FI Morning Grain Comments 03/08/21

PDF attached

 

Morning.
 

 

Traders
should monitor 24-hour sales this morning on rumors of a large US corn sale last week. 

 

The
CBOT agriculture markets rallied overnight from tight global supplies and higher energy markets (since then WTI paired gains) led by mineral oil after one of Saudi Arabia’s top producing locations came under fire by Houthi rebels the weekend.  USD was 26 higher
and WTI bouncing around, near unchanged.  The US Senate passed the $1.9 trillion coronavirus relief package and it now goes to the House for a vote.  Along with expectations for a US economic rebound as US states relax on restrictions, inflation could support
majority of commodity markets this week. The US will release February CPI data on Wednesday.  USDA will update their S&D’s on Tuesday. 

 

Argentina
was mostly dry over the weekend while Brazil’s waterlogged Mato Grosso saw additional rain.  It was also wet across Parana, Sao Paulo and surrounding areas.  Brazil will see drier weather across the southern areas this week while concerns over the quality
of the soybean crop and corn plantings should continue across the central and northern areas from additional rain in the forecast. The rain will not be as heavy as previous weeks but are still unwelcome.  Argentina will see a couple weak fronts this week,
but amounts could vary and overall, the country will continue to dry down, causing additional crop stress. 

 

US
precipitation was minimal across wheat country over the weekend.  Mixed precipitation and rain will develop across the upper Great Plains and upper WCB by Wednesday.  Heaviest rainfall will occur across Missouri, Illinois and Indiana over the next 5 days,
based on GFS models while the European model suggest rain will occur from Colorado and southern Kansas across northern Texas and Oklahoma to the lower Delta Friday into Monday. 

 

 

Weather

 

 

 

World
Weather Inc.

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:  Argentina’s weather will continue poor in some areas keeping downward pressure on some of the nation’s late season crop yields. Southern Brazil will dry down, too, but subsoil moisture will carry on favorable crop
development for a while. Weather elsewhere in Brazil will be typical of this time of year which may still be a little disruptive to the late harvest of soybeans and planting of Safrinha crops. Soybean production in Brazil is not likely to change much, but
corn production is still vulnerable to a more notable decline depending on when the summer monsoon will end. World Weather, Inc. expects the monsoon to end in April.

            U.S.
planting will occur more aggressively in the southeastern states during the coming week to ten days with some fieldwork increasing in the lower Delta while continuing in southern Texas. Parts of South Texas and the Texas Coastal Bend will continue too dry
for unirrigated crops.

            Early
season planting in southwestern Europe and southern China will be a little sluggish for a while. Farming activity in India will include winter crop filling and maturation. Some of India’s winter crops have yielded a little below that of last year, but a good-sized
crop is still expected.

            Eastern
Australia will receive periods of rain through the next ten days resulting in some slower early season crop maturation while the moisture will be good for late season crops. South Africa will experience net drying for a while, but rain next week should help
maintain a good finish for late season crops.

            Overall,
weather today will likely have a low impact on market mentality, although it will continue to provide a solid floor or support under market prices. With that said harvest pressure is expected to impact the soybean market for a while and worry over Safrinha
corn will continue to limit losses in that market.

 

MARKET
WEATHER MENTALITY FOR WHEAT AND OTHER SMALL GRAINS:  Recent rain in hard red winter wheat areas and the potential for some additional moisture in the coming ten days will help crops improve after threatening cold during February. Southwestern parts of the
Plains will not get much rain. The northern U.S. Plains will also struggle to get a moisture boost great enough to alter drought conditions for at least the next ten days.  

            Southeastern
Canada’s Prairies may get enough precipitation to increase topsoil moisture this week, but much more moisture will be needed in a larger region to reduce drought and improve spring planting conditions.

            Winter
crops in Europe and the western CIS are in mostly good shape. Winterkill has been minimal this year, but flooding may be a potential problem in western Russia over the next few weeks as snow melt occurs while new precipitation falls.

            China
winter crops are poised for good development and some improved rainfall in the Middle East recently has improved crops in that region. North Africa will get some welcome rain this week as well.

            India’s
wheat is filling and would still benefit from a little rain, but it is getting late enough in the season to minimize the change rain would have on production.

            Overall,
weather today will support a mixed influence on market mentality with a slight bearish bias.

Source:
World Weather Inc.

 

 

 

Bloomberg
Ag Calendar

Monday,
March 8:

• USDA
  Export Inspections – corn, soybeans, wheat, 11am
• EU
  weekly grain, oilseed import and export data
• China
  National People’s Congress in Beijing
• Ivory
  Coast cocoa arrivals
• HOLIDAY:
  Russia
• EARNINGS:
  Marfrig

Tuesday,
March 9:

• USDA’s
  monthly World Agricultural Supply and Demand (WASDE) report, noon
• China
  National People’s Congress in Beijing

Wednesday,
March 10:

• EIA
  weekly U.S. ethanol inventories, production
• Malaysian
  Palm Oil Board data on February palm oil end-stockpiles, output, exports
• China
  National People’s Congress in Beijing
• Malaysia’s
  March 1-10 palm oil export data
• ISO
  sugar conference
• FranceAgriMer
  monthly grains report

Thursday,
March 11:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports
• China
  National People’s Congress in Beijing
• New
  Zealand Food Prices
• Conab’s
  data on yield, area and output of corn and soybeans in Brazil
• HOLIDAY:
  India, Indonesia

Friday,
March 12:

• ICE
  Futures Europe weekly commitments of traders report (6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• FranceAgriMer
  weekly update on crop conditions

Source:
Bloomberg and FI

 

 

 

 

 

 

 

CFTC
Commitment of Traders

 

 

 

 

 

Macros

Futures
Point To A Lower Open On Wall Street While Brent Tops $70/Barrel

 

 

Corn

• Corn
  futures are higher from strength in soybeans but a reversal in WTI to the downside may temper gains.  Overnight Brent crude oil surpassed $70 for first time since the pandemic began and this was supporting corn overnight.  Traders will be watching if USDA
  announced US corn sales this morning (some are suggesting 20-80 million bushels).  Brent hits $70 for first time since the pandemic began after the Saudi attack.  Managed money are still very long corn and soybeans. 
  
• It
  will be a busy week.  We look for very good corn inspections to be reported by USDA on Monday, at or below average soybeans and below average all-wheat shipments. Tuesday USDA will update their S&D’s, followed by MPOB palm data Wednesday and Conab Thursday. 
  Later this week traders will also get February US CPI inflation data (Wed), projected to increase 0.4% from the previous month and up 1.7% from year ago (1.4% rise in Jan.). 
  
• On
  Friday funds were net buyers of 33,000 corn contracts on the session. 
• China
  plans to crack down harder on fake ASF vaccines. 
• China’s
  Jan-Feb crude oil imports were 89.57 million tons, up 4.1% from a year ago and up 9.5% from the same period in 2019.

 

Export
developments.

• None
  reported

 

Soybeans

• Soybeans
  are near a 7-year high on SA crop concerns, tight global oilseed inventories and higher soybean oil.  This week traders will be watching to see if the CBOT soybean complex can sustain their current rally this week.  Strategie Grains lowered its forecast for
  EU and UK rapeseed ending stocks.  Pakistan bought 594,000 tons of soybean in recent weeks.  Malaysian palm climbed 137 MRY to 3875 and cash was up $25.00/ton to $996.50.  Rotterdam soybean oil basis the nearby contracts were up about $50/ton form this time
  Friday morning and cash rapeseed oil was up $30/ton.  China soybean oil futures were up 3.5% overnight and palm futures up 2.7%.  CBOT soybean meal is higher on strength in soybeans and firm Rotterdam soybean meal cash market.  China soybean meal futures were
  up 1.5%. 
• China
  January through February soybean imports were 13.41 million tons, down 0.8% from 13.51 million tons a year earlier.  China’s imports of edible vegetable oils imports during the two-month period increased a large 48 percent from the same period in 2020 to 2.04
  million tons.  On a macro level China’s exports surged from a rebound in global demand amid Covid-19 recovery. 
  
• Paris
  rapeseed hit an all-time high of $528.75 euros, up 10 sessions, longest rally since 2016. 
  
• Strategie
  Grains lowered its forecast for EU and UK rapeseed ending stocks this season by 180,000 tons to 1.1 million tons, down 800,000 tons from last season.  They also lowered its 2021-22 rapeseed crop to 17.05 million tons, down 90,000 tons from its previous estimate
  but still 800,000 tons above last season.
• ICE
  canola basis May was up 10.20 as of 7:10 am CT to 796.
• Brazil
  weather forecast has not changed greatly from Friday.  Argentina is slightly weather for this week from that of Sunday. 
  
• On
  Friday the funds were net buyers 15,000 soybean contracts, buyers of 2,000 soybean meal contracts and net buyers of 6,000 bean oil contracts.
• Indonesia’s
  Sumatra and Kalimantan, and Malaysia’s Sabah and Sarawak, will see heavy rain early this week. 
  
• Switzerland
  voted and approved a free trade agreement with Indonesia that will gradually lower tariffs on palm oil by about 20%-40% for up to 12,500 tons per year, but only if sustainability standards are met.
• Rotterdam
  vegetable oil prices were about unchanged to up 20 euros from this time yesterday. 
  
• Offshore
  values are leading soybean oil 83 lower and SBM CBOT futures $1.80 lower.
• China
  cash crush margins on our analysis were 113 cents, up from 113 cents late last week and compares to 128 cents year earlier. 
  

China
futures:

Malaysian
palm oil: about unchanged for the week

 

Export
Developments

• Pakistan
  bought 594,000 tons of soybean in recent weeks from Brazil and the US.  Pakistan is currently buying 200,000 to 250,000 tons of soybeans per month. 
  

 

 

Wheat

• US
  wheat futures were catching a bid on global export developments. Algeria is in for more wheat.  They seek 50,000 tons of wheat on Tuesday.  Iran bought 40,000 tons of barley.  Saudi Arabia bought 660,000 tons of barley.  Pakistan seeks 300,000 tons of wheat. 
  Bangladesh seeks 50,000 tons of rice.  Wheat prices this week could be influenced over changes in US selected state crop conditions, USDA S&D changes, fluctuations in the USD, and global export developments.
• China
  sold about 2 million tons of wheat from state reserves during March 2-3, about half of the 4 million tons offered.
  
• The
  USD was up 25 points as of 7:34 am CT. 
• On
  Friday funds were net buyers of 4,000 net soft wheat contracts on the session.
• EU
  May milling wheat was up 2.75 at 231 euros. 
• Black
  Sea market on a partial holiday today.

 

Export
Developments.

• Pakistan
  seeks 300,000 tons of wheat on March 16. 
• Algeria
  is in for more wheat.  They seek 50,000 tons of wheat on Tuesday, valid until Wednesday for March or April shipment, depending on origin. 
  
• Iran
  bought 40,000 tons of barley out of 400,000 sought, for March/April shipment.
  
• Saudi
  Arabia bought 660,000 tons of barley at an average price of $279.77 a ton c&f for arrival in Saudi Arabia during April and May. 
  

 

Rice/Other

·        
Bangladesh seeks 50,000 tons of rice on March 18.

·        
Syria seeks 25,000 tons of white rice on March 29, from China or Egypt.