FW: FI Morning Grain Comments 04/02/20

PDF attached

 

Morning.
China
said they plan to buy oil for reserves and a rally in crude oil might be helping stocks out. US jobless claims were about double estimates at 6.648 million.

 

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:

Weather
in South America, South Africa and India remains favorable for most oilseed development. India’s rapeseed will benefit from drier weather to help reduce a quality decline because of moisture during crop maturation and harvest season. Improving rainfall in
Southeast Asia will be good for palm oil production and corn planting.

            China’s
recent flooding rainfall in the south and that which is expected this weekend into next week will delay early season coarse grain planting and will keep rapeseed development a little sluggish as well. Dryness is also a concern in Yunnan.

U.S.
early season grain and oilseed areas are facing similar conditions with frequent precipitation and soggy field conditions to limit field progress for a while. Today’s somewhat drier biased outlook does offer a few pockets of drying, but the bottom line will
require much more precipitation.

           
Australia needs greater rain in the south prior to late April and May planting of canola. Rain in New South Wales and neighboring areas the remainder of this workweek will help to moisten some areas but follow up rain will be needed.

Europe’s
drier weather bias in place today will improve field conditions for planting, but warming temperatures are needed before much early corn will be seeded. Winter rapeseed will be breaking dormancy, but no aggressive crop development is expected for a while.
Warming next week will help improve the situation. Timely rain will be needed once seasonal warming becomes a little more significant.

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

 

MARKET
WEATHER MENTALITY FOR WHEAT: 

India’s
drier weather this week will help protect winter crop quality after weekend weather trended a little too wet in the north. China winter crops are in mostly good condition with more aggressive development expected as soon as additional warming kicks in.

            U.S.,
Russia and Europe winter crop conditions vary from fair to very good. Warming is needed in all production areas and there is some need for timely precipitation in the drier areas of western Kansas, eastern Colorado, central Washington, Kazakhstan, eastern
portions of Russia’s Southern Region, the lower Volga River Basin and southeastern Europe. Recent wet weather in Spain was ideal for its winter grains.

            North
Africa and the Middle East will need dry weather soon to promote grain maturation and harvesting. Too much moisture could result in a grain quality decline. Morocco has been too dry this year and will come up quite short on production.

           
Wheat planting prospects for Australia and South Africa are good this year because of recent rain and that which is expected over the next few weeks.

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

Source:
World Weather Inc. and FI

 

 

World
Weather’s April US outlook appears to be cold and wet that could delaying plantings. 

 

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

 

Bloomberg
Ag Calendar

THURSDAY,
April 2:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
• UN’s
  FAO World Food Price Index, 4am
• Port
  of Rouen data on French grain exports

FRIDAY,
April 3:

• ICE
  Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions
  
• 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

 

 

 

 

Brazil
selected export data for the month of March:

Commodity                     
March 2020      February 2020   March 2019

COFFEE(60
KG BAG)              3,041,400        2,810,200       3,205,400

CRUDE
OIL (TNS)                6,550,700        6,064,000       4,489,000

ETHANOL
(LTR)                  75,100,000      164,200,000    128,400,000

SOYBEANS
(TNS)                 11,644,300       5,115,700       8,458,700

IRON
ORE                       21,709,400       22,100,200     22,182,500

FROZEN
ORANGE JUICE (TNS)      38,200           29,000             26,600

NON-FROZEN
ORANGE JUICE (TNS)  120,500          115,100           141,700

SUGAR
RAW (TNS)                1,240,400        1,119,700         841,300

Source:
Reuters and FI

 

 

 

 

 

Macros

·        
US Initial Jobless Claims Mar-28: 6648K (exp 3800K; prev 3283K)

–         
Continuing Claims Mar-21: 3029K (exp 4941K; R prev 1784K)

·        
US Trade Balance (USD) Feb: -39.9B (exp -40.0B; R prev -45.5B)

 

Corn.

·        
Corn futures are higher on higher WTI crude oil and US planting delay concerns. 

·        
USDA export sales for corn of 1.075 million tons were at the high end of expectation.  See text after the wheat comment. 

• Precipitation
  for the Delta and lower Midwest early this month might be frequent enough to delay planting progress.
• China’s
  commerce ministry said main grain supplies are sufficient for domestic demand and will not be in shortage even without any imports.  China’s ending stocks of wheat, corn and rice in 2019 totaled more than 280 million tons.  Consumption on average is more than
  200 million tons.
• Ukraine’s
  grain exports were record 46 million tons in the first nine months of the 2019-20 versus 37.6 million year earlier, according to the Ministry for Development of Economy, Trade and Agriculture.
• Ukraine’s
  grain and oilseed exports in 2019-20 July-June season were estimated by UGA at 57.2 million tons, above 55.6 million tons a month ago. Ukraine’s major traders union UGA said this week it agreed with an economy ministry proposal to limit wheat exports to 20.2
  million tons in the 2019-20 season to avoid a rise in domestic bread prices. -Reuters
• US
  barge basis bids for corn were firmer by about 2 cents on Wednesday and fob was up about 5 cents. 
  

·        
US ethanol production is down 22 percent since late February.  Later in the day we heard ADM’s Columbus, NE ethanol plant will shut down. 

·        
US ethanol production declined a huge 165,000 barrels to 840,000, versus a Bloomberg poll looking for a 75,000-barrel decrease.  This is the lowest weekly level since September 20, 2013. 

·        
Ethanol stocks rocketed higher by 1.577 million barrels to a record 25.717 million barrels. 

·        
USDA’s Broiler Hatchery report showed eggs set in the selected US up 3 percent and chicks placed up 3 percent.  Cumulative placements from the week ending January 4, 2020 through March 28, 2020 for the United States were 2.48 billion. Cumulative
placements were up 4 percent from the same period a year earlier.

·        
USDA NASS corn for ethanol use during the month of February ended up above a Bloomberg average. 

 

 

Export
Developments

• Algeria
  bought 40,000 tons of corn for late April and early May shipment at about $192 to $193 a ton c&f.  Origin was thought to be from the US. 
  
• Today
  China was planned to auction off 20,000 tons of frozen pork from state reserves. 
  

 

Soybean
complex.

• CBOT
  soybean
  complex traded higher overnight but turned lower on lack of bullish news, despite a February US daily crush rate breaking January’s record (table below).  Real remains very weak and USD was up 32 points as of 8:03 am CT.  We see May/July spread firm this morning.
  SBO is getting a lift from higher WTI. 

·        
USDA export sales for soybeans were above expectations and included China for 131,000 tons. SBM meal sales were poor but shipments were good. SBO sales were a marketing year high at 67k.   See text after the wheat comment. 

·        
Offshore values are leading CBOT soybean oil 82 points higher and meal $1.30 higher.

·        
Rotterdam vegetable oils this morning down 1 euro for soybean oil from this time for the previous session and rapeseed oil was unchanged.   Rotterdam meal when imported from SA were mostly 3-5 euros lower. 

·        
China: 

·        
China cash crush margins as of this morning, using our calculation, were 205 cents per bushel (195 previous) and compares to 184 cents a week ago and negative 52 cents around this time last year. 

·        
Malaysian palm markets:
 The
Southern Palm Oil Millers Association estimated a 4% increase in palm oil production.

• USDA
  NASS February soybean crush was record on a daily adjusted basis.  At 6.26 million bushels per day, that would put annualized crush at 2.285 billion bushels, with capacity somewhere around 2.29-2.33 billion.  The February crush of 181.6 million bushels ended
  up 5 million above an average traded guess. Soybean oil stocks of 2.420 billion pounds are up from 2.351 billion last month and above 2.149 billion year earlier. 
  

 

 

Oilseeds
Export Developments

• Egypt
  seeks 3,000 tons of soybean oil and 2,000 tons of sunflower oil on April 5 for May 1-25 delivery. 
  

 

Wheat

• US
  wheat futures are lower again on technical selling. 
• US
  export sales for wheat of 72,900 tons old crop were a marketing year low. New crop sales of 185,900 tons were below our expectations. 
  
• Egypt
  canceled an import tender for wheat for May 5-20 shipment. Egypt’s GASC will require the supplier of wheat to bear the burden in freight difference if the origin changes.  Uncertainty for port loadings from coronavirus concerns is starting to spook traders. 
  
• Russia
  plans to sell up to 83% of grain from its state stockpile on the domestic market, starting April 13, or up to 1.5 million tons, mainly for needs by the flour and bakery industry. They currently have 1.8 million tons of grain in reserves after already selling
  1 million tons. 

• World
  food prices fell in March to 172.2 points last month, down 4.3% on February.

• EU
  May milling wheat fell 2.75 euros to 191.25/ton as of early this morning. 
  
• US HRW wheat area will see precipitation through early next week bias east and north.  Rain and snow in the Red River Basin into early Friday will likely
  to promote ongoing flooding. The Red River may reach major flood stage at some locations.
  

 

 

Export Developments.

• In its third import tender in weeks, Algeria seeks wheat on Friday. 
  
• After the close Egypt announced they are in for wheat on Thursday for May 5-20 shipment, then cancelled it a couple hours later.
  
• Ethiopia seeks 400,000 tons of wheat on April 7. 
  
• Jordan is in for 120,000 tons of wheat on April 6 for June-August shipment.
  
• Jordan seeks 120,000 tons of feed barley on April 7 for September through October shipment. 
  
• In an SBS import tender, Japan seeks 80,000 tons of feed wheat and 100,000 tons of barley on April 8 for arrival in Japan by July 31. 
  

 

Rice/Other

• The Philippines said it has secured Vietnam’s commitment for continuous supply of rice.
• The Philippines seek 300,000 tons of rice from Thailand and Vietnam.
  
• Cambodia will ban rice exports on April 5. 
  

 

 

U.S. EXPORT SALES FOR WEEK ENDING 3/26/2020

	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	54.1	1,812.1	2,563.3	170.3	7,492.2	6,073.0	82.2	522.4
SRW	5.6	279.2	922.8	15.9	2,060.1	2,320.3	16.0	178.4
HRS	-24.9	1,537.5	1,403.4	78.0	5,710.2	5,314.3	64.7	240.9
WHITE	37.9	1,148.5	1,102.9	9.2	3,830.3	4,142.4	23.0	59.0
DURUM	0.2	230.4	117.0	0.2	682.3	364.3	0.0	151.0
TOTAL	72.9	5,007.7	6,109.5	273.5	19,775.1	18,214.2	185.9	1,151.7
BARLEY	0.2	10.7	24.7	0.8	38.7	34.7	0.0	31.0
CORN	1,075.4	13,600.8	13,154.3	1,258.5	18,306.6	30,041.1	20.3	1,761.0
SORGHUM	200.2	1,255.6	236.4	231.2	1,417.2	774.0	0.0	33.0
SOYBEANS	957.4	5,102.0	13,635.9	468.4	31,759.5	29,940.6	114.0	528.9
SOY MEAL	125.2	2,851.5	3,292.0	324.9	5,935.4	6,028.5	-15.9	101.0
SOY OIL	67.0	286.4	143.6	59.5	612.6	441.1	2.3	4.9
RICE
L G RGH	25.3	328.3	314.0	43.8	979.0	804.4	0.0	0.0
M S RGH	1.5	44.4	55.1	0.4	24.9	31.1	0.0	0.0
L G BRN	0.2	20.7	6.2	0.4	36.7	29.3	0.0	0.0
M&S BR	0.2	63.1	78.4	0.8	45.2	63.0	0.0	0.0
L G MLD	4.5	94.0	109.1	4.0	660.8	587.3	0.0	0.0
M S MLD	36.6	255.0	205.5	7.1	405.3	349.5	0.0	0.0
TOTAL	68.3	805.4	768.1	56.5	2,151.9	1,864.5	0.0	0.0
COTTON		THOUSAND RUNNING BALES
UPLAND	147.5	6,665.1	5,750.7	400.8	8,627.3	7,137.0	111.4	2,006.5
PIMA	0.2	211.4	249.2	23.8	328.6	382.1	0.0	35.3

 

 

Export Sales Highlights 

This summary is based on reports from exporters for the period March 20-26, 2020.

·        
Wheat:  Net sales of 72,900 metric tons for 2019/2020–a marketing-year
low–were down 90 percent from the previous week and 86 percent from the prior 4-week average.  Increases primarily for Mexico (84,900 MT), the Philippines (60,000 MT), Malaysia (42,900 MT, switched from unknown destinations), Chile (40,000 MT), and Bangladesh
(25,000 MT), were offset by reductions primarily for unknown destinations (125,800 MT), Indonesia (65,600 MT), Nigeria (25,000 MT), Panama (22,200 MT), and the Dominican Republic (17,300 MT).  For 2020/2021, net sales of 185,900 MT were primarily for the Philippines
(60,000 MT), China (60,000 MT), Panama (23,200 MT), unknown destinations (22,200 MT), and Ecuador (16,000 MT).  Exports of 273,500 MT were down 34 percent from the previous week and 42 percent from the prior 4-week average.  The destinations were primarily
to Indonesia (74,400 MT), Mexico (74,300 MT), Japan (34,300 MT), Taiwan (24,900 MT), and Colombia (21,800 MT). 

·        
Corn:  Net sales of 1,075,400 MT for 2019/2020 were down 41 percent
from the previous week and 13 percent from the prior 4-week average.  Increases primarily for Mexico (314,600 MT, including 57,000 MT switched from unknown destinations), Japan (239,000, MT, including 30,800 MT switched from unknown destinations and decreases
of 12,400 MT), unknown destinations (170,800 MT), South Korea (136,100 MT, including decreases of 700 MT), and Colombia (97,600 MT, including 98,500 MT switched from unknown destinations and decreases of 8,400 MT), were offset by reductions primarily for Panama
(12,600 MT), Guatemala (5,300 MT), and El Salvador (4,000 MT).  For 2020/2021, net sales of 20,300 MT were primarily for Canada (10,200 MT).  Exports of 1,258,500 MT–a marketing-year high–were up 49 percent from the previous week and 42 percent from the
prior 4-week average.  The destinations were primarily to Japan (478,700 MT), Mexico (299,200 MT), Colombia (202,500 MT), South Korea (129,500 MT), and Costa Rica (33,100 MT). 

Optional Origin Sales: 
For 2019/2020, options were exercised to export 65,000 MT to South Korea from the United States.  The current outstanding balance of 581,000 MT is for South Korea (521,000 MT) and Israel (60,000 MT).

·        
Barley: Net sales of 200 MT for 2019/2020 were reported for Taiwan.  Exports of 800 MT were
down 76 percent from the previous week and 23 percent from the prior 4-week average.  The destination was Japan.

·        
Sorghum:  Net sales of 200,200 MT for 2019/2020 resulting in increases for unknown destinations
(132,000 MT) and China (77,700 MT, including 66,000 MT switched from unknown destinations and decreases of 2,000 MT), were offset by reductions for Japan (9,200 MT) and Mexico (400 MT).  Exports of 231,200 MT–a marketing-year high–were up noticeably from
the previous week and from the prior 4-week average.  The destinations were primarily to China (198,700 MT), Japan (20,800 MT), and Mexico (11,500 MT). 

·        
Rice: 
Net sales of 68,300 MT for 2019/2020 were down 7 percent from the previous week, but up 35 percent from the prior 4-week average.  Increases were primarily for Japan
(33,300 MT), Nicaragua (18,000 MT), El Salvador (5,200 MT), Mexico (4,100 MT, including decreases of 300 MT), and Canada (2,400 MT). 
Exports of 56,500 MT were down 21 percent from the previous week, but up 4 percent from the prior 4-week average.  The destinations were primarily to Mexico (44,900
MT), Canada (3,300 MT), South Korea (2,800 MT), Saudi Arabia (1,800 MT), and Japan (1,400 MT).

Exports for Own Account:  For 2019/2020,
new exports for own account totaling 100 MT were to Canada.  The current exports for own account outstanding balance is 100 MT, all Canada.

·        
Soybeans:  Net sales of 957,400 MT for 2019/2020 were up 6 percent from
the previous week and 75 percent from the prior 4-week average.  Increases primarily for Mexico (388,000 MT, including 47,500 MT switched from unknown destinations and decreases of 2,300 MT), China (131,000 MT), Bangladesh (108,300 MT, switched from unknown
destinations and decreases of 300 MT), Indonesia (97,800 MT, including 68,000 MT switched from unknown destinations and decreases of 2,100 MT), and Egypt (55,000 MT), were offset by reductions for Barbados (1,200 MT).  For 2020/2021, net sales of 114,000 MT
were for unknown destinations (65,000 MT), Mexico (47,500 MT), and Japan (1,500 MT).  Exports of 468,400 MT were down 23 percent from the previous week and 20 percent from the prior 4-week average.  The destinations were primarily to Mexico (124,600 MT), Bangladesh
(108,300 MT), Indonesia (86,400 MT), Japan (44,200 MT), and Malaysia (26,100 MT). 

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

·        
Soybean Cake and Meal:  Net sales of 125,200 MT for 2019/2020 were
down 50 percent from the previous week and 39 percent from the prior 4-week average.  Increases primarily for the United Kingdom (29,400 MT, switched from unknown destinations), Mexico (25,300 MT, including decreases of 100 MT), New Zealand (25,000 MT), Canada
(22,600 MT), and Guatemala (11,200 MT, including decreases of 10,700 MT), were offset by reductions primarily for unknown destinations (30,000 MT), Nepal (5,000 MT), Honduras (4,700 MT), and Chile (4,500 MT).  For 2020/2021, net sales reductions of 15,900
MT were for Guatemala (15,400 MT) and El Salvador (500 MT).  Exports of 324,900 MT were up 12 percent from the previous week and 7 percent from the prior 4-week average.  The destinations were primarily to Mexico (66,200 MT), the Philippines (50,500 MT), Morocco
(42,300 MT), the United Kingdom (29,400 MT), and Canada (25,900 MT).

·        
Soybean Oil: 
Net sales of 67,000 MT for 2019/2020–marketing-year high–were primarily for South Korea (42,000 MT), unknown destinations (15,000 MT),
Mexico (5,800 MT), Colombia (3,000 MT), and the Dominican Republic (900 MT, including decreases of 900 MT).  For 2020/2021, total net sales of 2,300 MT were for Mexico.  Exports of 59,500 MT were up noticeably from the previous week and from the prior 4-week
average.  The destinations were primarily to Morocco (20,000 MT), Colombia (14,000 MT), Guatemala (8,000 MT), Mexico (3,600 MT), and Jamaica (3,500 MT).

·        
Cotton:  Net sales of 147,500 RB for 2019/2020 were down 47 percent from
the previous week and 61 percent from the prior 4-week average.  Increases primarily for Vietnam (77,500 RB, including 2,100 RB switched from Taiwan, 700 RB switched from Japan, and decreases of 2,200 RB), China (24,500 RB), South Korea (15,000 RB, including
4,400 RB switched from Vietnam), Japan (14,000 RB, including 400 RB switched from South Korea and decreases of 500 RB), and Turkey (11,200 RB), were offset by reductions for Thailand (4,900 RB), Malaysia (4,800 RB), and Bangladesh (1,000 RB).  For 2020/2021,
net sales of 111,400 RB primarily for Turkey (36,100 RB), Pakistan (17,200 RB), Indonesia (12,800 RB), Portugal (11,000 RB), and Bangladesh (11,000 RB), were offset by reductions for Guatemala (500 RB).  Exports of 400,800 RB were up 4 percent from the previous
week, but down 3 percent from the prior 4-week average.  Exports were primarily to Vietnam (92,400 RB), China (71,800 RB), Pakistan (70,400 RB), Turkey (68,000 RB), and Bangladesh (23,200 RB).  Net sales of Pima totaling 200 RB were down 99 percent from the
previous week and from the prior 4-week average.  Increases primarily for Bangladesh (400 RB) and Greece (300 RB), were offset by reductions for El Salvador (500 RB).  Exports of 23,800 RB–a marketing-year high–were up 37 percent from the previous week and
50 percent from the prior 4-week average.  The primary destinations were primarily to India (6,200 RB), China (5,900 RB), Pakistan (5,000 RB), Vietnam (1,300 RB), and Bangladesh (1,300 RB). 
Exports for Own Account:  For 2019/2020, new exports for own account totaling 500 RB were to Pakistan.  Exports for own account totaling 1,600 RB to Pakistan (900 RB) and Indonesia (700 RB) were applied to new or outstanding sales.  The current exports
for own account outstanding balance of 31,000 RB is for Indonesia (19,400 RB), Bangladesh (6,500 RB), China (2,500 RB), India (1,700 RB), Malaysia (400 RB), Vietnam (300 RB), and Pakistan (200 RB).

·        
Hides and Skins: Net sales
of 619,300 pieces for 2020 were up 52 percent from the previous week and 59 percent from the prior 4-week average.  Increases were primarily for China (484,600 whole cattle hides, including decreases of 8,300 pieces), Thailand (47,900 whole cattle hides, including
decreases of 1,100 pieces), Indonesia (28,700 whole cattle hides, including decreases of 200 pieces), South Korea (26,000 whole cattle hides, including decreases of 1,500 pieces), and Mexico (24,200 whole cattle hides, including decreases of 400 pieces). 
Additionally, there were net sales reported for Mexico (2,600 kip skins).  Exports of 368,200 pieces reported for 2020 were up 1 percent from the previous week and 7 percent from the prior 4-week average.  Whole cattle hide exports were primarily to China
(190,000 pieces), South Korea (43,800 pieces), Mexico (40,800 pieces), Thailand (38,500 pieces), and Taiwan (21,200 pieces).  In addition, there were exports to Italy (5,200 calf skins). 

·        
Net sales of 55,600 wet blues
for 2020 were down 47 percent from the previous week and from the prior 4-week average.  Increases primarily for China (25,000 unsplit), Thailand (14,200 unsplit), Mexico (11,900 grain splits), South Korea (4,100 grain splits), and Taiwan (1,600 grain splits
and decreases of 100 unsplit), were offset by reductions for the Dominican Republic (3,200 unsplit).  Exports of 153,500 wet blues for 2020 were up 33 percent from the previous week and 13 percent from the prior 4-week average.  The destinations were primarily
to Italy (41,300 unsplit and 1,500 grain splits), China (36,800 unsplit and 4,200 grain splits), Vietnam (30,300 unsplit), Thailand (21,100 unsplit and 1,600 grain splits), and Taiwan (8,400 unsplit).  Total net sales of 172,100 splits were for Vietnam.  Exports
of 160,000 pounds were to Vietnam.

·        
Beef:
Net sales of 18,200 MT reported for 2020 were up 26 percent from the previous week and 10 percent from the prior 4-week average.  Increases
primarily for Japan (8,500 MT, including decreases of 700 MT), South Korea (5,700 MT, including decreases of 300 MT), Hong Kong (1,300 MT, including decreases of 100 MT), Taiwan (1,200 MT, including decreases of 100 MT), and Canada (1,100 MT, including decreases
of 200 MT), were offset by reductions for the Philippines (100 MT) and Mexico (100 MT).  Exports of 17,000 MT were up 1 percent from the previous week and 3 percent from the prior 4-week average.  The destinations were primarily to Japan (6,800 MT), South
Korea (4,100 MT), Taiwan (1,600 MT), Mexico (1,200 MT), and Canada (1,000 MT).

·        
Pork:
Net sales of 38,200 MT reported for 2020 were down 1 percent from the previous week, but up 88 percent from the prior 4-week average.  Increases were
primarily for China (18,900 MT), Mexico (8,500 MT), Japan (4,000 MT), South Korea (2,200 MT), and Canada (1,600 MT).  Exports of 40,200 MT were down 17 percent from the previous week and 11 percent from the prior 4-week average.  The destinations were primarily
to China (16,200 MT), Mexico (9,400 MT), Japan (5,100 MT), South Korea (2,700 MT), and Canada (2,200 MT).