From: Terry Reilly
Sent: Thursday, February 13, 2020 2:29:05 PM (UTC-06:00) Central Time (US & Canada)
Subject: FI Evening Grain Comments 02/13/20

PDF attached. Funds will be sent later

 

Attached
is our US wheat balance sheet.  Covid-19 continues to hang over the markets. 

 

USDA
on Friday will release its 2020:

·       
Agriculture projections at 11:00 am CT

https://www.ers.usda.gov/publications/

·       
Agriculture Baseline Database at 2:00 PM CT  

https://www.ers.usda.gov/calendar/?month=2&year=2020&day=14

 

Nearby
spreads             Chng

SH/K   
-10/-9.75          1.25

SMH/K  
-5.7/-5.6          0.10

BOH/K  
-0.37/-0.36        0.00

CH/K   
-5.25/-5          -0.75

WH/K   
-0.25/0            0.75

KWH/K  
-7/-6.75           -0.75

MWH/K  
-9.75/-9.5         -0.25

 

Weather

The
CPC looks for 60 percent chance for a neutral ENSO through the NH spring. 

 

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:
 

Not
much has changed overnight. 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, but progress is being made every day and it looks as though the paces is not far from the five year average even though much slower than last year.

            Too
much rain in northeastern South Africa in the past week has resulted in some flooding. Crop damage has not been assessed, but the region impacted is a minor production region in eastern Limpopo and northeastern Mpumalanga. Other areas in South Africa have
ideal crop development conditions.

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.

           
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. With that said there may have been some damage in a few minor wheat areas in central Nebraska this morning where morning temperatures fell near slightly below
zero Fahrenheit.

            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, weather today will continue to provide a mixed influence on market mentality.

Source:
World Weather Inc. and FI

 

 

Bloomberg
Ag Calendar

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

 

 

 

 

Informa
US 2020 acreage

Corn
93.44 vs 89.70 last year

Soybeans
86.50 vs 76.10 last year

All
wheat 45.53 vs 45.20 last year

OS
30.80 vs 31.20 last year

Durum
1.45 vs 1.34 last year

Cotton
13.01 vs 13.74 last year

 

FI
is using 92.50 for corn, 87.10 for soybeans, and all-wheat 45.6.  (table attached)

USDA
2019 Feb. outlook was 85.0 soybeans, 92.0 corn and 47.0 wheat

Source:
newswires and trade

 

Macros

US
CPI (M/M) Jan 0.1% (est 0.2%; prev 0.2%)


US CPI (Y/Y) Jan 2.5% (est 2.4%; prev 2.3%)

US
Core CPI (M/M) Jan 0.2% (est 0.2%; prev 0.1%)


US Core CPI (Y/Y) Jan 2.3% (est 2.2%; prev 2.3%)

US
Initial Jobless Claims Feb 8  205 K (est 210 K; prevR  203 K; prev 202 K)


US Continuing Claims Feb 1 1.698 Mln (est 1.745 Mln; prevR 1.759  Mln; prev 1.751 Mln

 

Corn.

·        
Corn, oats and US wheat trended lower.  March corn fell 3.50 cents on lack of fundamental bullish news, large SA crop prospects and spike in coronavirus deaths and cases.  China has been a heavy buyer of Ukraine
corn this week.  PNW fob corn was last around $15 premium to Ukraine spot fob corn.  The quality of the US corn has been in question when looking at the slow US sales for South Korea. 

·        
USDA corn sales of nearly 970,000 tons were within expectations. 

·        
1350+ deaths and more than 60,000 cases of coronavirus was recorded.  Click on the BBC link for charts:
https://www.bbc.com/news/world-asia-china-51482994

·        
Today was the last day of the Goldman Roll. 

·        
Argentina Buenos Aires Grain Exchange estimated the 2020 corn crop at 49 million tons.  USDA is at 50 million tons versus 51.0 million tons in 2019.  BA exchange is using a forecast of 50.6 million tons for
2019 (2019-20 local crop year).

·        
Agroconsult looks for the Brazil second corn crop to end up near 74.7 million tons, up from 74.0 from their previous projection.  USDA is using a combined crop-year production of 101.0 million tons for Brazil. 

·        
USDA pork sales last week were 28,600 (China 3.7k). 

·        
Port of Milwaukee will see a $31 million uplift to create space for handling DDGS. 

https://www.jsonline.com/story/money/2020/02/13/new-port-milwaukee-facility-ship-grain-overseas/4748713002/

 

Export
Developments

  • Results
    awaited: Algeria’s ONAB seeks 35,000 tons of optional origin corn on Feb. 13 for shipment in the second half of March

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

 

Soybean
complex.

·        
Soybeans rallied led by the nearby contracts on lack of US producer selling and strong domestic crush rate.  China is still buying soybeans, but mainly from South America.  Purchases and shipments from the
US to China has slowed in recent weeks.  Traders will be watching what happens after February 14, the date the 30-day observation period ends for Phase One trade agreement.  We don’t expect large sales to show up immediately.  Note Monday is a US holiday. 
US interior movement of soybeans slowed this week with snow across the Midwest and heavy rain across the southeast.  Palm oil rolled over again with futures and cash falling more than 2 percent. Soybean meal basis firmed about $3.00 at three locations in Iowa. 

·        
Spreading in soybeans was active again. March soybeans closed 3.75 cents higher and May 2.50 higher. 

·        
March meal was up $0.20 at $291.90 and March soybean oil down 31 points at 30.72 points.

·        
USDA US soybean sales were near the lower end of expectations, meal was within and soybean oil above.   Reuters noted soybean shipments to China fell to their lowest level in 10 months.

·        
China soybean stocks were nearly 6 million tons, according to the CNGOIC, a comfortable level, in my opinion. 

·        
Port movement in Brazil is picking up after getting heavy rain earlier this week.  Producers have been active selling soybeans in part to the real hitting record lows earlier this week. 

·        
Brazil’s AgMin noted the value of agriculture exports during January fell 9.4 percent from the previous year to $5.8 billion.  Export volume was down 2.2%.   Brazil’s Mato Grosso soybean forward sales are
running at about 68 percent.

·        
Agroconsult looks for the Brazil soybean crop to end up near 126.3 million tons, up from 124.3 from their previous projection.  USDA is using 125.0 million tons. 

  • The
    Rosario grains exchange estimated the Argentina soybean crop at 55 million tons, up 1 million tons from their last estimate.  USDA is at 53.0 MMT versus 55.3 in 2019. 
  • The
    USDA February Outlook Forum starts a week from today. 
  • NOPA
    will issue its US January crush on Tuesday (Monday in the US is a holiday). Early estimates include around 1.725 billion pounds for soybean oil stocks and  just under 175 million bushels for soybean crush, which on a daily rate would be near December’s level. 

·        
The US$ was 23 higher as of 2 pm CT and slightly lower. The Brazilian Real was stronger at 4.3369 after hitting an all-time low during its intraday session. 

·        
SEA reported India January vegetable oil imports reached 1.196 MMT, down 6 percent from year earlier.  2019-20 Nov-Jan exports total 3.451 million tons.

 

Oilseeds
Export Developments

  • Egypt’s
    GASC bought 41,500 tons of local soybean oil at 12,300 Egyptian pounds ($788.44) a ton for arrival March 25-April 15.  Prices they paid are down from the $875+ shoveled out LH January for imported soybean oil. 

Reuters
breakdown of the purchase:

20,000
tons of soyoil at 12,300 Egyptian pounds($788.44) a ton

6,000
tons soyoil at 12,300 Egyptian pounds ($788.44) a ton

5,000
tons soyoil at 12,300 Egyptian pounds ($788.44) a ton

4,000
tons soyoil at 12,300 Egyptian pounds($788.44) a ton

3,500
tons soyoil at 12,300 Egyptian pounds($788.44)

3,000
tons soyoil at 12,300 Egyptian pounds($788.44) a ton

 

 

Brent
versus palm and soybean oil

Source:
Reuters and FI

 

Wheat

·        
US wheat futures traded lower on a strong USD and lack of daily US export developments. USDA export sales improved from the previous week but concerns over the coronavirus continued to linger over the market. 
The window to sell current crop year US wheat to China is closing. 

·        
March Chicago wheat closed down 3.25 cents, March KC down 5.00 cents and March Minn off 4.50 cents.  

·        
March Paris wheat futures finished up 0.25 euros at 192.75.

·        
USDA US all-wheat export sales were near the top end of expectations and nearly double than previous week (643,100 tons for week ending 2/6).  HRW wheat sales were 294,200 tons and HRS 197,700 tons.

·        
Strategie Grains lowered their 2020-21 EU wheat crop to 138.6MMT from 139.8 previous. See table after the export development section. 

 

Export
Developments.

  • South
    Korea’s MFG bought 67,000 tons of feed wheat at about $248.35/ton for May/June shipment. 
  • Turkey
    seeks 25,000 tons of barley on Feb. 18 for 2/26-3/15 loading. 
  • Jordan
    seeks 120,000 tons of wheat, optional origin, on Feb 18.
  • Jordan
    seeks 120,000 tons of feed barley.
  • Japan
    bought 110,565 tons of food wheat from the United States, Canada and Australia on Thursday.

Details
are as follows (in tons):

 

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.

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

 

 

 

U.S. EXPORT SALES FOR WEEK ENDING 2/6/2020

 

CURRENT MARKETING YEAR

NEXT MARKETING YEAR

COMMODITY

NET SALES

OUTSTANDING SALES

WEEKLY EXPORTS

ACCUMULATED EXPORTS

NET SALES

OUTSTANDING SALES

CURRENT YEAR

YEAR
AGO

CURRENT YEAR

YEAR
AGO

 

THOUSAND METRIC TONS

WHEAT

 

 

 

 

 

 

 

 

   HRW    

294.2

1,908.1

1,808.2

200.1

6,261.0

3,770.6

0.0

80.9

   SRW    

11.7

393.2

886.1

73.5

1,809.1

1,391.0

20.0

25.2

   HRS     

197.7

1,576.6

1,511.3

179.8

4,732.2

3,992.9

24.0

83.0

   WHITE   

132.4

1,218.8

1,167.2

52.8

3,188.5

2,961.6

0.0

20.9

   DURUM  

7.0

197.4

89.9

0.0

623.8

330.0

0.0

61.0

     TOTAL

643.1

5,294.1

5,462.7

506.3

16,614.7

12,446.1

44.0

270.9

BARLEY

0.0

15.8

30.9

1.0

33.0

27.4

0.0

30.5

CORN

968.8

11,869.4

13,020.8

782.8

11,890.0

19,266.6

0.0

1,258.9

SORGHUM

17.6

284.0

119.2

84.3

889.2

357.4

0.0

0.0

SOYBEANS

644.8

5,504.9

12,517.2

611.3

27,447.7

17,851.9

6.3

316.6

SOY MEAL

234.2

3,630.2

3,936.1

268.2

3,885.4

2,973.6

0.0

87.3

SOY OIL

39.1

298.6

210.7

12.8

342.9

195.2

0.0

0.5

RICE

 

 

 

 

 

 

 

 

   L G RGH

101.5

440.7

222.9

43.9

757.7

564.4

0.0

0.0

   M S RGH

25.0

43.3

4.5

0.2

17.0

23.1

0.0

0.0

   L G BRN

0.2

22.2

5.2

1.4

22.0

24.7

0.0

0.0