FI Morning Grain Comments 02/16/21

PDF attached

 

Morning.

 

CBOT
futures are higher on extreme winter weather conditions and widespread commodity buying.  Higher global vegetable oil markets are supporting SBO.  Outside energy markets are lending support to US ags. 

 

 

Reuters
CRB total return index vs. USD

 

 

Weather

US
snow coverage improved over the long holiday weekend, but bitter cold temperatures tested winter wheat. 

 

 

 

 

 

WEATHER
AROUND THE WORLD TODAY

• Extremely
  cold temperatures occurred across the central United States and portions of Canada’s Prairies during the weekend
• Low
  temperatures fell below zero Fahrenheit as far south as southern portions of West Texas and all of Oklahoma except the southeast. Most of Missouri except the southeast also experience subzero-degree temperatures along with most of central and northern Illinois
  and northwestern Indiana
• Some
  of the coldest temperatures recorded included -30 in Holyoke, Colorado, -28 at Lamar, Colorado and Kendal, Kansas, -18 at Marshall, Mo, -35 southwest of Sidney, Nebraska, -13 at Norman, Illinois, -35 in Wakefield, Michigan (in western Upper Michigan), -38
  at Barnes, Wisconsin, -42 near Stephen, Minnesota, -33 at Clam Lake, South Dakota and -35 at Hazen, ND.
  
• Two
  unconfirmed extremes of -49 were noted Sunday morning at Coleharbor and Manning, N.D.
  
• During
  the past week winterkill from extreme cold temperatures likely occurred in minor wheat production areas of Alberta, Saskatchewan and western North Dakota as well as some production areas in central and western South Dakota
• During
  the weekend temperatures in western Kansas and eastern Colorado were near the damage threshold Saturday morning, but very little damage was suspected even though snow free conditions were present
• Snow
  cover increased Sunday, but there were still portions of west-central Kansas that were snow free and temperatures near the damage threshold
• Snow
  cover was best in Kansas and Colorado Monday morning which was coldest with extreme lows in the -20s and negative teens Fahrenheit
  
• Damage
  in Kansas and Colorado cannot be ruled out, but losses are suspected of being low because of snow cover being widespread when the coldest readings were in place. Crops were sufficiently hardened for the borderline damaging temperatures Saturday and Sunday
  and snow depths were likely sufficient to protect many crops from the coldest conditions Monday morning.
  
• Injured
  plants can recover by setting new tillers in the spring, but to be successful in recovering the plants will need abundant moisture and mild temperatures during the early spring.
  
• Areas
  suffering from winterkill will experience permanent production cuts
• Snow
  cover in the U.S. southern Plains and Midwest provided adequate protection to wheat that was also subjected to cold temperatures
• No
  snow melt of significance is likely in the U.S. Plains over the next couple of days due to persistent cold weather
• Winter
  crops will remain sufficiently protected from ongoing cold, although the coldest weather is now passing and the threat of additional damage will be low
• Wheat
  in eastern Europe and the western Commonwealth of Independent States was not injured by temperatures near and slightly below zero Fahrenheit because of snow cover
• Very
  few areas were snow free and those that were failed to be cold enough for permanent damage
• Argentina
  weather is becoming more tenuous with restricted rainfall over the next ten days to two weeks
• Scattered
  showers and thunderstorms in the coming week will be sporadic and light leaving some areas quite dry while others get enough rain to slow drying rates to buy more time for crops
• Subsoil
  moisture is still favorable in central parts of the nation, but dryness is a greater concern in the south
• Northern
  Argentina will see the greatest drying this week
• European
  model suggests some needed rain will fall a week from now in Buenos Aires and a few neighboring areas of Cordoba to offer some short term improvement to crop conditions, but the precipitation is not widespread in other parts of the nation.
  
• European
  model presents a ridge of high pressure over Argentina next week and if that verifies there will be greater heating and dryness for crops to contend especially in the north half of the nation and that could hurt late season crops if its persistent
• Brazil
  weather will be mixed over the next ten days to two weeks
• Southern
  parts of the nation will experience good drying conditions favoring soybean maturation and harvesting as well as Safrinha crop planting
• Mato
  Grosso and Goias will continue to experience periods of rain through the next ten days keeping crop maturation and harvest progress a little slower than desired
• Safrinha
  crop planting will also experience slow planting progress
• The
  precipitation in Mato Grosso and Goias as well as that in Minas Gerais will maintain moisture abundance for many summer crops that continue to develop
• Drying
  is needed in many areas to help expedite crop maturation and harvesting.
• Brazil’s
  bottom line will be mixed and mostly good for harvesting and planting with the exception of Mato Grosso, Goias and Minas Gerais which are expecting a little too much rain. Flooding is possible in a few areas, but mostly in Minas Gerais
• Brazil
  rainfall during the past three days was erratic allowing fieldwork to advance relatively well in many areas
• Rain
  was concentrated on Mato Grosso where 1.00 to 2.50 inches resulted keeping fieldwork slowest
  
• Temperatures
  were seasonable
• Argentina
  weather over the past three days included erratic rainfall and seasonably warm temperatures
• Many
  areas dried down, but central parts of the nation still had adequate subsoil moisture carrying on normal crop development
• Some
  rainfall of 0.60 to 1.42 inches occurred in central and southern Buenos Aires which helped to ease dryness in a few areas
• Rain
  also fell significantly in Santiago del Estero
• Temperatures
  were seasonable
• China
  precipitation the past three days occurred farther north than expected bringing moisture to the southern Yellow River Basin and parts of the North China Plain and parts of Liaoning and Jilin
• The
  moisture boost will be of great use to crops in the spring
• Winter
  wheat and rapeseed are still rated favorably
• Recent
  warm temperatures has brought on some greening in southern rapeseed areas
• China
  precipitation this week will be limited to the far northeastern provinces as snow and to the Yangtze River Basin as rain
  
• The
  moisture will be welcome for use in the spring
• Next
  week’s precipitation will be more broad-based in the east-central and interior southeastern parts of the nation while more snow falls in the far northeast
• Temperatures
  will be cool early this week in northeastern China and then warm up for a while
• East-central
  and southern China will continue to experience periods of mild to warm temperatures
• India
  was dry the past three days and temperatures were mild to warm
• Central
  and a part of interior southeastern India will get some welcome rain this workweek lifting topsoil moisture for improved winter crop development.
• The
  far north will be left dry
• Temperatures
  will be seasonable this week
• India
  will trend drier and warmer next week which may stress some winter crops that have not received much precipitation recently
• Australia’s
  cotton and sorghum areas of interior southeastern Queensland and northeastern and north-central New South Wales received some very important rainfall during the past three days
• Rain
  amounts varied from 0.50 to 2.50 inches with some of that occurring in a very important cotton and sorghum area of Queensland
• Rain
  amounts of 1.00 to 2.00 inches occurred in north-central New South Wales
• Temperatures
  were seasonable
• The
  bottom line for Australia and a welcome improvement to summer grain and cotton in both irrigated and dryland production areas
• Australia
  will receive less rain this week and net drying may result except along the lower Queensland and upper New South Wales coast where more significant rain will impact sugarcane production areas
  
• Heavy
  rain will also impact the Cape York Peninsula this week
• Next
  will bring back a few more showers to Queensland and New South Wales cotton and sorghum areas, although resulting rainfall will be light and sporadic
• Extreme
  eastern parts of South Africa received heavy rain during the past three days
• Rain
  totals of 3.50 to more than 8.00 inches occurred in southeastern Mpumalanga
• Rainfall
  elsewhere was more limited and net drying resulted
• Temperatures
  were mild in east-central parts of the nation and seasonably warm elsewhere
• South
  Africa will experience erratic rainfall over the next ten days benefiting some crops more than others, but the moisture will help preserve favorable production potentials for 2021
• Temperatures
  will be seasonable
• Bitter
  cold will expand across Russia during the coming week and prevail into next week
• The
  cold will occur while snow is widespread and sufficient to protect winter crops form any potential damage
• Europe
  temperatures will be a little warmer than usual in the west and more seasonably cool in the east this week and next week
• Precipitation
  is expected to be erratic and mostly lighter than usual
• Some
  of the flood potential in Europe will ease as rainfall diminishes and runoff continues
• Crop
  conditions will remain favorable
• North
  Africa precipitation will remain limited over the next ten days to two weeks
• Winter
  crops are semi-dormant and do not have much need for moisture
• Temperatures
  will be seasonable
• Eastern
  Ghana and western Ivory Coast received some rain during the past three days
• Erratic
  flowering might have occurred especially when that moisture was combined with rain that fell in a few areas last week
• Greater
  and more uniform rain is needed to induce a more generalized bout of flowering in coffee and cocoa areas, but the showers occurring now are not unusual for February and should increase next month
• Other
  areas in west-central Africa will see most of this week’s rain occurring near the coast
• Southeast
  Asia rainfall occurred typically during the past three days with mainland areas dry, and moderate to locally heavy rain in parts of Philippines, Indonesia and Malaysia
• Rainfall
  reached over 6.00 inches in central Mindanao during the weekend and slightly less rain occurred in southern Samar Island while rainfall elsewhere in Philippines, Indonesia and Malaysia was light to moderate and beneficial for developing crops
• Central
  and northern Sumatra, western Kalimantan and Peninsula Malaysia were left in a net drying mode
• Southeast
  Asia weather is not likely to change much in the coming week, although some additional heavy rain will overtake much of the Philippines this weekend into early next week causing some local flooding
• A
  tropical cyclone is possible
• East-central
  Africa precipitation over the next ten days will be most significant in Tanzania and lightest in Ethiopia
• All
  of the rain will be welcome and beneficial
• U.S.
  weather over the past three days was snowy besides cold
• Snow
  fell over most of the central and southern Plains through the northern Delta and heart of the Midwest to the central and eastern Great Lakes region
• Accumulations
  of 2 to 5 inches occurred in the central Plains, although central Kansas reported less than 1 inch along with northern Missouri
• Snowfall
  reached over 6 inches in the western and northern Texas Panhandle and varied from 3 to 9 inches from portions of West Texas through central and interior southeastern Texas to Michigan, Indiana and Illinois
  
• Abilene,
  Texas reported nearly 15 inches of snow while up to 11 inches occurred in central Arkansas
  
• The
  snow protected winter wheat from the bitter cold
• Monday’s
  U.S. Midwest snow storm will shift to the northeastern states and southeastern Canada through Tuesday
• Snow
  accumulations of 3 to 9 inches will result with local totals to 12 inches
• Areas
  from the northern Delta through Ohio to northern New England and southern Quebec Canada will get the greatest snow
• A
  follow up storm is expected in the Delta Wednesday that will also move into the northeastern states during the day Thursday and early Friday
• Travel
  in the northeastern states, the Middle Atlantic Coast states and parts of the mid-south will be extremely difficult because of this week’s two storms
  
• Snowfall
  of 2 to 6 inches and local totals to 10 inches are expected
• A
  few strong thunderstorms will accompany the mid-week storm this week in the mid-south region
• A
  weekend storm center will move across the northern  Plains to the upper Midwest producing snow and a little wintry mix of precipitation types
• That
  system will also produce some rain in the lower Midwest
• Another
  storm will impact the upper Midwest and Great Lakes region during the middle to latter part of next week
• U.S.
  bitter cold will linger through mid-week this week and then give way to more seasonable temperatures
• Southern
  Oscillation Index weakened during the weekend and this trend will continue this week
• Today’s
  SOI was +12.46 today and the index will continue to move lower this week
• Mexico
  precipitation this week and next week will be mostly confined to the east coast. although a few showers may occur briefly in the far north too
• Central
  America precipitation will continue greatest along the Caribbean Coast and in Guatemala while the Pacific Coast is relatively dry
• Canada
  Prairies will experience warmer temperatures this week with readings becoming much closer to normal
• Precipitation
  will continue limited
• Southeast
  Canada will experience greater than usual precipitation this week and seasonably cool temperatures

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:  Concern about Argentina and a mixed outlook across Brazil might provide a bullish bias for market mentality today.

 

MARKET
WEATHER MENTALITY FOR WHEAT AND OTHER SMALL GRAINS:   Concern about wheat in the U.S. Plains will dominate the market today with rumors of damage and speculation over the amount of damage that may have occurred. That will create a bullish bias. However, World
Weather, Inc. subscribers need to be cautious of the rumors because the mentality heard prior to market opening sounds bullish, but the actual damage may not be as great as feared.  With that said, no one will really know the impact of this week’s cold until
spring and some may have to wait until harvest to know the full story.

 

MARKET
WEATHER MENTALITY FOR COTTON:  Moisture resulting from snow in the U.S. southern Plains will be good for future cotton planting. Cotton in Bahia, Brazil is in good condition and early development in Mato Grosso is expected to advance well, although there was
a reduction in area planted because of delayed soybean plantings.

           
Argentina cotton conditions are mostly good and not likely change much right away, but the north could become drier as time moves along this weekend and next week.

           
Cotton in Australia benefited greatly from rain during the past three days. Cotton in South Africa was still rated favorably.

           
Overall, weather today will likely provide a mixed influence on market mentality with underlying bullishness because of reduced Brazil plantings.

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

Tuesday,
Feb 16:

• USDA
  Export Inspections, 11am
• Abares
  February Australian crop report
• MPOB
  and Universiti Kebangsaan Malaysia webinar on palm oil’s marketability to EU
• Green
  Coffee Association releases U.S. monthly green coffee stockpiles data
• USDA
  sugar and sweeteners outlook
• New
  Zealand dairy trade auction
• Tereos
  earnings
• HOLIDAYS:
  China, Carnival holiday throughout much of South America

Wednesday,
Feb 17:

• KL
  Kepong earnings
• HOLIDAY:
  China

Thursday,
Feb 18:

• EIA
  weekly U.S. ethanol inventories, production
• USDA
  Net Export Sales, 8:30am
• USDA
  Corn, Cotton, Soybean, Wheat Acreage Outlook, 8:30am
• Sime
  Darby Plantation earnings
• Port
  of Rouen data on French grain exports

Friday,
Feb 19:

• 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
• FranceAgiMer
  crop conditions report
• USDA
  Corn, Cotton Soybean, Wheat End Stock Outlook, 7am
• U.S.
  Cattle on Feed, 3pm

Source:
Bloomberg and FI

 

 

 

 

 

CFTC
Commitment of Traders

Trade
estimates for the traditional funds were nowhere near actual for the week ending February 9th, a testament that when you see volatile markets the trade tends to miss CFTC traditional and managed money positions.  Key takeaway is there is price upside left
for managed money to reach multi month and/or multiyear record net long positions if we continue to see the uptrend in CBOT agriculture futures. 

 

 

 

 

Macros

US
Empire Manufacturing Feb 12.1 (est 6.0; prev 3.5)

–
Six Month Business Conditions 34.9 (prev 31.9)

–
Employment 12.1 (prev 11.2)

–
Prices Paid 57.8 (prev 45.5)

–
New Orders 10.8 (prev 6.6

Texas
Grid Operator Expects All Power To Be Back Tuesday Evening

 

 

 

Corn.

• Corn
  futures are higher today following strength in soybeans and wheat.  Widespread commodity buying led by energy products is also supporting US agriculture futures. 
  
• March
  support over the short term is seen at $5.37 and resistance at $5.6575. 
• USDA
  is due out with commodity outlooks for the US 2021-22 supply and demand on Friday.  Thursday we will see baseline projections followed by updated S&D’s by NASS on Friday.  https://www.usda.gov/oce/ag-outlook-forum
  
• The
  Baltic Dry Index climbed to 1,495 points, a 9.6 percent increase. 

 

Soybean
and Corn Advisory:

• 2021
  U.S. Acreage – 93 Million Acres of Corn and 91 Million of Soy
• 2020/21
  Brazil Corn Estimate Unchanged at 105.0 Million Tons
• 2020/21
  Argentina Corn Estimate Increased 1.0 mt to 45.5 Million

 

Corn
Export Developments

·        
None reported

 

Soybean
complex.  

• March
  soybeans are higher this morning on widespread commodity buying and sharply higher soybean oil that tracked higher palm futures and higher global vegetable oil cash markets.  Egypt is back in for vegetable oil.  Shipment delays of soybeans in Brazil is also
  supporting the market.  Meanwhile Argentina will see restricted rain over the next week while parts of Brazil will continue to see harvest delays from too much rain, bias
  Mato
  Grosso and Goias.  Reuters over the weekend noted about 3,000 Brazil grain trucks were stranded outside a northern transportation hub, mainly due to logistical problems. 
  
• ICE
  canola nearby futures were up $7.80 early this morning. 
• Reuters
  poll for NOPA calls for 183.1 million bushels crushed during January (183.2 Dec.) and stocks at 1.763 billion pounds (1.699 end of Dec.). 
  
• January
  Egypt soybean imports from the US were 613,100 tons, up 66 percent from the previous months. 
  
• Concerns
  over Malaysian palm oil production continues to support that vegetable oil market.  The Southern Peninsula Palm Oil Millers’ Association noted Malaysian CPO production for Feb 1-15 increased 9.42 percent compared with the same period in January, short of the
  markets expectations for a 13 percent increase.  Meanwhile palm shipments continue to improve from FH January. 
  
• Note
  India recently raised the base import price of crude palm oil by $32 to $1,045 per ton.
  
• AmSpec
  reported 1-15 February palm shipments at 542,709 tons versus 426,276 tons.  ITS reported a 27 percent increase to 530,545 tons and SGS a 38 percent increase to 554,872 tons. 
  
• Offshore
  values are leading soybean oil 47 points higher and soybean meal $1.70 higher. 
  
• China
  is on holiday. 
• Malaysian
  palm oil: mixes multiple days

 

Soybean
and Corn Advisory:

• 2021
  U.S. Acreage – 93 Million Acres of Corn and 91 Million of Soy
• 2020/21
  Brazil Soybean Estimate Unchanged at 130.0 Million Tons
• 2020/21
  Argentina Soybean Estimate Unchanged at 46.0 Million Tons

 

Soybean
Export Developments

• Egypt
  seeks at least 30,000 tons of soybean oil and 10,000 tons of sunflower oil on Thursday for April 1-15 arrival. 
  
• Turkey
  seeks 25,000 tons of sunflower oil on Feb 18.  Shipment is sought between Feb. 26 and March 20.
  

 

 

 

Wheat

• US
  wheat is
  higher on concerns over winterkill for western US winter wheat country and parts of the Black Sea.  We note US snow coverage expanded over the long holiday weekend which will be beneficial for drought high Texas and Kansas.  Global import tender announcements
  ticked up over the weekend which is seen as supportive.  Some estimate 30 percent of the US hard red winter wheat crop was exposed to cold temperatures over the weekend.  Reuters noted Commodity Weather Group last week estimated that 10% of the U.S. soft wheat
  crop and 15% of the hard wheat crop were at risk of damage from winterkill caused by freezing temperatures.  Eastern Europe will continue to see cold temperatures this week with Bulgaria and Romania in focus. 
  
• EU
  March milling wheat was up 1.50 at 230 euros. 
• IKAR:
  Russia 2021 wheat crop 78 million tons, up 1 million tons from previous. 
  
• Australia
  looks for a record wheat crop in 2020-21 at 33.34 million tons, above previous high of 31.8 million tons in 2016-17.  Previous 2020-21 estimate was 31.17 million tons. 
  

 

Export
Developments.

• Jordan
  passed on 120,000 tons of barley.
• The
  Philippines seek 145,000 tons of milling wheat and animal feed wheat on Wednesday.  They are in for 75,000 tons of feed wheat in two consignments for delivery between April and June. Another 70,000 tons of milling wheat is sought in two consignments for delivery
  in June. (Reuters)
• Algeria
  seeks at least 50,000 tons of optional origin wheat for February 21 onward shipment. 
  
• Algeria
  also seeks 50,000 tons of feed barley on Wednesday for LH March shipment. 
  
• Syria
  seeks 200,000 tons of wheat for shipment within 60 days of contract signing. 
  
• Japan
  seeks 82,393 tons of food wheat from the US later this week. 

• Japan
  received no offers for feed wheat and feed barley in their regular SGS import tender. 
  
• Jordan
  seeks 120,000 tons of wheat on February 17.

 

Rice/Other

·        
EIA Nat Gas update https://www.eia.gov/todayinenergy/detail.php?id=46757&src=email

·        
Mauritius seeks 4,000 tons of long grain white rice, optional origin, on March 2, for delivery between April 15 and June 15.