FI Morning Grain Comments 10/09/20

PDF attached

 

Morning.

 

USDA
report due out later.  USD was 25 lower and WTI crude 31 lower. US agriculture futures are higher this morning on strength in China markets after a week long holiday and talk of Chinese demand for corn, corn byproducts and soybeans.  Offshore values are suggesting
a higher trade for CBOT soybean meal and soybean oil.  Malaysian palm futures were up nearly 8 percent this week.  Overnight tenders include Pakistan in for 300,000 tons of wheat on October 14 for arrival by end of January.  China in their monthly S&D update
raised their corn import forecast by 2.0 million tons for 2020-21 to 7.0 million.  We think that will be higher. 

 

 

 

Weather
and Crop Progress

 

 

 

MORNING
WEATHER MODEL COMMENTS

NORTH
AMERICA

• No
  significant changes were noted to the outlook overnight
• Hurricane
  Delta will come ashore into Louisiana as expected with the remnants of the system moving through the heart of the lower Mississippi River Valley and then from Tennessee to the middle Atlantic Coast states over the weekend and into Monday
• A
  mid-latitude frontal system will move across the central and eastern states Sunday into Tuesday generating a little rain in the northern Midwest
• Cooling
  will follow the early week frontal system with a couple of reinforcing shots of cool air expected in the following week bringing a few sporadic showers with each occurrence
• Most
  of hard red winter wheat country will remain dry or nearly dry
• Northwestern
  U.S. Plains are not likely to see much moisture
• Some
  rain will fall in the Pacific Northwest, but will favor the mountains and not the valleys

The
00z GFS model run was too wet in the central and southern Plains. The drier 06z and especially the European model runs are preferred.

 

SOUTH
AMERICA

• No
  theme changes were noted overnight
• GFS
  model outlook has not changed greatly for center west into center south Brazil for next week and the following weekend with rain expected in many areas
• Restricted
  rainfall occurs in Mato Grosso do Sul, western Parana and western Sao Paulo through October 19
• Rain
  this weekend will occur mostly from eastern Santa Catarina to Rio de Janeiro and southeastern Minas Gerais
• Far
  southern Brazil is still advertised to see a good mix of rain and sunshine during the next ten days to two weeks favoring crops and fieldwork
• No
  changes were noted in Argentina for the first 8-9 days of the outlook with southern Buenos Aires most of the nation’s significant rain – most of which occurs Saturday into Sunday of this week
• Argentina
  rainfall was still advertised to increase Oct. 18-21, but the 06z GFS was much too wet suggesting a widespread general soaking of rain
• However,
  some increase in rainfall is expected during this period of time, but it is too far out in time to get specific and have high confidence

The
generalities of the South America outlook have not changed much today relative to the previous model run or the overall outlook suggested Tuesday. Argentina is not likely to see much rain until October 18 except in Buenos Aires where some rain will fall this
weekend. The potential for at least some dryness relief is improving for the Oct. 18-21 period, but confidence in its significance is still low. In Brazil, a period of beneficial moisture will impact center west and center south crop areas next week and the
following weekend; although portions of Mato Grosso do Sul and western and northern Parana as well as western Sao Paulo may not get much rain and will need more soon.

 

EUROPE/BLACK
SEA REGION

• Some
  additional rain fell in western Ukraine overnight with amounts to 1.14 inches, but this moisture did not reach into eastern areas
• No
  significant theme changes occurred overnight, although World Weather, Inc. still believes there is some “potential” for one of the many weather disturbances in Europe to spin out into some of the drier areas of eastern Ukraine, Russia’s Southern Region and
  neighboring areas during the coming week to ten days
• If
  this occurs it would not be a general soaking and certainly would not be signaling the start of a rainier weather pattern
• A
  trough of low pressure in Europe that has been drifting east recently will eventually retrograde back to the west ending this “potential” for rainfall in the drier areas of the western CIS and once the retrograding is complete Russia’s Southern Region, eastern
  Ukraine and Kazakhstan crop areas will be right back into the dry and warm bias for a while longer

CHINA

• No
  general theme changes noted overnight
• Northeastern
  China will not be completely dry, but less frequent and less significant rain is expected and that will translate into much better grain and oilseed maturation and harvest progress over the next two weeks
• A
  good mix of weather is also expected in the Yellow River Basin and North China Plain where wheat planting, germination and emergence will occur while summer crops continue to mature and be harvested with little weather disruption.
  
• Periodic
  rain near and south of the Yangtze River will slow farming activity occasionally and maintain some concern over crop conditions, but the environment in general is expected to improve slowly

PLEASE
NOTE THAT CHINA WEATHER OBSERVATIONS HAVE NOT BEEN AVAILABLE FOR THE PAST TWO DAYS

 

INDIA

• No
  general theme changes were noted overnight
• Concern
  will be rising over frequent rainfall in central India during the week next week and into the following weekend
• Delays
  in harvest progress and concern over some crop quality will likely increase
• Weather
  this weekend is expected to remain mostly good as it has been in the past week

AUSTRALIA

• No
  big changes were noted overnight in the coming ten days to two weeks
• Western
  Australia is still not advertised to receive much significant rain
• Only
  a few showers near the southern and lower western coasts are expected
• There
  is some “potential” for short term bout of rain in the southwest of the state October 20-22, but confidence is low today
• Rain
  will fall often enough in Victoria, South Australia and southern New South Wales to maintain a very good crop outlook
• Rain
  was increased in southeastern Queensland and northeastern New South Wales after October 18 to Oct. 21 on the 06z GFS model run
• Some
  of this increase would be welcome, but it might also be a little overdone
• Some
  increase in rainfall is possible during this period of time, but further adjustments in the outlook are expected during the weekend.

The
advertised potential rain events in southwestern Australia and Queensland during the second week of the forecast today has been showing up in the model data a little more routinely recently, but the systems advertised are not quite right and additional adjustments
will occur during the weekend and we will be watching these areas closely for Sunday’s weather update.

Source: 
World Weather Inc. 

 

Bloomberg
Ag Calendar

FRIDAY,
Oct. 9:

• USDA’s
  WASDE report with world supply/demand crops update, stockpiles noon
• 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’s
  CNGOIC to publish monthly soy and corn reports
• China
  agriculture ministry (CASDE) to release its monthly data on supply and demand
• FranceAgriMer
  weekly update on crop conditions
• Brazil
  Unica cane crush, sugar production (tentative)
• HOLIDAY:
  Korea

Monday,
Oct. 12:

• U.S.
  crop conditions, harvesting progress for soybeans, corn, cotton, 4pm
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals
• Malaysian
  Palm Oil Board releases Sept. end- stocks, output, exports
• SGS
  releases Malaysia Oct. 1-10 palm oil export data
• Cherkizovo
  trading update
• Vietnam
  Customs data on coffee, rice and rubber exports in September
• HOLIDAY:
  Argentina, Brazil, Canada, Chile

Tuesday,
Oct. 13:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• China
  trade data on soybeans and meat imports
• New
  Zealand Food Prices
• France’s
  agriculture ministry crop estimates
• U.K.’s
  AHDB Grain Market Outlook Conference
• U.S.
  winter wheat planted, 4pm
• HOLIDAY:
  Thailand

Wednesday,
Oct. 14:

• Leman
  China Swine Conference, Chongqing, day 1
• FranceAgriMer
  monthly crops report
• Global
  Food Forum, Australia, day 1
• Malaysia
  3Q cocoa grinding figures

Thursday,
Oct. 15:

• Malaysia
  Oct. 1-15 palm oil export data
• Port
  of Rouen data on French grain exports
• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• Global
  Food Forum, Australia, day 2
• Leman
  China Swine Conference, Chongqing, day 2
• European
  Cocoa Association grindings

Friday,
Oct. 16:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• 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
• Asia
  3Q cocoa grinds
• Cocoa
  Association of Asia’s webinar on Asian cocoa demand
• Leman
  China Swine Conference, Chongqing, day 3

Source:
Bloomberg and FI

 

 

 

 

 

 

 

 

 

Macros

Canadian
Net Change In Employment Sep: 378.2K (exp 150.0K; prev 245.8K)

–        
Unemployment Rate Sep: 9.0% (exp 9.8%; prev 10.2%)

–        
Participation Rate Sep: 65.0% (exp 64.7%; prev 64.6%)

–        
Full Time Employment Change Sep: 324.0 (prev 205.8)

–        
Part Time Employment Change Sep: 44.2 (prev 40.0) 

 

 

Corn.

• Corn
  is higher on strength in China futures and positioning ahead of the USDA report. 
  
• China
  raised their 2020-21 corn import projection by 2 million tons to 7 million.  We think it could end up to more than 9 million tons.  CNGOIC sees a 25 million ton shortage in China’s corn supply.
  
• Traders
  are looking for a slight downward revision to the US corn and soybean yields. 
  

• Ukraine
  EconMin sees grain exports so far this season down 11.8 percent to 13.02 MMT, including 774,000 tons of corn (2.33 MMT same period year ago). 
  

• China
  discovered ASF in piglets in Chongqing, first outbreak since July 25. 
• Germany
  ASF: 53 cases since September 10 

 

Corn
Export Developments

• None
  reported

 

Soybean
complex.  

• CBOT
  soybeans are higher after China came back from holiday and longs plowed into China soybean meal and soybean oil futures.  There was talk China was looking for corn, DDGS, and soybeans.
  
• USDA
  Attaché: Argentina soybean crop was estimated at 51 million tons. USDA official is at 53.5 million for September. 
  

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Oilseeds%20and%20Products%20Update_Buenos%20Aires_Argentina_10-01-2020

• Offshore
  values this morning were leading CBOT soybean oil 74 higher (124 for the week to date) and meal
  $1.90
  higher ($6.00 for the week to date). 
• Rotterdam
  soybean oil values were around 5-6 euros higher, rapeseed oil near unchanged in the benchmark positions, and Rotterdam meal mostly unchanged to 3 euros higher from this time previous session. 
  
• China
  cash crush margins were 88 cents on out our calculation compared to 90 last week and 130 year ago. 
  

• Malaysian
  palm oil was up nearly 8 percent this week. 

• MPOB
  report will be out October 12.  Traders are looking for Sep MPOB palm production to increase 3.1% from Aug.
  

 

Oilseeds
Export Developments

• Syria
  seeks 50,000 tons of soybean meal and 50,000 tons of corn on October 26 for delivery within four months of contract. 
  

 

 

 

Wheat

• US
  wheat futures are mostly higher on technical buying and a lower USD after prices plunged on Thursday from overbought conditions. 
  
• Argentina
  granted a drought resistant type of GMO wheat for commercial use but Brazil will need to ok the approval before seeds are sold to producers as Brazil imports wheat from Argentina.   
  
• SovEcon:
  Russia’s winter wheat sowing area may decrease by 10-15% of already planted winter grains if rain does not occur.   
  
• French
  wheat plantings were 6 percent complete as of October 5, and compares to 3 percent last year.
  
• Paris
  (Matif) December wheat was 0.50 higher at 199.50 euros.

 

Export
Developments.

• Pakistan
  seeks 300,000 tons of wheat on October 14 for arrival by end of January. 
• Jordan
  seeks 120,000 tons of wheat on October 14, optional origin, for Jan -late Feb shipment.
• 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

·        
Mauritius seeks 5,500 tons of white rice on October 20 for Dec 15-Mar 15 2021 delivery.

·        
(Bloomberg) — U.S. 2020-21 cotton ending stocks seen at 6.79m bales, 411,000 less than USDA’s previous est., according to the avg in a Bloomberg survey of nine analysts.

o  
U.S. production seen at 16.74m bales vs 17.06m in September

o  
Global ending stocks seen 103,000 bales lower at 103.74m