FI Morning Grain Comments 12/16/20

PDF attached

 

Morning. 

 

Higher
trade in all major CBOT ag markets on follow through buying and slightly drier Brazilian weather forecast.  Soybeans are at a two-week high.  Talk surrounded yesterday’s developments over Argentina strike problems and large US November crush.  The USD Index
fell to its lowest level since April 2018.  The British pound climbed to its highest level since 2018.  Yesterday NOPA reported a record US November crush for the month and an all-time record on a crush per day basis at 6.03 million bushels, up from 5.98 bushels
per day in October (previous record).   Bloomberg reported China is close to securing a trade deal with China to supply corn.  China cash crush margins on our calculation improved to 100 cents from 88 previous.  China will auction off pork and corn later this
week.  China corn futures fell to their lowest level since September 30.  A weekly Bloomberg poll calls for ethanol production to decline to 982,000 barrels per day from 991,000 previous week and stocks to decrease to 19.872 million barrels from 22.083 million
previous week. 

 

 

 

Weather

 

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

The
reduction in rainfall in Argentina Friday and Saturday has already impacted the market place, but much of the reduction was in the GFS model run which was too wet Tuesday.  The European model rainfall reduction has been more subtle, but nevertheless there
is less rain in the outlook and that will continue to raise concern about Argentina’s longer range outlook. The nation’s soil moisture is already short to very short in the west and rain is needed to revitalize the crop. The precipitation event will buy the
driest areas “some” time for crop improvements, but more rain will certainly be needed.

            Brazil
weather will be good for many crop areas, but there will continue to be a few dry pockets.

            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.

           
Indonesia and Malaysia rainfall continues a little lighter than usual, but the impact on long term crop development is not huge as long as greater rain falls late this month and especially in January. 

            Overall,
weather today will likely produce a neutral to slightly bullish bias to market mentality.

 

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, with crops dormant and the ground freezing up in some areas it will be difficult to get sufficient
moisture into the soil to support better root and tiller systems prior to spring.

            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 northern and central India benefited from some rain recently, but more is needed throughout the wheat production region to induce a more generalized bout of crop improvement ahead of reproduction in late January and February.

           
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 neutral to slightly bearish bias to market mentality.

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

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

 

 

 

 

Macros

US
Retail Sales Advance (M/M) Nov: -1.1% (est -0.3%; prevR -0.1%; prev 0.3%)

US
Retail Sales Ex-Auto (M/M) Nov: -0.9% (est 0.1%; prevR -0.1%; prev – 0.2%)

US
Retail Sales Ex-Auto, Gas Nov: -0.8% (est 0.1%; prevR -0.1%; prev 0.2%)

US
Retail Sales Control Group Nov: -0.5% (est 0.2%; prevR -0.1%; prev 0.1%)

Canadian
CPI NSA (M/M) Nov: 0.1% (est 0.0%; prev 0.4%)

Canadian
CPI (Y/Y) Nov: 1.0% (est 0.8%; prev 0.7%)

Canadian
CPI Core – Median (Y/Y) Nov: 1.9% (est 1.9%; prev 1.9%)

Canadian
CPI Core – Common (Y/Y) Nov: 1.5% (est 1.6%; prev 1.6%)

Canadian
CPI Core – Trim (Y/Y) Nov: 1.7% (est 1.8%; prev 1.8%)

Canadian
International Securities Transactions Oct: 6.92B (prev 4.46B)

Canadian
Wholesale Trade Sales (M/M) Oct: 1.0% (est 0.7%; prev 0.9%)

 

 

Corn.

• CBOT
  March corn is
  marginally higher following soybeans.  Lack of fresh US export developments are limiting gains.  
  
• A
  weekly Bloomberg poll calls for ethanol production to decline to 982,000 barrels per day from 991,000 previous week and stocks to decrease to 19.872 million barrels from 22.083 million previous week. 
  
• Bloomberg
  reported China is close to securing a trade deal with China to supply corn. 
  
• China
  corn futures fell to their lowest level since September 30. 
• China’s
  Heilongjiang plans to offer 714,516 tons of 2015 corn from state reserves on Thursday.
• China
  will offer to sell 20,000 tons of pork sales from reserves on Thursday. The Chinese government expects hog numbers to rebound back to pre‐ASF levels by mid‐2021.
• A
  weekly Bloomberg poll calls for ethanol production to decline to 982,000 barrels per day from 991,000 previous week and stocks to decrease to 19.872 million barrels from 22.083 million previous week. 
  

 

Corn
Export Developments

• None
  reported

 

 

 

Soybean
complex.  

• Higher
  trade in the soybean complex on follow through buying and slightly drier Brazilian weather forecast.  Soybeans are at a two-week high.  Talk this morning surrounded yesterday’s developments over Argentina strike problems and large US November crush. 
  
• Soybean
  oil ended mixed at the electronic session. 
• Argentina
  soybean meal was up 15-20 euros/ton from this time yesterday morning.  Rotterdam oils were up 7-10 euros. 
  
• The
  USD Index fell to its lowest level since April 2018.  The British pound climbed to its highest level since 2018. 
  
• Indonesia
  may lower their 2021 biodiesel allocation to 8.5 million kiloliters from 9.2 million currently.  Yesterday NOPA reported a record US November crush for the month and an all-time record on a crush per day basis at 6.03 million bushels, up from 5.98 bushels
  per day in October (previous record).  
• Offshore
  values this morning were leading CBOT soybean oil 1 higher and meal $5.00 higher.  
  
• Rotterdam
  soybean oil values were about up 10 euros, rapeseed oil up 7, and Rotterdam meal 9-20 euros higher from this time previous session. 
  
• China
  cash crush margins were 100 cents on our calculation (88 previous), compared to 93 last week and 160 year ago.
  

• Malaysian
  palm oil: 

• Anec
  sees Brazil soybean exports during the month of December below 100,000 tons. 
  
• NOPA
  US November 2020 crush was a record for the month and ranked third for all-time at 181.018 million bushels, 1 million above an average trade guess, 4.2 million below October and 16.1 million above November 2019.  For November, the crush was also all-time record
  on a per day basis at 6.03 million bushels, up from 5.98 bushels per day in October (previous record) and up from 5.50 million in November 2019. US end of December US soybean oil stocks were reported at 1.558 billion pounds, 10 million above a Reuters trade
  guess, above 1.487 billion previous month and compares to 1.448 billion a year ago. US NOPA soybean meal exports were a large 1.082 million short tons, below our working estimate of 869,000 short tons, and highest since March 2017. 
  

 

Brazil
SBO basis was higher yesterday

 

Oilseeds
Export Developments

• None
  reported

 

Wheat

• US
  wheat is
  higher on follow through buying. 
• EU
  March milling wheat was down 0.75 at 206.50 euros.
• Australia
  plans to appeal to the WTO over China’s large import tariffs on Australian barley imports.
  
• Russian
  plans to send wheat to Iraq so they can test it, a step forward in opening a wheat trade relationship. Russia is also working with Japan to open a market. 
  
• Ukraine
  grain export are running 14 percent below the previous season, including 12.2 million tons of wheat and 7.2 million tons of corn. 
  

 

Export
Developments.

• Tunisia
  bought an unknow amount of soft wheat, durum, and barley.  Soft wheat was bought at $280.15/ton c&f, and lowest price for durum was $371.09 and lowest for barley at $241.50. 
  Tunisia
  was in for 117,000 tons of optional origin soft milling wheat, 100,000 tons of durum and 100,000 tons of animal feed barley for Jan 15-Feb 25 shipment. 
  
• Thailand
  bought 77,000 tons of feed wheat around $279-$280/ton c&f for shipment in February. 
  
• Bangladesh
  withdrew their 50,000 wheat import tender set to close Dec 27.  
• Japan
  in their SBS import tender received no offers for 80,000 tons of feed wheat and 100,000 tons of feed barley for arrival in Japan by March 11.
• Yesterday
  Egypt’s GASC) bought 235,000 tons of wheat (120,000 tons of Romanian wheat and 115,000 tons of Ukrainian) for Feb. 1 to 15 shipment.
  
• Jordan
  seeks 120,000 tons of wheat on December 23 for Jun-Jul shipment. 

 

Rice/Other

• India approved a subsidy to allow millers to export 6 million
  tons of sugar in 2020-21 (Oct-Sep).
• 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.