FI Morning Grain Comments 01/13/21

PDF attached

 

Morning. 
Conab
reported a much lower than expected corn production estimate. 

 

 

Under
the 24-hour announcement system, private exporters sold 464,300 tons of soybeans to unknown.  Of that, 396,300 tons were for 2020-21 delivery and 68,000 tons for 2021-22. 

 

CBOT
agriculture markets resumed their charge higher during the overnight trade with some commodities establishing fresh multi-year highs. 
CBOT
corn is at a 7-1/2 year high and Chicago wheat hit a 2014 high.  Soybean contracts reached a fresh high but selected weaker soybean meal contracts are limiting gains.  Soybean oil mixed to higher on product spreading. 
Corn
led the overnight session, gapping higher (517.25 yesterday high and 522.25 overnight low). 
CBOT
corn limits expanded to 40 cents.  Argentina lifted its 30,000 per day ton limit on corn exports, in part to producer backlash. 

 

 

CME
Current Daily Price Limit

https://www.cmegroup.com/trading/price-limits.html

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

            Recent
rain in Argentina and that which is expected later this week will be sufficient to carry crops into the latter part of this month without a huge amount of stress, but quick drying is expected this weekend through Jan. 23 and that will eventually bring back
concern over dryness especially in the southwest half of the nation.

            Brazil
crop weather has not changed today with most of the nation expecting rain – at least in key grain and oilseed production areas. The environment should be supportive of improved crop conditions. There is a pocket of dryness in Sao Paulo, southern Goias and
extreme eastern Mato Grosso do Sul that must be filled in with moisture soon to prevent crop stress from evolving, but that area should get rain in time to prevent any significant crop development issues. A boost in rain would also benefit northern Mato Grosso.

           
South Africa weather will remain good for the next couple of weeks. Sufficient snow cover will be present in the western CIS to protect winter rapeseed when cooling occurs later this month.

            India’s
unharvested summer crops in the south are getting too much rain and need to dry out. Winter crops have improved in some areas because of recent rain. Australia’s sorghum has also improved with recent rain, but more moisture is needed.

            No
crop damage has occurred to China’s rapeseed because of cold weather last week and Europe crops will not be threatened with damaging cold in this coming week.

            Overall,
weather today will likely produce a mixed influence on market mentality.

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Colder weather expected in Russia and Ukraine over the next couple of weeks should not adversely impact winter crops because of deep snow cover. Russia’s Southern Region will get additional rain and snow this week further improving
the potential for crop development in the spring – at least in areas that got planted and established favorably during the autumn.

No
threatening cold is expected in Europe or China during the coming week. India’s weather will trend a little drier this week, but recent rain improved wheat and other winter crops.

            Argentina’s
wheat harvest advanced well until Sunday when some delay to fieldwork took place. Much of the crop has been harvested, but late season fieldwork will advance around periods of rain this week.

            U.S.
wheat areas in the central and northwestern Plains may pick up a little snow cover in the next two weeks as gradual cooling occurs. The snow will help protect crops from any bitter cold that might evolve. However, there is no threat of crop damaging conditions
for at least the coming week and probably ten days.

           
Winter crops in southern Canada’s Prairies and the northwestern U.S. Plains need snow to better protect the region against colder weather coming later this month.

            Overall,
weather today will have a low impact on market weather mentality. The bottom line will be mixed.

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

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
CPI (M/M) Dec: 0.4% (est 0.4%, prev 0.2%)

US
CPI (Y/Y) Dec: 1.4% (est 1.3%, prev 1.2%)

US
CPI Ex Food & Energy (M/M) Dec: 0.1% (est 0.1%, prev 0.2%)

US
CPI Ex Food & Energy (Y/Y) Dec: 1.6% (est 1.6%, prev 1.6%)

US
Real Avg Hourly Earnings (Y/Y): 3.7% (prev 3.2%)

US
Real Weekly Earnings (Y/Y): 4.9% (prev 4.7%)

 

 

 

Corn.

• Corn
  is higher on follow through bullish sentiment from the USDA report, potential slowdown in Black Sea shipments, and a lower than expected Brazil Conab production estimate. 
  
• Conab
  reported the Brazil corn crop at 102.3 million tons, 5.6 million below a Bloomberg trade guess and 0.3 million below the previous month. 
  
• CBOT
  March corn gapped higher from 517.25 (yesterday high) and 522.25 (overnight low).  Prices remain firm headed into the day session.  We see March climbing to $5.50.  CBOT corn is at a 7-1/2 year high. 
  
• CBOT
  corn limits expanded to 40 cents.
• Funds
  on Tuesday bought an estimated net 58,000 corn. 
• CBOT
  open interest for corn was up 39,138 contracts (March was down 1,040 per CME). 
  
• Argentina
  lifted its 30,000 per day ton limit on corn exports, in part to producer backlash.  Farm groups and export companies agreed to monitor domestic prices. 
  
• Meanwhile
  Russia is considering a barley and corn export tax of 10 euros ($12) per ton and 25 euros per ton, respectively, between Feb. 1 and March 31, 2021. 
  
• In
  Ukraine, the livestock and poultry producers’ associations asked the government to limit corn exports throughout 2020-21 to 22 million tons to avoid shortages of animal feed. Ukraine has exported 9.7 million tons of corn so far this season.  Ukraine Black
  Sea shipments are currently restricted because of weather conditions. 
• Correction
  from last night’s comment.  USDA made a 3.8 bushel decrease to the US 2020 corn yield, not 3.3 as we wrote. 
  
• Today
  is day 4 of the “Goldman Roll.” 

• A
  Bloomberg poll looks for weekly US ethanol production to be unchanged at 935,000 barrels (921-966 range) from the previous week and stocks up to 244,000 barrels to 23.528 million.
  

 

CBOT
March corn

Source:
Reuters and FI

 

Corn
Export Developments

• South
  Korea’s FLC bought 66,000 tons of corn at around $295.50/ton c&f for February shipment. 
  

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

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

 

 

 

Soybean
complex.  

• Soybean
  contracts reached a fresh high but selected weaker soybean meal contracts are limiting gains.  Conab reported the Brazilian soybean crop at 133.7 million tons, 1 million tons above a Bloomberg trade guess and 0.8 million tons below their December estimate. 
  Today we may see ongoing overnight corn/soybean spreading.  Note NOPA is due out Friday (our trade estimates below). 
  
• Soybean
  oil is mostly higher on product spreading. 
• China
  cash crush margins improved on our calculation to 172 cents (143 previous), compared to 98 year ago. China announced they will import more Indonesian products and increase investments.  This could include CPO. 
  
• China
  bought one PNW November soybean cargo yesterday, and one Argentina May shipment.  They also were thought to have bought a February cargo (unknown origin). 
  
• Indonesia
  plans to import 2.6 million tons of soybeans this year (AgMin). 
• Malaysian
  palm oil traded at a two week low on slowing palm exports.  Malaysia will leave its export duty for crude palm oil at the maximum 8% for February after calculating a reference price of 3,657.67 ringgit per ton. 
  
• CBOT
  open interest for soybeans was up 2,051 contracts (Jan down 236 to 199). 
• Funds
  on Tuesday
  bought an estimated net 33,000 soybeans, bought 14,000 soybean meal and bought 2,000 soybean oil. 
  
• Offshore
  values this morning were leading CBOT soybean oil 35 points higher and meal $2.20 lower.
  
• Rotterdam
  soybean oil values are about up 10 euros, rapeseed oil up 10 euros, and Rotterdam meal mostly 13 to 18 euros higher. 
  
• Malaysian
  palm oil futures:  Traders concerned over slowing palm exports. 
  

• China
  cash crush margins were 172 cents on our calculation (143 previous), compared to 145 last week and 98 year ago.
  
• China
  futures:

 

Oilseeds
Export Developments

• Under
  the 24-hour announcement system, private exporters sold 464,300 tons of soybeans to unknown.  Of that, 396,300 tons were for 2020-21 delivery and 68,000 tons for 2021-22. 
  
• Algeria
  seeks 35,000 tons of soybean meal on Thursday for Feb 15-Feb 28 shipment, optional origin.
• 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).
  
• 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). 
  

 

 

Wheat

• Chicago
  wheat hit a 2014 high overnight. 
• CBOT
  Chicago wheat open interest was up 1,957 contracts (March down 37).
• Funds
  on Tuesday
  bought an estimated net 25,000 Chicago wheat contracts. 
• EU
  March milling wheat was up 5.50 at 230.00 euros.
• Russian
  may expand their export tax beyond oilseed and wheat exports.  Russia is considering a barley and corn export tax of 10 euros ($12) per ton and 25 euros per ton, respectively, between Feb. 1 and March 31, 2021. 
  
• FranceAgriMer
  estimated French soft wheat exports outside the European Union’s 27 at 7.27 million tons, down from 13.57 million tons last season.  French 2020-21 soft wheat stocks were unchanged from the 2.5 million tons estimated in December. 
  

 

Export
Developments.

• Jordan
  seeks 120,000 tons of wheat on January 13 for July-August shipment.  They saw three participants.
  

• Japan
  in a SBS auction seeks 80,000 tons of feed wheat and 100,000 tons of feed barley for arrival in Japan by March 18 on January 19.
  
• Jordan
  seeks 120,000 tons of feed barley on Jan 19. 
• Bangladesh
  seeks 50,000 tons of wheat in January 13 for shipment within 40 days of contract signing. 
  
• Japan
  seeks 116,700 tons of food wheat this week. 

• Syria
  seeks 200,000 tons of wheat on Jan 18 for shipment within 60 days after contract signing. 
  
• Turkey
  seeks 400,000 tons of milling wheat on Jan 19 for Jan through Feb 25 shipment. 
  

• Results
  awaited:  Syria seeks 25,000 tons of Black Sea wheat on January 11. 
• Bangladesh
  seeks 50,000 tons of wheat in January 18 for shipment within 40 days of contract signing. 
  
• Bangladesh
  seeks 50,000 tons of wheat in January 25 for shipment within 40 days of contract signing. 
  

 

Rice/Other

• (new
  1/13) Bangladesh seeks 50,000 tons of rice on January 26. 
• Bangladesh
  seeks 10,000 tons of rice on January 18. 

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

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

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

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