FW: FI Morning Grain Comments 03/09/20

PDF attached

 

Morning. 
WTI in focus today as Saudi Arabia and Russia continue to argue. WTI traded $10 lower overnight and recoil in the equity markets are in focus.   A level one circuit breaker for equities was triggered and trading resumed 15 min thereafter.  We are seeing selling
spill over into the ag markets. 

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Some
needed rain will fall in some very important Argentina crop areas this week to help curb moisture stress and to protect production potentials. Greater rain will be needed in the north and far south. Brazil weather should be mostly good with some relief from
recent drying in the west and south next week. South Africa will experience a few showers and thunderstorms with some net drying. Europe is plenty moist and poised for good early spring crop development, although moisture is needed in the southeast corner
of the continent. China winter crops along with those in India will perform well this winter with good yields. U.S. planting concerns will slowly rise over the next few weeks as the wet biased pattern from the southeastern Plains to the lower eastern Midwest
and Tennessee River Basin prevails.

Overall,
weather today will likely provide a mixed influence on market mentality.

 

MARKET
WEATHER MENTALITY FOR WHEAT: 

Recent
weather and that which is coming this week will continue to promote earlier than usual winter crop development in the U.S. central and southern Plains, Delta and southeastern states as well as southern Russia, southern Ukraine and parts of China. Moisture
in Canada’s Prairies will improve spring planting conditions when seasonal warming begins. North Africa will continue struggling for moisture in Morocco and northwestern Algeria as well as in parts of Spain.

            Overall
weather today will likely provide a neutral to bearish bias to market mentality.

Source:
World Weather Inc. and FI

 

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

MONDAY,
MARCH 9:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals

TUESDAY,
MARCH 10:

• USDA’s
  monthly World Agricultural Supply and Demand (WASDE) report, noon
• Brazil
  Conab soybean and corn yield, area and production, 8am
• China
  agriculture ministry (CASDE) supply & demand monthly report
• AmSpec,
  Intertek, SGS release palm oil export data for March 1-10
• Malaysian
  Palm Oil Board data on palm production, exports, stocks
• Ros
  Agro 4Q results

WEDNESDAY,
MARCH 11:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• Santander
  and Datagro hold sugar, ethanol conference, Sao Paulo
• FranceAgriMer
  monthly cereals balance sheet

THURSDAY,
MARCH 12:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
• Port
  of Rouen data on French grain exports
• New
  Zealand food prices, 5:45pm

FRIDAY,
MARCH 13:

• 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

Source:
Bloomberg and FI

 

 

 

 

 

 

 

 

CFTC
Commitment of Traders

・        
Big changes for the week ending March 3 for soybeans and corn. Money managers that week bought net 39,400 soybean contracts and 58,800 soybean meal.  Money managed were light net sellers of corn and bought soybean oil and wheat. 

・        
Funds were much less long in corn than expected by 33,200 contracts, and also much less long in Chicago by 22,500 contracts.  Funds were off 19,800 contracts in their meal position.

 

 

 

 

 

 

 

 

 

Macros

・        
Recoil in the equity markets are in focus. 

 

 

Corn.

・        
Corn futures were sinking by more than 8 cents after the day session open.  While we are seeing an uptick on global import tender business the fundamentals are basically a nonmarket factor with currency fluctuations and downside move in
energy and equities.  One fact is for sure, Brazil commodity products are cheaper from last week and this is concerning for bulls banking on US export demand. 

・        
WTI crude tanked and DOW futures are seeing their worst one-day loss in years.  

・        
Bottom line is it will take months to quantify the impact of economic conditions from this coronavirus. 

・        
China is looking to set up 29 locust monitoring sites along the border by the end of March. 

 

Export
Developments

• South
  Korea’s KFA bought 65,000 tons of corn from South America at around 206/ton c&f for arrival around July 10.  They paid 208/ton on Friday for one cargo. 
  
• South
  Korea’s MFG bought 135,000 tons of, optional origin at $204.50 and $207.01/ton, for arrival in July. 
  

 

The
USDA Attaché updated their China corn S&D
and they look for corn imports in 2019-20 to end up near 6 million tons.  China took more than 2.0 million tons of Ukrainian corn during the September through mid-February period. In 2018-19 China bought 3.84 million tons of corn from Ukraine.  It’s hard to
see China buying more than 3.0 million tons of corn from the United States for the 2019-20 marketing year even if US prices become competitive.
https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Update_Beijing_China%20-%20Peoples%20Republic%20of_01-16-2020

 

Soybean
complex.

• CBOT
  soybeans
  dropped more than 20 cents, meal off $6.40 basis May, and SBO down more than 100 points after the CBOT day session open. 
  
• USD
  was down 117 points this morning.  BRL was sharply lower at 4.7790 and the Argentina peso declined to 62.3310.  (8:45 am CT)
• Safras
  reported 2019-20 soybean sales are 61 percent complete, up from 50 percent month earlier and 46 percent for the 5-year average. 
  
• China
  imported 13.51 million tons of the oilseed in January and February, up from 11.83 million tons a year earlier and compares to 9.54 million tons in December. 
  
• Offshore
  values are leading CBOT soybean oil 42 points lower and meal $5.20 lower.
  

・        
Rotterdam vegetable oils this morning were down 23 euros for nearby soybean oil positions and down around 13 euros for rapeseed oil. Rotterdam meal when imported from SA were 2-4 euros lower. 

・        
China:

・        
China cash crush margins as of this morning, using our calculation, were 129 cents per bushel, and compares to 136 cents a week ago and negative 21 cents around this time last year. 

・        
Malaysian palm markets:
 Reuters
poll calls for Feb palm stocks down 1.4% to 1.73MMT.

 

 

Oilseeds
Export Developments

• Under
  the 24-hour reporting system, US exporters sold 123,500 tons of soybeans to unknown for the 2019-20 marketing year. 
  

 

Wheat

・        
Chicago wheat

・        
May Paris wheat futures were down 3.75 at 178.00 euros as of early this morning.

 

 

Export
Developments.

• Syria seeks 200,000 tons of wheat from Russia, Bulgaria, or Romania, on March 11. 
  
• Algeria seeks 50,000 tons of milling wheat, optional origin, on March 11, valid until March 12, for April
  and/or May shipment depending on origin. 
• Jordan seeks 120,000 tons of wheat on March 10.  Sep-Oct shipment. 
  
• Jordan seeks 120,000 tons of feed barley on March 11.  June-FH Aug. shipment. 
  
• 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. 
• 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

• Outside markets remain primary focus