FW: FI Morning Grain Comments 12/24/19

PDF attached

 

Happy
Holidays! 

 

CBOT closes early on Tuesday
(12:05 CT) and will have a hard open Thursday.

 

 

CME Group
Holiday Calendar

https://www.cmegroup.com/tools-information/holiday-calendar.html

 

 

 

 

 

Weather

 

From
World Weather Inc.

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Brazil
and Argentina weather will be favorable over the next two weeks, although the ridge of high pressure in southern Brazil will have to be monitored this week to make sure it is only going to prevail this workweek. If it stays too long there could be a negative
impact on some crops.

            Argentina
should see timely rainfall in most of the nation over the next two weeks, although there will still be areas of lighter than desired rainfall. Temperatures will be warm, but not excessively hot. Crops are still stressed in the southwest, despite some recent
rain. More precipitation is needed in all central and southern crop areas.

            South
Africa rainfall will be erratic over the next ten days leaving some areas a little too dry while some beneficial crop and field conditions evolve in other areas.

            Eastern
Australia’s summer coarse grain and oilseed crops have been stressed in recent heat and dryness, but irrigated areas remain in the best shape. Rain later this week will likely be too close to the coast to benefit very many crops, but some eastern sorghum might
benefit from a little rain this workweek. Temperatures will not be as oppressively hot this week in eastern crop areas.

            Winter
rapeseed conditions have not changed much in Europe central Asia of China, but some rain in each of these areas will either improve crop conditions later this week or in the spring when seasonal warming returns.

            Late
season harvest progress in the U.S. will only be able to advance slowly in the next couple of weeks. Warm temperatures and limited precipitation through mid-week this week will help some areas. Snow melt and muddy field conditions will not allow much progress,
however.

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

 

MARKET
WEATHER MENTALITY FOR WHEAT AND OTHER SMALL GRAINS: 

Winter
wheat conditions in the west-central and southwestern U.S. Plains may improve later this week if the southwestern U.S. storm comes into the Plains as advertised today. The region needs moisture for improved crop establishment in the spring.

            Additional
rain in the Midwest later this week will maintain wet field conditions in soft red wheat production areas. Crop conditions will not change much, although rising soil temperatures may reduce winter hardiness as this week moves along especially in the south.

           
Argentina wheat harvesting will advance relatively well for a while as rainfall continues erratic and light. Last week’s rain briefly disrupted harvest progress, but might have been good for the most immature crops

           
Turkey and Syria will receive some needed rain this week improving their establishment potential. Most other areas in the Middle East have seen a good mix of weather this season.

            Winter
crops in Eastern Europe and the western CIS will not be vulnerable to any winterkill this week as temperatures remain well above average. Snow cover remains minimal

            North
Africa wheat is rated favorably, but more rain is needed in southwestern Morocco, Tunisia and some interior eastern Algeria locations.

            Recent
rain in Spain and Portugal has improved winter crop prospects for early spring crop development in February. Additional rain would be welcome.

           
Overall, weather today will likely produce a slightly 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

TUESDAY,
Dec. 24:

• Unica
  cane crush, sugar production
• U.S.
  poultry slaughter, 3pm

WEDNESDAY,
Dec. 25:

• Christmas
  Day

THURSDAY,
Dec. 26:

• Boxing
  Day
• AmSpec
  releases Malaysia’s Dec. 1-25 palm oil export data, 10pm Monday (11am Kuala Lumpur); SGS data due at 3pm KL

FRIDAY,
Dec. 27:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, 8:30am
• EIA
  U.S. weekly ethanol inventories, production, 11am
• U.S.
  agricultural prices paid, received, 3pm
• ICE
  Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions ~1:30pm (~6:30pm London)

SATURDAY,
Dec. 28:

• Nothing
  major scheduled

SUNDAY,
Dec. 29:

• Nothing
  major scheduled

MONDAY,
Dec. 30:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm

TUESDAY
DECEMBER 31

• AmSpec
  releases Malaysia’s Dec. 1-31 palm oil export data, 10pm Monday (11am Kuala Lumpur); SGS data due at 3pm KL

WEDNESDAY,
Jan. 1:

• Nothing
  major scheduled

THURSDAY,
Jan. 2:

• Australia
  commodity index
• USDA
  Soybean crush, DDGS production, corn for ethanol, 3pm

FRIDAY,
Jan. 3:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, 8:30am
• EIA
  U.S. weekly ethanol inventories, production, 11am
• ICE
  Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions ~1:30pm (~6:30pm London)

Source:
Bloomberg and FI

 

USDA
inspections versus Reuters trade range                                            

Wheat      
578,458     versus  375000-600000           range

Corn         
387,188     versus  500000-700000           range

Soybeans  
1,083,866  versus  1000000-1500000       range

 

Macros.

·        
Philadelphia Fed Non-Manufacturing Regional Business Activity Index 13.4 In Dec Vs 20.7 In Nov

·        
Fed Wage And Benefit Cost Index 45.3 In Dec Vs 36.7 In Nov

·        
NY Fed Accepts All Of $24.80 Bln In Bids At Overnight Repo Operation

 

 

Corn.

·        
Despite the USDA reporting a large US hog and pig population as of December 1, CBOR corn futures were moderately lower before the shortened day session.  Lower soybeans were weighing on prices.   

·        
CBOT March corn are back below their 100-day MA. 

·        
Futures volumes overnight were again low as we enter holiday mode. 

·        
China approved DDGS imports from Bulgaria. 

·        
AKIpress News Agency noted 1,000 tons of Kazakh corns was exported via train in containers to China, first shipment by train in history, a move that represents logistical improvement and opens the door for
agriculture trade between both countries.  China’s appetite for corn has increased in recent years and they no long rely solely on SA, Ukraine and US corn. 

·        
USDA US corn export inspections as of December 19, 2019 were 387,188 tons, below a range of trade expectations, below 699,673 tons previous week and compares to 1,014,931 tons year ago. Major countries included
Mexico for 214,126 tons, Japan for 97,760 tons, and Colombia for 16,316 tons.

·        
A Bloomberg poll looks for weekly US ethanol production to be unchanged at 1.064 million barrels from the previous week and stocks to increase 70,000 barrels to 21.877 million.

·        
No major surprises were seen this quarter for the USDA hogs and pigs report. All US hogs as of December 1 were 3 percent above a year ago, as expected.  Kept for breeding was 2.1 percent higher, a half percentage
point above an average trade guess, and kept for market 3.1 percent above 2018, as expected.  The pig crop expansion was less than expected. 

 

 

Export
Developments

• South
  Korea’s MFG bought 66,000 tons of optional origin corn at around $209.74 a ton c&f for arrival in South Korea around April 1, 2020.
• India’s
  NAFED seeks 100,000 tons of corn from Ukraine on December 3 with offers valid until December 24 for shipment between Jan. 10 and Jan. 31. 
  

 

 

Soybean
complex.

·        
CBOT soybeans
fell from a 6-week low. Prices were up the last two sessions.  Soybean meal and oil were lower as well.  Egypt is in for vegetable oils. 

·        
There were no changes in soybean registrations but 110 soybeans came out of Chicago yesterday.  We now do think this was related to the 22 barges making their way to the Gulf as we were told Chicago is the
cheapest origin.  Looking at soybean basis at crush plants, they are up at several locations from the previous week.  This tells us the producers are getting friendly soybeans, perhaps on the US/China trade deal announcement, and we don’t see them selling
until the beginning of 2020 anyway.  US producers also have more incentive to sell the July contract with current cost of carry.  Lack of producer selling could narrow the Jan/Mar soybean spread to 7.00-7.25 cents.  It was last 8.50 at 8:01 am CT. 

·        
USDA US soybean export inspections as of December 19, 2019 were 1,083,866 tons, low end a range of trade expectations, below 1,335,473 tons previous week and compares to 699,629 tons year ago. Soybean shipments
to China slumped to 418k from about 830k previous week.  Major countries included China Main for 418,389 tons, Thailand for 89,318 tons, and Mexico for 58,601 tons.

·        
Argentina officials are in talks with producers that reside far from the ports and crushing plants to work on a plan to potentially lower export taxes.  Soybean export tax increased to 33% from about 25%. 

·        
Traders will be monitoring the high-pressure ridge over Brazil this week as it could yield beneficial rainfall for Argentina, if the ridge drifts into Argentina during the weekend and next week. 

·        
Offshore values are leading CBOT soybean oil 14 points lower and meal $2.70 lower.  

• Rotterdam
  vegetable oils this morning were about flat for nearby soybean oil positions and 3 lower for rapeseed oil. Rotterdam meal when imported from SA were mostly 1 euro higher. 
  
• China
  cash crush was last 134 cents per bushel (142 previous), compared to 160 on Friday and negative 21 cents year ago. 
  

·        
China prices:

·        
Malaysian palm markets:
 

·        
The European Union reported soybean import licenses since July 1 at 6.614 million tons, below 6.732 million tons a year ago. European Union soybean meal import licenses are running at 9.319 million tons for
2019-20, above 8.095 million tons a year ago. EU palm oil import licenses are running at 2.577 million tons for 2019-20, down from 3.166 million tons a year ago.

 

Oilseeds
Export Developments

• Egypt’s
  GASC seeks 30,000 tons of soyoil and 10,000 tons of sunflower oil on December 30 for arrival on Feb. 5-20.  They are in for local vegetable oils as well. 
  

 

Wheat

·        
After a two-sided trade on Monday, US wheat futures are higher on technical buying.  Morocco will lower its import duty on soft wheat early January. 

·        
Morocco set a timeframe to suspend its soft wheat customs duty. From Jan. 2 to April 30 they will suspend the 35% duty. 

·        
Reuters: Russian state-controlled grain trader United Grain Company (UGC) has drafted a new strategy aimed at increasing its own grain purchases and trade to 8 million tons a year by 2024, Russian daily the
Kommersant reported on Monday.

·        
Russia’s government reported the wheat crop for 2019-20 at 74.3 million tons, below the Deputy Prime Minister’s previous statement of around 75 million tons. 

·        
USDA US all-wheat export inspections as of December 19, 2019 were 578,458 tons, within a range of trade expectations, above 510,183 tons previous week and compares to 578,794 tons year ago. Major countries
included Mexico for 127,821 tons, Philippines for 101,398 tons, and Bangladesh for 64,172 tons.

·        
A winter storm is expected in the U.S. central and southwestern Plains late this week and into the weekend. Heavy snow is expected from Colorado to Nebraska. 

·        
China’s Shanghai Futures Exchange will loosen trading position limits on
product contracts next year to encourage trading.

·        
March Paris wheat futures earlier were unchanged at 187.00 euros.

·        
The European Union granted export licenses for 152,000 tons of soft wheat imports, bringing cumulative 2019-20 soft wheat export commitments to 13.402 MMT, up from 8.015 million tons committed at this time
last year, a 38 percent increase.  Imports are down 48 percent from year ago at 2.302 million tons.

 

Export
Developments.

• Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) in an SBS import tender on December 25
  seeks 120,000 tons of feed wheat and 200,000 tons of feed barley for arrival in Japan by March 12. 
  
• Mauritius seeks 95,000 tons of optional origin wheat flour on Jan. 10, 2020, for shipment between July 1, 2020,
  and June 20, 2021. 

·        
Syria seeks 200,000 tons of soft wheat from Russia on January 20, 2020.  They are in for 150,000 tons of wheat from Russia on December 18. 

 

Rice/Other

• South Korea is in for 42,222 tons of rice for April-June arrival on Dec 27. Reuters:
  

Details of the tender are as follows:

    TONNES(M/T)    GRAIN TYPE      ARRIVAL/PORT

         3,000     Milled Long     April 30, 2020/Busan

        17,000     Milled Medium   June 30, 2020/Busan

        22,222     Brown Medium    June 30, 2020/Busan

• Syria seeks 45,000 tons of white rice on Jan. 6, 2020.  (Reuters) Short grain white rice of third or fourth class
  was sought. No specific country of origin was specified in the tender, traders said.  Some 25,000 tons was sought for supply 90 days after confirmation of the order and 20,000 tons 180 days after supply of the first consignment.  The rice was sought packed
  in bags and offers should be submitted in euros.  A previous tender from the agency for 45,000 tons of rice with similar conditions had closed on Nov. 13.