FI Morning Grain Comments 02/23/21

PDF attached

 

Morning.

 

This
morning CBOT soybean complex and corn are higher while wheat is taking a breather.  Early US winter wheat crop conditions continue to show below average values for the major producing states.  Palm oil rallied over 3 percent overnight and cash vegetable oil
prices were strong on Monday led by sunflower oil.  The US cold snap is behind us and do not discount some selling to come in after corn and soybean futures traded above key psychological levels.  There are 6 days left until the end of the meteorological winter. 

 

 

 

Weather

 

 

 

 

 

World
Weather Inc.

Net
drying will continue across most of Argentina through next Monday; though, there will be some locally meaningful rain mostly from La Pampa through Santiago del Estero. This evening’s GFS model run was notably wetter than the midday European Model run in La
Pampa and southwestern Cordoba and an in-between solution is most likely. The GFS model was drier than the European Model from Santa Fe into Formosa and Corrientes. The European Model was likely too wet in this area; though, there will be a few locally meaningful
amounts. This evening’s GFS model was drier than the midday GFS model for week 2 of the outlook; though, it continued to showed greater coverage of meaningful moisture compared to week 1. This still fits World Weather, Inc.’s thoughts that the first week of
March might trend a little wetter.

       
    Most of Brazil will continue to be favorable; though, some areas from Tocantins and northern Mato Grosso through Minas Gerais will still be wetter than preferred.

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

Tuesday,
Feb 23:

• USDA
  Milk production, 3pm
• U.S.
  pork, beef, poultry cold storage data, 3pm
• U.K.
  National Farmers Union virtual annual conference to discuss the future of agriculture, horticulture
• EARNINGS:
  IOI Corp.
• HOLIDAYS:
  Japan, Russia

Wednesday,
Feb 24:

• EIA
  weekly U.S. ethanol inventories, production
• Amsterdam
  sustainable cocoa conference (Feb 24-26)
• U.S.
  poultry slaughter, 3pm
• MPOB
  palm oil prices seminar

Thursday,
Feb 25:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports
• International
  Grains Council monthly report
• Malaysia’s
  Feb. 1-25 palm oil export data
• USDA
  red meat production, 3pm
• EARNINGS:
  Minerva, BRF, FGV (tentative), Golden Agri

Friday,
Feb 26:

• 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, 3pm
• Earnings:
  Olam
• HOLIDAY:
  Thailand

Source:
Bloomberg and FI

 

 

 

 

USDA
inspections versus Reuters trade range

Wheat         
324,597         versus   300000-550000  range

Corn             
1,231,810     versus   500000-1400000                range

Soybeans   
721,845         versus   300000-950000  range

 

Macros

 

Corn.

• Corn
  futures are higher (2-week high) on follow through buying. Lower wheat is seen capping gains.  March and May corn are back above the psychological $5.50 level.  Higher WTI crude oil is aiding gains. 
  
• Yesterday
  funds bought an estimated net 25,000 corn contracts, and CBOT corn open interest dropped about 15,350 contracts. 
  
• China
  apparently is not out of the woods to achieve fully pre ASF hog production, at least in the northern provinces.  Cold weather has increased the spread of the disease, according to a Bloomberg article.  One analyst they cited noted China’s hog herd could have
  fallen as much as 15 percent over the winter from new outbreaks, including new variants. Pork prices will help sort through actual supply as about 90 percent of the population has returned back to normal levels from Covid restrictions. 
  
• Poland’s
  egg supply is threatened by bird flu outbreaks across Europe, particularly Poland.  Bird flu cases are approaching 2016 levels.  Prices for eggs on the wholesale market in Poland increased by about 18% to 20% at the end of January.
  
• Soybean
  and Corn Advisory:
• 2020/21
  Brazil Corn Estimate Unchanged at 105.0 Million tons
• 2020/21
  Argentina Corn Estimate Unchanged at 45.5 Million Tons
• Yesterday
  the US EPA announced they will not move on any decision on facility blending exemptions until the US Supreme Court rules on it.  This could take months.  Separately they sided with the appeals court’s decision that sided with limiting oil refiners exemptions
  to U.S. biofuel blending laws a win for agriculture lobby groups.  In January 2020 the 10th U.S. Circuit Court of Appeals ruled waivers granted to small refineries after 2010 should only be approved as extensions.
• The
  European Union granted imports licenses for 3,372 tons of corn imports, bringing cumulative 2020-21 imports to 14.348 MMT, 28 percent below same period year ago. 
  
• USDA
  US corn export inspections as of February 18, 2021 were 1,231,810 tons, within a range of trade expectations, below 1,314,960 tons previous week and compares to 923,999 tons year ago. Major countries included Mexico for 332,271 tons, Japan for 227,681 tons,
  and Vietnam for 146,198 tons.
• A
  Reuters poll calls for South Africa’s CEC to initially report their 2020-21 corn production at 16.872 million tons, up from the 15.300 million tons last season.  The first survey of the season is expected to show 8.929 million tons of white maize and 7.943
  million tons of yellow maize.  They will release the report on Thursday. 
  

 

Corn
Export Developments

·        
None reported

 

Soybean
complex.  

• CBOT
  soybean futures
  are sharply higher on strength in CBOT soybean oil and a bull run in Canadian canola futures.  Soybean meal is following beans higher.  March and May soybeans are trading over $14.00 and nearing respected contract highs (currently one-month high).  Slowing
  US soybean exports could temper bulls, but Brazil harvest delays is short term supportive.  Volatility in Brazil’s currency and equity markets should be monitored this week. 
  Global
  vegetable oil prices firmed on Monday led by Argentina and India sunflower oil.  Palm oil futures were up about 3 percent in late trading. 
  
• CBOT
  option open interest for the BOQ 59 calls: +7,500, settled @ 0.615 yesterday. 
  
• China
  import margins favor nearby Brazil shipments while they favor US for new-crop. 
  
• Argentina
  and Brazil were mostly dry over the past day. 
• Argentina
  will be very warm to hot and experience net drying conditions in many areas during the coming ten days after a few early week thunderstorms.  Restricted rainfall is expected from Mato Grosso, Brazil, and southwestern Sao Paulo to Rio Grande do Sul and Paraguay. 
  Rosario grain exchange is at 49 million tons for soybeans and 48.5 million tons for corn. 
  
• Soybean
  and Corn Advisory:
• 2020/21
  Brazil Soybean Estimate Unchanged at 130.0 Million tons
• 2020/21
  Argentina Soybean Estimate Unchanged at 46.0 Million Tons
• There
  are reports the shortage of soybeans in Ukraine may prompt crushers to import the product.  Ukraine produced a small crop and producers have been reserve sellers. 
  
• Yesterday
  funds bought an estimated net 6,000 soybean contracts, sold 2,000 soybean meal and bought an estimated 2,000 soybean oil. 
  
• ICE
  canola May futures were 21.70 higher at 774.90/ton.
• Offshore
  values are leading soybean oil 59 points higher and soybean meal $1.40 higher. 
  
• China
  cash crush margins on our analysis were 127 cents (113 previous) versus 140 cents last week and compares to 126 cents around this time last year. 
  
• China
  

• Malaysian
  palm oil:

• AgRural
  reported 15 percent of the Brazil soybean crop had been collected as of February 18 versus 31 percent this time year ago and slowest in ten years.  IMEA reported Mato Grosso was just over 33 percent harvested by mid-February, below a five-year average of 58%
  and well behind last year’s pace of 73.2%.
• USDA
  US soybean export inspections as of February 18, 2021 were 721,845 tons, within a range of trade expectations, below 922,181 tons previous week and compares to 573,450 tons year ago. Major countries included China for 155,928 tons, Netherlands for 139,100
  tons, and Egypt for 105,082 tons.
• The
  European Union reported soybean import licenses since July 1 at 9.359 million tons, above 9.128 million tons a year ago. European Union soybean meal import licenses are running at 11.123 million tons so far for 2020-21, below 11.785 million tons a year ago.
  EU palm oil import licenses are running at 3.622 million tons for 2020-21, below 3.649 million tons a year ago, or down 1 percent.
• European
  Union rapeseed import licenses since July 1 were 4.293 million tons, down 4 percent from 4.469 million tons from the same period a year ago.

 

Soybean
Complex Export Developments

• None
  reported

 

ICE
May Canola

Source:
Reuters and FI

 

Wheat

• Wheat
  futures are lower this morning despite mixed changes in US winter wheat crop ratings from late January.  OK was down 13 points for the combined good/excellent condition, Texas was up one point but only at 30 points, and NE unchanged.  Export tender updates
  were quiet over the past day. 
• Yesterday funds bought an estimated 12,000 soft red winter wheat
  contracts. 
• According to a MARS report yesterday, the
  cold snap across Europe had minimal impact on winter crops.
• EU May milling wheat was down 0.25 euros at 229.00 euros. 
  

• Ukraine’s grain stocks at the end of January were 18.2 million tons (State Statistics Service).  They included 5.1 million tons of wheat. 
  

• USDA US all-wheat export inspections as of February 18, 2021 were
  324,597 tons, within a range of trade expectations, below 418,816 tons previous week and compares to 437,336 tons year ago. Major countries included China for 67,260 tons, Peru for 49,499 tons, and Nigeria for 48,242 tons.
  
• The European Union granted export licenses for 18,000 tons of soft
  wheat exports, bringing cumulative 2020-21 soft wheat export commitments to 16.590 MMT, well down from 20.341 million tons committed at this time last year, an 18 percent decrease.  Imports are up slightly from year ago at 1.504 million tons.
  

 

Other states attached after text.

 

Export Developments.

• 3 participants: Jordan seeks 120,000 tons
  of barley on February 23.
• Jordan seeks 120,000 tons of wheat on February 24.
  
• Japan seeks 57,331 tons of Australian milling wheat this week. 
  

• Syria seeks 200,000 tons of wheat for shipment within 60 days of
  contract signing. 

 

Rice/Other

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

 

The big melt.
 US 35% coverage versus 47% Monday and 66% Saturday.  Month ago 27.5%.