FI Evening Grain Comments 03/05/21

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CBOT
agriculture markets rallied in part to positive sign the US economy will gradually recover, poor SA weather, and rumors of US export demand.  US equities rebounded to close sharply higher and WTI crude oil made new contract highs (April added about $2.45). 
US jobs were better than expected (we noted disappointing in our am note).  Most jobs were added in the bar and restaurant industries, a good sign of the economy reopening.  Unemployment stands at 6.2%. 

 

Weather

 

 

World
Weather Inc.

CHANGES
OVERNIGHT

• Rain
  fell overnight from eastern Colorado into Kansas from the northwest into south-central parts of the state as well as in north-central Oklahoma
• The
  event occurred as expected with moisture totals of 0.20 to 0.65 inch common and Goodland, Kansas (in the northwest) reporting 0.87 inch
• Argentina’s
  forecast was wetter in the far southern part of the nation March 12-13 relative to the previous model run and a small part of the north was also a little wetter
• Northern
  Argentina was also wetter March 16-18
• Central
  Argentina was still advertised with restricted rainfall, although some showers and thunderstorms will occur form Cordoba into central Buenos Aires Sunday into Monday that might help slow some of the region’s drying
• No
  serious changes were noted in Brazil’s outlook overnight
• U.S.
  weather was a little wetter from eastern Kansas to Ohio March 11-12 and central Texas to Southern Illinois precipitation was reduced during that same period of time.
  
• Model
  divergence remains for the southern Plains
• The
  GFS model brought in significant moisture to the region March 18-19, but this event was likely overdone
• The
  European model run suggested greater precipitation for the southern Plains March 13-14
  
• This
  event does not look like it will verify either
• Not
  much change of significance for other areas in the world

 

WEATHER
TO WATCH THIS WEEKEND

• Argentina’s
  rainfall outlook is not very good and many areas in the nation will experience net drying over the coming week, despite some periodic showers of varying significance
• Most
  of the precipitation will not counter evaporation for a while
• World
  Weather, Inc. sees some changes in the upper air wind pattern evolving in the second week of the forecast that may help to bring a little better opportunity for rain periodically
• But
  confidence is still low on how much relief might occur
• Crop
  stress will remain a serious concern for many summer crops in Argentina until a generalized soaking rain evolves. Pockets of improvement may occur if the rain advertised in the next two weeks verifies, but some areas will remain too dry to support the best
  yields and crop quality.
• Temperatures
  will be very warm to hot which may limit the benefit of lighter showers that occur over the next seven days.
  
• Some
  cooling is expected March 12-18
• Brazil’s
  weather has not changed overnight and for the next two weeks most of the nation will be impacted by alternating periods of rain and sunshine
• The
  moisture will be mostly near normal except in the northeast where drier than usual conditions are expected
• A
  few locations in southern Rio Grande do Sul may also receive a more limited amount of rain
• Fieldwork
  will advance around the expected shower activity, but there will be enough drier days for favorable progress to be made
• U.S.
  hard red winter wheat areas will trend drier after this morning’s rain ends
• Southwestern
  U.S. Plains may continue missing rain events for a while
• Rain
  may be possible again in the second week of the outlook, but confidence is low
• U.S.
  central Plains wheat will benefit from the next ten days of periodic moisture and sunshine, but there will still be need for more precipitation especially in the southwest where rainfall will likely be lightest
• Frequent
  rain and mild temperatures are needed to induce new tillering and to stimulate some crop recovery and improvement in production potentials after dryness last autumn and the bitter cold event of February
• Southeastern
  parts of the U.S. northern Plains will have a good opportunity for some needed moisture Monday night into Wednesday morning
• Moisture
  totals will vary from 0.05 to 0.50 inch
• Minnesota
  and eastern South Dakota will likely be wettest
• Drought
  to the west will not likely be impacted
• Temperatures
  will be unusually warm in these areas through the weekend with extreme highs in the 60s and 70s expected Saturday
• Much
  of the U.S. Midwest will be dry into early next week and what little moisture occurs in the north is not likely to create a problem as the region’s snow cover continues to melt
• Central
  parts of the Midwest will trend wetter during the second half of next week with another storm system in the second week of the outlook
• U.S.
  southeastern states will see less frequent and less significant rain in the coming ten days resulting in needed drying and some spring planting
• Unseasonably
  warm temperatures in the central U.S. will send temperatures into the 60s and lower 70s Fahrenheit this weekend as far north as Montana, southwestern North Dakota and South Dakota
• Normal
  highs in the northern Plains should be in the 30s and 40s followed by lows in the teens and 20s
• The
  warmup in the northern Plains should set the stage for some needed moisture to fall when colder weather returns next week
• Drought
  remains a serious concern across the Dakotas, eastern Montana and areas north into the Canada Prairies
• Temperatures
  in the 50s and lower 60s might also reach into southern Saskatchewan and southern Alberta, Canada
  
• Unusual
  warmth in the central Plains and light precipitation overnight may also stimulate some new wheat development
  
• Soil
  temperatures are already rising, and some greening has begun in the southern Plains
• Southern
  U.S. spring planting is getting off to a slow start in southern Texas due to dryness in unirrigated areas, but it has begun
• Slow
  planting has also occurred near the central Gulf of Mexico coast from Louisiana to northern Florida and Georgia because of wet fields, but some fieldwork has likely evolved recently
  
• Improving
  weather in the lower Delta and southeastern states in this coming week will lead to improved corn and rice planting conditions in time.
• Canada’s
  central, eastern and southwestern Prairies will remain drier than usual through the next ten days
  
• Precipitation
  elsewhere is expected to be infrequent and light limiting the potential for increasing soil moisture
• Temperatures
  will be near to above average
• Southeast
  Canada will experience a seasonable mix of precipitation and sunshine with temperatures a little cooler than usual
• North
  Africa rainfall will improve over this coming week with many areas from northern Morocco through northern Tunisia getting rain at one time or another lifting topsoil moisture for future crop development
• Winter
  crops are semi-dormant, but expected to resume development soon
• Ivory
  Coast, Ghana, Benin and southern Nigeria will experience a boost in rainfall for a while late this week into next week favoring coffee and cocoa flowering
  
• East-central
  Africa rainfall will continue greatest in Tanzania this week and probably next week, as well
• A
  more erratic and light precipitation pattern is expected elsewhere with net drying in Ethiopia, northern Uganda and in a few southwestern Kenya locations
• South
  Africa will experience an erratic rainfall pattern through the next two weeks with temperatures mostly in a seasonable range with a slight warmer bias in the west
• Showers
  will be greatest in Natal and eastern portions of both Mpumalanga and Limpopo
• Net
  drying will occur in most other areas
• Summer
  crop conditions will remain favorably rated, although there will be a growing need for showers by mid-March
• India
  was mostly dry Thursday
• Very
  little rainfall is expected over the next week to ten days and temperatures will be seasonably warm
• Showers
  will occur in the far north, extreme south and far east
• Some
  mild crop stress is expected resulting in some minor yield loss
• Rain
  is needed to support the best potential yields before filling ends this month
• China
  weather over the coming week will include seasonably warm temperatures  and near to above average precipitation in the south
• The
  greatest precipitation relative to normal will be in the Yangtze River Basin and areas to the south
• Rainfall
  near and south of the Yangtze River will vary from 1.00 to more than 5.00 inches except in the coastal provinces where amounts will be less than 1.00 inch
• Local
  flooding is possible
• Yunnan
  will remain dry and produces 3% of the corn crop and quite a bit of rice and sugarcane
• Australia
  weather in the coming week is expected to bring back scattered showers and thunderstorms to northeastern New South Wales and southern Queensland this weekend into next week
• The
  precipitation will be good for late season crops and for improving topsoil moisture for autumn planting
• Early
  maturing cotton might not welcome the precipitation
• 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
• Rain
  in the coming week will be mostly confined to the east coast and temperatures will be seasonable with a slight warmer bias in the driest areas
• Central
  America precipitation will continue greatest along the Caribbean Coast and in Guatemala while the Pacific Coast is relatively dry
• Southeast
  Asia rainfall will occur relatively normally over the next two weeks
• Mainland
  areas will experience few showers periodically in the next week to ten days
• The
  resulting rainfall will be sporadic and light with net drying probably continuing in many areas for a while longer
• Philippines
  rainfall will be scattered and mostly light to moderate until late next week when a boost in precipitation is expected
• Indonesia
  and Malaysia weather during the next two weeks will bring rain to most crop areas maintaining a very good outlook for crop development
• A
  boost in precipitation is expected and will be welcome
• Sumatra,
  Peninsular Malaysia and western parts of Borneo have been drying out recently and greater rain is needed especially in Peninsular Malaysia
• New
  Zealand weather over the next ten days will include a mix of sunshine and rain while temperatures are a little cooler than usual
  
• The
  nation’s soil moisture has drifted below average especially in the north
• Southern
  Oscillation Index has been falling and was at +8.29 this morning. The index is expected to continue to fall notably over the next several days
• Warming
  in Europe and the western CIS has been melting some snow
• Snow-free
  conditions are present today in Russia’s Southern Region, much of Ukraine and in many areas across Europe to the west of Ukraine and eastern Poland
  
• There
  is no threatening cold in any winter crop region for the next ten days
• Europe
  weather will be tranquil over the coming week with only brief periods of light precipitation and temperatures close to normal
• A
  boost in precipitation is expected March 11-17
• Western
  CIS temperatures will be seasonable with a slight warmer bias this week in the south and while a little cooler than usual in the north
• Precipitation
  will remain periodic keeping the region plenty moist in snow free areas and some significant runoff is expected in areas warm enough for melting snow
  
• Cooling
  next week will bring some threatening cold air into the western CIS, but snow cover will adequately protect most crops

Source:
World Weather Inc.

 

Bloomberg
Ag Calendar

Sunday,
March 7:

• China
  National People’s Congress in Beijing
• China
  customs to publish trade data, including import numbers for soy, edible oils, meat and rubber

Monday,
March 8:

• USDA
  Export Inspections – corn, soybeans, wheat, 11am
• EU
  weekly grain, oilseed import and export data
• China
  National People’s Congress in Beijing
• Ivory
  Coast cocoa arrivals
• HOLIDAY:
  Russia
• EARNINGS:
  Marfrig

Tuesday,
March 9:

• USDA’s
  monthly World Agricultural Supply and Demand (WASDE) report, noon
• China
  National People’s Congress in Beijing

Wednesday,
March 10:

• EIA
  weekly U.S. ethanol inventories, production
• Malaysian
  Palm Oil Board data on February palm oil end-stockpiles, output, exports
• China
  National People’s Congress in Beijing
• Malaysia’s
  March 1-10 palm oil export data
• ISO
  sugar conference
• FranceAgriMer
  monthly grains report

Thursday,
March 11:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports
• China
  National People’s Congress in Beijing
• New
  Zealand Food Prices
• Conab’s
  data on yield, area and output of corn and soybeans in Brazil
• HOLIDAY:
  India, Indonesia

Friday,
March 12:

• ICE
  Futures Europe weekly commitments of traders report (6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• FranceAgriMer
  weekly update on crop conditions

Source:
Bloomberg and FI

 

 

 

 

 

 

CFTC
Commitment of Traders

 

 

 

 

SUPPLEMENTAL     
Non-Comm               Indexes                  Comm

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
348,615    -24,212    406,940        811   -744,997     17,850

Soybeans          
126,532    -25,259    167,637      2,976   -288,118     19,482

Soyoil             
78,735     -2,113    126,140     -3,068   -226,378      4,916

CBOT
wheat             413      5,301    156,286       -318   -142,653     -3,913

KCBT
wheat          32,695      3,691     69,192       -965    -96,775      4,930

 

FUTURES
+ OPTS     Managed                 Swaps              Producer

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
348,546    -12,605    263,609      3,677   -729,567     18,654

Soybeans          
155,561    -16,803     91,099     14,753   -273,369      9,091

Soymeal            
65,424     -4,063     69,673     -1,054   -182,079      6,231

Soyoil            
108,081     -4,564     92,538     -2,233   -239,062      5,609

CBOT
wheat          31,803      4,893     93,392      2,511   -121,574     -3,928

KCBT
wheat          51,724     -1,484     42,173       -380    -88,975      5,173

MGEX
wheat          14,101      1,948      4,192        711    -25,511     -3,549

Total
wheat         97,628      5,357    139,757      2,842   -236,060     -2,304

Live
cattle         80,570     -7,594     84,277        561   -170,476      5,555

Feeder
cattle        1,164       -570      7,692       -300     -1,988        235

Lean
hogs           74,133      1,352     55,032       -147   -128,516     -3,746

Source:
Reuters, CFTC and FI

 

 

Macros

US
Change In Nonfarm Payrolls Feb: 379K (est 198K; prevR 166K; prev 49K)

US
Unemployment Rate Feb: 6.2% (est 6.3%; prev 6.3%)

US
Average Hourly Earnings (M/M) Feb: 0.2% (est 0.2%; prevR 0.1%; prev 0.2%)

US
Average Hourly Earnings (Y/Y) Feb: 5.3% (est 5.3%; prevR 5.3%; prev 5.4%)

US
Change In Private Payrolls Feb: 465K (est 195K; prevR 90K; prev 6K)

US
Change In Manufacturing Payrolls Feb: 21K (est 15K; prevR -14K; prev -10K)

US
Average Weekly Hourly All Employees Feb: 34.6 (est 34.9; prevR 34.9; prev 35.0)

US
Labour Force Participation Rate Feb: 61.4% (est 61.4%; prev 61.4%)

US
Underemployment Rate Feb: 11.1% (prev 11.1%)

US
Trade Balance (USD) Jan: -68.2B (est -67.5B; prevR -67.0B; prev -66.6B)

Canadian
International Merchandise Trade Jan: 1.41B (est -1.4B; prev -1.67B)

 

Corn

• Corn
  futures ended the week on a high note on US corn export chatter, Brazilian production concerns, Algeria buying 30,000 tons of corn, and WTI crude oil establishing new contract highs.  May corn saw some resistance at its 20-day MA.  Talk of China pig crop rebound
  may also supported US corn futures.  We picked up Brazil and China are close to an agreement on phytosanitary certificates for corn, and China may have recently bought Brazilian corn.  This was on top of rumors the US could see a large sale corn sales announcement
  on Monday.  We already look for corn inspections north of 1.2 million tons to be reported by USDA midmorning Monday.  Fresh US corn sales commitments, however, could provide additional support to CBOT futures next week.  89.5% of USDA’s corn export projection
  is already sold, highest for this time of year since at least 2001 in our history. 
  
• China
  latest five-year plan promotes agriculture food security.  China plans to raise the minimum purchase price for wheat and rice and expand corn planting.  The lowered support prices for most commodities in 2018 due to high inventories.  For wheat this would
  be the first increase since 2014. 
• Meanwhile,
  we are hearing its “a mess” for central and northern Brazil producers for collecting soybeans and plating second crop corn, bias Mato Grosso.  
  
• Funds
  were net buyers of 33,000 corn contracts on the session. 
• Vietnam
  and other countries are relaxing on German pork import bans after ASF was discovered in wild boar last year.  
  
• (Reuters)
  – China’s first hog breeding exchange traded fund (ETF) makes its debut on the Shenzhen Stock Exchange on Friday, the first of three tied to the country’s booming pork sector that is rebuilding after African swine fever decimated herds in 2018. 
  

 

Export
developments.

• Algeria
  bought about 30,000 tons of corn, optional origin, at $289/ton to $293/ton c&f, for shipment by April 15.

 

EIA:
Cold weather brings near record-high natural gas spot prices

https://www.eia.gov/todayinenergy/detail.php?id=47016&src=email

 

Updated
3/1/21

May
corn is seen in a $5.20 and $5.75 range.

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

December
corn is seen in a $3.85-$5.50 range.

 

Soybean
Complex

• Soybeans
  traded higher in part to a dry outlook for Argentina and too much rain for parts of Brazil (raising concerns over quality) but a higher USD and Brazilian soybean shipments increasing over the next few weeks limited gains.  Anec sees Brazil soybean exports
  during March at 13.79 million tons. 
• May
  soybeans has seen about a 13.40 to 14.45 trading range since late January.  There is a potential for the contract to make a new high if SA weather fails to improve. 
  
• We
  are hearing US soybeans are starting to get tight in the ECB but WCB buyers are still able to source them. 
  
• CBOT
  soybean meal traded two-sided, ended higher.  Strong corn prices and sharply higher soybeans supported meal. Soybean meal prices in China are starting to get cheap enough to entice an increase for feed use but importers may want to see better returns on crush
  margins before setting off another round of soybean purchasing. 
• Soybean
  oil had another 100+ point rally on ongoing concerns global vegetable oil supplies will continue to tighten. 
  
• ICE
  canola, May position, was up 3.10 as of to 785.40.  Futures were up 6 straight sessions. 
  
• The
  SA weather forecast was unchanged Friday morning. Brazil rains will occur across the east central and northern areas through Tuesday while east central and northwest areas will see ongoing delays in fieldwork.  Argentina rains, although light, should favor
  southern Cordoba, northern La Pampa, and northwestern Buenos Aires on Monday.
  
• US
  Census reported US January soybean exports at 324 million bushels, as expected, down from 397 million in December and 195 million during January 2020. 
  
• The
  funds were net buyers 15,000 soybean contracts, buyers of 2,000 soybean meal contracts and net buyers of 6,000 bean oil contracts.
• Egypt
  said they have enough vegetable oil strategic reserves for five months. 
• Indonesia
  today will see heavy rain for parts of Indonesia’s Sumatra, Java, Kalimantan and Sulawesi. 
  
• Offshore
  values are leading soybean oil 83 lower (25 lower week to date) and SBM CBOT futures $1.80 lower ($7.00 lower for the week).
• China
  cash crush margins on our analysis were 101 cents, down from 112 cents late last week.  China soybean meal prices fell to their lowest levels this year in China.
  

 

Export
Developments

• None
  reported

 

 

 

Updated
3/4/21

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

May
soymeal is seen in a $400 and $460 range.

May
soybean oil is seen in a 49.00 and 54.00 cent range.

 

Wheat

• Wheat
  futures started
  lower but turned higher following strength in corn and soybeans and higher outside markets, despite a higher USD and Pakistan passing on 300,000 tons of wheat due to high prices.  The Philippines bought less than expected wheat, but SK picked up a couple cargoes
  of opt. origin wheat. 
• The
  USD was up 35 points by Friday afternoon. 
• Funds
  were net buyers of 4,000 net soft wheat contracts on the session.
• Black
  Sea trades were quiet towards the end of this week as producers start to shift focus on new crop.  The inverse in Paris wheat is also keeping some traders away. 
  
• Ukraine
  producers are expected to kick off the spring planting season next week, a little later than last year because of snow coverage. 
  
• Over
  in France barley plantings reached 50 percent as of March 11, up from 19 percent week earlier.  French soft wheat was rated 88 percent good/excellent, up one point from previous week. 
  
• French
  wheat shipments outside EU and Britain: 821,000 tons in February, up from 561,000 tons in January and below the season high of 877,000 tons in November.  
  
• EU
  May milling wheat was up 0.25 at 208.75 euros. 

 

Export
Developments.

• South
  Korea’s MFG bought 130,000 tons of feed wheat, optional origin.  Both 65,000 ton consignments were bought at an estimated $282.86 a ton c&f for arrival in South Korea around Aug. 24 and at $275.14 a ton c&f for arrival in South Korea around Sept. 24. (Reuters)
• The
  Philippines bought about 55,000 tons (145,000 sought) of milling wheat for April and June shipment.  No prices were given but traders thought it was below $310/ton. 
  
• Pakistan
  may have passed on 300,000 tons of wheat due to high prices. 
• Results
  awaited: Saudi Arabia seeks 540,000 tons of barley on Friday, valid until Monday, for April – May shipment. 
  
• Results
  awaited: Iran’s SLAL seeks up to 400,000 tons of animal feed barley on Wednesday, March 3, for shipment between March 10 and April 10.

 

Rice/Other

·        
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.

·        
Syria seeks 25,000 tons of white rice on March 29, from China or Egypt. 

 

Updated
3/4/21

May
Chicago wheat is seen in a $6.25‐$6.90 range.

May
KC wheat is seen in a $5.50‐$6.75 range.

May
MN wheat is seen in a $6.20‐$6.65 range.