From: Terry Reilly
Sent: Wednesday, January 08, 2020 5:15:34 PM (UTC-06:00) Central Time (US & Canada)
Subject: FI Evening Grain Comments 01/08/20

PDF attached


Weekly Export Sales Report Delayed

Jan. 8, 2019 ― The U.S. Department of Agriculture’s Export Sales Report for the week ending Jan. 2 will be published at 8:30 a.m. EST on Friday, Jan. 10, instead of Thursday, Jan. 9, due to the weather-related closure of Washington, D.C.-area federal offices
on afternoon of Jan. 7.






conditions in many Brazil and Argentina crop areas will be favorable over the next two weeks, although a close watch on the rain distribution is warranted. A few pockets could be a little too dry. Rio Grande do Sul will get some relief from dryness Thursday
into the weekend. Some areas in Paraguay received needed rain Monday and far southern areas will get rain Thursday into the weekend. Parts of Argentina’s north need timely rainfall will get some, but additional moisture will be needed.

Africa summer crop conditions should be largely beneficial over the next couple of weeks. Australia weather will continue hot and too dry for crop changes, although it would not be surprising to see some rain in eastern parts of the nation later this month.

winter crops are in very good condition and should remain that way for the next two weeks. Summer crop harvesting in the south will continue around brief periods of rain.

rapeseed conditions will have potential for improvement in the spring after this week’s storm system brought significant moisture to the production region. A follow up storm system will see to it the region is plenty moist in the spring.

Europe and the southwestern parts of the CIS will dry out for a while, but winter crops are dormant or semi-dormant and will not be bothered. A boost in precipitation will be needed in the late winter prior to the start of spring growth.

weather today will likely provide a mixed influence on market mentality with a slight bearish bias prevailing.



crop conditions around the world are either in fair to good condition or poised for improvement. Recent moisture in the United States will be good for spring crop development. Snow will develop in the northwestern U.S. Plains before bitter cold conditions
evolve in the next week to ten days to prevent winterkill.

southern Russia and Kazakhstan are still snow free and some winter crops are not well established due to dryness and change is needed by spring to improve crops. 

is no risk of crop threatening cold in Russia, Europe or most of China’s key winter crop production areas for the coming week to ten days. Winter crops are not as well established as they should be in some areas of southeastern Europe locations or in parts
of China, but recent rain and snow in eastern China will see to it that big improvements occur prior to the start of aggressive crop development in the spring.

winter crops are poised to perform quite well this year and rain in Pakistan Sunday into Monday will improve the outlook there as well.

in northern Africa will be closely monitored with Morocco the only area at risk of lower production today but drying in northwestern Algeria will continue for a while.

weather today will likely produce a mixed influence on market mentality.

World Weather Inc. and FI


Ag Calendar

JAN. 8:

  • Conab
    releases 4th estimate for Brazil’s soy, corn crops

JAN. 9:

  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, 8:30am
  • Port
    of Rouen data on French grain exports
  • United
    Nation’s FAO Food Price Index
  • Australia’s
    Bureau of Meteorology releases climate statement
  • New
    Zealand commodity price

JAN. 10:

  • USDA’s
    monthly World Agricultural Supply and Demand (WASDE) report, noon
  • Malaysia
    end-2019 palm oil stocks, production, export numbers; Jan. 1-10 palm oil export data from AmSpec, Intertek and SGS
  • U.S.
    winter wheat seeding forecast
  • USDA
    quarterly wheat, barley, corn, soybean stocks, noon
  • ICE
    Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions ~1:30pm (~6:30pm London)
  • CFTC
    commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm

Bloomberg and FI














ADP Employment Change Dec: 202K (exp 160K; prev 124K)

DoE Crude Oil Inventories (W/W) 03-Jan: 1164K (est -3250K; prev -11463K)

DoE Distillate Inventories (W/W): 5330K (est 3500K; prev 8776K)

DoE Cushing OK Crude Inventories (W/W): -821K (prev -1449K)

DoE Gasoline Inventories (W/W): 9137K (est 3200K; prev 3212K)

Refinery Utilization (W/W): -1.50% (est 0.15%; prev 1.20%)



Nearby corn futures were weaker (back months were up) following a higher USD, lower crude oil, positioning ahead of the USDA reports and China ethanol developments. Macro influences had a major impact on CBOT
wheat, soybean and corn prices today.  Adding onto the bearish undertone in corn was a 6.8 percent increase in US ethanol stocks from the previous week, as reported by the EIA. Conab reported Brazil corn production (98.71) below a Bloomberg average but the
trade appeared to be shrugging off the update.  Uncertainty over the size of the South American corn and soybean crop has not seem to be a large factor in prices lately.  Traders are more concerned with geopolitical developments and positioning ahead of the
USDA January 10 reports.  With this said, there were a considerable risk on/off activity in commodities today.  WTI fell more than $3.00, and when the February contract broke below $60/barrel, there was a huge spike in corn volume.  Theory is that funds were
shoring up long positions in WTI, and dumping money into corn and wheat, and possibly soybeans.  Other than that, the fundamentals didn’t favor bull traders in corn, wheat or soybeans today, in our opinion.  Unless you traded solely on Conab estimates.

March corn support is seen at $3.8075, then $3.7875. 

Funds were even in corn.

Corn volatility is very low. 

Baltic Dry Index fell another 2.3 percent or 18 points to 773. Lowest since April 2017 and down 20 consecutive sessions. 

Gold was down about $14 as and Dow futures up 244 points. 

USD was 29 points higher.

WTI crude oil dropped more than $3.00/barrel.  

China suspended its initiative to boost the national ethanol blending target to 10 percent due to tight supply of corn stocks.  In 2017 they announced a 10 percent blend mandate by 2020.  This is perceived
to be negative for US corn futures as traders hoped China would increase US ethanol imports amid phase one trade deal.  Reuters noted “Reaching the 2020 target would have required about 15 million tons of the biofuel annually, more than four times current
output, or some 45 million tons of corn, which is about 16% of the country’s current consumption.”  Brazil has plans to ramp up corn for ethanol capacity.  Like the US, Brazil would like to export ethanol to China.  China corn reserves were projected around
50 to 60 million tons last fall, about a quarter where they were thought to be at in 2017. 

Bulgaria plans to cull another 40,000 pigs due to another outbreak of African swine fever.  Last year Bulgaria culled 130,000 pigs. 

India reported a bird flu outbreak in Chhattisgarh (H5N1). 

China reported a bird flu outbreak in Xinjiang (H5N6). 
swans were infected.

The weekly USDA Broiler Report showed eggs set in the United States up 4 percent and chicks placed up 4 percent.

China sow herd increased 2.2 percent in December from November and is up 7 percent since September.  China does not report the number of its sow heard but it was thought it declined 40 percent in September
compared to the previous year.  Some analysts estimate 55 percent of the pig crop was lost since mid-2018.  Poultry production was up 3 million tons or about 15% in 2019


US ethanol production fell 4,000 barrels to 1.062 million barrels from the previous week, as expected. But stocks increased a large 1.428 million barrels to 22.462 million barrels, much larger increase than expected. 



average retail gasoline prices in 2019 were slightly lower than in 2018







unchanged to slightly lower on lack of direction but rallied on technical buying and stronger CBOT soybean meal. The products are seeing a reversal with meal higher and soybean oil lower.    Conab reported Brazil soybean production (122.23) below a Bloomberg
trade guess but the trade seemed to be ignoring the number.  See the first bullet point in corn for our macro comment.

Funds bought an estimated net 6,000 soybeans, bought 2,000 soybean meal and sold 4,000 soybean oil. 

India banned imports of refined palm oil.  This should be negative for global vegetable oils.  India buys most of its refined palm oil from Malaysia and this holds, it could be a big blow to Malaysian palm
oil prices.  Meanwhile, Primary Industries Minister Teresa Kok told reporters that the new B20 mandate for biodiesel consumption will require an additional 500,000 tons of crude palm oil in 2020.  On December 27 the USDA Attaché estimated Malaysia 2019-20
industrial domestic use for palm oil at 3.065 million tons, up from 2.789 million tons.  It will be interesting to see if Malaysia will reach its 20 percent target, after rolling it out for the transportation sector (Feb) and if industrial domestic demand
increases beyond USDA’s (Attaché) 3.065-million-ton projection.   We are under the opinion B20 will not be met until late in 2020 due to logistics, but a potential pileup in palm stocks after India cutoff Malaysian palm imports could facilitate the program.  
Malaysian palm for biodiesel production increased to about 1.6 million tons in 2019 from 120,000 tons in 2010.  MPOB is due out with updated S&D data on Friday (late Thursday evening for US observers).

March soybean support is seen at $9.3975, then $9.3600.

Despite the higher CBOT, US country movement of soybeans was slow as of mid-week. Basis formed a touch in NE and northern IL.  Forward sales in South America are also slow. The USD is losing against the BRL. 
Argentina spot crush margins are poor but new-crop is a little better. 

The chairman of Paraguay’s grain and oilseed export chamber, Capeco, estimated exports for the country at 6 million tons.  Argentina may take 4.0-4.5 million tons and Russia 1.5 million tons.   Paraguay soybean
production may end up near 9.5 million tons. 

Australia’s weather bureau does not see any sign of cooler weather or significant rain over the next few months.  Fires have destroyed nearly 26 million acres of land. 

USDA is set to release their annual crop production report on Friday. 

Argentina producers continue to stage protests over higher export taxes. 


Export Developments



  • CBOT
    March soybeans are seen in a $9.00-$9.60 range
  • March
    soybean meal is seen a $285 and $310 range
  • March
    soybean oil 33.00-36.00 range
  • Upside
    in oil share is seen limited at 37.5 percent, for the short term.  Eventually it could rally to 38.5-39.0 percent.



US wheat futures

started the day session mixed but ended higher on technical buying, positioning ahead of the USDA reports, and Egypt picking up 300,000 tons of wheat-an indication global import demand is still strong.  Egypt paid about $10/ton above what they paid in their
last import tender mid-December. 

Funds bought an estimated net 3,000 Chicago wheat. 

March Paris wheat futures closed 1.50 euros higher at 189.00.

Chicago March support is seen at $5.4250, then $5.4225. 

Ukraine’s state weather forecaster looks for a high 2020 winter wheat crop. 



60,000 tons of Russian wheat at $231.95 FOB plus freight costs of $13.50, total $245.45 a ton c&f

60,000 tons of Romanian wheat at $232.79 FOB plus freight costs of $12.80, total $245.59 a ton c&f

60,000 tons of Romanian wheat at $232.79 FOB plus freight costs of $12.80, total $245.59 a ton c&f

60,000 tons of Ukrainian wheat at $231.16 FOB plus freight costs of $14.77, total $245.93 a ton c&f

60,000 tons of Russian wheat at $232.48 FOB plus freight costs of $13.50, total $245.98 a ton c&f.

  • Thailand
    passed on feed wheat and barley due to high prices for March-May shipment.

  • Japan
    seeks 120,000 tons of feed wheat and 200,000 tons of feed barley on January 15 for arrival by March 19. 
  • China
    sold 104,034 tons of wheat or 3.36 percent of what was offered out of auction at an average price of 2,287 yuan per ton. 
  • Jordan
    seeks 120,000 tons of wheat on January 14.
  • Japan
    seeks 106,125 tons of wheat on Thursday.

  • Results
    are awaited on Ethiopia in for 80,000 tons of durum wheat and another 75,000 tons of soft wheat.
  • Morocco
    seeks to import about 354,000 tons of US durum wheat on January 9 for arrival by May 31.
  • Mauritius
    seeks 95,000 tons of optional origin wheat flour on Jan. 10, 2020, for shipment between July 1, 2020, and June 20, 2021. 
  • Turkey
    seeks 550,000 tons of red milling wheat on January 14, minimum protein content of 13.5% for January 21-February 15 shipment. 
  • Turkey
    seeks 100,000 tons of durum wheat on January 14 for Jan 25-Feb 25 shipment.

Syria seeks 200,000 tons of soft wheat from Russia on January 20, 2020. 



of the new tender are as follows:


20,000   Brown Medium    Sept.1-Oct.31,2020/Busan

10,764   Brown Medium    Sept.1-Oct.31,2020/Gwangyang



(high end increased)

CBOT Chicago March wheat is seen in a $5.40-$5.80 range

CBOT KC March wheat is seen in a $4.70-$5.00 range

MN March wheat is seen in a $5.50-$5.75 range

We like KC wheat over Chicago wheat.





Terry Reilly

Senior Commodity Analyst C Grain and Oilseeds

Futures International │190 S LaSalle St., Suite 410│Chicago, IL  60603

W: 312.604.1366

AIM: fi_treilly


Skype: fi.treilly


Description: Description: Description: Description: FImail


Trading of futures, options, swaps and other derivatives is risky and is not suitable for all persons.  All of these investment products are leveraged, and you can lose more than your initial deposit.  Each investment product is offered
only to and from jurisdictions where solicitation and sale are lawful, and in accordance with applicable laws and regulations in such jurisdiction.  The information provided here should not be relied upon as a substitute for independent research before making
your investment decisions.  Futures International, LLC is merely providing this information for your general information and the information does not take into account any particular individual’s investment objectives, financial situation, or needs.  All investors
should obtain advice based on their unique situation before making any investment decision.  The contents of this communication and any attachments are for informational purposes only and under no circumstances should they be construed as an offer to buy or
sell, or a solicitation to buy or sell any future, option, swap or other derivative.  The sources for the information and any opinions in this communication are believed to be reliable, but Futures International, LLC does not warrant or guarantee the accuracy
of such information or opinions.  Futures International, LLC and its principals and employees may take positions different from any positions described in this communication.  Past results are not necessarily indicative of future results.


This email, any information contained herein and any files transmitted with it (collectively, the Material) are the sole property of OTC Global Holdings LP and its affiliates (OTCGH); are confidential, may be legally privileged and are intended solely for
the use of the individual or entity to whom they are addressed. Unauthorized disclosure, copying or distribution of the Material, is strictly prohibited and the recipient shall not redistribute the Material in any form to a third party. Please notify the sender
immediately by email if you have received this email by mistake, delete this email from your system and destroy any hard copies. OTCGH waives no privilege or confidentiality due to any mistaken transmission of this email.