From: Terry Reilly
Sent: Thursday, April 02, 2020 2:44:44 PM (UTC-06:00) Central Time (US & Canada)
Subject: FI Evening Grain Comments 04/02/20

PDF attached includes US corn, soybean and all-wheat balances

 

Russia
and Saudi Arabia may slow oil production.  China said they plan to buy oil for reserves and a rally in crude oil might be helping stocks out. US jobless claims were about double estimates at 6.648 million.

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:

Weather
in South America, South Africa and India remains favorable for most oilseed development. India’s rapeseed will benefit from drier weather to help reduce a quality decline because of moisture during crop maturation and harvest season.

Improving
rainfall in Southeast Asia will be good for palm oil production and corn planting.

            China’s
recent flooding rain in the south and that which is expected this weekend into next week will delay early season coarse grain planting and will keep rapeseed development a little sluggish as well. Dryness is also a concern in Yunnan.

U.S.
early season grain and oilseed areas are facing similar conditions with frequent precipitation and soggy field conditions to limit field progress for a while. Today’s somewhat drier biased outlook does offer a few pockets of drying, but the bottom line will
require much more precipitation.

           
Australia needs greater rain in the south prior to late April and May planting of canola. Rain in New South Wales and neighboring Wednesday and that which occurs through Friday will help to moisten some areas, but follow up rain will be needed.

Europe’s
drier weather bias in place today will improve field conditions for planting, but warming temperatures are needed before much early corn will be seeded. Winter rapeseed will be breaking dormancy, but no aggressive crop development is expected for a while.
Warming next week will help improve the situation. Timely rain will be needed once seasonal warming becomes a little more significant.

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

 

MARKET
WEATHER MENTALITY FOR WHEAT:
 

India’s
drier weather this week will help protect winter crop quality after weekend weather trended a little too wet in the north. China winter crops are in mostly good condition with more aggressive development expected as soon as additional warming kicks in.

            U.S.,
Russia and Europe winter crop conditions vary from fair to very good. Recent frost and freezes in southern production areas did not permanently harm crops. Warming is needed in all production areas.

There
is some need for timely precipitation in the drier areas of western Kansas, eastern Colorado, central Washington, Kazakhstan, eastern portions of Russia’s Southern Region, the lower Volga River Basin and southeastern Europe. Recent wet weather in Spain was
ideal for its winter grains.

            North
Africa and the Middle East will need dry weather soon to promote grain maturation and harvesting. Too much moisture could result in a grain quality decline. Morocco has been too dry this year and will come up quite short on production.

           
Wheat planting prospects for Australia and South Africa are good this year because of recent rain and that which is expected over the next few weeks.

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

Source:
World Weather Inc. and FI

 

 

Bloomberg
Ag Calendar

THURSDAY,
April 2:

  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
  • UN’s
    FAO World Food Price Index, 4am
  • Port
    of Rouen data on French grain exports

FRIDAY,
April 3:

  • ICE
    Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions
  • 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

 

 

 

 

 

Macros

·        
President Trump announced Russia is considering cutting oil production. Trump: Oil Output Cut Could Be As Much As 15m Bbls

·        
US Crude Oil Futures Settle At $25.32/Bbl, Up $5.01 Or 24.67%

·        
US Initial Jobless Claims Mar-28: 6648K (exp 3800K; prev 3283K)

         
Continuing Claims Mar-21: 3029K (exp 4941K; R prev 1784K)

·        
US Trade Balance (USD) Feb: -39.9B (exp -40.0B; R prev -45.5B)

·        
US Factory Orders (M/M) Feb: 0.0% (est 0.2%; prev -0.5%)


Factory Orders Ex-Transportation (M/M) Feb: -0.9% (prev R -0.4%)


Durable Goods Orders (M/M) Feb F: 1.2% (est 1.2%; prev 1.2%)


Durables Ex-Transportation (M/M) Feb F: -0.6% (est -0.6%; prev -0.6%)


Cap Goods Orders Nondef Ex-Air (M/M) Feb F: -0.9% (est -0.8%; prev -0.8%)


Cap Goods Ship Nondef Ex-Air (M/M) Feb F: -0.8% (est -0.8%; prev -0.7%)

 

Corn.

·        
Corn futures started higher strength in WTI crude oil and US planting delay concerns, but bear spreading led to mixed settlement.  While we were in the process of downward revising our weekly ethanol production
estimates for the US (updated corn balance attached), WTI crude oil jumped about $4.00 barrel higher after President Trump said he brokered a deal with Saudi Arabia and Russia on lowering crude oil production.  This helped support corn prices.  Algeria bought
corn but origin was thought to be Black Sea or US rather than Argentina. 

·        
US crude settled at $25.32/bbl, up $5.01 or 24.67%. 

·        
USDA export sales for corn of 1.075 million tons were at the high end of expectation.  See text after the wheat comment. 

  • Precipitation
    for the Delta and lower Midwest early this month might be frequent enough to delay planting progress.
  • China’s
    commerce ministry said main grain supplies are sufficient for domestic demand and will not be in shortage even without any imports.  China’s ending stocks of wheat, corn and rice in 2019 totaled more than 280 million tons.  Consumption on average is more than
    200 million tons.
  • Ukraine’s
    grain exports were record 46 million tons in the first nine months of the 2019-20 versus 37.6 million year earlier, according to the Ministry for Development of Economy, Trade and Agriculture.
  • Ukraine’s
    grain and oilseed exports in 2019-20 July-June season were estimated by UGA at 57.2 million tons, above 55.6 million tons a month ago. Ukraine’s major traders union UGA said this week it agreed with an economy ministry proposal to limit wheat exports to 20.2
    million tons in the 2019-20 season to avoid a rise in domestic bread prices. -Reuters

·        
US ethanol production is on the decline and we again revised lower our corn for ethanol for 2019-20 to a low 5.000 billion bushels, below 5.378 billion for 2018-19 and well below USDA’s 2019-20 estimate of
5.425 billion. We increased our feed estimate to 5.800 billion bushels due to robust Q2 feed demand.   USDA is using 5.525 billion bushels.  Look for USDA to lower corn for ethanol and raise its feed estimate in its April update.  We think USDA will report
2019-20 ending stocks around 1.986 billion bushels versus 1.892 billion for March.  Attached is our US corn balance. 

·        
For new crop, several analysts are above 2.4 billion bushels, including myself,  for ending stocks. 

 

Export
Developments

  • Algeria
    bought 40,000 tons of corn for late April and early May shipment at about $192 to $193 a ton c&f.  Origin was thought to be from the US. 
  • Egypt
    might be looking around for a couple cargos of Ukraine corn. 
  • Today
    China was planned to auction off 20,000 tons of frozen pork from state reserves. 

 

Updated
3/24/
20

 

Soybean
complex

  • CBOT
    soybean

    complex traded two-sided, ending lower on lack of bullish news, despite a February US daily crush rate breaking January’s record.  There was talk that Argentina agriculture commodity movement was starting to flow at better rates than last week.  The brazil
    real remains very weak and USD was up 57points as of 1:50 pm CT. 
  • Soybean
    meal ended $1.40-$5.80 lower led by bear spreading. 
  • Soybean
    oil saw a lift on higher WTI crude oil. 

·        
USDA export sales for soybeans were above expectations at 957.4k tons and included China for 131,000 tons. SBM meal sales were poor but shipments were good. SBO sales were a marketing year high at 67k.   See
text after the wheat comment. 

·        
The Southern Palm Oil Millers Association estimated a 4% increase in palm oil production.  This pressured palm oil prices on Thursday. 

·        
The Argentina BA Grains Exchange estimated the soybean crop at 49.5 million tons, down from a previous forecast of 52 million tons.  Last year they had 55.1 million tons. 

 

Oilseeds
Export Developments

  • Egypt
    seeks 3,000 tons of soybean oil and 2,000 tons of sunflower oil on April 5 for May 1-25 delivery. 

 

 

Updated
4/1/20 (top end of range lowered)

 

Wheat

  • US
    wheat futures ended lower again on technical selling. 
  • US
    export sales for wheat of 72,900 tons old crop were a marketing year low. New crop sales of 185,900 tons were below our expectations. 
  • Egypt
    looks to increase their grain and other agriculture commodity stocks to last six months.  Many commodities are at three months, with some at 5-6 months.  Egypt will start buying local wheat around April 15. 
  • Egypt
    canceled an import tender for wheat for May 5-20 shipment. Egypt’s GASC will require the supplier of wheat to bear the burden in freight difference if the origin changes.  Uncertainty for port loadings from coronavirus concerns is starting to spook traders. 
  • Russia
    plans to sell up to 83% of grain from its state stockpile on the domestic market, starting April 13, or up to 1.5 million tons, mainly for needs by the flour and bakery industry. They currently have 1.8 million tons of grain in reserves after already selling
    1 million tons. 
  • World
    food prices fell in March to 172.2 points last month, down 4.3% on February.  Vegetable oil prices fell 19 percent led by declines in Malaysian palm oil. 

  • Paris
    May milling wheat settled down 2.75 euros, or 1.4%, at 190.75 euros ($206.89) a ton.

  • US
    HRW wheat area will see precipitation through early next week bias east and north.  Rain and snow in the Red River Basin into early Friday will likely to promote ongoing flooding. The Red River may reach major flood stage at some locations.

 

Export
Developments.

  • In
    its third import tender in weeks, Algeria seeks wheat on Friday. 
  • After
    the close Egypt announced they are in for wheat on Thursday for May 5-20 shipment, then cancelled it a couple hours later.
  • Ethiopia
    seeks 400,000 tons of wheat on April 7. 
  • Jordan
    is in for 120,000 tons of wheat on April 6 for June-August shipment.
  • Jordan
    seeks 120,000 tons of feed barley on April 7 for September through October shipment. 
  • In
    an SBS import tender, Japan seeks 80,000 tons of feed wheat and 100,000 tons of barley on April 8 for arrival in Japan by July 31. 

 

Rice/Other

  • The
    Philippines said it has secured Vietnam’s commitment for continuous supply of rice.
  • The
    Philippines seek 300,000 tons of rice from Thailand and Vietnam.
  • Cambodia
    will ban rice exports on April 5. 

 

Trade
outlook

  • May
    Chicago $5.15 and $5.68 range
  • May
    KC $4.40 and $4.90 range
  • May
    MN $5.15 and $5.35 range

 

US
Trade Balance – Agriculture (Source Dow Jones)

DJ
U.S. Grain Exports-Apr 2

   
In kilograms (top) and in bushels (bottom), except flour in cwt and malt

in
pounds.  /1 denotes includes commercial and donated. Source: U.S. Department

of
Commerce.

(*)NOTE:
Year ago figures reflect data reported at that time.

Data
includes Exports and Re-Exports.

 

                               ——-
In Kilograms ——-

                         Feb
20         Jan 20         Dec 19      Feb 19(*)

Barley               
1,805,334      4,935,169      3,549,000      5,489,650

Corn
/1           3,916,049,000  2,494,779,000  2,508,110,000  3,616,868,000

Sorghum            
297,902,000    252,083,000    429,017,000    304,705,000

Oats                 
3,294,333      2,591,827      2,108,645      2,646,264

Rye                     
10,201        156,917        191,000         46,000

Wheat
/1          2,184,411,853  1,880,541,355  2,161,218,136  2,285,227,870

  wheat
flour /1     22,924,077     22,285,228     19,393,854     24,921,853

Malt                
34,692,762     36,006,869     33,837,887     34,499,204

 

                            ——-
In Bushels, CWT or Pounds ——-

                         Feb
20         Jan 20         Dec 19      Feb 19(*)

Barley                  
82,917        226,668        163,003        252,135

Corn
/1             154,166,457     98,214,103     98,738,916    142,388,342

Sorghum             
11,727,763      9,923,967     16,889,480     11,995,583

Oats                   
226,959        178,561        145,272        182,311

Rye                        
402          6,177          7,519          1,811

Wheat
/1             80,262,572     69,097,357     79,410,358     83,966,889

  wheat
flour /1        505,389        491,305        427,561        549,433

Malt                
76,484,461     79,381,572     74,599,784     76,057,739

1/Includes
commercial and donated.

Write
to Kareema Clark at
csstat@dowjones.com

 

 

DJ
U.S. February Oilseed, Meal, Oils/Fats Exports-Apr 2

  
In kilograms (top). Oils in pounds, soybeans in bushels, meal and hulls in

short
tons (bottom). Source: U.S. Department of Commerce.

(*)NOTE:
Year ago figures reflect data reported at that time.

Data
includes Exports and Re-Exports.

 

                               ——-
In Kilograms ——-

                        Feb
20         Jan 20         Dec 19     Feb 19(*)

soybeans         
2,758,866,780  5,319,216,023  5,570,376,324 4,577,364,744

soyoil             
179,744,204     56,754,373     83,597,599    41,656,639

  crude            
163,046,872     44,792,336     63,337,525    29,230,159

  refined              
108,209        117,811         26,618        74,299

  other/1           
16,290,645     11,604,484     20,064,091    12,102,016

  hydrogenated         
298,478        239,742        169,365       250,165

cottonseed
oil        1,869,006      3,350,588      2,995,985     2,614,588

  crude                
551,000        287,428        436,031        70,727

  refined                
3,181      1,950,488      1,175,021     1,914,644

  other/1            
1,251,311      1,112,672      1,360,432       629,217

  hydrogenated          
63,514              0         24,501             0

sunseeds               
111,174        139,950         95,844        20,412

sunseed
oil           2,656,075      3,763,147      3,547,768     2,729,318

rapeseed            
18,964,381     15,539,122     16,936,345    26,690,888

rapeseed
oil          9,792,681      7,162,668     10,661,340     6,513,300

   crude             
5,914,163        617,984      6,671,711       942,103

   refined           
3,878,518      6,544,684      3,989,629     5,571,197

linseed
meal             76,253         96,195        150,303             0

cottonseed
meal       7,107,971      9,314,249      7,004,919    11,456,804

soymeal          
1,026,610,411    709,529,097    787,612,454   787,412,007

soymeal/flour      
227,891,987    255,531,628    219,553,686   200,862,800

soymeal
hulls         5,132,000     18,361,000      9,703,000     7,924,000

lard                 
1,554,612      2,432,874      2,193,897     1,007,426

edible
tallow        10,542,563     12,182,157     11,565,601     9,121,219

inedible
tallow      36,917,562     23,993,259     38,124,785    18,742,291

ch
white grease       5,010,434              0         36,421         9,960

 

                         ——-
In Bushels, Pounds or Short Tons ——-