FI Morning Grain Comments 09/22/20

PDF attached

 

Morning.

 

Turnaround
Tuesday this morning in the ag markets with USD is lower and WTI crude higher.  The increase in Black Sea cash wheat prices, widely ignored in Monday’s trade, is supportive for wheat.  Trade is also shifting talk back to the strong Chinese corn and soybean
demand.  We heard China’s Sinograin bought 8-9 US PNW soybean cargoes on Monday, and one Argentine May cargo, while Cofco was inquiring for US Gulf shipments.  US corn conditions improved one point and soybeans were unchanged, but as we see harvest progress
increase this week, conditions will have less impact on price movements going forward.  US weather still looks good, but the weather models now indicate rainy weather for this week across the upper Midwest as the jet stream dips down into the heart of the
country, creating precipitation.  Malaysian palm oil tracked about 50MYR lower.  South Korea’s KFA bought 60,000 tons of Brazilian corn at $229.00/ton for Oct 15-Nov 15 shipment. South Korea’s NOFI bought 202,000 tons of SA corn at between $228.45 & $228.90/ton
for Jan/Feb arrival.  Reuters poll for South Africa’s Sep 29^th crop year 2020 corn crop: 15.271MMT (8.877 white & 6.493 yellow) vs. 15.537 by CEC in August and compares to 11.275MMT in 2019.  Egypt is in for wheat today and lowest off was $244.00/ton
for Russian wheat.  Don’t rule out French origin.  South Korea’s MFG passed on 70,000 tons of feed wheat for late Jan arrival with lowest offer at $255/ton c&f. 

 

 

 

Weather
and Crop Progress

Below
tables were issued incorrectly Monday evening

 

 

 

Tropical
Storm Beta made landfall in southeastern Texas between Corpus Christi and Houston. Significant rain related to this system will impact the Delta through Thursday and the southeastern states Wednesday into Friday. A frontal boundary will then enhance the rain
again in the southeastern states for late Saturday and Sunday. The rain in the Delta and Southeast will cause more fieldwork delays. Cotton boll rot potentials are also still elevated due to the expected heavy rain as well.

 

Showers
and a few thunderstorms are still expected in center west and center south Brazil Wednesday which will begin to moisten the topsoil moisture a little. Greater rainfall will be needed though to promote better flowering conditions.

Source:
World Weather Inc. 

 

Bloomberg
Ag Calendar

TUESDAY,
Sept. 22:

• U.S.
  cold storage data – pork, beef, poultry, 3pm
• HOLIDAY:
  Japan

WEDNESDAY,
Sept. 23:

• China
  customs publishes data on imports of corn, wheat, sugar and cotton
• EIA
  U.S. weekly ethanol inventories, production, 10:30am

THURSDAY,
Sept. 24:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports
• Brazil’s
  Unica to release cane crush and sugar output data during the week (tentative)
• USDA
  data on hogs and pigs inventory, red meat production, poultry slaughter, 3pm
• International
  Grains Council monthly report

FRIDAY,
Sept. 25:

• 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
• China
  customs publishes country-wise soybean and pork import data
• S&P
  Platts Sugar and Ethanol Conference, Sao Paulo
• FranceAgriMer
  weekly update on crop conditions
• Malaysia
  palm oil export data for Sept. 1-25
• U.S.
  cattle on feed, 3pm

Source:
Bloomberg and FI

 

 

 

 

USDA
inspections versus Reuters trade range                                                    

Wheat         
469,939         versus   450000-700000  range

Corn             
755,111         versus   650000-900000  range

Soybeans   
1,310,854     versus   1000000-1580000             range

 

Macros

Philadelphia
Fed Non-Mfg Regional Business Activity Index Sep: 8.0 (prev 1.6)

Philadelphia
Fed Wage And Benefit Cost Index 13.1 In Sept Vs 14.6 In Aug

Firm-Level
Business Activity Index 20.4 In Sept Vs 17.9 In Aug

New
Orders Index 8.5 In Sept Vs 11.6 In Aug

Full-Time
Employment Index 5.1 In Sept Vs -3.0 In Aug

 

 

Corn.

• December
  and March corn was unchanged at the electronic pause in part to favorable US harvesting weather and higher soybeans.  Weather models now indicate potential rainy weather for this weekend across the upper Midwest as the jet stream dips down into the heart of
  the country, creating precipitation.  South Korea’s NOFI and KFA bought South American corn. 
  

• Harvesting
  delays will occur to in the Delta and southeastern states due to remnants of Tropical Storm Beta, but the rest of the country will see mostly dry weather. 
  
• Outside
  markets were trying to stabilize.  The USD was about 2 higher and WTI near unchanged.
  
• The
  US White House dropped its plans to roll out a plan to aid oil refineries denied biofuel waivers.  At least $300 million from potentially the USDA CCC program was to be granted to the refineries. 
  

• Trade
  is shifting talk back to the strong Chinese corn demand.
• Reuters
  poll for South Africa’s Sep 29th crop year 2020 corn crop: 15.271MMT (8.877 white & 6.493 yellow) vs. 15.537 by CEC in August and compares to 11.275MMT in 2019. 
  

• Soybean
  and Corn Advisory: US corn yield unchanged at 176.0 bu/ac.
• USDA
  reported corn conditions at 61 points for the combined good and excellent categories from 60 percent last week and 57 last year and 66 average.  The trade was looking for a one-point decrease. 
  

• US
  corn harvest progress was reported at 8 complete from 5 percent previous week, 6 year ago and compares to 10 percent average.  The trade was looking for 11 percent.   95 percent of the crop was dented and 59 percent mature (49 average). 
  
• Brazilian
  producers started corn plantings in RGDS, Minas Gerais and Parana.  It’s been slowed recently by cold weather.  In Argentina corn plantings started bias eastern areas where rains occurred.
  
• Note
  the probability of La Nina during the OND period is nearly 80 percent.  
• China
  plans to buy 7,700 tons of beef and mutton for state reserves on September 24. 
  
• China
  will auction off 20,000 tons of pork from reserves on Sep 25, taking the amount to 590,000 if all of it sold. 
  
• USDA
  US corn export inspections as of September 17, 2020 were 755,111 tons, within a range of trade expectations, below 939,113 tons previous week and compares to 235,389 tons year ago. Major countries included China Main for 204,498 tons, Colombia for 134,812
  tons, and Mexico for 115,063 tons.

 

Corn
Export Developments

• South
  Korea’s KFA bought 60,000 tons of Brazilian corn at $229.00/ton for Oct 15-Nov 15 shipment
• South
  Korea’s NOFI bought 202,000 tons of SA corn at between $228.45 & $228.90/ton for Jan/Feb arrival.
  

 

 

 

Soybean
complex.

• Turnaround
  Tuesday this morning for soybeans and meal with USD is lower and WTI crude higher.  Soybean oil was lower in part to follow through selling and lower palm oil futures.  Don’t discount a two-sided trade in SBO.  Brazilian soybean oil basis was up 100 in the
  spot position from the previous day. Brazil has nearly run out of supplies for export.  Demand for Argentina spot soybean oil is good.  But in other oils they seem to be topping out such as sunflower oil.  Time will tell.  A further break in soybeans will
  make it even more difficult for Argentine crushers to source beans. This is providing support to US meal prices and supports meal/oil spreads. 
  
• We
  heard China’s Sinograin bought 8-9 US PNW soybean cargoes on Monday, and one Argentine May cargo, while Cofco was inquiring for US Gulf shipments. 
  

• Soybean
  and Corn Advisory: US soybean yield unchanged at 51.0 bu/ac.
• USDA
  reported soybean conditions at 63 points for the combined good and excellent categories from 63 percent last week, 54 last year and 63 average.  The trade was looking for a one-point decrease. On an adjusted basis, the US condition was unchanged. 
  

• US
  soybean harvest progress was initially reported at 6 complete and compares to 6 average.  The trade was looking for 5 percent.   59 percent of the crop is dropping leaves. 
  
• Ukraine
  producers see a 19 percent decrease in the 2020 soybean crop to 3.0 million tons. 
  
• USDA
  US soybean export inspections as of September 17, 2020 were 1,310,854 tons, within a range of trade expectations, below 1,625,688 tons previous week and compares to 926,271 tons year ago. Major countries included China Main for 889,788 tons, Indonesia for
  79,853 tons, and Egypt for 46,405 tons.

• Offshore
  values this morning were leading CBOT soybean oil 32 points higher and meal
  $0.50
  lower. 
• Rotterdam
  soybean oil values were about down 7-8 euros, rapeseed oil 10 lower in the benchmark positions, and Rotterdam meal 4-7 euros lower from this time previous session. 
  
• China
  cash crush margins as of this morning, using our calculation, were 82 cents per bushel (79 previous session) and compares to 97 cents a week ago and 111 cents around this time last year.
  

• Malaysia
  palm oil  

• The
  Platts SA soybean contract started trading yesterday.  Here is the link for the new contract.
  https://www.cmegroup.com/trading/agricultural/south-american-soybeans.html
  

 

Oilseeds
Export Developments

• Under
  the 24-hour announcement system, private exporters reported to the U.S. Department of Agriculture the following activity:
•  
• Today
  the CCC last week seeks 4,000 tons of soybean meal for October 15-30 shipment for Georgia. 
  

 

Wheat

• US
  wheat futures are higher on good global demand.  The increase in Black Sea cash wheat prices, widely ignored in Monday’s trade, is supportive for wheat.  Egypt is in for wheat today and lowest off was $244.00/ton for Russian wheat.  Don’t rule out French origin. 
  

• Paris
  (Matif) December wheat was down 0.75 at 193.75 euros.

• US
  spring wheat harvest progress was reported at 96 complete from 92 percent previous week, 84 year ago and compares to 96 average.  The trade was looking for 97 percent.  
  
• US
  winter wheat progress was reported at 20 complete from 10 percent previous week, 18 year ago and 19 average.  The trade was looking for 22 percent.   3 percent was emerged vs, 2 last year and 2 average. 
  
• USDA
  US all-wheat export inspections as of September 17, 2020 were 469,939 tons, within a range of trade expectations, below 692,422 tons previous week and compares to 488,647 tons year ago. Major countries included Japan for 95,726 tons, Brazil for 63,074 tons,
  and Thailand for 58,413 tons.

 

Export
Developments.

• South
  Korea’s MFG passed on 70,000 tons of feed wheat for late Jan arrival with lowest offer at $255/ton c&f. 
  

• Results
  awaited: Algeria’s OAIC seeks 50,000 tons of animal feed barley, valid until September 23 in two 25,000 ton consignments for shipment between Nov. 1-15 and Nov. 16-30.
• Pakistan
  seeks 300,000 tons of optional origin wheat on September 23 for arrival in Pakistan by Jan. 31, 2021.
• Taiwan
  seeks 91,300 tons of US wheat on Sep 23 for Nov/Dec shipment. 

• Jordan
  seeks 120,000 tons of wheat on September 23 for shipment sometime during Dec or Jan. 
  
• Ethiopia
  seeks about 80,000 tons of milling wheat on Sept. 30.
• Ethiopia
  seeks 400,000 tons of wheat by October 13.
• (new
  9/15) Ethiopia seeks about 200,000 tons of milling wheat on October 15.

 

Rice/Other

·        
Syria is in for 39,400 tons of white rice on September 30.