From: Terry Reilly
Sent: Tuesday, March 24, 2020 2:06:38 PM (UTC-06:00) Central Time (US & Canada)
Subject: FI Evening Grain Comments 03/24/20

PDF attached includes updated US corn and wheat balance sheets


Wild trade in the outside markets.  CBOT agriculture grains and oilseeds opened lower but many markets rebounded on speculation China will continue purchasing US commodities. 





Sufficient rain is expected in Argentina to support key crops from Cordoba and to northern and central Buenos Aires over the next couple of weeks. Other areas will get light precipitation that may slow drying, but a few pockets of moisture stress cannot be ruled out. The bottom line is still good for late season crop development in most of that country.

            Brazil soil moisture is still quite favorable for maintaining good crop conditions. There is need for greater rain in the south and some timely moisture will occur to ensure there is no serious stress to crops outside of Rio Grande do Sul where production cuts have already occurred.

            U.S. planting delays are expected to prevail through the first week of April due to wet field conditions and additional precipitation in the Delta and Tennessee River Basin with areas that are usually planted in early April also being impacted. Less rain and some warming will occur for a little while in early April, but how significant that drying is remains to be seen.

            India, China and Australia weather is mostly good for this time of year. Rain will have to fall in southern Australia by May to support autumn canola planting.

            Rain in southern Europe has been and will continue to be good for early corn planting in Spain, Portugal, Italy and eventually in the southern Balkan Countries, although warming is needed.

            Southeast Asia oil palm production areas are favorably moist in many areas, but greater rain is needed in parts of the northern and eastern Philippines and in northern Sumatra as well as the Malay Peninsula.

            South Africa summer crops are developing favorably.

            Overall, weather today will likely provide a mixed influence on market mentality with a slight bearish bias.



Winter crop development prospects are favorable in portions of Europe, the CIS, India and China, although some of these regions did not experience good weather for establishment last autumn and it will be important that ideal weather and soil conditions are present this spring to induce improvement prior to reproduction. More moisture is needed in the southern CIS, Romania and parts of Spain while less rain is needed to the north and that is exactly what should evolve this week, although Kazakhstan and Russia’s Southern Region will stay too dry.

            Recent North Africa rain was good for late developing wheat and barley, but much of the lost production in Morocco because of dryness was permanent. Additional rain is expected over the next few days with drying this weekend.

            Australia needs rain to bolster soil moisture prior to planting in late April and May, but there is plenty of time for weather changes to evolve.

            Middle East wheat areas will soon need drier weather to support grain maturation and the same will be true in Morocco.

            U.S. small grain production areas are poised to develop favorably in this early spring, but greater moisture is needed in the west-central high Plains and less rain in the Midwest and Delta. Warming is needed too in some areas.

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

Source: World Weather Inc. and FI


Bloomberg Ag Calendar


  • U.S. poultry slaughter, 3pm
  • Brazil’s Unica may release sugar report (tentative)
  • EARNINGS: WH Group


  • EIA U.S. weekly ethanol inventories, production, 10:30am
  • Malaysia’s palm oil export data for March 1-25
  • China Soy import numbers


  • USDA weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
  • POSTPONED: Cocoa Association of Asia’s International Cocoa Conference and Dinner in Singapore postponed to June 1-2
  • International Grains Council monthly supply & demand report
  • Port of Rouen data on French grain exports
  • USDA hogs and pigs inventory, 3pm


  • ICE Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions ~2:30pm (~6:30pm London)
  • CFTC commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
  • FranceAgriMer weekly update on crop conditions

Source: Bloomberg and FI




·         Wild swings in the outside markets. 

·         US Crude Oil Futures Settle At $24.01/Bbl

·         US Philadelphia Fed Non-Manufacturing Firm-Level Business Activity Index Mar: -12.8 (prev 36.1)

·         US February Building Permits Revised To -6.3% (prev -5.5%)

–          Annual Rate To 1.452Mln Units From 1.464Mln Units

·         US Markit Manufacturing PMI Mar P: 49.2 (exp 43.5; prev 50.7)

–          Markit Services PMI Mar P: 39.1 (exp 42.0; prev 49.4)

–          Markit Composite PMI Mar P: 40.5 (prev 49.6)

·         US New Home Sales Feb: 765K (exp 750K; R prev 800K)

–          New Home Sales (M/M) Feb: -4.4% (exp -1.8%; R prev 10.5%)



  • Corn prices ended higher led by bull spreading.  Corn prices were lower early on US demand destruction in the ethanol industry, but prices rallied on talk China was in for US corn off the PNW and flash headlines over USDA’s comments that China adopted a new registration process to fast track US grain imports.  "These steps show that China is moving in the right direction to implement the Phase One agreement" – Agriculture Secretary Sonny Perdue via Reuters. 
  • The near-term weather outlook calls for limited rainfall over the next seven says for the southeast but for precipitation to return again April 1-7 that may end up above normal. 

·         Renewable Fuels Association estimated about 2 billion gallons of annualized ethanol production could be shuttered by the end of this week.  That is about 13 percent of total US ethanol blended into gasoline for the year.  When looking at 2 billion gallons, this equates to 685 to 715 million bushels, depending on what yield you use (2.8 or the average 2.92 for Q1 Sep-Nov).  But note this is on an annual basis.  About 3.100 to 3.150 billion bushels of corn is estimated to be used during the September through March period. Assuming we take out 2 billion of ethanol capacity from April through August, then one could shave off about 250 to 300 million bushels from USDA 5.425-billion-bushel corn for ethanol usage projection for 2019-20. 

·         We slashed our 2019-20 US corn ethanol estimate by nearly 250 million bushels to 5.175 billion bushels, below USDA’s 5.425 billion projection in March.  We increased feed use by 75 million bushels to 5.675 billion, above USDA’s 5.525 billion, and raised exports by 50 million bushels to 1.775 billion, 50 million above USDA.  Our stocks is sitting at 1.917 billion bushels, above USDA’s 1.892 billion estimate.  Note we lowered our corn imports by 20 million bushels to 40 million, 10 million below USDA. 

·         See attached US corn S&D. 

·         A Bloomberg poll looks for weekly US ethanol production to be down 56,000 at 979,000 barrels (800-1039 range) from the previous week and stocks to decrease 56,000 barrels to 24.539 million.  We look for the US weekly ethanol production to fall 20,000 barrels from the previous week to 1.035 million barrels. 

·         We estimate US corn stocks as of March 1 at 8.065 billion bushels, 6% below year ago of 8.613 billion bushels. 

  • Soybean and Corn Advisory:
    • 2019/20 Brazilian corn estimate was left unchanged at 98.0 million tons
    • 2019/20 Argentina Corn Estimate Unchanged at 49.0 Million Tons
  • China’s Heilongjiang province will raise subsidies for corn growers in 2020 by 200 yuan.

·         China Jan-Feb pork imports were up 158 percent from year earlier to 560,000 tons.  December pork imports were a record 269,846 tons. 

·         US meat prices continue to see support on hopes China will buy large amounts from the US.  Some US processors are increasing wages and prices paid to producers to keep operations afloat.  CME had expanded limits for cattle and hogs today, and cattle touched the expanded limit.

·         China’s WH group sees pork production running near normal despite the coronavirus outbreak. 

·         Like doctors and other industry specialists in the US, Canada is asking recently retired meat inspectors to come back to work. 


Export Developments

  • South Korea’s MFG seeks 66,000 tons of corn on Wed. for arrival around October 10. 




Updated 3/24/20


Soybean complex.

  • CBOT soybeans ended 1.75-3.00 cents higher, 6th consecutive session increase.   Soybeans opened lower led by weakness in soybean meal.  The recovery in soybeans helped soybean meal pair losses.  Meal eventually ended mixed.  Soybean meal at the Gulf increased $3.00 short ton.  Soybean oil ended 41-48 points higher following higher US energy markets. 
  • China was quiet on Tuesday. 
  • China’s National Bureau of Statistics reported vegetable oil imports for the first two months of 2020 down 12 percent to 1.22 million tons.  Palm oil imports were 610,000 tons, down 28 percent. 
  • Argentina was on holiday over the past two days and return Wednesday.  Grain receivers in Argentina suspended their plant strike. 
  • Soybean and Corn Advisory:
    • 2019/20 Brazil Soy Estimate Lowered 1.0 mt to 122.0 Million Tons
    • 2019/20 Argentina Soybean Estimate Unchanged at 51.0 Million Tons
  • Brazil exported 7.2 million tons of soybeans so far in March, higher than the 5.0 million in February.  March exports could end up above 8 million tons, about inline and above earlier estimates.  Last year they exported 8.5 million tons during March. 


Oilseeds Export Developments

  • None reported



·         Chicago wheat traded two-sided, ending mixed.  KC ended higher after opening lower.  Bear spreading was a big feature.  MN wheat also traded two-sided, ending higher. 

·         US wheat opened lower after USDA late on Monday reported a large increase in OK, TX, and CO winter wheat crop ratings. 

·         We estimate US March 1 all-wheat stocks at 1.407 billion bushels, down about 11 percent from 1.593 billion as of March 1, 2019, and down from 1.834 billion as of December 1. 

·         May Paris wheat was down 1.75 euros at 194.75 euros a ton.


Interesting close in KC wheat today


USDA condition wrap using Reuters points:

·         48% of the Kansas winter wheat crop rated good to excellent condition, up from 46% a week earlier.

·         Texas rated 49% of the winter wheat crop as good to excellent, up from 36% the previous week.

·         Texas corn crop 36% planted, above five-year average of 31%.

·         Oklahoma rated 77% winter wheat crop in good to excellent condition, up from 67% a week earlier.

·         27% of Oklahoma’s winter wheat had reached the jointing stage of growth, compared with the five-year average of 35%.

·         Colorado rated 55% winter wheat as good to excellent, up from 46% a week earlier.

·         Arkansas rated 43% wheat as good to excellent, up from 39% a week earlier.


Export Developments.

  • Thailand bought 120,000 tons of optional origin feed wheat at $210.50/ton c&f and $214.90/ton c&f.
  • Taiwan seeks 99,450 tons of US milling wheat on March 27 for shipment between May 13 through May 27, and May 29 through June 12. 
  • Results awaited: Algeria seeks 50,000 tons of milling wheat, optional origin, on March 24 for May or June shipment, depending on origin. 
  • Results awaited: Syria seeks 200,000 tons of wheat from Russia by March 23.  No purchase was made that closed on February 17. 

·         Yesterday USDA announced a 24-hour sales correction.  Private exporters sold 340,000 tons of wheat, previously announced all to China for the current marketing year, was changed to 55,000 tons for 2019-20 and 285,000 tons for 2020-21. 

  • Turkey’s TMO seeks 200,000 tons of red milling wheat for shipment during April 7-27 on March 27. 
  • Ethiopia seeks 400,000 tons of wheat on April 7.  IN a separate tender, they seek 200,000 tons of wheat on April 1.  Both are optional origin. 



  • Vietnam has no plans to cut off rice exports as coronavirus spreads. 
  • South Korea seeks 20,000 tons of rice from China on March 25 for arrival around July 30. 
  • South Korea seeks 73,664 tons of rice on March 25 for arrival around end of Sep. to Oct 31. 


Updated 3/23/20

  • CBOT Chicago May wheat is seen in a $5.20-$5.80 range

·        CBOT KC May wheat is seen in a $4.45-$5.25 range

·        MN May wheat is seen in a $5.10-$5.60 range


Terry Reilly

Senior Commodity Analyst – Grain and Oilseeds

Futures International │190 S LaSalle St., Suite 410│Chicago, IL  60603

W: 312.604.1366

AIM: fi_treilly

ICE IM:  treilly1

Skype: fi.treilly


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