FI Morning Grain Comments 10/12/20

PDF attached

 

Morning.

 

Markets
traded in a wide two-sided range overnight.  Traders continue to soak in the bullish USDA report.  We raised out crop year average trading averages for all major agriculture commodities. Look for the trade to shift focus on South American weather and China
imports of soybeans and corn.  Argentina is on holiday.  Offshore values this morning were leading CBOT soybean oil 53 lower and meal $4.20 lower.  Algeria is in for milling wheat.  Taiwan’s MFIG seeks 65,000 tons of corn on October 14 for Dec/Jan shipment. 
Ukraine’s UGA lowered crop estimates for corn and wheat production to 32.5 million tons from 35.3 MMT previously and 25.3 million tons from 26.6 previous, respectively.  Iran’s SLAL seeks 200,000 tons of soybean meal and 200,000 tons of barley on October 14
for OND shipment. 

 

 

 

Weather
and Crop Progress

 

 

 

 

 

GREATEST
WEATHER ISSUES OF THE DAY

• Hurricane
  Delta moved into Louisiana Friday evening and moved as expected through the lower Mississippi River Basin to the Tennessee River Basin where it dissipated
• Rainfall
  of ranged from 8.00 to more than 20.00 inches in the interior southwestern part of Louisiana
  
• Rainfall
  ranged from 4.00 to more than 8.00 inches in the remaining middle two thirds of Louisiana and ranged from 2.00 to 5.00 inches in southeastern Arkansas and west-central Mississippi while 1.50 to 3.00 inches occurred in many other areas in northeastern Arkansas,
  southwestern Tennessee and northern Mississippi.
• Rainfall
  also ranged from 1.50 to more than 4.00 inches in central, east-central and northeastern Alabama  and western and central North Carolina as well as northern South Carolina
• Rainfall
  of 3.00 to nearly 8.00 inches from north-central through northeastern Alabama
  

 

• Lighter
  rain occurred in other southeastern U.S. crop areas while dry weather occurred in many other crops areas in the United States

 

• Weekend
  temperatures in the United States were unusually warm in the central states and seasonably warm elsewhere
• Many
  highs were in the 80s and lower 90s

 

• Typhoon
  Chan-Hom stayed south of Japan’s main islands during the weekend, but heavy rainfall occurred in southern Honshu with amounts of 1.34 to 3.50 inches with local totals of up to 7.00 inches
  
• Some
  local flooding resulted
• Crop
  damage away from the coasts was minimal
• The
  typhoon was far south of the islands today and was expected to move southeasterly at while dissipating over the next couple of days

 

• Tropical
  Storm Linfa formed east of Vietnam during the weekend was moving inland today
  
• The
  storm produced exceptionally great rainfall along the coast with amounts to 18.26 inches resulted at Da Nang and 8.58 inches at Hue

 

• A
  previous tropical disturbance that was along the southern Vietnam coast Friday moved west northwesterly into the Andaman Sea produced local rain totals over 4.00 inches in a part of southwestern Thailand early in the weekend
• Extreme
  amounts reached 11.46 inches

 

• Tropical
  disturbance 246 miles southeast of Visakhapatnam in northeastern Andhra Pradesh at 1800 GMT today was moving westerly while producing wind speeds of up to 25 mph
• The
  system will continue to organize and intensify before moving inland through northeastern Andhra Pradesh late Monday and early today
• The
  storm will then move to Maharashtra after passing through Telangana during mid-week, but may linger along the west-central India coast during the balance of this week and into the weekend producing waves of rain
• Rainfall
  will be heavy this week varying from 2.00 to more than 6.00 inches with local totals approaching 10.00 inches in several locations resulting in some flooding

 

• Lighter
  rain will reach northward through most of Madhya Pradesh, India this coming weekend and the precipitation will fester into early next week while having a minor influence on Gujarat and Rajasthan causing some disruption to farming activity
• Cotton
  fiber quality concerns are expected as well
• Some
  concern over soybean and rice quality is possible as well
• Summer
  crop maturation and harvest progress will be very slow
• The
  moisture will be good for future winter crop planting

 

• Tropical
  cyclone development is expected west of the Philippines Monday
• The
  disturbance was located near 17.0 north, 118.9 east or 183 miles northwest of Manila moving west northwesterly
• This
  system will likely become a tropical cyclone in the next day or two and will move toward Hainan, China with landfall possible Tuesday and then on to northern Vietnam Wednesday
• Heavy
  rainfall is expected in both Hainan and northern Vietnam as the storm moves across those areas respectively
  

 

• One
  more tropical cyclone may evolve west of the Philippines late this week before moving across the South China Sea and reaching central Vietnam at the end of this week and during the weekend
• Some
  heavy rain and flooding is expected

 

• Watch
  Western Australia and southeastern Queensland for possible needed rain in the second week outlook
• Both
  regions remain quite dry and are not likely to see much moisture over the next seven days
• Conditions
  are improving for a brief shot of rain in Western Australia October 20-22 with one more disturbance possible Oct. 24-26, although it has not yet evolved in the forecast models
• Queensland
  rainfall is possible October 18-22

 

• Southern
  Oscillation Index rises to highest level of the La Nina event at +12.18 and the index is expected to level off for a while this week
• The
  strongly positive index can be an early indicator of increasing rainfall for Southeast Asia, India and eastern Australia
• Improved
  South Africa rainfall is also a possibility as the SOI strengthens and then prevails, but today’s outlook is not offering much more than sporadic showers and thunderstorms
  

 

• Watch
  Argentina’s second week forecast for greater rainfall amounts and coverage in the second week (October 18-22)
  
• Model
  forecasts have been quite varied recently with some models advertising more rain than others, but confidence is rising for at least some better distributed rain for a brief period of time
• Rain
  is expected in northern Argentina briefly early this week, but resulting amounts will be light
• European
  model run does not agree with the GFS or Canadian models that rain will evolve next week
• World
  Weather, Inc. anticipates at least some increase in rainfall

 

• There
  is some potential for increased shower activity in eastern Ukraine and a part of Russia’s Southern Region during the October 18-25 period, although the models are not in complete agreement  over this potential, but World Weather, Inc. believes “some” showers
  will evolve for a brief period of time.

 

• Central
  and eastern Europe rainfall will be abundant to excessive this week
• Rain
  totals of 2.00 to more than 6.00 inches will occur from the Adriatic Sea region to eastern Germany and Poland overt the coming week to ten days
• The
  moisture will delay fieldwork and result in some flooding
• Unharvested
  summer crop quality may decrease

 

• Center
  west and center south Brazil will experience some periodic showers and thunderstorms during the next couple of weeks with the precipitation being a little sporadic and light through this first week of the outlook, but most areas will eventually get rain
• Resulting
  rainfall will vary greatly from one location to another and from one day to the next with mid-week next week wettest
• Minas
  Gerais will be wettest along with neighboring areas of Espirito Santo and Rio de Janeiro
• Portions
  of Mato Grosso do Sul, western Sao Paulo and northwestern Parana “may” see some of the lightest rainfall in this coming week
• Moisture
  totals may not be enough to counter evaporation raising some concern for crops in that area
• European
  and Canadian models are far more supportive of sufficient rain in these areas while than the GFS
  
• Some
  soybean planting is expected to occur
• Coffee
  in Minas Gerais, Espirito Santo and Rio de Janeiro will benefit greatly from the next two week of rain
• Excessive
  heat in center west, and center south Brazil will be eased as rainfall increases

 

• Kazakhstan
  remains too dry and no relief is expected for two weeks

 

• U.S.
  west-central and southwestern hard red winter wheat areas in the Plains will be warm and dry early this week and may cool down briefly late this week only to heat back up again next week
• Rainfall
  continues minimal for the region through at least October 26

 

• Northern
  U.S. Plains will begin to receive some periodic rain over the coming week to ten days
• The
  region is quite dry and winter crops need moisture for improved establishment
• The
  precipitation advertised may be a little erratic and light

 

• South
  Africa weather is slowly improving with recent rain in the south and east, but more rain is still needed to support spring planting and to ensure the best finish for winter crops
• An
  erratic precipitation pattern is expected over the next ten days resulting in some additional pockets of improvement, but more generalized rain will be needed

 

• Southeastern
  Canada and the U.S. Great Lakes region will continue to experience periodic rainfall during the coming week to ten days which may lead to some delay in farming activity
• Drier
  biased weather is needed to expedite fieldwork

 

• U.S.
  harvest weather in the lower Midwest and Great Plains will be mostly good through the next ten days , despite a couple of cool fronts and brief bouts of rain
• Rain
  is expected in the northern Plains and upper Midwest most often causing some disruption to fieldwork, but progress will advance between events
• Temperatures
  will be warm early this week and then colder for the balance of this week and into the weekend
• The
  cool bias will slow evaporation rates which may delay drying rates for those areas that get periodic rain
• Harvesting
  in the drier areas will advance well, despite cooling

 

• U.S
  Delta and southeastern states will experience net drying conditions for at least ten days (after rain ends in the southeastern states Monday)
• The
  drying is needed to promote crop maturation and harvest progress
• Several
  days of drying will be needed before fieldwork can begin in those areas impacted by excessive rain from Hurricane Delta or other recent rain

 

• Central
  and western Ukraine and portions of southeastern Europe will receive waves of rain through most of next week
• Sufficient
  rain will fall to relieve some of the driest areas from dryness
• Rainfall
  of 0.50 to 2.50 inches and locally more by the end of next week
• Temperatures
  will be warmer than usual in much of the forecast period

 

• Western
  Europe will continue to experience waves of rain over the next two weeks, but the intensity will vary widely from one day to another and one region to another
• Spain
  and Portugal will be driest and a boost in precipitation will soon be needed
• Temperatures
  in western Europe will be cooler than usual this year and warmer biased in the west

 

• Southeast
  Asia rainfall over the next ten days will be erratic, but most areas will be impacted multiple times in the next two weeks supporting most crop needs

 

• Mexico
  precipitation will be most significant in the south of the nation over the coming week to ten days

 

• Central
  America will be sufficient wet over the next ten days to two weeks delaying early season crop maturation, but favoring long term water supply.
  

 

·        
West-central Africa will experience waves of rain through the next ten days favoring coffee, cocoa, sugarcane, rice and other crops

• Cotton
  areas need some drier weather
• Rainfall
  will be well above average in areas from Ghana to Guinea, Sierra Leone and Liberia
  

 

·        
East-central Africa rain will be erratic and light over the next couple of weeks, but most of Uganda, southwestern Kenya and portions of Ethiopia will be impacted while Tanzania
receives restricted amounts of rain

 

·        
Philippines rain will be widespread over the next ten days to two weeks maintaining a favorable outlook for crops

 

·        
New Zealand weather will be wetter than usual in North Island and western parts of South Island while below average in eastern parts of South Island

• Temperatures
  will be below average

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:  Harvest weather in the United States is expected to be good, but that in India will deteriorate for a while in the coming ten days because of rain. Central and eastern Europe will be wet for a while delaying farming
activity and harvest progress in the western CIS is expected to advance around a few showers.

           
Australia may get some rain in the southwest next week easing long term dryness.

           
Brazil rainfall over the next two weeks will improve early season corn and soybean planting conditions. Rain in northern Argentina this week will also improve planting and emergence conditions for early season corn and sunseed. Rain is possible in other areas
of Argentina next week.

           
Overall, today’s weather will support bearish bias to market weather mentality.

 

MARKET
WEATHER MENTALITY FOR WHEAT AND OTHER SMALL GRAINS:  There is “some” potential for rain in Western Australia, Russia’s Southern Region and Eastern Ukraine next week which may lead to some bearish biases to market mentality. However, the U.S. hard red winter
wheat region will continue dry biased and no change is expected in Argentina, despite a few showers this week. Europe may be a little too wet for some crop areas. Wheat in Brazil, South Africa and the remainder of Australia is not likely to experience much
change.

           
India and China wheat planting should advance favorably.

           
Overall, weather today may provide a mixed influence on market mentality, but with rain in the CIS and Australia still a week away confidence in the relief may still be low in the market place.

 

MARKET
WEATHER MENTALITY FOR COTTON: Concern about rainy weather in Africa and recent rain and wind in a part of the U.S. Delta from the recent hurricane and will remain today. However, weather in the U.S. is expected to improve over the next week to ten days.

           
Australia may get some rain next week to benefit cotton planting, but confidence is still a little low. Argentina will get some rain for planting this week, although it will be light and sporadic. Brazil’s center south cotton will benefit from showers this
week, although the precipitation will be erratic for a while.

           
China’s harvest is winding down in Xinjiang and it has been a good production year. Harvesting in India has advanced well recently, but rain may evolve in some of the production area in the coming week to ten days to possibly disrupt fieldwork and raise a
little concern over fiber quality.

           
South Africa planting will begin soon, although the nation needs a little more rainfall to stimulate the best planting and emergence conditions.

           
Overall, weather today will likely provide a mixed influence on market mentality.

Source: 
World Weather Inc. 

 

Bloomberg
Ag Calendar

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

 

 

 

 

 

FSA
US Acreage

U.S.
corn and soybean plantings
Prevented planting
(thousands of acres)

Crop               
Oct 2020     Sept 2020      Oct 2019

Corn                  
6,177         6,078        11,420

Soybeans              
1,476         1,451         4,459

Wheat                 
1,270         1,268         2,215

Rice                    
494           493           752

Barley                   
32            31            33

Sorghum                 
298           296           172

Cotton-Upland           
402           400           494

U.S.
corn and soybean plantings
Plantings
(thousands of acres)

Crop               
Oct 2020     Sept 2020      Oct 2019

Corn                 
88,212        87,560        86,974

Soybeans             
81,854        81,455        74,956

Wheat                
46,100        45,947        46,705

Rice                  
2,986         2,982         2,504

Barley                
2,524         2,467         2,623

Sorghum               
5,304         5,237         4,822

Cotton-Upland        
11,667        11,630        13,223

 

 

Commitment
of Traders

Traders
missed the long positions for all 5 commodities in this weeks CFTC COT report. 

 

 

 

 

 

 

 

Macros

 

Corn.

• Higher
  trade on light unwinding of soybean/corn spreads. 
• Ukraine’s
  UGA lowered crop estimates for corn and wheat production to 32.5 million tons from 35.3 MMT previously and 25.3 million tons from 26.6 previous, respectively. Ukraine corn production was taken down 2 million tons to 36.5 million tons by USDA.  Russian corn
  was unchanged at 15 million tons. 
• Germany
  ASF: 53 cases since September 10 

 

Corn
Export Developments

• Iran
  seeks 200,000 tons of barley on October 14. 
• Taiwan’s
  MFIG seeks 65,000 tons of corn on October 14 for Dec/Jan shipment. 

 

Soybean
complex.  

• CBOT
  soybeans mixed as traders continue to position post USDA report.
• Today
  is day 4 of the Goldman roll and the SX/SF weakened a touch. 
• Argentina
  is on holiday. 
• Offshore
  values this morning were leading CBOT soybean oil 53 lower and meal $4.20
  lower. 
• Rotterdam
  soybean oil values were around 4-5 euros higher, rapeseed oil near unchanged in the benchmark positions, and Rotterdam meal mixed from this time previous session. 
  
• China
  cash crush margins were 84 cents on out our calculation compared to 88 last week and 125 year ago. 
  

• Malaysian
  palm oil was up for the sixth consecutive day. 

 

 

Oilseeds
Export Developments

• Iran’s
  SLAL seeks 200,000 tons of soybean meal and 200,000 tons of barley on October 14 for OND shipment. 
  
• 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 mixed with lack of direction and erratic overnight trade in soybeans.     
  
• Paris
  (Matif) December wheat was 0.25 higher at 200.50 euros.
• Russian
  wheat prices:
• IKAR
  12.5% protein Black Sea ports October was at $245 a ton free on board (FOB), up $8 from the previous week
• SovEcon
  up $4 to $239 per ton

 

Export
Developments.

• Algeria
  seeks at least 50,000 tons of wheat from the several countries including the Black Sea on October 12, valid until Tuesday, for Oct/Nov shipment. 
  
• 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.