FW: FI Evening Grain Comments 02/06/20

PDF attached

 

USDA
export sales were within expectations. GS roll starts Friday. Dow Jones hit an all-time high today. 

 

Does
not appear USDA will incorporate Phase One trade deal into their Feb S&D report.  So, we changed our US ending stocks estimates.  Bottom line is we don’t know what path USDA may take.  New corn, soy and wheat balances attached

https://www.usda.gov/oce/commodity/reports/USDATradeForecastsAndUSChinaAgreement.pdf

 

Weather

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Weather
continues supportive of crops in most of Brazil and Argentina. There is some concern over rainfall in Brazil delaying some of this year’s soybean harvest, but the bottom line should not impact production for most areas. A few areas in Argentina may become
too wet in the next few days after some heavy rain already occurred overnight.

            Australia’s
summer crops will get some additional rainfall in this coming week and India crops will remain in good shape. China still has potential for improving rapeseed production potential once spring arrives due to recent precipitation and improving soil moisture
in parts of southeastern Europe into Kazakhstan may do to the same for those areas in the spring.

            Southeast
Asia weather will trend a little wetter in the coming week restoring favorable soil moisture to many Indonesian and Malaysian crop areas. Rain is needed most in parts of Peninsular Malaysia.

            Overall,
weather today is likely to contribute a bearish bias on market mentality.

 

MARKET
WEATHER MENTALITY FOR WHEAT: 

Weather
continues supportive of crops in most of Brazil and Argentina. There is some concern over rainfall in Brazil delaying some of this year’s soybean harvest, but the bottom line should not impact production for most areas. A few areas in Argentina may become
too wet in the next few days after some heavy rain already occurred overnight.

            Australia’s
summer crops will get some additional rainfall in this coming week and India crops will remain in good shape. China still has potential for improving rapeseed production potential once spring arrives due to recent precipitation and improving soil moisture
in parts of southeastern Europe into Kazakhstan may do to the same for those areas in the spring.

            Southeast
Asia weather will trend a little wetter in the coming week restoring favorable soil moisture to many Indonesian and Malaysian crop areas. Rain is needed most in parts of Peninsular Malaysia.

            Overall,
weather today is likely to contribute a bearish bias on market mentality.

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

THURSDAY,
FEB. 6:

• UN’s
  FAO World Food Price Index, 4am
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, 8:30am

FRIDAY,
FEB. 7:

• 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
• Agricultural
  conference organized by consultancy IKAR, Moscow
• Guatemala
  Coffee Exports

Source:
Bloomberg and FI

 

 

 

 

 

 

 

USDA
Export Sales

・        
USDA export sales were within expectations for all the major commodities.  Soybeans, soybean oil and corn were near the higher end of expectations. 

・        
US corn commitments have a long way to go to catch up to last year’s pace (down 29 percent yoy).

 

・        
All-wheat sales are running 19 percent above last year’s pace. 

・        
SBO sales were very good at 52,900 tons. Remember USDA announced 30k was sold to Egypt under the 24-hour system. 

・        
USDA US pork net export sales of 29,500 MT for 2020 included 5,100 to China. 

 

 

 

 

 

Macros

・        
US Initial Jobless Claims Feb-1: 202K (exp 215K; R prev 217K)

–         
Continuing Claims Jan-25: 1751K (exp 1720K; prev 1703K) 

・        
US Nonfarm Productivity Q4 P: 1.4% (exp 1.6%; prev -0.2%)

–         
Unit Labour Costs Q4 P: 1.4% (exp 1.3; prev 2.5%)

 

Corn.

・        
March corn futures ended 1.50 cents lower.  Despite good export sales, crop-year to date sales are still lackluster, in part to poor commitments and shipments to South Korea.  USDA export sales of 1.25 million
tons help pair some losses before the market paused.

・        
Buy stops were hit at 10:40 CT in corn, soybeans and meal. 

・        
April hog futures traded limit higher. USDA US pork net export sales of 29,500 MT for 2020 included 5,100 to China. 

・        
Goldman Roll starts Friday. 

• BA
  Grains Exchange reported at least 96% (latest report) of Argentina’s 2019-20 soybean crop was getting enough water.  They have production at 53.1 million tons, below the 55.1 million tons in 2018-19. 
  

・        
A large number of containers are apparently stuck over in China. 

• China
  plans to sell 2.96 million tons of corn from state reserves on February 7.
  
• Zimbabwe
  Finance Minister lifted the ban on GMO corn  imports.
• Bloomberg:
  Brazil January Beef Exports Rise 9.8% as Chinese Demand Double
• Bloomberg:
  USDA FAS Boosts Brazil Soybean-Output Est. by 1m Tons to 124.5m
• USDA
  Attaché estimated Ukraine 2019-20 corn exports at 28.1 million tons. https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Quarterly_Kyiv_Ukraine_01-31-2020

 

Export
Developments

• South
  Korea’s KOCOPIA bought 60,000 tons of corn sourced from the United States at about $221.82 a ton c&f for arrival in South Korea around April 25.
• China
  plans to sell 2.96 million tons of corn from state reserves on February 7.

 

 

 

Updated
1/31/20

• CBOT
  March corn is seen in a $3.65 and $3.95 range

 

Soybean
complex.

・        
Soybeans ended higher in the front months and lower for Sep and Nov. 

・        
The soybean complex was higher ahead of the USDA export sales report and rallied after USDA posted 703,800 tons, higher end of expectations. Prices drifted back and forth for the remainder of the day.  Back
out 30k tons for soybean oil from the 52,900 tons reported (24-h) and sales were decent. Soybean meal sales topped 200k. 

・        
Soybean meal traded outside day higher.  Product spreads reversed mid-morning, and soybean oil ended about 8 points lower. 

・        
China announced they will cut import tariffs on $75 billion of US imports on February 14, same time the US plans to scale back on China import tariffs, part of the Phase One trade deal.  China will cut the
additional tariffs by half, but the original retaliatory tariff will remain in place.  For soybeans, the import tariff will only decline to 27.5 percent from 30 percent.  This is a minor move, but a step in the right direction.

・        
Goldman roll starts on Friday.  Spreads have been active ahead of this roll all week.

• Brazil’s
  wet weather is starting to affect early soybean exports. We are hearing vessels at the ports in Santos and Paranagua are starting to pile up.  Heavy rain is expected to fall across many of the growing regions through mid-February. 
  
• The
  USDA Attaché estimated Brazil 2019-20 soybean crop at 124.5 million tons.
  
  • Soybean
    exports 75MMT, up from 74 in 2018-19.
  • Crush
    44MMT
  • https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Oilseeds%20and%20Products%20Update_Brasilia_Brazil_01-31-2020
• Welcome
  showers are expected for southeast Europe for the remainder of the week. 
  

University
of IL: Biodiesel Production Profits in 2019 https://farmdocdaily.illinois.edu/2020/02/biodiesel-production-profits-in-2019.html?utm_source=farmdoc+daily+and+Farm+Policy+News+Updates&utm_campaign=2746c0edd5-FDD_RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_2caf2f9764-2746c0edd5-173649469

 

Oilseeds
Export Developments

• We
  are hearing China may have bought upward to 20 cargos of soybeans from SA this week for March-June shipment.
  

 

 

 

 

 

Updated
1/31/20

• CBOT
  March soybeans are seen in a $8.60-$8.90 range  
• March
  soybean meal is seen a $280 and $300 range
• March
  soybean oil 29.50-31.70 range   

 

Wheat

・        
US wheat futures fell on slow US exports.  USDA export sales of 338,600 tons were about half of last week’s level.  Strength in the USD weighted on prices (up 15 points around 2:30 CT). 

・        
Chicago March finished down 5.75, KC March down 6.00, and MN March was off 2.75 cents.

・        
Goldman Roll starts Friday. 

・        
Some strikes are still ongoing (on and off) in France.

・        
March Paris wheat futures were down 0.75 at 192.75 euros as of early this morning.

・        
There is talk China bought wheat from France this week after picking up wheat from Australia last week. 

・        
Eastern Australia is going to see rain through mid-February which will benefit the sorghum crops. 

• USDA
  Attaché estimated Ukraine 2019-20 wheat production at 29.144 million tons from 25.057MMT year earlier.
  https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Quarterly_Kyiv_Ukraine_01-31-2020
• USDA
  Attaché pegged Turkey’s 2019-20 wheat imports at a record 8.5 million tons, up from 6.366 million tons year earlier. 
  
• The
  FAO world food price index for the month of January increased 0.7% mom to 182.5 from 181.2 in December and is 11.3 percent higher than a year earlier.  While meats declined 4 percent from December, cereals rose 7 percent and vegetable oils were up 5.5 percent. 
  

 

 

Export
Developments.

• Three
  South Korean flour millers bought around 99,200 tons of milling wheat from the United States and Canada.
  • Daehan
    Flour Mill bought 45,000 tons of U.S. wheat of various types for shipment April 1-20, traders said.
  • Sajo-DongAOne
    mill bought 27,100 tons of wheat from the United States also of various grades for shipment between April 20 and May 20.
  • CJ
    Cheiljedang mill bought about 27,100 tons of Canadian western red spring wheat at about $252.33 a ton.  (Reuters)
• Algeria’s
  OAIC bought around 150,000 tons of optional origin animal feed barley last week at around $214 to $216 a ton c&f, for shipment between Feb. 16-29.
• Jordan
  seeks 120,000 tons of optional origin wheat on Feb. 11. 
• Jordan
  seeks 120,000 tons of optional origin animal feed barley on Feb. 12, at various shipment periods thought to be May 1-15, May 16-31, June 1-15 and June 16-30.

• Japan
  bought 117,895 tons of milling wheat on Thursday.  Original details of the tender as follows:
  

• The
  Philippines might be in for wheat soon.
• Japan
  in an SBS import tender seeks 120,000 tons of feed wheat and 200,000 tons of feed barley for arrival in Japan by July 30, on Feb. 12. 
  
• Syria
  seeks 200,000 tons of wheat from Russia on February 17 for shipment within 60 days of contract signing. 
  

 

Rice/Other

・        
Turkey’s TMO seeks 20,000 tons of rice on Feb. 12 for shipment between Feb. 19 and April 6.

・        
India’s rice exports in 2019 fell 18.1 % from a year ago to their lowest in eight years.

・        
Mauritius has delayed the deadline for to buy up to 6,000 tons of long grain white rice to Feb. 10, for delivery between May 1 and July 31.

・        
Result awaited: South
Korea seeks 77,778 tons of non-glutinous brown rice for arrival between March and May, on Jan. 30.  Details of the tender are as follows:

   
TONNES(M/T)  GRAIN TYPE    ORIGIN    ARRIVAL/PORT

       
20,000   Brown Short   China     March 15-31/Gunsan

       
20,000   Brown Short   China     April 30/Masan

       
15,556   Brown Short   China     May 31/Donghae

       
22,222   Brown Medium  U.S.      May 31/Incheon

 

Updated 2/6/20 (tighten ranges)

・       
CBOT Chicago March wheat is seen in a $5.45-$5.80 range

・       
CBOT KC March wheat is seen in a $4.60-$4.80 range

・       
MN March wheat is seen in a $5.25-$5.45 range