FW: FI Morning Grain Comments 01/28/20

PDF attached

 

Morning. Malaysian palm oil market crashed on Tuesday. 

 

 

 

Weather

MARKET WEATHER MENTALITY FOR CORN AND SOYBEANS: 

There is still not much reason for concern over Brazil summer crop conditions, but Argentina is still a little worry. Argentina is not likely to see failing rainfall over a large enough area to move markets in a big manner especially not with Brazil’s weather so good.

            Weather in eastern Australia improved briefly during the weekend, but this week will trend drier again. South Africa will dry down for a while raising some potential for mild crop stress.

            Southeast Asia rainfall will be well mixed and mostly supportive of palm oil development. Rain in China and India will be typical of this time of year with winter crops poised for improvement as spring approaches because of recent past precipitation.

            Southeastern Europe remains too dry, but there is potential for some rain and mountain snow this week from there into Kazakhstan possibly easing long term dryness in Romania, the lower Danube River Basin and parts of Ukraine. The moisture boost will be important for spring planting and early season winter rapeseed development.

            Overall, weather today will produce a neutral to slightly bearish bias to market mentality.

 

MARKET WEATHER MENTALITY FOR WHEAT:  There is still no risk of winterkill around the world for the next couple of weeks. That will leave winter crop conditions mostly unchanged. China crops will improve in the spring because of recent precipitation. India’s crops are still expected to yield extremely well.

There is still some concern over Morocco weather and the lack of rain in the southwest may harm production. A few other areas in northern Africa will also need some timely rain in February to protect production potentials.

Middle East wheat conditions are rated favorably but would benefit from some greater rain. Southeastern Europe, Ukraine, southern Russia and Kazakhstan may get some needed precipitation in the next two weeks to improve soil moisture for spring crop development. Warm weather will continue to minimize the risk of winterkill and some areas may become snow free.

U.S. crops are not likely to experience much change in the next two weeks and the same is true for southeastern Canada.

Overall, weather today will have a neutral bias on market mentality.

Source: World Weather Inc. and FI

 

Source: World Weather Inc. and FI

 

Source: World Weather Inc. and FI

 

Bloomberg Ag Calendar

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

 

 

 

USDA inspections versus Reuters trade range                                            

Wheat       223,994     versus  400000-600000           range

Corn          668,559     versus  500000-900000           range

Soybeans   1,038,840  versus  700000-1300000         range

 

Macros

US Durable Goods (DecP): 2.4% (est 0.4%, prevR -3.1%)

Durable Ex Transportation (DecP): -0.1% (est 0.3%, prevR -0.4%)

 

 

Corn.

·         Corn futures are higher on spreading, in our opinion.  Traders bearish soybeans are hedging by spreading against corn. 

·         The Baltic Dry Index fell 7 points or 1.3 percent to 539, a 4-year low. 

·         President Trump is expected to sign the USMCA on Wednesday. 

·         USDA US corn export inspections as of January 23, 2020 were 668,559 tons, within a range of trade expectations, above 396,613 tons previous week and compares to 968,585 tons year ago. Major countries included Mexico for 265,282 tons, Colombia for 242,281 tons, and Japan for 88,409 tons.

 

Export Developments

• Under the 24-hour reporting system, private exporters sold 124,355 tons of corn for delivery to Mexico during the 2019-20 marketing year.

 

 

Soybean complex.

·         CBOT soybeans and oil are lower after Malaysian palm oil fell 10 percent overnight.  Cases of the coronavirus are booming, and more than 100 deaths are recorded.  While the virus is in its infancy, its tracking much attention. The 10 percent drop in palm oil overnight is incomprehensible.  This might be a buying opportunity. 

·         Brazilian real was slightly stronger at 4.2053.  USD was up 16.  

·         Offshore values are leading CBOT soybean oil 61 points lower and meal $1.10 higher.

·         Rotterdam vegetable oils this morning were down 2-3 euros for nearby soybean oil positions and 20 euros lower for rapeseed oil. Rotterdam meal when imported from SA were unchanged to 2 euros higher. 

·         China is on holiday through Sunday. China cash crush was last 84 cents per bushel. 

·         AmSpec reported January 1-25 palm oil exports down 5.2 percent from the previous period last month to 1.012 million tons.

·         Malaysian palm markets:  

·         USDA US soybean export inspections as of January 23, 2020 were 1,038,840 tons, within a range of trade expectations, below 1,206,140 tons previous week and compares to 944,680 tons year ago. Major countries included China Main for 486,416 tons, Japan for 108,950 tons, and Spain for 71,506 tons.

·         AgRural reported Brazil soybean harvesting at 4.2 percent, below 13 percent at this time year ago.  The slow harvest pace is related to late plantings.  They see a record soybean production of 123.9 million tons. 

 

Oilseeds Export Developments

• Algeria seeks 35,000 tons of soybean meal on Wednesday for shipment by March 15. 

 

Wheat

·         Another risk off session.  US and Paris wheat futures are lower this morning on global food demand fears, yet world import tenders continue to flourish.  Syria and Algeria are in for wheat.   The rebound in prices yesterday off absolute contract lows is an indicator the markets may have seen a short-term bottom.  But prices continue to wan as traders try to get a handle over the spread of the virus.  One bearish aspect for US wheat was a Bloomberg story citing China bought Canadian, French and Australian wheat over the past couple of months.  More than 1 million tons was thought to be procured. 

·         March Paris wheat futures were down 0.25 at 194.00 euros as of early this morning. 

·         USDA US all-wheat export inspections as of January 23, 2020 were 223,994 tons, below a range of trade expectations, below 516,309 tons previous week and compares to 367,604 tons year ago. Major countries included Japan for 81,805 tons, Ecuador for 54,617 tons, and Mexico for 39,908 tons.

 

Export Developments.

• Jordan seeks 120,000 tons of wheat.  They got 4 offers. 
• Algeria seeks 50,000 tons of feed barley on Thursday, valid until Friday, for Feb 16-29 shipment. 
• Syria seeks 200,000 tons of wheat from Russia on February 17 for shipment within 60 days of contract signing. 
• 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.