FI Morning Grain Comments 12/14/20

PDF attached

 

Morning. 

 

Today
is last trade for December futures. The US soybean complex is higher in part to higher outside markets and sharply lower USD.  There was little fresh news released over the weekend.  Offshore values are leading SBO 15 points higher and meal $1.80 lower.  A
Reuters NOPA poll calls for the November crush to be reported at 180.0 million bushels, down 2.8% from October (185.3), and soybean oil stocks at 1.548 billion pounds (1.487 end of Oct.).  Corn is higher following soybeans, slow Argentina corn registrations
for export, and hopes China will but more US corn.  US wheat futures are lower in a risk off session.  Russian domestic wheat prices plunged from the previous week.  SovEcon noted domestic prices for third-class wheat fell by 225 rubles to 15,725 rubles ($215.4)
per ton last week. Russia may impose a 25/ton euro export tax on wheat exports effective February 15 ($30.40/ton) lasting through June 30.   Meanwhile IKAR reported fob prices for export were unchanged at $252/ton for 12.5% protein wheat.  SovEcon showed a
$2.00/ton increase to $257.   Parts of the US Great Plains saw additional snow over the weekend with some areas seeing it for the first time this season, but it will no stick around very long.  Temperatures are set to rise this week. Jordan seeks 120,000 tons
of wheat on December 23 for Jun-Jul shipment. 

 

 

Weather

 

Snow
fell significantly in a part of the region from southeastern Colorado through southwestern and south-central Kansas into the Texas Panhandle and Oklahoma during the weekend. The snow will provide a small moisture boost for many winter crop areas in the region
as warmer temperatures allow some melting to take place. There is little to no frost in the ground.

More
snow will fall in the west late today into Tuesday. This moisture will be welcome and needed with some of the driest areas receiving as much as 0.25 inch of water equivalence. Much more moisture will still be needed after this event, though, and winter crops
will not be able to respond to the moisture prior to spring.

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Winter crops in the U.S. central Plains and Russia’s Southern Region have either received a little moisture or soon will. However, the driest areas in Kansas, Colorado and Nebraska have not seen enough moisture to make any big
changes and winter crops are now dormant. Improved soil moisture in Colorado, southwestern and south-central Kansas into Texas and Oklahoma is slight, but every little bit helps. The same kind of response is expected to light precipitation in Russia’s Southern
Region over the next two weeks.

            Argentina
wheat is filling, maturing and being harvested in a mostly good environment. A little rain late this week and into the weekend might be welcome, although it is getting a little late for big changes.

            Winter
crops in India benefited from some rain during the weekend in central parts of the nation will get a few more showers this week.

           
Wheat conditions in China remain good and late season harvesting in South Africa and Australia has been advancing around brief periods of rain.

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

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Weather
in South America still has the look of improvement for Brazil and much of central and northern Argentina. Rain late this week and into the weekend in Argentina’s south advertised by the European model run would be a boon to the region’s summer crops. South
Africa weather is mostly favorable, although rain is needed in the west. Australia will see some improved rainfall in eastern sorghum areas and most oil palm production areas in Southeast Asia will get beneficial moisture.

            Winter
crops in China will stay in mostly good shape and recent rain along with a few more showers this week in India will be good for its winter crops. Some moisture expected over the next couple of weeks in Russia’s Southern Region will also be of some interest
for spring.

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

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

Monday,
Dec. 14:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• U.S.
  winter wheat conditions, cotton harvested, 4pm
• Monthly
  MARS bulletin on crop conditions in Europe
• Vietnam
  customs data on coffee, rice, rubber exports in November
• Ivory
  Coast cocoa arrivals

Tuesday,
Dec. 15:

• Brazil’s
  Conab releases sugar, cane and ethanol production data
• Malaysia’s
  Dec. 1-15 palm oil export data
• New
  Zealand global dairy trade auction
• Brazil’s
  sugar-cane industry group Unica holds year-end press conference

Wednesday,
Dec. 16:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• HOLIDAY:
  Bangladesh

Thursday,
Dec. 17:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• USDA
  Total Milk Production, 3pm
• Port
  of Rouen data on French grain exports
• Conab’s
  estimate for 2020 Brazil coffee crop
• Poland
  publishes crop output figures for 2020

Friday,
Dec. 18:

• 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
• U.S.
  Cattle on Feed

Source:
Bloomberg and FI

 

 

 

 

CFTC
Commitment of Traders

Managed
money futures and options for wheat extended their short position as of last Tuesday from 4,400 to 5,700 contracts.  Funds were much more short in traditional fund soybean oil position than expected. 

 

 

 

 

 

 

Macros

 

Corn.

• CBOT
  March corn is
  higher this morning from higher energy markets and weakness in the USD.  Slow Argentina corn registrations for export and hopes China will but more US corn are also supporting futures. 
  
• The
  USD was down 50 points as of 7:38 am CT and WTI up $0.60. 
• Global
  lock down concerns is rising.  Germany
  went back into a hard lock down over the weekend.  London is going back into Tier 3 lock down and the Netherlands may soon announce a hard lock down as of Dec 16.
• Brazil’s
  tariff-free ethanol import quota with the United States ended today as talks broke down.  US tariff ethanol imports will go back to 20%.  Note Brazil ethanol production is set to double this year. 
  
• BAGE
  reported Argentina’s corn planting is over 50% complete. 
• For
  48 hours staring last Friday, South Korea ordered a nationwide standstill order for poultry farms to prevent the spread of bird flu disease. 
  
• Note
  China will start trading hog futures January 8.  Chinese New Year is next week, and traders are hoping China will be buying US corn and other feedgrains ahead of the holiday. 
  Domestic
  Chinese pork prices are strengthening ahead of the holiday. 

 

Corn
Export Developments

• None
  reported

 

Source:
Trade News Service

 

Soybean
complex.  

• January
  contracts are higher in part to a sharply lower USD and technical buying. 
  
• Argentina’s
  extended forecast looks a bit drier but Brazil sems to have stabilized considerably. Mato Grosso has turned a tough drier again. But weekend rains were pretty much as advertised.
• A
  Reuters NOPA poll calls for the November crush to be reported at 180.0 million bushels, down 2.8% from October (185.3), and soybean oil stocks at 1.548 billion pounds (1.487 end of Oct.). 
  
• AgRural
  reported 95 percent of Brazil’s soybean crop had been planted, up 5 points from the previous week and compares to 96 percent year ago.  They are using 131.6 million tons. 
  
• Abiove
  estimate Brazil’s soybean exports at 82.3 million tons from 82 million previously, and crush at 45 from 44.6 MMT previously. 
  
• Offshore
  values this morning were leading CBOT soybean oil 16 higher and meal $1.80 lower.  
  
• Rotterdam
  soybean oil values were about 1-2 euros higher, rapeseed oil up 2.00, and Rotterdam meal mostly 2-5 euros higher from this time previous session. 
  
• China
  cash crush margins were 94 cents on out our calculation, compared to 93 last week and 160 year ago.
  

• Malaysian
  palm oil was up for the third consecutive day.  Note we will get December 1-15 palm oil export data on Tuesday. 
  

 

 

Oilseeds
Export Developments

• Last
  week the USDA bought 16,850 tons of bulk crude degummed soybean oil for January 15-25 delivery at $984.22 per ton. 
  

 

January
soybean oil share

 

Wheat

• US
  wheat is
  lower in a risk off trade after sharply rising last week.  Renewing global lock down concerns might start negatively impact commodity prices.  Look for Russian exporters to heavily market wheat over the next few weeks ahead of the Feb 15 export tax date. 
  
• Russian
  domestic wheat prices plunged from the previous week.  SovEcon noted domestic prices for third-class wheat fell by 225 rubles to 15,725 rubles ($215.4) per ton last week.
  
• Russia
  may impose a 25/ton euro export tax on wheat exports effective February 15 ($30.40/ton) lasting through June 30.   This is around 75 cents a bushel.  Meanwhile IKAR reported fob prices for export were unchanged at $252/ton for 12.5% protein wheat.  SovEcon
  showed a $2.00/ton increase to $257. 
• SovEcon
  thinks the Russia export tax could shave off 3 million tons of wheat for export. 
  
• APK-Inform
  reported Ukrainian wheat export prices for 12.5% protein wheat was $252-$256 per ton FOB Black Sea at the end of past week, mostly unchanged. 
  
• Parts
  of the US Great Plains saw additional snow over the weekend with some areas seeing it for the first time this season, but it will no stick around very long.  Temperatures are set to rise this week.
  
• EU
  March milling wheat was down 1.75 at 208.75 euros.

 

Export
Developments.

• Jordan
  seeks 120,000 tons of wheat on December 23 for Jun-Jul shipment. 

• Jordan
  seeks 120,000 tons of feed barley on December 15 for March-May shipment.

• Japan
  in a SBS import tender seeks 80,000 tons of feed wheat and 100,000 tons of barley on Dec 16 for arrival around March 11. 
  

 

Rice/Other

·        
Bangladesh seeks 50,000 tons of rice on Dec. 22.  They bought a combined 100,000 tons on Dec. 2 and Nov 26, the country’s first rice purchase in about three years.  Bangladesh plans to import 300,000 tons of rice.