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Fresh
highs set in corn and Chicago wheat.  USDA announced 261,000 tons of soybean to China.  Soybean meal and wheat made impressive gains today on global weather problems.  US meal basis firmed today.   

 

 

Weather
and Crop Progress

 

 

 

 

MORNING
WEATHER MODEL COMMENTS

NORTH
AMERICA

  • Some
    increase in U.S. rainfall was suggested by the GFS model run overnight
    • The
      change matches that of the European model of the past couple of days, although the European model is a little less intensive with its rain suggested for the period relative to Wednesday
  • GFS
    increased rainfall from northern Illinois to northern Ohio and southern Michigan for Wednesday through Friday of next week
    • The
      increase was overdone
  • GFS
    reduced rain from eastern U.S. hard red winter wheat areas of Kansas and north-central Oklahoma for late next week
    • Some
      reduction was needed
  • GFS
    increased precipitation from the Dakotas through Iowa to the Ohio and Tennessee River Basin Oct. 28-30
    • This
      event is overdone
  • GFS
    reduced rain in New Mexico and western Texas as well as southeastern Colorado and southwestern Kansas Oct. 29-30, but it increased rain from Oklahoma into central and southwestern Texas and a part of the Delta Oct. 29-30
    • The
      reduction in rainfall was needed for West Texas and New Mexico, but the increase in rainfall was not likely to verify

Three
waves of cool air will occur in the central and eastern United States over the next two weeks each bringing a chance for rain to the Midwest. The moisture will improve field conditions for winter wheat in the lower Midwest, but the precipitation will briefly
disrupt farming activity occasionally. The first frontal system is in the eastern Midwest today and will produce the least amount of rain. A second frontal system is expected in the Midwest Sunday and Monday and will be swift moving to limit rain delays. The
last frontal system comes along Oct 22-24, but its precipitation is overdone. Temperatures will trend cooler during the coming ten days in the Plains and Midwest.

 

SOUTH
AMERICA

  • No
    theme changes were noted overnight
    • Argentina
      rainfall will be mostly in north today and in the northeast Saturday and early Sunday
    • Much
      of Argentina will receive rain starting late this weekend in the southwest and advancing northeast early next week
      • Sufficient
        rainfall is expected to bolster topsoil moisture and improve early corn and sunseed planting and establishment conditions
        • Rainfall
          will be highly variable with most of the driest areas getting 0.25 to 0.85 inch with local totals to 1.50 inches; greater rain will occur in other areas
      • Cordoba,
        Santiago del Estero and Santa Fe’s drier biased areas will get rain to ease long term dryness
    • Argentina
      follow up rainfall potentials are best for Oct. 23-24 when scattered showers occur across the nation again with lighter resulting rainfall
      • Rain
        may return again Oct. 27-28, but confidence is low on its expected distribution
    • Brazil
      rainfall is expected to be scattered erratically over the coming week with Mato Grosso expecting the least significant rainfall and will struggle for enough moisture to support planting and development
      • Follow
        up rain will be very important
    • Brazil
      rainfall in this first week will be greatest in Minas Gerais and immediate neighboring areas in Sao Paulo and Goias with lighter rainfall in Parana and Mato Grosso do Sul
      • The
        precipitation will be beneficial and increased planting of grain and oilseeds is likely while there is support for coffee and citrus flowering as well as sugarcane development
    • Center
      west and center south Brazil’s greatest rainfall boost is expected October 24-30

Overall,
the next couple of weeks seem to provide a little moisture for both Argentina and Brazil. However, Mato Grosso will not do well with rainfall for this first week of the outlook and neither will some of the immediate neighboring areas. Rain will improve in
interior southern Brazil and a portion of center south Brazil soil moisture and crop potentials. Rain will also evolve in Argentina early next week to bring relief to persistent dryness, but frequent follow up rain is needed. Today’s outlook for Argentina
does offer a little follow up rain event Oct. 23-24 and again Oct. 27-28, but confidence in the significance of these follow up rain events is a little low.

 

BLACK
SEA REGION

  • GFS
    model reduced rain potentials to eastern Ukraine, Russia’s Southern Region and Kazakhstan for the coming two weeks
    • The
      changes were needed after the evening model run last night was too wet
  • Showers
    are still expected in a narrow band in Russia’s Southern region briefly Monday into Tuesday
  • A
    follow up rain event is possible Oct. 25-27
  • Moisture
    totals from these two events will vary from 0.10 to 0.60 inch except in that narrow band expected in Russia’s Southern region where a few locations could receive locally more
  • European
    model run keeps the precipitation events very light

Overall,
the rain advertised for eastern Ukraine, Kazakhstan and Russia’s Southern region early next week and again Oct. 24-26 will be welcome, but much of it is expected to be brief and light leaving a limited response by crops in the region. A developing ridge of
high pressure that will follow these rain events will bring back another period of dry weather leaving winter crops poorly established into early November.

 

CHINA

  • No
    general theme changes were noted overnight
    • Restricted
      rainfall is expected in northeastern China and in the northern Yellow River Basin as well as the North China Plain where summer crop harvest progress and winter crop planting and establishment will advance favorably
    • Rain
      will continue periodically over the coming week in the Yangtze River Basin and southwestern crop areas in the nation
      • Net
        drying is advertised for much of eastern China during the second week of the forecast

INDIA

  • No
    general theme changes were noted overnight
    • Rain
      is expected to occur in central, southern and eastern India through early next week
      • Sufficient
        amounts of rain will fall to stall summer crop maturation and harvest progress in central India while raising some crop quality issues for cotton, soybeans, pulse crops and some rice
    • The
      rain will retreat to the south again during the second half of next week bringing back some improving weather

AUSTRALIA

  • No
    big changes were noted overnight in the coming ten days to two weeks
    • GFS
      model continues to attempt to bring rain to southern parts of Western Australia during mid-week next week and again October 23-24 with one more event near the end of this month
      • Confidence
        in these advertised rain events remains low because of drier biased conditions advertised by the European and Canadian model runs
  • Eastern
    Australia rainfall is still advertised to steadily increase as time moves along with the second week of the outlook wettest.

There
is only a low potential for rain in a few of Western Australia’s winter crop areas during the coming ten days. Rain farther to the east will be good for spring planting as well as maintaining good winter crop conditions in the southeast.

Source: 
World Weather Inc. 

 

Bloomberg
Ag Calendar

Thursday,
Oct. 15:

  • NOPA
    Crush
  • 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

 

Macros

US
DoE Crude Oil Inventories (W/W) 09-Oct: -3818K (est -2100K; prev 501K)


Distillate Inventories (W/W): -7245K (est -1687K; prev -962K)


Cushing OK Crude Inventories (W/W): 2906K (prev 470K)


Gasoline Inventories (W/W): -1626K (est 1300K; prev -1435K)


Refinery Utilization (W/W): -2.00% (est -0.90%; prev 1.30%)

US
Initial Jobless Claims Oct-10: 898K (exp 825K; R prev 845K)

–        
Continuing Claims Oct-3: 10018K (exp 10550K; R prev 11183K)

livesquawk
US Empire Manufacturing Oct: 10.5 (exp 14.0; prev 17.0)

US
Philadelphia Fed Business Outlook Oct: 32.3 (exp 14.8; prev 15.0)

US
Import Price Index (M/M) Sep: 0.3% (exp 0.3%; prev 0.9%)

–        
Import Price Index Ex-Petroleum (M/M) Sep: 0.7% (exp 0.5%; prev 0.7%)

–        
Import Price Index (Y/Y) Sep: -1.1% (exp -1.2%; prev -1.4%)

–        
Export Price Index (M/M) Sep: 0.6% (exp 0.3%; prev 0.5%)

–        
Export Price Index (Y/Y) Sep: -1.8% (prev -2.8%)

Canadian
ADP Nonfarm Payrolls Sep: -240.8K (R prev -770.6K)

 

Corn.

  • Argentina’s
    Rosario grains exchange left their corn production estimate unchanged at 48 million tons. 
  • Anec
    sees Brazilian corn exports during October to reach a record 5.237 million tons, up 670,000 tons from their previous estimate, and compares to 5.51 million tons from a year ago. 
  • China
    corn futures traded lower Thursday after establishing a record high of 2,595 yuan per ton on Wednesday.
  • Germany
    ASF: 65 cases since September 10 
  • The
    USDA Broiler Report showed broiler-type eggs set in the United States up 2 percent and chicks placed down 3 percent.  Cumulative placements from the week ending January 4, 2020 through October 10, 2020 for the United States were 7.61 billion. Cumulative placements
    were down 1 percent from the same period a year earlier.
  • Weekly
    US ethanol production increased a more than expected 14,000 to 937,000 barrels, highest since early September and stocks were also up a more than expected 336,000 barrels to 20.008 million.  A Bloomberg poll looked for weekly US ethanol production to be up
    6,000 and stocks to be up 124,000 barrels.   Sep 1 to date production is down 6.5 percent compared to the same period year ago. 

 

 

 

 

USDA
Attaché: Brazil Corn Ethanol Boom

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Corn%20Ethanol%20Production%20Booms%20in%20Brazil%20_Brasilia_Brazil_10-04-2020

 

Corn
Export Developments

  • Iran
    passed on 200,000 tons of barley. 
  • South
    Korea’s KOCOPIA group bought 60,000 tons of corn at $251.82/ton from Brazil for arrival by Jan 20. 
  • South
    Korea’s NOFI bought 13,000 tons of feed barley at $248.15/ton c&f for arrival around February 1.  Yesterday KFA paid $247.69/ton for arrival around Jan 20. 
  • Results
    awaited:  Algeria seeks 30,000 tons of feed corn and 25,000 tons of feed barley on October 15. 

  • Iran
    opened a new tender for 200,000 tons of barley, set to close October 21. 

 

Updated
10/15/20

December
corn is seen in a $3.90-$4.20 range (up 15 cents for the top end of the range)

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

 

Soybeans

  • Argentina’s
    Rosario grains exchange left their soybean production estimate unchanged at 50 million tons.  
  • IL
    soybean meal firmed by $3.00 to 5 over the December and Gulf was unch/up $2.00 to +22/+30 over the December. 
  • Strategie
    Grains increased the EU (+ Britain ) soft wheat production to 129.5 million tons from 129.3 million last month.  Then they increased 2020-21 soft wheat exports outside the EU and Britain by 2 million tons to 25.0 million tons from 23.0 million in September.
  • Malaysian
    palm oil traded lower from a slowdown in October palm exports.    
  • AmSpec
    reported Malaysian palm exports for first half October at 763,772 tons, down 2.1 percent from the same period last month.  ITS reported October 1-15 palm exports at 760,082 tons, down 2.5 percent. 

 

The
September US NOPA crush came in at 161.5 million bushels, 2.2 percent below August and up 5.8 percent from 152.6 million last year.  On a daily adjusted basis, the September crush improved 1.1 percent from the August rate to 5.38 bushels per day, and well
up from 5.08 million bushels per day for September 2019.  The September crush was 0.7 million above trade expectations.  Soybean oil stocks declined to 1.433 billion pounds, 21 million above an average trade guess. Soybean meal exports were excellent at 991,000
short tons, a record for the month and well above 755,000 during August.  This was seen bullish for soybean meal.  2019-20 US soybean meal exports came in 9.1 percent above 2018-19. 

 

 

Oilseeds
Export Developments

  • USDA
    announced private exporters sold: 261,000 tons of soybeans for delivery to China during the 2020/2021 marketing year

  • Results
    awaited: Iran’s SLAL seeks 200,000 tons of soybean meal and 200,000 tons of barley on October 14 for OND shipment. 
  • 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
10/12/20

November
soybeans are seen in a $10.25-$11.10 range

December
soybean meal is seen in a $345-$385 range

December
soybean oil is seen in a 32.50-35.00 range

 

Wheat

 

Export
Developments.

  • Jordan
    issued a new tender for 120,000 tons of wheat set to close October 21. 
  • Japan
    bought 87,110 tons of food wheat from Canada (25k) and rest from the US. 
  • Japan
    seeks 80,000 tons of feed wheat and 100,000 tons of feed barley on October 21 for arrival by February 25. 
  • Awaited:
    Offers around $284/ton – Pakistan seeks 300,000 tons of wheat on October 14 for arrival by end of January. 
  • Awaited:
    5 participants – Ethiopia seeks 400,000 tons of wheat by October 13.
  • Awaited:
    (new 9/15) Ethiopia seeks about 200,000 tons of milling wheat on October 15.
  • Turkey
    seeks 175,000 tons of wheat on October 22 for shipment between November 9 and November 24. 

 

Rice/Other

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

 

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

 

Terry Reilly

Senior Commodity Analyst – Grain and Oilseeds

Futures International │190 S LaSalle St., Suite 410│Chicago, IL  60603

W: 312.604.1366

treilly@futures-int.com

ICE IM: 
treilly1

Skype: fi.treilly

 

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