FW: FI Morning Grain Comments 03/02/20

PDF attached

 

Morning.

Apparently,
China developed a vaccine for ASF. https://www3.nhk.or.jp/nhkworld/en/news/20200302_11/ 

COVID-19:
88,000+ infected and 3,300+ deaths.

Bunge
stopped 143 meal

 

 

 

Weather

WEATHER
ISSUES OF THE DAY

 

• Argentina
  will be left mostly dry and warm for at least another week and the rain advertised for next week does not look like it will be able to seriously replenish lost moisture
  • Temperatures
    will be well above average with highs in the middle 80s through the 90s and some periodic extremes near and above 100 Fahrenheit
  • The
    March weather outlook is offering some relief, but rainfall will continue lighter than usual, but not quite as dry as that of this coming 10 days
  • Argentina’s
    bottom line
    will become more threatening to late season crops as the ground continues to dry out and temperature heat up. Subsoil moisture will carry crops through the week ahead, but widespread rain will be needed a couple of times this month throughout the nation to
    ensure the best late season production potentials. Late double-cropped soybeans, late corn, sorghum and some peanuts will be vulnerable the dry spell. Production potential will be most threatened this weekend into next week except in those few areas that are
    already too dry like southern Buenos Aires and parts of San Luis.

 

• Brazil’s
  south and some areas in center west will experience net drying for the next ten days with some forecast models suggesting two weeks of drier than usual weather
  • Temperatures
    will not be as anomalously warm as those in Argentina, but plenty of sunshine and seasonable temperatures will be quick to deplete topsoil moisture over the coming week
    • Subsoil
      moisture will remain favorable, however
  • The
    environment will be very good for summer late season soybean harvesting and second season corn and cotton planting

 

• Brazil’s
  northern center south and far north will receive frequent rain in the coming week and sufficient rain next week to maintain wet field conditions
  • Greatest
    rainfall next ten days will be from Minas Gerais, far northeastern Sao Paulo and Rio de Janeiro to Tocantins, central and northern Goias and northeastern Mato Grosso
    • Rain
      totals of 3.00 to more than 5.00 inches will occur this week with amounts of 1.00 to 3.00 inches possible next week
    • Bahia,
      Espirito Santo and other far northeastern Brazil crop areas will be wetter than usual while little to no rain is expected in the west and south
  • Temperatures
    will be milder than usual in many areas this week, but the southwest will tend warmer this weekend into next week quickening evaporation and drying rates
  • The
    bottom line for Brazil
    will still be good this week, but increasing crop moisture stress is expected in parts of the west and south as the ground firms up additionally. Excellent field progress is expected in the drier areas, but moisture will soon be needed to support second season
    crops. Moisture returning to Bahia, Espirito Santo and areas northeast into Pernambuco will be good for late season crop development. Too much rain has been falling in Minas Gerais and a few immediate neighboring areas recently and this trend will continue.
    Water supply has been rising rapidly and reports of flooding are expected to rise as well. Sugarcane in Minas Gerais needs drier weather, coffee needs some sunshine and early season soybeans in Goias and Minas Gerais need to dry out for faster harvesting.
    

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

MONDAY,
MARCH 2:

• AmSpec,
  Intertek, SGS palm oil export data for Feb. 1-28
• USDA
  weekly corn, soybean, wheat export inspections, 11am
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• Australia
  commodity index, 12:30am
• Brazil
  soybean, sugar, corn and coffee exports, 1:15pm
• USDA
  soybean crush, DDGS output, corn for ethanol, 3pm
• SGS
  palm oil export data for Feb. 1-29

TUESDAY,
MARCH 3:

• Abares
  agriculture outlook conference, Canberra
• Purdue
  Agriculture Sentiment, 9:30am
• BRF
  4Q19 earnings before market open, Sao Paulo

WEDNESDAY,
MARCH 4:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• New
  Zealand commodity price
• Abares
  agriculture outlook conference
• CNGOIC’s
  montly supply/demand report on China soy, corn

THURSDAY,
MARCH 5:

• FAO
  world food price index, 4am
• Day
  1 of three-Day National Coffee Association USA Annual Convention
• Intertek
  Malaysia palm oil export data for March 1-5
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, 8:30am
• Port
  of Rouen data on French grain exports

FRIDAY,
MARCH 6:

• 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

SATURDAY,
MARCH 7:

• China
  soybean import volume data

Source:
Bloomberg and FI

 

 

CFTC
COT

·        
Managed money futures and options showed soybean meal net short a record 77,112 contracts. 

·        
Traditional funds were just shy of the record net short for soybean meal

 

 

 

 

Deliveries

 

 

CBOT
registrations

·        
Rice up 68 – see above

 

 

 

 

 

 

Macros

·        
USD is down sharply

·        
Money markets are pricing in a half-point cut in U.S. central bank interest rates

 

 

Corn.

·        
WTI crude oil was up more than $1.00 earlier this morning, which lent strength to the CBOT corn market.  A US economic stimulus is perceived as positive for commodity prices.  There is speculation the US will lower interest rates to stabilize
the economy, due to face company earning headwinds from logistical problems from coronavirus outbreaks. 

·        
Lower USD could trigger long positioning.

·        
CME raised hog futures trading limits to 3.75 cents per pound from 3.00 cents. 

·        
Cure to ASF? https://www3.nhk.or.jp/nhkworld/en/news/20200302_11/

·        
China is preparing for a potential locust invasion.  Last week they said ducks released could help combat the infestation.

 

Export
Developments

·        
None reported

 

 

Soybean
complex.

• Higher
  trade seen in the soybean complex on speculation US interest rates will be lowered.  Outside markets are seen helping US commodity prices today. 
  
• Eyes
  should turn to Argentina as they are a key exporter of soybean meal and soybean oil.  Any increase in export taxes could shift business to the US.
  
• CBOT
  meal deliveries included Bunge stopping 143. 
• Strategie
  Grains estimated EU rapeseed production at 17.85 million tons, down from 18.05 previously and above 16.89 million tons from their 2019 forecast. 
  

• U.S.
  production of biodiesel was 133 million gallons in December 2019, 6 million gallons higher than production in November 2019. There were a total of 1,023 million pounds of feedstocks used to produce biodiesel in December 2019, up from 979 million in November
  and down from 1283 million for December 2018. We had a working estimate of 1,244 million pounds for December 2019.  We lowered our soybean for biodiesel production to 8.175 billion pounds, 25 million below USDA.  Our tentative 2019-20 US soybean oil carryout
  is 1.46 billion pounds, below 1.515 billion USDA February S&D.  This will change when NASS updates their US crush.

·        
Offshore values are leading CBOT soybean oil 75 points higher and meal $3.40 higher.

·        
Rotterdam vegetable oils this morning were down 2-3 euros for nearby soybean oil positions and up around 5 euros for rapeseed oil. Rotterdam meal when imported from SA were 3-7 euros higher. 

·        
China:

·        
China cash crush margins as of this morning, using our calculation, were 134 cents per bushel, compared to 126 cents a week ago and negative 35 cents around this time last year. 

·        
Cargo surveyor SGS reported February Malaysian palm exports at 1,075,954 tons, 144,530 tons below the same period a month ago or down 11.8%, and 155,904 tons below the same period a year ago or down 12.7%.

·        
Malaysian palm markets:
 

 

Oilseeds
Export Developments

• Egypt
  seeks 30k of soybean oil and 10k of sunflower oil on Wed. for arrival around 1-20. 
  

 

 

 

 

Wheat

·        
US wheat is lower but don’t discount a two-sided trade on a sharply lower USD and speculation for a US interest rate cut. 

·        
USD was lower by 58 points earlier this morning.

·        
May Paris wheat futures were down 1.00 at 183.25 euros as of early this morning.

·        
Ukraine’s 2020 wheat crop was estimated at 25.8 million tons bu UGA. 

·        
Russia exported 28.6 million tons of grain from July1, 2019 to February 27, 2020, down from 35 million tons during the same period a year earlier. 

 

 

Export Developments.

• Thailand seeks 240,000 tons of feed wheat on March 2 for June-Sep. shipment.
  
• Jordan seeks 120,000 tons of wheat on March 3. 
  
• Jordan seeks 120,000 tons of feed barley on March 4. 
  
• 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

• None reported