FI Morning Grain Comments 10/27/20

PDF attached

 

Morning.

 

Corn
futures are higher on higher wheat futures, corn/soy spreading, and a large increase in SK buying.  Soybeans are lower on US harvest pressure.  Offshore values this morning were leading CBOT soybean oil 11 lower and meal $0.30 lower.
US wheat futures are higher on a much lower than expected US winter wheat rating but 24-hour past precipitation shows improvement for the US Great Plains. 
USDA reported initial US winter wheat rating at 41 percent for the combined good and excellent categories, 11 points below expectation and lowest since the 2013-14 crop year (planted fall 2012) and compares to 56 percent last year and 53 percent average.
The KS rating fell one point from the previous week to 29 percent G/E, lowest for this time of year since at least 1989. 

 

 

 

 

 

 

 

Weather
and Crop Progress

 

 

 

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

            A
closer watch on southern Brazil rain distributions is warranted over the next few weeks due to La Nina which may lead those areas into a drier bias. For now, the environment is great for spring and summer planting throughout Brazil. Argentina’s recent rain
has bolster soil moisture favorably except in northern Cordoba and Santiago de Estero where there is need for more moisture. Planting, establishment and early season development in Argentina corn, sunseed and soybean areas should advance well with drier weather
that lies ahead.

       
    Good harvest weather is also expected in India and China while some rain in eastern Australia will be good for summer crops and a little late season canola. South Africa will get better rain this weekend and next week to improve planting conditions.

            In
the U.S., weather will not be quite so good with additional rain and snow prolonging delays to harvesting in the Midwest, Delta and southeastern states this workweek. Weather conditions should improve this weekend and next week. Some additional wet weather
is expected in southeastern Canada, too, prolonging field working delays there as well.

            Overall,
weather today will contribute a bearish bias to market mentality.

 

MARKET
WEATHER MENTALITY FOR WHEAT

            Significant
moisture in U.S. hard red winter wheat areas this week will greatly ease the worry over dryness and change the long-term outlook for that crop. Warming this weekend and next week through the first half of November should induce better crop establishment and
general conditions.

Showers
in Russia’s Southern region late this week and early next week will induce some improvement along with a few eastern Ukraine locations, but the changes are not going to be dramatic.

            China
and India weather remains good and that in Australia seems to be favorably mixed, despite worry over crop quality.

            South
Africa winter crops are rated mostly good and Brazil still has an excellent wheat crop coming along. Argentina’s recent rain has improved its winter crop production potential.

            U.S.
Midwest soft wheat is a little too wet and needs to dry down and that may come along late this week and into next week, but more rain and some snow will occur until then.

            Overall,
weather today will contribute a bearish bias to market mentality.

Source: 
World Weather Inc. 

 

Bloomberg
Ag Calendar

Tuesday,
Oct. 27:

• Virtual
  Palm Oil Conference, day 1
• EARNINGS:
  WH Group

Wednesday,
Oct. 28:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• Virtual
  Palm Oil Conference, day 2
• HOLIDAY:
  Indonesia

Thursday,
Oct. 29:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• Port
  of Rouen data on French grain exports
• Vietnam’s
  General Statistics Office releases commodity trade data for October
• International
  Grains Council monthly report
• EARNINGS:
  ADM
• HOLIDAY:
  Indonesia, Malaysia

Friday,
Oct. 30:

• 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
• U.S.
  agricultural prices paid, received, 3pm
• HOLIDAY:
  Indonesia

Source:
Bloomberg and FI

 

 

Macros

US
Durable Goods Orders Sep P: 1.9% (est 0.5%; prevR 0.4%; prev 0.5%)

US
Durable Goods Orders Ex-Transportation Sep P: 0.8% (est 0.4%; prevR 1.0%; prev 0.6%)

US
Cap Goods Orders Nondef Ex-Air Sep P: 1.0% (est 0.5%; prevR 2.1%; prev 1.9%)

US
Cap Goods Ship Nondef Ex-Air Sep P: 0.3% (est 0.4%; prev 1.5%)

 

Corn.

• Corn
  futures are higher on higher wheat futures, corn/soy spreading, and a large increase in South Korean buying. 
  
• Cofco
  sees China corn imports possibly doubling to 17 million tons during the 2020-21 crop year from a decline in production and increase in feed demand. 
  
• US
  corn harvesting progress was reported at 72 percent, one point below expectations, up from 60 previous week, and compares to 38 percent year ago and 56 percent average. 
  
• Corn
  open interest was up 16,447 contracts. 
• USD
  was 15 lower as of 7:36 am CT, and crude was $0.19 higher. 
• The
  US EPA is considering changes to gas pump labeling for E15 ethanol blend as the biofuel industry believes the current labels are discouraging use of the fuel. 
  
• Ukraine
  grain exports were 15 million tons do far this season, down 16.4 percent from same period year ago.  1.54 million tons of corn was sold compared with 3.59 million tons last year. Wheat exports fell to 10.1 million tons from 10.9 million.  Wheat exports will
  be capped at 17.5 million tons this season.  57% of the quota has been used.
• The
  Philippines see 2020 corn production at 8 million tons, up 4 percent from 7.7 million tons in 2019.  8 million tons is about 8 months of consumption. 
  
• USDA
  US corn export inspections as of October 22, 2020 were 636,290 tons, below 911,648 tons previous week and compares to 391,231 tons year ago. Major countries included Mexico for 213,677 tons, China Main for 131,651 tons, and Japan for 71,677 tons.
  

 

Corn
Export Developments

• South
  Korea’s FLC bought 65,000 tons of corn, optional origin, at $264.41/ton c&f for arrival around February 15. 
  
• South
  Korea’s NOFI bought 203,000 tons of corn, optional origin.
• One
  was bought at $262.41/ton fob for arrival around March 5.
• Another
  at $253.40/ton fob for arrival around March 15.
• Third
  boat was bought at $250.20/ton fob for arrival around April 5.
• $271.73/ton
  c&f for arrival in February. 
• South
  Korea’s KFA passed on 69,000 tons of corn, optional origin.  Lowest price was $271.73/ton c&f for arrival in February. 
  

• Taiwan’s
  MFIG bought 65,000 tons of US corn at $2.4738 / bushel over the May for Jan/Feb shipment. 
  

• Iran’s
  SLAL seeks 200,000 tons of corn and 200,000 tons of barley on October 28 for Nov-Jan shipment. 
  

 

 

Soybean
complex.  

• Soybeans
  are lower on US harvest pressure and light profit taking in soybean/corn spreads, meal higher in the front months on good US domestic and export demand, and soybean oil lower following a near flat palm oil market.  Palm was slightly lower overnight despite
  a 1 percent increase in China SBO and palm futures, but on Monday it rallied on talk Indonesia was going to raise export taxes. 
  
• US
  Gulf soybean oil firmed from the previous week to about 500 over from 475 and domestic soybean meal basis firmed at selected locations on Monday, a positive indication that crushers are getting decent margins.  January crush is out to $1.3725 this morning
  while March is at $1.1800.  We are hearing biodiesel margins are ok but the industry is facing a shortage of deodorization capacity.
  
• A
  second Covid wave for the US could hamper soybean product demand over the medium term, but it’s too early to tell. 
  
• Look
  for Midwestern crushers to continue to raise bids on soybeans as they compete with the barge market amid strong export demand out of the Gulf. 
  
• We
  heard China bought 3-4 cargoes of US soybeans late Monday for shipment between November and January shipment. 
  

• US
  soybean harvesting progress was reported at 83 percent, 3 points below expectations, up from 75 previous week, and compares to 57 percent year ago and 73 percent average. 
  
• Soybean
  open interest was down 10,302 contracts. 

• Offshore
  values this morning were leading CBOT soybean oil 11 lower and meal $0.30 lower. 
  
• Rotterdam
  soybean oil values were slightly lower, rapeseed oil 2 euros higher, and Rotterdam meal mostly higher from this time previous session. 
  
• China
  cash crush margins were 101 cents on out our calculation (100 previous session) compared to 95 last week and 151 year ago. 
  

• Malaysian
  palm oil futures. Down from a one-month high. 

• USDA
  US soybean export inspections as of October 22, 2020 were 2,664,352 tons, above 2,317,798 tons previous week and compares to 1,578,604 tons year ago. Major countries included China Main for 2,021,055 tons, Mexico for 103,231 tons, and Thailand for 84,543 tons.
  

 

Oilseeds
Export Developments

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

• The
  USDA seeks 240 tons of packaged vegetable oil under the PL 480 program for Dec 1-31 shipment, on November 3. 
  

 

Wheat

• US
  wheat futures are higher on a much lower than expected US winter wheat rating but 24-hour past precipitation shows improvement for the US Great Plains.
  
• USDA
  reported initial US winter wheat rating at 41 percent for the combined good and excellent categories, 11 points below expectation and lowest since the 2013-14 crop year (planted fall 2012) and compares to 56 percent last year and 53 percent average. 
  

• US
  winter wheat planting progress was reported at 85 percent, one point below expectations, up from 77 previous week, and compares to 83 percent year ago and 80 percent average.  62 percent of the wheat crop was emerged, 2 points above average.  The KS rating
  fell one point from the previous week to 29 percent G/E. 
• Syria’s
  local wheat inventories bought from producers are running at only at 1.5 months of consumption. 
  

• Paris
  (Matif) December wheat was up 0.75 at 208.00 euros.

• USDA
  US all-wheat export inspections as of October 22, 2020 were 363,806 tons, above 241,283 tons previous week and compares to 543,166 tons year ago. Major countries included Japan for 105,399 tons, China T for 53,248 tons, and El Salvador for 49,406 tons.
  

 

Export
Developments.

• 3
  participants: Jordan seeks 120,000 tons of feed barley on October 27, optional origin, for LH December through FH March shipment.
  
• Syria
  seeks 200,000 tons of wheat from the Black Sea on October 28.
• Jordan
  seeks 120,000 tons of wheat on October 28 for Feb/Mar shipment. 
• Pakistan
  seeks 320,000 tons of wheat on November 3 for arrival by November 3 for arrival by the end of January. 
  

 

Rice/Other

·        
Syria seeks 37,400 tons of white rice on November 23.  White Chinese/Egyptian short grain white rice of third or fourth class was sought. Shipment is sought within three months of order confirmation. 

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