From: Terry Reilly
Sent: Thursday, April 09, 2020 5:36:48 PM (UTC-06:00) Central Time (US & Canada)
Subject: FI Evening Grain Comments 04/09/20

PDF attached

 

USDA
reported US ending stocks for soybeans, corn and wheat above trade expectations.  SA soybean production was revised lower but corn for Argentina and Brazil were unchanged. 

 

Statistics
Canada will delay its April 24 planting intentions report due to the COVID-19 pandemic.

 

Conab
reported a 1.8MMT upward revision to its Brazil corn production and lowered soybeans by 2.1 million tons from March.  China CASDE showed projected 2019-20 China corn imports higher but industrial use down from last month.  USDA export sales were good for grains
but not so great for the soybean complex and wheat.  USD traded sharply lower. 

US
Initial Jobless Claims Apr 4: 6606K (exp 5500K; prevR 6867K; prev 6648K).  Fed also announced a new 2.3 trillion program to support economy.

 

 

USDA
April supply and demand

Initial
reaction:

Bearish
for all three commodities but bulls waiting on the sideline added to positions.  One supportive feature was a combined downward revision to Argentina and Brazil soybean production by 3.5 million tons. 

 

USDA
NASS and OCE executive summaries

https://www.nass.usda.gov/Newsroom/Executive_Briefings/index.php

https://www.usda.gov/oce/commodity/wasde/Secretary_Briefing/index.htm

 

  • US
    stocks for soybeans, corn and wheat came in above expectations. 

  • USDA
    took a pessimistic view on corn for ethanol demand, as they should, but cut soybean oil for biodiesel as well, by a large amount, which we thought was unwarranted. 
  • US
    corn for ethanol demand was lowered 375 million bushels to 5.050 billion bushels, well below 5.378 billion in 2018-19.  Corn exports were unchanged at 1.725 billion bushels.  Imports were decreased 5 million to 45 million.  USDA took corn feed and residual
    up 150 million bushels to 5.675 billion bushels compared to 5.430 billion for 2018-19.  Food use  saw a small increase. US ending stocks were lifted higher by 200 million bushels to 2.092 billion, 88 million above a Reuters trade guess.  The high US stocks
    suggest 2020-21 US carryout could reach over 2.4 billion bushels. 
  • US
    soybean exports were revised down 50 million bushels to 1.775 billion, still above 1.748 billion for 2018-191.  USDA lowered the soybean residual by 24 million and raised the crush by 20 million to a record 2.125 billion bushels.  Seed use was lowered 2 million. 
    US 2019-20 ending stocks ended up 55 million bushels to 480 million bushels, 50 million above an average trade guess, and 47 percent below 2018-19. 
  • US
    soybean oil for biodiesel production was revised down 300 million pounds, and exports up 300 million, but food use was lowered 200 million pounds.  With the higher product year crush, soybean oil production was lifted higher by 190 million pounds, and imports
    lowered 75 million.  The 2019-20 soybean oil yield was lowered two tenths to 11.52 pounds per bushel, which matches our estimate. 
  • Our
    US soybean balance sheet looks very different from USDA.  We are under the assumption US biodiesel plants are not seeing the slowdown in output like corn for ethanol plants.  In fact, there is good coverage for this quarter and next quarter, and there are
    ideas soybean oil for biodiesel feedstock will be in more demand as other feedstocks will be able to source over the short-term, like restaurant grease and corn oil. 

  • US
    soybean meal exports were up 250,000 short tons from the previous month to 13.450 million short tons.  Domestic use was increased 300,000 short tons to 37.1 million short tons.  USDA increased production for soybean meal by 500,000 short tons, in large part
    to higher crush. The yield was slightly increased. 
  • US
    all-wheat feed was revised down 15 million bushels to 135 million bushels, a surprise in our opinion.  Exports were lowered 15 million bushels to 985 million bushels.  
  • All-wheat
    wheat stocks were revised 30 million bushels higher to 970 million bushels.  By class, Hard Red Winter and Soft Red Winter were reduced 10 million and 5 million bushels, respectively.
  • Note
    the USDA will resurvey producer corn & soybean area and supply for Michigan, Minnesota, South Dakota and Wisconsin and publish adjustments in its May 12 crop production report, if warranted.   North Dakota will be done at a later date.
    https://www.nass.usda.gov/Newsroom/Notices/2020/04-07-2020.php
  • USDA
    made no changes to Brazil and Argentina corn production but lowered soybean production.
  • Brazil’s
    soybean crop was revised down 1.5 million tons to 124.5 million tons and Argentina soybeans taken down 2.0 million to 52.0 million tons. 
  • China
    soybean imports were taken up 1.0 million tons.  Brazil exports were raised 1.5 million tons. 
  • Global
    soybean stocks were projected down 2.0 million tons from the previous month to 338.1 million tons, 5.7 percent below 2018-19.
  • World
    corn and wheat ending stocks were taken up 5.8 and 5.6 million tons, respectively. 
  • Russian
    wheat exports were reduced by 1.5 million tons, which was partially offset by a slight upward revision to EU wheat exports. 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:
 

Some
temporary relief from dryness occurred in some Safrinha crop areas in Brazil earlier this week and the region will continue to be closely monitored over the next few weeks for signs of dryness and crop stress. World Weather, Inc. anticipates at least a part
of the production region will struggle with dryness in May during reproduction, but it is unclear how widespread that will be. Some new production forecasts will be released from Brazil today and the impact of drought in Rio Grande do Sul will be further enlightened.

            Argentina
crop areas will experience net drying for a while, but crops will be fine during much of the period. A few areas may become a little dry, but it is late enough in the growing season to limit the impact on production.

            South
Africa late season crop development will remain favorable and recent rain in eastern Australia along with that expected late this week will maintain better pre-planting soil conditions for canola. More rain will be needed throughout all of southern Australia
this month to more favorably moisten the soil for aggressive early season planting.

            India
weather remains very good for late season crop maturation and early harvest progress.

            Europe’s
recent cold has not seriously hurt rapeseed. Warming under way now will accelerate a decrease in soil moisture and raise the need for rain. However, aggressive spring planting will begin while soil moisture is still marginally favorable and rain is absent.
Soil temperatures are rising quickly.

            U.S.
planting conditions may improve for another day in areas that are not bothered with wet soil or rainfall, but cooling is under way and a weekend storm system promises precipitation for nearly all areas. Field progress will advance most significantly from the
lower Delta to northern Florida, Georgia and South Carolina today and into Friday and then rain this weekend will shut everything down again. South Texas rainfall recently has improved sorghum and corn conditions, but more is needed especially in the far south
of Texas. Precipitation periodically in the eastern Midwest and developing cool weather this weekend into next week will limit fieldwork.

            China
is cooling down briefly which may slow the prospects for spring planting, but rapeseed development in key production areas will advance favorably.

            Oilseeds
in Philippines are still struggling with dryness and significant rain is needed for its coconut and oil palm crops.

            Overall,
weather today may have a mixed influence on market mentality.

Source:
World Weather Inc. and FI

 

MARKET
WEATHER MENTALITY FOR WHEAT:

Concern
in the market place may continue today over a broad based drying trend in Europe and limited soil moisture in Romania, southwestern Ukraine, Kazakhstan and eastern parts of Russia’s Southern Region. However, a burst in spring planting is expected in Europe
because of warm and dry conditions. It will not be long before complaints about poor emergence conditions will evolve because of dryness.

China
wheat development will advance a little faster briefly because of warmer weather, but expected cooling will slow things down a bit for a while. India’s harvest will begin to increase. Australia’s recent rain in New South Wales and that expected through Thursday
will be good for lifting topsoil moisture, but follow up rain must occur prior to the planting season late this month. All of the remaining crop areas in southern Australia still need a general soaking of rain before planting begins in late April and May.

            U.S.
weather will trend cooler today, but will cool down more significantly during the late week and weekend and early next week with frost and freezes likely next week deep into the Plains and eventually across the Midwest. Permanent crop damaging conditions are
unlikely, but some vegetative development in the Plains may get burned back by frost and freezes.

            North
Africa wheat is still rated favorably in Tunisia and northeastern Algeria and the same is true in Spain. Morocco crop production is still expected to be down for the year because of persistent dryness.

            Wheat
in the Middle East will be frequent in eastern Turkey in much of Iran and parts of Afghanistan. Some of these areas need to start drying out to protect grain quality.

            Overall,
weather today is expected to have a mixed influence on market mentality with a bullish bias.

Source:
World Weather Inc. and FI

 

Seven-day
outlook:

 

 

Bloomberg
Ag Calendar

THURSDAY,
April 9:

  • USDA’s
    monthly World Agricultural Supply and Demand (Wasde) report, noon
  • China
    agriculture outlook committee (CASDE) to publish monthly supply/demand forecast for soybean, corn, cotton and sugar
  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
  • Port
    of Rouen data on French grain exports
  • Brazil
    crop agency Conab posts 7th report on 2019-20 soy, grains output

FRIDAY,
April 10:

  • 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
  • Malaysian
    Palm Oil Board to release stockpiles, export and production data
  • Cargo
    surveyors AmSpec and Interetk to release Malaysia’s April 1-10 palm oil export numbers

MONDAY,
April 13:

  • USDA
    weekly corn, soybean, wheat export inspections, 11am
  • Ivory
    Coast cocoa arrivals
  • U.S.
    crop progress – corn, soybeans, cotton; winter wheat condition, 4pm
  • Easter
    Monday holiday in many countries, including Australia, U.K. and Germany

TUESDAY,
April 14:

  • China
    soybean import data
  • Vietnam
    trade data for rice, rubber and coffee
  • HOLIDAY:
    India, Bangladesh

WEDNESDAY,
April 15:

  • EIA
    U.S. weekly ethanol inventories, production, 10:30am
  • AmSpec,
    Intertek palm oil export data for April 1-15
  • FranceAgriMer
    monthly cereals balance sheet
  • New
    Zealand food prices
  • Malaysia
    CPO export tax
  • India
    monsoon forecast (tentative)

THURSDAY,
April 16:

  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
  • Port
    of Rouen data on French grain exports
  • EARNINGS:
    Barry Callebaut half-yearly results

FRIDAY,
April 17:

  • 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

 

China
CASDE

  • China’s
    corn imports in 2019/20 were seen at 4 million tons, up 1 million from the forecast
  • China
    lowered industrial consumption of corn in 2019/20 to 82.5 million tons, down 2 million tone from the previous month
  • Revised
    an estimate for edible oils consumption in 2019/20 down by 960,000 tons, at 32.43 million tons.
  • Forecasts
    for production, consumption, and imports of soybeans remained the same as last month.
  • No
    table was provided by the newswire

Source:
Reuters and FI

 

Actually,
due out 4/10 (wrong date in table above)

 

 

USDA
export sales

  • US
    pork sales surged to 55,900 tons; a marketing year high. 
  • US
    sorghum export sales were also robust at 373,800 that included 186,600 tons for China.
  • US
    corn export sales were excellent at 1.849 million tons for 2019-20 and new-crop came in at 608,800 tons. 
  • All-wheat
    sales of 258,700 were again disappointing.
  • US
    2019-20 soybean export sales of 270,400 were very poor, well below expectations, and down from 957,400 tons last year.
  • Soybean
    meal sales for 2019-20 slipped below 200,000 tons to 193,300 tons but improved from the previous week.  Soybean meal shipments were ok at 273,100 tons.
  • US
    soybean oil export sales current crop-year were 24,100 tons.  Shipments were poor at 5,400 tons.

 

 

 

 

 

 

Macros

·        
USD was down 60 points by 1 pm CT. 

·        
OPEC+ agrees to historic 10 million barrel per day production cut
https://www.cnbc.com/2020/04/09/oil-jumps-ahead-of-make-or-break-opec-meeting.html?__source=iosappshare%7Ccom.apple.UIKit.activity.CopyToPasteboard

·        
US Crude Oil Futures Settle At $22.76/Bbl, Down $2.23 Or 9.29%

·        
US Initial Jobless Claims Apr 4: 6606K (exp 5500K; prevR 6867K; prev 6648K)

o  
US Continuing Claims Mar 28: 7455K (exp 8236K; prevR 3059K; prev 3029K)

·        
Covid-19 cases are about peaking around now across the US

 

Corn.

·        
Corn ended 1.25-2.25 cents higher in a two-sided trade.  USDA’s April report was interpreted as bearish bu bull traders returned to the market anyway.  The USD was sharply lower.  WTI closed lower in nearby
contracts after a volatile trade.  Corn found strength during the trade from their energy prices after Russia and Saudi Arabia was said to be ending a price war.  Prior to the USDA report, corn saw a two-sided trade in part to
robust USDA export sales, slowing US corn plantings and strong import demand by South Korea so far this week.

·        
After the close the USDA confirmed a case of H7N3 bird flu at a commercial farm in South Carolina. This is the first case of any bird flu kind for the US since 2017 (HAI and LPAI H7N8), and not the same strain
that killed 50 million birds in 2014 and 2015 (H5N1, H5N2 and H5N8).  The H7N3 does not infect humans that we know of. 

·        
Conab estimated the Brazil corn production at 101.9 million tons, 400,000 above a Bloomberg trade guess and 1.8 million tons above March projection. 

  • US
    pork sales surged to 55,900 tons; a marketing year high. 
  • US
    sorghum export sales were also robust at 373,800 that included 186,600 tons for China.
  • US
    corn export sales were excellent at 1.849 million tons for 2019-20 and new-crop came in at 608,800 tons. 
  • Columbia
    suspended corn, sorghum and soybean import tariffs until June 30. 

·        
Parana, Mato Grosso do Sul, Sao Paulo and Mato Grosso’s south may not see rain until April 14. 

  • Brazil
    farm lobby CAN mentioned Q1 Brazil corn exports fell 51 percent due to strong domestic demand. 

·        
Goldman Roll – third day.