FI Morning Grain Comments 01/27/21

PDF attached

 

Morning.

 

Choppy
session as some longs are getting out. 

 

WASHINGTON,
January 27, 2021–Private exporters reported to the U.S. Department of Agriculture the following activity:

–Export
sales of 680,000 metric tons of corn for delivery to China during the 2020/2021 marketing year;

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

–Export
sales of 126,500 metric tons of soybeans for delivery to unknown destinations during the 2020/2021 marketing year.

 

We
are seeing a choppy session despite positive US demand for soybeans and corn.  Wheat was following corn higher but opened lower on spreading.  Algeria is in for 40,000 tons of corn. Jordan bought 60,000 tons of wheat and Iraq is in for 30,000 tons of rice. 
Japan bought only 440 tons of feed barley in their SBS weekly import tender.  Ag Resource put out a 110 million ton China soybean import figure and 22-25 MMT corn import estimate.  Yesterday USDA’s Attaché assured the trade China could buy up to 22 million
tons of corn this year.  We still see new contract highs in corn and soybean oil by the end of the week.  We heard China bought one PNW cargo yesterday for Nov and one out of the Gulf for Nov as well.  April and May Brazil cargoes traded to China on Tuesday. 
A Bloomberg poll calls for weekly ethanol production to end up near 939, down from 945 previous week, and stocks at 23.794 million compared to 23.628 million previous week.  Just when we thought Brazil weather made a positive turn, flooding is now threatening
crops in Rio Grande do Sul, Parana, and parts of Paraguay. 

 

Source:
World Weather Inc. and FI

 

 

 

Weather

MOST
IMPORTANT WEATHER AROUND THE WORLD

• Argentina
  weather over the next ten days will be well mixed with opportunities for rain occurring in most of the nation supporting a relatively good environment for crop development
• Brazil
  crop weather will remain mostly good in the west and south with a favorable mix of rain and sunshine supporting ongoing crop development and some early harvesting of soybeans
• Northeastern
  Brazil will get some temporary relief from dryness during mid- to late week next week, but the bottom line will continue stressful until then and the amount of relief is likely to be a little disappointing
• Flooding
  rain expected from far northeastern Argentina and Paraguay into Rio Grande do Sul and some neighboring areas in Parana and Santa Catarina during the coming week to ten days is not likely to cause much damage
• Crops
  in low-lying areas will be impacted, but the production cuts are not likely to be very great
• Some
  loss cannot be ruled out, but much of the rain will be spread out over multiple days which should help localize the greatest flooding
  
• Paraguay
  production should be most impacted from the excessive rainfall and ensuing floods
• No
  threatening cold temperatures are perceived for any winter crop production area in the northern Hemisphere that is not snow covered for at least the next week
• Cooling
  in February will raise the need for snow in the northwestern U.S. Plains and southwestern Canada’s Prairies
• Snow
  cover is expected to decrease across parts of southeastern Europe, including Ukraine and a part of Russia’s Southern Region, but no threatening cold is expected anytime soon
• Flood
  potentials are high in western Europe and the eastern Adriatic Sea nations where frequent rain of significance has been occurring over multiple weeks
• Local
  flooding has already been occurring
• No
  generalized major flood event is anticipated for now because of the absence of large storm systems, but the situation must be closely monitored for later this winter and spring – or at least until a period of dry weather evolves
• North
  Africa dryness is mostly confined to southwestern Morocco and areas from near the Morocco/Algeria border into northwestern Algeria
• These
  areas will remain dry biased for a while, but this is a time of year in which crops are semi-dormant which limits the need for moisture until seasonal warming begins.
  
• South
  Africa will receive widespread rain during the next ten days further ensuring good production potentials for its summer crops
• Central
  India may receive some needed showers in the second half of next week, but will be dry until then
• Most
  of India’s winter crops will reproduce over the next few weeks and timely rain is needed to induce the best yields
• U.S.
  hard red winter wheat areas benefited from this week’s snowstorm, but there will still be an ongoing need for greater moisture in the soil across many areas
• La
  Nina conditions will prevail into early spring and that will likely keep precipitation events a little more meager than usual
• The
  need for rain will rise as seasonal warming begins in the spring
• U.S.
  snowstorm this week slowed transportation and was a little stressful for livestock from the central Plains to the Great Lakes region, but there was not much serious impact
• Western
  U.S. storminess is expected to improve topsoil moisture, but more precipitation will be needed to more seriously impact drought conditions
• California’s
  Sierra Nevada is experiencing rising snow depths that will improve runoff for the state’s reservoirs
• Early
  season precipitation in California and most of the western U.S. was well below average
• Only
  parts of the Pacific Northwest have been reporting routinely occurring precipitation and much of that has been on the coast
  
• U.S.
  Midwest, Delta and southeastern states are still plenty moist which is not unusual for this time of year
• The
  moisture abundance in parts of the Delta and southeastern states, however, is unusual for a La Nina year
• Some
  drying will occur in these areas later this season
• Drought
  in the U.S. northwestern Plains and southwestern Canada’s Prairies is still significant an must change in the spring to support normal planting conditions
• New
  South Wales, Australia will receive some needed rain over the coming week improving both dryland and irrigated crop conditions
• Queensland,
  Australia’s sorghum and cotton areas need significant rain along with most of its livestock region, but precipitation will be restricted over the next week to ten days
• Crop
  conditions are better than they were last year at this time, but drought remains in Queensland’s central and south
  
• Sugarcane
  areas along the upper coast are rated favorably
• China
  wheat and rapeseed are favorably rated and expected to perform well in the spring.
  
• There
  is no threatening cold weather for the next two weeks and sufficient precipitation will fall to maintain status quo conditions
• 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 will receive some infrequent rainfall over the next ten days
• Southern
  Oscillation Index remained very strong during the weekend and was at +17.55 today and the index will remain strongly positive over the coming week
• Southeast
  Asia weather is not likely to change much over the coming week
• Mainland
  areas have been will continue to be mostly dry
• Philippines
  rainfall will be erratic and mostly light, but it may increase somewhat during the next ten days
• Indonesia
  and Malaysia rainfall has been, but sufficient in maintaining a very good crop development environment
• No
  excessive rain occurred recently and little is anticipated for a while
• Northern
  and far southeastern Mexico will get most of the rain periodically during the next ten days
• The
  precipitation will be erratic and mostly light, but still welcome wherever it occurs
• Many
  areas in Mexico are still dealing with long term drought
• Central
  America precipitation will continue greatest along the Caribbean Coast  while the Pacific Coast is relatively dry
• Canada
  Prairies will continue cold for another day or two, but some warming is expected
• Precipitation
  will be periodic and mostly light
• Southeast
  Canada will experience restricted precipitation and seasonable temperatures over the coming ten days

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

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

 

 

 

 

 

Macros

 

Corn.

• Corn
  futures are
  higher on Chinese demand and Brazilian harvest delays. 
• USDA
  announced 680,000 tons of corn to China after announcing yesterday 1.36 million tons sold.  We think these two sales could be pushed back to 2021-22 delivery as China has already committed a large amount of corn for the current crop year.  But in retrospect
  we don’t know how much corn China is sitting on in reserves, so 5 or 10 million tons of corn imports can seem like a drop in a bucket if they keep expanding their hog population. 
  
• Ag
  Resource sees China corn imports at 25-27 million tons. 
• USDA
  Attaché on China corn.  Imports maintained at 22MMT.  https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Update_Beijing_China%20-%20Peoples%20Republic%20of_01-20-2021
  
• Meanwhile
  ADM sees China eventually importing 25 million tons of corn. 
• Bloomberg
  reported the Biden administration will announce debt relief measures for more than 12,000 financially distressed farmers.  Borrowing and paying back loans last year became difficult in a tough economic environment. 
  
• USD
  was 16 points lower, WTI 0.32 higher and gold up $1.50. US stocks are mixed. 
  
• A
  Bloomberg poll calls for weekly ethanol production to end up near 939, down from 945 previous week, and stocks at 23.794 million compared to 23.628 million previous week. 
  

 

Corn
Export Developments

·        
Algeria seeks 40,000 tons of corn on Jan 28 for Feb 25-Mar 15 shipment, optional origin. 

·        
WASHINGTON, January 27, 2021–Private exporters reported to the U.S. Department of Agriculture the following activity:

–Export
sales of 680,000 metric tons of corn for delivery to China during the 2020/2021 marketing year;

 

 

Soybean
complex.  

• CBOT
  soybean
  complex was higher led by soybean oil but turned lower on profit taking after the day session open long buying dried out.  Palm futures were up more than 120 points overnight adding to the rebound in global vegetable oil prices this week.  ICE canola, near
  a 13-year high is one example of the outside commodity markets helping the underpin in CBOT prices.  China demand for soybeans along with fears the US may see very tight supplies during the summer months are supportive features, but now harvest delays in Brazil’s
  southern areas from heavy rain is adding fuel to this fire.  A perfect storm of supportive news this week could yield to fresh contract highs in selected commodity markets. 
  
• China
  was an active buyer on Tuesday of US soybeans and Brazil cargoes for spot.
  
• Note
  the Feb 1 Brazil truck strike is around the corner and its gaining popularity leading up to the event. 
  
• Offshore
  values this morning were leading CBOT soybean oil 6 points higher and meal $0.30
  higher. 
  
• Rotterdam
  soybean oil values are up about 10-12 euros, rapeseed oil up 10-30, and Rotterdam meal 5-11 higher. (these are 24-hour changes) 
  
• Malaysian
  palm oil futures: 

• China
  cash crush margins were 156 cents on our calculation, (206 previous) compared to 190 at the end of last week and to 84 year ago.
  
• China

 

Oilseeds
Export Developments

·        
WASHINGTON, January 27, 2021–Private exporters reported to the U.S. Department of Agriculture the following activity:

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

–Export
sales of 126,500 metric tons of soybeans for delivery to unknown destinations during the 2020/2021 marketing year.

 

Wheat

• US
  wheat futures are lower on spreading and slowing global demand as indicated by Japan overnight after passing on feed wheat.  
  
• Poor
  Black Sea weather is holding up some wheat shipments. 
• EU
  March milling wheat was up 1.50 at 231.25 euros.

 

Export
Developments.

• Japan’s
  AgMin in a SBS import tender passed on 80,000 tons of feed wheat and bought only 440 tons of (out of 100,000 tons) feed barley for arrival by March 18, on January 27.

• Jordan
  bought 60,000 tons of milling wheat, optional origin.

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

 

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

 

Rice/Other

·        
Iraq seeks 30,000 tons of rice on Feb 3, valid until Feb 10, optional origin. 

·        
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.