FI Morning Grain Comments 11/09/20

PDF attached

 

Morning.

 

Eyes
are on the equity markets. S&P 500 hit a record high on Monday after U.S. drug maker Pfizer said its experimental vaccine was more than 90% effective in preventing COVID-19.  “Stay Home” stocks are taking a hit. 

 

Several
tenders developed Sunday morning into Monday.  Jordan is in for wheat and barley. Saudi Arabia bought 860,000 tons of wheat. Ethiopia bought 600,000 tons of wheat.  Iran is in for grains and vegetable oils. Syria seeks 25,000 tons of rice.  South Korea’s FLC
and MFG both bought corn last week.  China soybean imports are up more than 40 percent for the month of October from a year ago.  Palm oil futures are trading near an 8-year high on tight supplies.  USDA is due out Tuesday with S&D updates. Conab, MPOB, CASDE,
and weekly reports will be released as well. 

 

Soybeans,
corn and wheat prices are higher on sharply higher crude oil and rally in the equity markets. 

 

USDA
released its annual baseline S&D’s

https://www.usda.gov/media/press-releases/2020/10/26/usda-announces-early-release-select-commodity-tables-usdas

• USDA
  FORECASTS 2021/22 U.S. CORN PLANTINGS AT 90.0 MILLION ACRES, CROP AT 14.890 BILLION BUSHELS
• USDA
  FORECASTS 2021/22 U.S. SOYBEAN PLANTINGS AT 89.0 MILLION ACRES, CROP AT 4.465 BILLION BUSHELS
• USDA
  FORECASTS 2021/22 U.S. ALL-WHEAT PLANTINGS AT 46.0 MILLION ACRES, CROP AT 1.890 BILLION BUSHELS
• USDA
  PROJECTS 2021/22 U.S. CORN ENDING STOCKS AT 2.257 BILLION BUSHELS, SOY ENDING STOCKS AT 255 MILLION BU, WHEAT ENDING STOCKS AT 830 MILLION BU

 

 

Weather
and Crop Progress

 

 

 

Rain
expected in Brazil during the next ten days may lead to a little bearish bias in market mentality. Argentina’s weather will continue a little more tenuous. South Africa weather will continue to improve and there is not much reason to worry over Australia’s
unharvested canola conditions for a while. Harvesting in China and India continues to advance favorably and winter rapeseed is establishing well in China. Winter rapeseed in Europe may not be as well established as it could be, but the crop is in better shape
than last year except in parts of Ukraine.

            Today’s
weather may offer a bearish bias to market mentality. 

 

Australia
small grain weather will be good for crop maturation and harvesting over the next couple of weeks. Harvest weather in South Africa will also be good as it will be in Rio Grande do Sul, Brazil. Argentina small grains are likely developing better than earlier
this year, but some production cut did occur because of dryness earlier in the growing season.

            U.S.
hard red winter wheat is establishing relatively well, but more moisture is certainly needed before dormancy to ensure the best possible establishment. Wheat in the northwestern U.S. Plains did not get all planted and this week’s blizzard will bury fields
with no further planting or establishment time remaining. Moisture in Canada’s Prairies will be sufficient this week to improve spring planting conditions in 2021.

            India
and China small grains are establishing favorably and little change is expected. Europe small grain conditions vary widely with the poorest establishment in southeastern Europe and from there into Kazakhstan, despite some late season precipitation.

            North
Africa needs greater rain to induce better planting and establishment conditions this autumn. Recent rain in Spain should be greatly improving crop establishment.

            Overall,
today’s weather may induce a neutral to slightly bearish bias to market mentality.

Source: 
World Weather Inc. 

 

Bloomberg
Ag Calendar

Monday,
Nov. 9:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  winter wheat conditions; harvest for soybeans, corn, cotton, 4pm
• Brazil
  Unica cane crush, sugar production (tentative)
• Ivory
  Coast cocoa arrivals
• EU
  weekly grain, oilseed import and export data
• EARNINGS:
  BRF SA

Tuesday,
Nov. 10:

• USDA’s
  monthly World Agricultural Supply and Demand (WASDE) report, noon
• China’s
  agriculture ministry (CASDE) releases monthly report on supply, demand
• Malaysian
  Palm Oil Council webinar on China’s post-pandemic palm oil demand
• Malaysian
  Palm Oil Board releases data on end-October stockpiles, exports, production
• Conab’s
  data on area, output and yield of soybeans and corn in Brazil
• Malaysia
  Nov. 1-10 palm oil export data from AmSpec, SGS

Wednesday,
Nov. 11:

• EARNINGS:
  JBS, Barry Callebaut
• HOLIDAY:
  U.S. (Veterans Day, federal govt closed, CME trading unaffected), France, Canada

Thursday,
Nov. 12:

• Port
  of Rouen data on French grain exports
• Vietnam
  customs data on coffee, rice and rubber exports in October
• EIA
  U.S. weekly ethanol inventories, production
• EARNINGS:
  BayWa, Marfrig

Friday,
Nov. 13:

• ICE
  Futures Europe weekly commitments of traders report, 1:30pm (6:30pm London)
  
• NOTE:
  CFTC Commitments of Traders report, usually released on Fridays, is scheduled for Monday, Nov. 16, due to U.S. federal holiday
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• FranceAgriMer
  weekly update on crop conditions
• New
  Zealand Food Prices

Saturday,
Nov. 14:

• China
  Animal Agriculture Association summit on hog recovery, ASF vaccine progress

Source:
Bloomberg and FI

 

 

 

 

 

 

 

 

 

USDA
inspections estimates via Reuters              

Wheat         
250000-500000

Corn             
650000-1000000

Soybeans   
1950000-2250000

 

CFTC
Commitment of Traders

Funds
for the second week in a row were much more long than estimate for the traditional net long position in corn.  Traditional funds in soybeans are still near their recent record. 

 

 

 

 

 

Macros

 

 

Corn.

• US
  CBOT corn futures are lower despite easing Covid-19 demand destruction fears and rally in outside markets.  US cash markets are slightly softer.  Rain expected in Brazil during the next ten days, but Argentina’s weather will continue to see ongoing dry conditions. 
  After election results, there was talk China may try to renegotiate the Phase One US/China trade deal but it will take months for this to become realistic, in our opinion, and by the time it comes up, China will have committed to most of the 40+ billion of
  US agriculture commitments. 
• For
  the week ending November 5 (Thursday), domestic corn prices in Brazil fell 1.6 percent to 81.28 BRL per 60-kilo bag. (ESALQ/BM&FBovestpa Index)
• CBOT
  corn open interest was up 8,318 contracts on Friday. 
• WTI
  was up $3.76 and USD 5 points higher at the time this was written. 

 

Corn
Export Developments

• Iranian
  state-owned animal feed importer SLAL seeks up to 60,000 tons of animal feed corn, 60,000 tons of feed barley and 60,000 tons of soymeal, on Wednesday, Nov. 11, for shipment in December 2020 and in January 2021.
• Both
  South Korea’s FLC and MFG bought a combined 268,000 tons of corn last week. 
  

 

Soybean
complex.  

• The
  soybean complex is rallying led by soybean oil (higher WTI crude oil) on easing fears over demand destruction from increasing Covid-19 cases after it was announced a vaccine could be available by late November.   Soybeans are trading near a 4-year high on
  SA weather concerns and Chinese soybean demand.  The U.S. National Aeronautical and Space Administration (NASA) has declared drought in South America is the second most serious one since 2002 with 2015-16 being more serious. (World Weather Inc.)
• We
  heard China bought at least one Brazilian soybean cargo late last week for March shipment. 
  
• China’s
  General Administration of Customs reported China’s soybean imports were up 41% in October from a year ago to 8.69 million tons from 6.18 million tons in the same month year earlier, and down from 9.8 million tons in September.  Imports of vegetable oils were
  885,000 tons in October, down 3.9% from the previous month. 
• Russia
  seeks to tax sunflower seed exports at 30 percent from current 6.5 percent due to lower Black Sea production this year. 
  
• Abiove
  sees Brazil importing one million tons of soybeans in 2020, highest since 2008 nearly four times average calendar year imports.  Looking at 2021, Abiove pegged imports at a half million tons.  We think this reflects heavy imports in January 2021. 
  
• Argentina
  soybean planting progress was less than 5 percent complete last workweek, well behind normal.  Paraguay was 90 percent complete. 
  
• Strategie
  Grains has lowered its forecast for rapeseed imports in the European Union and Britain this season to 5.9 million tons, from 6.3 million a month earlier.
• We
  last heard late last week IL soybean was 100 over, East 125 over, West 75 over and Gulf 550 over.  Brazil was 770 over and Argentina 480 over. 
  
• CBOT
  soybean open interest was up 3,724 contracts on Friday. 

• Offshore
  values this morning were leading CBOT soybean oil 26 higher and meal $0.80 higher. 
  
• Rotterdam
  soybean oil values were about 5 lower, rapeseed oil 4 euros higher, and Rotterdam meal mostly higher from this time previous session. 
  
• China
  cash crush margins were 101 cents on out our calculation, compared to 115 last week and 162 year ago. 
  

• Traders
  are looking for Malaysian palm end of October stocks to fall 9.8 percent to 1.56 million tons from 1.725 million at the end of September.  Good demand from exports and lower production may sink ending palm oil stocks to a three-year low. 
  
• Malaysian
  palm futures are trading near an 8-year high. 

 

 

Oilseeds
Export Developments

• Under
  the 24-hour announcement system, private exporters sold 123,000 tons of soybeans to unknown for 2020-21 delivery. 
  
• Iranian
  state agency the Government Trading Corporation (GTC) seeks up to 60,000 tons of milling wheat, 30,000 tons of soyoil and 30,000 tons of sunflower oil, on Tuesday, Nov. 10, for shipment in December 2020 and in January 2021.
  
• Awaiting
  results:  Egypt’s GASC seeks local vegetable oils on November 9 for Dec 25-Jan 15 arrival (2,000 sunflower oil and 3,000 soybean oil). 
  Offers:

5,000
tons of soyoil at 14,000 Egyptian pounds equivalent to around $893.42

8,000
tons of soyoil at 14,300 Egyptian pounds equivalent to around $912.57

3,000
tons of soyoil at 14,500 Egyptian pounds equivalent to around $925.33

5,000
tons of soyoil at 14,500 Egyptian pounds equivalent to around $925.33

8,000
tons of soyoil at 14,315 Egyptian pounds equating to around $913.52

• The
  USDA last Wednesday reported the purchase of 5,610 tons soybean meal under the Food for Progress export program for shipment Dec 1-10 and Dec 18-28 to Honduras. Price paid was reported at $503.00 per ton. 
  
• The
  USDA last week reported the purchase of 60 tons of packaged oil for shipment to Zimbabwe under Title II, PL480. Shipment was scheduled for Dec 1-31, with prices ranging from $1,222.80 to $1,587,86.
• The
  USDA seeks 180 tons of veg oil packaged in 4-liter cans on Nov 17 for use in the McGovern-Dole Food for Export program for shipment to Liberia. Shipment was scheduled for Dec 16-31 and Jan 1-15 (Jan 1-31 for plants at ports).
  

 

 

Wheat

• Wheat
  is lower following technical weakness and recent beneficial weather for the Northern Hemisphere but dry weather for Argentina remains a great concern.  42% of the Argentine wheat crop is being rated as poor. The trade is expecting US winter wheat conditions
  to improve this afternoon. 
• IKAR:
  Russian wheat export prices for 12.5% protein were up $2/ton to $253 from the previous week.
  
• SovEcon:
  Black Sea wheat unchanged at $253/ton fob while barley up $3/ton to $214/ton. 
  
• APK-Inform: 
  Ukraine wheat 12.5% protein Black Sea wheat prices traded at $252-$256 per ton fob Black Sea, near unchanged.
• Ukraine
  grain exports fell 16.7 percent so far in 2020-21 to 17.4 million tons from 20.9 million tons year earlier.  Corn exports were 2.9 million ton as of Nov. 9 compared to 5.1 million tons last year.   Wheat exports declined to around 11 million ton from 12.2
  million.
• Kazakhstan
  seeks to export 500,000 tons of wheat and flour to China during 2020-21, a 47.2% year-on-year increase from 339,600 tons during 2019-20. 
  
• In
  the first four months of this marketing year (July 2020 through June 2021) Kazakhstan exported 2.5 million tons of wheat and flour in grain equivalent, according to Kazakh Ministry of Agriculture, up 17 percent from the same period a year ago
• Russian
  exports of wheat increased to 24.7 million tons in the first nine months of 2020 from 22.7 million tons a year ago – customs.

• The
  U.S. Agency for International Development said it will grant $20 million to the World Food Program to purchase wheat for Sudan to alleviate shortages in the east African country. (Reuters)
• Paris
  (Matif) December wheat was 0.75 euro higher at 209.50 euros. 

 

Export
Developments.

• Saudi
  Arabia bought a more than expected 860,000 tons of 12.5% protein wheat at $277.53/ton for February through March delivery. 
  
• Ethiopia
  bought a combined 600,000 tons of wheat recently, optional origin. 
• Jordan
  seeks 120,000 tons of milling wheat on November 18 for LH Mar through FH May shipment. shipment. 
  
• Jordan
  seeks 120,000 tons of feed barley on November 17 for Feb/Mar shipment. 

• Iranian
  state agency the Government Trading Corporation (GTC) seeks up to 60,000 tons of milling wheat, 30,000 tons of soyoil and 30,000 tons of sunflower oil, on Tuesday, Nov. 10, for shipment in December 2020 and in January 2021.
  

• Syria
  seeks 150,000 tons of wheat on November 9.  They were in on October 28 for 200,000 tons. 
  
• Turkey
  seeks 550,000 tons of wheat on November 11 for Nov 24 and Dec 18 shipment. 
  

 

Rice/Other

·        
Syria seeks 25,000 tons of white rice on December 2. 

·        
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.