FI Morning Grain Comments 10/15/20

PDF attached

 

Morning.

 

USDA
announced 261,000 tons of soybean to China.  Several agriculture markets and energy markets are lower expectations a stimulus package will not be rolled out until at least after the election.  WTI was down more than $1.30 and USD was up 39 points.  US stock
futures are pointing to a sharply lower open.  EU equity markets are lower.  COVID-19 is increasing across Europe and several countries are going back into partial lockdown. 

 

Soybeans
are lower on weather forecasts calling for improving rainfall for Brazil and rain that occurred over Argentina yesterday into today.  Corn was mostly moderately lower early this morning from lower soybeans and higher wheat.  Wheat is seeing support from unfavorable
global weather.  Soybean meal is gaining over sharply lower soybean oil.  Malaysian palm oil traded down 71 ringgits from a slowdown in October palm exports.  Offshore values are leading SBO 40 points lower and meal $0.90/short ton lower.

 

(World
Weather Inc.) – Finally, there are signs of a buildup of atmospheric moisture in Brazil’s Amazon River Basin beginning in the last days of October. This change has been long awaited and provides encouragement that delayed rainfall in Brazil may be in its final
ten days to two weeks. But it also suggests at least another week of frustrating weather in center west soybean production areas. 

 

 

 

Weather
and Crop Progress

 

MORNING
WEATHER MODEL COMMENTS

 

NORTH
AMERICA

• Some
  increase in U.S. rainfall was suggested by the GFS model run overnight
• The
  change matches that of the European model of the past couple of days, although the European model is a little less intensive with its rain suggested for the period relative to Wednesday
• GFS
  increased rainfall from northern Illinois to northern Ohio and southern Michigan for Wednesday through Friday of next week
  
• The
  increase was overdone
• GFS
  reduced rain from eastern U.S. hard red winter wheat areas of Kansas and north-central Oklahoma for late next week
• Some
  reduction was needed
• GFS
  increased precipitation from the Dakotas through Iowa to the Ohio and Tennessee River Basin Oct. 28-30
• This
  event is overdone
• GFS
  reduced rain in New Mexico and western Texas as well as southeastern Colorado and southwestern Kansas Oct. 29-30, but it increased rain from Oklahoma into central and southwestern Texas and a part of the Delta Oct. 29-30
• The
  reduction in rainfall was needed for West Texas and New Mexico, but the increase in rainfall was not likely to verify

Three
waves of cool air will occur in the central and eastern United States over the next two weeks each bringing a chance for rain to the Midwest. The moisture will improve field conditions for winter wheat in the lower Midwest, but the precipitation will briefly
disrupt farming activity occasionally. The first frontal system is in the eastern Midwest today and will produce the least amount of rain. A second frontal system is expected in the Midwest Sunday and Monday and will be swift moving to limit rain delays. The
last frontal system comes along Oct 22-24, but its precipitation is overdone. Temperatures will trend cooler during the coming ten days in the Plains and Midwest.

 

SOUTH
AMERICA

• No
  theme changes were noted overnight
• Argentina
  rainfall will be mostly in north today and in the northeast Saturday and early Sunday
• Much
  of Argentina will receive rain starting late this weekend in the southwest and advancing northeast early next week
• Sufficient
  rainfall is expected to bolster topsoil moisture and improve early corn and sunseed planting and establishment conditions
• Rainfall
  will be highly variable with most of the driest areas getting 0.25 to 0.85 inch with local totals to 1.50 inches; greater rain will occur in other areas
• Cordoba,
  Santiago del Estero and Santa Fe’s drier biased areas will get rain to ease long term dryness
• Argentina
  follow up rainfall potentials are best for Oct. 23-24 when scattered showers occur across the nation again with lighter resulting rainfall
• Rain
  may return again Oct. 27-28, but confidence is low on its expected distribution
• Brazil
  rainfall is expected to be scattered erratically over the coming week with Mato Grosso expecting the least significant rainfall and will struggle for enough moisture to support planting and development
• Follow
  up rain will be very important
• Brazil
  rainfall in this first week will be greatest in Minas Gerais and immediate neighboring areas in Sao Paulo and Goias with lighter rainfall in Parana and Mato Grosso do Sul
• The
  precipitation will be beneficial and increased planting of grain and oilseeds is likely while there is support for coffee and citrus flowering as well as sugarcane development
• Center
  west and center south Brazil’s greatest rainfall boost is expected October 24-30

Overall,
the next couple of weeks seem to provide a little moisture for both Argentina and Brazil. However, Mato Grosso will not do well with rainfall for this first week of the outlook and neither will some of the immediate neighboring areas. Rain will improve in
interior southern Brazil and a portion of center south Brazil soil moisture and crop potentials. Rain will also evolve in Argentina early next week to bring relief to persistent dryness, but frequent follow up rain is needed. Today’s outlook for Argentina
does offer a little follow up rain event Oct. 23-24 and again Oct. 27-28, but confidence in the significance of these follow up rain events is a little low.

 

BLACK
SEA REGION

• GFS
  model reduced rain potentials to eastern Ukraine, Russia’s Southern Region and Kazakhstan for the coming two weeks
• The
  changes were needed after the evening model run last night was too wet
• Showers
  are still expected in a narrow band in Russia’s Southern region briefly Monday into Tuesday
• A
  follow up rain event is possible Oct. 25-27
• Moisture
  totals from these two events will vary from 0.10 to 0.60 inch except in that narrow band expected in Russia’s Southern region where a few locations could receive locally more
• European
  model run keeps the precipitation events very light

Overall,
the rain advertised for eastern Ukraine, Kazakhstan and Russia’s Southern region early next week and again Oct. 24-26 will be welcome, but much of it is expected to be brief and light leaving a limited response by crops in the region. A developing ridge of
high pressure that will follow these rain events will bring back another period of dry weather leaving winter crops poorly established into early November.

 

CHINA

• No
  general theme changes were noted overnight
• Restricted
  rainfall is expected in northeastern China and in the northern Yellow River Basin as well as the North China Plain where summer crop harvest progress and winter crop planting and establishment will advance favorably
• Rain
  will continue periodically over the coming week in the Yangtze River Basin and southwestern crop areas in the nation
• Net
  drying is advertised for much of eastern China during the second week of the forecast
  

INDIA

• No
  general theme changes were noted overnight
• Rain
  is expected to occur in central, southern and eastern India through early next week
• Sufficient
  amounts of rain will fall to stall summer crop maturation and harvest progress in central India while raising some crop quality issues for cotton, soybeans, pulse crops and some rice
• The
  rain will retreat to the south again during the second half of next week bringing back some improving weather

AUSTRALIA

• No
  big changes were noted overnight in the coming ten days to two weeks
• GFS
  model continues to attempt to bring rain to southern parts of Western Australia during mid-week next week and again October 23-24 with one more event near the end of this month
• Confidence
  in these advertised rain events remains low because of drier biased conditions advertised by the European and Canadian model runs
• Eastern
  Australia rainfall is still advertised to steadily increase as time moves along with the second week of the outlook wettest.
  

There
is only a low potential for rain in a few of Western Australia’s winter crop areas during the coming ten days. Rain farther to the east will be good for spring planting as well as maintaining good winter crop conditions in the southeast.

Source: 
World Weather Inc. 

 

Bloomberg
Ag Calendar

Thursday,
Oct. 15:

• NOPA
  Crush
• 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

 

US
Initial Jobless Claims Oct-10: 898K (exp 825K; R prev 845K)

–        
Continuing Claims Oct-3: 10018K (exp 10550K; R prev 11183K)

livesquawk
US Empire Manufacturing Oct: 10.5 (exp 14.0; prev 17.0)

US
Philadelphia Fed Business Outlook Oct: 32.3 (exp 14.8; prev 15.0)

US
Import Price Index (M/M) Sep: 0.3% (exp 0.3%; prev 0.9%)

–        
Import Price Index Ex-Petroleum (M/M) Sep: 0.7% (exp 0.5%; prev 0.7%)

–        
Import Price Index (Y/Y) Sep: -1.1% (exp -1.2%; prev -1.4%)

–        
Export Price Index (M/M) Sep: 0.6% (exp 0.3%; prev 0.5%)

–        
Export Price Index (Y/Y) Sep: -1.8% (prev -2.8%)

Canadian
ADP Nonfarm Payrolls Sep: -240.8K (R prev -770.6K)

 

 

Corn.

• Corn
  is lower early this morning from sharply lower soybeans.  SK continued to buy South American corn.  News is light.  USD was up 40 by 7:57 am CT. 
  
• A
  Bloomberg poll looks for weekly US ethanol production to be up 6,000 at 929,000 barrels (920-937 range) from the previous week and stocks up to 124,000 barrels to 19.796 million.  
  
• Strategie
  Grains lowered their estimate for EU and British corn production to 62.7 million tons from 64.9 million last month.
• Anec
  sees Brazilian corn exports during October to reach a record 5.237 million tons, up 670,000 tons from their previous estimate, and compares to 5.51 million tons from a year ago. 
  
• Meanwhile
  China corn futures traded lower Thursday after establishing a record high of 2,595 yuan per ton on Wednesday.
  
• Germany
  ASF: 65 cases since September 10 

 

 

Corn
Export Developments

• South
  Korea’s KOCOPIA group bought 60,000 tons of corn at $251.82/ton from Brazil for arrival by Jan 20. 
  
• South
  Korea’s NOFI bought 13,000 tons of feed barley at $248.15/ton c&f for arrival around February 1.  Yesterday KFA paid $247.69/ton for arrival around Jan 20. 
  

• Results
  awaited:  Algeria seeks 30,000 tons of feed corn and 25,000 tons of feed barley on October 15. 
  

• Results
  awaited:  Iran seeks 200,000 tons of barley on October 14. 

 

 

 

 

Soybean
complex.  

• Soybeans
  are lower on macroeconomic headwind concerns, weather forecasts calling for improving rainfall for Brazil and rain that occurred over Argentina yesterday into today. 
  Soybean
  meal is seeing limited losses from sharply lower soybean oil.  Malaysian palm oil traded down 71 ringgits from a slowdown in October palm exports.  USDA announced 261,000 tons of soybean to China.
  
• We
  heard China bought at least 4 cargoes of Brazilian soybeans from early yesterday for April-July shipment. 
  
• Brazil
  soybean premiums for March through June positions were up anywhere from5-11 cents. 
  

• Strategie
  Grains increased the EU (+ Britain ) soft wheat production to 129.5 million tons from 129.3 million last month.  Then they increased 2020-21 soft wheat exports outside the EU and Britain by 2 million tons to 25.0 million tons from 23.0 million in September.
• The
  September NOPA crush is due out later with estimates at 160.8 million bushels and oil stocks of 1.412 billion pounds as last month did see some maintenance downtimes across the industry.
  
• Argentina
  oilseed workers ended their strike late yesterday after the government stepped in. 
  

• Offshore
  values this morning were leading CBOT soybean oil 40 lower and meal $0.90
  lower. 
• Rotterdam
  soybean oil values were up around 5 euros lower, rapeseed oil down 3, and Rotterdam meal 0.50 to 15 euros higher (front months rallying) from this time previous session. 
  
• China
  cash crush margins were 97 cents on out our calculation (93 previous) compared to 88 last week and 125 year ago. 
  

• AmSpec
  reported Malaysian palm exports for first half October at 763,772 tons, down 2.1 percent from the same period last month. 
  
• ITS
  reported October 1-15 palm exports at 760,082 tons, down 2.5 percent. 
• Malaysian
  palm oil traded lower from a slowdown in October palm exports.    

 

Oilseeds
Export Developments

• USDA
  announced private exporters sold: 261,000 tons of soybeans for delivery to China during the 2020/2021 marketing year

• Results
  awaited: 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.  Traders are waiting to see if the Black Sea and US rains forecast in the weather models materialize. 
  
• Strategie
  Grains increased the EU (+ Britain ) soft wheat production to 129.5 million tons from 129.3 million last month.  Then they increased 2020-21 soft wheat exports outside the EU and Britain by 2 million tons to 25.0 million tons from 23.0 million in September.
• CPI
  food inflation index for China increased 7.9% from the previous year thanks to tightening meat supplies
  while nonfood inflation was unch. 
• Paris
  (Matif) December wheat was 0.50 higher at 204.00 euros.

 

Export
Developments.

• Jordan
  issued a new tender for 120,000 tons of wheat set to close October 21. 
• Japan
  bought 87,110 tons of food wheat from Canada (25k) and rest from the US. 
• Japan
  seeks 80,000 tons of feed wheat and 100,000 tons of feed barley on October 21 for arrival by February 25. 
  
• Awaited:
  Offers around $284/ton – Pakistan seeks 300,000 tons of wheat on October 14 for arrival by end of January. 
  
• Awaited:
  5 participants – Ethiopia seeks 400,000 tons of wheat by October 13.
• Awaited:
  (new 9/15) Ethiopia seeks about 200,000 tons of milling wheat on October 15.
• Turkey
  seeks 175,000 tons of wheat on October 22 for shipment between November 9 and November 24. 
  

 

Rice/Other

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