FW: FI Evening Grain Comments 02/07/20

PDF attached

 

Quiet
on the news front.

 

 

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.

            There
is more talk about the U.S. facing planting delays again this year and that is weighing on the market a little as well. There is some truth to that outlook and the early spring is not likely to favor fieldwork very much in the Delta, Southeastern States or
possibly the lower Midwest.

           
Australia’s summer crops have benefited from recent rain, but next week will begin trending drier again for a while. 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 some Indonesian and Malaysian crop areas. Rain is needed most in parts of Peninsular Malaysia.

            Overall,
weather today may offer a more neutral influence than that of recent days.

 

MARKET
WEATHER MENTALITY FOR WHEAT: 

There
is very little risk of crop threatening cold for small grain crops around the world. Cooling in the U.S. this week in the west-central and southwestern Plains proved to be beneficial since recent temperatures were so very warm. No significant crop damage occurred
in the west-central high Plains earlier this week when temperatures turned much colder, but a few fields in Colorado may have suffered some damage.

            Improving
precipitation in southeastern Europe and the southwestern grain areas of the Commonwealth of Independent states this week may improve production potentials in the spring. China’s winter crops are still expected to improve in the early spring if there are a
few timely rain events as temperatures trend warmer

        
   India is still expecting a huge winter wheat crop and the only thing needed would be a few timely rain events this month and no extreme heat. No excessive heat is expected, but precipitation should be limited over the next two weeks.

            Rain
in east-central Australia will be winding down this weekend into early next week with drier conditions coming for a while thereafter. Wheat and barley planting are months away and much of the recent moisture may be lost to evaporation by that time. A close
watch on the situation is warranted, but conditions will favor some rain in southern production areas during the autumn. 

            North
Africa wheat is still a concern with southwestern Morocco production already expected to be down. Timely rain will be needed later this month and in March to support reproduction and filling throughout northern Africa. Early February will be dry and warm biased.

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

Source:
World Weather Inc. and FI

 

 

 

 

Bloomberg
Ag Calendar

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

SUNDAY,
FEB. 9:

• Dubai
  Sugar Conference, Feb 9-12; speakers include Al Khaleej Sugar

MONDAY,
FEB. 10:

• USDA
  weekly corn, soybean, wheat export inspections, 11am
• National
  Ethanol Conference, Feb. 10-12
  • Speakers
    include former U.S. President George W. Bush and USDA Undersecretary Ted McKinney
• EU
  weekly grain, oilseed import and export data
• Malaysia’s
  Feb. 1-10 palm oil exports data
• Ivory
  Coast cocoa arrivals

TUESDAY,
FEB. 11:

• USDA’s
  monthly World Agricultural Supply and Demand (Wasde) report, noon
• France
  agriculture ministry gives estimate for 2020 winter grain and rapeseed plantings
• China
  agriculture ministry’s (CASDE) supply, demand monthly report
• Brazil
  Conab soybean and corn yield, area and production
• Sao
  Martinho Earnings Conference Call, Sao Paulo
• HOLIDAY:
  Japan

WEDNESDAY,
FEB. 12:

• EIA
  U.S. weekly ethanol inventories, production, 10:30am
• FranceAgriMer
  monthly cereals balance sheet

THURSDAY,
FEB. 13:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, 8:30am
• Giant
  pulp maker Suzano holds investor day in Sao Paulo
• Brazil’s
  grain exporter group Anec holds conference on 2019-20 crop outlook

FRIDAY,
FEB. 14:

• 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
• FranceAgriMer
  crop conditions – French crops office expected to resume crop-conditions reports after winter break
• New
  Zealand food prices
• Biosev
  holds analyst conference call to discuss 4Q earnings.

Source:
Bloomberg and FI

 

 

 

 

 

 

 

CFTC
Commitment of Traders

Funds
were much less long in corn than expected. 

 

 

As
of Friday:

 

 

 

 

 

Macros

·        
US Non Farm Payrolls Jan: 225K (est 165K ; prevR 147K ; prev 145K)

·        
US Unemployment Rate Jan: 3.6% (est 3.5% ; prev 3.5%)

·        
US Average Earnings (M/M) Jan: 0.2% (est 0.3% ; prev 0.1%)

·        
US Average Earnings (Y/Y) Jan: 3.1% (est 3.0% ; prevR 3.0% ; prev

·        
Canadian Unemployment Rate Jan: 5.5% (est 5.7% ; prev 5.6%)

·        
Canadian Full Time Unemployment Change SA Jan: 35.7K (prevR 33.9K ; prev 38.4K)

o  
Canadian Part Time Employment Change SA Jan: -1.2K (prevR -6.5K ; prev -3.2K)

·        
US Wholesale Inventories (M/M) Dec F: -0.2% (est -0.1%; prev -0.1%)

–
Wholesale Trade Sales (M/M) Dec: -0.7% (est 0.1%; prev R 0.9%)

 

Corn.

·        
March corn futures ended 4.25 cents higher on short covering.  The contract ended at $3.8350, its 50-day MA.  For the week it was up 2.50 cents. The higher USD capped gains today, and for the week for that
matter.  The USD and weakness in the Brazilian real have had a significant impact on US corn exports in recent months. 

Weekly
BRL/USD

·        
Meanwhile, US corn basis has been sacked since the outbreak of the coronavirus.  The threat that China may not buy 32 billion USD of American agriculture goods over the next two years is now in jeopardy, and
this is reflected by US producer sales.  Many farmers holding cash corn are reluctant sellers, holding out for higher prices.  With this in mind, futures may have found some support level-on lack of producer selling. 

·        
Funds were estimated net buyers of 20,000 corn contracts.

• China
  plans to sell 2.96 million tons of corn from state reserves on February 7.
  

·        
US jobs report (227k vs 165k est.) was a bullish indicator for the US economy. 

·        
Hong Kong has 25 cases of coronavirus.  630 deaths have been reported in China.

·        
China’s Hubei province plans to boost food supplies by releasing 2,000 tons of frozen pork from reserves.  COFCO will send 200 tons of rice, 50 tons of flour and noodles, and 300 tons of edible oils to Wuhan
– each day. 

 

US
ethanol D6 RIN prices

Source:
Reuters and FI

 

Export
Developments

• China
  plans to sell 2.96 million tons of corn from state reserves on February 7.

 

Soybean
complex.

·        
March soybeans finished 1.00 cent higher at $8.8200, March meal up $1.10 at $289.30 and March soybean oil down 27 points at 30.97 points.  Short covering was noted in soybeans but huge crop forecasts for the
Brazilian soybean crop limited gains. Also dragging on futures was the lack of 24-hour USDA sales announcements.  Soybean meal rallied on product spreading. 
Soybean
oil is on the defensive on lower palm and CBOT product spreading.  China crush margins significantly improved this week and end users and state-run buyers booked more than one million tons of South American soybeans. This disappointed US bull traders awaiting
material results from the Phase One trade deal.  

·        
Funds were even in soybeans, buyers of 3,000 in soybean meal, and net sellers of 4,000 bean oil contracts.

·        
Goldman roll started today. 

• Arc
  Mercosul reported 15.7 percent of the Brazil soybean crop had been harvested versus 27.3 percent at this time last year.  The 16 percent should be near average.  Last year producers had a great start in harvest season due to dryness. 
  

·        
China cash crush margins as of today, using our calculation, was 139 cents per bushel (137 previous), compared to 84 cents more than a week ago and 48 cents around this time last year. 

·        
Malaysian palm oil snapped a 4-day winning streak. 

 

Oilseeds
Export Developments

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

 

US
biodiesel D4 RIN prices

 

Source:
Reuters and FI

 

Wheat

·        
Chicago March finished up 2.50, KC March up 4.75, and MN March 3.25 cents higher. March wheat was up 5 cents for the week. Short covering lifted prices higher on Friday.  Gains were limited this week from
a higher USD and China opting to buy French wheat. 

·        
Improving soil moisture over the past week for the US Great Plains could boost crop conditions for winter wheat. 

·        
Funds were net buyers of an estimated 4,000 contracts on the day for Chicago wheat futures.

·        
March Paris wheat futures were up 0.25 at 193.25 euros as of early this morning.

·        
Algeria granted preliminary approval for importing Russian wheat.

·        
IKAR warned Russia wheat exports could fall below 32 million tons. Russia shipped 22.1 million tons of wheat between July 1 and Jan. 30.

·        
IKAR estimated the Russia grain crop at 127MMT, with exports reaching 48 million tons. 

·        
Meanwhile the First Deputy Agriculture estimated grain production at 121.2 million tons.

·        
China and Hong Kong citizens are apparently shifting short term diets over to noodles and rice, one reason we may have seen China demand for wheat pick up over recent weeks. 

·        
China southwestern province of Sichuan is battling fall armyworms, according to news agency Xinhua. 

·        
Goldman Roll starts today. 

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

·        
French wheat is cheapest in the world.

·        
France exported 1.2 million tons of soft wheat outside the European Union in December, up from 1.0 million tons in November and highest monthly volume since the start of the marketing year. 

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

 

 

Source:
World Weather Inc. and FI

 

Export
Developments.

• Turkey’s
  TMO seeks around 250,000 tons of wheat and 50,000 tons of durum on Feb. 18 for March shipment.
  

• South
  Korea bought US wheat this week.  Total volume was thought to be around 71,200 tons. 
  
• 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
  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. 
  
• The
  Philippines might be in for wheat soon.

 

Rice/Other

·        
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.

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