FI Morning Grain Comments 03/12/21

PDF attached

 

Morning.
 

 

Soybeans
and corn are on the defensive from end of week contract positioning and lack of export developments since Thursday afternoon.  News was very light.  Evening weather models were slightly wetter for Argentina for this Monday and Tuesday.  USD was 44 points higher
and WTI off 12 cents at the time this was written.  US wheat futures (Chicago hit a one-month low) were mixed early this morning.  A large US wintery precipitation event is expected to bring soil moisture relief to many parts of the central and southern Great
Plains.  The Kansas (ratings declined one point last week to 36% G/E) wheat areas badly need precipitation. 

 

 

 

 

 

 

 

 

Weather

 

 

World
Weather Inc.

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Crop
stress in Argentina is very serious in some areas and rain must fall immediately to stop the decline in late season yields. Rain next week will bring on some relief but follow up rain will be very important. Additional yield and quality declines may occur
until then.

Southern
Brazil will dry down, 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 late April.

            U.S.
planting will occur more aggressively in the southeastern states through the weekend with some fieldwork increasing in the lower Delta too 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 mixed influence on market mentality.

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Rain and some snow in the central and southern U.S. Plains starting today and lasting through mid-week next week will ensure a better environment for crop recovery in areas damaged by February’s bitter cold. New tiller setting
is expected, and some production potential may be regained over time.

            Despite
recent precipitation in the Northern U.S. Plains and Canada’s Prairies there is a big need for additional moisture, and it may not occur during the next ten days – at least not in a significant manner.

            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 still has need for greater rainfall, despite recent rain.

           
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 bearish bias to market mentality.

Source:
World Weather inc.

 

Source:
World Weather inc.

 

Source:
World Weather inc.

 

Bloomberg
Ag Calendar

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

Monday,
March 15:

• USDA
  Export Inspections – corn, soybeans, wheat, 11am
• EU
  weekly grain, oilseed import and export data
• Malaysia
  to announce crude palm oil export tax rate for April (tentative)
• Monthly
  MARS bulletin on EU crop conditions
• Ivory
  Coast cocoa arrivals
• India
  Feb. vegetable oil imports (tentative)
• Malaysia’s
  March 1-15 palm oil export data

Tuesday,
March 16:

• New
  Zealand global dairy trade auction

Wednesday,
March 17:

• EIA
  weekly U.S. ethanol inventories, production
• Brazil’s
  Unica may release cane crush, sugar production data (tentative)

Thursday,
March 18:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports
• China
  customs to publish trade data, including import numbers for corn, wheat, sugar and pork
• USDA
  total milk production

Friday,
March 19:

• 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
• U.S.
  cattle on feed

Saturday,
March 20:

• China
  3rd batch of Jan.-Feb. trade data, including country breakdowns for energy and commodities. No timing

Source:
Bloomberg and FI

 

 

Macros

US
PPI Final Demand (M/M) Feb: 0.5% (est 0.5%; prev 1.3%)

US
PPI Ex-Food, Energy (M/M) Feb: 0.2% (est 0.2%; prev 1.2%)

US
PPI Ex-Food, Energy, Trade (M/M) Feb: 0.2% (est 0.3%; prev 1.2%)

US
PPI Final Demand (Y/Y) Feb: 2.8% (est 2.7%; prev 1.7%)

US
PPI Ex-Food, Energy (Y/Y) Feb: 2.5% (est 2.6%; prev 2.0%)

US
PPI Ex-Food, Energy, Trade (Y/Y) Feb: 2.2% (est 2.5%; prev 2.0%)

Canadian
Net Change In Employment Feb: 259.2K (est 75.0K; prev -212.8K)

Canadian
Unemployment Rate Feb: 8.2% (est 9.2%; prev 9.4%)

Brazil
Retail Sales (Y/Y) Jan: -0.3% (est 0.3%; prev 1.2%)

Brazil
Retail Sales (M/M) Jan: -0.2% (est 0.0%; prev -6.1%)

Brazil
Retail Sales Broad (Y/Y) Jan: -2.9% (est -0.5%; prev 2.6%

 

 

Corn

• Corn
  futures from
  end of week contract positioning and a higher USD (+43). 
• News
  for the corn market was extremely light. 
• China
  corn traded lower on ASF concerns. 
• We
  look for US export inspections for corn to increase over the next several weeks as imports shift away from soybeans. 
  

 

Export
developments.

• None
  reported

 

Soybeans

• The
  soybean complex is
  on the defensive from end of week contract positioning and lack of export developments since Thursday afternoon.  News was very light.  Evening weather models were slightly wetter for Argentina for this Monday and Tuesday.  Soybean meal is lower despite a
  currency adjusted higher lead in outside markets.  USD was 47 points higher and WTI off 27cents.  Soybean oil turned lower into the electronic pause.  Overnight we saw another rally in Malaysian palm futures, by 65 MYR and cash was up $22.50/ton.  China soybean
  oil appreciated 1.5%. soybeans up fractionally, and China soybean meal up 0.3%.  Rotterdam meal was mostly lower and Rotterdam vegetable oils unchanged to higher. 
  
• Note
  vegetable oil accounted for 40% of Ukraine’s farm exports so far in 2020-21 in USD terms (4.4 USD billion). 
  
• There
  again were no major changes to the SA weather forecast although Argentina was slightly wetter for early next week.  Argentina will see 1-1.5 inches of rain Tuesday and Wednesday.  Northern and central Brazil will remain active for at least the next week. 
  
• Yesterday
  the BA Grain Exchange estimated the Argentina soybean crop at 44 million tons and 45 million tons for corn.  They were at 46 million tons for both for their previous estimate.   We are at 46 million tons.  For Brazil we are using 133 million tons, around other
  trade expectations. 
• Coceral
  lowered their EU rapeseed crop to 17.7 million tons from 17.8 million tons in December, above 17.1 million harvested in 2020.
• India
  vegetable oil imports slowed last month.  SEA reported India February palm oil imports at 394,495 tons, down 27% year earlier and lowest level in nine months.  Soybean imports were 285,973 tons from 322,448 tons, and sunflower oil dropped to 116,110 tons from
  226,743 tons.
• Rotterdam
  vegetable oil prices were unchanged to 20 euros higher from this time yesterday and meal mostly 3-2 euros lower. 
  
• Offshore
  values are leading CBOT SBO 49 points lower (69 lower for the week) and meal $0.90 short ton higher ($4.10 lower for the week).
  
• China
  cash crush margins on our analysis were 178 cents (175 previous), up from 113 cents late last week and compares to 128 cents year earlier. 
  

China
futures:

Malaysian
palm oil: Up 10 percent this week to nearly 5-1/2 year high. 

 

Export
Developments

• Results
  awaited: South Korea’s NOFI group seeks 12,000 tons of soybean meal for March 11-March 29 shipment (US), or up through April 15 if sourced from China. 
  
• The
  USDA CCC seeks 2,030 tons of packaged oil on March 16 for shipment Apr 16 – May 15.

 

Monthly
oil share – rolling second month

Source:
Reuters and FI

 

Wheat

• US
  wheat futures (Chicago hit a one-month low) were mixed early this morning but front months ended the overnight higher.  A large US wintery precipitation event is expected to bring soil moisture relief to many parts of the central and southern Great Plains. 
  The Kansas (ratings declined one point last week to 36% G/E) wheat areas badly need precipitation. 
  
• French
  soft wheat conditions were 88% as of March 8, unchanged from the week prior and above 63% a year ago.  Durum was rated 88% as well, and winter barley at 85%, according to FranceAgriMer.  Egypt said they have enough strategic reserves for 5 months. 
  
• Coceral
  lowered their EU soft wheat production to 141.5 million tons from 143.0 million but above last year’s 128.2 million.
• EU
  May milling wheat was up 0.25 at 224.75 euros as of 7:50 am CT. 
• Egypt
  said they have enough strategic reserves for 5 months. 
• APK-Inform:
  (Barley now more than expensive than milling wheat
• Milling
  wheat $218-$227 a ton Black Sea June-July delivery
• Barley
  $220-$230 a ton CPT (carriage paid to) Black Sea June-July delivery
• 80%
  of Russia’s winter crop is in good condition-Russian Ag Ministry.

 

Export
Developments.

• Japan
  bought 94,925 tons of milling wheat this week. 
• Results
  awaited: Algeria seeks around 50,000 tons of feed barley on March 11 for shipment by April 25. 
  

• Jordan
  seeks 120,000 tons of animal feed barley, on March 16 for shipment between October 1 and November 15. 
  

• Pakistan
  seeks 300,000 tons of wheat on March 16 for April-August shipment. 

 

Rice/Other

·        
South Korea’s Agro-Fisheries & Food Trade Corp. seeks 208,217 tons of rice, on March 25 for arrival in South Korea in 2021 between May 1 and Oct. 31.  64,444 tons of non-glutinous brown rice is sought from the United States. 
Rest from Thailand, China, Australia and Vietnam.

·        
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.