FW: FI Morning Grain Comments 01/31/20

PDF attached

 

Morning.
24-hour
showed 134k corn sold to SK

 

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

South
America weather still looks mostly good, although a close watch on the rain distribution is warranted in Argentina and far southern Brazil during the next few weeks. Recent forecast model runs have been promoting timely rainfall for these areas, but if precipitation
is missed there could be some greater concern over production potential. For now, Brazil is still on target for a huge soybean crop and good early corn crop. Argentina’s corn and soybeans will produce favorably, although not necessarily ideally. Some production
cut has already occurred to early season corn and sunseed in parts of Argentina due to spring dryness.

            Weather
in eastern Australia improved briefly recently due to rain and some additional precipitation is forthcoming this weekend into next week. South Africa will dry down for a while this week raising some potential for mild crop stress especially in western production
areas.

            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 in China 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. A moisture boost is needed by
spring to support 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

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

MONDAY,
FEB. 3:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• Australia
  commodity index, 12:30am
• Brazil
  soybean, sugar, corn, coffee exports
• U.S.
  soybean crush, DDGS production, corn for ethanol, 3pm
• EU
  weekly grain, oilseed import and export data
• Honduras,
  Costa Rica January coffee exports
• International
  Cotton Advisory Committee releases monthly report
• Ivory
  Coast cocoa arrivals

TUESDAY,
FEB. 4:

• U.S.
  Agriculture Economy Barometer Index, 9:30am
• New
  Zealand global dairy trade auction

WEDNESDAY,
FEB. 5:

• Statcan
  Canada wheat, soybean, barley, canola and durum stocks, 8.30am
• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• New
  Zealand ANZ Bank Commodity World Price

THURSDAY,
FEB. 6:

• UN’s
  FAO World Food Price Index, 4am
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, 8:30am

FRIDAY,
FEB. 7:

• 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
• Agricultural
  conference organized by consultancy IKAR, Moscow
• Guatemala
  Coffee Exports

Source:
Bloomberg and FI

 

No
changes in CBOT registrations

 

 

 

 

Bloomberg
bull/bear survey

·        
Soybeans: Bullish: 7 Bearish: 6 Neutral: 12

·        
Corn: Bullish: 8 Bearish: 4 Neutral: 13

·        
Wheat: Bullish: 2 Bearish: 13 Neutral: 10

·        
Raw sugar: Bullish: 5 Bearish: 0 Neutral: 3

·        
White sugar: Bullish: 5 Bearish: 0 Neutral: 3

·        
White-sugar premium: Bullish: 4 Bearish: 0 Neutral: 4

 

Macros

US
Personal Income Dec: 0.2% (exp 0.3%; R prev 0.4%)

–      
   Personal Spending Dec: 0.3% (exp 0.3%; prev 0.4%)

–         
Real Personal Spending Dec: 0.1% (exp 0.1%; prev 0.3%)

US
PCE Core Deflator (M/M) Dec: 0.2% (exp 0.1%; prev 0.1%)

–         
PCE Core Deflator (Y/Y) Dec: 1.6% (exp 1.6%; R prev 1.5%)

–       
  PCE Deflator (M/M) Dec: 0.3% (exp 0.2%; R prev 012%)

–         
PCE Deflator (Y/Y) Dec: 1.6% (exp 1.6%; R prev 1.4%)

US
Employment Cost Index Q4: 0.7% (exp 0.7%; prev 0.7%)

Canadian
GDP (M/M) Nov: 0.1% (exp 0.0%; prev -0.1%)

–         
GDP (Y/Y) Nov: 1.5% (exp 1.4%; prev 1.2%)

Canadian
Industrial Product Price (M/M) Dec: 0.1% (exp 0.0%; R prev -0.1%)

 

 

Corn.

·        
Corn futures were
mixed earlier this morning as traders study the global economic impact of the coronavirus.    

·        
Funds sold about 15,000 corn on Thursday. 

·        
The World Health Organization declared a global health emergency. Death toll was up to 213 in China, while confirmed cases jumped to 9,692.

·        
The European Commission raised their 2019-20 European Union corn import projection to 20 million tons from 19 million previously.  Wheat exports were left unchanged 28 million tons.

 

Export
Developments

• Under
  the 24-hour announcement system, private exporters reported optional origin sales of 134,000 tons of corn for delivery to South Korea during the 2019-20 marketing year.
  
• South
  Korea’s Major Feedmill Group (MFG) bought 69,000 tons of optional origin corn at $214.69 a ton c&f for arrival around May 1.
• South
  Korea’s NOFI bought 68,000 tons of corn at around $213.60 a ton c&f for arrival around May 10.
• South
  Korea’s FLC bought about 65,000 tons of corn at $213.99 a ton c&f for arrival around May 5.
  
• India’s
  MMTC passed on 175,000 tons of GMO-free corn for shipment by Feb. 10. Lowest price offer in the tender was reported to be $226.80 a ton c&f.
  

 

 

 

Soybean
complex.

·        
CBOT soybeans
were trading lower Friday, but losses were limited after prices dropped 8 consecutive days.  Meal was slightly higher and soybean oil 24-27 points lower.  SA soybean crop prospects are large. 

·        
Soybean futures headed for their biggest monthly drop since mid-2018 as the spreading coronavirus upends.  Prices are down about 8% this month.  – Bloomberg

·        
CBOT soybean oil open interest fell 16,549 contracts on Thursday. 

·        
At Least Two-Thirds  of China Economy to Stay Shut Next Week.  – Bloomberg

·        
We are hearing China is not offloading agriculture exports because of the risk on spreading the coronavirus.

·        
The US$ is lower and the is higher. The Brazilian Real is lower again.

·        
the Buenos Aires Grain Exchange increased Argentina’s soybean production forecast by 4% to 53.1 million tons. 

·        
Offshore values are leading CBOT soybean oil 55 points higher (4 higher for the week to date) and meal $0.70 higher ($0.50 higher for the week).

·        
Rotterdam vegetable oils this morning were down 10-11 euros for nearby soybean oil positions and 1 euro lower for rapeseed oil. Rotterdam meal when imported from SA were 2.50-4.00 euros lower. 

·        
Chinese purchases of American soybeans increased to 3.1 million tons in December (well up from year ago), compared with 2.6 million tons the previous month. 

·        
China is on holiday through Sunday, but most normal business will not return until February 10.

·        
China cash crush was last 84 cents per bushel. 

·        
Malaysian palm oil exports fell 7.9 percent to 1.220 million tons from the previous month, according to SGS. 

·        
Malaysian palm markets:
 Malaysia
failed to recoup losses, with January closing down 15%, the most since 2012.

 

Oilseeds
Export Developments

• None
  reported

 

 

 

Wheat

·        
Wheat is lower on virus fears.

·        
March Paris wheat futures were down 0.75 at 191.50 euros as of early this morning. 

·        
Yesterday Egypt bought 180,000 tons of French wheat. 

·        
SovEcon Cuts Russian 2019-20 Wheat Export Estimate to 32.2m Tons – Bloomberg

·        
IKAR looks for this year’s wheat production to reach 79.5 million tons.

·        
Russia’s AgMin sees the 2020 grain crop reaching 125.3 million tons, up from 120.7MMT in 2019.

·        
Australia 2019-20 Wheat Output Seen at 12-Year Low: USDA FAS – Bloomberg   At 15 million tons, this would be down from 17.3 million tons year earlier. 

·        
Ukraine’s 2019 grain production was reported at a record 75.1 million tons versus 70 million tons in 2018, according to latest state statistics service data.  It includes 28.3 million tons of wheat, 35.8 million
tons of corn and 8.9 million tons of barley. 

 

Export
Developments.

• Tunisia
  bought 50,000 tons of feed barley.   Earlier the lowest offer was $211.92/ton c&f. 
  
• Results
  awaited: Algeria seeks 50,000 tons of feed barley on Thursday, valid until Friday, for Feb 16-29 shipment. 
  
• Jordan
  seeks 120,000 tons of wheat on February 4 for August – September shipment. 
  
• Syria
  seeks 200,000 tons of wheat from Russia on February 17 for shipment within 60 days of contract signing. 
  

 

 

Rice/Other

• Result
  awaited: 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.