2019, SAGO bought 1.02 million
tons at an average price of $216.62 a ton c&f.

• Jordan
  seeks 120,000 tons of wheat on January 28. 
• Japan
  seeks 120,000 tons of feed wheat and 200,000 tons of feed barley on January 29 for arrival by March 19. 
  

 

Rice/Other

• South
  Korea seeks 77,778 tons of non-glutinous brown rice for arrival between March and May, on Jan. 30.  Details of the tender are as follows:

   
TONNES(M/T)  GRAIN TYPE    ORIGIN    ARRIVAL/PORT

       
20,000   Brown Short   China     March 15-31/Gunsan

       
20,000   Brown Short   China     April 30/Masan

       
15,556   Brown Short   China     May 31/Donghae

       
22,222   Brown Medium  U.S.      May 31/Incheon

• Mauritius
  seeks up to 6,000 tons of long grain white rice on Feb. 3, optional origin, for delivery between May 1 and July 31.
  

 

 

Export Sales Highlights    

This summary is based on reports from exporters for the period January 10-16, 2020.

 

Wheat:  Net sales of 696,000 metric tons for 2019/2020 were up 7 percent from the previous week and 58 percent from the
prior 4-week average.  Increases were primarily for Bangladesh (111,900 MT, including 56,900 MT switched from unknown destinations), Japan (96,200 MT), Guatemala (88,600 MT), Taiwan (76,800 MT), and South Korea (71,200 MT), were offset by reductions for unknown
destinations (16,200 MT).  For 2020/2021, total net sales of 46,000 MT were for unknown destinations.  Exports of 525,000 MT were up 14 percent from the previous week and 27 percent from the prior 4-week average.  The destinations were primarily to Indonesia
(115,200 MT), the Philippines (64,100 MT), Bangladesh (56,900 MT), Mexico (53,800 MT), and the Dominican Republic (39,600 MT). 

Optional Origin Sales:  For 2019/2020, the current outstanding balance of 56,000 MT is for the Philippines. 

 

Corn:  Net sales of 1,006,900 MT for 2019/2020 were up 28 percent from the previous week and 92 percent from the prior
4-week average.  Increases were primarily for Japan (372,600 MT, including 8,400 MT switched from unknown destinations and decreases of 10,000 MT), Mexico (269,900 MT, including decreases of 34,600 MT), Colombia (154,500 MT, including 91,400 MT switched from
unknown destinations), Guatemala (73,200 MT, including decreases of 2,600 MT), and Nicaragua (39,600 MT).  For 2020/2021, total net sales of 2,000 MT were for Nicaragua.  Exports of 392,100 MT were down 28 percent from the previous week and 15 percent from
the prior 4-week average.  The destinations were primarily to Mexico (161,200 MT), Colombia (120,500 MT), Japan (66,200 MT), Canada (21,200 MT), and Jamaica (7,100 MT).  Optional Origin Sales:  For 2019/2020, the current outstanding balance of 375,900 MT is
for South Korea (267,000 MT), Egypt (58,900 MT), and Israel (50,000 MT).

 

Barley: No net sales for 2019/2020 were reported for the week.  Exports of 400 MT were down 48 percent from the previous week and 42 percent from
the prior 4-week average.  The destination was Japan.

 

Sorghum:  Total net sales of 11,100 MT for 2019/2020 were for Japan.  Exports of 16,700 MT were down 27 percent from the
previous week and 75 percent from the prior 4-week average.  The destinations were Japan (11,100 MT) and Mexico (5,600 MT).   
 

 

Rice:  Net sales of 78,600 MT for 2019/2020 were up noticeably from the previous week and up 82 percent from the prior 4-week average.  Increases
were primarily for South Korea (30,800 MT), Mexico (26,400 MT), Haiti (12,500 MT, including decreases of 2,700 MT), Canada (3,300 MT), and El Salvador (2,600 MT). 
Exports of 72,200 MT were up noticeably  from the previous week and up 12 percent from the prior 4-week average.  The destinations were primarily to Japan (26,700 MT), the Dominican Republic (15,000 MT), Haiti (12,600
MT), South Korea (5,900 MT), and Mexico (4,000 MT). Exports for Own Account:  For 2019/2020, the current exports for own account outstanding balance is 200 MT, all Canada.

 

Soybeans:  Net sales of 790,000 MT for 2019/2020 were up 23 percent from the previous week and 59 percent from the prior 4-week average.  Increases primarily
for China (225,900 MT, including 70,000 MT switched from unknown destinations and decreases of 171,300 MT), Mexico (218,900 MT, including 47,500 MT switched from unknown destinations and decreases of 1,500 MT), Egypt (187,500 MT, including 65,000 MT switched
from unknown destinations), Vietnam (87,800 MT, including 70,000 MT switched from unknown destinations), and Germany (69,400 MT), were offset by reductions for unknown destinations (256,900 MT).  For 2020/2021, net sales of 120,700 MT were for unknown destinations
(120,000 MT) and Japan (700 MT).  Exports of 1,053,100 MT were down 13 percent from the previous week and 3 percent from the prior 4-week average.  The destinations were primarily to China (447,700 MT), Bangladesh (165,200 MT), Mexico (91,700 MT), Vietnam
(80,900 MT), and Germany (69,400 MT). 

Exports for Own Account:  For 2019/2020, the current exports for own account outstanding balance is 2,100 MT, all Canada. 
Export Adjustments:  Accumulated exports of soybeans to the Netherlands were adjusted down  69,377 MT for week ending January 9^th.  The correct destination is Germany and is included in this week’s report.

 

Soybean Cake and Meal:  Net sales of 641,900 MT for 2019/2020–a marketing-year high–were up 71 percent from the previous week and up noticeably from the
prior 4-week average.  Increases primarily for the Philippines (184,500 MT), Mexico (82,300 MT, including decreases of 100 MT), Spain (60,000 MT), Germany (55,000 MT), and unknown destinations (33,700 MT), were offset by reductions for the Dominican Republic
(300 MT) and Leeward Windward Islands (100 MT).  Exports of 231,600 MT were primarily to the Philippines (46,900 MT), Mexico (38,600 MT), Morocco (32,000 MT), Ecuador (31,700 MT), and the Dominican Republic (20,700 MT).

 

Soybean Oil: 
Net sales of 55,600 MT for 2019/2020 resulting in increases primarily for unknown destinations (19,000 MT), South Korea (13,400 MT), Colombia (8,500 MT), Jamaica (7,000 MT), and Guatemala
(5,000 MT), were offset by reductions for Canada (2,200 MT).  Exports of 2,500 MT were to Mexico (2,200 MT) and Canada (300 MT). 

 

Cotton:  Net sales of 307,800 RB for 2019/2020 were up 32 percent from the previous week and 61 percent from the prior
4-week average.  Increases primarily for Turkey (82,700 RB), Pakistan (72,200 RB), Vietnam (70,800 RB, including 1,300 RB switched from South Korea, 200 RB switched from Hong Kong, 100 RB switched from Japan, and decreases of 3,300 RB), Indonesia (33,600 RB,
including 800 RB switched from Japan and decreases of 200 RB), and Egypt (17,600 RB), were offset by reductions for India (25,000 RB).  For 2020/2021, total net sales of 13,200 RB were for Vietnam.  Exports of 282,600 RB were down 6 percent from the previous
week, but up 20 percent from the prior 4-week average.  Exports were primarily to Vietnam (80,500 RB), Pakistan (44,700 RB), China (41,400 RB), Turkey (29,000 RB), and Mexico (20,600 RB).  Net sales of Pima totaling 20,200 RB were down 41 percent from the
previous week, but up 9 percent from the prior 4-week average.  Increases were primarily for India (6,400 RB), China (6,000 RB, including decreases of 200 RB), Pakistan (2,400 RB), Bangladesh (2,400 RB), and Vietnam (900 RB).  Exports of 6,500 RB were down
16 percent from the previous week and 7 percent from the prior 4-week average.  The primary destinations were Peru (1,600 RB), India (900 RB), Vietnam (900 RB), Pakistan (700 RB), and El Salvador (600 RB). 

Exports for Own Account:  For 2019/2020, new exports for own account totaling 10,100 RB were primarily to Vietnam (5,600
RB), South Korea (2,300 RB), and Bangladesh (1,400 RB).  Exports for own account totaling 14,200 RB to Vietnam were applied to new or outstanding sales.  The current exports for own account outstanding balance of 27,400 RB is for Bangladesh (7,900 RB), India
(7,800 RB), Vietnam (6,000 RB), China (2,500 RB), South Korea (2,300 RB), and Taiwan (900 RB).

 

Hides and Skins: Net sales of 472,700 pieces
reported for 2020.  Whole cattle hide sales totaling 457,200 pieces primarily for China (231,900 pieces, including decreases of 17,000 pieces), Thailand (65,000 pieces, including decreases of 900 pieces), Mexico (59,500 pieces, including decreases of 4,600
pieces), South Korea (53,000 pieces, including decreases of 10,500 pieces), and Taiwan (29,900 pieces, including decreases of 1,300 pieces), were offset by reductions for Cambodia (200 pieces).  Exports of 453,300 pieces reported for 2020.  Whole cattle hide
exports of 444,600 pieces were primarily to China (298,600 pieces), South Korea (68,800 pieces), Mexico (38,100 pieces), Taiwan (12,200 pieces), and Thailand (6,800 pieces).

 

Net sales of 188,300 wet blues for 2020 were reported for Italy (88,400
unsplit), China (35,600 unsplit and 100 grain splits), Vietnam (34,200 unsplit and 200 grain splits), Hong Kong (8,000 unsplit), and Mexico (7,900 grain splits).  Exports of 185,600 wet blues were to Vietnam (60,600 unsplit and 1,400 grain splits), China (39,000
unsplit and 7,200 grain splits), Italy (34,300 unsplit and 3,600 grain splits), Thailand (12,500 unsplit), and Taiwan (12,300 unsplit).
Total net sales reductions of splits, 4,500 pounds for 2020 were for Vietnam.  Total exports of 525,500 pounds were to Vietnam.

 

Beef:
Net sales of 27,800 MT for 2020 were primarily for South Korea (9,700 MT, including decreases of 400 MT), Japan (8,200 MT, including decreases of 200 MT), Mexico (3,000
MT, including decreases of 100 MT), Taiwan (2,000 MT, including decreases of 100 MT), and Hong Kong (1,800 MT, including decreases of 100 MT).  Exports of 17,900 MT were primarily
to Japan (5,400 MT), South Korea (4,800 MT), Mexico (1,900 MT), Taiwan (1,500 MT), and Hong Kong (1,200 MT). 

 

Pork:
Net sales of 30,300 MT
for 2020 were primarily for Mexico (10,400 MT), Japan (4,900 MT), Canada (3,400 MT), China (3,000 MT), and South Korea (2,600 MT).  For 2021, total net sales of 300 MT were for South Korea. 
Exports of 44,400 MT were primarily to China (16,900 MT), Mexico (11,800 MT), Japan (5,400 MT), South Korea (3,500 MT), and Canada (2,700 MT).

 

U.S. EXPORT SALES FOR WEEK ENDING 1/16/2020

	CURRENT MARKETING YEAR						NEXT MARKETING YEAR
COMMODITY	NET SALES	OUTSTANDING SALES		WEEKLY EXPORTS	ACCUMULATED EXPORTS		NET SALES	OUTSTANDING SALES
		CURRENT YEAR	YEAR AGO		CURRENT YEAR	YEAR AGO
	THOUSAND METRIC TONS
WHEAT
HRW	284.3	1,608.9	1,808.2	213.0	5,825.2	3,770.6	20.9	80.9
SRW	5.3	437.2	886.1	29.2	1,692.6	1,391.0	0.0	4.2
HRS	220.1	1,430.6	1,511.3	172.6	4,373.7	3,992.9	14.2	59.0
WHITE	182.9	1,128.5	1,167.2	110.3	2,970.0	2,961.6	10.9	20.9
DURUM	3.3	190.4	89.9	0.0	623.8	330.0	0.0	61.0
TOTAL	696.0	4,795.6	5,462.7	525.0	15,485.3	12,446.1	46.0	225.9
BARLEY	0.0	29.8	30.9	0.4	29.9	27.4	0.0	0.0
CORN	1,006.9	10,481.8	13,020.8	392.1	9,826.3	19,266.6	2.0	1,024.6
SORGHUM	11.1	508.4	119.2	16.7	632.0	357.4	0.0	0.0
SOYBEANS	790.0	6,977.5	12,517.2	1,053.1	24,225.9	17,851.9	120.7	304.3
SOY MEAL	641.9	3,373.8	3,936.1	231.6	3,256.1	2,973.6	0.0	87.3
SOY OIL	55.6	197.3	210.7	2.5	322.7	195.2	0.0	0.5
RICE
L G RGH	22.0	345.8	222.9	3.6	681.5	564.4	0.0	0.0
M S RGH	4.5	19.3	4.5	0.1	16.0	23.1	0.0	0.0
L G BRN	1.3	21.8	5.2	0.3	20.2	24.7	0.0	0.0
M&S BR	30.8	71.0	95.2	3.2	19.0	45.3	0.0	0.0
L G MLD	17.4	135.9	141.8	30.8	534.7	371.8	0.0	0.0
M S MLD	2.7	132.3	217.3	34.2	295.6	191.2	0.0	0.0
TOTAL	78.6	726.1	687.0	72.2	1,567.0	1,220.5	0.0	0.0
COTTON		THOUSAND RUNNING BALES
UPLAND	307.8	7,446.0	7,305.9	282.6	4,721.2	3,572.9	13.2	1,030.7
PIMA	20.2	221.5	294.6	6.5	186.8	172.6	0.0	35.3