FI Morning Grain Comments 01/19/21

PDF attached

 

Morning. 

 

USDA
24-hour:

–Export
sales of 132,000 metric tons of soybeans for delivery to China during the 2021/2022 marketing year;

–Export
sales of 128,000 metric tons of corn for delivery to Japan during the 2020/2021 marketing year; and

–Export
sales of 100,000 metric tons of corn for delivery to Israel during the 2020/2021 marketing year.

 

As
expected with the rise in global wheat cash prices on Monday, US wheat futures are responding by trading higher while corn is under pressure along with a sharply lower trade in soybeans after parts of South America received good rain over the long holiday
weekend.  Offshore values are suggesting a lower trade for the products bias soybean meal to the downside.  Malaysian palm oil is trading near a two-month low.  Keep an eye on wheat export developments as offers for some tenders are starting to thin and some
countries deciding to pass or push back import tenders due to high cash prices. 

 

South
America saw mostly good rain over the 3-day period, bias northern Argentina.  Brazil rainfall was widespread from Rio Grande do Sul to southern Minas Gerais and northward into Mato Grosso during the Friday through Monday afternoon.  Brazil rainfall this week
will be greatest from northern Rio Grande do Sul, Santa Catarina, Parana and southern Sao Paulo to Mato Grosso.  Argentina received rain Friday and Saturday, bias north with 1.00 to 2.00 inches.  The wetter areas were from western Entre Rios through central
and northern Santa Fe to Santiago del Estero, Chaco and Formosa.  Argentina’s weather outlook looks dry this week but wet for the last week of January. 

 

Jordan
saw three participants for 120,000 tons of barley.  Philippines passed on feed wheat and barley.  Japan saw no offers for feed wheat and feed barley.  Algeria seeks at least 50,000 tons of wheat for February 15-28 shipment.  Turkey moved their import tender
for 400,000 tons back to January 22 for January 29-February 26 shipment.  Taiwan’s MFIG seeks a cargo of corn on Wednesday for March or April loading.  Japan seeks 72,653 tons of milling wheat this week. 

 

 

 

 

Weather

THE
WORLD’S MOST IMPORTANT WEATHER IN 5 MINUTES

• Argentina’s
  rainfall during the past week has bolstered soil moisture to the benefit of nearly all crops
• Some
  pockets of dryness remain, but general crop conditions have been improving and will continue to improve for a few days
• Net
  drying this week will be of interest and raise the importance of follow up rain the last days of January and February
• Argentina’s
  second week outlook today is a little drier than that suggested Monday, but that change was needed
• The
  nation’s weather pattern has not come completely out of the drier mode and rain in February will be extremely important for many crops
• La
  Nina is still prevailing, although it will start a weakening trend over the next few weeks
• Brazil
  weather has still not completely straightened out
• Rainfall
  so far this month has continued below average in parts of Sao Paulo, southern and Mato Grosso, southwestern Minas Gerais, northern and eastern Parana, Tocantins, northeastern Goias or western Bahia
  
• Recent
  rain has, however, improved soil moisture in Sao Paulo and southwestern Minas Gerais, as well as northern Parana
• Be
  sure to note that these areas received significant rain over the past week even though the data does not completely reflect that fact due to poor population of “official” weather reporting stations, but the supplemental data has certainly suggested improvement
• Brazil
  weather over the next two weeks will be plenty wet from northern Rio Grande do Sul to western and southern Sao Paulo and northward through Mato Grosso and Goias
• Even
  if some of the rainfall remains lighter than usual its coverage and frequency will be great enough to support good crop development
• Some
  concern over early season soybean harvest conditions may evolve later this month if rain falls too frequently, but that is not likely to be a huge issue
• East-central
  and northeastern Brazil will struggle with dryness for a while
• This
  first week of the outlook will be one of net drying for crop areas from northeastern Sao Paulo through all of Minas Gerais to eastern Tocantins, southern Piaui, Bahia and Pernambuco
• Second
  week rainfall should improve in western and southern Minas Gerais and eastern Tocantins, but will continue limited in other areas in the northeast
• This
  dryness may impact unirrigated coffee, sugarcane and cocoa more significantly than grain and oilseed crops
• Brazil’s
  greatest rainfall for a while is expected in northern and western Rio Grande do Sul, southern Paraguay, southern Mato Grosso do Sul and parts of both Santa Catarina and southern Parana during the coming ten days
• Brazil’s
  Rio Grande do Sul crops will be in much better than usual condition for a La Nina year
• China
  winter crops are in good conditions with little to no winterkill so far this year
• There
  was some concern over bitter cold in the north earlier this season when snow cover was limited and if there was some damage it should be slight
• China’s
  weather over the next couple of week should be typical for this time of year
• India
  has been and will continue to be dry for a while
• There
  is need for more precipitation in winter crop areas outside of the far south
• Recent
  drying in the far south has been good for late season harvesting that had been delayed by too much moisture earlier this month and last
• Indonesia,
  Malaysia and eastern Philippines have been dealing with frequent precipitation events some of which have induced flooding in recent weeks
• Some
  drying would be welcome and should happen over the next two weeks
• Soil
  moisture and crop conditions are mostly good and any negative impact from recent flooding has likely been localized and not suspected of having a huge impact on any crop
• Europe
  is a bit too wet in the west and some southern locations and drier weather would be welcome
• Crop
  damage because of too much moisture has not likely occurred, but with the wet bias continuing the potential for flooding will increase and that could lead to some potential problems
• Recent
  precipitation in eastern Spain, Romania, Bulgaria, Greece, Moldova, Ukraine and Russia’s Southern Region has improved soil moisture for spring use
• The
  precipitation will continue periodically maintaining an improved outlook
• Russia’s
  Southern Region will not be as wet this week as it has been
• Bitter
  cold temperatures during the weekend brought temperatures below zero Fahrenheit from the Baltic Plain into Ukraine and northern parts of Russia’s Southern Region as well as other western Russia locations
• The
  cold induced no crop damage because of sufficient snow coverage

 

• Warming
  is expected in eastern Europe and the western CIS this week which may melt snow cover in southern areas and reduce winter crop protection from harsh weather if it were to suddenly return
• There
  is no threat of damaging cold for the next two weeks
• U.S.
  crop weather is still fine in the Midwest, Delta and southeastern states with plenty of soil moisture present and no threat of winterkill in wheat areas
• Hard
  red winter wheat areas are still dry in Nebraska, northwestern Kansas and northeastern Colorado where significant precipitation is needed for spring crop use
• That
  precipitation may not come immediately – at least not significantly, but the spring outlook should trend a little more favorably
• Northwestern
  U.S. Plains and southwestern Canada’s Prairies will see temperatures fall near the damage threshold for winter wheat later this week and into next week, but the combination of sufficient crop hardening against the cold, at least a dusting of snow in some areas
  and borderline damaging cold conditions the impact is expected to be low
• Montana
  and the southwestern Canada Prairies winter crops were not well established last autumn because of dryness
• Drought
  in the western United States might be eased ever so slightly late this week and during the weekend as snow and rain evolve briefly in some of the dry areas
• Much
  more precipitation will be needed to seriously change drought conditions and that is not very likely even though another bout of precipitation will evolve early next week
• West
  Texas will receive some light precipitation this week, but it will not be well distributed and much more precipitation is needed to bolster long term soil moisture
• South
  Texas remains too dry and needs significant rain in the next few weeks to support early season planting in late February and March, but there is still another few weeks for possible change
• U.S.
  Delta and southeastern states are still plenty moist and will stay that way for a while
  
• U.S.
  soft wheat in the Midwest is in favorable condition with plenty of moisture available and no threat of damaging cold anytime soon
• North
  America temperature outlook still brings colder than usual air to Canada’s Prairies later this week and into early next week, but it is not as potent as that advertised previously and it will not last as long either
• The
  cold also fails to get as far to the south into the U.S. Plains or Midwest relative to last week’s forecasts
• South
  Africa weekend precipitation was erratic resulting in pockets of net drying and pockets of ongoing good crop development
• South
  Africa will experience net drying this week except in Limpopo where some significant rain may fall during the weekend from a tropical cyclone expected in Mozambique
• Rainfall
  should improve next week over at least a part of the nation
• Tropical
  Cyclone Eloise will reach northern Madagascar today and will produce heavy rain and some moderate wind across the region
• Flooding
  is possible, but damage to rice, corn, sugarcane or vanilla is not very likely
• The
  storm will move across the Mozambique Channel during the latter part of this week with some re-intensification expected. The storm may make landfall during the weekend in southern Mozambique producing heavy rain across some of that nation’s crop areas; however,
  there is potential the storm could curve to the south and stay over open water
• Damage
  is expected to be light if the storm moves inland
• Australia’s
  southeastern Queensland and northern New South Wales weather outlook is not very good for significant rainfall in the next two weeks
• Net
  drying will increase unirrigated crop stress
• Temperatures
  will be near to below average in eastern Queensland and northeastern New South Wales and a little warmer than usual in the remainder of the nation
• 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
• Some
  rain fell in coastal areas of Ivory Coast and Ghana during the weekend, but key crop areas were dry
• 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 +18.56 today and the index will remain very strong for a while longer
• Welcome
  rain is expected in central and northern Mexico this week
• The
  moisture will help bring some badly needed relief to drought conditions, but more rain will be needed
  
• Winter
  crop planting and establishment conditions will improve briefly
• Canada
  Prairies will trend colder this week with periods of snow into mid-week
• The
  snow will help improve crop protection for winter wheat in the south and east, but some areas in southern Alberta may stay snow free
• Southeast
  Canada will receive brief periods of rain and snow this week, but resulting moisture will be lighter than usual
• Temperatures
  will be seasonably cool

Source:
World Weather Inc. and FI

 

 

Bloomberg
Ag Calendar

Monday,
Jan. 18:

• China
  customs to publish trade data, including corn, wheat, sugar and pork imports
• China
  4Q pork output
• EU
  weekly grain, oilseed import and export data
• Brazil
  coffee exporters group Cecafe releases December data
• Ivory
  Coast cocoa arrivals
• HOLIDAY:
  U.S. (Martin Luther King, Jr. Day)

Tuesday,
Jan. 19:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• New
  Zealand global dairy trade auction

Wednesday,
Jan. 20:

• China
  customs to publish import data split by country
• European
  Cocoa Association grinding data
• Malaysia’s
  Jan 1-20 palm oil exports

Thursday,
Jan. 21:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports
• USDA
  red meat production

Friday,
Jan. 22:

• 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
• EIA
  weekly U.S. ethanol inventories, production, 10:30am (two days later than usual due to federal holidays earlier in the week)
• U.S.
  Cattle on Feed, poultry slaughter

Source:
Bloomberg and FI

 

 

 

 

CFTC
COT

“Traditional”
fund positions for corn hit another record for futures only and futures and options combined.  We think managed money positions still have room to the upside. 

 

 

 

Macros

 

 

Corn.

• Corn
  futures are lower on good rain across South America over the weekend and sharply lower soybeans.  Higher wheat and good demand from China are limiting losses.   
  
• We
  made an error on our US corn balance sheet issued over the weekend.  New-crop US corn plantings should be 92 million acres, not 89.5 million (pulled in old number).  We will issue a revised balance in tonight’s comment. 
  
• After
  Russia announced on Friday to impose and increase wheat export taxes, Ukraine on January 25 will decide whether to limit corn exports to 22 million tons.  Ukraine exported nearly 11 million tons so far this season.  The Ukraine grain traders union, UGA, sees
  no ground to restrict Ukraine corn exports. 
• CBOT
  open interest for corn was down 1,919 contracts (March was down 18,272 per CME). 
  
• Funds
  on Friday sold an estimated net 10,000 corn contracts.
• China’s
  customs data showed a record 11.3 million tons of corn was imported last year, more than double the previous year.  It included 2.25 million tons in December.  The 11.3 million tons is above the 7.2 million tons quota. 
  
• China
  will auction off 30,000 tons of pork on Jan 21. 
• China
  National Bureau of Statistics reported the following:
• 2020
  pork output fell 3.3% from a year earlier to 41.13 million tons
• China
  slaughtered 527.04 million hogs in 2020, down 3.2% from the same period a year earlier.
• China
  pig herd rose to 406.5 million heads at the end of December from 370.39 million at the end of September

• So
  far in January, Ukraine corn export prices rose $23-$26 per ton to $256-$264 fob Black Sea, according to APK-Inform.  This is $6-$10 per ton higher than the previous record in May 2014. 
  

• Mexico’s
  decision to phase out GMO corn will include GMO corn imports for feed.  This could affect 15.5-18 million tons of GMO corn imports going forward.  They could reverse their decision if they cannot source non-GMO corn, or replace supplies. 
  

 

Corn
Export Developments

• USDA
  reported the following 24-hour sales:
• Export
  sales of 128,000 metric tons of corn for delivery to Japan during the 2020/2021 marketing year
• Export
  sales of 100,000 metric tons of corn for delivery to Israel during the 2020/2021 marketing year.
  

• Taiwan’s
  MFIG seeks 65,000 tons of corn on Wednesday for March or April loading.

 

Trade
News Service

 

 

Soybean
complex.  

• CBOT
  soybeans are sharply lower after South America saw rain over the weekend and lower lead by offshore product values. 
  
• CBOT
  open interest for soybeans was up 1,638 contracts. 
• Funds
  on Friday sold an estimated net 12,000 soybeans, sold 1,000 soybean meal and sold 12,000 soybean oil. 
  
• Last
  we heard, IL crude SBO was nominal 150 over, East nominal 175 over, West nominal 125 over and crude degummed at the Gulf at 575 over, down from 700 early last week. 
  
• Argentine
  as of late last week planted 94 percent of their soybean crop, one point below average. 
  
• AgRural
  reported Brazil harvested less than one percent of the soybean crop, behind 2 percent a year earlier.  MG is less than one percent versus nearly 5 percent average. 
  
• Brazil
  truck workers are planning to go on strike February 1 over fuel prices. 
• European
  rapeseed oil demand remains good by China. 
• India
  oilseed meal imports were 512,997 tons in December from 220,404 tons a year earlier.  Shipments of soybean meal 251,221 tons vs 72,233 tons. 
  
• Offshore
  values this morning were leading CBOT soybean oil 22 points lower and meal $5.00 lower.
  
• Rotterdam
  soybean oil values are down about 10-14 euros, rapeseed oil down 15, and Rotterdam meal mixed. 
  
• Malaysian
  palm oil futures: 

Two
Day adjustment

• China
  cash crush margins were 181 cents on our calculation, (179 previous) down from 198 at the end of last week and compares to 84 year ago.
  
• China
  futures: 2 day period

• NOPA
  December crush was reported 2 million bushes below a trade guess at 183.2 million bushels and soybean oil stocks came in at 1.699 billion, 13 million below an average trade guess. 
  

 

Oilseeds
Export Developments

• USDA
  reported the following 24-hour sales:
• Export
  sales of 132,000 metric tons of soybeans for delivery to China during the 2021/2022 marketing year

• 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

• US
  wheat is higher on follow through buying after Russia said they will impose higher export duties than what they previously planned.  Black Sea cash prices appreciated last week which is supportive for global prices.  EU wheat is at a 7-1/2 year high.  Russia
  will impose a wheat export tax of 50 euros a ton from March 1 to June 30, increasing an initial 25 euro levy to apply from Feb. 15.  They may tax new-crop. 
  
• CBOT Chicago wheat open interest was up 979 contracts.
  
• Funds on Friday bought an estimated net 2,000 Chicago wheat contracts. 
  
• China’s customs data showed China imported a record 8.38 million tons of wheat against a quota of 9.64 million tons.
• China sold 3.9 million tons of wheat form reserves, nearly all that was offered at auction at an average price of 2,504 yuan per ton. 
  
• EU March milling wheat was up 3.00 at 238.75 euros.
  
• Russia wheat export prices rose $23/ton last week to $298/ton, according to IKAR. 
  
• Ukraine wheat export prices rose $3.00 per ton to $284-$293 fob Black Sea, according to APK-Inform. 
  
• Ukraine grain exports are running 18 percent lower from last season at 27.2 million tons.  Flour exports are down 56% so far this year. 
  

 

Export
Developments.

• Japan in a SBS auction passed on 80,000 tons of feed wheat and 100,000 tons of feed barley for arrival in Japan by March 18.
  
• The Philippines may have passed on 100,000 tons of feed wheat and 80,000 tons of barley.  Feed wheat may have been offered at $300/ton. 
  
• Jordan bought 60,000 tons of feed barley at $262/ton c&f for FH July shipment. 
  

• Algeria seeks at least 50,000 tons of wheat for February 15-28 shipment on Wednesday. 
  
• One offer was presented for Bangladesh for 50,000 tons of wheat.  Going forward, Bangladesh plans to seek
  wheat from Ukraine after Russia planned to increased wheat export taxes.  Russia has supplied about 200,000 tons, half of the planned export target to Bangladesh. 
  
• Turkey moved their import tender for 400,000 tons back to January 22 for January 29-February 26 shipment. 
  
• One trading house participating:  Bangladesh seeks 50,000 tons of wheat January 18 for shipment within 40
  days of contract signing. 

• Syria seeks 200,000 tons of wheat on Jan 18 for shipment within 60 days after contract signing. 
  

• Jordan seeks 120,000 tons of milling wheat, optional origin, on Jan. 20.  Possible shipment combinations
  are between June 1-15, June 16-30, July 1-15, July 16-31, Aug. 1-15 and Aug. 16-31.

• Turkey seeks 400,000 tons of milling wheat on Jan 19 for Jan through Feb 25 shipment. 
  

• Bangladesh seeks 50,000 tons of wheat January 25 for shipment within 40 days of contract signing. 
  

 

Rice/Other

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

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

• Bangladesh seeks 50,000 tons of rice on January 26. 
  

·        
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.