FI Morning Grain Comments 09/25/20

PDF attached

 

 

Morning.

 

USD
up 21, WTI down $0.37, gold $11.50 lower and US equities mostly weaker.  Light news day in oilseeds.  Soybeans are mixed with November just below the psychological $10.00 level. The contract is on track to decline around 4 percent this week.  Soybean meal
is lower while soybean oil is finding some strength from a higher trade in Malaysian palm oil.  China soy futures were off 1% and palm down 1.6%.  Malaysian palm oil futures rebounded to end 68MYR higher and cash was up $14.00/ton.  Offshore values this morning
were leading CBOT soybean oil 16 points higher (5 points lower for the week) and meal $4.40 higher ($4.50 lower for the week to date).  Bull spreading in corn reflects technical buying after reaching a one-week low yesterday. French corn conditions declined
one point for the week ending Sep. 21 to 58 percent and compares to 59 percent year earlier.  15 percent of the French corn crop had been harvested compared to 2 percent year ago.  South Korea’s KFA passed on 68,000 tons of South American corn (they were not
in for US) due to high prices.  Lowest offer was $224/ton.  Wheat is lower on lack of fresh news.  

 

 

Weather
and Crop Progress

 

 

MOST
IMPORTANT WEATHER TO WATCH

• Argentina
  received some much needed rain overnight in interior northern parts of Buenos Aires where 0.30 to 1.00 was common and local totals over 2.00 inches
• Lighter
  rain fell in a few neighboring areas
• Improved
  soil moisture for wheat development and future planting of corn and sunseed resulted with more expected
• Southern
  and eastern Argentina will get some additional very important rain today into the weekend improving topsoil moisture in many areas from La Pampa and southern Cordoba to Buenos Aires and in portions of both Santa Fe and Entre Rios
• Follow
  up rainfall is not likely to be very frequent or significant leading to net drying conditions, but it may be a good opportunity for early season fieldwork and wheat development
• Temperatures
  will be mild to warm
• Dryness
  will continue in northern Cordoba, central and northwestern Santa Fe, Santiago de Estero and portions of western Chaco, Argentina during the next ten days to two weeks; some rain in northern cotton areas in the nation will allow some planting to begin
• Central
  and western Ukraine will receive some much needed rain in the coming week to ten days with some of it being heavy 1.00 to 3.00 inches and local totals over 4.00 inches will occur with far western areas and neighboring areas of southeastern Poland, eastern
  Slovakia  and northern Romania also being impacted with some potential for flooding
  
• Eastern
  Ukraine will also get a some needed rain Sunday into Wednesday with rainfall of 0.20 to 0.70 inch and local totals to 1.50 inches
  
• Greater
  rain will be needed in eastern Ukraine while western areas will see improved rapeseed, wheat, barley and rye planting and establishment, although some delay to fieldwork will be possible
• Flooding
  may occur in various locations in eastern Europe over the coming week because of heavy rain as noted above
• High
  pressure ridge aloft over the heart of Brazil will minimize rain potentials in much of center west through center south crop areas for at least the next ten days and perhaps for two weeks
• Northwestern
  Mato Grosso will be the only area that will see some periodic showers
• Planting
  moisture will be scarce outside of northwestern Mato Grosso preventing much early soybean or corn planting and conditions will be very poor for germination and emergence
• Southern
  Brazil wheat, corn and rice areas will receive periodic rainfall maintaining good conditions for planting, emergence and establishment of spring crops and supporting a very good wheat yield outlook
• Beneficial
  rainfall is coming to France, the United Kingdom, Germany and many other areas in central and western Europe over the coming week easing long term dryness in northwest
• Spain
  and Portugal will be left mostly dry
• Some
  rain already began in France and the U.K. overnight
• Eastern
  Bulgaria, Greece and southeastern Romania may not get much rain for a while
• Northeastern
  China continues to fight moisture surpluses that are keeping summer crop maturation and harvest progress very slow
• The
  situation will improve “very slowly” during the next two weeks and absolute dryness is needed
• The
  wet bias has been present in the region since mid-August
• Some
  fields in Jilin, eastern Liaoning and Heilongjiang may still have standing water from three tropical cyclones that impacted the region in recent weeks
• Showers
  are still expected periodically during the next ten days and that combined with mild temperatures will keep drying rates low and fieldwork progressing poorly
• China’s
  Yellow River Basin and North China Plain are experiencing nearly ideal conditions for wheat planting and summer crop maturation and early harvesting
• Alternating
  periods of rain and sunshine are expected to support wheat planting, emergence and establishment while supporting summer crop maturation and harvesting
• Western
  Australia drying remains a concern with northern crops reproducing in a declining soil moisture environment
• Southern
  crop areas in the state still have favorable soil moisture, but the region is drying and will need rain in October to support reproduction of wheat, barley and canola
• Some
  rain is expected in October to help ease the drying bias
• Southeastern
  Australia wheat, barley and canola prospects are looking extremely good with soil moisture in abundance and expected to prevail in New South Wales, Victoria and South Australia
• Periodic
  rainfall is expected to continue in these areas over the next two weeks
• Queensland,
  Australia has a large need for rain to support cotton and sorghum planting that will soon be starting; dryland areas need the moisture most significantly
  
• La
  Nina should provide the necessary moisture boost later this spring
• India’s
  monsoon is withdrawing from central parts of the nation and will continue doing so over the next few days with a drying bias expected
• The
  nation’s rainy season has been very successful with the nation having 109% of the normal rainfall for the June 1-September 25 period
• Drying
  is needed in central areas to protect summer crop conditions and to promote crop maturation
• South
  Africa still needs significant rain to support winter crops especially in the east
• Rain
  is also needed to improve topsoil moisture for early corn planting that begins in early October and for all other summer crops that are planted from late October into December

 

• U.S.
  hard red winter wheat areas are drying down rapidly and significant rain is needed soon to bolster soil moisture for improved wheat planting, emergence and establishment
• The
  outlook is for poor rainfall and warmer than usual conditions during the next ten days and perhaps longer
• Net
  drying may eventually delay unirrigated wheat germination, emergence and establishment
• U.S.
  Midwest crop maturation and harvest conditions will be good through the weekend, but rain and cooling next week in the Great Lakes region southward into Ohio and parts of Indiana may slow that process
• Rain
  will first impact most of the lower and eastern Midwest early next week as the initial cool air arrives
• Showers
  during the middle to latter part of next week will occur with cool temperatures and will maintain a slow advancement in crop maturation and harvest progress especially in the Great Lakes region and lower eastern Midwest
• Another
  frontal system in the second weekend of the two week outlook may induce some additional showers in the Great Lakes region and lower eastern Midwest
• Net
  Drying will occur in the eastern Midwest after Oct. 4
• Western
  Corn Belt will experience good harvest weather through much of the next ten days, although there will be a few brief periods of showers in a part of the region
• Frost
  and freezes may occur to help defoliate some soybeans in a part of the Midwest late next week and into the following weekend
• Winter
  wheat planting will advance favorably along with some summer crop harvesting
• Some
  wheat areas need rain
• The
  bottom line to the Midwest weather will be slow field work and crop maturation rates next week in the Great Lakes region and lower eastern Midwest where there will be a rising need for dry and warm conditions. The western Corn Belt will experience the best
  harvest weather.
• U.S.
  Delta will experience some needed drying over the next ten days except Monday when rain is expected once again
• Dry
  weather will occur Friday through Sunday
• Rain
  Monday will be followed by mostly dry conditions the remainder of next week and into the following weekend
• Improved
  summer crop maturation and harvest conditions are likely during the middle and latter part of next week and into the following weekend
• U.S.
  southeastern states will experience some periodic showers and thunderstorms today and again Sunday through Tuesday keeping crop maturation and harvest progress slow
• Better
  drying conditions will evolve next week and last through the first week of October with only a few showers expected
• West
  Texas cotton, corn, sorghum and peanut conditions are mostly good for crop maturation and early season harvesting and this will last for at least the next ten days
• U.S.
  northwestern Plains need a boost in precipitation to induce better winter crop establishment and planting conditions
• U.S.
  far western states still need a generalized rain to ease long term dryness, but none is expected for a while
• Canada’s
  Prairies will experience a favorable weather pattern for fieldwork, despite some showers periodically
• Weekend
  rainfall will be greatest and cause the most disruption to fieldwork
• Temperatures
  will be near to above average
• Ontario
  and Quebec, Canada may get rain a little more frequently than desired beginning next week and lasting at least a week and possibly for ten days resulting in some crop maturation and harvest delays
• Xinjiang,
  China weather will continue favorable for cotton and other crop maturation and early harvest progress except in the northeast where showers and cold conditions are expected this weekend into next week
• The
  precipitation in northeastern Xinjiang will not be heavy, but enough to slow fieldwork for brief periods of time
• Minor
  changes in cotton fiber quality are expected
• Cooling
  during the weekend and next week will bring an increasing risk of frost and freezes to at least northern portions of the region, but cloud cover may keep the temperature up for a while
• Freezes
  would be not harm crops at this point in their development
• Key
  cotton areas in the west and south will not be as cold and should stay dry
• West-Central
  Africa will continue to experience periodic showers and thunderstorms over the next couple of weeks
• Cotton
  areas will need to dry out soon to protect fiber quality and promote maturation
• Most
  coffee, cocoa, rice and sugarcane crops receiving rain will likely benefit from the moisture
  
• East
  central Africa rainfall has been and will continue to be erratic and mostly beneficial over the next ten days
• Mainland
  areas of Southeast Asia will experience periodic showers and thunderstorms over the next couple of weeks
  
• Late
  season moisture boosting is extremely important since water supply has not been fully restored from last year’s low levels
• Philippines
  rainfall will continue periodically benefiting most crops.
• Improving
  rainfall in Indonesia and Malaysia is expected over the next two weeks with some locally heavy rain possible in random locations especially in the first week of October
• New
  Zealand rainfall will be above average during the next week to ten days and temperatures a little cooler than usual
• Mexico
  precipitation is expected to be confined to the far south over the next week while all other areas experience net drying
• Frequent
  rain will continue in Central America maintaining good crop conditions
• Southern
  Oscillation Index was +10.34 today and it will stay significantly positive into next week

Source:
World Weather Inc. 

 

Bloomberg
Ag Calendar

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

MONDAY,
Sept. 28:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  crop conditions, harvesting progress for soybeans, corn, cotton, 4pm
• FT
  Commodities Global Summit (Sept. 28-30)
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• EARNINGS:
  Louis Dreyfus

TUESDAY,
Sept. 29:

• Nothing
  major scheduled

WEDNESDAY,
Sept. 30:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• USDA
  quarterly corn, soybean, wheat, sorghum, barley and oat stocks
• U.S.
  wheat production for Sept.
• Roundtable
  on Sustainable Palm Oil virtual discussion on seasonal haze
• Malaysia
  Sept. 1-30 palm oil export data
• U.S
  agricultural prices paid, received for Aug., 3pm
• Poland
  to release grains output data
• HOLIDAY:
  Korea

THURSDAY,
Oct. 1:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports
• USDA
  soybean crush, DDGS output, corn for ethanol, 3pm
• Australia
  commodity index for Sept.
• Webinar
  on the effects of climate change on coffee production in Southeast Asia
• Honduras,
  Costa Rica coffee exports monthly stats
• International
  Cotton Advisory Committee releases monthly world outlook
• HOLIDAY:
  China, Hong Kong, Korea

FRIDAY,
Oct. 2:

• 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
• FranceAgriMer
  weekly update on crop conditions
• HOLIDAY:
  China, Hong Kong, India, Korea

Source:
Bloomberg and FI

 

 

 

 

 

Macros

US
Durable Goods Orders Aug P: 0.4% (est 1.4%; prevR 11.7%; prev 11.4%)

US
Durable Goods Ex Transportation Aug P: 0.4% (est 1.0%; prevR 3.2%; prev 2.6%)

 

Corn.

• Higher
  trade this morning with bull spreading reflecting technical buying after December reached a one-week low yesterday.  South Korea’s KFA passed on 68,000 tons of South American corn.  
  

• French
  corn conditions declined one point for the week ending Sep. 21 to 58 percent and compares to 59 percent year earlier.  15 percent of the French corn crop had been harvested compared to 2 percent year ago. 
  
• Yesterday
  funds sold an estimated net 18,000 corn contracts. 

• China
  planned to auction off 20,000 tons of pork from reserves today, taking the amount to 590,000 if all of it sold. 
  
• China’s
  eastern city of Qingdao found coronavirus contamination on some packages stored by a seafood importer.

 

Corn
Export Developments

• South
  Korea’s KFA passed on 68,000 tons of South American corn (they were not in for US) due to high prices.  Lowest offer was $224/ton.  They were in for February 5 arrival. 
  

 

 

 

Soybean
complex.  

• CBOT
  soybean
  complex is mixed with a reversal in product spreads (meal lower/SBO higher from a rebound in palm).  Soybeans are trading near the $10.00 level.  Note USDA reported 100,000 tons of soybean meal sold to unknown this morning. 
  
• The
  soybean price direction sentiment turned bearish this week, kicked off by overbought conditions followed by large SA production prospects.  We may see soybeans trend lower over the next week or two is global weather improves.  China will be on holiday October
  1-7.  During this period, traders are looking for a slowdown in sales announcements, US harvest pressure, and increase in SA planting progress. 
  
• Yesterday
  funds sold an estimated net 14,000 soybean contracts, sold 8,000 soybean meal and sold 3,000 soybean oil. 
  

• Central
  and Northern Argentina into southern Brazil will see scattered moderate showers Friday-Saturday and isolated showers Sunday.
  
• We
  did not hear China buying soybeans on Thursday into Friday. 
• During
  August, out of the total 9.6MMT China took in, China imported 8.15 million tons of soybeans from Brazil, up from 6.68 million tons year earlier. 
  

• Offshore
  values this morning were leading CBOT soybean oil 16 points higher (5 lower for the week) and meal
  $4.40
  higher ($4.50 lower for the week to date). 
• Rotterdam
  soybean oil values were about up 3-4 euros, rapeseed oil 3 lower in the benchmark positions, and Rotterdam meal 2-7 euros lower from this time previous session. 
  
• China
  cash crush margins as of this morning, using our calculation, were 92 cents per bushel (95 previous session) and compares to 97 cents a week ago and 111 cents around this time last year.
  

• Malaysian
  Sep 1-25 palm oil exports:
• ITS
  1,304,331 tons, up 6.9% from same period month ago
• SGS
  1,320,949 tons, up 14.1 percent
• AmSpec
  1,319,405 tons, up 8.1 percent
• Malaysia
  palm oil – higher for the first time in five days

 

 

Oilseeds
Export Developments

• Under
  the 24-hour announcement system, USDA reported private exporters reported to the U.S. Department of Agriculture export sales of 100,000 tons of soybean meal for delivery to unknown destinations during the 2020-21 marketing year. 
  

 

Wheat

• Wheat
  is lower on lack of fresh news and improving global weather.  Ukraine may see some rain this weekend that is much needed.  Argentina will see rain which will improve the wheat crop. 
  

• Paris
  (Matif) December wheat was up 0.50 at 192.75 euros.

 

Export
Developments.

• Postponed
  until Sep 28 – Jordan seeks 120,000 tons of wheat for shipment sometime during Dec or Jan. 
  
• Japan
  seeks 80,000 tons of feed wheat and 100,000 tons of barley for arrival by Feb on Sep 30. 
  
• 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

·        
Brazil granted tariff free imports of 188,000 tons of rice, including 100,000 tons from the US, 70,000 from India and 18,000 from Guyana. 

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