FI Evening Grain Comments 11/06/20

PDF Attached

 

Joseph
Robinette Biden Jr. has defeated Donald Trump to become the 46th U.S. president

 

We
don’t expect a sticker shock in the Ag markets Sunday night as much of it is priced in. 
Profit
taking hits the US wheat market while rolling spreads pressure nearby soybeans and corn.  China soybean imports are up more than 40 percent for the month of October from a year ago. 

 

USDA
released its annual baseline S&D’s Friday at 2 p.m. CST

https://www.usda.gov/media/press-releases/2020/10/26/usda-announces-early-release-select-commodity-tables-usdas

• USDA
  FORECASTS 2021/22 U.S. CORN PLANTINGS AT 90.0 MILLION ACRES, CROP AT 14.890 BILLION BUSHELS
• USDA
  FORECASTS 2021/22 U.S. SOYBEAN PLANTINGS AT 89.0 MILLION ACRES, CROP AT 4.465 BILLION BUSHELS
• USDA
  FORECASTS 2021/22 U.S. ALL-WHEAT PLANTINGS AT 46.0 MILLION ACRES, CROP AT 1.890 BILLION BUSHELS
• USDA
  PROJECTS 2021/22 U.S. CORN ENDING STOCKS AT 2.257 BILLION BUSHELS, SOY ENDING STOCKS AT 255 MILLION BU, WHEAT ENDING STOCKS AT 830 MILLION BU

 

Weather
and Crop Progress

 

 

 

 

 

TOPICS
TO THINK ABOUT DURING WEEKEND

• Tropical
  Depression Eta will become a tropical storm later today and intensify as it moves to Cuba this weekend
• The
  storm will move across Cuba Sunday morning with rain and wind from the storm impacting the region from Saturday afternoon into Monday morning
• Damage
  to citrus, sugarcane and unharvested rice is possible
• Flooding
  should be expected
• The
  storm center will move extremely close to the south tip of Florida and will likely pass over the Florida Keys Sunday night into Monday
• Heavy
  rain will impact southern Florida with some windy conditions as well
• Damage
  to southern citrus and sugarcane is not expected to be significant, but a little fruit droppage is possible in southwestern citrus areas depending on how close the storm center is to land
• Citrus
  in the remainder of Florida’s peninsula could be impacted by the storm if it takes a more northerly track than expected
• By
  mid-week next week the storm will be west of Tampa Florida
• There
  is potential for the system to intensify enough to reach hurricane intensity, but probably not until it reaches the southeastern Gulf of Mexico early next week
• Eta
  may not be the last tropical cyclone to impact the Atlantic Ocean, Caribbean Sea or Gulf of Mexico
• Another
  disturbance may form in the southern Caribbean sea late next week, although confidence is low
• Tropical
  Depression Goni moved through central Vietnam Thursday and is producing significant rain in inland parts of mainland Southeast Asia
• Very
  little crop damage is expected, although rainy weather will continue
• Tropical
  Storm Astani was located near Taiwan this morning and it will pass well south of Hong Kong this weekend before dissipating on approach to the lower Vietnam coast Monday
• Tropical
  disturbance east of Philippines today will move across central parts of the nation this weekend and then it will organize into a tropical cyclone while enroute to the lower central Vietnam coast Sunday into Monday
• Landfall
  is expected in Vietnam Monday or early Tuesday and the storm will bring more rain and wind to a part of Vietnam’s Central Highlands
  
• Coffee
  is not expected to be seriously impacted, but wind and rain will raise the potential for some cherry and bean droppage
• Multiple
  precipitation events impacting Vietnam’s central coast over the next week will result in rain totals of 6.00 to 15.00 inches and local totals approaching 20.00 inches.
  
• Flooding
  has been and will continue a serious impact along the central Vietnam coast where impressive rain totals in the past 30 days
• More
  disruption to commerce and shipping will occur because of the additional rain
• New
  Tropical cyclone is advertised to evolve between Guam and Philippines early next week and it may reach the northern Philippines late next week
  
• Blizzard
  from Montana to northwestern Manitoba including much of Saskatchewan will stall travel, stress livestock and may knock power out for a while this weekend and Monday
• Snow
  accumulations of 10 to 20 inches will be common with surrounding areas getting 4 to 10 inches. There is potential for a few areas to get 20 to 26 inches of snow
• Moisture
  continent will range from 0.50 to 2.00 inches
• The
  storm will bring much improved soil moisture to the region when the snow melts
• Most
  of these areas have been suffering from dryness for many months and the relief is needed to improve the planting and production outlook for 2021
• West-central
  and southwestern U.S. hard red winter wheat areas will get little precipitation over the next ten days to two weeks
• Some
  crop improvements occurred from precipitation earlier this season, but more is needed specially from central Kansas to southeastern Colorado and the northwestern Texas Panhandle
• Recent
  very warm and dry weather has brought back some drying
• High
  wind speeds in the central and northern Plains and upper Midwest this weekend could bring on power outages and induce some accidents for high profile vehicles
• Speeds
  of 30 to 50 mph will occur in many areas from western Texas and eastern Colorado into Nebraska and in the western Dakotas and eastern Montana in association with the weekend blizzard to the west and north
• U.S.
  Midwest and Delta harvest weather will remain good over the next ten days, despite a couple of fast moving weather disturbances
• U.S.
  southeastern states will deal with frequent rain next week – mostly in Virginia and the Carolinas – resulting in harvest delays and wetter field conditions
• Unharvested
  cotton quality could experience a little decline because of the rain
• A
  slightly more active weather pattern in the U.S. Pacific Northwest will bring on periods of rain and mountain snow during the next two weeks.
  
• Many
  valley locations will only receive light amounts of moisture, though
• California
  will receive some of its first rain and mountain snow of the season today and Saturday, although amounts will be light and the distribution will be sporadic
• Bitter
  cold air will return to the northwestern U.S. Plains, northern and central Rocky Mountain region and interior parts of the Pacific Northwest next week with cooling likely in the northwest half to two-thirds of the Great Plains, as well
• West
  Texas precipitation will be minimal through the weekend, but some rain might occur briefly next week
  
• The
  moisture will have a minor impact on the region
• The
  impact on harvesting will be minimal
• Russia’s
  Southern Region will be trending cooler over the next week to ten days limiting the potential for additional crop improvement from any new moisture that occurs
• Recent
  precipitation gave some crops in western parts of Russia’s Southern Region and a part of Ukraine a late season lift in soil moisture that will help improve crops in the spring
• Some
  improvement has occurred recently, but much of the precipitation in eastern Ukraine and western parts of Russia’s Southern Region was too late to induce better crop establishment prior to dormancy
• That
  leaves crops more vulnerable to winterkill this year if there is not substantial snow on the ground during periods of harsh temperatures
• Eastern
  portions of Russia’s Southern Region and Western Kazakhstan failed to get significant moisture this autumn raising worry over small grain production next spring
  
• Overall,
  World Weather, Inc. believes enough of Ukraine and Russia’s Central Region received sufficient moisture this autumn to leave crops poised for improvement in the spring as long as winterkill is kept to a minimum. Crops in Russia’s Southern Region got their
  moisture much later and the risk of loss during the winter is higher than in production areas to the west and north.
  
• Argentina’s
  dryness in central and eastern summer crop areas during the next ten days to two weeks will maintain worry over summer crop emergence, establishment and late planting
• Fieldwork
  should advance well for a little while longer, but once the ground dries out fieldwork may slow and there will certainly be delays in crop emergence and establishment
• There
  is still time for improvement, but there is not much rain in the pipeline today
• Center
  west and southern Brazil will continue dry through the weekend, but scattered showers and thunderstorms expected next week will bring timely relief to many crop areas
• Improved
  emergence and establishment conditions will occur to many areas that have been quite dry recently from southern Minas Gerais to Rio Grande do Sul and a few areas into Mato Grosso do Sul and Paraguay
• A
  close watch will be needed on the distribution of rain next week to make sure all crop areas get needed moisture
• There
  will be an ongoing need for more precipitation, however
• Southeastern
  Australia rainfall over the next two weeks will be infrequent and light enough to protect winter crop quality while benefiting some summer crop planting and establishment.
  
• Queensland,
  Australia dryland summer crop areas will get some showers this weekend and they will continue infrequently through the following ten days
  
• The
  moisture will be good for dryland cotton, sorghum and other summer crop planting, emergence and establishment, although greater moisture will be needed in many areas to ensure the best soil moisture
• Fieldwork
  will be slowed by the precipitation periodically
• Unharvested
  winter grains will not be negatively impacted
• Western
  Australia should get some showers today and again early next week
• No
  serious impact on harvesting or unharvested crop quality is expected.
• Some
  rain of significance will fall in Georgia and extreme southern parts of Russia’s Southern Region again today and possibly again late next week
• China
  weather will remain favorably dry over the next ten days favoring winter crop planting and establishment as well as summer crop harvesting
• Any
  showers that occur will be brief and light causing only a limited amount of disruption to fieldwork
• Not
  much precipitation fell during the weekend
• South
  Africa rain Thursday was welcome, but more is needed
• Today
  and Saturday will be dry and then scattered showers and thunderstorms will resume again Sunday through next week providing a better mix of weather for the nation’s spring and summer crops
• India
  weather will be favorable for late season crop development and widespread harvesting over the next ten days
• Winter
  crop planting, emergence and establishment will advance well
• Rain
  will be confined to the far south and a few areas in the far Eastern States
• Waves
  of rain will continue to impact parts of Southeast Asia that are not being impacted by tropical cyclones over the next ten days to two weeks; most crop conditions will remain favorable
• This
  includes Indonesia, Malaysia, Thailand, Laos and parts of the Philippines and Vietnam not impacted by tropical cyclones
• Brief
  periods of precipitation will move across the European continent over the coming week
  
• Most
  of the continent will report very little precipitation of significance
• Fieldwork
  will advance around the precipitation
• Temperatures
  will be near to above average
• Ontario
  and Quebec, Canada will experience limited precipitation through early next week improving harvest progress in the region after abundant moisture in October
• Some
  rain will fall briefly during mid-week next week followed by some additional net drying and then another storm in the second weekend of the outlook
• Southern
  Oscillation Index was +3.41 this morning; the index vary in a narrow range over the next week
• Mexico
  precipitation will be quite limited over the coming week favoring summer crop maturation and harvesting
  
• Portions
  of Central America will remain wetter than usual into mid-month, despite Tropical Depression Eta’s exit from a part of the region
• Flooding
  has been extensive in Nicaragua and parts of Honduras this week
• Rain
  will be greatest in Guatemala, El Salvador, Costa Rica, Nicaragua and Panama
  

 

·        
West-central Africa will experience erratic rain through the next ten days favoring crop areas closest to the coast

• Daily
  rainfall is expected to be decreasing as time moves along which is normal for this time of year
• Cotton
  areas are benefiting from drier weather

·        
East-central Africa rain will be erratic and light over the next couple of weeks, but most of Uganda and southwestern Kenya will be impacted while Tanzania and northwestern Ethiopia rainfall is erratic and light

• Some
  heavy rain may fall in Uganda early this week

·        
New Zealand rainfall will be near to above average in North Island and northern parts of South Island while near to below average in southern South Island

• Temperatures
  will be near to below average

Source: 
World Weather Inc. 

 

Source:
World Weather and FI

 

 

Bloomberg
Ag Calendar

Friday,
Nov. 6:

• HOLIDAY:
  Argentina

Saturday,
Nov. 7

• China’s
  trade data on soybeans and meat imports

Monday,
Nov. 9:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  winter wheat conditions; harvest for soybeans, corn, cotton, 4pm
• Brazil
  Unica cane crush, sugar production (tentative)
• Ivory
  Coast cocoa arrivals
• EU
  weekly grain, oilseed import and export data
• EARNINGS:
  BRF SA

Tuesday,
Nov. 10:

• USDA’s
  monthly World Agricultural Supply and Demand (WASDE) report, noon
• China’s
  agriculture ministry (CASDE) releases monthly report on supply, demand
• Malaysian
  Palm Oil Council webinar on China’s post-pandemic palm oil demand
• Malaysian
  Palm Oil Board releases data on end-October stockpiles, exports, production
• Conab’s
  data on area, output and yield of soybeans and corn in Brazil
• Malaysia
  Nov. 1-10 palm oil export data from AmSpec, SGS

Wednesday,
Nov. 11:

• EARNINGS:
  JBS, Barry Callebaut
• HOLIDAY:
  U.S. (Veterans Day, federal govt closed, CME trading unaffected), France, Canada

Thursday,
Nov. 12:

• Port
  of Rouen data on French grain exports
• Vietnam
  customs data on coffee, rice and rubber exports in October
• EIA
  U.S. weekly ethanol inventories, production
• EARNINGS:
  BayWa, Marfrig

Friday,
Nov. 13:

• ICE
  Futures Europe weekly commitments of traders report, 1:30pm (6:30pm London)
  
• NOTE:
  CFTC Commitments of Traders report, usually released on Fridays, is scheduled for Monday, Nov. 16, due to U.S. federal holiday
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• FranceAgriMer
  weekly update on crop conditions
• New
  Zealand Food Prices

Saturday,
Nov. 14:

• China
  Animal Agriculture Association summit on hog recovery, ASF vaccine progress

Source:
Bloomberg and FI

 

Updated
for Monday:

 

Updated
for Monday:

 

 

 

 

 

 

CFTC
Commitment of Traders

Funds
for the second week in a row were much more long than estimate for the traditional net long position in corn.  Traditional funds in soybeans are still near their recent record. 

 

 

 

 

 

Macros

US
Non-Farm Payrolls Oct 638K (est 600K; prevR 672K; prev 661K)

US
Unemployment Rate Oct 6.9% (est 7.7%; prev 7.9%)

US
Private Payrolls Oct 906K (est 690K; prevR 892K; prev 877K)

-US
Manufacturing Payrolls Oct 38K (est 50K; prevR 60K; prev 66K)

-US
Average Hourly Earnings (M/M) Oct 0.1% (est 0.2%; prevR 0.0%; prev 0.1%)

-US
Average Hourly Earnings (Y/Y) Oct 4.5% (est 4.6%; prevR 4.6%; prev 4.7%)

-US
Average Workweek Hours Oct 34.8 (est 34.7; prevR 38.8; prev 34.7)

-US
Participation Rate Oct 61.7% (est 61.5%; prev 61.4%)

7:32:10
AM livesquawk Canada Net Change In Employment Oct 83.6K (est 100.0K; prevR K; prev 378.2K)

-Canada
Unemployment Rate Oct 8.9% (est 8.8%; prev 9.0%)

7:32:12
AM livesquawk Canada Hourly Wage Rate Permanent Employees (Y/Y) Oct 5.2% (est 5.4%; prev 5.4%)

 

Corn.

• Nearby
  corn futures turned mostly lower led by bear spreading as traders were taking profits and rolling spreads ahead the start of the Goldman Roll that started today.  May through September contracts ended higher on optimism US corn export demand will be strong
  during these contract periods.  Prices earlier on Friday were underpinned by strong US export demand for feedgrains, expectations for USDA to lower the US yield next week and lower USD. 
  
• News
  was light until USDA announced 206,900 tons of corn to unknown. 
• There
  was a lot of follow up conversation after USDA’s Attaché upward revised China’s corn imports to 22 million tons.  Statistically this would boost China’s rank as a major importer to the number two position, behind the EU.  We are unsure whether USDA next week
  will upward revise China’s import number, but if had to guess, USDA will leave it unchanged.  In our opinion, unchanged would simply mean USDA is respecting China’s current TRQ policy.  USDA will not project foreign country policy.  Thinking out loud, an upward
  revision by 22 million tons would obviously boost world trade, and slightly lower the global stocks to use projection, in our opinion.  If USDA take corn exports to less than 22 million tons, to say, 15 million tons, it might be perceived as slightly bearish. 
  If USDA does adjust, which we don’t think they will, one key factor to watch is the adjustment in US and Ukraine corn exports. 
  
• For
  the week ending November 5 (Thursday), domestic corn prices in Brazil fell 1.6 percent to 81.28 BRL per 60-kilo bag. (ESALQ/BM&FBovestpa Index)
• CBOT
  corn open interest was up 8,318 contracts on Friday. 
• WTI
  was down $1.30 and USD 29 points lower. 
• France
  is 94 percent complete with their corn harvesting, we up from 76 percent year ago. 
  
• Sweden
  raised their bird flu risk assessment from low to elevated. 

 

 

Corn
Export Developments

• Under
  the 24-hour announcement system, private exporters reported export sales of 206,900 tons of corn received during the reporting period for delivery to unknown destinations during the 2020/2021 marketing year; and

 

Updated
11/05/20

December
corn is seen in a $3.90-$4.25 range

 

Soybean
complex.
 

• Most
  soybean contracts started higher on ongoing bullish features including drier outlook for Argentina, Chinese buying of US soybeans and expectations for USDA to lower the US soybean yield next week. 
  There
  was talk China bought 4 soybean cargoes on Thursday. PNW and Gulf interest was noted.  Later in the morning USDA announced soybean sales to China and unknown.  But the bullish story in US export demand was muted when bear spreading kicked in, sending January
  soybean futures lower.  Some US elevators were selling soybeans today to cover margins after futures ripped higher earlier this week. 
  We think US crushers were active buying soybeans on Friday.  March crush went off at $1.07, up 1.50 cents. 
  
• Soybean
  oil turned higher at the day session open as USDA announced soybean oil sales to South Korea, but by afternoon traded two-sided following weakness in nearby soybeans and soybean meal.  It’s thought Argentina will slow soybean oil shipments until crushings
  increase.  But no one knows how long Argentina’s economic problems will last. 
  
• China’s
  General Administration of Customs reported China’s soybean imports were up 41% in October from a year ago to 8.69 million tons from 6.18 million tons in the same month year earlier, and down from 9.8 million tons in September.  Imports of vegetable oils were
  885,000 tons in October, down 3.9% from the previous month. 
• According
  to Secex, from January to October, Brazil exported 81.43 million tons of soybean, a record for the period. China received 73.12% of the Brazilian product.
• Friday
  was a holiday in Argentina.
• Argentina
  soybean planting progress was less than 5 percent complete last workweek, well behind normal.  Paraguay was 90 percent complete. 
  
• The
  U.S. National Aeronautical and Space Administration (NASA) has declared drought in South America is the second most serious one since 2002 with 2015-16 being more serious. (World Weather Inc.)
• Safras
  & Mercado reported Brazil soybean forward sales at 55% versus 30% on average for this time of the year.  Brazil cannot afford a major weather problem.  Safras forecasts Brazil will produce a record crop of 133.5 million tons of soybeans in 2020-21. 
  
• Abiove
  sees Brazil importing one million tons of soybeans in 2020, highest since 2008 nearly four times average calendar year imports.  Looking at 2021, Abiove pegged imports at a half million tons.  We think this reflects heavy imports in January 2021. 
  
• CBOT
  soybean meal spreads were active on Friday, especially for the December/March.  US soybean meal basis was quiet.  Mankato was up $3.00 to 10 under the December.  Chicago was down $1.00 to 6 over the Dec. 
  
• CBOT
  soybean open interest was up 3,724 contracts on Friday. 

• Offshore
  values this morning were leading CBOT soybean oil 60 lower (42 lower week to date) and meal $3.00 lower ($3.30 lower week to date). 
  
• China
  cash crush margins were 115 cents on out our calculation (112 previous) compared to 139 last week and 155 year ago. 
  
• Traders
  are looking for Malaysian palm end of October stocks to fall 9.8 percent to 1.56 million tons from 1.725 million at the end of September.  Good demand from exports and lower production may sink ending palm oil stocks to a three-year low. 
  

 

 

Oilseeds
Export Developments

• The
  USDA last Wednesday reported the purchase of 5,610 tons soybean meal under the Food for Progress export program for shipment Dec 1-10 and Dec 18-28 to Honduras. Price paid was reported at $503.00 per ton. 
  
• The
  USDA midweek reported the purchase of 60 tons of packaged oil for shipment to Zimbabwe under Title II, PL480. Shipment was scheduled for Dec 1-31, with prices ranging from $1,222.80 to $1,587,86.
• The
  USDA seeks 180 tons of veg oil packaged in 4 liter cans on Nov 17 for use in the McGovern-Dole Food for Export program for shipment to Liberia. Shipment was scheduled for Dec 16-31 and Jan 1-15 (Jan 1-31 for plants at ports).
  
• Under
  the 24-hour announcement system, private exporters reported export sales of:

• 132,000
  tons of soybeans for delivery to China during the 2020/2021 marketing year
• 272,150
  tons of soybeans for delivery to unknown destinations during the 2020/2021 marketing year
• 30,000tons
  of soybean oil for delivery to South Korea during the 2020/2021 marketing year

• Egypt’s
  GASC seeks local vegetable oils on November 9 for Dec 25-Jan 15 arrival (2,000 sunflower oil and 3,000 soybean oil). 
  

 

Updated
11/05/20

January
soybeans are seen in a $10.75-$11.40 range

December
soybean meal is seen in a $370-$410 range

December
soybean oil is seen in a 34.50-37.00 range

 

Wheat

• Traders
  targeted wheat when taking profits in selected commodities on Friday.  Global import developments slowed Thursday into Friday when comparing to the flurry of activity early in the week.  Black Sea futures traded slightly lower.  Australian wheat prices are
  offered at $275/ton, below Black Sea wheat believed to be around $258/ton.
  
• US
  wheat futures started higher on good global demand and net drying across the US Great Plains.  Saudi Arabia is in for wheat today and results might be released over the weekend or on Monday.  Pakistan bought 320,000 tons of wheat. 
  
• The
  U.S. Agency for International Development said it will grant $20 million to the World Food Program to purchase wheat for Sudan to alleviate shortages in the east African country. (Reuters)
• Ukraine
  collected 54.4 million tons of grain or 89 percent of the intended harvested area – Ukraine economy ministry. 
  
• France
  planted 76 percent of their soft wheat crop as of November 2, versus 66 week earlier and 63 last year.
  
• Paris
  (Matif) December wheat ended 0.25 euro lower at 208.75 euros. 

 

Export
Developments.

• Pakistan
  bought 320,000 tons of wheat at $286.20/ton, c&f. It might originate from France or Australia. 
  
• Yesterday
  Egypt’s GASC bought 300,000 tons of Russian wheat.  It included 180,000 tons for shipment Dec. 15-30 and 120,000 for shipment Jan. 8-18. 
  
• Saudi
  Arabia seeks 600,000 tons of 12.5% protein wheat for February through March delivery.  Results might be out over the weekend.  
  
• Syria
  seeks 150,000 tons of wheat on November 9.  They were in on October 28 for 200,000 tons. 
  
• Turkey
  seeks 550,000 tons of wheat on November 11 for Nov 24 and Dec 18 shipment. 
  
• Lowest
  offer $286.20/ton:  Pakistan seeks 320,000 tons of wheat 3 for arrival by November 3 for arrival by the end of January. 
  

 

Rice/Other

·        
Syria seeks 37,400 tons of white rice on November 23.  White Chinese/Egyptian short grain white rice of third or fourth class was sought. Shipment is sought within three months of order confirmation. 

 

Updated
11/05/20

December
Chicago wheat is seen in a $5.90-6.20 range

December
KC wheat is seen in a $5.45-$5.80 range

December
MN wheat is seen in a $5.45-$5.75 range