FI Morning Grain Comments 09/29/20

 

Morning.

 

Markets
are searching for direction today with mostly a softer undertone.  Today is position day for October meal and oil.  Meal registrations stand at 300 and SBO at 1,907.  Look for positioning in other markets ahead of the USDA Grain Stocks report.  US weather
still looks favorable but cold.  There were no major surprises in the US crop progress report.  Soybean conditions were up one and corn unchanged.  Winter wheat plantings are running at 35 percent, slightly above average.  USD was down 22, WTI down $0.24,
gold $1.90 higher and US equities mostly lower.  Offshore values this morning were leading CBOT soybean oil 50 points lower and meal $1.80 higher.  Malaysian palm oil futures were down 45 and cash off $5.50.  China soybean oil and palm were up 0.3% and 0.4%,
respectively.  China warned La Nina may bring colder winter and frost in the corn region.  Thailand is in for 213,000 tons of feed wheat.  Yesterday Jordan bought 120,000 tons of wheat. 

 

 

 

 

 

 

Weather
and Crop Progress

 

MOST
IMPORTANT WEATHER TO WATCH

• AREAS
  OF CONCERN

• U.S.
  hard red winter wheat areas will be dry for the next ten days to two weeks and excessive heat and dryness has already depleted soil moisture
• Montana
  and South Dakota wheat areas need greater moisture too
• Russia’s
  Southern Region remains too dry for winter crop planting, although some brief showers will occur near the Ukrainian border over the coming week
• Kazakhstan
  wheat areas are still critically dry in unirrigated areas and rain is unlikely for the next two weeks
• Northeastern
  China continues to receive rain too frequently and summer crop maturation and harvesting remain slow, despite some weekend drying
• South
  Africa winter crop areas need rain as do future spring planting areas
• Brazil’s
  center west and center south crop areas will be drier than usual into the middle of October further delaying the planting of early soybeans and some corn
• Brazil
  coffee areas will experience little to no rain of significance for the next ten days
  
• Brazil
  temperatures will remain very warm to hot over the next ten days
• Northwestern
  and west-central Argentina will remain too dry over the next ten days
• Flooding
  rain may impact a part of far southern Mexico and Central America in the next ten days to two weeks
• A
  tropical cyclone may form in the Caribbean Sea later this week and could threaten Mexico’s Yucatan Peninsula
• Northeastern
  China’s weather will become wetter biased again Wednesday through the weekend and drier next week

• AREAS
  OF IMPROVEMENT

• Ukraine
  has received some rain and more will fall over the coming week to improve winter crop planting and establishment conditions
• Northeastern
  China has seen some net drying recently and fieldwork may be advancing at a “snail’s pace” with more rain coming
• Net
  drying will occur the remainder of this week in the U.S. Delta and southeastern states benefiting areas that have been too wet in recent weeks

 

UNITED
STATES

• Dryness
  will continue in the U.S. Plains for at least ten days and probably longer
• Rain
  in the Midwest will be most frequent and significant in the Great Lakes region where field working delays will be most frequent
• Improving
  conditions are likely in the U.S. Delta and southeastern states
• Temperatures
  are still expected to be cold in the heart of the Midwest into next week while the western U.S. is quite warm

BRAZIL

• Worry
  over dryness in center west and center south will continue with little to no rain for the next ten days
• Some
  showers may develop thereafter, but with restricted rainfall resulting for some areas into mid-month
• Temperature
  will continue hot in many areas

ARGENTINA

• Rain
  is still not well distributed over the next two weeks, but there will be some precipitation
• Central
  and northern Cordoba, parts of Santa Fe, Santiago del Estero and other northwestern Argentina crop areas are unlikely to see much rain of significance for at least ten days
• Temperatures
  will be seasonable to slightly cooler biased

INDIA

• Rain
  will be greatest in the west-central, south and far eastern parts of the nation
• Net
  drying in the north and central crop areas

 

MAINLAND
SOUTHEAST ASIA

• Nearly
  to above average rainfall is expected with northern Thailand to Myanmar and Bangladesh wetter than usual

CHINA

• Showers
  returned to the northeast Monday where some new disruption to net drying and farming activity resulted
• Rain
  also occurred Monday in the middle Yangtze River Basin
• Northeast
  China will be dry today, but frequent showers Wednesday into next Monday will restrict harvest progress in a part of the region
• Northeast
  China trends drier next week
• Best
  harvesting and planting weather is expected in the Yellow River Basin and North China Plain over next ten days with a mix of rain and sunshine
• Southern
  China will continue wet with frequent rain near and south of the Yangtze River over the next ten days

EUROPE

• Additional
  waves of rain are expected in France and immediate neighboring areas in western Europe over the coming week

• Excessive
  wind and heavy rain will impact France, northwestern Spain and northern Portugal late Thursday and Friday

• Some
  property damage may result

• Additional
  high wind speeds and rain may impact the U.K. and northern France late in the weekend and early next week

• Rain
  will also fall frequently in western Ukraine, southern Poland and northern Romania during the coming week
• A
  favorable mix of showers and sunshine will occur elsewhere over the next two weeks
  
• Temperatures
  will be mild to cool in the west and warm east

WESTERN
CIS

• Temperatures
  will be warmer than usual in the coming week to ten days
• Waves
  of rain will be greatest in central and western Ukraine where some local flooding might eventually develop (mostly in the west)
• Showers
  in far western Russia, the Baltic States and Belarus will be a low impact on farming activity
• Limited
  rainfall is expected in the Middle and lower Volga River Basin, Russia’s Southern Region and Kazakhstan over the next ten days
• Good
  harvest weather In New Lands

AUSTRALIA

• Brief
  periods of rain will impact Victoria, South Australia and New South Wales during the next ten days to two weeks maintaining good field moisture
• Western
  Australia will get some brief showers in southern crop areas Thursday into Friday; more rain would benefit the state’s crops

INDONESIA/MALAYSIA

• Periodic
  rain is expected over the next two weeks maintaining a mostly good environment for most crops

MEXICO/CENTRAL
AMERICA

• Rain
  will continue greatest from far southern Mexico into Central America
• A
  possible tropical cyclone in the northwestern Caribbean may impact the Yucatan Peninsula this weekend

WEST-CENTRAL
AFRICA

• Waves
  of rain will continue through the next ten days favoring coffee, cocoa, sugarcane, rice and other crops

EAST-CENTRAL
AFRICA

• Rain
  will be erratic and light over the next couple of weeks

PHILIPPINES

• Rain
  will impact most of the nation over the next ten days to two weeks maintaining a favorable outlook for crops

CANADA
PRAIRIES

• Showers
  will occur most often in the eastern half of the Prairies and in the Peace River Region leaving most other areas dry during the next week to ten days
• Temperatures
  will be near to above average in the west and near to below average in the east

ONTARIO/QUEBEC

• Rain
  will fall frequently over the next week to ten days while temperatures are mild to cool resulting in delayed summer crop maturation and harvesting

TYPHOON
KUJIRA

• Was
  located over open water well east of Japan and posing no threat to land

TROPICAL
DEPRESSION 18E WEST OF MEXICO

• The
  storm will move away from North America and poses no threat to land

NEW
ZEALAND

• Conditions
  will trend cooler this week while precipitation diminishes and becomes mostly confined to the west coast of South Island

• Southern
  Oscillation Index was +10.10 today and it will stay significantly positive throughout this week

Source:
World Weather Inc. 

 

Bloomberg
Ag Calendar

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

 

 

 

 

USDA
inspections versus Reuters trade range                                                    

Wheat                 
563,427                 versus   400000-650000  range

Corn                     
806,639                 versus   650000-900000  range

Soybeans           
1,211,733             versus   1100000-1400000             range

 

Note
Reuters polled for 2019 corn production.  We think it will be unchanged.  Reuters average was 13.607 billion bu versus 13.617 USDA, so others also not looking for change (range 13.427-13.750 billion for those looking for a change). 

Average
estimates for 2019-20 ending stocks for September 1 don’t deviate much from USDA

USDA
Aug 2019-20 corn carry 2.253 (ave. est. 3 bushels below USDA)

USDA
Aug 2019-20 soy carry 0.575 (ave. est. 1 bushel above USDA)

 

Macros

US
Wholesale Inventories (M/M) Aug P: 0.5% (est -0.1%; prevR -0.1%; prev -0.3%)

US
Advance Goods Trade Balance Aug: -$82.9B (est -$81.8B; prevR -$80.1B)

US
Retail Inventories (M/M) Aug: 0.8% (est 1.1%; prev 1.2%)

Canadian
Industrial Product Price (M/M) Aug: 0.3% (est 0.1%; prev 0.7%)

Canadian
Raw Materials Price Index (M/M) Aug: 3.2% (prev 3.0%)

 

 

Corn.

• Corn
  is lower on positioning ahead of the USDA reports due out Wednesday and US harvesting pressure.  The US weather forecast looks mostly dry through mid-October. 
  
• Look
  for volatility ahead of the September 30 Grains Stocks report as we near an end to the month and end of quarter.   China starts their weeklong holiday on Thursday so we will see if they visit the US market before then. 
  
• A
  South China Morning Post article mentioned through August, China bought less than one-third of the US exports that President Donald Trump pledged it would purchase this year, and that the proposed legislation against Xinjiang cotton puts added pressure on
  trade. 

• China
  warned La Nina may bring colder winter and frost in the corn region. 

• Germany
  ASF:  36 cases since September 10
• US
  corn harvest progress was active over the weekend and may slow this week across the Great Lakes region where rain will occur. USDA reported 15 percent of the corn crop collected, up from 8 percent last week and compares to 10 percent year ago and 16 percent
  average.  Traders were looking for 17 percent.  75 percent of the corn crop is mature, 10 points above year ago. 
  
• South
  Africa’s Crop Estimates Committee (CEC) estimated corn production at 15.422 million tons (6.620 yellow and 8.802 million tons white) in 2019-20, slightly lower than previous month, 37% higher compared with 11.275 million tons 2018-19.  August was pegged at
  15.537 million tons. A Reuters survey was at 15.271 million tons for the Sep estimate. 
  
• US
  corn conditions were reported at 61 percent, unchanged from the previous week.  Traders were looking for unchanged. 
  
• USDA
  US corn export inspections as of September 24, 2020 were 806,639 tons, within a range of trade expectations, above 765,589 tons previous week and compares to 421,735 tons year ago. Major countries included Mexico for 303,192 tons, China Main for 274,205 tons,
  and Japan for 139,767 tons.

 

 

Today
in Energy: U.S. fuel ethanol production capacity increased by 3% in 2019

https://www.eia.gov/todayinenergy/detail.php?id=45316

 

Corn
Export Developments

• Iran
  seeks 200,000 tons of corn feed and 200,000 tons of soybean meal on Sep 30 for OND shipment.  The corn will be out of the Black or EU or South America. 
  

 

 

 

Soybean
complex.  

• Markets
  are searching for direction today with mostly a softer undertone mainly on US harvesting pressure.  Today is position day for October meal and oil.  Meal registrations stand at 300 and SBO at 1,907.  Both spreads have firmed.  We don’t see much in the way
  of deliveries for meal (0-150) but soybean oil could end up between 800-1200 contracts. 
  
• We
  heard at least four to five cargoes of US soybeans were bought by China late Monday out of both Gulf and PNW.
• US
  soybean conditions were up one point in the combined good and excellent categories at 64 percent.  Traders were looking for unchanged. 
  
• 20
  percent of the soybean crop had been harvested as of Sunday, up from 6 percent last week and compares to 6 percent last year and 15 percent average.  Traders were looking for 18 percent.  74 percent of the US soybean crop were dropping leaves, above 69 percent
  average. 
• Offshore
  values this morning were leading CBOT soybean oil 50 points lower and meal
  $1.80
  higher. 
• Rotterdam
  soybean oil values were about down 2 euros, rapeseed oil 5 lower in the benchmark positions, and Rotterdam meal 2-5 lower from this time previous session. 
  
• China
  cash crush margins as of this morning, using our calculation, were 97 cents per bushel (99 previous) and compares to 92 cents a week ago and 117 cents around this time last year.
  

• Malaysia
  palm oil – mixed for various front months

• USDA
  US soybean export inspections as of September 24, 2020 were 1,211,733 tons, within a range of trade expectations, below 1,379,971 tons previous week and compares to 986,305 tons year ago. Major countries included China Main for 893,556 tons, Vietnam for 80,559
  tons, and Mexico for 65,327 tons.

• The
  European Union reported soybean import licenses since July 1 at 3.365 million tons, above 3.321 million tons a year ago. European Union soybean meal import licenses are running at 4.028 million tons so far for 2019-20, below 5.003 million tons a year ago.
  EU palm oil import licenses are running at 1.454 million tons for 2020-21, above 1.435 million tons a year ago, or up 1 percent.

 

Oilseeds
Export Developments

• Iran
  seeks 200,000 tons of corn feed and 200,000 tons of soybean meal on Sep 30 for OND shipment.  Soybean meal will be out of Brazil, Argentina and/or India. 
  
• Under
  the 24-hour reporting system, US exporters reported the following:

• Export
  sales of 100,000 tons of soybeans for delivery to Mexico during the 2020/2021 marketing year

 

Wheat

• Wheat
  is setting back today after rallying Monday on lack of fresh news, but a weaker USD may limit downside risk.   
  

• Thailand
  is in for 213,000 tons of feed wheat.  Yesterday Jordan bought 120,000 tons of wheat. 
  

• 35
  percent of the US winter wheat crop had been planted as of Sunday, up from 20 percent a week earlier and compares to 34 percent year ago and 33 percent average.  Traders were looking for 35 percent complete.  Winter wheat plantings for TX are running 3 percent
  below average, OK 7 percent below average, and NE 9 percent below average.  10 percent of the winter wheat crop was emerged compared to 8 percent for the 5-year average. 
  
• Traders
  remain focused on Black Sea dryness.  Ukraine’s weather will improve this week, but parts of Russia are also in need of rain.  Over in Australia, La Nina conditions could hinder harvest season as wetter than normal conditions could occur. 
  

• Paris
  (Matif) December wheat was up 0.25 at 193.50 euros.
• The
  European Union granted export licenses for 756,000 tons of soft wheat exports, bringing cumulative 2020-21 soft wheat export commitments to 4.366 MMT, well down from 7.110 million tons committed at this time last year, a 39 percent decrease.  Imports are down
  9 percent from year ago at 0.830 million tons.

• USDA
  US all-wheat export inspections as of September 24, 2020 were 563,427 tons, within a range of trade expectations, above 503,034 tons previous week and compares to 502,915 tons year ago. Major countries included
  China Main for 186,783 tons, Chile for 101,308 tons, and Philippines for 85,542 tons.
  

 

Export
Developments.

• Thailand
  seeks 213,000 tons of feed wheat on September 30 for Nov-Jan shipment.  Origins sought are the Black Sea region, European Union, Canada, South America and Australia. 
  
• Yesterday
  Jordan bought 120,000 tons of wheat ay $257.90/ton c&f 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.
• Pakistan
  seeks 300,000 tons of wheat on October 5 for arrival by mid Jan. 
• 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

·        
US COTTON – 13 PCT HARVESTED VS 11 PCT WK AGO (14 PCT 5-YR AVG) -USDA

·        
US COTTON – 43 PCT CONDITION GOOD/EXCELLENT VS 45 PCT WK AGO (40 PCT YR AGO) -USDA

·        
US COTTON – 66 PCT BOLLS OPENING VS 57 PCT WK AGO (66 PCT 5-YR AVG) -USDA

·        
US RICE – 57 PCT HARVESTED VS 47 PCT WK AGO (70 PCT 5-YR AVG) -USDA

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

 

Terry Reilly

Senior Commodity Analyst – Grain and Oilseeds

Futures International │190 S LaSalle St., Suite 410│Chicago, IL  60603

W: 312.604.1366

treilly@futures-int.com

AIM: fi_treilly

ICE IM: 
treilly1

Skype: fi.treilly

 

 

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