FI Morning Grain Comments 01/05/21

Jan 5, 2021







PDF attached

 

Morning. 

 

A
weaker USD and higher WTI crude oil are supporting CBOT agriculture futures today.  The weather situation in South America appears to remain adverse and traders are still concerned over the Argentina restriction on corn exports through February.  However,
with business potentially shifting to the US over the short term, it should be supportive for the nearby corn spread. Argentina grain handlers are still on strike action at some facilities bias southern export areas.  One source mentioned exporters can load
at one terminal but not another.  Meanwhile Argentina corn registrations surged to over 1.2 million tons during the first week of new year for shipments beyond the February period.  High Argentina corn prices are beneficial for exporters.  Jordan saw 4 participants
for their 120,000 ton barley import tender.  Bangladesh is in for another 50,000 tons of wheat.  Today the USDA/CCC seeks 2,000 tons of vegetable oil, packaged in 4 liter cans, for export to Kenya for February 1-28 shipment (Feb 16 to Mar 15 for plants located
at ports).  Malaysian palm oil traded 31 MYR higher and cash increased $10.00/ton.  A Reuters poll sees end of December palm stocks hitting at least a 13-year low at 1.22 million tons, down 22 percent from the previous month.  Rotterdam meal and vegetable
oil prices were lower from yesterday.  Wheat futures may see limited upside today.  Kansas winter wheat crop ratings increased to 46 percent good/excellent from 33 percent at the end of November, according to state data.  Nebraska increased to 37 percent from
35 percent over the past month and Colorado decreased one point to 19 percent. 

 

Last
night there were 3900 CH 450c exercised leaving over $1.1m of time value on the table. If you need help with options, please drop us a line.

 

 

 

Weather

IMPORTANT
WEATHER ISSUES OF THE DAY

  • Rainfall
    in Argentina overnight was a little better organized and locally greater than expected from western Buenos Aires through the heart of Cordoba
    • Most
      amounts ranged from 0.15 to 0.75 inch with local totals of 1.00 to 2.00 inches
      • One
        location in southwestern Buenos Aires reported 2.16 inches of rain
    • The
      greatest precipitation occurred in three pockets; 1) in southwestern Buenos Aires, 2) near the Buenos Aires/Santa Fe/Cordoba common border and 3) near and northwest of Cordoba City, Cordoba.
  • Southeastern
    Paraguay received another good dose of rain overnight and some of that extended south into northern Rio Grande do Sul, Brazil where amounts varied greatly from 0.12 to 0.75 inch most often
    • However,
      1.00 to 3.00 inches occurred in southeastern Paraguay and up to 1.57 inches occurred locally in northwestern Rio Grande do Sul
      • Some
        rain also scattered across a part of interior western Parana and across portions of Mato Grosso do Sul.
  • Today’s
    Argentina forecast still favors scattered shower and thunderstorm activity next week, but until then some areas will experience net drying especially in central and eastern parts of the nation
    • Rain
      is expected to concentrate on portions of Buenos Aires today and Wednesday with 0.30 to 1.00 inch and a few local totals of 1.00 to 2.00 inches
      • Precipitation
        elsewhere will not be very great
    • Not
      much other precipitation of significance will occur through Saturday, although a few showers may occur in the perimeter of Argentina’s crop country
    • Isolated
      to scattered showers and thunderstorms will then begin Sunday and continue next week
      • The
        European model is not nearly as wet as the GFS model for next week in east-central crop areas and World Weather, Inc. favors the European solution
      • East-central
        Argentina may not receive more than 0.50 inch of rain next week while other areas receive 0.40 to 1.25 inches with local totals possibly getting up near and over 2.00 inches
        • The
          greatest rainfall will occur in far northern and western parts of the nation
      • Additional
        rainfall will scatter across parts of Argentina periodically late next week and into the following weekend before a new round of net drying occurs
  • World
    Weather, Inc. urges a little caution about the Argentina outlook next week. The GFS model has been too excited about rainfall. La Nina is still deeply in control of South America weather and the odds are good that the European model has the best solution suggesting
    east-central parts of Argentina may not do very well with rainfall next week. Our comments in Monday’s special weather report on Argentina are still valid that even if the rain event next week is not as good as advertised there will be some short term benefit
    to crops and enough rain will fall to keep a large part of the nation’s crop viable and still poised to perform adequately if timely rain continues. Recent rainfall and that expected over the next two weeks will be highly erratic and variable from one location
    to another resulting in pockets of serious crop stress not far from areas that will experience more favorable development potential.
  • Brazil’s
    weather outlook today has not changed much, although there is more rain advertised in both Rio Grande do Sul and in a part of northeastern Brazil
    • If
      the forecast changes verify most of Brazil will benefit greatly from weather in this coming ten days
    • Sufficient
      rain will fall to support crops in nearly all areas allowing the improving trend for pod setting and filling in soybean production areas to continue
    • Coffee,
      citrus, rice, cotton corn, cocoa and other crops will all benefit from a good distribution of rain
  • Morocco
    will receive waves of rain over the coming week bolstering soil moisture for improved wheat and barley establishment
    • This
      is the beginning of the third year of drought in southwestern Morocco making the coming week of rain extremely important and welcome
  • Northwestern
    Algeria has also been drier biased this season and some rain will fall there as well
  • Most
    of the Mediterranean Sea region of southern Europe will receive frequent rainfall resulting in greater soil moisture, but also inducing some potential for flooding
    • Rainfall
      will be greatest in eastern Spain, Italy, the eastern Adriatic Sea nations and from parts of Greece and Bulgaria to Russia’s Southern Region
  • Waves
    of rain and snow will impact Russia’s Southern Region through the next ten days resulting in a welcome boost to soil moisture in areas that have no frost in the ground
    • Snow
      will pile up on top of the ground in areas where temperatures are coldest, but the snow will melt during the warmer days and weeks ahead in late winter and early spring to improve soil conditions for better winter crop establishment
  • Additional
    rain fell in northern India Monday resulting in further improvement in topsoil moisture
    • Additional
      moisture totals varied up to 0.75 inch, although most areas received lighter totals
    • Recent
      precipitation from eastern Rajasthan and northern Uttar Pradesh into Jammu and Kashmir has bolstered soil moisture for improved winter crop conditions
      • Moisture
        totals over the past several days have ranged from 0.30 to 1.00 inch with local totals to 1.58 inches
    • Today
      will be the last day for precipitation in the region for a while
    • Some
      rain will fall in central India Thursday and Friday of this week with amounts to 0.50 inch
  • China
    will experience some very cold temperatures Wednesday possibly resulting in some potential for winterkill due to the lack of snow cover
    • Wednesday
      and Thursday will be coldest this week with extreme lows in the positive and negative single digits Fahrenheit near and north of the Yellow River with little to no snow on the ground
      • Winterkill
        is not very likely, but the situation will be closely monitored because of temperatures near the damage threshold
        • Sufficient
          wheat hardening has occurred over the past week and through the first part of this week to help limit the potential for permanent crop damage
  • Waves
    of rain will impact the Philippines starting late this week and lasting a full week
    • Excessive
      moisture is expected resulting in new flooding for parts of the nation especially in eastern most islands
    • Flooding
      has already been an issue for the nation at times in recent months and additional damage to crops and property will be possible
  • Frequent
    rain in Indonesia and Malaysia will eventually result in some new flooding
    • Recent
      flooding in Peninsular Malaysia caused damage to crops and personal property, although that situation will improve before new excessive rain and flooding impacts a part of the region in the coming week to ten days
    • Other
      areas in Indonesia and Malaysia are likely to become too wet over time with Java and northern Borneo as well as peninsular Malaysia impacted from time to time.
  • Mainland
    areas of Southeast Asia will be dry over the next ten days except coastal areas of Vietnam where waves of rain are expected
  • Eastern
    Australia received additional rain Monday in New South Wales and parts of Queensland
    • Amounts
      varied from 0.10 to 0.88 inch with a few totals to 1.81 inches
    • Northeastern
      New South Wales has been wettest, but southeastern Queensland will become the wetter area over the balance of this week
  • Eastern
    Australia will receive additional showers and thunderstorms into Friday and then net drying is expected for a while in key grain and cotton production areas
    • Another
      0.50 to 2.50 inches of rain and locally more will occur by Saturday morning in southeastern Queensland
      • Not
        much other precipitation is expected there or in New South Wales for a full week
  • Cape
    York Peninsula and the upper Queensland, Australia coast will experience frequent waves of rain through the next ten days resulting in more flooding
    • The
      area near Townsville, Queensland has received excessive rainfall in the past week and will be getting much more resulting in damage for sugarcane and some other agriculture
  • South
    Africa received scattered showers and thunderstorms in the western and southern parts of the nation Monday with highly varying amounts of rain
    • Most
      areas reported less than 0.60 inch of moisture with local totals over 1.00 inch
    • Temperatures
      trended cooler in the wetter biased areas with highs in the  upper 60s and 70s Fahrenheit which is down form 80s and 90s during the weekend
  • South
    Africa will receive frequent showers and thunderstorms over the next ten days bringing rain to most summer crop areas and ensuring aggressive crop development
    • Western
      areas may be wettest for a while
  • U.S.
    weather Monday was dry except for a little lingering snow in the northeast and widespread rain and mountain snow in the Pacific Northwest
    • Temperatures
      were a little warmer than usual in many areas across the nation
  • U.S.
    weather changes were minor overnight
    • Rain,
      snow and a little freezing rain will occur tonight and Wednesday from the eastern Dakotas and western Minnesota into Missouri and eastern Kansas
      • Moisture
        totals will vary from 0.05 to 0.35 inch and locally more
      • Snowfall
        of 1 to 4 inches is most likely, but several counties in southeastern North Dakota and northeastern South Dakota will receive 4 to 8 inches
        • Locally
          heavy snow like that will also occur in a narrow band across interior western Iowa
    • The
      storm system responsible for rain and snow in the western Corn Belt through Wednesday will produce widespread rainfall across the Delta and into the southeastern states late Wednesday into early Friday
    • Hard
      red winter wheat areas will receive their greatest precipitation during the weekend as snow and rain fall from Colorado to northern Texas and parts of Oklahoma
      • Moisture
        totals will vary from 0.10 to 0.35 inch with local totals of 0.35 to 0.75 inch and possibly more with northern Texas and southern Oklahoma wettest
    • Rain
      will fall across eastern Texas, the lower Delta and southeastern states during the late weekend and early part of next week with 0.40 to 1.50 inches resulting
    • Waves
      of rain and mountain snow will impact the Pacific Northwest throughout the coming two weeks maintaining wet conditions in some of those areas
    • Colder
      air moving into North America near mid-month may drop a cold front through the north-central and eastern U.S. with a little snow and rain accompanying it
    • Additional
      waves of cool air and brief bouts of snow will move from northwest to southeast across the central and eastern United States in the third week of this month and progressive cooling is expected
  • Some
    of the bitter cold impacting China this week will reach North America  near mid-month and will prevail into the end of January with Canada Prairies, the U.S. northern Plains and Midwest all experiencing notably colder weather over time.
  • West
    Africa rainfall will remain mostly confined to coastal areas while temperatures in the interior coffee, cocoa, sugarcane, rice and cotton areas are in a seasonable range for the next ten days
  • East-central
    Africa rainfall will continue limited in Ethiopia as it should be at this time of year while frequent showers and thunderstorms impact Tanzania, Kenya and Uganda over the next ten days
  • Southern
    Oscillation Index remains very strong during the weekend and was at +18.25 today which is the highest this index has been in the current La Nina episode
  • Mexico
    and Central America weather will continue to generate erratic rainfall
    • Far
      southern Mexico and portions of Central America will be most impacted by periodic moisture
  • Canada
    Prairies will remain unseasonably warm this week and warmer than usual through day ten before cooling occurs during the weekend and next week
  • Southeast
    Canada will receive less than usual precipitation this week and temperatures will continue a little warmer than usual

Source:
World Weather Inc. and FI

 

 

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

Tuesday,
Jan. 5:

  • New
    Zealand global dairy trade auction
  • Purdue
    Agriculture Sentiment, 9:30am
  • Malaysia’s
    Jan. 1-5 palm oil export data
  • Virtual
    palm oil trade fair and seminar 2021, Jan. 5-7
  • HOLIDAY:
    Russia

Wednesday,
Jan. 6:

  • EIA
    weekly U.S. ethanol inventories, production, 10:30am
  • China’s
    CNGOIC to publish soy and corn reports
  • HOLIDAY:
    Russia, Poland

Thursday,
Jan. 7:

  • FAO
    World Food Price Index
  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
  • Port
    of Rouen data on French grain exports
  • HOLIDAY:
    Russia, Ghana, Egypt

Friday,
Jan. 8:

  • 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
  • Trading
    of China’s hog futures to begin on Dalian Commodity Exchange
  • HOLIDAY:
    Russia

Source:
Bloomberg and FI

 

 

OPEN
INTEREST IS SLIGHTLY OFF FROM PRELIMINARY CME REPORT

 

 

 

Brazil
selected commodities exports:

Commodity                     
December 2020      December 2019

CRUDE
OIL (TNS)                5,442,921             8,539,668

IRON
ORE (TNS)                 33,165,506            24,990,225

SOYBEANS
(TNS)                 274,082               3,269,636

CORN
(TNS)                     5,006,035             4,164,806

GREEN
COFFEE(TNS)              254,552               189,831

SUGAR
(TNS)                    2,983,359             1,437,471

BEEF
(TNS)                     142,524               148,767

POULTRY
(TNS)                  350,857               364,658

PULP
(TNS)                     1,276,018             1,205,654

 

CFTC
Commitment of Traders

 

 

 

 

 

 

SUPPLEMENTAL     
Non-Comm               Indexes                  Comm

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
377,636     79,749    402,096      2,546   -754,343    -77,584

Soybeans          
174,943     -3,300    173,087     -6,571   -343,790     15,003

Soyoil             
89,072     11,494    125,015      1,624   -233,322    -10,308

CBOT
wheat         -10,218     11,322    131,921     -1,239   -106,329     -9,365

KCBT
wheat          33,865      3,068     70,347        -60   -104,909     -4,111

=================================================================================

 

FUTURES
+ OPTS     Managed                 Swaps              Producer

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
332,045     66,330    239,790     -4,101   -714,432    -72,932

Soybeans          
196,487      7,864     92,865     -7,836   -336,247     15,728

Soymeal            
89,487      6,102     69,726      2,372   -208,306     -5,256

Soyoil
            112,989     11,736     88,376        -80   -242,531     -9,265

CBOT
wheat          13,360      7,126     78,289     -2,876    -93,233     -7,592

KCBT
wheat          55,560      4,016     40,824     -3,270    -98,716       -574

MGEX
wheat           3,933      1,513      3,247        514    -15,505     -3,168

                
———- ———- ———- ———- ———- ———-

Total
wheat         72,853     12,655    122,360     -5,632   -207,454    -11,334

 

Live
cattle         49,001      1,303     66,972       -748   -127,904      1,471

Feeder
cattle        3,726        368      7,637        -29     -3,718        497

Lean
hogs           33,770        916     50,256      1,142    -79,293     -2,532

 

USDA
inspections versus Reuters trade range                                                    

Wheat         
324,983         versus   300000-500000  range

Corn             
912,802         versus   750000-1300000                range

Soybeans   
1,305,786     versus   1000000-2000000             range

 

Macros

 

Corn.

  • CBOT
    corn
  • CBOT
    open interest for corn was up 19,620 contracts (March down 613 per CME). 
  • Managed
    money and traditional funds added many contracts for the week ending a week ago Tuesday.  Funds were less long than expected in soybeans, which may prompt soybean/corn spreading. 
  • There
    were CH 450c exercised 3,900x yesterday afternoon.  This leaves 1.1 million USD on the table. 
  • Mexico
    will phase out importing genetically modified corn over the next three years and phase out imports as they aim to become self-sufficient. 

  • StoneX
    Brazil survey-based production lowered their soybean estimate to 132.64 million soybeans from 133.9 million previously. Corn was unchanged at 109.34 million tons.
  • USDA
    US corn export inspections as of December 31, 2020 were 912,802 tons, within a range of trade expectations, below 1,255,341 tons previous week and compares to 550,930 tons year ago. Major countries included Mexico for 298,059 tons, Colombia for 161,868 tons,
    and Japan for 99,813 tons.

 

EIA:
Crude oil prices briefly traded below $0 in spring 2020 but have since been mostly flat

https://www.eia.gov/todayinenergy/detail.php?id=46336&src=email

 

Corn
Export Developments

  • Qatar
    seeks 100,000 tons of bulk barley on January 12.
  • Qatar
    seeks 640,000 cartons of corn oil on January 12.

 

 

 

Soybean
complex.  

  • China
    cash crush margins were 95 cents on our calculation (98 previous), compared to 113 last week and 133 year ago.
  • China
    futures

  • USDA
    US soybean export inspections as of December 31, 2020 were 1,305,786 tons, within a range of trade expectations, below 2,201,907 tons previous week and compares to 1,039,675 tons year ago. Major countries included Mexico for 98,451 tons, Spain for 72,544 tons,
    and Egypt for 57,158 tons.
  • The
    European Union reported soybean import licenses since July 1 at 7.385 million tons, below 6.906 million tons a year ago. European Union soybean meal import licenses are running at 9.085 million tons so far for 2020-21, below 9.741 million tons a year ago.
    EU palm oil import licenses are running at 3.016 million tons for 2020-21, above 2.746 million tons a year ago, or up 10 percent.
  • European
    Union rapeseed import licenses since July 1 were 3.534 million tons, down 6 percent from 3.776 million tons from the same period a year ago.

 

 

Oilseeds
Export Developments

 

MPOB
Jan. 11 palm estimates:

               
Range   Median

Production         
1,296,000-1,386,000        1,326,283

Exports
                1,272,000-1,650,000        1,500,000

Imports
               60,000-150,000  100,000

Closing
stocks    1,107,000-1,477,200        1,218,535

 

Wheat

 

Export
Developments.

  • Ethiopia
    canceled an import tender for 600,000 tons of wheat that was set to close back on November. 
  • Jordan
    bought 60,000 tons of animal feed barley (120k sought).  Possible shipment combinations are in 2021 for June 1-15, June 16-30, July 1-15 and July 16-31. 
  • Bangladesh
    seeks 50,000 tons of wheat in January 13 for shipment within 40 days of contract signing. 

 

Rice/Other

·        
None reported

 

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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