FW: FI Morning Grain Comments 04/03/20

PDF attached

 

Morning.

 

China
bought 567,000 tons of US corn. 

 

US
March jobs number out today was thought to be already obsolete. 4.4% unemployment rate, down 701,000.  WTI and Brent are extending gains.  Higher trade in US agriculture futures.  Palm oil traded lower. China crush margins are still near multiyear highs. 

 

 

 

Weather

UNITED
STATES 0.6z changes – (does not reflect official World Weather outlook as too aggressive)

·        
No serious trend changes were noted this morning in the first seven days of the GFS 06z model run

·        
Precipitation was reduced in eastern Canada’s Prairies and the northern Plains April 10-12 and precipitation was also reduced in the Midwest at the same time

·        
A boost in rainfall was suggested from the lower Delta into Georgia, northern Florida and South Carolina April 10-12

·        
A larger storm system was presented in the central Plains and western and central Corn Belt April 13-15

·        
Rain in the southeastern U.S. April 13-15 was shifted southward to the Gulf of Mexico coastal region and northern Florida while extended back to the west into eastern Texas

·        
The larger storm in the Midwest April 13-15 was pushed through the northeastern states April 16-17 and was too intense there as well

 

Seven-day
outlook

 

 

 

 

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 rain 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 Wednesday and that which occurs through Friday 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 with a bearish bias.

 

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. Recent frost and freezes in southern production areas did not permanently harm crops. Warming is needed in all production areas.

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

 

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

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

MONDAY,
April 6:

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

TUESDAY,
April 7:

• Purdue
  Agriculture Sentiment, 9:30 am
• France
  agriculture ministry to issue field-crop planting estimates for 2020 season

WEDNESDAY,
April 8:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• CNGOIC’s
  monthly report on China soy, corn supply and demand
• FranceAgriMer
  monthly cereals balance sheet

THURSDAY,
April 9:

• USDA’s
  monthly World Agricultural Supply and Demand (Wasde) report, noon
• China
  agriculture outlook committee (CASDE) to publish monthly supply/demand forecast for soybean, corn, cotton and sugar
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
• Port
  of Rouen data on French grain exports
• Brazil
  crop agency Conab posts 7th report on 2019-20 soy, grains output

FRIDAY,
April 10:

• 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
• Malaysian
  Palm Oil Board to release stockpiles, export and production data
• Cargo
  surveyors AmSpec and Interetk to release Malaysia’s April 1-10 palm oil export numbers

Source:
Bloomberg and FI

 

 

 

 

 

 

 

Macros

·        
US Change In Nonfarm Payrolls Mar: -701K (exp -100K; prev 272K)

·        
US Unemployment Rate Mar: 4.4% (exp 3.8%; prev 3.5%)

–         
Labour Force Participation Rate Mar: 62.7% (exp 63.3%; prev 63.4%)

 

 

Corn.

·        
Corn futures are higher this morning on technical buying.

·        
Under the 24-hour announcement system, US exporters sold 567,000 tons of corn to China.

o  
63,000 for 2019-20

o  
504,000 tons for 2020-21

·        
Both nearby Brent and WTI crude oil are higher.  

·        
South Korea about 197,000 tons of corn overnight but the origin was thought to be South America. 

·        
CBOT corn December $3.30/$2.70 put spreads traded 6,600 times in a single block on Wednesday.

• Precipitation
  for the Delta and lower Midwest early this month might be frequent enough to delay planting progress. 
  

·        
We lowered our corn for ethanol for 2019-20 to a low 5.000 billion bushels, below 5.378 billion for 2018-19 and well below USDA’s 2019-20 estimate of 5.425 billion. We increased our feed estimate to 5.800 billion bushels due to robust Q2
feed demand.   USDA is using 5.525 billion bushels.  Look for USDA to lower corn for ethanol and raise its feed estimate in its April update.  We think USDA will report 2019-20 ending stocks around 1.986 billion bushels versus 1.892 billion for March.  For
new crop, several analysts are above 2.4 billion bushels, including myself,  for ending stocks. 

• The
  South African Rand hit a record.  ZAR below

 

Export
Developments

·        
Under the 24-hour announcement system, US exporters sold 567,000 tons of corn to China.

o  
63,000 for 2019-20

o  
504,000 tons for 2020-21

• South
  Korea’s MFG bought 66,000 tons of corn at $188.45/ton c&f for shipment between June 26 and July 18.  Origin was thought to be SA.
  
• South
  Korea’s MFG bought 69,000 tons of corn at $188.49/ton c&f for arrival around August 28.  Origin was thought to be SA.
  
• South
  Korea’s KFA bought 62,000 tons of corn at $184.43/ton c&f for arrival around September 30.  Origin was thought to be SA. 
  
• Egypt
  might be looking around for a couple cargos of Ukraine corn. 

 

Soybean
complex.

• CBOT
  soybean
  complex rallied late during the overnight trade.  Higher nearby WTI crude oil and wheat could be underpinning soybean complex prices.  
  

·        
Brazil’s Agriculture Ministry expects large price swings due to the coronavirus outbreak.  The Brazilian real is near a record. It was last 5.273 around 7:09 am CT. 

·        
The Argentina BA Grains Exchange estimated the soybean crop at 49.5 million tons, down from a previous forecast of 52 million tons.  Last year they had 55.1 million tons. 

·        
Argentina soybean oil as of early Friday morning slipped 5.4 percent from the previous week.  US Gulf declined 0.8 percent. 

·        
China said they have not resumed Canadian canola imports this week after Canada’s Agriculture Minister earlier this week mentioned China would allow imports to continue. 

·        
CNGOIC via Bloomberg

o  
China soyoil inventories at end-March 1.27MT, -90k tons m/m.  Soyoil inventories may continue to drop as weekly soy crush stays low

o  
Palm oil inventories at 800k tons, -130k tons m/m

o  
More restaurants are open for business

o  
China soy imports in March seen at 4.3m tons and 6.6m tons for April.  Exports of soybeans from Brazil rose in March

·        
Offshore values are leading CBOT soybean oil 49 points lower (34 lower for the week to date) and meal $0.10 lower ($0.20 lower for the week to date).

·        
Rotterdam vegetable oils this morning down 5 euros for soybean oil from this time for the previous session and rapeseed oil was up about 5 euros.   Rotterdam meal when imported from SA were mostly 4-8 euros
lower. 

·        
China: 

·        
China cash crush margins as of this morning, using our calculation, were 207 cents per bushel (205 previous) and compares to 184 cents a week ago and negative 52 cents around this time last year. 

·        
Malaysian palm oil slipped 5.6% this week.  The palm premium over gasoil is running at its highest level since 2016 at $215/ton. 

·        
Malaysia is seeing a labor shortage after many migrant workers returned home.

·        
Malaysian palm markets:
 

 

 

 

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 higher on end of week positioning. The Chicago May contract fell the past four previous sessions to a 2-week low. 
  
• Kazakhstan
  announced April wheat and flour export quotas of 200,000 tons and 70,000 tons, respectively. 
  
• With
  corn attempting to recover, that was lending support to US wheat. 
• Brazil
  millers asked the government to abolish its 10-percent wheat import tariff for countries residing outside of the Mercosur trade agreement and drop sanitary restriction on Russian wheat.  Concerns over Argentina logistic problems prompted the request. 
  
• Black
  Sea dryness may continue into next week for half of the winter grain areas of Ukraine and Russia as the forecast for rain is less than 50 percent of normal through the end of next week.  Bloomberg noted Maxar mentioned soil moisture in the top five Russian
  winter-wheat regions dropped below normal by the most since at least 2008 as of April 1. 
  
• Egypt
  said they have enough wheat in its strategic reserves to last more than four months.  They may tender soon.  Egypt looks to increase their grain and other agriculture commodity stocks to last six months.  Many commodities are at three months, with some at
  5-6 months.  Egypt will start buying local wheat around April 15. 
• Iraq
  said they expects to market 5-6 million tons of local wheat this season, which begins April 10. 
  
• FranceAgriMer
  reported French soft wheat conditions as of March 30 declined one percentage point from the previous week for the combined good and excellent conditions to 62 percent and compare to 84 last year.  Winter barley conditions decreased one point to 62 percent
  and compare to 80 year ago.  Durum was 64 percent, down 2, and compare to 72 last year. 
  
• EU
  May milling wheat was up 1.75 euros to 192.50/ton as of early this morning. 
  

 

Export Developments.

• Results are awaited on Algeria seeking wheat.  
• 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. 
  
• Ethiopia seeks 400,000 tons of wheat on April 7. 
  
• 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

• US rice futures hit their highest level in nearly six years. 
  
• South Korea bought 49,993 tons of non-glutinous brown rice last week. Details via Reuters.

    TONNES(M/T)    ORIGIN     PRICE($/T)    ARRIVAL

        20,000     China        $818.88      July 31, 2020

        15,000     Thailand    $493.50      Sept. 30, 2020

        14,993     Thailand    $498.75      Oct. 31, 2020

• The Philippines seek 300,000 tons of rice from Thailand and Vietnam.
  
• Cambodia will ban rice exports on April 5.