FW: FI Morning Grain Comments 02/12/20

PDF attached

 

Morning. 
Global tenders increased especially in soybean meal and corn.  The pace of the coronavirus spread is slowing but deaths continue to rise. China officials are asking local crushers to resume operations, if they have not already. 

 

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

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

 

Bloomberg
Ag Calendar

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

・        
No changes

 

 

 

 

Macros

 

Corn.

・        
Corn futures are
lower on follow through selling and lower wheat, despite a spike in South Korean import business. 

・        
South Korea bought at least 261,000 tons of corn overnight.  One source question if it was up to 330,000 tons.  They were also thought to have picked up a cargo of feed wheat.  Much of the corn was also said
to be sourced from origins other than US PNW due to quality problems. 

・        
1115+ deaths and more than 44,000 cases of coronavirus was recorded. 
https://www.bbc.com/news/world-asia-51470363

・        
Open Interest in corn was up 8,392 contracts.

・        
Goldman Roll C day 4

・        
Brazil internal corn prices are near a 4-year high due to strong demand by feed end users, good export demand and higher consumption for industrial use.  FAS Attaché updated their Brazil corn S&D (link below). 
Earlier today USDA left their Brazil corn production estimate unchanged at 101.0 million tons but increased domestic feed use by 0.5MMT to 56.5 million, up from 55.4 million tons in 2018-19. 

・        
China’s state reserve will sell 20,000 tons of frozen pork on Feb. 14.

・        
A Bloomberg poll looks for weekly US ethanol production to be down 16,000 at 1.065 million barrels from the previous week and stocks to increase 132,000 barrels to 23.606 million.

 

 

Export
Developments

• South
  Korea’s Feed Leaders Committee (FLC) bought about 65,000 tons of optional origin corn at $212.23 a ton c&f for arrival in South Korea around May 20.
  
• South
  Korea’s Major Feedmill Group (MFG) bought 130,000 tons of optional origin corn at $213.25 and $214.99/ton for arrival in South Korea in the second half of May. 
  
• South
  Korea’s KFA bought about 66,000 tons of optional origin yellow corn at around $212.95 a ton c&f for arrival in South Korea around May 20.
  
• Algeria’s
  ONAB seeks 35,000 tons of optional origin corn on Feb. 13 for shipment in the second half of March

 

Soybean
complex.

・        
Soybeans are unchanged to slightly lower, meal lower and SBO 27 higher. Look for a choppy trade.  There were no 24-hour announcements.   

• We
  heard China booked four new-crop cargos (2021) of Brazil soybeans. 
• May
  CBOT crush was up 0.50 at 97.50. 

・        
Open Interest in soybeans was down 2,087 contracts. 

・        
The US$ is higher and the lower. The Brazilian Real was stronger at 4.3310 after hitting an all-time low during its intraday session Wed.

・        
Offshore values are leading CBOT soybean oil 10 points lower and meal flat. 

・        
Rotterdam vegetable oils this morning were unchanged for nearby soybean oil positions and up 7-8 euros for rapeseed oil. Rotterdam meal when imported from SA were unchanged to 2 euros lower. 

・        
China:

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

・        
India exempted Nepal for refined palm olein oil imports.  They had restricted imports of refined palm oil and palm olein in January. 88,000 tons of refined bleached deodorized palm olein from Nepal were issued
so far.

・        
Malaysian palm markets:
 rebounded
on technical buying

 

Oilseeds
Export Developments

• South
  Korea’s Nonghyup Feed Inc. (NOFI) bought 21k of meal for March/April arrival.
  • 13,000
    tons of palm kernel expeller meal from South East Asia at $161.78 a ton c&f and $159.88 a ton c&f
    
  • 8,000
    tons of corn gluten feed from China at $202.00 a ton c&f and $198.50 a ton c&f.
  • Passed
    on 14,000 tons of copra meal extractors
• South
  Korea’s Feed Leaders Committee (FLC) bought 60,000 tons of soybean meal at about $347.60 a ton c&f for arrival in South Korea around Sept. 10. Origin is unknown. 
  
• South
  Korea’s Major Feedmill Group (MFG) bought about 60,000 tons of soybean meal at around $347.55 a ton c&f for shipment between July 1-31. 
  
• 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 volume on Tuesday was a record at 345,000.

・        
All three US markets are mostly lower on follow through selling.  

・        
Yesterday Egypt’s GASC bought 360,000 tons of Romanian (180k) and Russian (180k) wheat for March 21-31 shipment.

・        
March Paris wheat futures were up 0.50 at 193.00 euros as of early this morning.

・        
FranceAgriMer increased its estimate for non-EU country soft wheat exports to 12.6 million tons from 12.4 million for 2019-20.  Exports to China were increased 0.2MMT to 1.2MMT. 

 

Export
Developments.

• Japan
  seeks 110,565 tons of food wheat from the United States, Canada and Australia on Thursday.

Details
are as follows (in tons):

• We
  heard South Korea may have bought a cargo of feed wheat. 
• 13
  company offers: 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

・        
Thailand set a rice export target of 7.5 million tons for 2020, the lowest in seven years.

・        
South Korea’s Agro-Fisheries & Food Trade Corp. bought 22,222 tons of US rice.  They were looking for 77,778 tons which closed on Jan. 30.

・        
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.