FW: FI Morning Grain Comments 02/27/20

PDF attached

 

Morning. 
Today is position day.  COVID-19: 82,000+ infected and 2,800+ deaths.  Confirmed cases in South Korea rose to more than 1,750.

 

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Concern
about Argentina drying and rising crop stress potentials over the next couple of weeks will begin influencing market trade in the next few days. There will also be some concern over flooding rain expected in Minas Gerais, Goias, Rio de Janeiro and northeastern
Sao Paulo, Brazil in the next seven days. Some important drying will occur in Brazil before the greater rain falls and that will support second season planting for a while.

            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.

           
U.S. early season planting may be slow this year in the Delta, southeastern states and possibly the lower Midwest because of frequent rain and wet field conditions.

            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: 

Worry
over rising temperatures in the central and southern U.S. Plains over the next couple of weeks might have the markets attention. Wheat will be brought out of dormancy in Texas and Oklahoma along with areas to the east. Cold weather may return later in March
and/or April to bring back freezes which could place some of the crop at risk. Crops in Kansas, Colorado and Nebraska will lose winter hardiness as well.

            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 mixed influence 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

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

 

FND
Delivery Estimates

·        
Corn zero

·        
Soybeans 0-75, bias zero

·        
Meal 250-600

·        
SBO 900-1500

·        
Chicago wheat zero

 

CBOT
registrations

·        
No changes

 

 

 

USDA
Export Sales

·        
USDA export sales for soybeans were again poor of only 339,300 tons. Soybean meal sales were at the low end of expectations, but shipments were good at 276,700 tons.  Soybean oil sales, after a good run over the last month, fell to a low
5,600 tons. SBO shipments were 20,500 tons.

·        
Corn sales were 864,600 tons, down from 1.25 million last week and were at the low end of expectations. 

·        
All-wheat sales slightly improved from the previous week to 381,900 tons but fell below a range of expectations.

·        
Pork sales were 38,900 tons, with China booking 7,200 tons. 

 

 

 

 

Macros

·        
US GDP Annualized (Q/Q) Q4 S: 2.1% (exp 2.1%; prev 2.1%)

·        
US Personal Consumption Q4 S: 1.7% (exp 1.7%; prev 1.8%)

·        
US Durables Goods Orders Jan P: -0.2% (exp -1.5%; R prev 2.9%)

·        
US Initial Jobless Claims Feb-22: 219K (exp 212K; R prev 211K)

–        
Continuing Claims Feb-15: 1724K (exp 1719K; R prev 1733K)

·        
EU Commission: Considering Possible Support Measures For Sectors Hit By Coronavirus, Including Tourism, Cars

·        
Coronavirus Patient In California Was Not Tested For Days – NYT

·        
Goldman Sachs: US Companies Will Generate No Earnings Growth In 2020 If Coronavirus Becomes Widespread

 

 

Corn.

·        
Corn futures
are
lower bias bear spreading despite a sharply weaker USD on coronavirus concerns.  USDA export sales for corn were 864,600 tons, low end of expectations. 

·        
Crude oil was down about $1.40/barrel as of 7:15 CT.  

·        
We estimate SK bought nearly 1.5 million tons of corn this week, including at least two cargos from the US.  

·        
CBOT corn open interest fell 55,969 contracts on Wednesday. 

·        
China has been a big buyer of Ukraine corn in recent weeks and the Ukraine shipping lineup suggests nearly 500,000 tons could end up being shipped during February to China. 

·        
Weekly US ethanol production increased 14,000 barrels to 1.054 million barrels and stocks decreased 63,000 barrels to 24.718 million.  A Bloomberg poll looked production to be up 1,000 stocks to decrease 5,000
barrels.  

·        
The USDA Broiler Report showed eggs set in the US up 3 percent and chicks placed up 3 percent.  Cumulative placements from the week ending January 4, 2020 through February 22, 2020 for the United States were
1.52 billion. Cumulative placements were up 4 percent from the same period a year earlier.

·        
China was looking to sell 20,000 tons of pork from reserves today. 

·        
Yesterday there was a headline stating US President Trump will pare biofuel waivers for oil refineries. Assuming this is for 2019 biofuel waiver applications, one estimate stated the cut could go from 1.43 billion gallons, waived in 2018,
to about 400 million for 2019, but if all big refineries are cut out. 

·        
We don’t look for any CBOT corn deliveries on Friday.  Today is position day. 

 

 

Export
Developments

·        
None reported

 

Soybean
complex.

• Speculation
  Argentina will increase export taxes on oilseeds after they suspended export registrations yesterday sent CBOT meal higher on Wednesday and many interior US locations lifted soybean meal basis by $4-$10/short ton.  But in a risk off session, soybean meal turned
  lower on Thursday, dragging soybeans down with it amid coronavirus concerns. Soybean oil managed to trade higher prior to export sales on unwinding of soybean meal/oil spreads but turned mixed after USDA export sales came in below expectations.  WTI was more
  than a $1.00 lower. 
• Poor
  soybean export sales added to the negative undertone.  Soybean meal was down more than $2.00/short ton. 
  

·        
CBOT open interest was down 20,227 in soybeans, down 19,489 in meal and down 20,474 in soybean oil. 

·        
Brazil’s currency made a new record low on Thursday.  At the time this was written it was at 4.4573. The Argentina peso was again weaker.   

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

·        
It was reported by AgRural Brazil’s soybean harvest late last week was 31 percent complete versus 31 average.  It could be near 50 percent by the weekend. 

·        
FND soybean deliveries are estimated between zero to 75 contracts with a bias of zero, soybean meal 250-600, and soybean oil 900-1500. 

·        
Offshore values are leading CBOT soybean oil 70 points higher and meal $1.50 lower.

·        
Rotterdam vegetable oils this morning were up 4-5 euros for nearby soybean oil positions and up around 17 euros for rapeseed oil. Rotterdam meal when imported from SA were 2-4 euros higher. 

·        
CNGOIC reported China’s soybean crush increased from the previous week despite virus woes. An estimated 1.6-1.8 million tons will be crushed this week.

·        
If it comes to it, China is readying 100,000 ducks to combat a locust invasion. 

·        
China:

·        
China cash crush margins as of this morning, using our calculation, were 133 cents per bushel (130 previous day), compared to 159 cents a week ago and negative 12 cents around this time last year. 

·        
Malaysian palm markets:
 

 

Oilseeds
Export Developments

• None
  reported

 

 

 

Wheat

·        
US wheat was lower as corona virus concerns increase and poor USDA export sales of 381,900 tons.

·        
USD was lower by 40 points earlier this morning.

·        
CBOT Chicago wheat open interest fell 10,201 contracts on Wednesday.

·        
We look for FND Chicago wheat deliveries to be zero. 

·        
Weather conditions in Morocco are poor. Since September 1, rain totals are running at second lowest in 30 years, resulting in barley and wheat yield loss.

·        
Egypt looks to secure 3.5 million tons of local wheat this year. 

·        
May Paris wheat futures were down 1.00 at 188.00 euros as of early this morning.

 

 

Export Developments.

• Tunisia bought 75,000 tons of feed barley on Thursday at $204.29/ton c&f, in three 25,000-ton consignments for shipment between April 1 and May 5, depending
  on origin. 
• Jordan seeks 120,000 tons of wheat on March 3. 
  
• Jordan seeks 120,000 tons of feed barley on March 4. 
  
• Offers: lowest $265.38/ton…Bangladesh seeks 50,000 tons of wheat. 
  
• 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. 
  
• Morocco seeks 354,000 tons of US durum wheat on March 5 for arrival by May 31.
  
• Syria seeks 200,000 tons of wheat from Russia by March 23.  No purchase was made that closed on February 17. 
  

 

Rice/Other

• Indonesia looks to import 130,000 tons of sugar from India. 
  

 

U.S. EXPORT SALES FOR WEEK ENDING 2/20/2020

	CURRENT MARKETING YEAR						NEXT MARKETING YEAR
COMMODITY	NET SALES	OUTSTANDING SALES		WEEKLY EXPORTS	ACCUMULATED EXPORTS		NET SALES	OUTSTANDING SALES
		CURRENT YEAR	YEAR AGO		CURRENT YEAR	YEAR AGO
	THOUSAND METRIC TONS
WHEAT
HRW	111.1	1,859.7	2,534.6	103.5	6,586.6	4,983.5	0.0	87.1
SRW	19.4	363.6	959.1	19.9	1,874.2	1,937.1	1.5	58.2
HRS	201.0	1,537.0	1,440.1	152.5	5,051.3	4,762.4	16.6	122.0
WHITE	50.3	1,110.1	1,254.3	132.1	3,426.2	3,611.9	0.0	20.9
DURUM	0.0	148.4	119.2	0.0	679.8	357.8	50.0	111.0
TOTAL	381.8	5,018.8	6,307.4	408.0	17,618.1	15,652.6	68.1	399.1
BARLEY	0.3	15.5	27.5	0.3	33.7	30.7	0.5	31.0
CORN	864.6	12,377.3	14,030.6	844.7	13,495.9	25,525.3	113.6	1,373.6
SORGHUM	444.5	690.5	99.2	2.3	976.7	643.6	0.0	33.0
SOYBEANS	339.3	4,782.8	13,383.9	597.9	28,937.5	25,499.1	22.1	342.0
SOY MEAL	157.5	3,443.3	3,526.8	276.7	4,399.2	4,965.2	8.6	95.8
SOY OIL	5.6	238.1	188.5	20.5	450.9	320.2	0.0	0.5
RICE
L G RGH	3.1	415.1	349.7	6.2	831.8	651.0	0.0	0.0
M S RGH	0.0	42.8	17.4	0.0	17.5	23.1	0.0	0.0
L G BRN	0.2	11.5	5.3	0.1	33.2	27.8	0.0	0.0
M&S BR	0.1	57.2	88.0	3.6	33.5	53.0	0.0	0.0
L G MLD	2.6	107.9	89.3	2.0	593.1	535.5	0.0	0.0
M S MLD	46.3	174.5	181.9	23.3	369.0	301.6	0.0	0.0
TOTAL	52.3	809.0	731.7	35.2	1,878.1	1,592.0	0.0	0.0
COTTON		THOUSAND RUNNING BALES
UPLAND	214.6	7,080.1	6,591.4	324.1	6,567.3	5,350.0	198.9	1,482.9
PIMA	28.1	237.0	219.8	18.2	241.1	298.9	0.0	35.3

 

Export Sales Highlights   

This summary is based on reports from exporters for the period February 14-20, 2020.

Wheat:  Net sales of 381,800 metric tons for 2019/2020 were up 10 percent from the previous week, but down
23 percent from the prior 4-week average.  Increases primarily for Japan (116,800 MT, including decreases of 300 MT), the Philippines (76,000 MT), Indonesia (55,000 MT switched from unknown destinations), Thailand (45,200 MT, including decreases of 1,800 MT),
and Peru (43,400 MT), were offset by reductions primarily for unknown destinations (22,500 MT).  For 2020/2021, net sales of 68,100 MT for unknown destinations (50,000 MT), Japan (16,600 MT), and Honduras (2,000 MT), were offset by reductions for Colombia
(500 MT).  Exports of 408,000 MT were down 32 percent from the previous week and 5 percent from the prior 4-week average.  The destinations were primarily to Mexico (88,300 MT), Japan (87,900 MT), Sri Lanka (68,200 MT), the Philippines (65,000 MT), and Bangladesh
(58,400 MT). 

Corn:  Net sales of 864,600 MT for 2019/2020 were down 31 percent from the previous week and 26 percent from
the prior 4-week average.  Increases primarily for Japan (316,700 MT, including 95,200 MT switched from unknown destinations), Mexico (162,300 MT, including 66,000 MT switched from unknown destinations and decreases of 75,900 MT), Costa Rica (146,600 MT),
Colombia (104,500 MT, including 37,000 MT switched from unknown destinations), and South Korea (67,100 MT), were offset by reductions for unknown destinations (111,500 MT).  For 2020/2021, net sales of 113,600 MT were for Mexico (97,600 MT), unknown destinations
(13,000 MT), and Japan (3,000 MT).  Exports of 844,700 MT–a marketing-year high–were up 11 percent from the previous week and 20 percent from the prior 4-week average.  The destinations were primarily to Mexico (278,700 MT), Colombia (224,700 MT), Japan
(155,500 MT), Guatemala (62,200 MT), and Honduras (59,600 MT). 

Optional Origin Sales:  For 2019/2020, new optional origin sales of 65,000 MT were reported for South Korea.  The current outstanding balance of 649,900 MT is for South Korea (531,000
MT), Israel (60,000 MT), and Egypt (58,900 MT).

Barley: For 2019/2020, total net sales of 300 MT were for Japan.  For 2020/2021, total net sales of 500 MT were for Japan.  Exports of 300
MT were down 19 percent from the previous week and 66 percent from the prior 4-week average.  The destination was Japan.

Sorghum:  Net sales of 444,500 MT for 2019/2020–a marketing-year high–were up noticeably from the previous
week and from the prior 4-week average.  Increases were primarily for unknown destinations (324,200 MT), China (119,000 MT), and Mexico (1,100 MT, including decreases of 200 MT).  Exports of 2,300 MT were down 97 percent from the previous week and from the
prior 4-week average.  The destination was Mexico.

Rice:  Net sales of 52,300 MT for 2019/2020 were down 46 percent from the previous week and 39 percent from the prior 4-week average.  Increases were
primarily for Japan (39,200 MT), Israel (4,100 MT), Mexico (2,600 MT), Guatemala (1,500 MT), and Canada (1,500 MT). 
Exports of 35, 200 MT were down 64 percent from the previous week and 49 percent from the prior 4-week average.  The destinations were primarily to Japan (15,400 MT), El Salvador (5,600 MT), South Korea (3,500 MT),
Canada (2,100 MT), and Jordan (1,900 MT).

Exports for Own Account:  For 2019/2020, exports for own account totaling 100 MT to Canada, were applied to new or outstanding sales.

Export Adjustments:
 Accumulated exports of long grain rough rice to Venezuela were adjusted down 10,000 MT for week ending February 13^th.  The exports
were reported in error and included in this week’s report.

Soybeans:  Net sales of 339,300 MT for 2019/2020 were down 31 percent from the previous week and 38 percent from the prior 4-week average.  Increases
primarily for Japan (108,200 MT, including 54,900 MT switched from unknown destinations and decreases of 2,000 MT), China (71,700 MT, including 66,000 MT switched from unknown destinations), Costa Rica (69,500 MT), Germany (66,000 MT), and South Korea (58,400
MT, including 55,000 MT switched from unknown destinations), were offset by reductions for unknown destinations (176,400 MT).  For 2020/2021, net sales of 22,100 MT were for Mexico (21,000 MT) and Japan (1,100 MT).  Exports of 597,900 MT were down 38 percent
from the previous week and 42 percent from the prior 4-week average.  The destinations were primarily to Mexico (102,900 MT), Egypt (94,000 MT), China (68,700 MT), Germany (66,000 MT), and South Korea (60,300 MT). 

Exports for Own Account:  For 2019/2020, the current exports for own account outstanding balance is 2,100 MT, all Canada.

Export Adjustments:
 Accumulated exports of soybeans to the Netherland were adjusted down 65,999 MT for week ending January 30^th.  The correct destination is Germany and is included in this week’s report.  

Soybean Cake and Meal:  Net sales of 157,500 MT for 2019/2020 were down 7 percent from the previous week and 40 percent from the prior 4-week average. 
Increases primarily for Colombia (64,400 MT, including decreases of 8,300 MT), the Philippines (24,300 MT), Costa Rica (16,700 MT), Honduras (14,400 MT, including 5,600 MT switched from unknown destinations, 5,000 MT switched from El Salvador, and decreases
of 100 MT), and Canada (13,200 MT, including decreases of 300 MT), were offset by reductions primarily for unknown destinations (11,600 MT) and El Salvador (5,100 MT).  For 2020/2021, total net sales of 8,600 MT were for Costa Rica.  Exports of 276,700 MT
were up 17 percent from the previous week and 28 percent from the prior 4-week average.  The destinations were primarily to the Philippines (49,500 MT), Colombia (39,900 MT), Peru (32,100 MT), Morocco (30,700 MT), and Honduras (28,500 MT).

Soybean Oil: 
Net sales of 5,600 MT for 2019/2020 primarily for Guatemala (3,200 MT), Morocco (3,000 MT switched from unknown destinations), Colombia (1,300 MT), Venezuela (500 MT), and the Dominican Republic (500 MT, including
decreases of 100 MT), were offset by reductions for unknown destinations (3,000 MT) and Canada (100 MT).  Exports of 20,500 MT were down 77 percent from the previous week and 24 percent from the prior 4-week average.  The destinations were primarily to the
Dominican Republic (9,500 MT), Colombia (8,700 MT), Mexico (1,800 MT), and Canada (300 MT). 

Cotton:  Net sales of 214,600 RB for 2019/2020 were down 9 percent from the previous week and 32 percent
from the prior 4-week average.  Increases primarily for Vietnam (70,200 RB, including 1,100 RB switched from Bangladesh and decreases of 800 RB), China (39,600 RB, including decreases of 33,000 RB), Pakistan (35,800 RB, including decreases of 100 RB), Turkey
(26,900 RB), and Indonesia (19,200 RB, including 700 RB switched from Japan and decreases of 1,400 RB), were offset by reductions primarily for Japan (4,600 RB) and Honduras (400 RB).  For 2020/2021, net sales of 198,900 RB were primarily for Vietnam (176,000
RB), Indonesia (9,700 RB), El Salvador (4,900 RB), Mexico (3,400 RB), and China (2,200 RB).  Exports of 324,100 RB were down 14 percent from the previous week 15 percent from the prior 4-week average.  Exports were primarily to Vietnam (88,100 RB), Pakistan
(83,800 RB), China (32,900 RB), Turkey (25,400 RB), and Indonesia (14,700 RB).  Net sales of Pima totaling 28,100 RB were up noticeably from the previous week and from the prior 4-week average.  Increases primarily for China (12,100 RB), India (6,100 RB),
Hong Kong (2,600 RB), Egypt (2,100 RB), and Pakistan (2,000 RB), were offset by reductions for Switzerland (400 RB) and Japan (100 RB).  Exports of 18,200 RB were up 79 percent from the previous week and up noticeably from the prior 4-week average.  The primary
destinations were India (7,900 RB), Pakistan (2,900 RB), Bahrain (2,000 RB), Bangladesh (1,600 RB), and Vietnam (900 RB). 

Exports for Own Account:  For 2019/2020, exports for own account totaling 3,600 RB to Vietnam were applied to
new or outstanding sales.  The current exports for own account outstanding balance of 30,300 RB is for Indonesia (17,900 RB), Bangladesh (5,300 RB), India (3,400 RB), China (2,500 RB), Vietnam (800 RB),
and Malaysia (400 RB).

Hides and Skins:
Net sales of 368,600 pieces for 2020 were up 48 percent from the previous week and 42 percent from the prior 4-week average.  Increases primarily for Thailand (99,200 whole cattle hides, including decreases of 800 pieces), China (89,200 whole cattle hides,
including decreases of 14,700 pieces), Mexico (81,900 whole cattle hides, including decreases of 6,400 pieces), South Korea (46,100 whole cattle hides, including decreases of 1,800 pieces),  Taiwan (38,400 whole cattle hides, including decreases of 400 pieces),
and Italy (1,500 kip skins), were offset by reductions for Italy (1,600 calf skins) and Brazil (400 whole cattle hides).  Exports of 327,300 pieces reported for 2020 were down 22 percent from the previous week and 26 percent from the prior 4-week average. 
Whole cattle hide exports were primarily to China (123,100 pieces), South Korea (68,200 pieces), Mexico (67,800 pieces), Thailand (29,600 pieces), and Taiwan (13,500 pieces).  Whole kip skins exports of 5,700 pieces were to Italy (2,900 kip skins) and Belgium
(2,800 kip skins).

 

Net sales of 123,900 wet blues
for 2020 were up 18 percent from the previous week and 36 percent from the prior 4-week average.  Increases primarily for Vietnam (55,200 unsplit), Italy (43,200 unsplit and 1,500 grain splits), China (18,900 unsplit, including decreases of 100 grain splits),
Mexico (1,200 unsplit and 800 grain splits), and Thailand (3,100 unsplit), were offset by reductions for Taiwan (800 unsplit).  Exports of 176,000 wet blues for 2020 were up 21 percent from the previous week and 35 percent from the prior 4-week average.  The
destinations were primarily to Italy (39,200 unsplit and 7,100 grain splits), Vietnam (43,300 unsplit and 1,300 grain splits), Thailand (36,600 unsplit), China (30,600 unsplit and 5,700 grain splits), and Mexico (3,800 unsplit).
Net sales reductions of splits, 8,500 pounds for 2020, were for Vietnam.  Exports of 446,900 pounds were to Vietnam.

 

Beef:
Net sales of 13,900 MT reported for 2020 were down 28 percent from the previous week and from the prior 4-week average.  Increases were primarily for Japan (5,300 MT,
including decreases of 300 MT), South Korea (2,100 MT, including decreases of 400 MT), Mexico (1,600 MT, including decreases of 100 MT), Canada (1,300 MT, including decreases of 100 MT), and Taiwan (1,100 MT, including decreases of 100 MT).  Exports of 17,800
MT were down 1 percent from the previous week, but up 2 percent from the prior 4-week average.  The destinations were primarily to Japan (5,700 MT), South Korea (5,000 MT), Mexico (2,100 MT), Taiwan (1,400 MT), and Canada (1,400 MT).

Pork:
Net sales of 38,900 MT reported for 2020 were up 64 percent from the previous week and 34 percent from the prior 4-week average.  Increases were primarily for Mexico (11,800 MT), South Korea (8,800 MT), China
(7,200 MT), Japan (3,300 MT), and Canada (1,600 MT).  Exports of 42,500 MT
were up 1 percent from the previous week, but down 1 percent from the prior 4-week average.  The destinations were primarily to China (15,700 MT), Mexico (10,900 MT), Japan (5,800 MT), South Korea (3,300 MT), and Canada (2,500 MT).