FI Morning Grain Comments 02/08/21

PDF attached

 

Morning.

 

We
should see additional positioning in futures and options ahead of the Tuesday USDA report.  Wheat is apparently higher on cold US temperatures although snow coverage is good across the heart of the US, but some of western areas are vulnerable to winterkill. 
Looking at the US forecast, the western wheat areas will be mostly dry over the next week.  China was quiet over the weekend after picking up a handful of soybean cargoes last week.  They will start their holiday Thursday (no trade Friday).  Corn futures are
near a 2013 high.  China demand for feedgrains is supporting the commodity.  Speaking of China, they sold 1.719 million tons of wheat from auction out of 4.023 million tons offered, at an average price of 2,359 yuan per ton, shy of the record 2,504 yuan record
mid-January.  Soybean oil is higher after Malaysian palm futures (+60) and cash (+$15.00/ton) rallied overnight.  There are concerns over palm labor shortages.  Soybean oil and palm in China appreciated 1.0% while soybeans were up 0.9% (meal fell 0.3%).  Note
the FAO Vegetable Oil Price Index increased by 5.8 percent in January.  We remain bullish soybean oil long term amid shrinking global vegetable oil stocks.

 

 

 

Weather

 

MOST
IMPORTANT WEATHER OF THE DAY

• Argentina
  weather was dry Friday through Sunday morning
• Highest
  afternoon temperatures were in the 80s and lower 90s except in the far northwest and extreme southwest where highs reached more solidly into the 90s Fahrenheit
• Drying
  accelerated across the nation, but good subsoil moisture carried on normal crop development in many areas except a few locations in the far northwest and extreme south that were already dry late last week
• Limited
  Argentina rainfall is expected over the next ten days from La Pampa and western Buenos Aires to southeastern Cordoba, central and southern Santa Fe and southwestern Entre Rios
• Less
  than 0.50 inch of rain will occur in these areas through Feb. 17.
• Scattered
  showers and thunderstorms will occur in other parts of the nation during the same ten days with rainfall of 0.30 to 0.90 inch and a few amounts of 1.00 to 2.00 inches
  
• Many
  areas in Argentina will experience net drying during the next ten days with the fastest drying expected from central through southwestern crop areas
• Crop
  stress is expected in parts of southwestern Buenos Aires and southern La Pampa soon in this first week of the outlook because those areas were already dry late last week
• Good
  subsoil moisture will carry on normal crop development in Cordoba, Santa Fe and northern Buenos Aires for a while this week, but these areas will need rain near and beyond mid-month to maintain the best possible crop development
• Temperatures
  will be seasonable this week and a little warmer than usual next week which may add crop stress until greater rain falls
• World
  Weather, Inc. sees some potential for improved rainfall after Feb. 17
• Brazil
  experienced good drying conditions from the southern one-third of Mato Grosso do Sul and southern Goias into Rio Grande do Sul and Parana Friday through Sunday morning
• The
  environment was welcome and good for crop areas that had been too wet last week
  
• Improved
  summer crop maturation and harvest conditions resulted
• Rain
  fell throughout Minas Gerais and western Bahia, Brazil during the weekend bolstering soil moisture for many crop areas that were too dry last week
• Rainfall
  peaked near and over 4.00 inches in some interior northern and east-central crop areas while 1.00 to 2.36 inches occurred in other areas with local totals to 2.83 inches in southwestern Bahia
• Rainfall
  in Espirito Santo and Rio de Janeiro ranged from 1.00 to 2.75 inches
• Brazil
  weekend temperatures were close to normal with a slight warmer than usual bias in northern Minas Gerais Friday when readings reached into the middle and upper 90s Fahrenheit
• Most
  high temperatures were in the 80s and lower 90s
• Brazil
  rainfall this workweek will remain poorly distributed in west-central and southern parts of the nation’s crop region
• A
  general boost in precipitation will begin during the weekend and become more significant next week bringing back scattered showers and thunderstorms to most of the west and south
• Rainfall
  of 0.50 to 2.00 inches will occur from Mato Grosso and southwestern Sao Paulo to Paraguay and Rio Grande do Sul this weekend and next week after most of this workweek (Monday through Friday) is left mostly dry
• Rain
  will fall more frequently and significantly in other Brazil locations over the next two weeks; including areas from northern and eastern Mato Grosso, Tocantins, Maranhao, Piaui, Bahia and Minas Gerais through the next two weeks
• Daily
  rainfall will vary from 0.30 to 0.90 inch with local totals of 1.00 to 2.00 inches
  
• All
  of this region will get rain at one time or another and sufficient amounts will occur to support late season soybeans, corn and cotton as well as sugarcane, citrus and coffee
• A
  few areas will get a little too much rain slowing the maturation and harvest of early season soybeans and the planting of second season corn and cotton
• Temperatures
  will be seasonable with a slight cooler bias during the next two weeks
• The
  bottom line for South America is mostly favorable for this week, but a watch on the distribution of rain in Argentina, Uruguay, Paraguay and Brazil is needed for next week since the distribution of rain at that time will determine which areas, if any, will
  experience moisture stress. For now, Brazil weather looks nearly ideal except for some delay in harvest progress in part of northern and eastern Mato Grosso, Goias and Minas Gerais. For Argentina concern is greatest over dryness in the southwest for this week
  and a close watch over potential rainfall in central areas for next week is warranted since crops in that area could become stressed later this month without returning rain.
  
• Bitter
  cold in North America during the weekend occurred without much snow on the ground in western North Dakota, extreme eastern Montana and northwestern, north-central and south-central South Dakota where some winterkill was suspected
• Snow-free
  conditions also occurred in a few areas in south-central and west-central Saskatchewan and east-central Alberta where extreme lows fell to the negative 20s and negative lower 30s Fahrenheit
• Most
  lows in the U.S. snow-free areas varied from the -20s to the negative teens in North Dakota, negative teens in northeastern Montana and negative and positive single digit temperatures in South Dakota and southeastern Montana
• Some
  damage to winter wheat was suspected,  but the areas impacted are not high production areas and the impact on total production will be minimal in both Canada and the United States
• Bitter
  cold in North America is not likely to have much negative impact as it persists for the next ten days         
  
• Sufficient
  snow cover will be present in hard red and soft winter wheat production areas from the central Plains into the Midwest to protect crops against damaging cold temperatures
• Any
  new crop damage in the northern Plains and/or Canada should be minimal since conditions will not change much over the next ten days
• Subzero
  temperatures will stay east of the Continental Divide (except some areas in the Pacific Northwest late this week and into the weekend) and occur as far south as the Texas Panhandle, northwestern Oklahoma, southern Missouri, southern Illinois, central Indiana
  and northwestern Ohio
• Temperature
  extremes will fall to the negative 30s near the Canada border, in the negative teens and negative 20s in the upper Midwest and in the negative 40s and negative 30s in Canada’s Prairies
• Extreme
  lows near -50 cannot be ruled out for a part of Canada’s Prairies
• Freezes
  will occur deep into Texas next weekend and may occur along the central Gulf of Mexico coast briefly during that weekend, as well
• Florida
  citrus and sugarcane areas should be spared of damaging cold
• Frequent
  waves of precipitation will occur over the United States from the central and southeastern Plains through the Delta, lower and eastern Midwest and the Atlantic Coast states during the next ten days to two weeks.
  
• Waves
  of snow and rain will also start to impact the western United States from coastal Washington, Oregon and northern California through the northern Great Basin to the central Rocky Mountains starting this weekend and lasting into next week
• Precipitation
  will be quite limited in the northern Plains and Canada’s Prairies, although not completely absent
• Far
  southwestern parts of the United States from the desert southwest into a part of western Texas will receive limited amounts of precipitation, although not necessarily completely dry
• U.S.
  weekend precipitation produced rain in the southeastern states and a part of the Delta with moisture totals of 0.15 to 0.50 inch and local totals to 1.71 inches
• Snow
  fell frequently with substantial accumulations from central Montana and the northern U.S. Rocky Mountain region through Nebraska and southwestern South Dakota into Kansas, Missouri and Iowa and then from those three states to the northeastern states and Appalachian
  Mountains
• Accumulations
  reached 13 inches at North Platte, Neb. and varied from 3 to 12 inches in crop areas of central Montana while 1 to 3 inches and local totals to nearly 5 inches occurred from south-central and eastern Kansas and southern Iowa to Indiana
• Snowfall
  from the central and southern Appalachian Mountains to southeastern New England ranged from 3 to 7 inches with local totals to 10 inches
• Europe
  precipitation continued in western parts of the continent during the weekend maintaining wet field conditions and some flooding
• A
  band of precipitation also occurred from central Germany to northeastern Romania and Moldova while other areas in Europe were mostly dry
• Temperatures
  were cold in northeastern parts of the continent where some sub-zero degree Fahrenheit lows were noted in snow covered areas
• No
  crop damage resulted
• Temperatures
  in Europe will be colder than usual across northern parts of the continent this week while readings are closer to normal in the south
• Europe
  precipitation will continue frequently in central and southern parts of the continent over the next two weeks while northern areas dry out and cool down
• Western
  CIS crop areas were also cold during the weekend with lows in the negative single digits Fahrenheit in many western Russia, northern Ukraine and Belarus locations while positive single digits occurred in many other areas with some 20s and teens in southern
  Ukraine and Russia’s Southern Region.
• Snow
  cover was present in all areas that were subjected to threatening cold conditions
• No
  crop damage was suspected
• CIS
  temperatures will be colder than usual in the northwest half of Russia’s Agricultural region while the southeast will be a little warmer than usual
• Waves
  of snow and some rain will continue in the CIS crop areas during the next ten days, but more so in the south this week than in recent past weeks
• Sufficient
  snow cover will be present to protect winter crops from any threatening cold
• China
  weather during the weekend was warmer than usual except in the far northeast where temperatures were a little cooler biased
• Precipitation
  was limited to the Yangtze River Valley where amounts varied up to 1.18 inches
• Light
  snow fell in a part of the far northeast
• Some
  greening of southern rapeseed was suspected
• China
  temperatures will continue warmer than usual for the next ten day7s
• Waves
  of rain will move through southern China this week bolstering topsoil moisture for new season sugarcane development and rice planting that begins soon
• Rain
  will also occur periodically over the next ten days in the Yangtze River Basin maintaining good early season rapeseed and wheat development potential
• India
  weather trended drier during the weekend after a few showers occurred in the lower Ganges River Basin area with rainfall to 0.35 inch
• The
  coming week to ten days will be dry across most of India and temperatures will be seasonable
• A
  boost in rainfall is possible in the second half of next week and into the following weekend in east-central and southeastern parts of the nation
• If
  the precipitation verifies there will be a welcome boost in topsoil moisture
• Morocco
  received some welcome rain during the weekend, but amounts were light in the southwest part of crop country where up to 0.30 inch occurred most often
• Greater
  rain fell in northern Morocco
• Other
  areas in North Africa were dry and mild
• Northern
  Africa will experience restricted precipitation for the next ten days and mild temperatures; net drying is expected in most crop areas
• Greater
  rain is needed in southwestern Morocco, northwestern Algeria and a few far northeastern Morocco locations where soil conditions remain driest
• South
  Africa received rain in 65% of the nation’s crop areas during the Friday through Sunday morning period
• Rainfall
  varied up to 0.75 inch most often with 1.00 to 2.60 inches in Mpumalanga and north-central North West
  
• Net
  drying occurred in parts of Natal, Eastern Cape, western Free State, western North West and in parts of eastern Northern Cape
• Temperatures
  were seasonable
• South
  Africa will continue experience periodic showers and thunderstorms over the next two weeks with resulting rainfall varying widely and disfavoring the far west
• Temperatures
  will be warm
• Crop
  conditions should stay mostly very good, but there will be a rising need for rain in the far west
• Australia
  rainfall during the weekend was generalized in New South Wales and Western Australia and erratic in southern Queensland
• Rainfall
  ranged from 0.27 to 1.58 inches in northern and central New South Wales and 0.57 to 1.50 inches along the lower west coast of Western Australia
• Queensland
  received 0.05 to 0.72 inch with a few local totals over 1.00 inch
• Southeastern
  and east-central Queensland were left mostly dry
• Temperatures
  were mostly seasonable with a slight warmer bias in the east and a slight cooler bias in the west
• East-central
  Australia will experience additional showers and thunderstorms periodically over the next ten days to two weeks.
  
• Most
  of the daily rainfall will be light, but it will be supportive of summer crop development especially irrigated fields
• Greater
  rain will be needed in dryland production areas, but all of the rain will be welcome
• Temperatures
  will be seasonable
• Southeast
  Asia rainfall will be erratic over the next ten days with all areas impacted at one time or another except in some interior mainland production areas
• Rain
  will fall today into Wednesday morning in northern Laos, northern Vietnam and portions of northern and eastern Thailand before dry weather resumes later this week into next week
• Rain
  in southern parts of mainland Southeast Asia will occur this workweek and then dry out again
• Rain
  in Philippines, Indonesia and Malaysia will be more routine over the next couple of weeks maintaining good crop conditions
• East-central
  Africa rainfall will be erratic and mostly light each day through the next two weeks
• Tanzania
  will receive the greatest rain and experience the greatest daily coverage
• A
  few showers and thunderstorms will occur periodically in Ethiopia, Kenya and Uganda
• 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 seasonably warm range for the next ten days
• There
  is potential for a few of the showers to reach northward into coffee and cocoa production areas this week, but resulting rainfall should be light
• A
  few showers occurred during the weekend with one location in Ivory Coast reporting 0.27 inch of rain
• Most
  of the weekend precipitation was confined to coastal areas as it should be during much of the next ten days
• 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 weakened during the weekend and this trend will continue this week
• Today’s
  SOI was +13.14 today and the index will move erratically for a while this week
• Mexico
  precipitation this week and next week will be mostly confined to the east coast
  
• 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 and in Guatemala while the Pacific Coast is relatively dry
• Canada
  Prairies will be colder than usual during the next two weeks and periodic precipitation is expected
• Bitter
  cold conditions will be a threat to unprotected wheat and livestock
• Some
  wheat damage was suspected during the weekend, although it was not widespread since the areas impacted do not produce much wheat
• Southeast
  Canada will experience less than usual precipitation and some colder biased conditions this week

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:  A mixed influence from weather is expected on market mentality today.  Expected weather has not changed much from that of Friday. Argentina will need some rain in another week to ten days in the heart of its production
region and there is some indication for at least some precipitation, but more may be required. In Brazil, weather will be favorably mixed, although there will be some ongoing chatter about delays in harvesting and planting in northern and eastern Mato Grosso,
Goias and Minas Gerais, but good drying conditions are likely this week in most other crop areas to the west and south.

           
South Africa production remains good with little change likely. Recent rain in New South Wales has been good for summer crop development, But Queensland needs greater rain.

           
Weather in rapeseed areas of China remains favorable and the same is true for India, although greater rain might be good for all of its winter crop areas this month.

           
Winter crops in Europe are plenty wet and cold with little change likely for a while. No harm to crops in the continent will occur anytime soon. That is true for Ukraine crops as well.

 

MARKET
WEATHER MENTALITY FOR WHEAT AND OTHER SMALL GRAINS:  There may be a small amount of interest in damaged wheat in the northern U.S. Plains from weekend bitter cold, but the loss may not be very large since it impacted a small part of the production region.
Damage in Canada was even less of an impact on its winter grain crop.

           
U.S. hard red winter wheat and soft red wheat in the Midwest will not be negatively impacted by bitter cold this week.

           
No crop damage has occurred in Europe or the western CIS so far this season and this week will likely maintain a mostly good environment for crops with snow cover to adequately protect wheat, barley and rye from permanent damage because of bitter cold temperatures.

           
Wheat conditions in China remain very good and that of India is fair to good. Rain is needed in most of India to induce better yield potentials, although the nation is still expecting a fair-sized crop.

           
North Africa rainfall during the weekend and that expected in the next ten days will not change the prospects for 2021 production. A boost in rainfall is needed especially in southwestern and far northeastern Morocco and northwestern Algeria.

           
Middle East precipitation has been erratic and often light this winter and a boost in precipitation would be welcome especially from Iraq to Afghanistan. Turkey precipitation has been better distributed than in most other areas.

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

 

MARKET
MENTALITY FOR COTTON:  Talk of reduced cotton plantings in Brazil and a possible switch from cotton to corn and soybeans in a part of the United States this year has helped to turn the market in recent weeks. India’s cotton for 2021 might also be impacted
by changing farmer planting intentions.

           
Australia production has been improving with recent rainfall, although there is still need for rain in dryland areas of southeastern Queensland. A mixed weather pattern over the next two weeks should bode well for production potentials.

           
South Africa’s cotton has likely developed well so far this year and not much change is expected.

           
Argentina’s cotton conditions have remained quite varied with some areas of decreased production potential in the west and some potential for higher yields in the east.

           
U.S. weather will not change much this week, although it will be colder. Only brief bouts of precipitation will occur in western or southern Texas and both the Delta and southeastern states will remain plenty moist. Stormy weather in California is over for
a while.

           
Overall, weather today will likely produce a mixed influence on market mentality with ongoing bullish support remaining.

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

Monday,
Feb 8:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• HOLIDAY:
  New Zealand

Tuesday,
Feb 9:

• USDA’s
  monthly World Agricultural Supply and Demand (WASDE) report, noon
• (CASDE
  ?)
• France
  agriculture ministry updates 2021 winter-crop planting estimates

Wednesday,
Feb 10:

• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• Malaysian
  Palm Oil Board data on January palm oil end- stocks, output, exports
• Malaysia
  Feb. 1-10 palm oil export data from AmSpec, Intertek, SGS
• FranceAgriMer
  monthly grains report
• HOLIDAY:
  Vietnam

Thursday,
Feb 11:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Conab’s
  data on yield, area and output of corn and soybeans in Brazil
• Russian
  consultant IKAR holds agricultural conference, day 1
• Port
  of Rouen data on French grain exports
• HOLIDAY:
  China, Japan, South Korea, Vietnam

Friday,
Feb 12:

• 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
• Russian
  consultant IKAR holds agricultural conference, day 2
• New
  Zealand Food Prices
• HOLIDAY:
  China, Hong Kong, Indonesia, Malaysia, South Korea, Singapore, Vietnam, Thailand, Philippines

Source:
Bloomberg and FI

 

 

 

 

 

 

CFTC
Commitment of Traders

 

 

 

 

 

 

 

 

Macros

 

Corn.

• Corn
  futures are
  higher on ongoing bullish sentiment over strong Chinese demand after they auctioned off another large amount of wheat over the weekend. 
  
• Goldman
  roll – day 2. 
• Watch
  for Argentina grain related news this week regarding export duties on grains.  There was some chatter on the issue last week.  An export tax can make importers a little more anxious after Russia announced their floating export duty rate. 
  
• China
  – hog futures up 4 percent Monday.  Disease outbreaks underpinned the contracts. 
  

 

Corn
Export Developments

·        
None reported

 

Source:
Trade News Service 

 

Soybean
complex.  

• The
  US soybean complex is mixed with lower meal offsetting higher soybean oil and soybeans.  Today we should see positioning amid USDA S&D report due out Tuesday.
  
• Soybean
  oil is higher after Malaysian palm futures (+60) and cash (+$15.00/ton) rallied overnight.  There are concerns over palm labor shortages (and major 500 fortune companies blocking palm purchases).  Soybean oil and palm in China appreciated 1.0% while soybeans
  were up 0.9% (meal fell 0.3%). 
• Note
  the FAO Vegetable Oil Price Index increased by 5.8 percent in January. 
• We
  remain bullish soybean oil long term amid shrinking global vegetable oil stocks.
  
• We
  heard China bought a March US soybean cargo on Friday and were price checking for nearby Brazilian cargoes.
  
• Offshore
  values are leading the CBOT soybean oil 47 points higher and meal $0.40 higher. 
  
• Only
  4 percent of Brazil’s soybean crop had been collected as of Friday, versus 16 percent year ago. 
  
• Malaysian
  palm oil futures: 
  

• China
  cash crush margins were 186 cents on our calculation, compared to 203 at the end of last week and to 147 year ago.
  
• China

 

MPOB
Malaysian palm data is due out Feb 10.  Breakdown of January estimates (in tons):

                               
Range                                                   Median

Production         
1,108,000-1,400,000                        1,160,000

Exports
                1,000,000-1,500,000                        1,056,000

Imports
               0-282,000                                             110,000

Closing
stocks    1,158,000-1,360,000                        1,287,000

 

Oilseeds
Export Developments

·        
Last week the USDA bought 13,530 tons of packaged oil under the PL480 export program. Included in the total were 12.850 tons in 4 liter cans, priced from $1,473.30 to $1,878.32 per ton, and 680 tons
in 20 liter pails priced at $1,708.97 per ton. (TNS via USDA)

·        
The USDA seeks 3,000 tons of palletized vegetable oil on Thursday in 4 liter cans on behalf of the Commodity Credit Corporation (CCC), for shipment Mar 15-Apr 15 (Apr 1-20 for plants at ports). 

 

Wheat

• US
  wheat is sharply higher despite a higher USD.  Wheat is apparently higher on cold US temperatures although snow coverage is good across the heart of the US, but some of western areas are vulnerable to winterkill.  With that note, the western US wheat areas
  will be mostly dry over the next week. 
• Black
  Sea logistical problems from cold temps are also supporting US wheat futures. 
  
• Meanwhile,
  some traders fear Russia will lose permanent business if it becomes a guessing game in pricing wheat export (prices) over the next several months. 
  
• China
  demand for feedgrains is supporting the commodity.  China sold 1.719 million tons of wheat from auction out of 4.023 million tons offered, at an average price of 2,359 yuan per ton, shy of the record 2,504 yuan record mid-January.   Perhaps this might generate
  some to think of upcoming import tenders after all the corn buying? 
• EU
  March milling wheat was up 1.50 at 226.00 euros.
• Reuters:
  Russia’s grain export quota for 17.5 million tons has been distributed among 234 exporters for Feb. 15-June 30, according to TASS news agency.  The amount matches what they said it would set at last month. 
  

 

Export
Developments.

• Japan
  seeks milling wheat this week.

• The
  Philippines seeks 230,000 tons of feed wheat on February 9 for April-June shipment if from the Black Sea or May and June if from Australia. 
  
• Jordan
  seeks 120,000 tons of animal feed barley on Feb. 9.
• Jordan
  seeks 120,000 tons of wheat on Feb 10.  

 

Rice/Other

·        
Syria is in for 25,000 tons of rice on February 9.