FI Morning Grain Comments 12/22/20

PDF attached

 

Schedule
Change: Weekly Export Sales Report

Because
federal government agencies will be closed on Thursday, December 24, the scheduled Export Sales Report for the week ending December 17 will be published on Wednesday, December 23, at 8:30 a.m. EST.

 

Note
the CBOT grain market will close early Thursday @ 12:05 PM CT per CME holiday calendar. 
https://www.cmegroup.com/tools-information/holiday-calendar.html

 

Morning. 

 

Rains
were near expectations yesterday for Brazil’s Mato Grosso, south Goias, south Minas, Sao Paulo, and northwest MGDS.  Argentina was dry.  Brazil will see rain favor the northern areas through this weekend.  The morning weather forecast for Argentina is a little
wetter for next week.  Argentina will see light rain across northern Cordoba and northwest Santa Fe Friday into Saturday after seeing dry weather until then. 

 

CBOT
prices are higher for soybeans, soybean oil and meal, mixed for corn and lower for wheat. 

 

 

 

 

Weather

 

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Argentina
will be in a net drying mode for the coming week and then will receive scattered showers for a few days offering some short term relief from what should be increasing moisture and heat stress by that time. Brazil weather will be very good for center west and
center south crop areas, but parts of the far south may dry down for a while along with the far northeastern corner of the nation.

            South
Africa weather will be mostly good for summer crops, but there will be some pockets of dryness. Indonesia and Malaysia weather will also continue erratic and light in portions of the nation during the next couple of weeks.

            China’s
winter rapeseed will be dormant and plenty moist this week. Weather in India will be good for most of its winter crops as well as for late summer crop harvest progress. Central and interior northern India may get some rain in the first days of January.

           
Overall, weather is expected to provide a mixed influence on market mentality.

 

MARKET
WEATHER MENTALITY FOR WHEAT:  No further improvement in soil moisture is expected in the U.S. central or southwestern Plains this week or most of next week. Some areas in Montana may get some light precipitation, but it will not change crop conditions due
to their dormant status. Snow coming to southern Canada’s Prairies will be extremely helpful in reducing the risk of winterkill. Some snow may also fall briefly in the central Plains during mid-week next week without much change in soil or crop conditions
expected.

            Russia’s
Southern Region and Ukraine crops will benefit from periods of snow and rain during the next couple of weeks, although the benefit will not be noted until spring. Any boost in snow cover will help protect winter crops, although there is no risk of crop damaging
cold.

            Winter
crops in Europe, China and India are mostly in favorable condition. Recent weeks of moisture improvement will help many of the winter grains in these areas experience better root and tiller systems in early spring.

            Morocco
still needs significant moisture especially in the southwest. A part of northwestern Algeria and a few far northeastern Morocco areas also need greater precipitation, but not much is coming this week. Some boost in precipitation might also be welcome in the
Middle East.

            Australia’s
late season harvest in the southeast will be disrupted by some precipitation in the coming week, but no serious harm to crop quality is anticipated.

            Argentina’s
limited rain in wheat areas during the weekend should help to expedite plant maturation and harvest progress over the next week to ten days.

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

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

Tuesday,
Dec. 22:

• U.S.
  cold storage stocks of poultry, pork, beef; poultry slaughter, 3pm

Wednesday,
Dec. 23:

• China
  customs publishes data on imports of corn, wheat, sugar and cotton
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, beef, 8:30am
• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• USDA
  hogs and pigs inventory, red meat production, 3pm

Thursday,
Dec. 24:

• Port
  of Rouen data on French grain exports

Friday,
Dec. 25:

• Christmas
  Day
• NOTE:
  Commitments of Traders reports for both ICE Futures Europe and CFTC will be delayed to Monday, Dec. 28
• China
  customs publishes country-wise soybean and pork import data

Source:
Bloomberg and FI

 

 

 

 

 

 

USDA
inspections versus Reuters trade range                                                    

Wheat                 
391,219                 versus   350000-600000  range

Corn                     
762,937                 versus   750000-1100000                range

Soybeans           
2,532,924             versus   1900000-2400000             range

 

Macros

US
GDP Annualized (Q/Q) Q3F: 33.4% (est 33.1%, prev 33.1%)

US
GDP Price Index (Q3F): 3.5% (est 3.6%, prev 3.6%)

US
Personal Consumption (Q3F):41% (est 40.6%, prev 40.6%)

US
Core PCE (Q/Q) Q3F: 3.4% (est 3.5%, prev 3.5%)

Canada
Non-Farm Payrolls Rose 183.7k In Oct. To 16 Mln

Canada
Average Earnings Rose 5.9% From Year Earlier In Oct.

 

 

Corn.

• March
  corn hit a new contract high overnight and bull spreading is lifting the nearby contracts higher this morning. 
  
• CBOT
  corn open interest was up 2,972 contracts on Monday. 
• There
  was talk China closed a poultry market in Hunan after a woman was infected with bird flu. 
  
• China
  sold all of its 103,431 tons of corn from states reserves stored in the northeast region from the 2014 and 2015 harvests. 
  Average selling price was 2,491 yuan per ton.  In a separate auction China will offer nearly one million tons out of reserves in Heilongjiang, but results on that have yet to be seen. 
  
• USDA
  US corn export inspections as of December 17, 2020 were 762,937 tons, within a range of trade expectations, below 924,246 tons previous week and compares to 401,894 tons year ago. Major countries included China Main for 271,922 tons, Japan for 260,794 tons,
  and Mexico for 149,616 tons.

 

Corn
Export Developments

• None
  reported

 

 

 

Soybean
complex.  

• CBOT
  soybean complex prices are higher.  Bull spreading is a feature especially for soybean oil.  BOF/BOH traded +51 this morning.  SBO is highest since June 2014.  Soybeans are near 6 year high and palm futures near an 8-year high. 
  ICE
  canola hit a 7-year high yesterday.  
• News
  was light overnight. 
• Argentina
  strike is still on and Brazilian wheat importers are starting to get a little worried.  The union may meet again today.  More than one hundred agriculture related cargo ships are delayed.  The country has shipped just 25% of its soybean meal commitments in
  December and 14% of those for soybean oil, according to the Rosario Board of Trade. (BB)
• Cofco
  expects China to import 100 million tons of soybeans in 2020, in line with other expectations.  They have crush at 92.6 million tons.  China’s agriculture ministry reported the pig herd recovered to more than 90% of normal levels by the end of November.  Cofco
  mentioned SBO demand increased 6 percent this year in part to expansion in the biodiesel industry. 
  
• We
  heard yesterday China was buying US soybeans for Jan/Feb.  Later we saw China bought at least one cargo of Brazil March soybeans.  February offers from Brazil are about 25 cents higher than the March position. 
  
• CBOT
  soybean OI increased 4,072 contracts on Monday. 
• Offshore
  values this morning were leading CBOT soybean oil 12 points higher and meal $3.30 lower.  
  
• Rotterdam
  soybean oil values were about up 3-4 euros, rapeseed oil 5 lower, and Rotterdam meal mixed from this time previous session. 
  
• China
  opened their palm oil futures contract to overseas investors on Tuesday, adding to six other markets that were opened including crude oil and copper.  We will have to wait and see if the palm contract gains attention.  China’s Dalian exchange will waive delivery
  fees for futures contracts from April 1 through Dec 31.  
• Indonesia
  set their 2021 biodiesel target at 9.2 million kiloliters, originally planned.  Indonesia is expected to distribute only 8.5 million kiloliters of biodiesel this year, compared with the 9.6 million originally planned.
• Malaysia
  set their Jan palm export tax at 8 percent from 6.5% in December. 
• Malaysian
  Palm Oil Council: Global palm oil output to rise nearly 6% next year to 78.4 million tons in 2021 from 74.19 million tons estimated this year.  Another leading analyst is at 70 million tons for 2021.  China’s palm oil consumption next year was expected to
  fall slightly to 6.35 million tons from 6.42 million tons this year. 
• Malaysian
  palm oil:  rebound on tight supplies  
  

• China
  cash crush margins were 119 cents on our calculation (109 previous), compared to 123 last week and 131 year ago.
  

• January
  CBOT options expire on Thursday.  Note the CBOT grain market will close early Thursday @ 12:05 PM CT per CME holiday calendar. 
  https://www.cmegroup.com/tools-information/holiday-calendar.html
  
• USDA
  US soybean export inspections as of December 17, 2020 were 2,532,924 tons, above a range of trade expectations, above 2,457,879 tons previous week and compares to 1,096,938 tons year ago. Major countries included China Main for 1,466,802 tons, Egypt for 192,724
  tons, and Japan for 131,291 tons.
• The
  European Union reported soybean import licenses since July 1 at 6.940 million tons, below 6.659 million tons a year ago. European Union soybean meal import licenses are running at 8.631 million tons so far for 2020-21, below 9.420 million tons a year ago.
  EU palm oil import licenses are running at 2.876 million tons for 2020-21, above 2.655 million tons a year ago, or up 8 percent.
• European
  Union rapeseed import licenses since July 1 were 3.242 million tons, down 11 percent from 3.633 million tons from the same period a year ago.

 

Oilseeds
Export Developments

• None
  reported

 

Wheat

• Wheat
  is lower on lack of bullish news and a weather forecast calling for light snow across the central Great Plains.   US winterkill threat is low.  The USD was up 20 points earlier. 
  
• EU
  March milling wheat was unchanged at 208.00 euros.
• UK’s
  wheat crop was projected at 9.66 million tons for 2020, down 40 percent from last year.  UK rapeseed crop was lowered to 1.04 million tons, down 40.8% year on year, compared with a previous estimate of 1.07 million tons. (Reuters)
• Jordan
  passed on feed barley. 
• Ukraine’s
  deputy minister also said there are no plans to change the grain export duties. 
  
• The
  WTO confirmed Australia launched a complaint against China over barley imports. 
  

• USDA
  US all-wheat export inspections as of December 17, 2020 were 391,219 tons, within a range of trade expectations, above 262,975 tons previous week and compares to 606,377 tons year ago. Major countries included Korea Rep for 89,626 tons, Mexico for 57,678 tons,
  and China T for 48,818 tons.

• The
  European Union granted export licenses for 196,000 tons of soft wheat exports, bringing cumulative 2020-21 soft wheat export commitments to 12.077 MMT, well down from 14.501 million tons committed at this time last year, a 17 percent decrease.  Imports are
  up 5 percent from year ago at 1.207 million tons.

 

Export
Developments.

• Jordan
  passed on 120,000 tons of animal feed barley on Dec. 22 for shipment during the April 1-15, April 16-30, May 1-15 and May 16-31 periods. 
  
• Jordan
  issued a new import tender for 120,000 tons of animal feed barley, set to close Dec. 29 for shipment during the April 1-15, April 16-30, May 1-15 and May 16-31 periods. 
  
• Jordan
  seeks 120,000 tons of wheat on December 23 for Jun-Jul shipment. 

 

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.
• 12/21. 
  Bangladesh seeks another 50,000 tons of rice on Dec. 30.