FI Morning Grain Comments 12/29/20

PDF attached

 

Morning. 

 

Eyes
will be focused today on Argentina as meetings between workers, unions and possibly government officials could end strikes.  The trade is looking for a resolution and today we are seeing CBOT soybean futures fall for the second consecutive day with January
easing off a 6-1/2 month high.  Corn was slightly lower on lack of direction. US wheat futures were mostly higher on technical buying after falling last couple of sessions and rise in weekly Black Sea wheat export prices.  Jordan passed on animal feed barley. 
Algeria seeks wheat on Wednesday.  Taiwan is in for US wheat this week.  Malaysian palm oil futures reversed losses earlier by settling 8 MYR higher and cash increased $3.00/ton to $915.00/ton.  China soybean futures were down slightly, meal down 0.8% and
SBO off 0.7%.  EU vegetable oils were mixed and EU meal mostly unchanged to 5 euros lower.  Soybean and Corn Advisory: 2020/21 Brazil Corn Estimate Unchanged at 102.0 Million Tons. 2020/21 Argentina Corn Estimate Lowered 1.0 mt to 46.0 Million. 2020/21 Brazil
Soybean Estimate Unchanged at 130.0 Million Tons. 2021/22 Argentina Soybean Estimate Lowered 1.0 mt to 47.0 Million. 

 

 

 

Weather

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Temporary
relief from dryness in parts of Argentina overnight and the sporadic showers that will linger today and Wednesday will briefly reduce crop moisture stress but resulting rainfall will be too low for most crop areas to seriously turn around soil moisture and
crop stress will be quick to resume with drier weather later this week into next week. Concern over production potentials will remain with limited rainfall beyond mid-week this week and continued warm weather.

            Brazil
crop weather will be more favorable, although Rio Grande do Sul and immediate neighboring areas will dry down once again. Net drying is also expected in the northeast, but some showers will occur briefly this weekend into early next week offering a temporary
reprieve from drying.

            South
Africa weather will be mostly good, but greater rain will soon be desired. Australia’s sorghum areas will benefit from a boost in precipitation soon.

            China’s
rapeseed is dormant and in mostly good shape. India’s late summer crop harvest will continue into January in the far south while rapeseed and mustard areas in the north and central parts of the nation will be looking for rain in the next few weeks.

            Winter
oilseeds in Ukraine and other European production areas are dormant with little change likely for a while.

            Southeast
Asia oil palm production areas are getting sufficient rain to support normal crop development.

            The
bottom line remains mostly mixed today with concern over Argentina weather remaining high and mostly favorable conditions in Brazil and South Africa. Weather today may have a mixed influence on market mentality with continued bullish support beneath market
volatility.

 

MARKET
WEATHER MENTALITY FOR WHEAT:  Winter crops are mostly dormant or semi-dormant in the Northern Hemisphere. Some small improvements in soil moisture have occurred recently and more will occur prior to spring in parts of Russia’s Southern Region, Ukraine and
the central U.S. Plains. China and India crops are favorably rated and the same is true for parts of Europe.

            Argentina’s
harvest is advancing around brief bouts of rain. Fieldwork in both South Africa and Australia will be winding down soon if not already.

            Overall,
weather today does not offer much support for higher prices, although the trade will probably follow corn and soybeans. There is no threat of damaging cold in Russia, Europe or North America, but a close watch on northern China may be warranted as cooler than
usual weather evolves while snow cover is limited.

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

Thursday,
Dec. 31:

• U.S.
  Export Sales Report will be released on Thursday, December 31, 2020.

Source:
Bloomberg and FI

 

 

 

 

USDA
inspections versus Reuters trade range                                                    

Wheat                 
303,809                 versus   300000-500000  range

Corn                     
993,710                 versus   700000-950000  range

Soybeans           
1,447,261             versus   1625000-2500000             range

 

CFTC
Commitment of Traders report

The
trade missed the funds positions for soybeans and corn by a very large amount.  Chicago wheat, meal and soybean oil were also less long than expected. 

 

 

SUPPLEMENTAL     
Non-Comm               Indexes                  Comm

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
297,888     19,173    399,550      5,605   -676,759    -25,356

Soybeans          
178,243     12,675    179,658      2,420   -358,792    -16,815

Soyoil             
77,577      4,916    123,391     -1,667   -223,014     -3,866

CBOT
wheat         -21,540     -3,418    133,160       -629    -96,964      1,578

KCBT
wheat          30,797       -735     70,407        480   -100,798      1,212

=================================================================================

 

FUTURES
+ OPTS     Managed                 Swaps              Producer

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
265,713     15,454    243,890     -3,392   -641,500    -18,078

Soybeans          
188,623     -1,595    100,702     -1,540   -351,975    -14,160

Soymeal            
83,385      6,179     67,353     -1,342   -203,050    -12,511

Soyoil            
101,253      3,534     88,457     -1,055   -233,265     -2,580

CBOT
wheat           6,233       -438     81,164        -61    -85,639      1,453

KCBT
wheat          51,544     -1,068     44,094      1,566    -98,142       -303

MGEX
wheat           2,420       -969      2,733        -34    -12,336       -172

                
———- ———- ———- ———- ———- ———-

Total
wheat         60,197     -2,475    127,991      1,471   -196,117        978

Live
cattle         47,698      6,430     67,721       -498   -129,375     -6,769

Feeder
cattle        3,358        835      7,665         22     -4,215        111

Lean
hogs           32,854      1,109     49,114        362    -76,760      1,882

 

 

 

 

 

 

Macros

 

Corn.

• CBOT
  corn is unchanged to lower on lack of direction.  A lower USD and higher WTI crude oil are supporting prices. 
  
• Argentina
  temperatures will be very hot this week adding to crop stress. 
• US
  corn inspections fell just below 1 million tons, but this tends to be a slow time of year for physical shipments. 
  
• Chicago
  ethanol swaps are at their highest level since Nov. 11. 
• Soybean
  and Corn Advisory: 2020/21 Brazil Corn Estimate Unchanged at 102.0 Million Tons. 2020/21 Argentina Corn Estimate Lowered 1.0 mt to 46.0 Million.
  
• CBOT
  corn open interest (OI) increased 2,158 (March down 5,667). 

 

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.  

• Soybeans
  eased off a 6-1/2 year high as traders think Argentina’s strike woes will end soon.  Some are attributing the weakness in the soybean complex from slowing US weekly soybean export shipments.  USDA soybean inspections were reported at a low 1.5 million tons,
  lowest since September.
• The
  Argentina CIARA-CEC chamber of soybean manufacturers will meet today with two main unions.  Meanwhile the government may also intervene.  An estimated 140 grain/oilseed ships have been delayed according to Reuters. 
  
• Beneficial
  rain fell on roughly half of Argentina Monday.  Argentina will see hot temperatures this week. Argentina will not likely receive enough rain during the next two weeks to ease crop stress. 
  
• CBOT
  OI: Soybeans down 20,003, SBO down 3,486 and SBM down 5,558.
• Soybean
  and Corn Advisory: 2020/21 Brazil Soybean Estimate Unchanged at 130.0 Million Tons. 2021/22 Argentina Soybean Estimate Lowered 1.0 mt to 47.0 Million. 
  
• Offshore
  values this morning were leading CBOT soybean oil 15 points higher and meal $1.70 lower.
  
• Rotterdam
  soybean oil values were slightly weaker, rapeseed oil near unchanged, and Rotterdam meal mostly unchanged to 5 euros lower. 
  
• Malaysian
  palm oil in part to higher mineral oil. 

• China
  cash crush margins were 104 cents on our calculation (103 previous), compared to 145 last week and 131 year ago.
  
• China
  futures

 

 

Oilseeds
Export Developments

• The
  USDA/CCC seeks 2,000 tons of vegetable oil, packaged in 4 liter cans, for export to Kenya on January 5 for February 1-28 shipment (Feb 16 to Mar 15 for plants located at ports).

 

Wheat

• US
  wheat futures traded higher overnight on technical buying after falling the last couple of sessions and rise in weekly Black Sea wheat export prices from early last week.   Prices turned lower just before the electronic close. 
  
• EU
  March milling wheat was up 0.25 at 211.25 euros.
• CBOT
  March SRW wheat OI was down 1,960 contracts and all contracts fell 3,499 lots. 
  
• USDA
  all-wheat export inspections were 304,000 tons, nearly 100,000 tons below the previous week. 
  
• Brazil
  milling wheat industry group mentioned there are wheat 10 ships held up in Argentina because of the strikes. 
  

 

Not
all US wheat areas will see snow early this week. 

 

Export
Developments.

• Algeria’s
  OAIC seeks 50,000 tons of wheat on December 30 for Feb shipment (Jan is from SA). 
  
• Taiwan
  seeks 82,325 tons of US wheat on December 30 for LH Feb through March shipment. 
  
• Jordan
  passed on animal feed barley.  They were un 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
  will be back in for animal feed barley (120k) on January 5. 
• Bangladesh
  floated an imported tender for 50,000 tons of wheat, set to close Jan 4. 

 

Rice/Other

• Today
  Bangladesh seeks 50,000 tons of rice.  Bangladesh received offers for 50,000 tons of rice and lowest offer was $405.60/ton.