FW: FI Evening Grain Comments 02/12/20

PDF attached

 

 

Global tenders increased especially in soybean meal and corn.  The pace of the coronavirus spread is slowing but deaths continue to rise. China officials are asking local crushers to resume operations, if they have not already. 

 

Weather

MARKET WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Favorable soil moisture is present in Argentina, Brazil, South Africa, India and some eastern Australia locations which should support crop development.  There is still some concern over harvest conditions in early season soybean areas of Brazil which may lead to more delay in second season corn planting.

More rain will fall this week in northern and eastern Europe and from there to Ukraine and that will improve early season crop development potentials for areas that were too dry last autumn.

China’s winter crops are still rated favorably with a big potential for improving rapeseed conditions in the early weeks of spring after recent weeks of rain.

India’s winter crops are still poised to perform quite favorably, despite a drier biased outlook for the next ten days.

Southeast Asia crops are still rated well, despite erratically distributed rainfall in recent weeks.

Eastern Australia sorghum conditions have improved, but drought remains in key production areas and much more rain will be needed before winter planting of canola begins in late April. Summer crop development has improved, but it will still be a very small crop.

South Africa crop conditions are still rated quite favorably with little change likely, despite some net drying for a while.

            Today’s weather will have a mixed influence on market mentality.

 

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 a low impact on market mentality.

Source: World Weather Inc. and FI

 

 

Bloomberg Ag Calendar

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

 

 

Macros

US DoE Crude Oil Inventories (W/W) 07-Feb: 7459K (est 3200K; prev 3355K)

– Distillate: -2013K (est -750K; prev -1512K)

– Cushing: 1668K (prev 1068K)

– Gasoline: -95K (est 650K; prev -91K)

– Refinery Utilization: 0.60% (est -0.40%; prev 0.20%)

 

Corn.

·         Corn futures started the day lower on follow through selling and lower wheat, despite a spike in South Korean import business.  But then turned higher after Chicago wheat rebounded.  Bull spreading was a feature. 

·         Corn futures ended 1.00-3.25 cents higher

·         South Korea bought at least 261,000 tons of corn overnight.  One source noted SK bought up to 330,000 tons.  They were also thought to have picked up a cargo of feed wheat.  Much of the corn was also said to be sourced from origins other than US PNW due to quality problems. 

·         1115+ deaths and more than 44,000 cases of coronavirus was recorded.  https://www.bbc.com/news/world-asia-51470363

·         China’s state reserve will sell 20,000 tons of frozen pork on Feb. 14.

·         The weekly USDA Broiler Report showed eggs set in the US up 5 percent and chicks placed up 4 percent.  Cumulative placements from the week ending January 4, 2020 through February 8, 2020 for the United States were 1.14 billion. Cumulative placements were up 4 percent from the same period a year earlier.

 

US weekly ethanol production fell 48,000 barrels to 1.033 million. A Bloomberg poll looked for it to be down 16,000.  US ethanol stocks increased 884,000 barrels to 24.358 million (trade was looking for a 132k increase).  For the past 4 weeks, ethanol production declined on average by 16,000 barrels and stocks increased 338,000 barrels.  Ethanol stocks are near a six-month high.  Corn crop year to date production is running 0.4 percent below the same period a year ago, an improvement from where it was running at the end of December (2.0 percent lower).  The ethanol blend rate was running at 90.1 percent, above 89.7 percent previous week.  We raised our corn for ethanol use from 5.400 billion bushels to 5.415 billion. USDA is at 5.425 billion versus 5.376 billion in 2018-19. 

 

 

 

 

Export Developments

• South Korea’s Feed Leaders Committee (FLC) bought about 65,000 tons of optional origin corn at $212.23 a ton c&f for arrival in South Korea around May 20.
• South Korea’s Major Feedmill Group (MFG) bought 130,000 tons of optional origin corn at $213.25 and $214.99/ton for arrival in South Korea in the second half of May. 
• South Korea’s KFA bought about 66,000 tons of optional origin yellow corn at around $212.95 a ton c&f for arrival in South Korea around May 20.
• Algeria’s ONAB seeks 35,000 tons of optional origin corn on Feb. 13 for shipment in the second half of March

 

Updated 2/11/20

• CBOT March corn is seen in a $3.75 and $3.90 range

 

Soybean complex.

·         Soybeans turned higher led by bull spreading on lack of US producer selling and good US domestic demand for crush.  We heard there was selling out of Brazil today. 

·         There were no USDA 24-hour announcements.   

·         CBOT March soybeans finished 7.75 cents higher at $8.9250, March meal up $0.90 at $291.70 and March soybean oil up 31 points at 31.03 points.

·         According to a Bloomberg story citing JCI, China’s soybean crushing was last running near 1.5 million tons this week and could increase 1.7 million tons next week.  The regular weekly rate is 1.7 million tons to 2.0 million tons.

·         The US$ was 25 higher by noon CT and the lower. The Brazilian Real hit another all-time low. 4.3511 was the intraday low by noon. 

• We heard China booked four new-crop cargos (2021) of Brazil soybeans. 
• May CBOT crush traded two-sided, ending 1.25 lower at 95.75. 
• The USDA February Outlook Forum starts a week from Thursday. 

 

Oilseeds Export Developments

• South Korea’s Nonghyup Feed Inc. (NOFI) bought 21k of meal for March/April arrival.
  • 13,000 tons of palm kernel expeller meal from South East Asia at $161.78 a ton c&f and $159.88 a ton c&f
  • 8,000 tons of corn gluten feed from China at $202.00 a ton c&f and $198.50 a ton c&f.
  • Passed on 14,000 tons of copra meal extractors
• South Korea’s Feed Leaders Committee (FLC) bought 60,000 tons of soybean meal at about $347.60 a ton c&f for arrival in South Korea around Sept. 10. Origin is unknown.  
• South Korea’s Major Feedmill Group (MFG) bought about 60,000 tons of soybean meal at around $347.55 a ton c&f for shipment between July 1-31. 
• 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. 

 

 

Updated 2/11/20

• CBOT March soybeans are seen in a $8.70-$8.95 range  
• March soybean meal is seen a $285 and $300 range
• March soybean oil 30.10-31.90 range   

 

Wheat

·         Front month March Chicago wheat closed up 5.50 cents today while May appreciated 4.50 cents and July up by 4.25 cents.  Easing concerns over coronavirus, short covering, and heavy rains forecast for the US Southeast thought to threaten the quality of the winter wheat crop all supported prices.  KC ended higher but Minn was on the defensive on improving global weather. 

·         In a down day, Chicago wheat futures volume on Tuesday was a record at 345,000.

·         March Paris wheat futures finished unchanged at 192.50.

·         FranceAgriMer increased its estimate for non-EU country soft wheat exports to 12.6 million tons from 12.4 million for 2019-20.  Exports to China were increased 0.2MMT to 1.2MMT. 

 

Export Developments.

• Japan seeks 110,565 tons of food wheat from the United States, Canada and Australia on Thursday.

Details are as follows (in tons):

• We heard South Korea may have bought a cargo of feed wheat. 
• Jordan passed on 120,000 tons of optional origin animal feed barley, 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

·         Thailand set a rice export target of 7.5 million tons for 2020, the lowest in seven years.

·         South Korea’s Agro-Fisheries & Food Trade Corp. bought 22,222 tons of US rice.  They were looking for 77,778 tons which closed on Jan. 30.

·         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.

 

Updated 2/11/20

·        CBOT Chicago March wheat is seen in a $5.30-$5.65 range

·        CBOT KC March wheat is seen in a $4.55-$4.80 range

·        MN March wheat is seen in a $5.20-$5.45 range