FI Morning Grain Comments 01/06/21

PDF attached

 

Morning. 

 

Under
the USDA 24-hour reporting system, private exporters sold 102,616 tons of corn to unknown.  Higher trade in ags.  We are eyeing $14.50 soybeans, $5.25 corn, and now $7.00 wheat.  The situation in Argentina turned south again as producers planned a strike set
for January 11-13.  WTI is slightly higher.  CBOT corn, soybeans, meal and oil set contract highs in the most active months while wheat for all three markets are near contract highs.  Look for trade estimates for USDA’s reports to be out no later than Thursday
noon CT. 

 

CME
Margin Changes per Reuters:

• CME
  RAISES WHEAT FUTURES (W) MAINTENANCE MARGINS BY 10% TO $1,650 PER CONTRACT FROM $1,500 FOR MARCH 2021
• CME
  RAISES SOYBEAN FUTURES (S) MAINTENANCE MARGINS BY 14.6% TO $2,750 PER CONTRACT FROM $2,400 FOR JAN. 2021
• CME
  RAISES CORN FUTURES (C) MAINTENANCE MARGINS BY 12.9% TO $1,100 PER CONTRACT FROM $975 FOR MARCH 2021
• CME
  LOWERS CRUDE OIL FUTURE NYMEX (CL) MAINTENANCE MARGINS BY 4.7% TO $4,525 PER CONTRACT FROM $4,750 FOR FEB. 2021
• SAYS
  INITIAL MARGIN RATES ARE 110% OF THESE LEVELS
• SAYS
  RATES WILL BE EFFECTIVE AFTER THE CLOSE OF BUSINESS ON JAN. 6, 2021

 

 

USD
Index

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

            Brazil
weather remains favorable for summer crop development. Rio Grande do Sul and a part of northeastern Brazil are still advertised to be wetter today and if that verifies summer crop conditions should improve. Other areas in Brazil will get timely rainfall to
support normal crop development.

           
Argentina’s weather overnight was wettest in southern Buenos Aires and in northwestern Santiago del Estero. The past two days of rainfall was good for western and southern parts of Argentina, but the central and east continues to dry out. Not much rain in
the drier areas will occur until next week and even then the prospects do not look very good for a generalized soaking. The bottom line remains one of concern for Argentina in the long run because of additional drying expected later this month.

            South
Africa weather will remain good and summer grain and oilseed development in Australia has been improving with recent rain. India’s winter crops have benefited from some rain this week and a little more will occur through the weekend. Some southern India locations
may be a little too wet for late summer crop harvesting.

            Winter
rapeseed in China and Europe is dormant and mostly poised to perform favorably in the spring. This week’s rain and snow in Russia’s Southern Region may improve topsoil moisture for use in the spring.  None of the cold in northern China Thursday will negatively
impact rapeseed areas.

            Overall,
weather today remains tenuous enough in Argentina for the bullish bias to remain especially with speculation running high for more dryness in Argentina later this month after next week’s scattered showers.

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Precipitation advertised in Russia’s Southern Region and that which has nibbled away at the U.S. hard red winter wheat dry region in recent weeks may diminish some of the uptrend bias in the marketplace of late – at least briefly. 

            Harvest
conditions in Argentina have been good and South Africa has reaped favorably along with Australia. Winter crop production in China is still poised to be very good, although there is some worry over possible winterkill for Thursday morning as bitter cold air
settles over snow free crop areas near and north of the Yellow River.

            Europe
weather has been plenty moist recently implying improved crop conditions in the spring. Morocco will receive rain this week along with a part of Algeria’s dry region and all of this will likely temper the recent bullishness – at least briefly.

           
Overall, weather may provide a little mixed influence on market mentality, although the “herd” mentality in the marketplace will likely perpetuate the bullish bias.

Source:
World Weather Inc. and FI

 

 

 

Bloomberg
Ag Calendar

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

 

 

 

 

Macros

US
ADP Employment Change Dec: -123K (est 75K; prevR 304K; prev 307K)

US
jobless claims report will be out on Thursday and monthly unemployment on Friday. 

 

 

FI
Estimates for USDA Grain Stocks

 

Corn.

• CBOT
  corn
  is higher on Argentina strike woes and corn export restrictions (nothing new) and net drying across Argentina.  Argentina producers planned a strike set for January 11-13.  WTI is slightly higher. 
  
• On
  Tuesday, funds bought an estimated net 25,000 contracts. 
• CBOT
  open interest for corn was up 12,284 contracts (March down 4,567 per CME). 
  
• Germany
  will cull 62,000 poultry after discovering H5N8 bird flu. 
• Mexico
  will phase out importing genetically modified corn over the next three years and phase out imports as they aim to become self-sufficient. 
  
• A
  Bloomberg poll looks for weekly US ethanol production to be down 7,000 at 927,000 barrels (913-940 range) from the previous week and stocks up to 241,000 barrels to 23.745 million.
  

 

Corn
Export Developments

• Under
  the USDA 24-hour reporting system, private exporters sold 102,616 tons of corn to unknown. 
  
• Turkey
  seeks 155,000 tons of corn on January 12 for Jan 25-Feb 15 shipment.

• Qatar
  seeks 100,000 tons of bulk barley on January 12.

• Qatar
  seeks 640,000 cartons of corn oil on January 12.

 

 

Soybean
complex.  

• CBOT
  soybean complex is higher led by soybeans and soybean oil (palm futures were up 122 points).  The situation in Argentina turned south again as producers planned a strike set for January 11-13. 
  
• We
  are hearing soybean end users have bought a lot of beans this week as elevators selling beans to meet margin calls. 
  
• China’s
  Sinograin was seeking US soybeans for October and November shipments and at least one cargo was bought.  China also bought at least one Brazilian soybean cargo for March shipment. 
  
• Argentina
  weather this week will include scattered showers and thunderstorms.  Brazil saw scattered showers over the long holiday weekend.  Brazil will see rain on and off over the next two weeks. Some areas will not receive adequate rainfall including the southern
  and eastern Mato Grosso, Bahia, eastern Piaui, Pernambuco and northeastern Minas Gerais.
  
• On
  Tuesday, funds bought an estimated 30,000 soybean contracts, 9,000 soybean meal and 12,000 soybean oil lots. 
  
• CBOT
  open interest for soybeans was up 10,825 contracts (Jan down 572 to 2,499). 
  
• Offshore
  values this morning were leading CBOT soybean oil 24 points lower and meal $3.80 higher.
  
• Rotterdam
  soybean oil values are about 20 euros higher, rapeseed oil up 30 euros, and Rotterdam meal 10-30 euros higher. 
  
• Malaysian
  palm oil futures: 

• China
  cash crush margins were 134 cents on our calculation (95 previous), compared to 113 last week and 133 year ago.
  
• China
  futures

 

Oilseeds
Export Developments

• None
  reported

 

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

• US
  wheat was higher this morning from a lower USD and strength in corn and soybeans.  We raised our target for Chicago March wheat to $7.00 but may need to see a pickup in the US export program before that happens, unless soybeans add another $1.00. 
  
• On
  Tuesday funds bought an estimated net 12,000 Chicago SRW wheat contracts. 
  
• CBOT
  Chicago wheat open interest was up 12,473 contracts (March up 4,625).
• Ukraine
  grain exports were 26.4 million tons so far in 2020-21, down from 31.49 million at the same date in 2020-economy ministry. Ukraine winter grain crops remain in good conditions. 
  
• EU
  March milling wheat was up 0.25 at 218.00 euros. 

 

Export
Developments.

• Japan
  this week seeks 120,228 tons of food wheat from the United States, Canada and Australia in a regular tender.
  
• Turkey
  seeks 155,000 tons of feed barley on January 12. 
• Ethiopia
  canceled an import tender for 600,000 tons of wheat that was set to close back on November. 
  
• Bangladesh
  seeks 50,000 tons of wheat in January 13 for shipment within 40 days of contract signing. 
  
• Bangladesh
  also seeks 50,000 tons of wheat in January 18 for shipment within 40 days of contract signing. 
  

 

Rice/Other

·        
None reported