FI Morning Grain Comments 12/24/20

PDF attached

 

Morning
and Happy Holidays!

 

CBOT
closes early today.  March corn hit a new contract high again overnight, and prices are up for the tenth consecutive session. China sold 956,457 tons of corn out of reserves from 1 million tons offered in Heilongjiang at an average price of 2,318 yuan per
ton. CBOT soybeans hit a fresh 6-1/2 year high from ongoing bullish sentiment over SA weather and Argentina shipment problems amid strikes.  Bull spreading in soybean oil is still a feature with Jan/Mar out to 84 points yesterday. It hit 83 overnight.   Malaysian
palm oil is at an 8-year high.  We heard China bought a couple Brazilian soybean cargoes on Wednesday.  US wheat futures were seeing a mixed trade early this morning from a large Russian production estimate and lack of direction.  Due to the federal holiday
on December 24 and December 25, the Commitments of Traders (COT) market report will be released on Monday, December 28, 2020.

 

 

 

 

 

Weather

Shower
and thunderstorm activity in Argentina will be erratic through next Wednesday; though, coverage of rain will be greatest Sunday through Tuesday due to a frontal boundary. West-central and northwestern production areas of Argentina will be wettest and meaningful
moisture in eastern and southern parts of the region will be more localized.

           
The biggest rainfall change in this evening’s GFS model run was the decrease of rain in northern Argentina, southern Paraguay, and Uruguay Jan. 5 – 7. The midday GFS model was aggressive with a frontal boundary in this timeframe which led to significant rain.
This evening’s run showed the boundary delayed and weaker. An in-between solution is most likely which led to the need for some decrease of rain compared to the midday run, but not a complete removal of it.

           
Conditions in Brazil will be mostly favorable for crops. Rain will increase in the far south later next week. Bahia and some immediate nearby areas will likely continue to be driest.

 

There
will be a storm system in the Hard Red Winter Wheat Region Monday into next Wednesday. Significant precipitation is expected in the eastern hard red winter wheat areas, such as central Oklahoma into central Nebraska and possibly into at least part of western
Nebraska as well. Some precipitation is likely in west-central and southwestern wheat areas; though, not as much as the eastern part of the region and World Weather, Inc.’s thoughts with this system are unchanged.

Source:
World Weather Inc. and FI

 

 

 

Bloomberg
Ag Calendar

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

 

 

 

 

 

Macros

 

Corn.

• March
  corn hit a new contract high again overnight, and prices are up for the tenth consecutive session.  The November China trade data that was released early Wednesday was still seen supportive with China buying a good amount of feedgrains (Nov. corn imports 1.23
  MMT).  US hog inventories as of December 1 contracted slightly from a year ago but historically remain high. 
  
• Yesterday
  there was talk China was in for corn and wheat. 
• China
  sold 956,457 tons of corn out of reserves from 1 million tons offered in Heilongjiang at an average price of 2,318 yuan per ton. 
  
• CBOT
  corn open interest was up 10,887 contracts on Wednesday. 
• AgriCensus
  noted Brazil’s domestic prices increased nearly 5% since Friday, accessing Cepea index data, in part to the depreciation of the real.
  

• The
  USDA Broiler Report showed eggs set in the United States down 1 percent and chicks placed down slightly from a year ago.  Cumulative placements from the week ending January 4, 2020 through December 19, 2020 for the United States were 9.42 billion. Cumulative
  placements were down 1 percent from the same period a year earlier.
• The
  USDA hogs and pigs report showed December 1 inventories near expectations. 
  Kept for breeding fell 3 percent from a year ago and was 1.1 percentage points below trade expectations. 
  
• Weekly
  ethanol production increased 19,000 barrels per day to 976,000 (a Bloomberg poll called for up 2,000), and stocks increased 219,000 barrels to 23.169 million barrels.  Gasoline demand (product supplied) was up 47,000 barrels from the previous week to 8.022
  million barrels while ethanol blended into finished motor gasoline was unchanged from the previous week at 802,000 barrels.  Ethanol blended into finished motor gasoline ran at 90.8% versus 89.3% previous week. 
  

 

Corn
Export Developments

• Qatar
  seeks 100,000 tons of bulk barley on January 12.

• Qatar
  seeks 640,000 cartons of corn oil on January 12.

 

 

 

Soybean
complex.  

• CBOT
  soybeans hit a fresh 6-1/2 year high from ongoing bullish sentiment over SA weather and Argentina shipment problems amid strikes.  Note Argentina’s maritime and port sector announced that they also started a 36 hour strike that started Wed.  Up to 170 ships
  are now delayed at ports.
• Bull
  spreading in soybean oil is still a feature with Jan/Mar out to 84 points yesterday. It hit 83 overnight.   Malaysian palm oil is at an 8-year high. 
  
• The
  January soybean chart since August looks a double black diamond ski slope that Olympians might be wary to tackle.  January hit $12.7425 overnight.  It broke above $12.00 only a week ago.  We caution bull traders as some funds may soon shore up end of year
  positions. 

• CBOT
  soybean open interest was down 11,659 contracts on Wednesday.  Meal was up 250 and SBO down 7,695 contracts.  Jan soybean oil position open interest fell 10,153 contracts as we near First Notice Day which is Thursday, Dec 31. 
  

• CBOT
  soybean meal registrations were down 25 for Incobrasa in Gilman, IL to 200.  That leaves outstanding at 200. 
  
• We
  heard China bought a couple Brazilian soybean cargoes on Wednesday. 
• Offshore
  values this morning were leading CBOT soybean oil 7 points higher (15 lower for the week to date) and meal $2.70 lower ($5.20 lower for the week).  
  
• Rotterdam
  soybean oil values were about up 5 euros, rapeseed oil near unchanged, and Rotterdam meal mostly 3-5 euros higher from this time previous session. 
  
• Malaysian
  palm oil

• China
  cash crush margins were 103 cents on our calculation (119 previous), compared to 123 last week and 131 year ago.
  

 

Oilseeds
Export Developments

• None
  reported

 

Wheat

• US
  wheat futures were seeing a mixed trade early this morning from a large Russian production estimate and lack of direction.  Russian wheat export prices this week climbed back up to a 6-year high, according to IKAR, to $258/ton. 
  
• Russia’s
  Statics Service estimated the 2020 wheat crop at 85.9 million tons, up from 74.5 million tons in 2019 and just shy of the record 86 million tons in 2017.  Note USDA is using 84.0 million tons for 2020 and 73.61 million tons for 2019. 
  
• CBOT
  Chicago wheat open interest was up 8,908 contracts. 
• The
  French shipping lineup shows wheat vessels destined for China, Algeria and Cuba.  Barley was expected to be shipped to Mexico. 
  
• EU
  March milling wheat was up 0.50 at 211.75 euros.

 

Export
Developments.

• 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. 
  
• Bangladesh
  floated an imported tender for 50,000 tons of wheat, set to close Jan 4. 

 

Rice/Other

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