PDF Attached

 

We
will get 5 reports over the next 24 hours.  This morning USDA reported a flash sale of 257,071 tons of corn for Mexico.  Prices rallied today on short covering and positioning. 

 

 

Weather

 

MOST
IMPORTANT WEATHER OF THE DAY

  • Brazil’s
    rainfall over the next ten days will be least significant in Bahia and southeastern Piaui, but there will be some occasionally rainfall in a few west-central and southwestern Bahia locations to benefit cotton, corn and soybeans
    • Eastern
      cocoa and coffee production areas will not get much rain for a while
  • Brazil
    rainfall will also be a little light in northern Mato Grosso do Sul, southeastern Bolivia and some immediate neighboring areas, but there will be at least some rain in these areas periodically to prevent a complete absence of moisture
  • Minas
    Gerais, Brazil will be the wettest state in Brazil during the coming two weeks with some potential for localized flooding
    • Most
      of the rain in Minas Gerais will be spread out over time helping to limit the potential for serious flooding
    • Neighboring
      areas of Espirito Santo and Rio de Janeiro will also be sufficiently moist while rain in Sao Paulo will be a little sporadic
  • Another
    round of welcome rain will come out of Paraguay and into Parana, Brazil and immediate neighboring areas Sunday into Wednesday of next week
    • This
      rain event will be well timed after some drying occurs through the weekend and will help to maintain a very good moisture environment for developing summer crops
  • Rainfall
    in Brazil may become more sporadic and light again for a little while during the second week of the outlook and a close watch on its distribution both prior to and during that period of time is warranted to ensure sufficient amounts of rain occur to support
    the best crop development potential.
  • Brazil’s
    bottom line is still one of improvement in this coming week to ten days. Greater rain intensity and amounts will be needed in the far south, northeast and in few other random areas. Production cuts have occurred in many areas, but the key to soybean production
    will be during pod setting and filling which will be evolving later this month and in January. That is the time period that will be most important time in determining yield.
  • Southern
    Argentina will see the least frequent and least significant rainfall in South America for a while
    • Buenos
      Aires still has some favorable subsoil moisture, but it is drying out
    • La
      Pampa, San Luis and southern Cordoba are already drying out and will experience crop stress first
    • Some
      rain will fall briefly in Buenos Aires Thursday to delay the onset of moisture stress, but net drying is expected in all of the south following that event
    • Temperatures
      will be a little warmer than usual keeping evaporation rates high enough raise concern about future crop development in the already driest areas
  • Argentina’s
    north and some central crop areas will get timely rainfall to support crop needs, although the greatest rain in central Argentina occurs early to mid-week next week and it may be infrequent enough that the region will have to be closely monitored
  • Argentina’s
    bottom line is mostly favorable during the next two weeks in central and northern areas, although parts of Cordoba and far southern Santa Fe may be a little dry for a while. Southwestern Argentina will have the greatest moisture stress issues especially in
    San Luis, southern Cordoba and La Pampa. Rain in Buenos Aires Thursday of this week will be of critical importance since without it the soil will become too dry immediately and with the moisture the driest conditions will be staved off for a few more days.
    Production cuts have occurred, but mostly to the early planted crops. More recently planted crops have had timely precipitation to support germination, emergence and establishment, but timely rainfall must continue to preserve and protect production potentials.
  • Eastern
    Australia generalized rain potentials are very low over the coming week, although some scattered showers will occur
    • Today’s
      forecast is drier than that advertised by all of the forecast models Tuesday
    • Temperatures
      in eastern Australia will be cooler than they have been during the coming week, but warming is expected again Dec. 16-23
  • Australia’s
    winter crop harvest in the south should be winding down soon and it has been a good harvest season
  • South
    Africa will be favorably mixed with periods of rain and sunshine impacting summer grain, oilseed and cotton production areas
    • Planting
      progress should advance favorably around periods of rain
    • Dryness
      is of most concern today in central and western Free States and eastern Northern Cape, but some rain fell in these areas overnight
  • Eastern
    China weather has improved recently with less rain allowing rapeseed and southern wheat production areas a chance to dry down after being too wet earlier this season
  • China’s
    weather over the next two weeks will keep most winter crops dormant or semi-dormant and precipitation will concentrate on the Yangtze River Basin where a wintry mix of precipitation types is expected late this weekend into next week
    • Winter
      crops are well established and poised to perform well in the spring
    • Sugarcane
      harvesting in the south will advance relatively well for a while due to expected dry weather
  • India’s
    wet bias in the south is abating and giving way to some much needed drying
    • Too
      much rain recently has delayed summer crop maturation and harvesting in Tamil Nadu and southern Andhra Pradesh where some cotton, rice and groundnut quality concerns have evolved recently
      • Drying
        will get harvest progress back on the right track
  • Central
    and far northern India showers next week will benefit a few winter crops, but greater rain will be needed in the heart of the nation
    • Most
      winter crops are favorably rated, however, with little change likely
  • Southern
    Vietnam and Cambodia will trend wetter than usual late this week and into the weekend with some of that moisture reaching far southern Thailand as well late in the period
    • The
      moisture will delay harvest progress for many crops, but no serious crop quality changes are likely
    • Some
      additional rain will fall along the central and lower Vietnam coast for a while next week and some additional rain will be possible in southern Cambodia and a few areas in the Malay Peninsula
  • Routinely
    occurring precipitation is expected in Philippines, Indonesia and Malaysia over the next two weeks
  • Russia’s
    Southern Region had eastern Ukraine will continue missing precipitation for the next ten days leaving dormant winter crops in need for greater soil moisture to be used in the spring
    • Winter
      crops are still not as well established as they should be
  • Greece,
    Bulgaria, eastern and southern Romania, Moldova and western Ukraine will all receive significant moisture late this weekend into early next week bolstering topsoil moisture for better winter crop establishment and growth potential in the spring
  • Portions
    of the U.K., France and the Iberian Peninsula will also receive periodic rainfall during the next two weeks along with Italy and the eastern Adriatic Sea region where some flooding will be possible due to heavy rain over areas that are already wet
  • North
    Africa rainfall will be greatest in northern Algeria and coastal areas of Tunisia during the coming ten days. The moisture will be welcome
    • Some
      moisture will also reach into far north-central Morocco, but there is need for more rain in the remainder of that nation and in particular the southwest
      • Morocco
        continues trying to recover from last year’s drought
  • U.S.
    weather was mostly dry and mild to warm Tuesday; temperatures were well above average in a part of the north-central states and in neighboring areas of Canada
  • U.S.
    storm late this week will impact areas from eastern Texas, eastern Oklahoma, Arkansas and Missouri to Michigan and New York with rain and some snow
    • Heavy
      snow will impact parts of northern and western Michigan and southeastern Wisconsin
    • An
      active weather pattern in the Dec 16-22 period will bring another storm to the Midwest, Delta and middle and northern Atlantic Coast States during the middle to latter part of next week followed by one more farther to the east during the Dec. 22-25 period.
    • Temperatures
      over the next seven days will be warmer than usual in much of the nation, but close to normal in the southeastern states
  • Mexico
    precipitation will be quite limited over the coming week except in the northwest tonight and Thursday when a storm system brings moisture to Sonora, Baja California, Sinaloa, northwestern Durango and Chihuahua
    • Rainfall
      of 0.20 to 0.75 inch and local totals to 1.25 inches will result disrupting summer crop harvesting, but benefiting winter crops
      • The
        precipitation event has been diminished relative to that of Monday
    • Southern
      areas will only receive light rainfall from scattered showers and harvesting will advance favorably
  • Portions
    of Central America will continue to receive periodic rainfall over the next couple of weeks, but the intensity and frequency will be low enough to support some farming activity
    • Costa
      Rica will be wettest this workweek

·        
West-central Africa will experience greater than usual rainfall over the coming week and some of the moisture might interfere with harvesting and could also induce some isolated flowering of coffee and cocoa in areas that get
the greatest moisture.

·        
East-central Africa rain will be erratic and light in Ethiopia, Kenya and Uganda while rainfall will be greatest over Tanzania

·        
New Zealand rainfall will be erratically distributed over the next ten days benefiting most areas

    • Much
      of the rain will be lighter than usual
    • Temperatures
      will be a little cooler than usual

 

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

Thursday,
Dec. 10:

  • China’s
    agriculture ministry (CASDE) releases monthly report on supply, demand, 10am local
  • Malaysian
    Palm Oil Board releases data on November stockpiles, exports, production, 12:30pm local
  • FranceAgriMer
    monthly crop report
  • Agroinvestor
    Russian agriculture conference
  • Port
    of Rouen data on French grain exports
  • Conab’s
    data on area, output and yield of soybeans and corn in Brazil, 7am
  • National
    Grain & Feed Association Country Elevator Conference, 10am
  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
  • USDA’s
    monthly World Agricultural Supply and Demand (WASDE) report, 12pm
  • HOLIDAY:
    Thailand

Friday,
Dec. 11:

  • ICE
    Futures Europe weekly commitments of traders report
  • HOLIDAY:
    Thailand

Source:
Bloomberg and FI

 

 

 

 

 

 

 

Bloomberg
Trade Estimates:

 

 

 

Macros

Bank
of Canada will maintain current level of policy rate until inflation objective is achieved, continues its quantitative easing program. 

 

Corn.

 

US
corn balance

– FI changes and comments: Corn 2020-21 crop year price was adjusted higher to $4.20 amid 11.1% STU.  US corn exports were revised to 2.600 billion, 50 million below USDA and up 50 from previous.  US corn imports are projected at 40 million, 15 above USDA. 
We also adjusted 2021 US corn plantings to reflect changes made last week, up 800,000 acres to 91.8 million.  Our 2021-21 US carryout is expected to remain tight, below 1.7 billion with a 11.4% STU, and price average is higher than $4.20 for 2020-21 based
on higher soybean price outlook of $11.25 for 2021-22. 

 

US
weekly ethanol production surprised the trade by increasing 17,000 barrels per day to 991,000 barrels., above its recent high of 990,000 posted for week ending November 20, and highest since March 20.  Stocks were up a large 843,000 barrels to 22.083 million,
highest since May 29.  A Bloomberg poll looked for weekly US ethanol production to be down 3,000 (actual 20,000 above trade) and stocks to increase 397,000 barrels (actual 446 above trade).  Crop year to date (early September through December 4) weekly ethanol
production is averaging 945,000 barrels per day, up from 929,000 barrels for the entire 2019-20 crop-year.  This is important to watch as in its monthly short-term energy outlook for the US, the EIA estimated 2020 (calendar year) ethanol production to average
900,000 barrels per day in 2020, unchanged from November, and increased 2021 average by 10,000 barrels per day to 980,000 barrels.  Both EIA estimates are below the 2019 production average of 1.03 million barrels per day.  We look for US ethanol production
to rebound back above 1.020 million barrels by the end of Q1 2021.  We are using 5.100 billion bushels for corn for ethanol use for the 2020-21 marketing year, 50 million above USDA and compares to 4.852 billion used in 2019-20, down from 5.378 billion in
2018-19.  Using the average Sep-early Dec ethanol production, annualized implied corn use, using a 2.80 yield, comes out to 5.171 billion bushels (omits sorghum use of projected 40 million bushels by USDA Nov).  For 2021-22, we look for corn for ethanol use
to expand to 5.400 billion bushels and if realized, second highest in history.   Note China has been asking around for US ethanol quotes, per trade talk. 

 

 

 

 

Corn
Export Developments

  • Under
    the 24-hour reporting system private exporters sold 257,071 tons of corn for delivery to Mexico during the 2020-21 marketing year. 
  • Taiwan’s
    MFG bought around 65,000 tons of US corn for Feb/Mar shipment at $1.9639/bu over the May futures. 

 

 

Updated
11/30/20

March
corn is
seen
trading in a $4.15 and $4.40 range. 

 

Soybean
complex
.
 

 

Oilseeds
Export Developments

  • Egypt’s
    GASC seeks at least 30,000 tons of soybean oil and 10,000 tons of sunflower oil on Thursday for arrival from Jan. 28 to Feb. 14.  The picked up local soybean oil in their last two tenders between $888 and $988.50/ton.  Last time they secured sunflower oil
    was back in early October. 
  • Iran’s
    GTC seeks about 30,000 tons of sunflower oil. 

 

Updated
12/02/20

January
soybeans are seen in a $11.40‐$12.10 range

January
soybean meal is seen trading in a $375 and $405 range

January
soybean oil is seen in a 36.00-38.50 cent range.

 

Wheat

  • US
    wheat saw an outside day higher in all three March contracts on short covering ahead of the USDA report.  Russia may take serious measures to curb food inflation, a hint wheat and other commodity exports could be limited until prices stabilize. 
  • Funds
    bought an estimated net 13,000 contracts of CBOT SRW contracts. 
  • Russian
    president Vladimir Putin ordered the Russian government to contain food price inflation, according to a Bloomberg article.  No specifics were provided.  Russian food inflation increase 5.8% in November from 4.8% in October.  Russia’s central bank meets December
    18.  
  • CBOT
    SRW deliverable stocks fell 564,000 bushels from the previous week and are 8 percent lower than this time last year.  HRW deliverable stocks are 10 percent below year ago. 
  • Chicago
    SRW wheat registrations declined 27 on Tuesday (Cofco Chicago) and are down 61 since 12/3 to 148 lots. 
  • Russia’s
    AgMin sees the 2020 grain crop above 131 million tons.  IKAR in late November estimated the grain crop at 125 million tons.
  • Ukraine
    used up 88 percent or 3.4 million tons of their barley export quota (up to 4.2MMT) with most of it for China.  Ukraine produced nearly 8 million tons of barley, up from 5.1 million tons in 2019-20. 
  • Coceral
    2021 EU + UK corn production was estimated at 63.1 million tons versus 62.8 million tons in 2020. 
  • EU
    March milling wheat was up 1.25 at 202.25 euros.
  • Refinitiv
    Commodities Research – 2020/21 Australia wheat production: 30.0 million tons.  ABARES @ 31.2 million tons.  Look for USDA to adjust to ABARES. 
  • Refinitiv
    Commodities Research – 2021/22 China wheat production: 138 million tons.  USDA Nov. is at 136. 
  • Refinitiv
    Commodities Research – 2021/22 EU wheat production: 152.6 million tons.  USDA is at 136.55 MMT. 
  • Refinitiv
    Commodities Research – 2021/22 Russia wheat production: 78.4 million tons.  USDA is at 83.50 MMT. 

 

Export
Developments.

  • Japan
    bought 131,305 tons of milling wheat.  Original details as follows.

  • Jordan
    seeks 120,000 tons of feed barley on December 15 for March-May shipment.

 

Rice/Other

·        
None

 

Updated
12/7/20

March
Chicago wheat is seen in a $5.60‐$6.20 range (lowered 10 cents)

March
KC wheat is seen in a $5.25‐$5.70 range (lowered 5 & 10)

March
MN wheat is seen in a $5.35‐$5.65 range (down 5 & 10)

 

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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