FI Morning Grain Comments 01/26/21

PDF attached

 

Morning.

 

WASHINGTON,
January 26, 2021–Private exporters reported to the U.S. Department of Agriculture the following activity:

–Export
sales of 1,360,000 metric tons of corn for delivery to China during the 2020/2021 marketing year; and

–Export
sales of 102,800 metric tons of corn for delivery to unknown destinations during the 2020/2021 marketing year.

 

 

Mostly
higher prices in Chicago this morning on Black Sea export concerns. March soybeans are back above their 20-day MA.  Soybean oil and corn are leading CBOT higher this morning on additional fund buying. Wheat is finding bull spreading. 

 

Russia
formally announced a proposal to impose a higher export tax on wheat from March 1, by implementing a 50 euro ($61) per ton tax starting through June 30.  This is up from the original 25 euro-per-ton tax set for Feb. 15 to March 1. A barley and corn export
tax are set at 10 euro/t and 25 euro/t, respectively, from March 15 to June 30.

 

Ukraine
will limit corn exports in 2020-21 to 24 million tons. Ukraine corn production was 30.3 million tons, a very large output compared to previous years. 

 

We
heard China may have been active yesterday.  Two cargoes may have traded out of the Gulf for October and one for November, and possibly one for February.  Jordan bought barley. Bangladesh pulled their rice import tender for 50,000 tons.  Japan floated a food
wheat import tender for 60,715 tons.  Note the Baltic Dry Index fell 6 percent from the previous day to 1,659 points. 

 

CME
RAISES SOYBEAN FUTURES (C) MAINTENANCE MARGINS BY 1.7% TO $3,000 PER CONTRACT FROM $2,950 FOR MARCH 2021

CME
RAISES CORN FUTURES (C) MAINTENANCE MARGINS BY 7.7% TO $1,400 PER CONTRACT FROM $1,300 FOR MARCH 2021 (Reuters)

 

 

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. Talk of flooding in the coming week from Corrientes and some immediate neighboring areas of Paraguay and eastern most parts of Chaco and Formosa into Rio Grande do Sul may not cause much damage to crops,
but it will give the market place something else to talk about. Flooding may be most significant in Paraguay and northwestern Rio Grande do Sul where the ground is wettest from previous rain.

            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 mixed influence on market mentality.

 

MARKET
WEATHER MENTALITY FOR WHEAT: Precipitation expected in U.S. hard red winter wheat 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 in recent
days, despite snow free conditions and temperatures near the damage threshold. This situation will continue into Wednesday before warming evolves.

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 mixed influence on market mentality with a slight bearish bias.

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

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

 

 

 

 

USDA
inspections versus Reuters trade range                                                    

Wheat         
523,901         versus   200000-400000  range

Corn             
1,391,455     versus   900000-1150000                range

Soybeans   
1,978,971     versus   1000000-2100000             range

 

Macros

Philadelphia
Non-Manufacturing Regional Business Activity Index Jan: -17.5 (prev -26.6)

Non-Manufacturing
Regional Fed Wage And Benefit Cost Index: 16.4 (prev 8.4)

Non-Manufacturing
Full-Time Employment Index: 3.1 (prev -5.8)

Non-Manufacturing
New Orders Index: 0.2 (prev -9.5)

Non-Manufacturing
Firm-Level Business Activity Index: -14.3 (prev 5.0)

 

 

Corn.

• Corn
  futures are
  up sharply on talk of China picking up US corn on Monday.  The March contract nearly erased Friday’s losses.     
• USD
  was 16 points lower, WTI 0.32 higher and gold up $1.50. US stocks are mixed. 
  
• Ukraine
  will limit corn exports in 2020-21 to 24 million tons. Ukraine corn production was 30.3 million tons, a very large output compared to previous years. 
  
• Note
  the Baltic Dry Index fell 6 percent from the previous day to 1,659 points.  We need to wait for more data to see which index collapsed on Monday. 
  
• The
  European Union granted imports licenses for 151,000 tons of corn imports, bringing cumulative 2020-21 imports to 9.455 MMT, 26 percent below same period year ago. 
  
• USDA
  US corn export inspections as of January 21, 2021 were 1,391,455 tons, above a range of trade expectations, above 914,880 tons previous week and compares to 680,459 tons year ago. Major countries included Japan for 518,021 tons, Mexico for 214,510 tons, and
  Taiwan for 93,195 tons.

 

Corn
Export Developments

• None
  reported

 

Soybean
complex.  

• CBOT
  soybeans basis
  the March position was back above its 20-day MA.  Yesterday we saw very good export inspections at a time when some thought shipments from the US would wind down as China shifts imports over to South America.  Soybean oil is the leader in the products on fund
  buying.  March soybean oil is not too far off from its absolute contract high of 44.69.
  
• We
  heard China was price checking PNW soybeans on Monday for Q4 shipment and Gulf soybeans for Q1.  Chinese crushers price checked Q4 shipments of US soybeans out of the PNW and Q1 shipment out of the Gulf, but no trades were reported.  Two cargoes may have traded
  out of the Gulf for October and one for November, and possibly one for February. 
  
• Offshore
  values this morning were leading CBOT soybean oil 53 points lower and meal $3.50
  lower. 
  
• Rotterdam
  soybean oil values are up about 7-8 euros, rapeseed oil down 12, and Rotterdam meal 6-7 higher. 
  
• 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

• USDA
  US soybean export inspections as of January 21, 2021 were 1,978,971 tons, within a range of trade expectations, below 2,273,005 tons previous week and compares to 1,059,997 tons year ago. Major countries included China for 1,220,102 tons, Mexico for 179,651
  tons, and Spain for 138,961 tons.
• The
  European Union reported soybean import licenses since July 1 at 8.324 million tons, below 7.984 million tons a year ago. European Union soybean meal import licenses are running at 9.933 million tons so far for 2020-21, below 10.891 million tons a year ago.
  EU palm oil import licenses are running at 3.312 million tons for 2020-21, above 3.193 million tons a year ago, or up 4 percent
• European
  Union rapeseed import licenses since July 1 were 3.910 million tons, down 5 percent from 4.114 million tons from the same period a year ago.

 

Oilseeds
Export Developments

• None
  reported

 

Wheat

• US
  wheat futures are higher led by bull spreading in part to Black Sea export limitations and technical buying.     
  
• Russia
  formally announced a proposal to impose a higher export tax on wheat from March 1, by implementing a 50 euro ($61) per ton tax starting through June 30.  This is up from the original 25 euro-per-ton tax set for Feb. 15 to March 1. A barley and corn export
  tax are set at 10 euro/t and 25 euro/t, respectively, from March 15 to June 30.
  
• Russia
  plans to continue monitoring domestic food prices and adjust its export taxes if needed. 
  
• The
  Australian Bureau of Statistics showed December wheat exports to China amounted to a large 600,000 tons despite high import tariffs. 
  Prior
  to December no exports were recorded since last August. The 600,000 tons is the largest monthly wheat export figure from Australia to any single country. 
  
• Note
  China has sold 10 million tons of wheat out of reserves so far in January. 
  
• Jordan
  has 1.5 million tons of wheat in reserves and 605,000 tons of barley, enough to last for 191 months and 10 months, respectively.  Jordan consumes about 80,000 tons of wheat and 60,000 tons of barley a month. 
  
• EU
  March milling wheat was up 1.75 at 228.25 euros.
• The
  European Union granted export licenses for 239,000 tons of soft wheat exports, bringing cumulative 2020-21 soft wheat export commitments to 14.503 MMT, well down from 17.215 million tons committed at this time last year, a 16 percent decrease.  Imports are
  up slightly from year ago at 1.434 million tons.
• USDA
  US all-wheat export inspections as of January 21, 2021 were 523,901 tons, above a range of trade expectations, above 282,627 tons previous week and compares to 225,825 tons year ago. Major countries included Japan for 112,963 tons, Mexico for 76,728 tons,
  and Philippines for 57,367 tons.

 

Export
Developments.

• Jordan
  bought 120,000 tons of animal feed barley.  $258.90 and $259/ton was estimated. 
  

• Japan
  seeks 60,175 tons of Australian food wheat this week. 
• Algeria’s
  state grains agency OAIC seeks 50,000 tons of wheat on Wed for shipment between Feb. 1-15 and Feb. 16-28. 
  

• 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.

• Taiwan
  launched an import tender for 85,340 tons of US wheat, set to close Jan 29, for late March through April 22 shipment. 
  
• Yesterday
  Bangladesh suspended an import tender for 50,000 tons of wheat. 

 

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. 

• Today
  Bangladesh suspended an import tender for 50,000 tons of rice.