FI Morning Grain Comments 12/01/20

PDF attached

 

Morning. 

 

CBOT
deliveries:

Chicago
Wheat; 100

KC
Wheat; 6

Oats;
240

 

CBOT
ag futures are firmer this morning on technical buying after dropping hard on Monday.  Australia is expected to produce its second largest crop in history, capping gains in wheat.  Lowest offer for Egypt seeking wheat is $261.85/ton of Russian wheat.  Only
Russia and Ukraine offers were presented.  Thailand seeks 106,300 tons of feed wheat (120k previous) on Wednesday.  Jordan passed on barley and Japan seeks 126,961 tons of wheat.  On our analysis, China soybean crush margins fell hard to 59 cents/bushel from
76 cents on Monday.  Offshore values are leading SBO 92 points higher and meal $2.00 higher.  Palm oil rose 42 points and cash increased $7.00 percent ton.   Argentina export workers planned a strike starting Tuesday.  Argentina fob soybean oil fell $21.00/ton
to $952/ton on Monday, according to AgriCensus.  Black Sea sunflower oil was also under a good amount of pressure. 

 

 

 

Weather

 

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Weather
conditions will improve in Brazil later this week through next week, but some additional crop stress is expected until the rain begins. Argentina received some beneficial rain during the weekend, but amounts in the areas that matter most were a little light
and greater rain is still needed. South America weather is expected to become more classic La Nina once again later this week through the balance of the first half of December with below average soil moisture and precipitation in eastern Argentina, Uruguay,
southern Paraguay and southern Brazil. However, it is important to note the short term improvement in crop and field conditions in southern Brazil, southern Paraguay and northern Uruguay during the weekend.

            South
Africa, Australia, India and China weather and soil conditions have not changed much from those of late last week and the outlook in each of these areas will be about the same this week. That suggests favorable planting and early season crop development in
South Africa and far southern India. Net drying is expected elsewhere in India and there is need for greater precipitation in eastern Australia and South Africa. Winter rapeseed in China is rated favorably.

            No
change in Europe or the western CIS crop and field conditions will occur in the coming week.

            Southeast
Asia oil palm production potentials remains favorably rated.

            Overall,
weather today will likely produce a mixed influence on market mentality with slight bearish bias. 

 

MARKET
WEATHER MENTALITY FOR WHEAT

Not
much change in U.S. hard red winter wheat condition has occurred recently and weather conditions will remain drier biased over the next ten days to two weeks. U.S. Midwest soft wheat conditions will remain favorable.

            No
change in Russia’s Southern region wheat has occurred recently and not much change is expected for a while. The same is true for Ukraine. However, both of these regions could see improved crop development in the spring if winterkill is kept to a minimum this
year and weather conditions bring some timely moisture in the spring.

            China
wheat has established well and should perform well in the spring. India winter crops are also rated favorably.

            Harvest
conditions in Australia are advancing well around brief periods of rain. South Africa’s harvest has also advanced relatively well. Argentina wheat conditions are mostly unchanged with crops filling, maturing and being harvested under fair conditions. Buenos
Aires crops are in the best shape as they have been most of this growing season.

            Europe
winter crops are in various conditions with many crops dormant or semi-dormant. There has been some development in the southwest part of the continent.

            Overall,
weather today will likely provide a mixed influence on market mentality.

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

Tuesday,
Dec. 1:

• International
  Coffee Conference, Vietnam, day 1
• Australia
  Commodity Index
• U.S.
  Purdue Agriculture Sentiment
• USDA
  Soybean crush, DDGS production, corn for ethanol, 3pm
• Virtual
  summit – Resetting the Food System from Farm to Fork
• CNA
  Outlook for Brazil’s Agriculture in 2020, Sao Paulo
• New
  Zealand global dairy trade auction

Wednesday,
Dec. 2:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• Virtual
  Indonesian palm oil conference, day 1
• International
  Coffee Conference, day 2

Thursday,
Dec. 3:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• FAO
  World Food Price Index
• Port
  of Rouen data on French grain exports
• ANZ
  Commodity Price
• Indonesian
  palm oil conference, day 2
• International
  Coffee Conference, day 3
• Canada
  Statcan wheat, durum, canola, barley and soybean production

Friday,
Dec. 4:

• 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
• China’s
  CNGOIC to publish monthly soy and corn reports
• FranceAgriMer
  weekly update on crop conditions

Source:
Bloomberg and FI

 

 

 

 

USDA
inspections versus Reuters trade range                                                    

Wheat         
502,788         versus   300000-600000  range

Corn             
890,033         versus   700000-1000000                range

Soybeans   
2,036,484     versus   1800000-2200000             range                                                                                                   

 

CFTC
– weekly commitments of traders report

The
traditional fund position in corn was 451,339 contracts, about 46,800 short of its record.  Soybeans came in at 281,730, just shy of its record of 282,075 contracts. 

 

 

 

 

 

Macros

·        
China’s Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 54.9 from October’s 53.6, a decade high.

 

 

Corn.

• CBOT
  corn is higher today on technical rebound after falling a large amount on Monday.  Corn continues to hold its long term trend support at $4.1575. Strong support for March corn is seen at $4.21. 
  
• Soybean
  and Corn Advisory: 2020/21 Brazil Corn Estimate Lowered 2.0 mt to 104.0 Million Tons.  2020/21 Argentina Corn Estimate Unchanged at 48.0 Million Tons
• The
  USD was about 22 points lower and WTI crude was $0.27 lower, at the time this was written. 
  
• USDA
  US corn export inspections as of November 26, 2020 were 890,033 tons, within a range of trade expectations, above 832,882 tons previous week and compares to 439,633 tons year ago. Major countries included Mexico for 294,535 tons, China Main for 200,860 tons,
  and Colombia for 140,216 tons.
• September
  US ethanol production totaled 27.778 million barrels, below 28.419 million for the month of August and compares to 29.232 million in September 2019.  We are using 5.100 billion bushels for corn for ethanol use, 50 million above USDA. 
  

 

Corn
Export Developments

• USDA
  announced private exporters sold:

—

 

 

 

Soybean
complex.  

• CBOT
  soybeans and
  products are higher this morning on light technical rebound and higher lead by the offshore product values.  On our analysis, China soybean crush margins fell hard to 59 cents/bushel from 76 cents on Monday.  Palm oil rose 42 points and cash increased $7.00
  percent ton.  The COT report showed the managed funds in soybeans not as long as expected at only 187k long.  USDA NASS is out with the monthly crush for Oct this afternoon.
  
• Traders
  looking to buy dips in soybeans should eye the $11.60-11.65 area if prices trend lower. 
  
• Argentina
  export workers planned a strike starting Tuesday. 
• Soybean
  and Corn Advisory: 2020/21 Brazil Soybean Estimate Lowered 2.0 mt to 130.0 Million.  2020/21 Argentina Soybean Estimate Unchanged at 49.0 Million Tons

• Argentina
  fob soybean oil fell $21.00/ton to $952/ton on Monday, according to AgriCensus.  Black Sea sunflower oil was also under a good amount of pressure. 
  
• Offshore
  values this morning were leading CBOT soybean oil 92 higher and meal $2.00 higher.  
  
• Rotterdam
  soybean oil values were about unchanged, rapeseed oil 5 euros higher, and Rotterdam meal mixed from this time previous session. 
  
• China
  cash crush margins were 59 cents on out our calculation (76 previous), compared to 75 last week and 162 year ago.
  

• Malaysian
  palm oil:

• The
  European Union reported soybean import licenses since July 1 at 5.806 million tons, below 5.837 million tons a year ago. European Union soybean meal import licenses are running at 7.379 million tons so far for 2020-21, below 8.160 million tons a year ago.
  EU palm oil import licenses are running at 2.477 million tons for 2020-21, above 2.342 million tons a year ago, or up 6 percent.
• European
  Union rapeseed import licenses since July 1 were 2.671 million tons, down 19 percent from 3.280 million tons from the same period a year ago.

• Malaysia
  may end its duty free crude palm exports, and this news sent palm futures lower. Malaysian November palm exports fell 16.5 percent, according to AmSpec, to 1.420 million tons from the previous month.  SGS reported an 18.9 percent decline.  
  
• USDA
  US soybean export inspections as of November 26, 2020 were 2,036,484 tons, within a range of trade expectations, below 2,233,630 tons previous week and compares to 1,576,703 tons year ago. Major countries included China Main for 1,388,722 tons, Mexico for
  136,928 tons, and Indonesia for 101,182 tons. FND
  deliveries were zero across the board.  Indonesia set its Dec crude palm oil export tax at $33/ton from $3/ton previous. 
  
• U.S.
  production of biodiesel was 159 million gallons in September 2020, 4 million gallons lower than production in August 2020. There was a total of 1,201 million pounds of feedstocks used to produce biodiesel in September 2020, down from 1,239 million in August
  and up from 1,803 million in September 2019. Soybean oil remained the largest biodiesel feedstock during September 2020 with 737 million pounds consumed, near our expectation, down from 745 previous month and up sharply from 599 million in September 2019. 
  This closes out the October-September crop year at 7.832 billion pounds of soybean oil for biodiesel production, below USDA’s latest estimate of 7.900 billion.  We project 2020-21 SBO feedstock at 8.0 billion, 100 less than USDA. 
  

 

Oilseeds
Export Developments

• Iran’s
  GTC seeks 30,000 tons of sunflower oil for Jan/Feb shipment. 
• The
  CCC seeks 8,660 tons of packaged vegetable oils for various locations on December 1 for Jan-FH Feb shipment. 
  

 

Reuters
has a crush estimate of 196.6 million and stocks of 1912 million pounds. 

 

Wheat

• US
  wheat futures are slightly firmer this morning on technical buying.  Australia is expected to produce its second largest crop in history, capping gains in wheat prices.  Lowest offer for Egypt seeking wheat is $261.85/ton of Russian wheat.  Only Russia and
  Ukraine offers were presented. 
• Australia’s
  ABARES estimated 2020-21 wheat production at 31.17 million tons, up from a September estimate of 28.91 million tons, and would be the second largest in history.  31.8 million tons was produced in 2016-17. 
  
• IKAR
  reported Russian winter grains are experiencing their poorest conditions since 2013.  About 78% of the sowings are in a good or satisfactory condition. 
  
• Ukraine
  harvested 62.5 million tons of grain or 98 percent of the projected area.  Ukraine also is nearly complete on winter sowings on the planned 8.2 million hectares.
  
• US
  winter wheat conditions increased an unexpected 3 points to 46 with good improvements for Texas (up 8) Oklahoma (up 4 points), Kansas (up 4 points), and IL (up 9 points).  Some states reported significant downturns.  Montana declined 11 points and Washington
  fell 10 points.  Traders were looking for US winter wheat conditions to remain unchanged at 43 percent.  On our adjusted rating, HRW increased 1.2 percent from the previous week, SRW was up 0.3 percent and Winter White declined 1.7 percent. 
  
• March
  milling wheat was unchanged at 207 euros.
• The
  European Union granted export licenses for 16,000 tons of soft wheat exports, bringing cumulative 2020-21 soft wheat export commitments to 9.318 MMT, well down from 12.239 million tons committed at this time last year, a 24 percent decrease.  Imports are up
  11 percent from year ago at 1.071 million tons.

• USDA
  US all-wheat export inspections as of November 26, 2020 were 502,788 tons, within a range of trade expectations, above 363,452 tons previous week and compares to 334,904 tons year ago. Major countries included Mexico for 68,669 tons, China Main for 62,999
  tons, and Nigeria for 49,003 tons.

 

Export
Developments.

• Egypt
  seeks wheat for Jan 26-Feb 5 shipment.  Lowest
  offer for Egypt seeking wheat is $261.85/ton of Russian wheat.  Only Russia and Ukraine offers were presented. 
  
• Thailand
  seeks 106,300 tons of feed wheat (120k previous) on Wednesday for Feb/Mar shipment. 
  
• Jordan
  passed on 120,000 tons of barley.
• Japan
  seeks 126,961 tons of wheat this week. 

• Turkey
  seeks 400,000 tons of wheat on December 4 for shipment between Jan 8 and Jan 25. 
  
• Jordan
  seeks 120,000 tons of wheat on Dec 9 for April through FH May shipment. 
• Qatar
  seeks 100,000 tons of feed barley on December 8, optional origin. 

 

Rice/Other

·        
India’s rice exports in January to October jumped 43% from a year ago to 11.95 tons from 8.34 million tons a year earlier – ministry of commerce and industry.

·        
Bangladesh seeks 50,000 tons of rice on December 2 for shipment within 40

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

·        
South Korea seeks 45,458 tons of US rice on Dec 7 for arrival around April 30 and May 31.