FW: FI Morning Grain Comments 03/04/20

PDF attached

 

Morning.

 

Argentina
to Hike Tax on Soy Products With Corn and Wheat Spared  https://www.bloomberg.com/news/articles/2020-03-02/argentina-is-said-to-plan-soy-meal-oil-export-tax-increase

 

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

The
South America weather outlook remains a concern today. Argentina will continue to progressively become too dry while a net drying trend impacts some western and southern Brazil locations. Argentina will see excessive heat as well while temperatures in Brazil
are more seasonable. Some relief advertised for central Argentina early next week would be extremely well timed in limiting the amount of serious crop stress that has occurred. Wet weather will continue in Goias, Minas Gerais and Tocantins.

The
situation in South America may not be critical enough to move markets in a big manner, but there might be some bullish influence from the weather amidst a huge array of other market concerns that may counter any influence from the weather.

            India’s
and China’s winter crop outlooks are still good and improvement has occurred in recent weeks across parts if Europe. South Africa’s weather has not changed from that of late last week and the U.S. outlook has shifted the greatest rainfall out of the lower
Midwest, northern Delta and Tennessee River Basin for this week and shifted it farther south. The southward shift will lead to delays in early season corn planting.

 

MARKET
WEATHER MENTALITY FOR WHEAT: 

Earlier
than usual crop development is expected for many production areas around the world, but as long as there is no threatening cold coming up the situation is not likely to be significant. Huge crops are still expected from India and China will end up with a big
crop as well. North Africa production is destined to be low based mostly on dryness in Morocco and northwestern Algeria. Europe winter crops are in mostly good shape, although rain is still needed in the southeast.

            U.S.
wheat is expected to remain in favorable shape, but greening and early season development in the southern Plains could be aggressive for a while due to unusually warm weather.

            Overall,
weather today may produce a neutral bias on market mentality.

Source:
World Weather Inc. and FI

 

 

 

Bloomberg
Ag Calendar

WEDNESDAY,
MARCH 4:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• New
  Zealand commodity price
• Abares
  agriculture outlook conference
• CNGOIC’s
  monthly 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

 

 

 

 

 

Macros

·        
USD was higher by 27 points as of 7:31 am CT.   

·        
US ADP Employment Change Feb 183K (est 170K; prev 291K)

·        
Lufthansa To Ground 150 Aircraft Due To The Coronavirus – Company Sources

 

 

Corn.

·        
Corn futures eased in the non expiring positions on light technical selling.  China was rumored to be looking for corn, sorghum and DDG’s on Tuesday.  The USDA 24-hour system reported 110,000 tons of sorghum was sold to China. 

·        
WTI crude was up $0.69 as of 7:33 am CT. 

·        
The 6-10 day for the US still looks wet. 

·        
CNGOIC warned 2019-20 China corn consumption could drop 3 million tons due to the reduction in chicken inventories. 

·        
A Bloomberg poll looks for weekly US ethanol production to be down 8,000 at 1.046 million barrels from the previous week and stocks to increase 89,000 barrels to 24.807 million.

 

Export
Developments

• The
  USDA 24-hour system reported 110,000 tons of sorghum was sold to China for the 2019-20 marketing year. 
  

 

 

Soybean
complex.

• CBOT
  soybeans were up on Wednesday on bargain buying.  Meal was slightly lower and soybean oil was very firm following strength in palm oil.  Crush is back above $1.00.
  
• Soybeans
  and soybean oil are seeing support from reports Argentina will increase export taxes on soybeans, meal and oil. 
  
• Brazil’s
  real and Argentina’s peso are making new lows. 
• Argentina
  will not be completely dry over the next two weeks. The central areas have an opportunity for rain Monday through mid-next week. 
  
• US
  ECB soybean meal basis firmed yesterday by $4-$6/short ton. 

·        
Solvent Extractors’ Association of India (SEA) estimated India rapeseed production at 7.8 million tons versus 7.5MMT year earlier. 

·        
Offshore values are leading CBOT soybean oil 33 points higher and meal $0.60 higher.

·        
Rotterdam vegetable oils this morning were up 1 euro for nearby soybean oil positions and up around 10 euros for rapeseed oil. Rotterdam meal when imported from SA were mixed (mostly higher). 

·        
China:

·        
China cash crush margins as of this morning, using our calculation, were 139 cents per bushel, up 4 cents from the previous day, and compares to 126 cents a week ago and negative 35 cents around this time
last year. 

·        
Malaysian palm markets:
 

·        
IEG Vantage: Brazil 128 million tons for 2019 soybeans and 55 million tons for Argentina, according to floor traders.  EU 2020 rapeseed production reduced 1.25 million tons to 17.5 million (0.5MMT above their
2019 forecast). Meanwhile FC Stone estimated the Brazil soybean crop at 124.2 million tons, up 200,000 from their previous projection.  Mato Grosso was noted to be in great shape while RGDS had some problems.

·        
Brazil raised the B11 mandate to B12. The higher use should result in lower soybean oil exports during 2020.  

 

Oilseeds
Export Developments

• Offers
  received.  Egypt seeks 30k of soybean oil and 10k of sunflower oil on Wed. for arrival around 1-20.  Lowest offer for soybean oil was $724.04/ton and sunflower $737.00/ton. 
  

 

Wheat

·        
US wheat futures

·        
USD was higher by 32 points earlier this morning.

·        
May Paris wheat futures were down 1.00 at 183.50 euros as of early this morning.

·        
Yesterday US PNW wheat basis collapsed by 30-38 cents from Monday to around $6.00/bu. 

https://www.ams.usda.gov/mnreports/jo_gr110.txt

 

Export
Developments.

• Tunisia seeks 117,000 tons of optional origin soft wheat and 50,000 tons of feed barley on March 5 for shipment during March-May and May-June,
  respectively. 
• SK yesterday bought 85,000 tons of US wheat.  This was already in the market. 
  
• 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
  Aug 7. 
• Japan bought 117,389 tons of food wheat late Wednesday. 
  

• 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 Aug 27, on March
  11. 
• Jordan seeks 120,000 tons of wheat on March 10.  Sep-Oct shipment. 
  
• Offers received: Jordan seeks 120,000 tons of feed barley on March 4.  No prices were provided. 
  
• Morocco seeks 354,000 tons of US durum wheat on March 5 for arrival by May 31.
  
• Turkey seeks 305,000 tons of wheat on March 11 for late March and/or early shipment. 
  
• Syria seeks 200,000 tons of wheat from Russia by March 23.  No purchase was made that closed on February 17. 
  
• Ethiopia seeks 400,000 tons of wheat on April 7.  IN a separate tender, they seek 200,000 tons of wheat on April 1.  Both
  are optional origin. 

 

Rice/Other

• None reported