FI Morning Grain Comments 12/08/20

PDF attached

 

Morning. 

 

Brazil
and Argentina weather appears to be mostly unchanged.  Brazil’s Mato Grosso, Goias, Minas Gerais, and Sao Paulo will see rain through Sat. and Argentina’s BA, Cordoba, and southern Santa Fe later this week.  CBOT soybeans, meal and oil hit overnight session
lows just before 6 am CT on sell stops.  US equities are lower, USD higher, and WTI slightly lower.  Traders across the globe remain concerned over the rise in Covid-19 cases and economic stimulus uncertainty.  Matif wheat is trading higher despite weakness
in the US markets.  France’s initial estimated of the soft wheat area was 4.73 million hectares, up 12.4% from year ago (4.21), but less than market expectations (4.9-5.2 million hectares). Five major reports are due out Thursday, MPOB, China CASDE, Conab,
USDA Export Sales & USDA S&D update. 

 

 

 

 

 

 

Weather

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Brazil’s
outlook for summer grain and oilseed continues to improve with frequent showers and thunderstorms expected over the next two weeks. A few pockets of dryness will linger and will need to be closely monitored, but this will likely be the best two weeks of crop
development seen this season.

            Argentina
dryness in the south will continue to be closely monitored since not much relief is anticipated. Crop conditions elsewhere have been more favorable, but routinely occurring rain must occur to support the best crop development.

            Concern
continued over eastern Australia dryland summer coarse grain and oilseed production areas, although relief is coming to a part of the region late this week. Worry also continued in central and western Free State and eastern Northern Cape in South Africa over
poor soil moisture. South Africa dryland crops will get relief before Australia’s crops do. Northeastern New South Wales will get some important rain later this week.

            China
winter rapeseed is dormant or semi-dormant and plenty moist which may be good for spring development. Europe soil moisture is rated adequate and crops are dormant or semi-dormant. Southeast Asia soil moisture is sufficient to support oil palm and many other
oil producing crops along with corn.

            India
summer crop harvesting advanced mostly well during the past week, but too much rain in the far south has fieldwork on hold. Southern India will trend drier later this week.

            Overall,
weather today will likely produce a bearish bias on market mentality.

 

MARKET
WEATHER MENTALITY FOR WHEAT

No
significant changes were noted overnight or in the two-week forecast for key wheat production areas around the world. Concern over poor winter crop establishment remains in Russia’s Southern Region, eastern Ukraine, the U.S high Plains region, Montana and
perhaps a few areas in Europe. Wheat conditions are rated favorably in China and India and most will finish out in Argentina without losing much yield potential or crop quality because of the current drying trend. Australia’s harvest has advanced well, despite
some periodic rain delays and more of the same is expected.

           
Overall, weather today will likely not provide much of a notable influence on market mentality due to the lack of change relative to recent past days, but a bearish bias will continue because of market “herd” mentality.

Source:
World Weather Inc. and FI

 

 

Bloomberg
Ag Calendar

Tuesday,
Dec. 8:

• Australia’s
  Abares releases quarterly agricultural commodities report
• French
  agriculture ministry to publish crop estimates
• UkrAgroConsult
  Black Sea Grain conference
• BRF
  Day
• Brazil
  Unica cane crush, sugar production (tentative)
• National
  Grain & Feed Association Country Elevator Conference, 10am

Wednesday,
Dec. 9:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• National
  Grain & Feed Association Country Elevator Conference, 10am

Thursday,
Dec. 10:

• China’s
  agriculture ministry (CASDE) releases monthly report on supply, demand, 10am local
• Malaysian
  Palm Oil Board releases data on November stockpiles, exports, production, 12:30pm local
• FranceAgriMer
  monthly crop report
• Agroinvestor
  Russian agriculture conference
• Port
  of Rouen data on French grain exports
• Conab’s
  data on area, output and yield of soybeans and corn in Brazil, 7am
• National
  Grain & Feed Association Country Elevator Conference, 10am
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• USDA’s
  monthly World Agricultural Supply and Demand (WASDE) report, 12pm
• HOLIDAY:
  Thailand

Friday,
Dec. 11:

• ICE
  Futures Europe weekly commitments of traders report
• HOLIDAY:
  Thailand

Source:
Bloomberg and FI

 

 

 

 

 

USDA
inspections versus Reuters trade range                                                    

Wheat                 
530,781                 versus   400000-600000  range

Corn                     
734,079                 versus   750000-1100000                range

Soybeans           
2,297,316             versus   1500000-2200000             range

 

Macros

 

US
Nonfarm Productivity Q3 F: 4.6% (est 4.9%; prev 4.9%)

US
Unit Labour Costs Q3 F: -6.6% (est -8.9%; prev -8.9%)

Brazil
IBGE Inflation IPCA (M/M) Nov: 0.89% (est 0.78%; prev 0.86%)

Brazil
IBGE Inflation IPCA (Y/Y) Nov: 4.31% (est 4.20%; prev 3.92%)

Eurozone
GDP SA (Q/Q) Q3 F: 12.5% (est 12.6%; prev 12.6%)

Eurozone
GDPA SA (Y/Y) Q3 F: -4.3% (est -4.4%; prev -4.4%)

S.Africa
GDP Annualised (Q/Q) Q3: 66.1% (est 54.4%; prevR -51.7%; prev -51.0%)

S.Africa
GDP (Y/Y) Q3: -6.0% (est -7.5%; prevR -17.5%; prev prev -17.1%)

 

Corn.

• CBOT
  March corn ended 3.50 cents higher after opening lower.  A rebound in wheat, slightly drier midday SA weather forecast and technical buying underpinned corn. 
    
• France
  confirmed the bird flu case reported Monday was H5N8. UkrAgroConsult lowered their Ukraine corn estimate by 1 million tons to 31 million. 
  
• Today
  is day 2 of the Goldman Roll.
• Ukraine
  completed the wheat and barley harvest by collecting 27.9 million tons of corn from 5.2 million hectares, or 96% of the sown area, according to the economic ministry. 
  
• USDA
  US corn export inspections as of December 03, 2020 were 734,079 tons, below a range of trade expectations, below 1,034,505 tons previous week and compares to 489,612 tons year ago. Major countries included Mexico for 314,771 tons, China Main for 271,335 tons,
  and Costa Rica for 57,908 tons.

 

Corn
Export Developments

• South
  Korea’s FLC bought 69,000 tons of corn at $235.95/ton c&f for FH June shipment out of the PNW and/or FH May shipment if from SA. 
  
• Taiwan’s
  MFIG seeks 65,000 tons of optional origin corn on Wednesday for February/March shipment. 
  

 

Natural
gas venting and flaring in North Dakota and Texas increased in 2019

https://www.eia.gov/todayinenergy/detail.php?id=46176&src=email#

 

 

Soybean
complex.  

• Soybeans,
  meal and soybean oil hit intra overnight session lows just before 6 am CT.  Despite robust export inspections posted yesterday, SA weather and economic concerns are dominating CBOT ag futures price movement.  About 1,600 SF sold around 5:58 am CT.  Brazil
  and Argentina weather appears to be mostly unchanged.  Brazil’s Mato Grosso, Goias, Minas Gerais, and Sao Paulo will see rain through Sat. and Argentina’s BA, Cordoba, and southern Santa Fe later this week.  Traders across the globe remain concerned over the
  rise in Covid-19 cases and economic stimulus uncertainty.  Products are lower led by weakness in offshore vegetable oil markets.  Malaysian palm oil fell 26 points and cash was down $6.00/ton. 
  
• US
  equities are lower, USD higher, and WTI slightly lower. 
• We
  heard China bought a few Brazilian soybean cargoes on Monday.  China crush margins were weaker on Tuesday. 
  
• Oil
  World sees China soybean imports between 101 and 102 million tons in calendar year 2020, up from 88.5 million tons year earlier. 
  
• Oil
  World sees China soybean imports between 101 and 102 million tons in calendar year 2020, up from 88.5 million tons year earlier. 
  

• Argentina
  is on holiday today.
• A
  director with Estate Crop Fund said Indonesia is still in line to export 36 million tons of palm oil in 2021 despite a recent tariff hike on exports, up from an expected at 32 million tons this year.
  
• Offshore
  values this morning were leading CBOT soybean oil 14 higher and meal $3.10 higher.  
  
• Rotterdam
  soybean oil values were about 1-3 euros higher, rapeseed oil unchanged to higher, and Rotterdam meal 2 to 3 euros higher from this time previous session.  EU vegetable oil prices saw a wide swing on Monday into today. 
  
• China
  cash crush margins were 85 cents on out our calculation (91 previous), compared to 81 last week and 161 year ago.
  

• Malaysian
  palm oil traded lower tracking outside markets.  Production in Southeast Asia has been hit by rainy weather amid La Nina.  Malaysia’s state-owned Federal Land Development Authority (Felda) on Tuesday said it agreed a deal that will see
  it increase its stake in palm giant FGV Holdings  (Reuters).

• USDA
  US soybean export inspections as of December 03, 2020 were 2,297,316 tons, above a range of trade expectations, below 2,423,867 tons previous week and compares to 1,402,627 tons year ago. Major countries included China Main for 1,551,216 tons, Egypt for 256,141
  tons, and Thailand for 85,331 tons.  Soybeans were upward revised 16.3 million bushels for previous week. 
  

• The
  European Union reported soybean import licenses since July 1 at 6.216 million tons, below 6.294 million tons a year ago. European Union soybean meal import licenses are running at 7.946 million tons so far for 2020-21, below 8.516 million tons a year ago.
  EU palm oil import licenses are running at 2.648 million tons for 2020-21, above 2.481 million tons a year ago, or up 7 percent.  European Union rapeseed import licenses since July 1 were 3.011 million tons, down 14 percent from 3.482 million tons from the
  same period a year ago.

 

Oilseeds
Export Developments

• Iran’s
  GTC seeks about 30,000 tons of sunflower oil. 

• USDA
  AMS seeks 17,200 tons of bulk crude degummed soybean oil on December 9 for Mozambique. 
  

 

Wheat

• Chicago
  March is
  near a two-month low on widespread commodity selling (US markets) and higher USD.  Lack of US export tender announcements and Covid-19 concerns are pressuring futures.  Japan seeks 131,305 tons of food wheat this week. 
  
• March
  milling wheat was down 0.50 at 201.75 euros on a less than expected French soft wheat area. 
  
• France’s
  initial estimated of the soft wheat area was 4.73 million hectares, up 12.4% from year ago (4.21), but less than market expectations (4.9-5.2 million hectares), and 1.9% below historical average.  Durum was projected at 239,000 hectares, an 8.8% increase. 
  Barley was up 6.6% to 1.305 million from the previous season and rapeseed up 1.0% to 1.105 million hectares. 
  
• Egypt
  targeted a local wheat production of 10 million tons this season, up from 9.5 million tons this year.
  
• USDA
  US all-wheat export inspections as of December 03, 2020 were 530,781 tons, within a range of trade expectations, below 534,387 tons previous week and compares to 366,014 tons year ago. Major countries included Japan for 90,568 tons, Mexico for 82,840 tons,
  and China Main for 68,249 tons.
• The
  European Union granted export licenses for 500 tons of soft wheat exports, bringing cumulative 2020-21 soft wheat export commitments to 10.438 MMT, well down from 13.192 million tons committed at this time last year, a 21 percent decrease.  Imports are up
  11 percent from year ago at 1.120 million tons.

 

Export
Developments.

• Jordan
  passed on 120,000 tons of feed barley on Dec 8 for March-May shipment. 
• Results
  awaited: Qatar seeks 100,000 tons of feed barley on December 8, optional origin. 
  
• Japan
  seeks 131,305 tons of milling wheat on December 9. 

• Jordan
  seeks 120,000 tons of wheat on Dec 9 for April through FH May shipment. 

 

Rice/Other

·        
None