FI Morning Grain Comments 01/25/21

PDF attached

 

Morning. 

 

Selling
resumed
overnight but light bottom picking paired losses from most of the CBOT ag markets.  The charts look bearish, IMO, led by March soybeans that could see a pullback this week to the $12.90 area.  Taiwan launched an import tender for 85,340 tons of US wheat. Syria
is in for 39,400 tons of rice and Bangladesh suspended an import tender for 50,000 tons of wheat.  Perhaps some of the importers could take a step back to see if futures continue to decline before pulling the trigger?  Saudi Arabia bought 660,000 tons of barley
at an average price pf $277.65/ton.  Over the weekend Egypt bought local soybean oil.  Offshore values are indicating a higher trade in the products.  China ag futures and Malaysian palm oil traded lower and this might weigh on SBO during the balance of today. 
This week look for Russian export duty developments and any changes to the SA weather forecast could influence price action. 
Argentina will see increasing rains this week. 

 

 

Weather

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

            Conditions
in Brazil and Argentina are not changing and that leaves Brazil crop moisture beneficial in most of the key grain and oilseed production areas. Argentina is expected to still have some pockets of drying that will need to be watched, but the nation (like Rio
Grande do Sul, Brazil) is doing better than some feared.

            India’s
winter crops are dry and will need some moisture in February to support the best yields. South Africa rainfall and temperatures will be nearly ideal for the best possible production potential.

            China
and Europe winter crops are still dormant and most are poised to develop favorably in the spring.

            Australia’s
sorghum produced in New South Wales will improve with expected rain this week, but Queensland unirrigated crop areas still need rain.

            Overall,
weather today will likely support a neutral to slightly bearish bias to market mentality.

 

MARKET
WEATHER MENTALITY FOR WHEAT: Precipitation expected in U.S. hard red winter wheat areas early this week will improve soil moisture for use in the spring.  Little to no crop damage occurred from bitter cold in Montana or southwestern parts of Canada’s Prairies
during the weekend. Other winter crops in North America, Europe and the western CIS have not experienced any crop damaging cold this year, so far, and mild to warm weather in the coming week will keep that potential very low. The same is true for China. India’s
winter crops need rain in February to induce the best yield potentials. North Africa rainfall will continue limited in the driest areas of southwestern Morocco and northwestern Algeria for the next ten days. A boost in precipitation is needed in the Middle
East.

            Overall,
weather today will likely induce a bearish bias to market mentality.

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

Monday,
Jan. 25:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• USDA
  total milk production
• U.S.
  cold storage data — pork, beef, poultry
• Monthly
  MARS report on EU crop conditions
• Malaysia’s
  Jan. 1-25 palm oil exports
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals

Tuesday,
Jan. 26:

• EARNINGS:
  ADM
• HOLIDAY:
  India, Australia

Wednesday,
Jan. 27:

• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• National
  Coffee Association’s webinar on U.S. coffee outlook in 2021
• Paris
  Grain Day virtual conference, day 1
• EARNINGS:
  Barry Callebaut

Thursday,
Jan. 28:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• USDA
  releases Citrus Report on global demand and supply
• Port
  of Rouen data on French grain exports
• Paris
  Grain Day virtual conference, day 2
• HOLIDAY:
  Malaysia

Friday,
Jan. 29:

• 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
• U.S.
  agricultural prices paid, received
• U.S.
  cattle inventory

Source:
Bloomberg and FI

 

 

 

 

 

CFTC
Commitment of Traders

·        
As of 1/19/21

·        
Traditional funds futures only for corn were reported at 528,700 contracts, down from their recent record of 542,100 contracts as of 1/12 and were down 13,500 contracts form the previous week.  The traditional futures and options
combined fund position for corn was down 14,200 contracts to 243,200 contracts.  Traditional funds were 28,400 contracts less short than expected. 

·        
Traditional funds futures only for soybeans sold a less than expected 4,200 contracts, and the net position was 17,800 contracts more long than expected. 

·        
Funds were a little more long than expected for wheat and soybean oil, and a little less than expected for soybean meal.  

·        
Money managers added a large 69,000 contracts to the soybean meal futures only net position while they sold 6,800 contracts for futures and options combined.  We may have to check to see if CFTC data is updated on Monday as this
looks odd. 

 

 

 

 

 

Macros

 

Corn.

• Corn
  futures saw
  a choppy trade overnight but light bottom picking paired some losses.  The US weather situation is mostly unchanged and a large storm system moving across the upper Midwest that originated across the western states should provide good soil moisture precipitation. 
  For SA, Argentina rains will ramp up this week that should limit crop deterioration.   
• USD
  was 4 points higher, WTI 0.08 lower and gold up $9.20. US stocks are mixed. 
  

 

Cattle
on feed
had a much higher number of placements than what the trade expected.  January 1 on feed was reported slightly above expectations.  We do not see much in the way of price influence on corn futures. 

 

Weekly
US ethanol production increased 4,000 barrels per day (a Bloomberg poll looked for down 3,000) and stocks decreased 64,000 barrels (poll looked for up 174,000 barrels).  Corn crop year to date ethanol production (early Sep to date) is running 7.8 percent
below the same period a year ago.  The ethanol blend rate into finished motor gasoline was 89.5 percent, down from 94.3 percent previous week.  US gasoline demand is running about 9 percent below this time a year ago.  Rolling spot corn prices are up 33 percent
from this time last year. 

 

Corn
Export Developments

• None
  reported

 

Soybean
complex.  

• CBOT
  soybeans are lower early on follow through selling and the charts are indicating a bearish sentiment. 
  50%
  for the move in SH is $12.90 and we are not far from that level.  Over the weekend Egypt bought local soybean oil.  Offshore values are indicating a higher trade in the products.  Argentina will see increasing rains this week. 
  
• Offshore
  values this morning were leading CBOT soybean oil 108 points higher and meal $6.00
  higher. 
  
• Rotterdam
  soybean oil values are down about 10-11 euros, rapeseed oil up 20, and Rotterdam meal 13-17 lower
• SGS:
  Malaysian palm exports for the Jan 1-25 period fell 34 percent to 847,534 tons.  AmSpec reported a 35 percent decrease at 872,707 tons. 
  
• Malaysian
  palm oil futures: 

• China
  cash crush margins were 206 cents on our calculation, compared to 190 at the end of last week and to 84 year ago.
  
• China

 

Oilseeds
Export Developments

• Egypt’s
  GASC bought 6,000 of local soybean oil at $1,068/ton.

 

Wheat

• US
  wheat futures traded choppy overnight and with corn and soybeans pairing some of their overnight losses it created a two-sided trade in MN wheat and nearby Chicago wheat.  The market will be eyeing import tenders this week and any Russian export duty developments. 
  As we near the close of the first month of the calendar year, don discount some positioning (selling).   
  
• EU
  March milling wheat was down 0.75 at 222.50 euros.
• China
  sold nearly 4 million tons of wheat from state reserves at an average price of 2,455 yuan per ton. 
  

 

Export
Developments.

• Taiwan launched an
  import tender for 85,340 tons of US wheat, set to close Jan 29, for late March through April 22 shipment. 
  
• Bangladesh suspended
  an import tender for 50,000 tons of wheat. 
• Saudi Arabia bought
  660,000 tons of barley at an average price pf $277.65/ton. 

• Jordan
  seeks 120,000 tons of animal feed barley on Jan. 26.

• Jordan’s
  seeks 120,000 tons of milling wheat, optional origin, on Jan. 27.

• 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

·        
Syria is in for 39,400 tons of rice on Feb 22.  They are also in for 25,000 tons of rice on February 9. 

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