FI Morning Grain Comments 01/11/21

PDF attached

 

Morning. 

 

Soybeans,
meal, corn and wheat are higher this morning are higher on positioning ahead of the USDA reports that expect to show a decline in US soybean and corn stocks.  Wheat caught a bid on sharply higher Paris wheat futures (up 2.75 euros earlier).  Soybean oil was
under pressure on product spreading following a lower trade in palm oil futures and lower WTI crude oil.  China corn and domestic non-GMO soybean Dalian futures reached contract higher on shortage concerns, while soybean meal futures are highest since 2014.
Argentina lifted their suspension on current corn export registrations announced in late December by modifying it to a temporary 30,000 ton daily cap. They want to ensure domestic supply of old crop corn but in the meantime calm backlash by exporters and producers
over the original ban. 

 

 

 

 

 

Weather

• Much
  of Argentina experienced net drying during the weekend, despite some showers and thunderstorms
• Rainfall
  was greatest from northern San Luis through northwestern Cordoba to southeastern Santiago del Estero and northwestern Santa Fe where 0.50 to 0.88 inch resulted with local totals to 1.14 inches resulted
• Another
  area of rain occurred from eastern La Pampa into western Buenos Aires Saturday night and early Sunday with rainfall of 0.30 to 1.10 inches and local total of 1.89 inches near Santa Rosa, La Pampa
• A
  final area of rain in central and northwestern Formosa produced 0.88 to 2.00 inches of rain
• Most
  other rain amounts varied from nothing to 0.20 inch through Sunday morning which was not enough to counter evaporation with highest afternoon temperatures in the 80s and lower to the middle 90s Fahrenheit
• Extreme
  highs in the upper 90s occurred in a few areas of northern Santa Fe, Chaco and western Corrientes
• Lowest
  morning temperatures were in the 50s and 60s except in the far north where some lower 70s were noted
• Net
  drying occurred in central and southeastern Cordoba, central and southern Santa Fe, Corrientes, Entre Rios and most of Buenos Aires away from the far west
• Argentina
  rainfall over the next two weeks will start out favorably mixed this week and then will trend drier next week
• Rain
  today and Monday will impact the central and north
• 0.30
  to 1.00 inch and local totals of 1.00 to 3.00 inches; wettest in Chaco, northern Santa Fe, northern Santiago del Estero and a part of Formosa
• Showers
  elsewhere in the nation will not counter evaporation staying mostly less than 0.60 inch
• Mostly
  dry Wednesday
• Showers
  central and southwest Thursday with rainfall under 0.50 inch favoring La Pampa, San Luis, western Buenos Aires and southern Cordoba
• Rain
  Friday into Saturday morning in the northeast half of the nation will be significant with 0.60 to 2.00 inches common and local totals to 3.00 inches
• Saturday
  afternoon through Jan. 22 will be dry or mostly dry
• Isolated
  to scattered showers and thunderstorms are expected Jan. 23-25 with daily rainfall of 0.15 to 0.60 inch and local amounts to 1.00 inch or more
• Confidence
  is low and rainfall is expected in the central and north
• Coverage
  should be low and most amounts will be light continuing a net drying bias in some areas
• Argentina
  temperatures will be warmer than usual during mid-week this week and again next week; some excessively warm conditions are expected next week.
  
• Argentina’s
  bottom line remains one of concern especially in the southwest where rainfall is expected to be lightest and least frequent. The entire nation will dry down next week making this week’s rain extremely important. Soil moisture last Friday was very short across
  Santa Fe, Chaco, Corrientes and Entre Rios as well as eastern Cordoba and far northeastern La Pampa and a few areas in northern Buenos Aires. Not much of this dry region received rain during the weekend, but rain today and Monday will offer some temporary
  relief with a better distribution of rain in portions of this region Friday into Saturday. Whatever area does not get adequate relief from dryness will be faced with more serious stress next week. Early indications suggest that most of the driest region will
  get “some” rain which may offer some short term relief, but it may not be enough in southern Santa Fe, northern Buenos Aires or parts of Entre Rios where greater stress may evolve next week after temporary relief.  It will be imperative that dry weather from
  Saturday of this week through Jan. 22 is followed by substantial rain. Without it, crop stress will likely start robbing the nation’s crops of yield once again.
• Brazil
  weather during the weekend was dry or mostly dry from much of Sao Paulo into Rio Grande do Sul and in parts of Mato Grosso do Sul.
  
• Soil
  moisture in this region late last week was favorably rated except in Rio Grande do Sul and in parts of Sao Paulo and immediate bordering areas
• These
  areas likely experienced further net drying and some increase in crop stress
• Rain
  fell in many other areas from Mato Grosso through Goias to western Bahia and Minas Gerais (southwestern Minas Gerais was left mostly dry)
• Amounts
  were highly variable ranging from 0.30 to 1.00 inch most often, but several 1.00 to 2,00-inch amounts were noted as well
• Temperatures
  were seasonably warm with above average temperatures in Mato Grosso, northern Minas Gerais, Bahia and Rio Grande do Sul
• Brazil
  weather is still expected to be favorable for summer crop development over the next ten days to two weeks
• Precipitation
  is expected in most of the nation at one time or another during the next ten days; northeastern areas may experience the lightest and least frequent rain, but amounts will be sufficient to support crops
• Rainfall
  of 0.80 to 2.00 inches will be common during the first week of the outlook; similar amounts will occur next week with the far south trending much drier over time
• This
  week’s rain will start out erratic leaving some areas in a net drying mode for a little longer
• Timely
  rainfall should impact Rio Grande do Sul to help prevent crops from having to endure serious moisture stress, although there will be some stress from time to time
• Northeastern
  Brazil rainfall is also expected to be a little erratic, but most of the grain and oilseed areas that need moisture will get it in sufficient timing to support crop development
• Brazil
  temperatures will be seasonable during much of the coming two weeks
• Brazil’s
  bottom line looks very good for the coming ten days with all crop areas in the nation getting rain at one time or another. Some of the model forecasts are too great with rainfall in the interior southern parts of the nation. Crop development should advance
  favorably even though there will be some pockets of moisture stress for a little while early this week.
  

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

 

 

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

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

 

Reuters
trade estimates for USDA reports

December
1 Grain Stocks

 

 

 

 

 

 

 

 

 

 

CFTC
Commitment of Traders

·        
As of 1/5/21

·        
Traditional funds hit a record for corn futures only at 521,097 contracts, and the traditional futures and options combined was also a record at 520,642 contracts. 

·        
Funds were less long than estimated for all the major commodities, for the traditional positions.  

 

 

 

 

 

 

 

Macros

 

Corn.

• CBOT
  corn
  futures are trading near a 7-year high. 
• This
  week we should see an increase in wide trading ranges amid increase in volatility with USDA in focus on Tuesday and potential changes to the South American weather forecast.  We remain bullish headed into the USDA report on tightening global supplies for feedgrains,
  wheat and oilseeds. 
• Argentina
  lifted their suspension on current corn export registrations announced in late December by modifying it to a temporary 30,000 ton daily cap. They want to ensure domestic supply of old crop corn but in the meantime calm backlash by exporters and producers over
  the original ban. 
• Argentina
  producers are considering lifting their strike that started early Monday. 
  
• Eyes
  will be on Argentina as USDA may trim the 2020-21 corn production estimate.  About 65 percent of Argentina’s corn planted area is impacted by drought conditions.  A Reuters trade guess looks for USDA to lower Argentina’s corn crop to 47.4 million tons from
  49 million current.  Brazil corn production was estimated at 107.7 million tons from 110 million current. 
  
• Today
  is day 2 of the “Goldman Roll.” 
• Funds
  on Friday bought an estimated net 5,000 corn. 
• CBOT
  open interest for corn was up 18,406 contracts (March was down 5,031 per CME). 
  
• Traders
  are looking for USDA to lower the 2020 US corn crop (14.470 Reuters estimate against USDA current 14.507 billion) and tighten US 2020-21 ending corn stocks to 1.599 billion from 1.702 billion.  For December 1 US corn stocks, a Reuters trade guess stands at
  11.951 billion bushels, up from 11.327 billion year earlier and if realized, a three year high. 
  
• China
  corn and domestic non-GMO soybean Dalian futures reached contract higher on shortage concerns, while soybean meal futures are highest since 2014. Bloomberg noted China feed mills and refineries are building inventories before the Lunar New Year holidays, while
  traders are hoarding corn on expectations for future price increases.  In effort to boost domestic production of corn, China approved two genetically modified corn varieties from Bayer AG and Syngenta AG for imports.  China’s Dalian Commodity Exchange will
  raise the margin requirement on speculative trades in its corn futures to 11% from 9% after settlement on Wednesday.  Hedging remains unchanged at 7%. 
  
• Update
  on Mexico GMO import phase out announcement:  A Bloomberg story that followed up on Mexico’s announcement they plan to phase out GMO corn imports over the next three years stated the government still has to decide whether it will, include corn for feed.  Mexico’s
  Agriculture department, Sagarpa, told Bloomberg that a meeting will take place later this week.  Last week Mexico banned GMO corn and will aim to become self-sufficient in food production. “Mexico will revoke permits and stop issuing new ones for the release
  of GMO corn seeds,” according to Bloomberg.  Mexico also will phase out the use of glyphosate, a common herbicide used throughout the world.  Mexico is the United States largest buyer of corn.  In 2019-20, Mexico imported 14.5 million tons of corn out of 45.2
  million tons total US exports (32 percent market share). 

 

 

 

 

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 remain at 6-1/2 year highs on expectations for USDA to lower US soybean ending stocks on Tuesday.  China was a slow buyer of soybeans late last week.  They bought at least one US Gulf cargo for August shipment and one February shipment out of the
  PNW.
• ICE
  canola was up four out the five days last week and March ended at a contract high on Friday, and are higher today following soybeans. 
  
• CBOT
  open interest for soybeans was up 3,426 contracts (Jan down 444 to 689). 
• The
  US Supreme Court said on Friday they will review a lower court ruling (10^th Circuit Court) that limits the government powers to exempt small refineries from RFS standards.  The 10^th Circuit Court made that ruling a year ago, and the Supreme
  Court will review it in April.  A reversal in that decision could benefit the biodiesel industry. 
  
• Funds
  on Friday bought an estimated net 15,000 soybeans, bought 7,000 soybean meal and sold 2,000 soybean oil. 
  
• Last
  we heard Il SBO basis was 125 over (dn 25 from previous week), East 150 over, West 100 over and Guld steady at 750 over.  Argentina was about 720 over and Brazil 735 over. 
  
• Traders
  are looking for USDA to lower the 2020 US soybean crop (4.158 Reuters estimate against USDA current 4.170 billion) and tighten US 2020-21 ending soybean stocks to 139 million bushels from 175 million current.  For December 1 US soybean stocks, a Reuters trade
  guess stands at 2.920 billion bushels, well down from 3.252 billion year earlier and if realized, a four year low. 
  
• A
  Reuters trade guess looks for USDA to lower Argentina’s soybean crop to 48.4 million tons from 50 million current.  Brazil soybean production was estimated at 131.4 million tons from 133 million current. 
  
• India’s
  Soybean Processors Association of India left their soybean production estimate for 2020-21 unchanged at 10.46 million tons.  
  
• MPOB
  sees 2021 Malaysian palm production at 19.7 million tons from 19.14 million tons produced in 2021.  Average crude palm oil prices may rise to 3,000 ringgit/ton in 2021 from 2,685.50 ringgit in 2020.
• Offshore
  values this morning were leading CBOT soybean oil 13 points higher and meal $0.20 higher.
  
• Rotterdam
  soybean oil values are about unchanged, rapeseed up 15 euros, and Rotterdam meal mostly 10-11 euros higher for Argentina and 2-5 euros lower for Brazil. 
  
• ITS
  reported January 1-10 Malaysian palm exports at 260,080 tons, down from 402,880 during the same period in December.  AmSpec reported palm exports at 271,789 tons, down 35% from 417,960 tons from the previous month.
  
• Malaysian
  palm oil futures: 

• China
  cash crush margins were 117 cents on our calculation, compared to 145 last week and 98 year ago.
  
• China
  futures

 

Oilseeds
Export Developments

• The
  USDA bought 2,000 tons of package vegetable oil last week under the PL480 program for unknown destinations. 
  
• USDA
  seeks 6,390 tons of vegetable oil on January 20 under the PL480 program for March 1-31 shipment (Mar 16-Apr 15 for plants at ports). 
  
• The
  USDA seeks 7,430 tons of vegetable oil under the PL480 program on January 14 for shipment during Feb 16 to Mar 15 (Mar 1-31 for plants at ports).
  

 

 

Wheat

• Lack
  of fresh bullish news and slow US export developments may keep US wheat futures steady this week, like what we saw last week, unless USDA surprises the trade by reporting December 1 US wheat stocks out of the range of expectations. 
  
• The
  trade will also get a glimpse on the potential size of the 2021 US winter wheat crop when USDA reports winter wheat plantings.  Recent crop progress updates from selected states showed an improvement in good/excellent ratings during the past month (end of
  November through early January) for Nebraska and Kansas, but five states posted a decrease from last fall (CO, IL, MT, ND & SD).  Texas and Oklahoma did not report an early January winter wheat rating.  Perhaps they maybe out this afternoon.   Texas may resume
  weekly updates starting February. 
• CBOT
  Chicago wheat open interest was down 408 contracts (March down 6692).
• Funds
  on Friday sold an estimated net 3,000 Chicago wheat contracts. 
• EU
  March milling wheat was up 2.75 at 219.50 euros. 

• A
  Reuters trade guess put 2021 US winter wheat seedings at 31.528 million acres, up from 30.415 million planted during the 2020 campaign.  Traders are looking for USDA to lower US all-wheat stocks by only 3 million bushels to 859 million from the previous month. 
  For December 1 US wheat stocks, a Reuters trade guess stands at 1.695 billion bushels, down from 1.841 billion year earlier.
  
• Egypt
  said they have enough wheat to last 4.7 months. 
• China
  sold 2,099,199 tons of wheat, or 52.16 % of the total offered at an auction from state reserves last week, at an average selling price of 2,365 yuan ($358.35) a ton. 
  
• Russian
  12.5%
  protein wheat
  export prices from
  Black Sea ports was $275 a ton FOB at the end of last week, up $13 from the end of 2020, according to IKAR. 
  

 

Export
Developments.

• Pakistan
  bought around 100,000 tons of optional origin wheat in recent days at about $306 per ton and $305 per ton, both C&F free out.
  
• Syria
  seeks 200,000 tons of wheat on Jan 18 for shipment within 60 days after contract signing. 
  

• Results
  awaited:  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

·        
South Korea seeks 113,555 tons of US, Thailand, and China rice on Han 21 for April 30 through July 31 arrival. 

·        
Bangladesh seeks 50,000 tons of rice on Jan. 24. 

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

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