FI Morning Grain Comments 01/08/21

PDF attached

 

Morning. 
Quiet
trade with soybeans, corn and to some extent wheat rebounding.  USD was down 12 points and WTI up 77.  US equities are higher.  A good mix of rain and sunshine and favorable conditions for crop development will occur across much of Brazil and Paraguay during
the next two weeks.  Argentina will see crop stress until rain occurs this weekend.  Next week much of Argentina may receive enough rain to stop declines in crop conditions. 

 

 

 

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 get some timely rainfall to slow net drying, but more will be needed. The best crop conditions in center west and center south
Brazil will occur Sunday through the heart of next week at which time the most important improvement to soil moisture is expected.

           
Argentina’s weather is expected to be favorable for rainfall again late this weekend into early next week and again later next week, but some areas will get far more rain than others resulting in concern about the drier biased areas. Entre Rios, southern Santa
Fe and a part of north-central and northeastern Buenos Aires may be among the driest areas along with a few locations in the far southwest. Drier biased weather in the last ten days of January will raise the importance of next week’s rain since those areas
that miss rain next week will be most stressed in late January.

           
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. 
Rain and snow in the southwestern Plains this weekend will also be good for winter wheat. The driest areas in the U.S. Plains remain in northwestern Kansas, and immediate neighboring areas.

           
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, despite recent bitter cold conditions and no snow cover.

           
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.

Source:
World Weather Inc. and FI

 

 

Source:
World Weather Inc. and FI

 

 

 

Bloomberg
Ag Calendar

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

Monday,
Jan. 11:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  winter wheat conditions, cotton harvested, 4pm
• Malaysian
  Palm Oil Board’s data on end-Dec. stockpiles, output and exports
• MPOB’s
  2021 economic review and palm oil outlook seminar
• Malaysia’s
  Jan 1-10 palm oil exports
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• HOLIDAY:
  Japan

Tuesday,
Jan. 12:

• USDA’s
  monthly World Agricultural Supply and Demand (WASDE) report, noon
• USDA
  quarterly soybean, sorghum, corn, barley stocks

Wednesday,
Jan. 13:

• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• Vietnam
  customs data on coffee, rice and rubber exports in December
• FranceAgriMer
  monthly crop report
• ANZ
  Commodity Price
• Malaysia
  Cocoa Board 4Q cocoa grind data
• Conab’s
  data on yield, area and output of corn and soybeans in Brazil

Thursday,
Jan. 14:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• China
  customs to publish 2020 trade data, including imports of soy, edible oils, meat and rubber
• AB
  Foods trading update
• International
  Grains Council monthly report
• Port
  of Rouen data on French grain exports
• EARNINGS:
  Suedzucker, Agrana

Friday,
Jan. 15:

• 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
• Cocoa
  Association of Asia releases 4Q 2020 cocoa grind data
• Malaysia’s
  Jan. 1-15 palm oil export data
• New
  Zealand Food Prices

Source:
Bloomberg and FI

 

 

 

 

 

Macros

US
Change In Nonfarm Payrolls Dec: -140K (est 50K; prevR 336K; prev 245K)

US
Unemployment Rate Dec: 6.7% (est 6.8%; prev 6.7%)

US
Average Hourly Earnings (M/M) Dec: 0.8% (est 0.2%; prevR 0.3%; prev 0.3%)

US
Average Hourly Earnings (Y/Y) Dec: 5.1% (est 4.5%; prevR 4.4%; prev 4.4%)

 

 

Corn.

• CBOT
  corn
  futures are higher from a weaker USD and technical rebound after trading lower last couple of days.  We remain bullish in anticipation for further Argentina corn production downgrades and strong US corn export demand.  March corn may trade back above $5.00
  if soybeans rally to $13.80 basis the March position.  Annual index rebalancing starts today.
  
• Argentine
  Farmers and Government are getting close to a deal to lift the corn export tax.  Details still forthcoming.  Meanwhile the grain inspector strike situation has basically ended. 
  
• Argentina’s
  government is evaluating the corn export suspension, but they may keep their focus on ensuring there is enough domestic supplies ahead of new-crop. 
  
• On
  Thursday, funds sold an estimated net 6,000 contracts. 
• CBOT
  open interest for corn was up 24,322 contracts (March was down 7,551 per CME). 
  
• China
  launched hog futures trading and September prices declined 12 percent.  They closed at 28,290 yuan ($4,376.95) per ton versus its 30,680 yuan listing price.
  
• Lithuania
  reported an outbreak of H5N8 bird flu virus in the town of Kaunas.
• The
  annual index rebalancing will start today with the bulk of the trading taking place from January 8-14.  With open interest so high, we see little impact on prices.  This year it appears index funds will be clawing back on agriculture commodities led by corn. 
  Meanwhile, with the USD declining as much as it has, and the new Biden Administration ability to issue more stimulus, we still look for investors looking to hedge against inflation to buy into commodities during first half 2021. 
  

 

Corn
Export Developments

• 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
  soybeans, meal and oil are higher on technical buying and an unchanged Argentina weather forecast calling for crop stress through Saturday.  Some models are suggesting less rain for SA over the next 2 weeks.  Argentina will see two meaningful rain events next
  week that may stop the declines in crop conditions. 
• Brazil
  saw needed moisture, unlike Argentina, which has some analysts looking for a near record crop again.
  
• On
  Thursday, funds sold an estimated 12,000 soybean contracts, 6,000 soybean meal and 2,000 soybean oil lots. 
  
• CBOT
  open interest for soybeans was down 943 contracts (Jan down 829 to 1,133). 
  
• Offshore
  values this morning were leading CBOT soybean oil 18 points higher (9 lower for the week to date) and meal $3.70 higher ($1.30 lower for the week).
  
• Rotterdam
  soybean oil values are about 5 euros higher, rapeseed up 10 euros, and Rotterdam meal mostly 0.50-5.00 euros lower. 
  
• Malaysian
  palm oil futures:  Up for the fourth week. 

• China
  cash crush margins were 145 cents on our calculation (141 previous), compared to 113 last week and 133 year ago.
  
• China
  futures

 

Oilseeds
Export Developments

• Under
  the US 24-hour announcement system, private exporters reported to the U.S. Department of Agriculture export sales of 204,000 tons of soybeans for delivery to China during the 2020/2021 marketing year.
  

 

 

Wheat

• US
  wheat futures are higher in nearby positions for Chicago, lower in KC and mostly lower for MN.  Lack of direction and positioning ahead of the weekend might in play.  A lower USD is slightly supportive.  Index rebalancing starts today. 
  
• Argentina’s
  Buenos Aires Grains Exchange estimated the wheat 17 million tons, up 200,000 tons above their previous estimate.  USDA is at 18 million. 
  
• On
  Thursday funds sold an estimated net 6,000 Chicago SRW wheat contracts. 
• CBOT
  Chicago wheat open interest was down 3,320 contracts (March down 2,806).
  
• EU
  March milling wheat was up 0.75 at 215.25 euros. 
• Argentina’s
  Buenos Aires Grains Exchange estimated the wheat 17 million tons, up 200,000 tons above their previous estimate.  USDA is at 18 million. 
  

 

Export
Developments.

• South
  Korea’s MFG passed on 65,000 tons of feed wheat for May/June shipment.  The MFG was seeking to buy at around $275 a ton c&f which was too low compared to selling offers around $290 to $295 a ton c&f.
• Japan
  bought 120,228 tons of food wheat from the United States, Canada and Australia.

Details
are as follows (in tons):

COUNTRY	TYPE	QUANTITY
U.S.	Western White	18,320	*
U.S.	Hard Red Winter(Semi Hard)	9,330	*
Canada	Western Red Spring(protein minimum 13.5%)	23,200	*
Canada	Western Red Spring(protein minimum 13.5%)	21,190	*
Australia	Standard White(West Australia)	24,003	**
Australia	Standard White(West Australia)	24,185	**

• Syria
  seeks 25,000 tons of Black Sea wheat on January 11. 
• Turkey
  seeks 155,000 tons of feed barley on January 12. 
• Jordan
  seeks 120,000 tons of wheat on January 13 for July-August shipment. 
• 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

·        
Bangladesh seeks 60,000 tons of rice on January 20. 

·        
Syria seeks 25,000 tons of rice on February 9.