FW: FI Morning Grain Comments 02/18/20

PDF attached

 

 

Morning. 
US is back from holiday. Wheat is the leader today.  Locust swarms with a 40-mile reach (length) that have been destroying farm crops Africa could now threaten Southwest
Asian countries.  Coronavirus continues to hit selected markets, such and India chicken demand and Indonesia palm export shipments to China.  Truck strikes in Brazil are disrupting port loadings, especially at Santos. 

 

 

Weather

·        
Flooding remains a serious issue across the far southern Delta and Southeast.  

·        
Snow and rain will develop in the southern U.S. Plains Wednesday and Thursday with accumulations of 1 to 4 inches.

·        
A larger central U.S. storm is expected during mid- to late-week next week that will bring significant moisture to the upper Midwest, northern Plains and a part of the western Corn Belt. 

·        
Argentina’s Chaco saw flooding over the weekend where more than 14 inches fell. 

·        
Argentina’s bottom line is mostly favorable.

·        
Brazil crops will all received rain at one time or another during the next two weeks.

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

TUESDAY,
FEB. 18:

• Australian
  crop report from Abares, Canberra
• USDA
  weekly corn, soybean, wheat export inspections, 11am
• New
  Zealand global dairy trade auction

WEDNESDAY,
FEB. 19:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• EARNINGS:
  Marfrig

THURSDAY,
FEB. 20:

• USDA
  Agricultural Outlook – corn, wheat, soy, cotton acreage, 8:20am
• USDA
  milk, read meat production, 3pm
• Malaysia’s
  Feb. 1-20 palm oil exports data
• EARNINGS:
  Wilmar

FRIDAY,
FEB. 21:

• USDA
  outlook — corn, soy, wheat cotton end-stockpiles
• 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
• FranceAgriMer
  weekly update on crop conditions
• U.S.
  Cattle on Feed, 3pm
• EARNINGS:
  Pilgrim’s Pride

Source:
Bloomberg and FI

 

CBOT
registrations

·        
No changes

 

 

 

 

Macros

·        
Euro hit a 34-month low. 

·        
Canada Manufacturing Sales (M/M) Dec: -0.7% (est 0.7% ; prevR -1.0% ; prev -0.6%)

·        
(Reuters) – China will cut some pension contributions and insurance fees to help companies cope with the coronavirus, while firms in Hubei province, the epicenter of the outbreak, won’t have to pay pensions,
jobless and work-injury insurance until June.

·        
China also lowered one key interest rate to pump more funds into their system. 

 

 

Corn.

·        
Corn futures are
higher in part to a strong rally in soybeans and renewed hopes China will buy US agriculture products by March 15. 

·        
CH traded at $3.80 every trading day since January 27. 

·        
Rallies maybe limited on PNW corn tender woes.  Platts reported two South Korean firms (MFG and NOFI) stopped taking offers for US PNW corn due to quality problems.  High levels of broken corn foreign material
(BCFM) was noted. 

·        
High water levels for lower Midwestern rivers continue to slow barge traffic. 

• As
  of Tuesday, China put the overall death toll at 1,868 and 72,436 infections.
  
• Brazil’s
  Mato Grosso was 63 percent complete on corn plantings, above 52 percent for the 5-year average. 
  
• Soybean
  and Corn Advisory:  Estimated the Argentina corn crop at 49.0 million tons, up 1.5 million, and left Brazil unchanged at 100.0 million tons.
  

·        
General Administration of Customs: China removed import restrictions on U.S. poultry and poultry products that were imposed in 2013, 2014 and 2015.  (Bloomberg)

·        
China warned the poultry and product industry may take a hit from coronavirus.  Poultry prices are down hard this year as demand eroded. 

·        
Bulgaria reported a bird flu outbreak (N5N8) at a duck farm in the southern part of the country. 

·        
India officials mentioned demand for chicken dropped over the past three weeks after social media reports speculated the coronavirus was thought to be spread through chickens.  Broiler chicken prices have
fallen to 35 rupees a kg from around 70 rupees in January. 

·        
Zimbabwe plans to import Uganda to make up for a shortfall in consumption. 

 

Export
Developments

·        
South Korea’s MFG bought 135,000 tons of optional origin corn at $211.79/ton c&f for arrival around June 11 and $211.78 for arrival around June 18. 

·        
South Korea’s NOFI bought 66,000 tons of optional origin corn at $212.30/ton c&f for arrival around May 20. 

 

Soybean
complex.

·        
Soybeans and meal are higher this morning after China said they will but some US agriculture products by early March.  A 60,000-ton soybean cargo sale here or there will not be bullish for trade expectations. 
We see more than two million tons as supportive. Anything below that and the trade may again lose optimism China’s pledge may fall short for Phase One trade deal, at least for 2020 expectations. 

·        
China’s central bank on Monday lowered a key interest rate (one-year rate) and injected more liquidity into the system.

·        
Bloomberg noted China was considering US agriculture buying by early March.  They lifted import restriction on US poultry and poultry products. 

• NOPA
  will issue its US January crush today. Reuters
  trade average is 173.7 million bushels, down from 174.8 in December.  End of Jan. stocks are seen at 1.782 billion pounds, above 1.757 billion at the end of December 2019. 
  
• Soybean
  and Corn Advisory:  Increased 2019-20 Brazil soybean crop by 1 million tons to 125 million tons.  Argentina was increased 1 million tons to 54 million. 
  
• The
  US$ is 30 higher and the lower, at the time this was written. The Brazilian Real was weaker at 4.3451, near its all-time low of 4.3829. 
  

·        
Over a two-day period, offshore values are leading CBOT soybean oil 11 points higher and meal $0.10 higher. 

·        
Over a two-day period, Rotterdam vegetable oils this morning were down one euro for nearby soybean oil positions and up 7-8 euros for rapeseed oil. Rotterdam meal when imported from SA were mostly 1-2 euros
higher. 

·        
China:

Monday
changes (from settle)

Tuesday
changes (from settle)

·        
China cash crush margins as of this morning, using our calculation, were 159 cents per bushel, compared to 147 cents a week ago and 8 cents around this time last year. 

• Ukraine
  sunflower exports since August are running at 2.225 million tons, up 61 percent yoy, according to APK Inform. 
  
• Cargo
  surveyor SGS reported month to date February 15 Malaysian palm exports at 529,191 tons, 56,060 tons below the same period a month ago or down 9.6%, and 144,938 tons below the same period a year ago or down 21.5%.  Shipments to the EU were 139,696 tons (167.6k
  Jan 1-15) and China 108,150 tons (68.3k Jan 1-15). 
• AmSpec
  reported 1-15 Feb exports of palm oil at 511,629 tons, down from 569,260 tons during Jan 1-15.     ITS was at 541,444 tons, down 6.7% from 580,421 tons in FH Jan.
  

·        
Malaysian palm markets:
 

Monday
changes (from settle)

Tuesday
changes (from settle)

2,642.00    
-7.00

 

Brazil

• Brazilian
  truck strike on Monday over high diesel prices crippled port operations in Santos. 
  
• Major
  Brazilian ports were scheduled to ship 8.66 million tons of soybeans as of Feb. 14, up from 8.58 million tons a week earlier – Williams via Bloomberg.  6.4 million tons were scheduled to be shipped at this time last year. 
  
• AgRural
  estimated the 2019-20 Brazil soybean production at 125.6 million tons, upward revised from 123.9 million tons in January.  21 percent of the crop had been collected, below 36 percent a year ago and near its 5-year average. 
  
• Soybean
  and Corn Advisory:  increased 2019-20 Brazil soybean crop by 1 million tons to 125 million tons.  Argentina was increased 1 million tons to 54 million. 
  
• Last
  week Abiove estimated the Brazil soybean crop at 123.7 million tons, up from 122.8 previously.  Exports were seen at 73.5 million tons, down from 75 million projected in January.  They look for the crush to end up near 44.5 million tons, up 500,000 from their
  January projection.  Separately, Agroconsult is at 126.3 million tons. 
• Brazil’s
  economic policy manager estimated a long-term coronavirus outbreak could have an economic impact on Brazil but maintained a 2.4 percent growth for 2020. 
  

 

University
of IL: 2020 Soybean Price Prospects Hubbs,
T. "2020 Soybean Price Prospects." farmdoc daily (10):29,  Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, February 17, 2020. farmdocdaily.illinois.edu/wp-content/uploads/2020/02/fdd170220.pdf

 

Oilseeds
Export Developments

• Egypt’s
  GASC seeks 30,000 tons of soybean oil and 10,000 tons of sunflower oil on Thursday for arrival April 10-30. 
  

 

 

 

Wheat

·        
Chicago wheat prices hit a one-week high on technical buying amid tighter global stocks, locust problems in Africa and renewed hopes China will buy US agriculture products after announcing over the weekend
they plan to buy goods from the US by early March.   Not all news is bullish. India estimated a record wheat production for 2019-20. 

·        
ABARES: Australia 2019-20 wheat crop fell to 15.17 million tons, down from 15.85 million tons at the end of 2019, but still above some private estimates.  15.17 million tons puts the crop lowest in 12 years. 

·        
Meanwhile, India projected a record 2019-20 wheat crop of 106.21 million tons, well above the 99-100 benchmark traders see as a break-even.  Domestic wheat consumption for India may end up near 98 million
tons in 2019-20, a record, according to USDA.  2019-20 production was estimated by USDA at 102 million tons, 4.2 million below the India government estimate. 

·        
March Paris wheat was unchanged on Monday.  Today
March
Paris wheat futures were up 1.50 at 195.50 euros as of early this morning.

·        
Ukraine grain exports are running at 38.4 million tons, up 24.5 percent from the same period a year ago, according to the Ministry of Economic Development.  State statistical service office at the end of the
year pegged the Ukraine grain crop at 75.1 million tons. 

·        
APK-Inform has the Ukraine grain crop at 75.08 million tons. 

·        
Russian 12.5 percent protein wheat prices fell to $220/ton, down $6 from the previous week, according to SovEcon.  IKAR showed a $3/ton decrease to $192.00/ton. 

 

Export
Developments.

• Bangladesh
  seeks 50,000 tons of wheat by February 27. 
• Japan
  seeks 93,100 tons of milling wheat on Thursday. 

• Morocco
  seeks 354,000 tons of US durum wheat on March 5 for arrival by May 31.
• Taiwan
  seeks 102,525 tons of US wheat on February 21 for April and/or early May shipment. 
  
• Turkey
  bought at least 155,000 tons of wheat.  Results are still awaited. Lowest offer $222.77/ton c&f: Turkey’s TMO seeks around 250,000 tons of wheat for March shipment.
  
• Turkey
  bought 25,000 tons of barley for 2/26-3/15 loading.  $200.88 c&f was noted. 
  
• Turkey
  bought 50,000 tons of durum for March 1-20 shipment.  $314.00 and $325.75/ton c&f was noted. 
  
• Results
  awaited: 4 offers…Jordan seeks 120,000 tons of wheat, optional origin, on Feb 18.
  
• Results
  awaited: Syria seeks 200,000 tons of wheat from Russia on February 17 for shipment within 60 days of contract signing. 
  
• Jordan
  seeks 120,000 tons of feed barley on Feb 19. Possible shipment periods are 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. 19. 
  

 

Rice/Other

·        
None reported