FW: FI Evening Grain Comments 02/10/20

PDF attached

 

USDA
is due out with updated S&D’s on Tuesday.

Weather

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Not
much has changed since Friday. Favorable soil moisture is present in Argentina, Brazil, South Africa, India and some eastern Australia locations which should support crop development.  More rain will fall this week in southeastern Europe and from there to
Ukraine and that will improve early season crop development potentials for areas that were too dry last autumn.

            Today’s
weather will maintain a bearish influence on market mentality, although the lack of change in weather should minimize its overall influence

 

MARKET
WEATHER MENTALITY FOR WHEAT: 

Many
of the winter crop areas in the world that experienced poor crop establishment because of dryness last autumn have seen some timely precipitation in recent weeks. The moisture should help improve winter crop establishment prior to reproduction this spring.
There has also been very little winterkill this year and that should be supporting larger crops.

            The
biggest dry concern today is in North Africa and in particular southwestern Morocco where durum wheat and barley production has been cut. There is potential for larger small grain losses from North Africa if improved rainfall does not occur soon. Spain and
Portugal are also drying out but have adequate subsoil moisture for now.

           
Overall, despite market performance of late, there is still no good weather related reason for futures price appreciation and some caution is warranted there. Today’s weather will maintain little change from that of late last week and that should include a
bearish bias to market mentality.

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

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

 

 

 

 

 

 

USDA
inspections versus Reuters trade range                                            

Wheat      
523,713     versus  300000-600000           range

Corn         
769,390     versus  500000-800000           range

Soybeans  
603,852     versus  700000-1350000         range

 

 

 

Macros

U.S.
Crude Futures’ Discount To Brent Crude Futures Hit $3.45 A Barrel, Smallest Since March 2018

 

Corn.

·        
March corn futures ended 1.75 cents lower at $3.8175, below its 50-day MA. 

·        
Corn futures were under pressure on Monday on lack of US demand and favorable weather in South America.  The harvest progress of soybeans in Brazil is running near a five-year average. Producers tend to follow
up with second corn crop plantings about a day or two following soybean harvest.  Bloomberg noted corn was lower on aggressive US cash sales by producers. 

·        
Funds were estimated net sellers of 8,000 corn contracts.

·        
908 deaths and more than 40,000 cases of coronavirus was recorded by the end of Sunday. 97 people died on Sunday. 

·        
We are hearing many businesses in China will not reopen until March.  The coronavirus also is impacting planned events outside China.  The Global Grains conference scheduled to take place March 9-11 is pushed
back until June 17-19 or June 29-July 1. 

·        
USDA US corn export inspections as of February 06, 2020 were 769,390 tons, within a range of trade expectations, above 562,380 tons previous week and compares to 752,758 tons year ago. Major countries included
Mexico for 216,138 tons, Japan for 197,770 tons, and Colombia for 189,695 tons.

·        
China sold 10,000 tons of pork from state reserves late last week.  They look to import more meat to satisfy consumption demand. 

·        
African swine fever was confirmed in the Philippines, first case since September. The Philippines is the world’s seventh largest pork importer and tenth largest consumer, according to Bloomberg. 

·        
The capesize index fell 20 points to a negative 254, down for the 42nd straight session.  Updated after the text is the FI charts for Baltic Dry Index.

·        
President Trump’s 4.8 billion USD budget hinted cuts to crop insurance. See table S-6 from link below.  It looks like the objective is to cut agriculture support programs by 57.7 billion dollars over a 10-year
period.  

https://www.govinfo.gov/content/pkg/BUDGET-2021-BUD/pdf/BUDGET-2021-BUD.pdf

·        
Germany reported a case of H5N8 bird flu outbreak in the southwest.  The virus killed 44 birds. 

·        
US cold storage stocks of pork at the end of December of 54.4 million pounds ended up at their highest level since 1989.  USDA ERS Livestock and Meat International Trade Data:
https://www.ers.usda.gov/data-products/livestock-and-meat-international-trade-data/livestock-and-meat-international-trade-data/

 

US
corn and soybean basis

Source:
Reuters and FI

 

Hubbs,
T. "Corn Consumption Showing Improvement." farmdoc daily (10):24,  Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, February 10, 2020.

https://farmdocdaily.illinois.edu/2020/02/corn-consumption-showing-improvement.html?utm_source=farmdoc+daily+and+Farm+Policy+News+Updates&utm_campaign=cdcbd62346-EMAIL_CAMPAIGN_2018_09_04_04_03_COPY_01&utm_medium=email&utm_term=0_2caf2f9764-cdcbd62346-173649469

 

Export
Developments

• None
  reported

 

Soybean
complex.

·        
Soybeans traded two-sided, ending higher.  Prices rallied after the open from unfavorable weather in Brazil and remarks from White House adviser Larry Kudlow.  He said that Chinese President Xi Jinping told
U.S. President Donald Trump that China will fulfill their promise to buy goods from the US despite delays from coronavirus. 
Heavy
rain today for Brazil’s Santos and Paranagua ports could slightly disrupt shipments. One positive sign on China demand was seen last week when they continued to buy soybeans from South America last week and higher soybean meal futures amid short covering by
money managers.  There were rumors of soybean sales off the PNW. 

·        
Soybean oil was on the defensive from a drop in Malaysian palm oil prices.  Uncertainty over Chinese demand for vegetable oils from the spread of coronavirus remains a concern. However, state-run companies
have been told to restart and/or increase oilseed crushings last week, leading some to believe China will not default on importing soybeans.  There was talk on Sunday that China bought about 15 cargos of SA soybeans last week, according to Bloomberg. AgriCensus
mentioned it was closer to 25 cargos.  A Bloomberg survey for Conab soybean production came in at 124.3 million tons.
AgRural
mentioned the recent rain across Brazil boosted production prospects and production may exceed 123.9 million tons.  16 percent of the soybean crop was harvested by Thursday, below 26 percent from this time last year which was above normal. 

·        
March soybeans finished 2.25 cents higher at $8.8425, March meal up $2.10 at $291.40 and March soybean oil down 35 points at 30.62 points. 

·        
Funds were estimated buyers of 7,000 soybeans, buyers of 3,000 in soybean meal, and net sellers of 5,000 bean oil contracts.

·        
USDA US soybean export inspections as of February 06, 2020 were 603,852 tons, below a range of trade expectations, below 1,373,502 tons previous week and compares to 1,150,863 tons year ago. Major countries
included China Main for 135,335 tons, Bangladesh for 85,972 tons, and Mexico for 83,890 tons.

·        
The US$ was about 15 points higher as of 2 pm CT.

·        
Money managers extended their net short position in soybean meal to a record 64,377.

·        
APK-Inform reported August to date Ukraine sunflower exports at 2.112 million tons, up 59 percent from the previous season. 

·        
Brazil exported 77.7 million tons of soybeans during the February-January period, down from 84.4 million tons in 2018-19.  Meal exports fell to 16.8MMT from 17.4MMT previous and soybean oil dropped to 1.010MMT
from 1.331MMT. 

·        
Average Brazil soybean exports during the first five working days of February fell to 198,600 tons per day on average from 263,500 tons per day for February 2019.

·        
China December palm imports fell 24 percent from the previous year to 723,237 tons. This is viewed bearish for palm oil. 

·        
Cargo surveyor SGS reported month to date February 10 Malaysian palm exports at 323,341 tons, 134,490 tons below the same period a month ago or down 29.4%, and 69,143 tons below the same period a year ago
or down 17.6%.  AmSpec showed a 20 percent drop to 364,456 tons. 

·        
Malaysian palm markets
were lower on Monday with third month benchmark futures down 2 percent.  China demand concerns amid coronavirus and palm export data weighted on palm oil futures.  End of January palm oil stocks came in below expectations, but production fell nearly 48,000
tons below a Reuters trade guess.  Stocks are lowest in 2 years. 

 

 

 

The
European Union reported soybean import licenses since July 1 at 8.348 million tons, below 8.781 million tons a year ago, a 5 percent decrease. European Union soybean meal import licenses are running at 11.168 million tons so far for 2019-20, above 10.555 million
tons a year ago. EU palm oil import licenses are running at 3.278 million tons for 2019-20, down from 3.953 million tons a year ago, or down 17 percent.  European Union rapeseed import licenses since July 1 were 4.052 million tons, up 43 percent from 2.835
million tons from the same period a year ago.

 

 

Oilseeds
Export Developments

• Egypt
  seeks at least 3,000 tons of soybean oil and 2,000 tons of sunflower oil on Thursday for March 24-April 15 arrival. 
  
• South
  Korea’s Nonghyup Feed Inc. (NOFI) seeks up to 13,000 tons of palm kernel meal expellers, 14,000 tons of copra meal and 8,000 tons of corn gluten feed, on Feb. 11 for arrival in South Korea in March and April.
  

 

Wheat

·        
Chicago March finished down 6.75 cents, KC March unchanged, and MN March 2.00 cents lower.

·        
Strength in Paris wheat is limiting losses for MN. Algeria seeks wheat for April shipment. 

·        
After the close Egypt announced they are in for wheat for March 21-31 shipment.  Egypt said they shave enough wheat to last 4.6 months.  Egypt said they will keep their wheat moisture limit cap at 13.5 percent 
to April 2021. 

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

·        
Texas winter wheat was rated 24 percent for the combined good and excellent condition.  Last week it was at 20 percent.  TX wheat was at 23 percent after the first week of December. 

·        
USDA US all-wheat export inspections as of February 06, 2020 were 523,713 tons, within a range of trade expectations, above 435,720 tons previous week and compares to 562,706 tons year ago. Major countries
included Bangladesh for 86,995 tons, Nigeria for 78,055 tons, and Philippines for 65,785 tons.

·        
Southeast Queensland and northeastern New South Wales in Australia are expected to get additional rain this week after seeing rain last week. 

·        
March Paris wheat futures were up 1.50 at 194.75 euros.

·        
French wheat is cheapest in the world.

·        
The European Union granted export licenses for 208,000 tons of soft wheat exports, bringing cumulative 2019-20 soft wheat export commitments to 17.542 MMT, up from 10.153 million tons committed at this time
last year, a 73 percent increase.  Imports are down 53 percent from year ago at 3.119 million tons.

 

 

 

 

Export
Developments.

·        
Egypt is in for wheat for March 21-31 shipment. 

• Algeria
  seeks 50,000 tons of soft milling wheat for April shipment.
• 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. 
  
• Turkey’s
  TMO seeks around 250,000 tons of wheat and 50,000 tons of durum on Feb. 18 for March shipment.
  
• The
  Philippines might be in for wheat soon.

 

Rice/Other

·        
Results awaited: 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.