FI Evening Grain Comments 10/09/20

PDF Attached

 

USDA
released their October S&D report

Reaction:  
Bullish bias soybeans, neutral corn, and slightly bearish Chicago wheat but friendly for KC type wheat. 

USDA
NASS and OCE executive summaries

https://www.nass.usda.gov/Newsroom/Executive_Briefings/index.php

https://www.usda.gov/oce/commodity/wasde/Secretary_Briefing/index.htm

 

Weather
and Crop Progress

 

 

 

MORNING
WEATHER MODEL COMMENTS

NORTH
AMERICA

• No
  significant changes were noted to the outlook overnight
• Hurricane
  Delta will come ashore into Louisiana as expected with the remnants of the system moving through the heart of the lower Mississippi River Valley and then from Tennessee to the middle Atlantic Coast states over the weekend and into Monday
• A
  mid-latitude frontal system will move across the central and eastern states Sunday into Tuesday generating a little rain in the northern Midwest
• Cooling
  will follow the early week frontal system with a couple of reinforcing shots of cool air expected in the following week bringing a few sporadic showers with each occurrence
• Most
  of hard red winter wheat country will remain dry or nearly dry
• Northwestern
  U.S. Plains are not likely to see much moisture
• Some
  rain will fall in the Pacific Northwest, but will favor the mountains and not the valleys

The
00z GFS model run was too wet in the central and southern Plains. The drier 06z and especially the European model runs are preferred.

 

SOUTH
AMERICA

• No
  theme changes were noted overnight
• GFS
  model outlook has not changed greatly for center west into center south Brazil for next week and the following weekend with rain expected in many areas
• Restricted
  rainfall occurs in Mato Grosso do Sul, western Parana and western Sao Paulo through October 19
• Rain
  this weekend will occur mostly from eastern Santa Catarina to Rio de Janeiro and southeastern Minas Gerais
• Far
  southern Brazil is still advertised to see a good mix of rain and sunshine during the next ten days to two weeks favoring crops and fieldwork
• No
  changes were noted in Argentina for the first 8-9 days of the outlook with southern Buenos Aires most of the nation’s significant rain – most of which occurs Saturday into Sunday of this week
• Argentina
  rainfall was still advertised to increase Oct. 18-21, but the 06z GFS was much too wet suggesting a widespread general soaking of rain
• However,
  some increase in rainfall is expected during this period of time, but it is too far out in time to get specific and have high confidence

The
generalities of the South America outlook have not changed much today relative to the previous model run or the overall outlook suggested Tuesday. Argentina is not likely to see much rain until October 18 except in Buenos Aires where some rain will fall this
weekend. The potential for at least some dryness relief is improving for the Oct. 18-21 period, but confidence in its significance is still low. In Brazil, a period of beneficial moisture will impact center west and center south crop areas next week and the
following weekend; although portions of Mato Grosso do Sul and western and northern Parana as well as western Sao Paulo may not get much rain and will need more soon.

 

EUROPE/BLACK
SEA REGION

• Some
  additional rain fell in western Ukraine overnight with amounts to 1.14 inches, but this moisture did not reach into eastern areas
• No
  significant theme changes occurred overnight, although World Weather, Inc. still believes there is some “potential” for one of the many weather disturbances in Europe to spin out into some of the drier areas of eastern Ukraine, Russia’s Southern Region and
  neighboring areas during the coming week to ten days
• If
  this occurs it would not be a general soaking and certainly would not be signaling the start of a rainier weather pattern
• A
  trough of low pressure in Europe that has been drifting east recently will eventually retrograde back to the west ending this “potential” for rainfall in the drier areas of the western CIS and once the retrograding is complete Russia’s Southern Region, eastern
  Ukraine and Kazakhstan crop areas will be right back into the dry and warm bias for a while longer

CHINA

• No
  general theme changes noted overnight
• Northeastern
  China will not be completely dry, but less frequent and less significant rain is expected and that will translate into much better grain and oilseed maturation and harvest progress over the next two weeks
• A
  good mix of weather is also expected in the Yellow River Basin and North China Plain where wheat planting, germination and emergence will occur while summer crops continue to mature and be harvested with little weather disruption.
  
• Periodic
  rain near and south of the Yangtze River will slow farming activity occasionally and maintain some concern over crop conditions, but the environment in general is expected to improve slowly

PLEASE
NOTE THAT CHINA WEATHER OBSERVATIONS HAVE NOT BEEN AVAILABLE FOR THE PAST TWO DAYS

 

INDIA

• No
  general theme changes were noted overnight
• Concern
  will be rising over frequent rainfall in central India during the week next week and into the following weekend
• Delays
  in harvest progress and concern over some crop quality will likely increase
• Weather
  this weekend is expected to remain mostly good as it has been in the past week

AUSTRALIA

• No
  big changes were noted overnight in the coming ten days to two weeks
• Western
  Australia is still not advertised to receive much significant rain
• Only
  a few showers near the southern and lower western coasts are expected
• There
  is some “potential” for short term bout of rain in the southwest of the state October 20-22, but confidence is low today
• Rain
  will fall often enough in Victoria, South Australia and southern New South Wales to maintain a very good crop outlook
• Rain
  was increased in southeastern Queensland and northeastern New South Wales after October 18 to Oct. 21 on the 06z GFS model run
• Some
  of this increase would be welcome, but it might also be a little overdone
• Some
  increase in rainfall is possible during this period of time, but further adjustments in the outlook are expected during the weekend.

The
advertised potential rain events in southwestern Australia and Queensland during the second week of the forecast today has been showing up in the model data a little more routinely recently, but the systems advertised are not quite right and additional adjustments
will occur during the weekend and we will be watching these areas closely for Sunday’s weather update.

 

Source: 
World Weather Inc. 

 

Bloomberg
Ag Calendar

FRIDAY,
Oct. 9:

• USDA’s
  WASDE report with world supply/demand crops update, stockpiles noon
• 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
• China’s
  CNGOIC to publish monthly soy and corn reports
• China
  agriculture ministry (CASDE) to release its monthly data on supply and demand
• FranceAgriMer
  weekly update on crop conditions
• Brazil
  Unica cane crush, sugar production (tentative)
• HOLIDAY:
  Korea

Monday,
Oct. 12:

• U.S.
  crop conditions, harvesting progress for soybeans, corn, cotton, 4pm
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• Malaysian
  Palm Oil Board releases Sept. end- stocks, output, exports
• SGS
  releases Malaysia Oct. 1-10 palm oil export data
• Cherkizovo
  trading update
• Vietnam
  Customs data on coffee, rice and rubber exports in September
• HOLIDAY:
  Argentina, Brazil, Canada, Chile

Tuesday,
Oct. 13:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• China
  trade data on soybeans and meat imports
• New
  Zealand Food Prices
• France’s
  agriculture ministry crop estimates
• U.K.’s
  AHDB Grain Market Outlook Conference
• U.S.
  winter wheat planted, 4pm
• HOLIDAY:
  Thailand

Wednesday,
Oct. 14:

• Leman
  China Swine Conference, Chongqing, day 1
• FranceAgriMer
  monthly crops report
• Global
  Food Forum, Australia, day 1
• Malaysia
  3Q cocoa grinding figures

Thursday,
Oct. 15:

• Malaysia
  Oct. 1-15 palm oil export data
• Port
  of Rouen data on French grain exports
• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• Global
  Food Forum, Australia, day 2
• Leman
  China Swine Conference, Chongqing, day 2
• European
  Cocoa Association grindings

Friday,
Oct. 16:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• 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
• FranceAgriMer
  weekly update on crop conditions
• Asia
  3Q cocoa grinds
• Cocoa
  Association of Asia’s webinar on Asian cocoa demand
• Leman
  China Swine Conference, Chongqing, day 3

Source:
Bloomberg and FI

 

 

FSA
US Acreage

U.S.
corn and soybean plantings
Prevented planting
(thousands of acres)

Crop               
Oct 2020     Sept 2020      Oct 2019

Corn                  
6,177         6,078        11,420

Soybeans              
1,476         1,451         4,459

Wheat                 
1,270         1,268         2,215

Rice                    
494           493           752

Barley                   
32            31            33

Sorghum            
     298           296           172

Cotton-Upland           
402           400           494

U.S.
corn and soybean plantings
Plantings
(thousands of acres)

Crop               
Oct 2020     Sept 2020      Oct 2019

Corn                 
88,212        87,560        86,974

Soybeans             
81,854        81,455        74,956

Wheat                
46,100        45,947        46,705

Rice                  
2,986         2,982         2,504

Barley                
2,524         2,467         2,623

Sorghum   
            5,304         5,237         4,822

Cotton-Upland        
11,667        11,630        13,223

 

 

Commitment
of Traders

Traders
missed the long positions for all 5 commodities in this weeks CFTC COT report. 

 

 

 

 

 

 

 

 

Macros

WH
Kudlow: Pres. Trump Has Cleared Relatively Broad-Based Deal

US
Gulf Shuts In 1.69M Bpd Or 91.55% Oil Production – BSEE

–
Shuts In 1,684.9 Mmcf/D Or 62.17% Gas Production

Canadian
Net Change In Employment Sep: 378.2K (exp 150.0K; prev 245.8K)

–        
Unemployment Rate Sep: 9.0% (exp 9.8%; prev 10.2%)

–        
Participation Rate Sep: 65.0% (exp 64.7%; prev 64.6%)

–        
Full Time Employment Change Sep: 324.0 (prev 205.8)

–        
Part Time Employment Change Sep: 44.2 (prev 40.0) 

 

Corn.

• A
  higher than expected US corn carryout projection by USDA triggered soybean/corn spreading, but corn prices still rallied on sharply higher soybeans, and fund buying in wheat.  December corn hit its highest level since late January.  We raised our December
  trading range (see below). 
• Funds
  bought an estimated net 40,000 corn contracts, 15,000 less than what they bought on September 30 (Grain Stocks Day). 
  
• USDA
  reported the USDA corn yield at 178.4 bushels per acre, down 0.1 from the previous month. The trade was looking for 177.7.  The harvested area was lowered 946,000 acres to 82.527 million, resulting in a 178-million-bushel reduction in production to 14.722
  billion bushels.  Production for US corn and soybeans came in below trade expectations. 
  
• USDA
  lowered the US corn carryout by 336 million bushels, in part to adjusting for September 1 stocks, to 2.167 billion bushels, yet 54 million bushels above trade expectations. 
  
• With
  a lower 2020-21 carry in stocks and reduction in production, USDA lowered feed use by 50 million bushels and corn for ethanol use by another 50 million. 
  
• US
  corn exports were left unchanged at 2,325 million bushels, above 1,778 million in 2019-20.  Note record US corn exports were 2,437.5 million in 2017-18 followed by 2,437.4 million in 2007-08 (100 difference).  In 2017-18 combined Ukraine and Russia corn production
  fell 6 million tons from the previous year.  This year combined corn production for those two countries are expected to increase to 51.5 million tons from 50.2 million tons in 2019-20.  For Brazil, USDA estimates 2020-21 corn exports will reach 39 million
  tons, up from 34 million tons in 2019-20.  The import demand increase for 2020-21 is most notable for the EU (24MMT) and SE Asia. 
  

 

USDA
Export Sales Commitments As Of Early October:

2020-21
= 25.848 million tons  – a record

2017-18
= 12.095 million tons

2007-20
= 23.785 million tons

 

• Global
  corn production was lowered 3.6 million tons to 1.159 million, 4 percent above last year.  Stocks were taken down 6.3 million tons. With the US stocks lowered 8.5 million tons, this was partially offset by ending stocks by major importing countries. 
  
• Ukraine
  corn production was taken down 2 million tons to 36.5 million tons by USDA.  Russian corn was unchanged at 15 million tons. 
  
• There
  were no major changes to China’s corn balance sheet for 2020-21, other than a smaller carry in. 
  
• CASDE:
  China raised their 2020-21 corn import projection by 2 million tons to 7 million.  We think it could end up to more than 9 million tons.  CNGOIC sees a 25 million ton shortage in China’s corn supply.
  
• China
  discovered ASF in piglets in Chongqing, first outbreak since July 25. 
• Germany
  ASF: 53 cases since September 10 
• Ukraine
  EconMin sees grain exports so far this season down 11.8 percent to 13.02 MMT, including 774,000 tons of corn (2.33 MMT same period year ago). 
  

 

Corn
Export Developments

• None
  reported

 

Updated
10/9/20

December
corn is seen in a $3.75-$4.10 range

China
could easily change the global balance sheet if they boost corn imports above 15 million tons in 2021. 

 

Soybean
complex.
 

• A
  projected 45 percent reduction in soybean stocks by USDA from last year sent futures flying higher.
  
• November
  soybeans failed to take out nearby rolling January 2017 high of $10.8000. Today’s high was $10.7975.  November settled 15.50 cents higher at $10.6550.  Soybean oil was up 87-101 points and soybean meal $3.90-7.00 higher.
  
• Funds
  bought an estimated net 16,000 soybeans, 4,000 soybean meal and 9,000 soybean oil. 
  
• USDA
  reported the USDA soybean yield unchanged from the previous month at 51.9 bushels per acre.  The trade was looking for 51.6.  The harvested area was lowered 731,000 acres to 82.289 million, resulting in a 45-million-bushel reduction in production to 4.268
  billion bushels. 
• USDA
  lowered the US soybean carryout by 170 million bushels to 290 million bushels, 79 million below trade expectations.  This was certainly the largest surprise in today’s report.  2020-21 soybean stocks are now projected 45 percent below 2019-20. 
  
• USDA
  raised their outlook on US exports by a large 75 million bushels to 2.200 billion bushels, well above 1.676 billion for 2019-20, thanks to Chinese buying and delayed Brazilian soybean plantings. 
  
• As
  of early October, US soybean commitments are running at a record 40.72 million tons, well above previous record of 29.67 million tons for the 2013-14 crop year. 
  
• The
  US crush was left unchanged. 
• USDA
  left its US 2020-21 soybean meal outlook unchanged.  They took old crop meal export up 100,000 short tons and lowered production by 70,000.  Imports were taken up 20,000.  Domestic disappearance was adjusted 150,000 short tons lower. 
  
• USDA
  lowered 2019-20 US soybean oil stocks by 105 million pounds to 1.740 billion, in part to an upward revision to biodiesel use by 100 million pounds to 7.850 billion.  New-crop soybean oil for biodiesel use was taken up 100 million pounds to 8.1 billion, offset
  by a reduction in food use by 100 million, resulting in a 105-million-pound draw in stocks to 1.755 billion. 
  
• Global
  soybean production was taken down 1.3 million tons to 368.5 million tons, 31.9 million higher than 2019-20, largely to changes in US output.  Brazil and Argentina production was unchanged. 
  
• China
  soybean imports were taken up 1 million tons to 100 million, above 97.4 million tons in 2019-20. 
  
• 2020-21
  global soybean stocks were taken down 4.9 million tons to 88.7 million, 5.4 percent below 2019-20.  Bottom line is global demand is expected to be very strong this crop year. 
  
• The
  trade will now shift their focus back to South American weather. 
• China
  came back from holiday and longs plowed into China soybean meal and soybean oil futures.  There was talk China was looking for corn, DDGS, and soybeans.
  
• Today
  was day 3 of the Goldman roll and the SX/SF weakened. 
• Safras
  reported Brazil producers sold 53 percent of their soybean crop, or more than 70 million tons using Conab’s 134 million ton estimate. 
  
• USDA
  Attaché: Argentina soybean crop was estimated at 51 million tons. USDA official is at 53.5 million for September. 
  

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Oilseeds%20and%20Products%20Update_Buenos%20Aires_Argentina_10-01-2020

• China
  cash crush margins were 88 cents on out our calculation compared to 90 last week and 130 year ago. 
  
• Malaysian
  palm oil was up nearly 8 percent this week.  MPOB
  report will be out October 12.  Traders are looking for Sep MPOB palm production to increase 3.1% from Aug.
  

 

Oilseeds
Export Developments

• Syria
  seeks 50,000 tons of soybean meal and 50,000 tons of corn on October 26 for delivery within four months of contract. 
  

 

 

Updated
10/9/20

November
soybeans are seen in a $10.40-$11.10 range

December
soybean meal is seen in a $355-$385 range

December
soybean oil is seen in a 32.50-35.00 range

 

Wheat

• US
  wheat futures briefly traded lower post USDA report but fund buying and sharply higher soybeans supported all three contracts.  Chicago eventually again sold off, settling mixed. Higher protein wheat gained over Chicago as USDA cut HRW wheat stocks.   KC was
  up 4.50-7.0 cents and MN up 1.25-4.75 cents.  Funds sold an estimated net 2,000 SRW wheat contracts. 
  
• USDA
  lowered the US all-wheat carryout by 42 million bushels, in part to adjusting for September 1 wheat stocks, only 4 million bushels below trade expectations.   
  
• USDA
  made light adjustments to its 2019-20 balance sheet, but it had a 15-million-bushel negative impact to HRW wheat stocks (lowered to 506 million). 
  

2020-21
US all-wheat imports were lowered 5 million bushels and feed was taken up 10 million (adjusting for Sep stocks).  At 883 million bushels for the carryout, its down 14 percent from 1.028 billion at the end of 2019-20.

• USDA
  surprised the trade by lowering new-crop HRW wheat stocks by 51 million tons to 334 million, well below 506 million at the end of 2019-20.  White stocks were upward revised 18 million, HRS down 5, and SRW down 6 million.  This caused KC over Chicago spreading. 
  
• Global
  wheat production was taken up 2.6 million tons.  Russia was upward revised 5 million to 83 million tons.  Argentina was lowered 0.5MMT to 19 million (still considered too high).  Canada was lowered 1 million tons and Ukraine was taken down 1.5 million tons
  to 25.5 million tons. 
• Russia
  was estimated at 83 MMT, up 5 million and Ukraine 25.5 million tons, down 1.5 million. 
  
• Global
  wheat stocks of 321.5 million tons are up 2.1 million from last month and 7.4 percent higher from 2019-20. 
  

 

• Argentina
  granted a drought resistant type of GMO wheat for commercial use but Brazil will need to ok the approval before seeds are sold to producers as Brazil imports wheat from Argentina.   
  
• SovEcon:
  Russia’s winter wheat sowing area may decrease by 10-15% of already planted winter grains if rain does not occur.   
  
• French
  wheat plantings were 6 percent complete as of October 5, and compares to 3 percent last year.
  
• Paris
  (Matif) December wheat was 1.25 higher at 200.25 euros.

 

US
Wheat Associates harvest report

https://www.uswheat.org/wp-content/uploads/2020/10/HR_2020-10-9.pdf

 

Export
Developments.

• Pakistan
  seeks 300,000 tons of wheat on October 14 for arrival by end of January. 
• Jordan
  seeks 120,000 tons of wheat on October 14, optional origin, for Jan -late Feb shipment.
• Ethiopia
  seeks 400,000 tons of wheat by October 13.
• (new
  9/15) Ethiopia seeks about 200,000 tons of milling wheat on October 15.

 

Rice/Other

·        
Mauritius seeks 5,500 tons of white rice on October 20 for Dec 15-Mar 15 2021 delivery.

·        
(Bloomberg) — U.S. 2020-21 cotton ending stocks seen at 6.79m bales, 411,000 less than USDA’s previous est., according to the avg in a Bloomberg survey of nine analysts.

o  
U.S. production seen at 16.74m bales vs 17.06m in September

o  
Global ending stocks seen 103,000 bales lower at 103.74m

 

Updated
10/9/20

December Chicago wheat is seen in a $5.70-$6.30 range

December KC wheat is seen in a $5.20-$5.70 range

December MN wheat is seen in a $5.35-$5.60 range