FI Morning Grain Comments 10/19/20

PDF attached

 

Morning.

 

Higher
trade led by investment fund buying and sharply lower USD .

 

 

 

Weather
and Crop Progress

 

MORNING
WEATHER MODEL COMMENTS

NORTH
AMERICA

• Today’s
  forecast models have suggested some precipitation may fall in a part of the southwestern U.S. Plains late this week and especially early next week
• World
  Weather, Inc. believes the precipitation will prove to be a general disappointment with only a few locations being impacted and resulting rainfall will be well below that which is needed for a lasting improvement in soil moisture and wheat establishment potential
  in unirrigated areas

 

• Precipitation
  is expected to occur frequently across the northern Plains this week improving topsoil moisture; however, temperatures will be so cold that soil temperatures may drop below the minimum threshold for wheat establishment
• Snowfall
  will occur before frost gets into the ground which suggests when snowmelt takes place the moisture will seep into the ground to improve topsoil moisture for use in the spring

 

• Warming
  in the northern Plains is advertised for late next week which should melt this week’s snowfall and improve topsoil moisture as snow melts
  
• Some
  fieldwork will resume with late season planting possible as the warming evolves

 

• Frequent
  precipitation is still advertised for the Midwest over the next ten days
• Today’s
  overnight model runs reduced some of the moisture advertised for the northern Midwest and this change was needed
• Plenty
  of moisture is still advertised for the lower Midwest where improvement in the low soil moisture situation that has been prevailing in soft wheat areas of the lower Midwest

 

• Southeastern
  states will receive limited rainfall this week while the Delta will experience alternating periods of rain and sunshine
• Next
  week will trend a little wetter briefly in both regions and then back to a drier regime

 

• Tropical
  Depression Twenty Seven in the Atlantic Ocean is not expected to threaten the United States, but it will impact Bermuda as a hurricane late this week and into the weekend

 

SOUTH
AMERICA

• Not
  much change occurred overnight
• Significant
  rain has begun to fall in Buenos Aires and far southern Cordoba with widespread rain overnight
• Rain
  will continue into Tuesday, but it will not get very far to the north in Argentina
• Central
  Cordoba to Entre Rios and Buenos Aires will be wettest
• Some
  showers will linger in central Argentina during mid-week and then a new wave of rain will impact the heart of the nation Friday into the weekend further improving topsoil moisture for better winter crop development and spring planting
• One
  more wave of showers will occur early next week across central and eastern Argentina before a period of drying evolves
• Rain
  was advertised to return Oct. 30-Nov. 1 in portions of Argentina
• Confidence
  in this event is low
• Net
  drying resumes immediately after this event

 

Overall,
Argentina has an excellent opportunity for improved planting, germination and emergence conditions during the next ten days in key summer coarse grain and oilseed production areas. Some cotton areas in the north will also benefit from the moisture along
with some rice in the east. Winter crop conditions will also improve

 

BLACK
SEA REGION

• No
  general theme changes were noted from Sunday or that of late last week
• Some
  rain will fall in a part of Russia’s Southern Region today from Krasnodar to the northwestern border region of Kazakhstan
• 0.20
  to 0.80 inch of moisture is expected with local totals to 1.25 inches
• A
  few other light showers may occur farther north in Russia’s Southern Region late this weekend, but resulting rainfall will be under 0.25 inch leaving a big need for more moisture
• Precipitation
  will be most significant throughout the coming ten days in northern Russia, the Baltic States and northern Belarus

 

Improvement
is expected to a small part of Russia’s Southern Region, but not much change will occur in eastern Ukraine or Kazakhstan, despite a few light showers briefly later this weekend

 

CHINA

• No
  general theme changes were noted overnight
• A
  favorable mix of sunshine and showers will occur over the next two weeks allowing fieldwork of all kinds to advance
• Winter
  wheat and rapeseed establishment should advance favorably along with the harvest of summer crops

 

INDIA

• No
  general theme changes were noted overnight
• Rain
  will end in west-central India over the next two to three days giving way to improving dry weather
• Rain
  will occur most often in southern and far eastern parts of the nation over the next two weeks

 

AUSTRALIA

• No
  big changes were noted overnight in the coming ten days to two weeks
• A
  few showers will occur in southern parts of Western Australia infrequently during the forecast period while the greatest and most frequent rain occurs in southeastern parts of the nation this week
  
• Eastern
  Australia rainfall is still advertised to steadily increase as time moves along with this weekend and next week trending wetter

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.

 

 

 

 

 

 

Bloomberg
Ag Calendar

Monday,
Oct. 19:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  crop conditions, harvesting progress for soybeans, corn, cotton, 4pm
• EU
  weekly grain, oilseed import and export data
• Ivory
  Coast cocoa arrivals

Tuesday,
Oct. 20:

• Malaysia
  Oct. 1-20 palm oil export data
• Virtual
  international palm oil sustainability conference, Q&A Session
• USDA
  total milk production, 3pm
• New
  Zealand global dairy trade auction

Wednesday,
Oct. 21:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am

Thursday,
Oct. 22:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports
• USDA
  red meat production, 3pm
• U.S.
  cold storage data – pork, beef, poultry

Friday,
Oct. 23:

• China
  customs publishes trade data on imports of corn, wheat, sugar and cotton
• 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
• Unica
  data on Brazil’s cane crush, sugar production (tentative)
• U.S.
  cattle on feed, poultry slaughter, 3pm
• HOLIDAY:
  Thailand

Source:
Bloomberg and FI

 

 

 

CFTC
Commitment of Traders

 

 

 

 

 

SUPPLEMENTAL     
Non-Comm               Indexes                  Comm

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
175,333     37,791    325,593     -7,031   -431,655    -26,113

Soybeans          
187,628    -13,239    201,305      1,321   -374,056     14,790

Soyoil             
65,828      2,930    114,402     -5,277   -198,908     -3,132

CBOT
wheat          16,424      8,706    130,079     -2,029   -126,653     -4,971

KCBT
wheat          12,363        -46     65,037        911    -77,197       -372

 

FUTURES
+ OPTS     Managed                 Swaps              Producer

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
170,869     36,404    166,689     -9,120   -388,968    -24,878

Soybeans          
226,444    -11,950    125,711      3,501   -365,579     15,563

Soymeal            
77,068          1     83,914      1,680   -206,624      6,865

Soyoil   
          82,188      1,194     94,015      1,562   -213,269     -6,006

CBOT
wheat          38,590      8,254     79,616       -469   -112,315     -3,940

KCBT
wheat          32,197      4,817     45,707      1,853    -76,617     -1,979

MGEX
wheat          -1,774      3,338      2,244         28     -3,417     -3,199

                
———- ———- ———- ———- ———- ———-

Total
wheat         69,013     16,409    127,567      1,412   -192,349     -9,118

Live
cattle         56,038     -2,979     75,454        215   -134,782        814

Feeder
cattle       -3,834     -1,962      5,118       -162     -2,725        550

Lean
hogs           37,154      1,481     51,339     -1,075    -95,025      1,528

 

 

Macros

 

Corn.

• December
  corn was 3.00 cents higher on global weather concerns and sharply lower USD.  China corn futures hit a fresh contract high. 
  
• Rain
  is arriving in South America and southern Russia, but the trade seems to be ignoring the past weekend weather and morning weather models calling for improving planting conditions for Brazil and Argentina. 
  
• Bull
  spreading was little active. 
• Germany
  ASF: One new case; 70 cases since September 10
• China
  third quarter (July – September) pork production increased 18 percent year on year to 8.4 million tons. 
  
• Pork
  output fell to a 16-year low of 42.6 million tons in 2019, then slowly rebounded in the first nine months of 2020, by dropping only 10.8% from a year earlier to 28.38 million tons.  The number of pigs slaughtered fell 11.7% in the first nine months to 361.86
  million.

 

Corn
Export Developments

• USDA
  announced private exporters sold:

–Export
sales of 345,000 metric tons of corn for delivery to unknown destinations during the 2020/2021 marketing year; and

–Export
sales of 123,000 metric tons of corn for delivery to Mexico during the 2020/2021 marketing year.

• Iran
  opened a new tender for 200,000 tons of barley, set to close October 21. 

 

Soybean
complex.  

• Soybeans
  are higher led by strength in soybean meal.  Soybean oil is lower on weaker energy markets and lower trade in Malaysian palm oil.  Funds are very active in meal/oil spreading, one reason the meal market is sharply higher. 
  
• The
  Brazilian government lowered the import tariffs on soybean. Soybean products, and corn imports for countries outside the Mercosur block trade until 2021.   Back in September they cut rice import tariffs to zero through the end of the year.  Brazil is seeing
  extremely high corn and soybean domestic prices.  The tariff on corn and soy imports from outside Mercosur, which includes Paraguay, Uruguay and Argentina, was 8%.

• Offshore
  values this morning were leading CBOT soybean oil 333 higher and meal $6.40
  higher. 
• Rotterdam
  soybean oil values were up around 3 euros lower, rapeseed oil up 21, and Rotterdam meal unchanged to 3 euros higher from this time previous session. 
  
• China
  cash crush margins were 107 cents on out our calculation compared to 97 last week and 151 year ago. 
  

• Malaysian
  palm oil

 

 

 

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

• Chicago
  wheat is trading at its highest level since 2014.  Some traders are noting the dryness across the southern Great Plains.  Southern Russia saw rain over the weekend, which should be good for emergence and development for wheat. 
  
• Look
  for Egypt to soon tender for wheat. 
• Paris
  (Matif) December wheat was 2.00 higher at 211.00 euros.
• Syria
  warned they need up 200,000 tons of wheat per month to meet consumption.  Production is running about 60 percent of what they were producing before the conflict. 
  

 

Export
Developments.

• South
  Korea’s NOFI bought 60,000 tons of US feed wheat at $265.69/ton c&f out arrival around March 5.    Late last week MFG paid $268.40/ton for Feb 15-Mar 15 shipment. 
  
• Awaited:
  offers received  –  Ethiopia seeks about 200,000 tons of milling wheat on October 15.
• Jordan
  issued a new tender for 120,000 tons of wheat set to close October 21. 
• Japan
  seeks 80,000 tons of feed wheat and 100,000 tons of feed barley on October 21 for arrival by February 25. 
  
• 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.