FW: FI Morning Grain Comments 12/31/19

Happy New Year

 

PDF attached

 

Morning. 
Thin volume in outside commodity markets could create a slightly volatile trade today in ags.

 

Tuesday
will be a regular session for CBOT agriculture. 

 

 

Weather

 

Argentina
saw good rains over the past day.

 

From
World Weather Inc.

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

South
America weather will be mostly good over the next two weeks. Recent rain in the previously dry areas of Argentina is improving recently planted crop emergence and establishment while crops planted earlier in the year likely experienced some stress relief and
this trend may continue for a while as additional showers and thunderstorms occur in many areas. The northeast will be driest

            Brazil
weather will continue favorably mixed, although a close watch on the south is warranted due to net drying over the next ten days. Dryness will have to breakdown later in January to protect production potentials.

            In
the meantime, recent rain in southern Sumatra and western and central Java and has been improving soil moisture for better oil palm production potentials in 2020. The rain must be sustainable over multiple weeks and it looks like that may be the case.

            South
Africa crop weather will remain varied offering some timely rainfall to many areas, but frequent follow up rain will be needed to seriously change crop moisture and development potential. Some areas may not get enough rain to counter evaporation in the next
two weeks while others will.

            India
will get some additional rain in the central and east this week benefiting some summer crops. Timely precipitation has occurred in many other areas and more is expected later in January to support good yields.

            Winter
crops in China and Europe are semi-dormant and mostly in good shape. Rain in China this winter will help to improve soil moisture for better winter rapeseed establishment prior to reproduction in the spring.

           
Late season farming activity in the United States will not advance very well for a while, but that is no change from last week’s weather outlook.

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

 

MARKET
WEATHER MENTALITY FOR WHEAT: 

Precipitation
in the U.S. hard red winter wheat production region during the weekend bolstered topsoil moisture for improved wheat establishment in the spring. Additional moisture will be needed periodically through the winter to ensure the best crop development potential.

            More
rain in the U.S. Midwest and snow in the southeastern Canada will leave those wheat areas plenty wet for spring fieldwork.

            Winter
crop conditions in China may improve if precipitation falls as expected this week and next week. The moisture will fall in areas that were a little dry in the autumn. Improvements in wheat establishment prior to reproduction cannot occur until warmer weather
comes along in the spring, but the moisture should still be available to crops unless a warm and dry finish to winter and start to spring takes place.

           
India wheat production areas will receive some welcome precipitation this week further ensuring high yields this winter.

            Crops
in Europe and the western CIS are dormant and mostly in fair to good shape. Dryness in the autumn left many crops in southeastern Europe, including Ukraine, and Kazakhstan with poor emergence and establishment. Timely rain and seasonable temperatures will
be needed in the spring. Until then, snow is needed to protect poorly established crops from any harsh or extreme weather that suddenly evolves. There is no threat of damaging cold for the next two weeks

           
North Africa wheat is in fair to good shape. Crops in southwestern Morocco are not well established and need timely rain in the next few weeks to induce better establishment prior to reproduction.

            Argentina
harvesting was disrupted during the weekend by some rain and additional precipitation periodically into next week will likely perpetuate this concern, although more than 80% of the wheat crop has been harvested. Barley has not been harvested as well.

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

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

 

 

 

Bloomberg
Ag Calendar

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

 

CFTC
Commitment of Traders

·        
As of 12/24/19

·        
The traditional fund net long position in soybean oil continued to take off to the upside while meal continues to struggle. 

·        
Managed money in soybean oil futures and options increased their net long position by 16,080 contracts to 140,752 lots, largest position since November 2016.  The record is 126,543 contracts in early November
2016.  Prices back then were around 37-38 cents/pound. 

·        
For managed money, they added an impressive 46,119 net long contracts, cutting the short position to net 33,888 lots.

·        
Traditional futures only funds bought 20,600 corn, 38,300 soybeans, 7,200 meal, 13,700 soybean oil and sold 11,100 Chicago wheat for the week. 

·        
Open interest in soybeans decreased 37,800 contracts futures and options combined. 

·        
Funds were much more long than expected for corn (by 28,900), soybeans (by 28,200) and soybean oil (16,600). 

 

 

 

 

 

 

 

 

 

USDA
inspections versus Reuters trade range                                            

Wheat      
312,017     versus  300000-650000           range

Corn         
408,946     versus  450000-650000           range

Soybeans  
911,482     versus  750000-1300000         range

 

 

 

 

Macros.

 

 

Corn.

·        
Grains are higher in part to weakness in the USD and end of month positioning.

·        
USDA US corn export inspections as of December 26, 2019 were 408,946 tons, below a range of trade expectations, above 401,894 tons previous week and compares to 952,881 tons year ago. Major countries included
Mexico for 167,153 tons, Japan for 109,072 tons, and Colombia for 69,153 tons.

·        
China plans to sell 30k pork from frozen reserves on Jan 3.

 

Export
Developments

• India’s
  MMTC seeks 50,000 tons of non-GMO corn on Jan 2, open until Jan 9, for arrival by January 22. 
  

 

Soybean
complex.

·        
Soybeans are slightly lower following soybean oil, but losses are limited to China/US trade optimism and higher meal.  Crush margins are slightly on the defensive. 

·        
Look for a light trade today.  On Thursday we get NASS crush. 

·        
USDA US soybean export inspections as of December 26, 2019 were 911,482 tons, within a range of trade expectations, below 1,097,748 tons previous week and compares to 756,153 tons year ago. Major countries
included China Main for 280,907 tons, Bangladesh for 112,303 tons, and Mexico for 91,576 tons.

·        
SGS reported December Malaysian palm oil exports down 6 percent at 1.325 million tons from 1.410 million tons during November.  

• Rotterdam
  vegetable oils this morning were down 5 euros for nearby soybean oil positions and 2 lower for rapeseed oil. Rotterdam meal when imported from SA were mixed. 
  

·        
Offshore values are leading CBOT soybean oil 48 points lower point1 lower and meal $1.00 lower.  

·        
China cash crush was last 141 cents per bushel (unch prev.), compared to 131 on Friday and 11 cents year ago. 

·        
China:

·        
3-year high: Malaysian palm markets:
 

 

Oilseeds
Export Developments

• USDA
  CCC seeks 14,650 tons of packaged vegetable oils for export to Yemen on January 7 with shipment February 1-29 (Feb. 16-Mar. 15 for plants at ports). 
  

 

 

 

Wheat

·        
Wheat futures
are higher on short covering and weaker USD. 

·        
March Paris wheat futures earlier were down 0.50 at 188.50 euros.

·        
News is light.

·        
USDA US all-wheat export inspections as of December 26, 2019 were 312,017 tons, low end a range of trade expectations, below 605,545 tons previous week and compares to 380,421 tons year ago. Major countries
included Indonesia for 74,103 tons, Japan for 55,638 tons, and Korea Rep for 41,085 tons.

 

 

Export
Developments.

• Ethiopia awarded 600,000 tons of wheat for import.
  
• Jordan seeks 120,000 tons of wheat on January 7.
  
• Morocco seeks to import about 355,000 tons of US durum wheat on January 9 for arrival
  by May 31.
• 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. 

 

Rice/Other

• Results awaited: 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.