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Weather

 

World
Weather Inc.

WEATHER
THAT MATTERS TODAY

  • Argentina
    is moving more deeply into a ten day period of net drying and warmth that promises to raise crop stress in many areas, but first in the driest areas from La Pampa and western Buenos Aires into southern Santa Fe and parts of southwestern Entre Rios
    • Potential
      yield losses will be on the rise as time moves along and the most stressful period is expected late next week through the following weekend unless rain falls more significantly than advertised
  • Brazil
    continues to struggle with its soybean harvest in the wetter areas of Mato Grosso and a few other areas
    • The
      rain, even though not unusual at this time of year, will hinder field progress at times
      • This
        matters more this year than in the past because the harvest is already notably late due to delayed seasonal rainfall in the spring which delayed the planting of soybeans
    • Weather
      patterns are not likely to change much during the next ten days to two weeks
  • Rio
    Grande do Sul, Brazil and Paraguay will dry down along with Argentina over the next ten days
    • Crop
      moisture stress will be on the rise and there is some potential for dryness to limit production in portions of both areas as time moves along
  • U.S.
    weather is drier today than advertised Tuesday especially in the first ten days of the outlook in the Plains and northern Midwest
  • U.S.
    northern Delta and Tennessee River Basin flood potentials will rise as waves of rain move across these areas late this week through Monday
    • The
      ground is already saturated and rainfall of 2.00 to 6.00 inches will lead to significant runoff and small river and stream flooding
    • Flooding
      of low-lying crop areas is also expected
  • U.S.
    Midwest snowmelt will increase runoff over the coming week, but no flooding of major rivers is expected, but some low-lying areas will experience days of standing water for a while
  • River
    ice on the Mississippi, Missouri and Illinois rivers will slowly decrease during the next week to ten days
  • U.S.
    hard red winter wheat is not likely to get much precipitation over the next ten days and net drying will result
    • Temperatures
      will be warm enough at times to increase evaporation leading to net drying and rising need for greater precipitation
  • Northern
    U.S. Plains and parts of Canada’s Prairies will receive brief bouts of light precipitation in the coming week, but no change in drought status is expected
    • Significant
      early spring precipitation is needed to recharge the soil with moisture to support planting
  • Southwestern
    U.S. drought is not likely to change anytime soon
  • West
    Texas dryness will prevail with some gradual loss in soil moisture expected due to warming temperatures
    • No
      relief is expected through the next ten days
  • South
    Texas crop areas are still too dry
    • 70-
      and 80-degree Fahrenheit high temperatures in the coming week will accelerate the dryness while raising soil temperatures. Planting in irrigated areas will occur soon
  • Assessments
    of freeze damage in South Texas and northeastern Mexico from earlier this month are ongoing, but damage to fruits and vegetables has been significant
  • Portions
    of North Africa are still too dry raising concern over spring crop development
    • Rain
      will fall in Morocco Thursday into Monday improving soil conditions in some areas
    • Northwestern
      Algeria and southwestern Morocco are driest, although Tunisia and northeastern Algeria have been drying down recently
  • India’s
    winter crop areas are drying down and will continue to do so for the next ten days
    • Yield
      potentials may slip a little during this period of time due to moisture stress, but production will still be favorable – just not as good as last year for some areas and some crops
  • Mexico
    drought conditions are still prevailing, although the impact on winter crops is low due to irrigation
    • Water
      supply is low in some areas and a notable improvement in rainfall is needed, but not very likely
    • Dryland
      winter crops are stressed and will yield poorly
    • Freeze
      damage is common in northern parts of the nation due to a couple of cold surges this winter
  • Eastern
    Australia has received periodic showers and thunderstorms this summer supplementing irrigation and supporting good production in irrigated areas
    • Dryland
      crop production may not be as good as expected this year especially in Queensland due to a somewhat restricted rainfall pattern in some areas at times

 

REST
OF THE WORLD

  • China
    has experienced no significant winterkill this year and soil moisture is favorably rated in most winter crop areas
    • A
      little too much rain will fall in the coming ten days in the Yangtze River Basin where local flooding might evolve
      • Southern
        rapeseed may not benefit from the wet bias and will require some drier weather soon
  • Russia’s
    winter crop areas have not been bothered by much winterkill this year
    • Bitter
      cold has occurred periodically, but snow cover has been present in most cases preventing significant losses
    • Production
      in Russia’s Southern Region is still expected to be down because of drought during the planting season
  • Long
    term moisture deficits are continuing in many areas from Turkey to Kazakhstan, southern Russia and Ukraine, despite improved soil moisture in parts of the region
    • Winter
      precipitation has been best in improving topsoil moisture in Ukraine, southeastern Europe and Turkey
  • Europe
    weather has become drier biased and a little warmer than usual.
    • Winter
      crops are still dormant or semi-dormant with little change likely into early March
    • Recent
      drier weather has reduced runoff and thus lowering the potential for spring flooding
  • West
    Africa rainfall will remain mostly confined to coastal areas for a while, but may drift to the north into some coffee and cocoa production areas early next week
  • East-central
    Africa precipitation will be scattered over the coming week
    • The
      lightest and most infrequent rain occurring in Ethiopia and parts of Uganda while the most significant rain occurs in Tanzania where all crop areas will get moisture
  • Southeast
    Asia rainfall will occur relatively normally over the next two weeks
    • Mainland
      areas will be mostly dry, although a few showers could pop up across the region next week
      • All
        of the precipitation will be sporadic and light having little to no impact on crops or soil conditions
    • Philippines
      rainfall will become more scattered and light after recent flooding rainfall from Tropical Depression Dujuan
    • Indonesia
      and Malaysia weather during the next two weeks will bring rain to most crop areas maintaining a very good outlook for crop development
      • Sumatra,
        Peninsular Malaysia and eastern Borneo have been drying out recently and greater rain is needed
  • New
    Zealand weather over the next ten days will include light rainfall and slightly warmer biased temperatures
  • Mexico
    precipitation in the coming ten days will be mostly confined to the east coast
  • Central
    America precipitation will continue greatest along the Caribbean Coast and in Guatemala while the Pacific Coast is relatively dry
  • Southern
    Oscillation Index is beginning to fall once again and was at +14.79 this morning. The index is expected to continue to fall over the next several days
  • Canada
    Prairies will experience seasonable temperatures over the next ten days with precipitation mostly near to below average
    • Some
      occasional precipitation will occur along the front range of mountains in Alberta and across the southwestern Prairies as well as in a few northeastern crop areas
  • Southeast
    Canada will experience near to above normal amounts of precipitation in the coming week while temperatures are seasonable.

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

Thursday,
Feb 25:

  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
  • Port
    of Rouen data on French grain exports
  • International
    Grains Council monthly report
  • Malaysia’s
    Feb. 1-25 palm oil export data
  • USDA
    red meat production, 3pm
  • EARNINGS:
    Minerva, BRF, FGV (tentative), Golden Agri

Friday,
Feb 26:

  • 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
  • U.S.
    agricultural prices paid, received, 3pm
  • Earnings:
    Olam
  • HOLIDAY:
    Thailand

Source:
Bloomberg and FI

 

Macros

US
10 Year Yield Rises To 1.40% The Highest Since Feb 2020

US
New Home Sales Change Jan: 923K (est 856K; prev 842K)


New Home Sales (M/M) Jan: 4.3% (est 1.6%; prev 1.6%)

 

Corn.

  • Corn
    futures ended higher despite poor US ethanol production.  Prices were likely led by higher soybeans and wheat.  Our outlook for US corn for ethanol use dropped 40 million bushels for 2020-21 because EIA reported the largest weekly drop in ethanol production
    since data began mid-2010, due to industrial production halts from the US deed freeze.  
  • Funds
    bought an estimated net 13,000 contracts. 
  • A
    Reuters poll calls for South Africa’s CEC to initially report their 2020-21 corn production at 16.872 million tons, up from the 15.300 million tons last season.  The first survey of the season is expected to show 8.929 million tons of white maize and 7.943
    million tons of yellow maize.  They will release the report on Thursday. 
  • The
    US deep freeze had a very large impact on US weekly ethanol production and time will tell if the industry can recover back above 900,000 barrels per day by the end of this month.  Ethanol production fell 6.2 percent or 253,000 barrels per day to 658,000, lowest
    level since the height of the world pandemic shutdowns nearly a year earlier, and down about 38 percent from this time a month ago.  This was the largest weekly drop for any week since weekly data began in 2010.  (Estimates ranged from 727-910 thousand barrels
    for production, down 92k average, and stocks to be down 207k).  Our bias is for US corn for ethanol use to end up below USDA’s 4.950 billion bushel outlook if ethanol blend rates fail to recover by the summer driving months to its respected linear three year
    trend.  Looking at early September through February 19th ethanol production, implied corn use to make ethanol is down 9.7 percent from the same period a year earlier.  Gasoline stocks increased 12,000 barrels to 257.1 million.  Refinery and blender
    net input of oxygenates fuel ethanol was only 725,000 barrels per day for the week ending February 19, down nearly 20 percent from a year ago.  Gasoline demand had a large impact on ethanol use as the ethanol blend rate remained above 89 percent (90.6% for
    the week). 
  • Our
    February projection for US ethanol production was revised lower to 23.191 million barrels from 25.109 million barrels previously. US corn for ethanol use is now seen at 4.960 billion bushels, down from 5.000 billion previously and compares to 4.950 billion
    bushels by USDA and 4.852 billion year ago.  The 40 million bushel decrease in industrial demand will likely get absorbed into exports when modifying our US balance sheet, taking int account delayed Brazilian Q4 (Oct-Sep) corn shipments (soybean export season
    extended) and strong Asian demand for US corn. 

 

 

 

 

Corn
Export Developments

·        
South Korea’s KOCOPIA bought about 60,000 tons of corn from the United States at about $309 a ton c&f for arrival in South Korea around May 20.

 

 

Updated
2/22/21

March
corn is seen trading in a $5.25 and $5.75 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-$6.00 range.

 

Soybean
complex
.
 

  • CBOT
    soybean
    futures
    ended
    sharply higher on follow through buying on Brazil harvest concerns and higher canola oilseed prices.  Products were higher led by a strong soybean oil market. 
    Thursday,
    we see USDA export sales which could indicate slowing of soybean commitments.  Shipments of meal and soybean oil will be important to observe. 
  • The
    slow Brazilian harvest has affected world trade flows, and importing countries are seeing a short supply in stocks, including vegetable oils. Meanwhile oversold countries, such as Ukraine, have started importing Brazilian soybeans (51.6k to start). 
  • The
    funds bought 9,000 SBO today.  Estimates suggest you got to go back to Feb 8 when they bought that much.  The funds have been net buyers of soybean oil 12 out of 17 trading days since Feb 1. 
  • Funds
    also bought 10,000 soybeans and 1,000 soybean meal. 
  • Some
    believe the SBO industrial use for the US will remain at large levels over the medium term.  We are looking for a 58% SBO to total feedstock for biodiesel production rate for the month of December. 

 

 

  • Argentina
    will see hot and dry weather over the next week and that is gaining attention from bull traders. 

 

Soybean
Complex Export Developments

 

May
oil share

Source:
Reuters and FI

 

We
cannot ignore a potential correction between palm oil and soybean oil futures

Source:
Reuters and FI

May
crush

Source:
Reuters and FI

 

Updated
2/24/21

March
soybeans are seen in a $13.50 and $15 range.

March
soymeal is seen in a $415 and $450 range.

March
soybean oil is seen in a 47.50 and 53 cent range. (unchanged, up 150)

 

Wheat

 

Export
Developments.

  • Jordan
    bought 60,000 tons of optional origin wheat out of 120,000 tons they sought, an estimated $279/ton c&f for second half of October shipment. 
  • Jordan
    seeks 120,000 tons of animal feed barley on March 2.  Shipment is sought between Sept. 1-15, Sept. 16-30, Oct. 1-15 and Oct 16-31.
  • Japan
    seeks 57,331 tons of Australian milling wheat this week. 

  • Syria
    seeks 200,000 tons of wheat for shipment within 60 days of contract signing. 

 

Rice/Other

·        
Coffee futures are at a 14-month high. 

·        
South Korea’s Agro-Fisheries & Food Trade Corp. seeks 38,889 tons of rice from the United States and China, part arrival in South Korea around Sept. 30 from the US. Another 16,667 tons of non-glutinous
short grain brown rice from China is sought for arrival around June 30.

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

 

Updated
2/22/21

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.

We
see the May trading ranges keeping a 10 to 15 cent premium over March for the balance of the month. 

 

Terry Reilly

Senior Commodity Analyst – Grain and Oilseeds

Futures International
One Lincoln Center
18 W 140 Butterfield Rd.

Oakbrook Terrace, Il. 60181

W: 312.604.1366

treilly@futures-int.com

ICE IM: 
treilly1

Skype: fi.treilly

 

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