FI Morning Grain Comments 03/29/21

PDF attached

 

Morning.
 Please
note I will be out of the office for majority of the morning. 

 

The
container ship that ran aground in the Suez Canal has been partly refloated. Some estimate it is costing the industry around 6 billion USD per day.  USD was higher earlier this morning, Brazil real weaker, and WTI crude higher. Nearby soybean prices may settle
below the psychological $14/bushel today if prices hold at current levels, first time since March 18. Longs reduced positions in CBOT soybeans late last week ahead of the USDA March 31 planting intentions report, large SA crop prospects, and slowing China
demand for US and Brazilian soybeans.  China crush margins declined from late last week and poor margins may keep buyers away this week. CBOT soybean oil is getting a lift from higher energy prices while spreading and lower corn & wheat futures are pressuring
meal.  Mexico’s upcoming ban on GMO corn imports will not include corn for feed. China sold 1,030,397 tons of wheat from auction. Russian 12.5% protein wheat export prices for April position fell $16/ton at $257 a ton FOB at the end of last week, according
to IKAR. 

 

 

Wednesday
& Thursday will be heavy data driven days with USDA stocks and plantings Wednesday, EIA data that will add renewable fuel data (sometime Wed.), followed by NASS soybean crush on Thursday and export sales.  USDA’s official crop progress report (initial) looks
like it will be released April 5 @ 3:00 pm, not this Monday.  We will get selected state data this Monday. 

 

 

Weather

 

 

 

World
Weather Inc.

MOST
IMPORTANT WEATHER IN THE WORLD

• Central
  Tennessee received excessive rainfall during the weekend resulting in flooding
• Rain
  totals of 3.00 to 7.49 inches resulted across the heart of the state while neighboring areas of northern Mississippi, northern Alabama, southeastern Kentucky and some of the western slopes of the Appalachian Mountains received 1.00 to 2.50 inches of rain.
  
• Additional
  rain is expected in some of this region Tuesday with 0.50 to 1.50 inches possible
• Southeastern
  U.S. will receive additional rain Tuesday and Wednesday of this week followed by at least a full week and possibly ten days of drying beginning Thursday
• Weekend
  rain will end today and occur again late Tuesday and Wednesday
• Additional
  amounts will vary from 0.20 to 0.80 inch in northern Florida, southeastern Georgia and southern South Carolina while varying from 0.50 to 2.00 inches elsewhere.
• The
  drying trend will firm the soil and improve spring planting conditions after some farming delay because of rain and wet fields this week
• U.S.
  Midwest received rain during the weekend, but most amounts were light staying under 0.75 inch with many areas getting 0.10 to 0.50 inch
• Local
  totals to 1.03 inches occurred along the southwestern Indiana/southeastern Illinois border and up to 0.97 inch in south-central Iowa near the Missouri border.
  
• A
  few areas were left dry
• Highest
  U.S. temperatures during the weekend were in the 80s Fahrenheit from Texas to the Carolinas, Georgia and northern Florida with a few temperatures over 90 in South Texas, Florida and southern Georgia
• Seasonably
  mild conditions occurred in the northern Plains and upper Midwest with warmer than usual conditions in the Pacific Northwest
  
• Central
  U.S. temperatures Monday will soar to the 70s and 80s across the central and southern Great Plains and in the eastern Dakotas and Minnesota
• High
  wind speeds and low humidity will accompany the heat removing large amounts of topsoil moisture in a relatively short period of time
• Notable
  cooling is expected Tuesday with the northern Plains high temperatures limited to the upper 20s and 30s north and 30s and 40s from South Dakota and southern Minnesota into Nebraska and Colorado
• Low
  temperatures will fall to the teens and 20s in the northern Plains and 20s and 30s in the southwestern Plains
• Livestock
  stress is expected
• Winter
  wheat is not expected to be permanently damaged by the freezes
• A
  new warming trend will begin late this week and this second wave of heat will last longer extending from Friday through the middle part of next week
• Periods
  of strong wind speeds will also occur during the warmest period with low humidity limiting rain potentials until mid-week next week
• Soft
  wheat areas in the Midwest, Delta and southeastern states will experience freezes during mid- to late-week this week
  
• Permanent
  crop damage is not likely, although crops in Tennessee will see temperatures fall to the upper 20s and the same may occur in northernmost Alabama and northern Georgia as well as parts of the Carolinas
• Some
  burning of new vegetative growth is expected
• A
  couple of low pressure centers will evolve in the U.S. Great Plains and western Corn Belt during the middle to latter part of next week at which time showers and thunderstorms are expected
• Resulting
  rainfall will be light, but many areas will be impacted in the Midwest and both the northern and eastern Great Plains as well as the Delta with at least a little rainfall
• Cooling
  will accompany and follow this rainfall
• One
  more wave of heat and dryness will then follow April 11-13
• THE
  BOTTOM LINE FOR U.S. CROP AREAS
• The
  Yakima Valley and areas south into Oregon will remain dry for the next two weeks stressing unirrigated winter crops as the come out of dormancy
• Most
  of the San Joaquin Valley and southwestern desert region will remain dry for the next two weeks
• West
  Texas precipitation will be too light and sporadic to counter evaporative moisture losses
• Some
  relief to dryness may impact Montana and a few areas in the western Dakotas early next week, but confidence in the event is low because of sufficient time for the outlook to change between now and then.
  
• Below
  average precipitation is advertised from the west-central and southwestern U.S. Plains through Nebraska to the eastern Dakotas, western Minnesota resulting in net drying
• Precipitation
  is expected, but greater amounts will be needed soon
• Dryness
  may be returning to parts of hard red winter wheat areas
• The
  Delta, southeastern states, Tennessee River Basin and the majority of the Midwest will get 0.30 to 1.0 inch of rain over the next two weeks with many areas getting 1.00 to 2.00 inches
  

Sufficient
moisture and warming are expected over the next couple of weeks to stimulate some fieldwork from the lower Midwest into the Delta and southeastern states. Some planting will also begin for early season crops in the northern Plains and Canada’s Prairies, but
only if significant rain falls and that remains questionable since the advertised event is a week away for the northern Plains.  Warming is also needed in Canada to raise soil temperatures enough to support early season planting.

• Southern
  Argentina received moderate to heavy rain from northeastern La Pampa through the heart of Buenos Aires during the weekend where 1.00 to 4.00 inches resulted
• One
  location along the southeast coast of Buenos Aires received over 5.00 inches of rain
• Northeastern
  Argentina also received significant weekend rainfall of 1.00 to 2.50 inches impacting Formosa, Chaco and northern Corrientes as well as southern Paraguay
• Central
  Argentina dried down during the weekend after receiving welcome rain last week
• Highest
  Argentina weekend temperatures were in the 60s and 70s Fahrenheit except in the far north where readings were in the 90s early in the weekend
• Lowest
  morning temperatures were in the 40s and 50s with an extreme of 36 in east-central San Luis
• Argentina
  will experience net drying for the coming week to ten days
• Periodic
  showers and thunderstorms are expected later next week, and many areas will get some timely rainfall to maintain favorable moisture for late season crop development
• Cooling
  will come late in the week followed by another bout of drying

Argentina’s
bottom line looks quite favorable for crops and fieldwork during the next two weeks. Dry and mild weather this week will give way to warming this weekend and then some rain next week followed by additional cooling. The mix should suffice all crop needs and
maintain a non-threatening environment for late season crop development. Early season harvesting will advance this week while dry weather prevails.

• Brazil’s
  drying trend continued to expand with little to no rain in center west, center south and northeastern parts of the nation Friday through Sunday morning
• Rain
  was reported in Paraguay, western Santa Catarina and Rio Grande do Sul
• Amounts
  ranged from 0.40 to 2.75 inches
• Northern
  soybean areas of Rio Grande do Sul and southwestern Paraguay were wettest
• Brazil
  high temperatures peaked in the 90s Fahrenheit with Mato Grosso and western Mato Grosso do Sul reporting middle and upper 90s
• Not
  much rain is expected for the next ten days from southeastern Bolivia southeastern Mato Grosso and southern Goias into western Sao Paulo, central and western Sao Paulo and northern and western Parana, Brazil
• Limited
  rainfall was also advertised for Rio Grande do Sul
• Some
  relief will come to much of Brazil late next week and into the following weekend
  

The
bottom line for Brazil should be mostly very good as long as rain resumes late next week and into the following weekend as advertised. Dry weather until then will be excellent for getting late season soybean harvesting completed and the rest of Safrinha crops
put into the ground. Low yields are expected for late season corn because of late planting and questionable rainfall later this season. However, a few cold air masses coming in late April and May could help induce some needed rain, but confidence is still
a little low.

• Canada’s
  Prairies will continue drier biased in the west-central Prairies including much of eastern Alberta and western Saskatchewan during much of the coming two weeks
• Rain
  and snow are possible farther to the east and in far western Alberta
• Concern
  over dryness will remain in the drier biased areas, although there is still time for improvement before the planting season begins
• Moisture
  in the eastern Prairies will improve planting moisture, although some of the precipitation advertised is overdone

Source:
World Weather inc.

 

Bloomberg
Ag Calendar

Monday,
March 29:

• Ivory
  Coast cocoa arrivals
• USDA
  Export Inspections – corn, soybeans, wheat, 11am
• EU
  weekly grain, oilseed import and export data
• U.S.
  winter wheat condition, 4pm (selected states)
• HOLIDAY:
  India

Tuesday,
March 30:

• EARNINGS:
  WH Group

Wednesday,
March 31:

• EIA
  weekly U.S. ethanol inventories, production
• USDA
  stocks and prospective planting – corn, wheat, soy, barley, sorghum
• EIA
  monthly ethanol and biodiesel / renewable / biodiesel fuel reports
• Malaysia’s
  March palm oil export data
• Unica
  report on cane crush and sugar production in Brazil (tentative)
• U.S.
  agricultural prices paid, received, 3pm

Thursday,
April 1:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports
• Australia
  commodity index
• U.S.
  corn for ethanol, soybean crush, DDGS production, 3pm
• HOLIDAY:
  Mexico, Argentina and several other Latin American countries

Friday,
April 2:

• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• HOLIDAY:
  Good Friday holiday across most of Europe, Africa, Americas and parts of Asia

Source:
Bloomberg and FI

 

 

 

 

 

CFTC
Commitment of Traders

Traders
missed estimating the corn traditional net fund futures only position by a very large 50,600 contracts (509,100 versus 488,100 estimated).  Funds were also more long than estimated for soybeans and wheat, and less short for SBO. 

 

 

 

 

Macro

 

Corn

• Corn
  futures are lower on positioning ahead of the March 31 USDA report, favorable SA weather, higher USD, and lack of US corn export developments.
  
• The
  container ship that ran aground in the Suez Canal has been partly refloated. Some estimate it is costing the industry around 6 billion USD per day. 
  
• USD
  was higher earlier this morning and WTI crude higher.
• China
  corn futures fell 1.5% (hit a 2021 low on Monday). 
• Mexico’s
  upcoming ban on GMO corn imports will not include corn for feed.
• March
  31 is USDA report day so expect traders to increase positioning today and Tuesday. 
  
• On
  Friday USDA Agriculture Secretary Tom Vilsack said Mexico still plans to ban imports of genetically modified (GMO) corn, but only for food consumption, not corn for feed. 
  
• Reuters
  trade estimates for US corn plantings average 92.21 million acres, above USDA’s February estimate of 92.0 million and compares to 90.819 million year ago. 
  

 

Export
developments.

• None
  reported

 

 

Soybeans

• CBOT
  soybean complex was mixed earlier this morning (bear spreading in soybeans, weaker meal and higher SBO).  Nearby soybean prices may settle below the psychological $14/bushel today if prices hold at current levels, first time since March 18. Longs reduced positions
  in CBOT soybeans late last week ahead of the USDA March 31 planting intentions report, large SA crop prospects, and slowing China demand for US and Brazilian soybeans.  China crush margins declined from late last week and poor margins may keep buyers away
  this week. CBOT soybean oil is getting a lift from higher energy prices while spreading and lower corn & wheat futures are pressuring meal.  With some global vegetable oil markets failing to follow the limit lower move in CBOT SBO, offshore values are well
  out of alignment after palm and cash rapeseed oil rallied from this time Friday morning.  Palm oil futures reached a 5-week low on Monday but rebounded to settle 55MYR higher (cash down $10) on India demand. Indonesia will see heavy rain today over most parts
  of Sumatra and Kalimantan.  Russia laid out plans for its sunflower oil export tax from September 1 over the weekend. 
  
• There
  were no changes to CBOT registrations.  
• Funds
  on Friday sold an estimated net 16,000 soybean contracts bought 1,000 soybean meal and sold an estimated 14,000 soybean oil.  
  
• Last
  week US western cash crude soybean oil basis surged to a nominal 1,000 in large part to renewable fuel producer demand. 
  
• Ukraine
  may produce 5.920 million tons of sunflower oil in the 2020-21 and export 5.520 million tons, according to the economic ministry, down from around 7 million tons produced in 2019-20. 
  
• Rotterdam
  vegetable oil prices were about 10 euros lower for the nearby soybean oil positions and up 20 euros for rapeseed oil.  Rotterdam meal was $1-3 euros lower. 
  
• Offshore
  values were leading CBOT SBO 219 points higher and meal $2.70 short ton lower. 
  
• China
  cash crush margins on our analysis were 145 vs. 169 cents late last week and compares to 207 cents year earlier. 
  

 

China
futures:

Malaysian
palm oil: (uses settle price)

 

• Russia
  plans to impose an export tax on sunflower oil for one year from Sept. 1 set at 70% of the difference between its indicative price per ton and $1,000.  They will also impose an export tax on sunflower seeds between July 1, 2021 and Sept. 1, 2022 at 50% of
  its price, but not less than $320 per ton.  The duty for sunseeds is currently set in euro at a lower level, according to Reuters. 
  
• Trade
  estimates for US soybean plantings range from 86.1 to 91.6 million acres, wide in our opinion. 
  Reuters
  trade estimates for US soybean plantings average 89.996 million acres, in line with USDA’s February estimate of 90 million and compares to 83.084 million year ago.  Regardless of outcome, look for 2021-22 US soybean stocks to end up tight, like this year. 
  

 

Export
Developments

• The
  USDA seeks 540 tons refined veg oil, under the McGovern-Dole Food for Education export program (470 tons in 4 liter cans and 70 tons in 4 liter plastic bottles/cans) on April 6 for May 1-31 (May 16 – Jun 15 for plants at ports) shipment. 
  

 

Wheat

• Wheat
  was mostly lower this morning for all three US markets on falling Black Sea cash export prices, improving US weather and forecast for precipitation across the dry areas of the Canadian Prairies. 
  
• Russian
  12.5% protein wheat export prices for April position fell $16/ton at $257 a ton FOB at the end of last week, according to IKAR.  SovEcon showed wheat down $21 to $253 a ton and barley fell by $8 to $240 a ton.
  
• Funds
  on Friday
  bought
  an estimated net 3,000 CBOT SRW wheat contracts. 
• China
  sold 1,030,397 tons of wheat from auction, 25.8% of wheat was offered at an average price of 2,354 yuan per ton.  122 million tons had been offered since June 22, 2020, and 44.04 million tons had been sold, at an average price of 2,355 yuan per ton.  2021
  sales alone amount to 26.6 million tons. 
• EU
  May milling wheat was down 0.50 at 214.25 euros as of 6:00 am CT.  Next level of support is seen at 210.50. 
  

 

Export Developments.

• Jordan will be back in for feed barley on March 30. Possible shipment combinations are Oct. 1-15, Oct. 16-31, Nov. 1-15 and Nov. 16-30, the same
  periods as sought in the previous two tenders.
• Ethiopia seeks 400,000 tons of optional origin milling wheat, on April 20, valid for 30 days.  In January Ethiopia cancelled 600,000 tons of wheat from a November import tender because
  of contractual disagreements. 

 

Rice/Other

·        
Bangladesh lowest offered for 50,000 tons of rice was $411.93/ton CIF for shipment within 40 days of contract signing. 

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

·        
Mauritius seeks 4,000 tons of optional origin long grain white rice on April 16 for delivery between June 1 and July 31.

·        
Syria seeks 39,400 tons of white rice on April 19.  Origin and type might be White Chinese rice or Egyptian short grain rice.

·        
Ethiopia seeks 170,000 tons of parboiled rice on April 20.