FW: FI Morning Grain Comments 02/26/20

PDF attached

 

Morning. 
Thursday is position day.  COVID-19: 81,190+ infected and 2,765+ deaths

 

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

South
America weather remains favorable, but there may be a few more concerns today over net drying in Argentina and a wet bias from center south through center west Brazil during the next couple of weeks. No serious weather anomalies are expected in this week,
but rain will be needed in Argentina and far southern Brazil during March.

            Southeast
Asia weather is quite varied. World Weather, Inc. anticipates an erratic shower and thunderstorm pattern in March supporting early season moisture boosting.

           
Winter grain and oilseed crops will remain favorably rated and poised for improvement in the spring in China and southeastern Europe. India’s winter crops are expected to perform well this year because of greater than usual rainfall.

     
      South Africa will get some timely rainfall along with parts of Australia to maintain a favorable outlook. With that said, eastern Australia production has not improved much, but some sorghum has received supplemental rainfall recently.

            Overall,
weather today will likely produce a neutral to slightly bullish bias.

 

MARKET
WEATHER MENTALITY FOR WHEAT: 

There
is still not much risk to winter wheat from adverse weather for a while. Frost and freezes in the southeastern United States likely burned back some new vegetative development, but no permanent harm likely came to the region’s crops. Some additional moisture
will fall early this week in the central U.S. Plains, although amounts will be light in same areas that have been drier biased for a while, including western Kansas, eastern Colorado and neighboring areas.

           
Russia crops are going to come into spring favorably moist except in the far south where greater rain will be needed. Kazakhstan will also need greater rain in the spring while Ukraine already has enough moisture to induce some improvement just as soon as
seasonal warming arrives.

            North
Africa’s outlook has not changed for Morocco, but there is a little more rain slated for Tunisia and northeastern Algeria over the next two weeks. No general soaking of rain is expected, but any showers would be welcome.

           
Australia’s winter small grains will not be planted prior to late April which leaves plenty of time for improved weather and soil conditions.

            India’s
wetter outlook over the next two weeks will further ensure a significantly large-sized winter crop.

            France
and Spain need to warm up along with Italy to support spring planting and to stimulate early season crop development when weather conditions improve.

           
Overall, weather today will likely maintain a neutral environment for wheat trading.

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

WEDNESDAY,
FEB. 26:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am (26 feb 2100)

THURSDAY,
FEB. 27:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, 8:30am
• Port
  of Rouen data on French grain exports
• International
  Grains Council monthly market report

FRIDAY,
FEB. 28:

• 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.
  agricultural prices paid, received, 3pm
• AmSpec,
  Intertek, SGS palm oil export data for Feb. 1-28
• EARNINGS:
  Olam, Golden Agri, Sime Darby

Source:
Bloomberg and FI

 

CBOT
registrations

·        
No changes

 

 

 

Macros

·        
US President Trump To Give A News Conference At 6PM ET On Coronavirus

·        
The U.S. Centers for Disease Control and Prevention warned Americans to prepare for an outbreak at home.

 

 

Corn.

·        
Corn futures
are
near unchanged as traders try to figure in pricing amid lower outside energy markets and recent surge of corn buying across the globe.  We estimate SK bought at least seven cargos of corn so far this week. 

·        
CBOT corn open interest fell 6,717 contracts on Tuesday. 

·        
Crude oil was down about $0.80/barrel as of 6:45 CT.  

·        
There is already talk of an interest rate cut for the Eurozone and US (June) due to economic uncertainty from the global trade disruptions caused by the coronavirus.

·        
South Africa’s CEC initial estimate for corn production was 14.560 million tons, just above a Reuters poll of 14.504 million tons, and up from 11.275 million tons in 2019. 8.287 (7.99 est.) million was estimated
for white corn and 6.273 (6.52 est.) million for yellow. 

·        
There was talk China bought US sorghum this week. 

·        
China looks to sell 20,000 tons of pork from reserves on February 27. 

·        
Vietnam culled over 100,000 birds since January 1 after discovering cases of H5N1 and H5N6 bird flu.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 1,000 at 1.041 million barrels from the previous week and stocks to decrease 5,000 barrels to 24.776 million.  

 

Export
Developments

·        
South Korea’s NOFI group bought 67,000 tons of corn from South America at around $212.48 a ton c&f for arrival in South Korea around June 20.  Yesterday they paid $208.95 for June 30 arrival. 

 

 

Soybean
complex.

• CBOT
  soybeans and
  soybean meal were struggling to the upside early this morning. Soybean oil was slightly lower on lower WTI crude oil and other energy markets. 
  

·        
London gas oil was down sharply this morning.

·        
Brazil’s currency made a new record low on Wednesday. 

·        
Southern Brazil will see much needed rain during the balance of this week. 

·        
Offshore values are leading CBOT soybean oil 7 points higher and meal $0.40 lower.

·        
Rotterdam vegetable oils this morning were down 5-6 euros for nearby soybean oil positions and down 7 euros for rapeseed oil. Rotterdam meal when imported from SA were mixed. 

·        
China:

·        
Heilongjiang will provide subsidies to local soy processors. The program will last for three years. 

·        
China cash crush margins as of this morning, using our calculation, were 130 cents per bushel (127 previous day), compared to 159 cents a week ago and negative 12 cents around this time last year. 

·        
Indonesia looks to increase its palm oil export tax to boost domestic biodiesel production and consumption.  The tax is currently set at $50 percent ton. 

·        
Malaysian palm markets:
 lowest
since late October 2019

·        
Yesterday there was a rumor Argentina may increase grain and oilseed export taxes by 3 percent, which is unfavorable for producers that reside in the northern growing areas. Argentina was closed for holiday
today.  Much of Brazil was also on holiday. 

 

Oilseeds
Export Developments

• None
  reported

 

Wheat

·        
US wheat was lower early in Chicago, unchanged to mixed in KC and higher in Minneapolis. 

·        
USD was higher by 17 points earlier this morning.

·        
CBOT Chicago wheat open interest fell 16,116 contracts on Tuesday.

·        
Ukraine grain exports topped 40 million tons so far this marketing year, up 23 percent from same period year ago.  

·        
May Paris wheat futures were up 0.25 at 188.75 euros as of early this morning.

 

Export Developments.

·        
10 participants: Jordan seeks 120,000 tons of feed barley for June-July shipment.  

• Syria seeks 200,000 tons of wheat from Russia by March 23.  No purchase was made that closed on February 17. 
  
• South Korean flour millers bought around 85,000 tons of US milling wheat for shipment between May 1-31.
  
• Tunisia seeks 75,000 tons of feed barley on Thursday, Feb. 27, in three 25,000-ton consignments for shipment between April 1 and May 5, depending on origin. 
  
• Japan in an SBS import tender received no offers for 120,000 tons of feed wheat and 200,000 tons of feed barley for arrival in Japan by July 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 March 4. 
  
• Bangladesh seeks 50,000 tons of wheat by February 27. 
  
• Morocco seeks 354,000 tons of US durum wheat on March 5 for arrival by May 31.
  

 

Rice/Other

• None reported.