FW: FI Morning Grain Comments 02/11/20

PDF attached

 

Morning.
Look for a choppy session ahead of USDA report (estimates attached).  Algeria, Egypt, Jordan, and talk Saudi Arabia (soon) are in for wheat.  SK is in for corn.  Conab soybean production fell short of expectations by 1.1MMT. China left their 2019-20 soybean
and corn balance sheets unchanged from the previous month. 

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Not
much has changed overnight. Favorable soil moisture is present in Argentina, Brazil, South Africa, India and some eastern Australia locations which should support crop development.  There is still some concern over harvest conditions in early season soybean
areas of Brazil which may lead to more delay in second season corn planting.

More
rain will fall this week in northern and eastern Europe and from there to Ukraine and that will improve early season crop development potentials for areas that were too dry last autumn.

China’s
winter crops are still rated favorably with a big potential for improving rapeseed conditions in the early weeks of spring after recent weeks of rain.

India’s
winter crops are still poised to perform quite favorably, despite a drier biased outlook for the next ten days.

Southeast
Asia crops are still rated well, despite erratically distributed rainfall in recent weeks.

Eastern
Australia sorghum conditions have improved, but drought remains in key production areas and much more rain will be needed before winter planting of canola begins in late April. Summer crop development has improved, but it will still be a very small crop.

South
Africa crop conditions are still rated quite favorably with little change likely, despite some net drying for a while.

            Today’s
weather will have a mixed influence on market mentality.

 

MARKET
WEATHER MENTALITY FOR WHEAT: 

Many
of the winter crop areas in the world that experienced poor crop establishment because of dryness last autumn have seen some timely precipitation in recent weeks. The moisture should help improve winter crop establishment prior to reproduction this spring.
There has also been very little winterkill this year and that should be supporting larger crops.

            The
biggest dry concern today is in North Africa and in particular southwestern Morocco where durum wheat and barley production has been cut. There is potential for larger small grain losses from North Africa if improved rainfall does not occur soon. Spain and
Portugal are also drying out, but have adequate subsoil moisture for now.

           
Overall, despite market performance of late, there is still no good weather related reason for futures price appreciation and some caution is warranted there.

Today’s
weather will maintain a low impact 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

 

 

 

Bloomberg
Ag Calendar

TUESDAY,
FEB. 11:

• USDA’s
  monthly World Agricultural Supply and Demand (Wasde) report, noon
• France
  agriculture ministry gives estimate for 2020 winter grain and rapeseed plantings
• China
  agriculture ministry’s (CASDE) supply, demand monthly report
• Brazil
  Conab soybean and corn yield, area and production
• Sao
  Martinho Earnings Conference Call, Sao Paulo
• HOLIDAY:
  Japan

WEDNESDAY,
FEB. 12:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• FranceAgriMer
  monthly cereals balance sheet

THURSDAY,
FEB. 13:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, 8:30am
• Giant
  pulp maker Suzano holds investor day in Sao Paulo
• Brazil’s
  grain exporter group Anec holds conference on 2019-20 crop outlook

FRIDAY,
FEB. 14:

• 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
• FranceAgriMer
  crop conditions – French crops office expected to resume crop-conditions reports after winter break
• New
  Zealand food prices
• Biosev
  holds analyst conference call to discuss 4Q earnings.

Source:
Bloomberg and FI

 

 

 

 

CBOT
registrations

·        
Ethanol down 22 to 84

 

 

 

USDA
inspections versus Reuters trade range                                            

Wheat      
523,713     versus  300000-600000           range

Corn         
769,390     versus  500000-800000           range

Soybeans  
603,852     versus  700000-1350000         range

 

China
CASDE:  They
left unchanged their 2019-20 balance sheets for major ag commodities but did mention coronavirus did have a short-term impact on crop supplies.  Corn sales had been significantly slower, according to the Ministry of Agriculture and Rural Affairs.  Edible oils
production was adjusted for 2018-19, down 3.5 million tons to 21.92 million tons. 

 

 

 

 

Corn.

·        
Corn futures are
lower on ongoing demand concerns for China and large Brazil corn production prospects.  SK is in for corn. 

·        
China left their 2019-20 soybean and corn balance sheets unchanged from the previous month. 

·        
Conab estimated Brazil’s corn production 1.8 million tons higher from last month, but 0.3MMT below a Bloomberg trade guess.  They are at 100.5 million tons versus 100.0 million tons year ago. 

·        
1000+ deaths and more than 43,000 cases of coronavirus was recorded. 
https://www.bbc.com/news/world-asia-china-51453848

·        
Open Interest in corn was down 9,469 contracts.

·        
Goldman Roll – day 3

·        
UkrAgroConsult pegged Ukraine 2019-20 corn exports at 29.8 million tons, up 500,000 from previous estimate.  USDA is at 30.5 million tons.

·        
USDA US corn export inspections as of February 06, 2020 were 769,390 tons, within a range of trade expectations, above 562,380 tons previous week and compares to 752,758 tons year ago. Major countries included
Mexico for 216,138 tons, Japan for 197,770 tons, and Colombia for 189,695 tons.

·        
President Trump’s 4.8 billion USD budget hinted cuts to crop insurance. See table S-6 from link below.  It looks like the objective is to cut agriculture support programs by 57.7 billion dollars over a 10-year
period.  

https://www.govinfo.gov/content/pkg/BUDGET-2021-BUD/pdf/BUDGET-2021-BUD.pdf

 

Export
Developments

• South
  Korea’s Major Feedmill Group (MFG) seeks up to 140,000 tons of corn for May arrival. We heard they got offers between $211.50 to $221/ton.  Reuters noted lowest offer was $212.95/ton.  Details of the tender are as follows:

   
TONNES(M/T)        ARRIVAL/PORT

   
55,000-70,000      May 19/ Pyeongtaek and Gunsan

   
55,000-70,000      May 27/ Pyeongtaek and Gunsan

 

Hubbs,
T. "Corn Consumption Showing Improvement." farmdoc daily (10):24,  Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, February 10, 2020.

https://farmdocdaily.illinois.edu/2020/02/corn-consumption-showing-improvement.html?utm_source=farmdoc+daily+and+Farm+Policy+News+Updates&utm_campaign=cdcbd62346-EMAIL_CAMPAIGN_2018_09_04_04_03_COPY_01&utm_medium=email&utm_term=0_2caf2f9764-cdcbd62346-173649469

 

 

Soybean
complex.

·        
Soybeans were unchanged to slightly lower, meal $0.60 higher and soybeans oil 5 points lower (nearby).  Palm oil futures were down 2 percent and cash slipped $14.50. 

·        
Conab estimated Brazil’s soybean crop 1.0 million tons higher from previous month at 123.3 million tons, 1.1 million tons below a Bloomberg trade guess and above 115.0 million tons produced last year. 

·        
Cordonnier increased his Brazil 2019-20 soybean crop estimate by 1 million tons to 124 million tons. 

·        
China left their 2019-20 soybean and corn balance sheets unchanged from the previous month. 

·        
China pork prices are near a record high on tight inventories.  Pork prices in January are up 116% from a year earlier, according to data from the National Bureau of Statistics.

• May
  CBOT crush was up 1.0 at 98.25. 

·        
Open Interest in soybeans was up 2,542 contracts. 

·        
The US$ is higher and the lower. The Brazilian Real was stronger at 4.3170 after hitting an all-time low on Monday.

·        
Offshore values are leading CBOT soybean oil 5 points higher and meal $0.40 lower. 

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

·        
China:

·        
China cash crush margins as of today, using our calculation, was 124 cents per bushel (130 previous), compared to 139 cents more than a week ago and 40 cents around this time last year. 

·        
Malaysian palm markets:
 

·        
USDA US soybean export inspections as of February 06, 2020 were 603,852 tons, below a range of trade expectations, below 1,373,502 tons previous week and compares to 1,150,863 tons year ago. Major countries
included China Main for 135,335 tons, Bangladesh for 85,972 tons, and Mexico for 83,890 tons.

·        
The European Union reported soybean import licenses since July 1 at 8.348 million tons, below 8.781 million tons a year ago, a 5 percent decrease. European Union soybean meal import licenses are running at
11.168 million tons so far for 2019-20, above 10.555 million tons a year ago. EU palm oil import licenses are running at 3.278 million tons for 2019-20, down from 3.953 million tons a year ago, or down 17 percent.  European Union rapeseed import licenses since
July 1 were 4.052 million tons, up 43 percent from 2.835 million tons from the same period a year ago.

 

Oilseeds
Export Developments

• Results
  awaited: South Korea’s Nonghyup Feed Inc. (NOFI) seeks up to 13,000 tons of palm kernel meal expellers, 14,000 tons of copra meal and 8,000 tons of corn gluten feed, on Feb. 11 for arrival in South Korea in March and April.
  
• Egypt
  seeks at least 3,000 tons of soybean oil and 2,000 tons of sunflower oil on Thursday for March 24-April 15 arrival. 
  

 

Wheat

·        
Chicago wheat futures are lower despite a rise in global import tenders.  Algeria, Egypt, and Jordan are/were in for wheat and there is talk Saudi Arabia might be in soon for wheat.  KC was mixed and MN slightly
lower.

·        
Lowest offer for Egypt’s import tender for March 21-31 shipment was $228.29 a ton for 60,000 tons of Romanian origin. 

·        
March Paris wheat futures were down 0.75 at 194.00 euros as of early this morning.

·        
UkrAgroConsult estimated Russia will produce 80.2 million tons of wheat in 2020-21 versus 74.6 million ton estimate for 2018-19. 

·        
Texas winter wheat was rated 24 percent for the combined good and excellent condition.  Last week it was at 20 percent.  TX wheat was at 23 percent after the first week of December. 

·        
Southeast Queensland and northeastern New South Wales in Australia are expected to get additional rain this week after seeing rain last week. 

·        
France’s AgMin lowered its estimate for the soft wheat area to 4.70 million hectares from 4.73 million hectares, down 5.6% from the 2019 area.  For last year, they increased its soft wheat production by 112,000
tons to 39.58 million tons. 

·        
The European Union granted export licenses for 208,000 tons of soft wheat exports, bringing cumulative 2019-20 soft wheat export commitments to 17.542 MMT, up from 10.153 million tons committed at this time
last year, a 73 percent increase.  Imports are down 53 percent from year ago at 3.119 million tons.

·        
USDA US all-wheat export inspections as of February 06, 2020 were 523,713 tons, within a range of trade expectations, above 435,720 tons previous week and compares to 562,706 tons year ago. Major countries
included Bangladesh for 86,995 tons, Nigeria for 78,055 tons, and Philippines for 65,785 tons.

 

Export
Developments.

·        
Lowest offer for Egypt’s import tender for March 21-31 shipment was $228.29 a ton for 60,000 tons of Romanian origin.  We didn’t see France in the lineup.  On Jan. 30 GASC bought 180,000 tons of French wheat.

·        
Algeria bought up to 660,000 tons of soft milling wheat for April and/or March shipment at about $237.50 and $237.75 a ton c&f.

• Jordan
  bought 60,000 tons of optional origin wheat at $224/ton for LH Aug shipment.  
  

• Jordan
  seeks 120,000 tons of optional origin animal feed barley on Feb. 12, at various shipment periods thought to be May 1-15, May 16-31, June 1-15 and June 16-30.
• Japan
  in an SBS import tender seeks 120,000 tons of feed wheat and 200,000 tons of feed barley for arrival in Japan by July 30, on Feb. 12. 
  
• Syria
  seeks 200,000 tons of wheat from Russia on February 17 for shipment within 60 days of contract signing. 
  
• Turkey’s
  TMO seeks around 250,000 tons of wheat and 50,000 tons of durum on Feb. 18 for March shipment.
  
• The
  Philippines might be in for wheat soon.

 

Rice/Other

·        
Results awaited: Mauritius has delayed the deadline for to buy up to 6,000 tons of long grain white rice to Feb. 10, for delivery between May 1 and July 31.

·        
Turkey’s TMO seeks 20,000 tons of rice on Feb. 12 for shipment between Feb. 19 and April 6.