FW: FI Morning Grain Comments 04/06/20

PDF attached

 

Morning.

 

Revised
daily estimate of fund positions attached. USDA US crop progress is due out later today and US winter wheat ratings will be out.  It was at 52 as of late November 2019. 
We think it could end up around 49 percent for the combined good and excellent categories for the week ending April 5.  The five-year average for early April winter wheat crop conditions is 48 percent (2018 was unusually low at 32 percent). 

 

China’s
official manufacturing PMI rebounded to 52 in March after hitting an all-time low of 35.7 in February, boosting confidence of a recovery in China’s economic activity.

 

Dry
weather for Ukraine and Russia may expand this week. Also, dryness for SW Kansas, NW Ok, and SW Colorado with cooler, sometimes frigid temps, should be monitored. The US$ is slightly higher and WTI lower in the nearby position. 

 

 

 

Weather

World
Weather’s take on the 06z run this morning:

Many
changes this morning, but the general theme is still promoting shots of colder air in the middle and eastern parts of the nation starting in the second half of this week and lasting out ten days. Some shots of rain are expected in key crop areas, but big heavy
soakings of rain like that of recent past weeks are not very likely. Drying rates will be slow because of the cool weather.  However, the early to middle part of this week warms up nicely and will give many areas a few days of “drier” weather and some areas
will experience welcome drying of topsoil while river and stream flows slowly come down from their recent flood levels.  The European and GFS models promote a possible more significant storm system in the Midwest April 13-15 that will be watched for. In the
meantime, rain will fall more aggressively from eastern Texas to the Carolinas this weekend and both models are carrying this feature.

 

Overall,
dryness in interior southern Brazil remains for some areas like Sao Paulo and immediate neighboring areas over the next ten days, based largely on the European model, although some rain will fall in Parana and neighboring areas today which may be the last
of significant rain for a while in that region. The general theme still promotes restricted rainfall in the interior southern parts of Brazil for a while and that region needs to be closely monitored since a fair amount of second season corn is produced in
that region. The worry is not about this two-week forecast period, but more about how much moisture will be retained in the region when reproduction for late planted crops occurs in mid-May.

 

Seven-day
outlook: rain on the back end of the outlook

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

 

 

 

Bloomberg
Ag Calendar

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

 

 

 

 

 

CFTC
Commitment of Traders

·        
As of 3/31/20

·        
Trade estimates for the daily estimate of traditional funds missed big for four of the five agriculture commodities we widely track.

·        
Funds were less long than estimated for corn by a large 38,900 contracts.

·        
For soybeans, meal and Chicago wheat funds were more long than expected, and  the soybean oil funds position was much less long than predicted. 

 

 

 

·        
Note this does not reflect some of the intensive selling the market saw during the last three days of this week.  Going home Friday, we estimate the positions at:

·        
For the second week in a row, oats were not reported. 

 

 

 

Macros

Iraq
Oil Ministry: Rocket Attacks On Fields Won’t Halt Output

 

 

Corn.

·        
Corn futures are lower and reach a fresh 3-1/2-year low on eroding US industrial corn usage.  May is down for the 7^th consecutive session.  Weakness in nearby WTI crude oil is weighing on prices.  Saudi Arabia and Russia delayed
a meeting to discuss output cuts.

·        
Last week the U.S. biofuel industry has asked the Trump administration for aid via CCC program.  The letter to the White House noted US plants idled some 3.5 billion gallons of annualized ethanol production, 25 percent of the industry. 
That figure is higher than 3 billion talked about earlier last week. 

·        
The US Farm Bureau in a letter to USDA that US producers are in financial need, stressing direct payments should be provided to cotton producers, livestock and cattle ranchers.

 

Export
Developments

• Syria
  seeks 50,000 tons of soybean meal in a combo with 50,000 tons of corn on May 12.
  

 

Soybean
complex.

• CBOT
  soybean
  complex was mixed with price leadership from a lower meal trade.  K/N meal spreads were again under pressure.  Large crop projection for Brazil and Argentina are weighing on soybean prices. Soybean oil was moderately higher on product spreading.  US lack of
  producer selling may slow price losses in nearby soybeans which are down 4 consecutive session. 
  
• China
  is on holiday.  Buying interest was light for current year and next year shipments.
  
• Egypt
  said they have enough vegetable reserves to last 5.8 months. 

·        
The Brazilian real is down but near a record. It was last 5.2690 around 8:02 am CT. 

·        
Late last week Abiove revised their Brazil soybean production to 120.75 million tons from 118.7 million in February, but left exports and crush unchanged at 73.5 million and 44.5 million tons.  This boosted
their ending stocks from 1.3 to 3.3 million tons.  ARC Mercosul put the Brazil 2019-20 soybean production at 123.5 million tons and harvesting at 86%. 

·        
AgRural reported 83% of the Brazil crop had been harvested as of April 2. 

·        
Argentina’s BA Grains Exchange said they do not expect much rain for Pampas through April 8.  8 percent of the soybean crop had been harvested, below average. 

·        
India March edible oil imports fell 3 percent from the previous year and November-March imports are now down 10 percent from the previous year.  Palm imports in March were only 335,308 tons, down 38 percent from the previous month, and
compare to 802,443 tons in March 2019. 

·        
Ukraine sunflower exports since September were 3.086 million tons, up 78 percent from 1.731 million year earlier.  APK-Inform.

·        
Offshore values are leading CBOT soybean oil 9 points higher and meal $2.70 higher. 

·        
Rotterdam vegetable oils this morning up about 5-10 euros for soybean oil from this time for the previous session and rapeseed oil was up about 18-25 euros.  Rotterdam meal when imported from SA were mostly
2-7 euros lower. 

·        
China: 

·        
China cash crush margins as of this morning, using our calculation, were 207 cents per bushel and compares to 207 cents a week ago and negative 62 cents around this time last year. 

·        
ITS: Malaysian palm exports for April 1-5 reported 10 percent above same period last month.

·        
Malaysian palm markets:
 Higher
on weaker MYR currency and positioning ahead of MPOB S&D due out Wednesday. 

 

Late
last week USDA NASS revised their monthly fats and oils report.

• February
  crush revised lower by 6.3 million bushels to 175.3 million
• February
  Soybean oil stocks revised lower 43 million pounds to 2.377 billion pounds
• February
  SBO unchanged at 11.43
• February
  soybean meal production revised down 148,000 short tons to 4.123 million short tons.
  
• February
  soybean meal stocks revised down 22,500 short tons to 442,000 short tons
• February
  soybean meal yield revised down to 47.04 from 47.05. 
• https://downloads.usda.library.cornell.edu/usda-esmis/files/mp48sc77c/ng452308w/g158c2196/cafo0420.pdf
  

 

Oilseeds
Export Developments

• Saudi
  Arabia asked their private sector to import 355,000 tons of wheat. 
• Syria
  seeks 50,000 tons of soybean meal in a combo with 50,000 tons of corn on May 12.
  
• Egypt
  bought 12,000 tons of local soybean oil at 10,225 Egyptian pounds ($648.79/ton) for May 1-25 delivery. 
  

 

 

Wheat

• US
  wheat futures are lower on good global import demand and Black Sea weather. 
  
• USDA
  US crop progress is due out later today.  US winter wheat ratings will be out.  It was at 52 as of late November 2019.  We think it could end up around 49 percent for the combined good and excellent categories for the week ending April 5.  The five-year average
  for early April winter wheat crop conditions is 48 percent (2018 was unusually low at 32 percent). 
  
• Ukraine’s
  parliamentary committee said there is no reason to ban grain exports.  They noted they have about 2.5 million tons of wheat in stocks to export by end of June after exporting 17.7 million tons so far this season.  Ukraine’s Presidential Commissioner for Land
  Affairs said they have enough the country has enough wheat for bakery demand and noted stock of wheat at the end of June, which is the end of the marketing year, will be 21% higher than the forecasted total amount of wheat consumption in the domestic market. 
  
• Black
  Sea dryness may continue into this 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. 
  
• Saudi
  Arabia’s SAGO started buying local wheat.  Up to 700,000 tons of local wheat are allowed.
• Egypt
  will consider floating wheat import tenders on a C&F basis, not FOB, and hold a separate tender for freight due to uncertainty origin of purchase will be unable to fulfill commitments due to potential logistical problems over coronavirus.  Last week 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. 
  
• Iraq
  said they expects to market 5-6 million tons of local wheat this season, which begins April 10. 
  
• EU
  May milling wheat was up 3.25 euros to 194.25/ton as of early this morning. 
  

 

 

Export Developments.

• Syria received 25,000 tons of wheat from Russia. 
  
• On Friday Algeria was thought to have passed on milling wheat. 
  
• Results awaited: 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

• Cambodia banned rice exports on April 5. 
  
• China donated 1,000 tons of rice to South Sudan.
  
• Egypt said they have enough sugar reserves to last 8.6 months, and enough rice to last 4.2 months.  Egypt consumes 2.5 million tons of rice a year.