FI Morning Grain Comments 12/02/20

PDF attached

 

Morning. 

 

No
24-hour USDA sales. Another down day for the US agriculture markets, in part to a robust October US crush rate and wet weather for South America over the next two weeks. The two week outlook for South America calls for decent rain for Argentina and southern
Brazil. Southwestern Argentina saw some rain overnight.  Southern Brazil was mostly dry.  The futures price weakness did attract physical grain buyers to the market overnight.  January soybeans, meal and oil traded through their respected 20-day MA’s overnight. 
China crush margins continue to erode.  Argentina fob soybean oil was down another $13 yesterday to around $939/ton. Offshore values were mixed but meal was leading CBOT soybean meal sharply lower this morning.  Indonesia 2020 biodiesel consumption is running
about 13 percent lower than their initial target.  Corn is following soybeans lower. Technicals look bearish for corn along with the soybean complex. Wheat losses are limited on bottom picking and increase in global export developments. 

 

 

 

 

 

 

Weather

 

MOST
IMPORTANT WEATHER IN THE WORLD

• Today’s
  GFS 00z model run produced a significant storm in the central U.S. impacting hard red winter wheat production areas Dec. 11-12, but that advertised storm will NOT verify.  The 06z model run has already corrected back to a more limited precipitation event,
  although some moisture may occur
• World
  Weather, Inc. still believes that there will be some periodic weather events in the central and southwestern Plains this month, but the amount of moisture resulting will continue below average leaving the region’s moisture deficits in place
• Seasonably
  mild to cool temperatures will help conserve whatever moisture does occur helping to leave at least a little more moisture in the soil at the end of this month than there is today, but the need for greater moisture will remain
• Southern
  Russia and other areas near the Black Sea will also experience a little more precipitation in December than in November and there will be “some” increase in soil moisture for the region and a little snow cover at times, too; however, moisture deficits will
  remain in at least a part of this region as well as in the west-central and southwestern U.S. Plains
• Argentina
  rainfall overnight was greatest in central and interior northern Cordoba and a few central Santa Fe locations with amounts of 0.20 to 0.88 inch common and a few amounts as great as 1.25 inches
  
• Southern
  Cordoba and far northern Cordoba as well as most other areas in the nation were left mostly dry
• The
  moisture was welcome and beneficial to “some” important summer crop areas
• That
  part of Argentina was missed by last weekend’s greater rainfall that impacted northeastern and east-central parts of the nation which has improved many crops in the nation – temporarily
• Argentina’s
  rain will be quick to advance northeast today impacting northern and central Santa Fe, northern Entre Rios, Corrientes, eastern Chaco and eastern Formosa bringing more moisture to areas that have become rather moist already because of last weekend’s rain
• Moisture
  totals will vary from 0.50 to 1.50 inches with a few amounts of 2.00 inches or more
• Argentina
  weather will be one of net drying Thursday through next Wednesday except in the far northwest of the nation where rain is expected late Monday into Tuesday before moving to Paraguay Wednesday, Dec. 9.
• Portions
  of Santiago del Estero, western Chaco, northwestern Formosa and southeastern Salta may be wettest with 0.50 to 1.75 inches possible and locally more
• Drying
  outside of the northwest during the coming week will lead to crop moisture stress for some areas in the south where recent rain has missed
• Favorable
  subsoil moisture in Buenos Aires will carry crops through the coming week of drying, but rain will be needed soon thereafter
• Southern
  Argentina “may” receive some rain Dec. 11-12, but amounts may be light and the benefit will be short-lived
• That
  rain event will impact other areas in the nation Dec. 12-14 favoring the north
• Argentina’s
  bottom line for the next couple of weeks will be favorable for crops in the north and especially the northeast. However, soil moisture may be a little low in southern parts of the nation for a while, including southern Cordoba, La Pampa and parts of Buenos
  Aires and southern most Santa Fe. It is important to noted, though, that subsoil moisture in central and eastern Buenos Aires is still rated favorably. The drier bias in the south is not all bad – winter crops that are filling, maturing and being harvested
  will all benefit.
• Brazil
  weather is expected to improve over the coming two weeks except in the northeast where net drying is expected in parts of Bahia and possibly portions of Piaui
  
• Rain
  in most other areas will be sufficient to support crops favorably
• Portions
  of Minas Gerais may become too wet as time moves along with multiple inches of rain expected that could lead to local flooding in time (probably next week)
• Parana
  may receive some moderate to locally heavy rainfall along with southeastern Paraguay and a few immediate neighboring areas by Sunday
• Moisture
  totals of 2.00 to 6.00 inches will occur in these areas with some model data suggesting locally more
• Mato
  Grosso and Goias rainfall will occur periodically and a bit more erratically than some other areas, but all of both states will be impacted eventually
• Rio
  Grande do Sul rainfall will be greatest today with a more sporadic and light distribution of rain after that for much of the coming ten days leaving the state with returning dryness in time
• Brazil’s
  bottom line should prove to be mostly good, but keep an eye on Bahia, Piaui and Rio Grande do Sul rainfall over the next couple of weeks. Those areas have the greatest potential of drying down. Conditions supporting improved monsoonal rainfall in late December
  and January seem to be coming together, although much of this week’s rainfall cannot be attributed to improved monsoonal activity. Crop conditions should improve for the majority of center west and center south production areas over the next ten days.
  
• Eastern
  Australia rain potentials will slowly be improving over the next two weeks with dryland crop areas of Queensland and New South Wales getting some badly needed rain during the second half of next week and into the following weekend
• The
  significance of this change has not been fully determined, but relief from recent excessive heat and dryness is probable
• Temperatures
  will not be nearly as oppressively hot during the next ten days, but warmer than usual conditions will prevail in Queensland until significant rain evolves
• Good
  harvest weather is expected in southern Australia around periods of light rainfall.
  
• South
  Africa rainfall will scatter across the nation over the next ten days benefiting most summer crop areas and improving early season emergence and growth eventually
• Portions
  of the nation are still a little too dry for optimum crop development, but the rain coming should bring improvement
  
• Free
  State, western North West and eastern Northern Cape are among the driest areas
• Tamil
  Nadu, India and northern Sri Lanka will be impacted by Tropical Cyclone Burevi
• The
  storm will move across northern Sri Lanka today and then to far southern Tamil Nadu and southern Kerala Thursday
• The
  storm will produce heavy rain in both regions resulting in some flooding and minor amount of damage to personal property and agriculture
• Rainfall
  of 3.00 to 12.00 inches will occur in northern Sri Lanka while 2.00 to 5.00 inches occur in southern India through Friday
• Additional
  waves of rain will continue far southern India and Sri Lanka through early next week, although amounts will be much lighter
• Sugarcane,
  rice and some cotton will be most impacted by the storm
• Other
  areas in India will experience good weather for crop maturation and harvest progress
• U.S.
  weather was mostly dry Tuesday, although some moisture occurred in the northwestern Plains and from the northeastern corner of the Midwest into New England
• No
  threatening cold occurred in Florida citrus areas this morning
• U.S.
  weather through the weekend presents one storm system
• Rain
  and snow evolve in southern and western Kansas, the Oklahoma and northeastern Texas Panhandles, southeastern Colorado and in most of Oklahoma today and early Thursday
• Moisture
  totals will vary from 0.05 to 0.50 inch with a few totals to 0.70 inch
• Some
  heavy snow is expected with 2 to 5 inches common from southeastern Colorado to southwestern Kansas and northern parts of the Texas Panhandle while varying locally up to 10 inches favoring a few counties from northwestern Oklahoma into the eastern Oklahoma
  Panhandle and few Kansas locations near the Oklahoma border
• Rain
  from this event will also occur in eastern Texas, western Arkansas and western Louisiana by Thursday morning
• The
  southern Plains storm will diminish while drifting into the Delta Thursday and then intensify in Tennessee and Kentucky Friday before moving northeast through southern New England Saturday
• Portions
  of the southeastern states will also get rain from this event
• Moisture
  totals will be less than 0.60 inch in the Delta and vary from 0.20 to 0.75 inch in the southeastern states while eastern Kentucky, eastern Tennessee and areas northeast to New Jersey receive 0.75 to 1.25 inches of moisture
• Precipitation
  elsewhere in the U.S. will not be very great through the weekend, although some rain and mountain snow will develop in Washington and Oregon
• U.S.
  weather next week will bring another storm from the southwestern states into the southern Plains during mid-week and then northeast to the Great Lakes region late in the week and into the following weekend
• A
  couple of follow up storm systems will impact the Delta, lower eastern Midwest and interior southeastern states in the second weekend of the outlook into Dec. 15.
  
• Other
  areas will not likely see much precipitation
• U.S.
  temperatures will be quite warm in the north-central states and New England in this first week of the outlook and then cooling is expected in many areas in the central and northwestern parts of the nation in the following week
• Snow
  cover in CIS winter crop areas continues restricted in some areas, but there has been no threatening cold in recent days and none was expected through the next ten days
• Bitter
  cold will be confined to the eastern New Lands and Kazakhstan
• Brief
  periods of light snow and rain will impact the western CIS over the next ten days; not much improvement in soil moisture is expected in the drier areas  leaving parts of Ukraine, Russia’s Southern Region and Kazakhstan still in need of greater moisture
• Temperatures
  will be close to normal west of the Ural Mountains and below average to the east
• Europe
  precipitation is expected to be erratic over the next ten days to two weeks with sufficient amounts in some areas to bolster soil moisture for use in the spring
• Italy,
  the eastern Adriatic Sea region, parts of the Iberian Peninsula France and the U.K. will be wettest
• Soil
  moisture is still favorable in much of the continent
• Temperatures
  will be seasonable with a cool bias in the west and a warm bias in the east
• North
  Africa rainfall will be greatest and most frequent in the coming week to ten days in northern Algeria, although some beneficial moisture will also impact northeastern Morocco and a few northern areas of Tunisia
• Greater
  rain is needed in Morocco and northwestern Algeria to improve planting conditions for wheat and barley
• China
  weather over the next two weeks will include restricted amounts of precipitation and temperatures will be near to slightly below average except in the far northeast where they will be a little warmer biased
• East-central
  parts of the nation will be wettest keeping some southern wheat and rapeseed areas plenty moist
• Indonesia,
  Malaysia and Philippines weather during the next two weeks will be routinely moist with frequent showers and thunderstorms supporting long term crop development
• Interior
  parts of mainland Southeastern Asia will be mostly dry over the next ten days
• Some
  frequent rain will occur along the Vietnam coast due to a strong northeast monsoon flow pattern
• Local
  flooding may occur, but mostly next week
• Southern
  Oscillation Index was +8.74 today; the index will rise the remainder of this week and into the weekend
• Mexico
  precipitation will be quite limited over the coming week favoring summer crop maturation
• Southern
  areas will be wettest and only light rainfall from scattered showers will result
• Portions
  of Central America will continue to receive periodic rainfall over the next couple of weeks, but the intensity and frequency of rain will be low in the north
• Costa
  Rica and Panama will be wettest along with southern Nicaragua this workweek

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

·        
East-central Africa rain will be erratic and light over the coming week

·        
New Zealand rainfall will be erratically distributed over the next ten days benefiting most areas

• Amounts
  will be near to above average along the west coast of South Island and in a few southern areas of North Island in this first week of the outlook and below average elsewhere
• Temperatures
  will be a little cooler than usual

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

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

 

 

 

 

Brazil
selected commodities exports:

Commodity                     
November 2020      November 2019

CRUDE
OIL (TNS)                5,736,048             3,728,734

IRON
ORE (TNS)                 29,150,249            29,270,678

SOYBEANS
(TNS)                 1,468,569             4,947,359

CORN
(TNS)                     4,896,436             4,110,283

GREEN
COFFEE(TNS)              275,840               197,734

SUGAR
(TNS)                    3,096,738             1,936,421

BEEF
(TNS)                     167,736               155,536

POULTRY
(TNS)                  324,080               313,173

PULP
(TNS)                     1,483,318             1,219,467

 

Macros

US
ADP National Employment (Nov): 307K (est 410K, prev 365K)

Canada
Labour Productivity Rate (Q3): -10.3% (PrevR 10.5%)

 

Corn.

• Another
  down day for the US agriculture markets, in part to wet weather for South America over the next two weeks. Lower soybeans are leading corn lower as well.  March corn traded below a strong support level of $4.21. Technicals look bearish for corn along with
  the soybean complex.
• The
  USD was about 3 points higher and WTI crude was $0.04 lower, at the time this was written. 
  
• Brazil
  domestic corn prices continues to weaken even though a couple production estimates for this year’s crop were trimmed this week and soybean replanting concerns (MG to replant more than 5 percent of the soybean crop).  
  
• Datagro
  estimated the Brazil corn crop at 114.04 million tons from 114.48 million previously.  StoneX’s Brazil team estimated December 1 Brazil soybean crop at 133.91 million tons, up from 133.48 a month ago, and Brazil corn crop lower to 109.34 million tons, down
  from 111.1 the previous month.
• A
  Bloomberg poll looks for weekly US ethanol production to be down 9,000 at 981,000 barrels (962-998 range) from the previous week and stocks up to 362,000 barrels to 21.228 million.
  
• USDA
  NASS reported the October corn for ethanol use at 433 million bushels, above trade expectations, well above 402 million during September but below October 2019. 
  

 

 

Corn
Export Developments

• South
  Korea’s FLC bought 65,000 tons of optional origin corn at $239.90/ton for arrival around June 15. 
  
• Algeria
  seeks 35,000 tons of optional origin corn on Thursday for shipment by Jan 5. 
  

 

 

Soybean
complex.  

• CBOT
  soybean prices declined further overnight after USDA NASS reported a record daily crush during the month of October. 
  The
  two week outlook for South America calls for decent rain for Argentina and southern Brazil. Southwestern Argentina saw some rain overnight.  Southern Brazil was mostly dry.  Brazil will see wet weather move into the central and northern parts of the country
  later this week and next. 
• January
  soybeans, meal and oil traded through their respected 20-day MA’s overnight.  China crush margins continue to erode to 47 cents/bushel from 59 cents on Tuesday.  We did hear one cargo of US Gulf soybeans may have traded to China for January shipment on Tuesday. 
  
• Argentina
  grain inspectors and oilseed workers will end their strike at 6 am end early on Wednesday morning that affected a few ports in Rosario.  Yesterday Argentina soybean oil fob was down $13-14/ton to around $939/ton.
  
• CBOT
  soybean oil registrations were down 66 (Volga, SD) to 1,592 and deliveries were 100. 
  
• We
  are hearing some US crush locations could see November soybean oil yields around 12.0 pounds per bushel, which is very high. 
  
• Indonesia
  2020 biodiesel consumption is running about 13 percent lower than their initial target.  Indonesia’s full year consumption of biodiesel was previously targeted at 9.6 million kiloliters.
  
• Indonesia’s
  chief economic minister projected palm oil prices will increase next year from $650 per ton to $668.
  

• India’s
  SEA requested to the government that the crude palm oil import tax cut to be rolled back.  The government on Nov. 26 announced slashing import duty to 27.5% on crude palm oil from 37.5%.
• Offshore
  values this morning were leading CBOT soybean oil 12 higher and meal $3.90 lower.  
  
• Rotterdam
  soybean oil values were about 15 euros lower, rapeseed oil 15 euros lower, and Rotterdam meal mostly 5-10 euros lower from this time previous session. 
  
• China
  cash crush margins were 47 cents on out our calculation (59 previous), compared to 75 last week and 162 year ago.
  

• Malaysian
  palm oil:

• USDA
  reported the October crush at a record 196.5 million bushels, near expectations, well above 171.0 million during September and 187.2 million during October 2019.  The daily adjusted crush rate was also a record 6.34 million bushels per day.  End of October
  soybean oil stocks were 1.964 billion pounds, 53 million above expectations, above 1.849 billion previous month and above 1.821 billion pounds at the end of October 2019.  Soybean oil production of 2.282 billion pounds were a record, in part to a large soybean
  oil yield of 11.61 pounds per bushel, and of course a record crush. 

• Brazil
  may not export any soybeans in early December, according to Anec.  Datagro estimated the Brazil soybean crop at 134.98 million tons from 134.44 million previously.  IMEA reported Mato Grosso, Brazil, producers may replant 5.75% of the soybean crop. 
  

 

 

 

Oilseeds
Export Developments

• Vietnam
  bought 68,000 tons of US and/or SA soybean meal for split delivery into two ports with several delivery periods between Dec 15 all the way through July.  Spot was bought at around $504 a ton c&f, deliveries up to March 2021 at around $475 a ton and deliveries
  between April and July at about $460 a ton c&f.
• Iran’s
  GTC seeks 30,000 tons of sunflower oil for Jan/Feb shipment. 

 

Wheat

• US
  wheat futures are mixed in part to bottom picking from the recent downturn in EU and US prices.  The futures price weakness this week did attract physical grain buyers to the market overnight. 
  
• News
  was light. 
• March
  milling wheat was down 1.00 at 204.25 euros.

 

Export
Developments.

• Thailand
  bought 54,000 tons of feed wheat (out of 106,300 tons) at $274.50/ton c&f for March shipment. 
  
• South
  Korea’s SPC bought 31,600 tons of US/Canadian wheat for February shipment. Reuters: “8,900 tons of U.S. northern spring/dark northern spring of a minimum 14% protein content bought at an estimated $309.00 a ton, 4,700 tons of hard red winter wheat of 12% protein
  bought at $315.50 a ton, 6,500 tons of soft white wheat of a maximum 10.5% protein bought at $291.50 a ton and 1,000 tons of soft white wheat of a maximum 9% protein at $291.50 a ton. Another 10,500 tons of Canadian western red spring wheat number 2 grade
  (2CWRS) of 13.5% protein was bought at $311.00 a ton c&f. “
• Algeria
  seeks 25,000 tons of feed barley on Thursday for LF January shipment. 
• 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

• China
  bought rive from India, first time in decades.
• Results
  awaited:  Bangladesh seeks 50,000 tons of rice for shipment within 40.  Lowest
  offer for 50,000 tons of rice was $404.35/ton. 

·        
Results awaited:  Syria seeks 25,000 tons of white rice. 

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