FI Morning Grain Comments 01/21/21

PDF attached

 

Morning. 

 

Sharply
higher trade in soybean and corn this morning on technical rebound and rumors of Chinese buying.  Argentina shipment delays from the driver strike was also seen supportive. US wheat is higher from a 0.75 euro higher trade in Paris wheat and strength in corn
along with rising Black Sea cash wheat prices topping $300/ton on Wednesday.  USD was 35 points lower, WTI 0.28 lower and gold up slightly. Asian stocks rose to new record highs. Malaysian palm futures were up 63 MYR and cash appreciated $15.00/ton to $857. 
China saw a mixed trade in futures.  Offshore values failed to follower the lower lead in US soybean meal futures and are suggesting a higher trade in meal and lower trade in SBO.  Adding to the mounting Black Sea agriculture export curbs, now Kazakhstan is
mulling over the introduction of a 15% sunflower seed export duty.  Note Russia has a 30% export duty on sunflower seeds.  Tunisia seeks 92,000 tons of durum wheat, 92,000 tons of soft wheat and 75,000 tons of animal feed barley on Friday, Jan. 22, optional
origin, for shipment between Feb. 15 and March 25.  Saudi Arabia’s SAGO seeks 480,000 tons of animal feed barley for delivery during March and April 2021, on January 22.  USDA export sales and EIA ethanol data are delayed until Friday.  Cattle on Feed is also
due out Friday. 

 

 

The
South American weather situation is about the same.  Warm temperatures and lack rain in Argentina are seen through Friday.  Rain will then increase this weekend through next Tuesday. Brazil conditions will still be mostly good for crops, with northeastern
areas too dry, and a little too wet in the south such as Santa Catarina and Parana.

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

            Argentina
crop conditions have improved over the past week, but parts of the nation will be drying down over this coming week leading to an increased need for rain especially in the central and south. Rain expected during mid- to late week next week will offer some
partial relief, but more rain will be needed.

            Brazil
crop weather is steadily improving in key corn and soybean production areas. The only exception is in minor production areas of the northeast where net drying will continue for a while stressing crops while reproducing, filling and beginning to mature. The
trend will change very little over the next two weeks.

            South
Africa crop conditions will remain mostly good, but net drying this week will raise the need for rain next week. Some rain is expected to arrive in a timely manner.

            Queensland
and New South Wales, Australia’s dryland sorghum areas need periodic rain to yield as well as possible. A boost in precipitation is needed for many areas and until it arrives there may be a rising bout of plant stress.

            India’s
winter crops will remain in favorable condition for the next ten days, although rapeseed and coarse grain crops would benefit from some rain as reproduction gets under way.

            China
and Europe rapeseed is rated favorably with little change likely.

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

 

MARKET
WEATHER MENTALITY FOR WHEAT: Another cold morning occurred today in Russia’s Southern Region along with northeastern Ukraine, but snow cover was sufficient to keep crops adequately protected from the cold. There has not been much winterkill this year in any
part of the world, although there is some concern over crop conditions in southwestern Canada’s Prairies and Montana where snow cover is not good, and it will trend a little colder.

            Moisture
improvements are still expected in Russia in the next couple of weeks as warming melts some of the snow and more rain and snow fall. Russia’s Southern Region will still need greater amounts of moisture to ease long term drought.

            U.S.
hard red winter wheat areas will get some infrequent, light, precipitation maintaining a status quo situation for crops in the region. The best chances for precipitation are expected next week.

            Soft
wheat in the U.S. Midwest is still rated favorably.

            Europe
and China winter crops are in good condition and expected to remain that way. Snow cover protected wheat, barley and rye in Eastern Europe from bitter cold last weekend and the region is warming up now to minimize and further risk.

            Harvesting
in the Southern Hemisphere should be mostly complete.

            Overall,
weather today may produce a limited influence on market mentality.

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

 

Bloomberg
Ag Calendar

Thursday,
Jan. 21:

• Port
  of Rouen data on French grain exports
• USDA
  red meat production

Friday,
Jan. 22:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am

• 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

 

 

 

 

Macros

US
Initial Jobless Claims Jan 16 900K (est 935K; prevR 926K; prev 965K)

–
US Continuing Claims Jan 9 5.054 Mln (est 5.300 Mln; prevR 5.181 Mln; prev 5.271 Mln)

US
Housing Starts Dec 1.669 Mln (est 1.560 Mln; prevR 1.578 Mln; prev 1.547 Mln)

–
US Building Permits Dec 1.709 Mln (est 1.608 Mln; prev 1.639 Mln)

US
Philadelphia Fed Business Outlook Jan 26.5 (est 11.8; prevR 9.1; prev 11.1)

 

 

 

 

Corn.

• Corn
  futures higher on technical buying, rising Black Sea cash corn prices, and Argentina strike woes.
  
• USD
  was 39 point lower, WTI 0.28 lower and gold up slightly. Asian stocks rose to new record highs.
  
• With
  SA crops stabilizing and no issues so far with second crop corn in Brazil, a setback below $5.00 basis the March contract is not out of the question.
  
• In
  a down day on Wednesday, CBOT corn open interest rose 13,025 contracts (March was down 11,594 lots).  Funds on Wednesday sold an estimated net 9,000 corn contracts.
  

• APK-Inform:
  Ukrainian corn prices lost $2 a ton to $260-$268 per ton on Wednesday.  Ukraine’s economy ministry and unions meet on Jan 25 whether to limit corn exports for 2020-21 to 22 million tons.
  

• China’s
  AgMin reported an outbreak of African swine fever in the southern province of Guangdong. In Pingyuan county, 214 out of 1,015 pigs were killed at a farm.  This is the first outbreak reported in nearly three months. 
  
• China
  will auction off 30,000 tons of pork on Jan 21. 
• Due
  to the Federal holidays of Dr. Martin Luther King Jr. and the Presidential Inauguration the next U.S. Export Sales Report will be released on Friday, January 22, 2021.
• Argentina
  producers sold 1.07 million tons of 2020-21 corn to exporters between January 7 and 13, up from 334,300 tons during the same period last year.  About 20 percent of new-crop corn has been sold.
  
• EIA
  ethanol data will be released on Friday.  A Bloomberg poll looks for weekly US ethanol production to be down 3,000 at 938,000 barrels (925-957 range) from the previous week and stocks up to 174,000 barrels to 23.866 million.
  

 

Corn
Export Developments

• None
  reported

 

 

 

 

Soybean
complex.  

• CBOT
  soybeans are sharply higher this morning on technical rebound and rumors of Chinese buying.  Argentina shipment delays from the driver strike was also seen supportive.  Truck arrivals at ports are down significantly for this time of year but keep in mind this
  is near the end for the current marketing year.  A strike during late February through April would have a much larger impact on meal and soybean exports. 
  
• Funds
  on Wednesday sold an estimated net 10,000 soybeans, sold 5,000 soybean meal and bought 5,000 soybean oil. 
  
• China
  yesterday may have bought at least one April shipment of Brazilian soybeans and one February shipment of US soybeans out of the PNW.
• Adding
  to the mounting Black Sea export curbs, now Kazakhstan is mulling over the introduction of a 15% sunflower seed export duty.  Note Russia has a 30% export duty on sunflower seeds.
• StoneX
  lowered their Brazil 2020-21 soybean production forecast to 132.6MMT, down 1.3MMT from previous outlook. 
  
• IHS
  MARKIT: Brazil 2020-21 soybean crop 133 million tons versus 132.5 previous. 
  
• Offshore
  values this morning were leading CBOT soybean oil 25 points lower and meal $7.10 higher.
  
• Rotterdam
  soybean oil values are up about 3-4 euros, rapeseed oil up 15, and Rotterdam meal mostly lower. 
  
• Reuters
  poll on 2021 palm oil price/production forecast:
• Futures:
  2,800 ringgit/ton, highest since 2012 (2,685 ringgit last year)
• Malaysia
  output seen at 19.6MMT
• Indonesia
  output pegged at 48.3MMT
• IJM
  Plantations Bhd. told Bloomberg that Malaysia’s state Sabah palm oil production may drop by over 20% in January from December from recent flooding.
  
• Malaysian
  palm oil futures: 

• China
  cash crush margins were 190 cents on our calculation, (188 previous) down from 198 at the end of last week and compares to 84 year ago.
  
• China

 

Oilseeds
Export Developments

• Egypt’s
  GASC seeks 3,000 of local soybean oil and 2,000 tons of local sunflower oil on Jan 23 for arrival between February 18 and March 5. 
  

 

Wheat

• US
  wheat futures are higher from a 0.75 euro higher trade in Paris wheat and strength in corn along with rising Black Sea cash wheat prices topping $300/ton on Wednesday. 
  
• Good
  precipitation is expected to fall across the eastern portion of the US Great Plains and Delta over the next week. 
  
• EU
  March milling wheat was up 0.75 at 234.75 euros.
• Funds on Wednesday sold an estimated net 4,000 Chicago wheat contracts. 
  
• APK-Inform: Ukrainian milling wheat export prices toped $300 per
  ton on Wednesday, with quotes between $292 and $303 per ton FOB Black Sea. 
  
• Russia’s Deputy Prime Minister estimated the 2021 grain crop at
  131 million tons, down from 133 million tons in 2020.

 

 

Export
Developments.

• Tunisia seeks 92,000 tons
  of durum wheat, 92,000 tons of soft wheat and 75,000 tons of animal feed barley on Friday, Jan. 22, optional origin, for shipment between Feb. 15 and March 25. 
  

• Saudi Arabia’s SAGO seeks 480,000 tons of animal feed barley for delivery during March and April
  2021, on January 22. 
• Japan bought 72,653 tons of milling wheat. Original tender as follows:
  

• Yesterday Algeria bought
  at least 330,000 tons of wheat for (originally) February 15-28 shipment at around $312.50 and $314.50 a ton c&f.  They last bought wheat at $292/ton on December 31.

• Amended to include white wheat: Turkey seeks 400,000 tons of milling wheat for Jan 29 through Feb
  26 shipment. 

• Bangladesh seeks 50,000
  tons of wheat January 25 for shipment within 40 days of contract signing. 
  
• Jordan seeks 120,000 tons
  of animal feed barley on Jan. 26.
• Japan’s AgMin in a SBS import
  tender seeks 80,000 tons of feed wheat and 100,000 tons of feed barley for arrival by March 18, on January 27.

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

 

Rice/Other

·        
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.