FI Morning Grain Comments 11/02/20

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Morning.

 

We
will see several reports today (inspections, NASS crush & corn industrial use, and crop progress).  We are seeing a lower trade in all three agriculture markets on long liquidation and improving US, South America, and Russian weather. 

 

 

Weather
and Crop Progress

 

KEY
WEATHER ISSUES AROUND THE WORLD

• Western
  portions of Russia’s Southern Region, Ukraine and Russia’s Central region received precipitation during the weekend with lingering showers early this week
• Moisture
  totals varying from 0.30 to 1.25 inches occurred in Ukraine while 0.05 to 0.84 inch occurred in western parts of Russia’s Southern Region
• The
  moisture was welcome and a few areas in southern parts of Russia’s Central Region (immediately north of the central Ukraine border) ranged from 1.00 to 2.00 inches
• Most
  of the precipitation has come too late in the autumn season to induce good stands in the driest areas, but there will be potential for crop improvement in the spring “if” winterkill is kept to a minimum this winter
• Eastern
  parts of Russia’s Southern Region, the lower Volga River Basin and western Kazakhstan received no appreciable moisture and most of these areas will stay dry this week
  
• Western
  Kazakhstan may get a little light rain and rain changing to snow briefly Friday into the weekend, but resulting moisture will not be significant enough to change unirrigated winter crop conditions
• Winter
  crops in western Kazakhstan and eastern parts of Russia’s Southern Region are poorly established in unirrigated areas because of drought
• Western
  Australia received widespread “light” rain during the weekend slowing harvest progress in some areas, but possibly benefiting the latest developing winter crops
• A
  few follow up showers are possible briefly Thursday, but the impact will be low
• Rain
  will develop in southeastern Australia during mid-week this week benefiting spring and summer crops, but keeping winter crops moist and briefly slowing crop maturation and harvest progress
• Southeastern
  Australia will be dry late this week and into next Monday and then may be bothered again by rain early to mid-week next week
  
• The
  moisture will raise a little more concern about the overall condition of wheat, barley and canola, but drier weather does return late in the week next week and lasts into the following weekend
• Most
  of the winter crops will likely manage the periodic precipitation relatively well, although longer periods of drying might be welcome
• Queensland,
  Australia dryland summer crop areas will get some rain late this week through the weekend and into early next week
• The
  moisture will be great for dryland cotton, sorghum and other summer crop planting, emergence and establishment
• Hurricane
  Eta will move into northeastern Nicaragua tonight and Tuesday and will impact both Nicaragua and Honduras into Friday
• Heavy
  rain expected in Honduras, northern Nicaragua and El Salvador
• Rainfall
  of 5.00 to 15.00 inches and local totals to 25.00 inches will result in notable flooding, landslides and considerable personal property, agriculture and infrastructure damage.
  
• Rice
  and sugarcane will be most vulnerable to damage, but some corn, sorghum, coffee and other crops will also be impacted
• At
  0700 CDT today was located 140 miles east of Cabo Gracias A Dios, on the Nicaragua/Honduras border, at 14.8 north, 81.1 west moving westerly at 10 mph and maximum sustained wind speeds were reaching 90 mph with tropical storm force wind occurring out 125 miles
  from the storm center and hurricane force wind out 25 miles
• Worry
  over the remnants of Tropical Storm Eta returning to the Caribbean Sea late this week and during the weekend will be rising
• Many
  computer forecast model runs are advertising such an event with the tropical system returning to the northwestern Caribbean Sea late this week and moving easterly during the weekend
• The
  storm is advertised to move erratically with Cuba, the Yucatan Peninsula, Florida and the Bahamas all at risk of some influence from the storm through next week
• Brazil
  rainfall during the weekend was most significant from northern and eastern Mato Grosso through Goias and Tocantins to Bahia, Minas Gerais and Espirito Santo
• Moderate
  to heavy rain fell in parts of the region especially in Espirito Santo and east-central through northern Minas Gerais where 2.00 to more than 5.00 inches resulted
• Net
  drying occurred in other Brazil locations especially in the west and south while temperatures were seasonable
• Brazil
  weather in this coming seven days will not change much with rain continuing in the northeastern one-third of the nation; including areas from northern and eastern Minas Gerais through Tocantins and parts of Goias to Bahia, Espirito Santo and northern Minas
  Gerais
• Sufficient
  amounts of rain will fall to maintain wet field conditions in many areas and to bolster soil moisture in other areas
• Net
  drying is expected elsewhere – not only in Brazil, but in Paraguay and Uruguay as well
• Nov.
  8-15 weather will continue drier than usual in Uruguay, southern Rio Grande do Sul and a few other random locations in southern Brazil and Paraguay, but most of the region is expected to encounter scattered showers and thunderstorms that will benefit many
  areas, but resulting rainfall may be a little light
• Concern
  will evolve over soil moisture and long-term crop development in portions of southern Brazil, Paraguay, Uruguay and eastern Argentina through the first half of November and perhaps all month
• Temperatures
  will be seasonable with a slight cooler bias this week and with a slight warmer bias next week
• Argentina
  weather during the weekend was dry and temperatures were mild
• Argentina
  weather this week will be mostly dry with the few showers that erupt being very brief and light resulting in not serious boost in topsoil moisture
• Argentina
  rainfall Nov. 8-15 will be a little better with scattered showers and thunderstorms expected
• The
  precipitation will be greatest in the west leaving eastern areas with a drier bias
• This
  pattern is classic La Nina
• Enough
  rain may fall in western crop areas to induce some crop improvement especially in Santiago del Estero and northern Cordoba where the driest weather has been prevailing for months
• Some
  forecast model runs have advertised rain in the east, too, but it if it occurs it is expected to be more sporadic and light
• Temperatures
  will be seasonable over the next two weeks
• The
  bottom line remain good for this week because most of the nation has favorable soil moisture for recent past rainfall
• Northwestern
  areas will be driest
• Rain
  next week will be very important as more of the nation becomes too dry once again
• U.S.
  weather trended drier biased during the weekend with some warming followed by a new bout of cooling
• The
  environment was improving for more aggressive harvesting in the lower Midwest, Delta and southeastern states, although more drying was needed and should evolve this week
• Winter
  crop planting likely resumed in some areas and should increase as drier weather continues this week.
  
• Temperatures
  are expected to be notably warmer than usual this week, but much colder next week in the Plains and far western states
• U.S.
  cooling is likely in far western U.S. this weekend and two storm systems will then evolve in the central United States
• Storm
  number one occurs during the weekend (Nov. 6-8)
• Rain
  changing to snow and then blizzard conditions may evolve in the northwestern Plains and a part of Canada’s Prairies
• Moisture
  totals will vary from 0.20 to 0.80 inch with a few amounts to 1.35 inches
• Heavy
  snow will fall from Montana and western North Dakota to Saskatchewan and a part of Manitoba
• Storm
  number two evolves in the central Plains Sunday into next Monday and then advances to the upper Midwest during the early part of next week with a trailing cold front bringing some rain to the eastern Midwest next week
• Moisture
  totals Nov. 8-10 will vary from 0.20 to 0.80 inch with a few amounts of 1.00 to 1.50 inches from eastern portions of the central Plains to the western Great Lakes region and Minnesota
• Eastern
  Kansas to Minnesota and Wisconsin will be wettest
• Heavy
  snow will fall from north-central and northeastern Kansas through Iowa to Wisconsin and Minnesota
• Remnants
  of Hurricane Eta could impact Florida later next week, although confidence is low
• U.S.
  hard red winter wheat areas will get additional precipitation this weekend into early next week with the southwestern and west-central Plains getting the lightest amount of moisture
• West
  Texas could receive a few showers late this weekend into early next week, but resulting amounts will be brief enough to limit the impact on cotton and other summer crop harvesting
• U.S.
  Pacific Northwest will receive some rain and mountain snow late this workweek and again briefly next week
• Moisture
  totals are not likely to be very great
• The
  moisture will be welcome, but not enough on its own for a serious improvement in soil moisture, but water supply and mountain snowpack for 2021 may begin to improve
• U.S.
  Delta and interior southeastern states will be dry for much of the coming week with a brief bout of rain coming with a frontal system during mid-week next week
• A
  close watch on the remnants of Hurricane Eta will be warranted for possible impact on Florida or perhaps a few areas farther north, but not before the second half of next week
• Other
  precipitation in western portions of the Commonwealth of Independent states will be light and helpful for maintaining favorable soil moisture for use in the spring.
• Some
  rain of significance will fall in Georgia and extreme southern parts of Russia’s Southern Region early this week and again Friday into the weekend
• China
  weather will remain favorably dry over the next ten days favoring winter crop planting and establishment as well as summer crop harvesting
• Any
  showers that occur will be brief and light causing only a limited amount of disruption to fieldwork
• Not
  much precipitation fell during the weekend
• Typhoon
  Goni moved into the central Philippines during the weekend and was downgraded to tropical storm status while moving into the South China Sea Sunday and today
• The
  storm produced nearly 11.00 inches of rain in southeastern Luzon Island and nearly 7.00 inches in Samar with lighter rain to the west
• Tropical
  Storm Goni is not expected to regain typhoon intensity as it races to central Vietnam early this week
• Landfall
  in central Vietnam is expected late Wednesday or Thursday as a tropical storm and will bring very heavy rain and windy conditions to Vietnam’s Central Highlands
• Some
  negative impact is possible on coffee and other crop production areas in the Central Highlands, but damage should be low
• Landfall
  should be between Qui Nhon and Quang Ngai around 1200 GMT Thursday
• Heavy
  rain from the storm will push across Vietnam’s Central Highlands and then into Cambodia where flooding has already been a problem at times in the past 30 days
• Tropical
  Depression Astani will remain northeast of the northern Philippines for a while this week, but the storm will likely pass to the north of Luzon Island Thursday and Friday and then move toward southern China with landfall in Guangdong or Guangxi late this week
• Astani
  will become a tropical storm and possibly a typhoon for a little while before it comes close to any landmass
  
• Weakening
  is expected prior to landfall in China
• Another
  tropical cyclone may form east of the Philippines late this week and move toward Luzon Island with landfall possible during the weekend
  
• South
  Africa weekend rain was greatest from western and central North West through central and eastern Free State to western and southern Natal and eastern parts of Eastern Cape
• Moisture
  totals varied from 0.60 to 3.25 inches with amounts of 2.00 to 3.25 inches common in eastern Free State and Natal
  
• Additional
  rain is needed nationwide to support summer crop planting
• South
  Africa rain will be erratic until Wednesday when a general increase in rain occurs across the nation through Thursday
• Sufficient
  rainfall will occur to bolster soil moisture for better spring and summer crop development
• Some
  winter crops might benefit from the moisture, but those crops are needing drier weather to promote maturation and harvesting soon
• Friday
  and Saturday will be dry and then scattered showers and thunderstorms will resume again providing a very good mix of weather for the nation’s spring and summer crops
• India
  weather will be favorable for late season crop development and widespread harvesting over the next ten days
• Winter
  crop planting, emergence and establishment will advance well
• Rain
  will be confined to the far south and a few areas in the far Eastern States
• Waves
  of rain will continue to impact parts of Southeast Asia that are not being impacted by tropical cyclones over the next ten days to two weeks; most crop conditions will remain favorable
• Central
  Vietnam will likely be impacted by Tropical Storm Goni during mid- to late week this week with additional heavy rain and strong wind speeds possible near Da Nang, Hue and Qui Nhon
• Southern
  China may be impacted by Tropical Storm Astani during mid-week before moving toward northern Vietnam later in the week
• Central
  Vietnam is advertised to be hit by 5 tropical weather systems over the next two weeks perpetuating its excessive moisture and flood problems
• The
  nation has already been impacted adversely by frequent tropical weather systems since October 5
• Brief
  periods of precipitation will move across the European continent over the coming week resulting in a favorable mix of moisture and sunshine for winter crops
• Fieldwork
  will advance around the precipitation
• This
  weekend and next week should trend drier
• Temperatures
  will be near to above average
• Ontario
  and Quebec, Canada will experience limited precipitation over the coming week to ten days greatly improving harvest progress in the region after abundant moisture in October
• Southern
  Oscillation Index leveled off and began to rise a little during the weekend. The index was +4.62 this morning; the index fell from a peak of +12.58 on October 13 to a low of +3.83 Saturday
• The
  index will rise this week
• Mexico
  precipitation will be quite limited this week
• Central
  America will be wetter than usual this week especially in Nicaragua and Honduras because of Hurricane Eta moving inland and not completely dissipating
• Flooding
  is likely along with some crop and property damage

·        
West-central Africa will experience erratic rain through the next ten days favoring crop areas closest to the coast

• Daily
  rainfall is expected to be decreasing as time moves along which is normal for this time of year
• Cotton
  areas are benefiting from drier weather

·        
East-central Africa rain will be erratic and light over the next couple of weeks, but most of Uganda and southwestern Kenya will be impacted while Tanzania and northwestern Ethiopia
rainfall is erratic and light

• Some
  heavy rain may fall in Uganda early this week

·        
New Zealand rainfall will be near to above average in North Island and northern parts of South Island while below average in southern South Island

Temperatures
will be near to below average

Source: 
World Weather Inc. 

 

 

 

 

Bloomberg
Ag Calendar

Monday,
Nov. 2:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• USDA
  soybean crush, corn for ethanol, DDGS output, 3pm
• U.S.
  crop conditions, harvest for soybeans, corn, cotton, 4pm
• Costa
  Rica, Honduras October coffee exports
• Cotton
  supply/demand outlook from International Cotton Advisory Committee
• Australia
  Commodity Index
• Ivory
  Coast cocoa arrivals
• HOLIDAY:
  Brazil

Tuesday,
Nov. 3:

• U.S.
  Purdue Agriculture Sentiment, 9:30am
• New
  Zealand global dairy trade auction
• FT
  Global Food Systems conference
• EARNINGS:
  Andersons, AB Foods
• HOLIDAY:
  Japan

Wednesday,
Nov. 4:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• New
  Zealand Commodity Price

Thursday,
Nov. 5:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• China’s
  CNGOIC to publish monthly soybean and corn reports
• FAO
  World Food Price Index
• Guatemala
  October coffee exports
• Port
  of Rouen data on French grain exports
• Malaysian
  Nov. 1-5 palm oil export data

Friday,
Nov. 6:

• 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
• HOLIDAY:
  Argentina

Saturday,
Nov. 7

• China’s
  trade data on soybeans and meat imports

Source:
Bloomberg and FI

 

 

 

 

CFTC
Commitment of Traders

 

 

 

 

 

 

 

 

CME
will revise their futures price limits effective February 2. 

 

Macros

 

Corn.

• December
  corn futures are lower on long liquidation and Covid-19 fears that could again impact global ethanol demand. Funds as of last Tuesday were 54,100 contracts more long than expected for the traditional funds.  Traders are busy shoring up positions ahead of the
  US election set for Tuesday.
• Brazil
  domestic corn prices were a little weaker as 54% of the first corn crop is planted (AgRural). We are picking up that South Korea was in the market for a corn cargo for LH April arrival, and it could originate from South Africa. 
  
• WTI
  was down only $0.06 after trading more than $1.00 overnight.    
• Germany
  ASF: 114 cases since September 10. 
• South
  Korea banned poultry imports from the Netherlands on bird flu concerns. 
• Safras
  & Mercado estimated the Brazil corn crop at 116.4 million tons, up from 115.5 million tons previously. 
  

 

Corn
Export Developments

• None
  reported

 

 

 

Soybean
complex.  

• January
  soybeans were lower on long liquidation and improving South American weather, lower palm oil and rising Covid-19 demand fears.  China has also slowed soybean purchases, but margins remain very good.  Softening CIF market and heavy deliveries may pressure spreads. 
  
• November
  soybean deliveries were 501 and registrations were up 220. 

• We
  heard China bought at least one US Jan/Feb soybean cargo out of the Gulf late Friday. 
  
• A
  Reuters trade guess looks for the September US soybean crush to end up near 171.3 million bushels (170.9-172.0 range), down from 174.6 million in August and above 162.3 million bushels in August 2019.  US soyoil stocks at the end of September were seen at
  1.826 billion pounds (1.764 and 1.875 range), down from 1.958 billion pounds at the end of August and a fifth straight decline, but above 1.775 billion pounds at the end of September last year.
• Safras
  & Mercado estimated the Brazil soybean crop at 133.5 million tons, up from 132.17 million tons previously. 
  
• Offshore
  values this morning were leading CBOT soybean oil 100 lower and meal $2.20 lower. 
  
• Rotterdam
  soybean oil values were about 10 lower, rapeseed oil 2 euros lower, and Rotterdam meal unchanged to 2 euros lower from this time previous session. 
  
• China
  cash crush margins were 138 cents on out our calculation compared to 139 last week and 155 year ago. 
  

• AmSpec
  reported palm oil exports during the morning of October at 1.701 million tons, up from 1.631 million tons from September, a 4.3 percent rise.  Meanwhile ITS reported at 5.6 percent increase to 1.690 million tons from 1.601 million during September. 
  
• Malaysian
  palm market

• Argentina’s
  government on Friday said China’s Sinograin will increase soybean purchases next year by around 1 million tons to 4 million tons and soybean oil to around 400,000 tons from 300,000 tons. 
  

 

 

U.S.
production of biodiesel was 163 million gallons in August 2020. Biodiesel production during August 2020 was 1 million gallons higher than production in July 2020. Soybean oil remained the largest biodiesel feedstock during August 2020 with 745 million pounds
consumed versus 775 million during July and 701 million in August 2019. 

 

 

Oilseeds
Export Developments

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

 

Wheat

• Lower
  trade on improving US and Russian weather.  More
  rain is expected in southern parts of Russia on Monday. 
• China
  sold 2.699 million tons of wheat from state reserves last week according to the National Grain Trade Center, 67.74% put up for auction.  Total sales through the auction since June 22 now total 37.8 million tons.
• China
  rejected Australia’s appeal to scrap a tariff on its barley exports, according to Reuters.  Duties will remain at 80.5%.
• US
  wheat futures Paris (Matif) December wheat was down 1.75 euros at 203.50 euros. 
  

 

Export
Developments.

• Tunisia
  seeks 50,000 tons of soft wheat and 50,000 tons of feed barley on Tuesday for Dec shipment. 
  
• Syria
  seeks 150,000 tons of wheat on November 9.  They were in on October 28 for 200,000 tons. 
  
• Russian
  wheat was the lowest offer in Ethiopia’s 400,000 tons wheat import tender at $243.90/ton c&f. 
  
• 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.