FI Evening Grain Comments 02/12/21

PDF Attached includes selected global STU graphs

 

US
Holiday Monday. Several other countries will also be on holiday.  CBOT reopens Monday night. 

 

 

WASHINGTON,
February 12, 2021—Private exporters reported to the U.S. Department of Agriculture the following activity:

Export
sales of 195,338 metric tons of corn for delivery to Costa Rica.  Of the total, 135,644 metric tons is for delivery during the 2020/2021 marketing year and 59,694 metric tons is for delivery during the 2021/2022 marketing year; and

Export
sales of 115,577 metric tons of corn for delivery to Guatemala during the 2020/2021 marketing year.

 

Weather

 

Source:
World Weather Inc. and FI

Source:
World Weather Inc. and FI

 

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Market
worry over Brazil harvest weather for soybeans and planting progress for Safrinha corn will continue, although the past week has been ideal in firming up the topsoil and supporting faster fieldwork. Expected rain over this coming week will disrupt fieldwork,
but it will not likely bring all field operations to a halt. Northern and eastern Mato Grosso may have the biggest problem with rain delays, although some will occur in other areas, as well.

In
Argentina, weather conditions are expected to be mixed with areas of drying from the southwest into central parts of the nation that may eventually raise a few flags, but there is still time for the outlook to change as crops thrive on favorable subsoil moisture
outside of southern La Pampa and southwestern Buenos Aires where conditions are already too dry.

            South
Africa production remains good with little change likely. Recent rain in New South Wales has been good for summer crop development, But Queensland needs greater rain.

            Weather
in rapeseed areas of China remains favorable and the same is true for India, although greater rain might be good for all of its winter crop areas this month.

            Winter
crops in Europe are plenty wet and cold with little change likely for a while. No harm to crops in the continent will occur anytime soon. That is true for Ukraine crops as well. There is a rising potential for flooding in far western Europe, northwestern and
west-central Russia and in western and north-central Ukraine this spring because of wet soil and deep snow cover outside of Western Europe.

            Overall,
weather today will continue to maintain a floor of support for the market’s bullishness, but caution is still warranted because the perception of what is happening in Brazil may be a little skewed from reality.

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Most of the wheat production losses in the northern U.S. Plains from recent bitter cold should be low from a national perspective, but locally farmers will not be pleased. Damage in Canada was even less of an impact on its winter
grain crop, but some loss is expected there as well.

            There
is some potential for crop damage in a few Kansas and Colorado production areas Saturday as temperatures drop near and below zero Fahrenheit in snow free areas. Crops in the region have been adequately hardened against the cold which should help reduce the
risk of loss, but damage cannot be ruled out. After that, snow will fall across most wheat areas in Kansas to protect crops from the coldest weather expected late this weekend and early next week. That should prevent any potential for additional damage.

Mostly
of the U.S. Midwest will also receive snow before temperatures get cold enough for damage. Only a few locations in the region are snow free and the potential for loss is low.

            No
crop damage has occurred in Europe or the western CIS so far this season and this week will likely maintain a mostly good environment for crops with snow cover to adequately protect wheat, barley and rye from permanent damage because of bitter cold temperatures.

           
Wheat conditions in China remain very good and that of India are fair to good. Rain is needed in most of India to induce better yield potentials, although the nation is still expecting a fair-sized crop. Some moisture will occur in central India next week.

            North
Africa wheat is drying out except in north-central Morocco where conditions have been ideal. Drought has already cut into southwestern Morocco production and the same may occur in northwestern Algeria if spring rainfall is not very good.

            Middle
East precipitation has been erratic and often light this winter and a boost in precipitation would be welcome especially from Iraq to Afghanistan. Turkey precipitation has been better distributed than in most other areas.

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

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

Friday,
Feb 12:

• ICE
  Futures Europe weekly commitments of traders report, 1:30pm (6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• Russian
  consultant IKAR holds agricultural conference, day 2
• New
  Zealand Food Prices
• HOLIDAY:
  China, Hong Kong, Indonesia, Malaysia, South Korea, Singapore, Vietnam, Thailand, Philippines

Monday,
Feb 15:

• Malaysia’s
  Feb. 1-15 palm oil export data
• Malaysia
  CPO export tax for March (tentative)
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• HOLIDAYS:
  Chinese New Year, U.S., Canada, and Carnival holiday in much of South America including Brazil and Argentina

Tuesday,
Feb 16:

• USDA
  Export Inspections, 11am
• Abares
  February Australian crop report
• MPOB
  and Universiti Kebangsaan Malaysia webinar on palm oil’s marketability to EU
• Green
  Coffee Association releases U.S. monthly green coffee stockpiles data
• USDA
  sugar and sweeteners outlook
• New
  Zealand dairy trade auction
• Tereos
  earnings
• HOLIDAYS:
  China, Carnival holiday throughout much of South America

Wednesday,
Feb 17:

• KL
  Kepong earnings
• HOLIDAY:
  China

Thursday,
Feb 18:

• EIA
  weekly U.S. ethanol inventories, production
• USDA
  Net Export Sales, 8:30am
• USDA
  Corn, Cotton, Soybean, Wheat Acreage Outlook, 8:30am
• Sime
  Darby Plantation earnings
• Port
  of Rouen data on French grain exports

Friday,
Feb 19:

• ICE
  Futures Europe weekly commitments of traders report, 1:30pm (6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• FranceAgiMer
  crop conditions report
• USDA
  Corn, Cotton Soybean, Wheat End Stock Outlook, 7am
• U.S.
  Cattle on Feed, 3pm

Source:
Bloomberg and FI

 

 

CFTC
Commitment of Traders

Trade
estimates for the traditional funds were nowhere near actual for the week ending February 9th, a testament that when you see volatile markets the trade tends to miss CFTC traditional and managed money positions.  Key takeaway is there is price upside left
for managed money to reach multi month and/or multiyear record net long positions if we continue to see the uptrend in CBOT agriculture futures. 

 

 

 

 

 

 

SUPPLEMENTAL     
Non-Comm               Indexes                  Comm

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
386,552      2,685    395,142      8,516   -771,378    -18,127

Soybeans          
158,440     12,389    154,281     10,459   -316,822    -26,530

Soyoil             
73,799      2,800    132,723      3,899   -229,111     -8,069

CBOT
wheat          -7,613     -2,131    143,015          6   -124,841       -149

KCBT
wheat          34,922      3,143     66,682     -2,080   -103,861     -2,188

=================================================================================

 

FUTURES
+ OPTS     Managed                 Swaps              Producer

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
358,807     13,659    257,367     10,867   -761,374    -18,898

Soybeans          
171,770     15,506     68,097      7,674   -293,187    -25,813

Soymeal            
69,625      2,114     67,701      3,589   -192,042    -10,576

Soyoil            
110,392      4,462     89,597      3,070   -235,512     -8,031

CBOT
wheat          19,306       -578     86,685     -1,689   -108,674      3,699

KCBT
wheat          60,092      3,691     42,088     -1,553    -98,508     -2,098

MGEX
wheat          12,933     -1,167      3,805         63    -21,813      2,648

                
———- ———- ———- ———- ———- ———-

Total
wheat         92,331      1,946    132,578     -3,179   -228,995      4,249

 

Live
cattle         86,610     11,439     82,640      3,900   -175,632    -12,931

Feeder
cattle        1,334       -126      7,752        -81     -2,034        105

Lean
hogs           56,176      4,823     52,783      2,012   -105,442     -7,898

 

                     
Other             NonReport                  Open

             
          Net        Chg        Net        Chg   Interest        Chg

Corn              
155,515    -12,555    -10,315      6,926  2,693,387     53,588

Soybeans           
49,220     -1,047      4,101      3,681  1,321,924     10,641

Soymeal            
17,667       -718     37,050      5,590    497,713     13,722

Soyoil             
12,933       -870     22,590      1,369    601,413     20,035

CBOT
wheat          13,243     -3,706    -10,561      2,275    557,908     -7,829

KCBT
wheat          -5,928     -1,164      2,257      1,125    248,840      5,427

MGEX
wheat           1,781     -1,386      3,295       -160     94,819        178

                
———- ———- ———- ———- ———- ———-

Total
wheat          9,096     -6,256     -5,009      3,240    901,567     -2,224

 

Live
cattle         24,601        -89    -18,220     -2,319    372,822     -8,292

Feeder
cattle        2,562        567     -9,615       -465     45,962        833

Lean
hogs            7,568         39    -11,085      1,024    288,133     15,147

Source:
Reuters, CFTC and FI

 

Macros

Canada
Wholesale Trade Sales (M/M)) Dec: -1.3% (est -1.7%, prev 0.7%)

US
Univ. Of Michigan Sentiment Feb P: 76.2 (est 80.9; prev 79.0)

–
Current Conditions Feb P: 86.2 (est 89.0; prev 86.7)

–
Expectations Feb P: 69.8 (est 76.0; prev 74.0)

–
1-Year Inflation Feb P: 3.3% (prev 3.0%)

–
5-10 Year Inflation Feb P: 2.7% (prev 2.7%)

 

Corn.

• Corn
  futures traded mixed, closing lower, probably on soybean/corn spreading.  USDA announced a combined 310,915 tons of corn sold to Central America, but since China was not involved, some traders may have been disappointed.  News was light with many countries
  on holiday. 
• March
  support over the short term is seen at $5.3650 and resistance at $5.5275. 
  
• Note
  USDA is due out with commodity outlooks for the US 2021-22 supply and demand a week from Friday.  There are some in the camp that USDA may unveil a 94 million US corn planted area.  An area reported above 92.5 million could be negative for new-crop December
  corn futures, based on our observations of selected estimates released in recent months. 
  
• USDA’s
  annual Ag Outlook Forum:  https://www.usda.gov/oce/ag-outlook-forum
  

 

Bloomberg
estimates below:

 

Corn
Export Developments

·        
Under the USDA 24-hour reporting system, private exporters reported export sales of 195,338 tons of corn for delivery to Costa Rica.  Of the total, 135,644 metric tons is for delivery during the
2020/2021 marketing year and 59,694 metric tons is for delivery during the 2021-22 marketing year.

·        
Under the USDA 24-hour reporting system, private exporters reported export sales of 115,577 tons of corn for delivery to Guatemala during the 2020-21 marketing year. 

 

 

Updated
2/10/21

March
corn is seen trading in a $5.20 and $6.00 range

May
corn is seen in a $5.15 and $6.00 range.

July
is seen in a $5.00 and $6.00 range.

December
corn is seen in a $3.75-$5.50 range.

 

Soybean
complex.
 

• March
  soybeans traded choppy on Friday but in the end led the front three contracts to end higher on technical buying.  November soybeans closed 1.25 cents lower.  Lack of direction with China and other countries on holiday should be taken in consideration.  The
  US and part of SA countries are on holiday early next week so positioning, in spreads, and profit taking, should also be noted in Friday’s trade.  The outlook on soybean prices appears to remain bullish but look for supply traders to struggle between the US
  running out of soybeans and upcoming large SA crop coming online, in the near future.  Late next week USDA will unveil their initial new crop US S&D estimate for US soybeans, and this could make or break crop-year spreads over the preceding two weeks.  US
  spring weather will be in focus from the late February through USDA planting intentions, along with shipping lineups for Argentina, Brazil and Paraguay.  La Nina remains a threat to the US Midwest planting season as it could hinder fieldwork amid excessive
  rains. 
• The
  product spreads were active, remarkably with soybean oil holding above water despite slowing US export commitments, and palm oil flowing into India over competing vegoils.   We do not have confidence soybean oil over the short term unless there is evidence
  US domestic demand will overtake export interest.  India soybean oil imports during January were down sharply as the country imported a large amount of palm oil due to lower November through January import tariffs, and Argentina shipping woes of soybean oil
  during the trucker strikes. 
• ICE
  canola nearby futures were up $28.90 or 4.10 percent.  Reuters noted short covering, but the trade should recognize stocks are low from robust Canadian canola exports and strong crush. 
  
• Reuters
  poll for NOPA calls for 183.1 million bushels crushed during January (183.2 Dec.) and stocks at 1.763 billion pounds (1.699 end of Dec.). 
  
• Argentina
  grains markets will be closed on Monday and Tuesday for local holidays.
• India’s
  January palm oil imports were 780,741 tons of palm, a 31% increase from a year earlier.  Soybean oil imports fell 66% to 88,667 tons.  CPO imports increased 24% to 2.17 million tons in the first quarter of 2020-21.  Sunflower oil imports fell 32% to 205,227
  tons in January.

 

Soybean
Export Developments

• Turkey
  seeks 25,000 tons of sunflower oil on Feb 18.  Shipment is sought between Feb. 26 and March 20.
  

 

 

Updated
2/9/21

March
soybeans are seen in a $13.50 and $15.00 range. 

March
soymeal is seen in a $415 and $470 range.

March
soybean oil is seen in a 44 and 47.00 cent range

 

Wheat

• US
  wheat closed
  mixed with KC lading Chicago higher and MN lower in the nearby contracts.  Back in focus, as it has been a persistent problem past two weeks, is cold temperatures for uncovered US and now Black Sea wheat areas. Over the next week temperatures will be cold
  again.  According to Bloomberg, about 15 percent of the Ukraine wheat area is lack snow coverage.  For the US, Kansas and Colorado is also lacking snow (see map below the US wheat drought update).  To make matters a little more concerning, the US winter what
  areas are expected to see little precipitation over the next two weeks.  32% of the US winter wheat area is experiencing drought. 
  
• Wheat
  is a weed and tends to survive during harsh conditions. 

 

 

• EU
  March milling wheat was up 1.25 223.75 euros after starting the Chicago day session around unchanged. 
  

• US
  temperatures will remain cold for the balance of the week, raising concerns over winterkill.  Ukraine and eastern Europe will also see very cold temperatures next week. 
  
• US
  wheat country will see limited rain for the 8-14 period.

 

 

Export
Developments.

• Jordan
  seeks 120,000 tons of wheat on February 17.
• Jordan
  seeks 120,000 tons of barley on February 16.
• Japan
  seeks 80,000 tons of feed wheat and 100,000 tons of barley in a SBS import tender on February 16 for arrival by July 29. 
  

 

Rice/Other

·        
Mauritius seeks 4,000 tons of long grain white rice, optional origin, on March 2, for delivery between April 15 and June 15.

·        
National Cotton Council:  US planted area will drop 5.2% to 11.5 million acres this year

 

Updated
2/9/21

March
Chicago wheat is seen in a $6.30‐$7.00 range.

March
KC wheat is seen in a $6.00‐$6.70 range.

March
MN wheat is seen in a $6.00‐$6.55 range.