From: Terry Reilly
Sent: Thursday, January 09, 2020 8:14:38 AM (UTC-06:00) Central Time (US & Canada)
Subject: FI Morning Grain Comments 01/09/20

PDF attached

 

Morning. 

 

USDA Weekly
Export Sales Report Delayed

WASHINGTON,
Jan. 8, 2019 ― The U.S. Department of Agriculture’s Export Sales Report for the week ending Jan. 2 will be published at 8:30 a.m. EST on Friday, Jan. 10, instead of Thursday, Jan. 9, due to the weather-related closure of Washington, D.C.-area federal offices
on afternoon of Jan. 7.

 

 

 

Weather

https://www.wpc.ncep.noaa.gov/qpf/p120i.gif?1578574583

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Weather
conditions in many Brazil and Argentina crop areas will be favorable over the next two weeks, although a close watch on the rain distribution is warranted. A few pockets could be a little too dry. Rio Grande do Sul will get some relief from dryness over the
coming week with northern soybeans benefiting more than southern corn or rice production areas. Paraguay will receive additional rain periodically over the coming week to further improve soil and crop conditions. The same is expected over all neighboring areas.

Parts
of Argentina’s north need timely rainfall and will get some over the coming week to ten days.

            South
Africa summer crop conditions should be largely beneficial over the next couple of weeks. Australia weather will continue hot and too dry for crop changes, although it would not be surprising to see some rain in eastern parts of the nation later this month.

            India’s
winter crops are in very good condition and should remain that way for the next two weeks. Summer crop harvesting in the south will continue around brief periods of rain.

            China
rapeseed conditions will have potential for improvement in the spring after this week’s storm system brought significant moisture to the production region. A follow up storm system will see to it the region is plenty moist in the spring.

            Southern
Europe and the southwestern parts of the CIS will be dry biased for a while, but winter crops are dormant or semi-dormant and will not be bothered. A boost in precipitation will be needed in the late winter prior to the start of spring growth.

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

 

MARKET
WEATHER MENTALITY FOR WHEAT: 

Winter
crop conditions around the world are either in fair to good condition or poised for improvement. Recent moisture in the United States will be good for spring crop development. Snow is accumulating in the northwestern U.S. Plains before bitter cold conditions
evolve in the next week to ten days to prevent winterkill.

Portions
of Ukraine, southern Russia and Kazakhstan are still snow free and some winter crops are not well established due to dryness and change is needed by spring to improve crops. 

            There
is no risk of crop threatening cold in Russia, Europe or most of China’s key winter crop production areas for the coming week to ten days. Winter crops are not as well established as they should be in some areas of southeastern Europe locations or in parts
of China, but recent rain and snow in eastern China will see to it that big improvements occur prior to the start of aggressive crop development in the spring.

India’s
winter crops are poised to perform quite well this year and rain in Pakistan Sunday into Monday will improve the outlook there as well.

            Dryness
in northern Africa will be closely monitored with Morocco the only area at risk of lower production today, but drying in northwestern Algeria will continue for a while.

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

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

US
CPC:

no active el nino or la nina

 

 

U.S. Drought Monitor Change Map

 

Bloomberg
Ag Calendar

THURSDAY,
JAN. 9:

  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, 8:30am
  • Port
    of Rouen data on French grain exports
  • United
    Nation’s FAO Food Price Index
  • Australia’s
    Bureau of Meteorology releases climate statement
  • New
    Zealand commodity price

FRIDAY,
JAN. 10:

  • USDA’s
    monthly World Agricultural Supply and Demand (WASDE) report, noon
  • Malaysia
    end-2019 palm oil stocks, production, export numbers; Jan. 1-10 palm oil export data from AmSpec, Intertek and SGS
  • U.S.
    winter wheat seeding forecast
  • USDA
    quarterly wheat, barley, corn, soybean stocks, noon
  • 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

Source:
Bloomberg and FI

 

 

 

 

 

 

 

Macros.

China
Says Liu He to Travel to U.S. for Trade Deal Signing 
https://www.bloomberg.com/news/articles/2020-01-09/china-says-liu-to-visit-washington-from-jan-13-for-deal-signing

 

 

Corn.

        
Corn futures are higher, but gains are expected to be capped as the March contract is expected to hold in a sideways trading pattern ahead of the large USDA report day. 

        
March corn traded above its 50-day moving average. The 100-day is at $3.8675.  March corn resistance is seen at $3.8725, then $3.9100. 

        
Gold was down about $13.60 as of 7:12 am CT and Dow futures up 90 points. 

        
USD was 13 points higher as of 7:12 am CT and WTI up 8. 

        
Baltic Dry Index fell 0.1 percent or 1 point to 772. Lowest since April 2017 and down 21 consecutive sessions. 

        
Weekly US ethanol production fell 4,000 barrels to 1.062 million barrels from the previous week, as expected. But stocks increased a large 1.428 million barrels to 22.462 million barrels, much larger increase
than expected. 

        
Poland reported 55 outbreaks of African swine fever in wild boar near the German border last month. Germany has been building fences to prevent a spread of the disease.  A discovery of ASF in Germany would
be a huge blow for the country as they are large exporters of pork.

        
Bulgaria plans to cull another 40,000 pigs due to another outbreak of African swine fever.  Last year Bulgaria culled 130,000 pigs. 

        
The weekly USDA Broiler Report showed eggs set in the United States up 4 percent and chicks placed up 4 percent.

        
Traders will be watching the phase one trade signing in Washington next week. 

        
Crumbling Corn Adding to Woes for American Grain Exporters
https://www.bloomberg.com/news/articles/2020-01-08/crumbling-pale-corn-adds-to-woes-for-american-grain-exporters

        
INTL FCStone estimated summer-corn output in Rio Grande do Sul at 4.8 million tons, down from 6 million tons last month.

        
FAS USDA Attaché: Brazil March-February corn exports could decline to 34 million tons from their forecast of 37 million year earlier. 

 

Export
Developments

  • South
    Korea’s NOFI bought 69,000 tons of optional origin corn at $211.95/ton c&f for arrival around April 15. 
  • South
    Korea’s FLC bought 66,000 tons of US corn at $207.49/ton c&f for shipment between Jan. 25 and Feb. 25 from the U.S. Pacific Northwest coast. 
  • Yesterday
    South Korea’s KOCOPIA bought 60,000 tons of corn at $218.28/ton c&f for arrival in March. 
  • Revised:
    India’s MMTC delayed their import tender for 175,000 tons (50k previously) of non-GMO corn from Jan 7 to January
    14,
    valid until January 22, for shipment by February 10. Another source put shipment by Jan 22. 

 

Soybean
complex
.

        
Soybeans
are
higher in anticipation for USDA to cut US and global ending stocks for the three main CBOT agriculture commodities. Soybean oil was up 27 points and meal, after ripping higher Thursday, is up $0.80. 

        
March soybeans resistance is seen at $9.50, then $9.5550.

        
There is talk China bought at least 10 cargos of Brazilian soybeans this week. 

        
USDA is set to release their annual crop production report on Friday. 

        
Rotterdam vegetable oils this morning were up 13 euros for nearby soybean oil positions and 6 euros higher for rapeseed oil. Rotterdam meal when imported from SA were mixed. 

        
Offshore values are leading CBOT soybean oil 65 points higher and meal $0.90 lower.   

        
China cash crush was last 137 cents per bushel (136 previous), compared to 145 on Friday and 24 cents year ago. 

        
China:

        
Indonesia plans to start B40 road tests in April.  The current mandate is B30. 

        
MPOB is due out with updated S&D data on Friday (late Thursday evening for US observers). 

        
Malaysian palm markets:
 Higher
traded on expectations India will import a large amount of crude palm oil.  We think Indonesia will benefit from this. 

        
The chairman of Paraguay’s grain and oilseed export chamber, Capeco, estimated exports for the country at 6 million tons.  Argentina may take 4.0-4.5 million tons and Russia 1.5 million tons.   Paraguay soybean
production may end up near 9.5 million tons. 

        
Argentina may see heavy rains in the north of the agricultural area and a subsequent decrease in temperature, according to the BA Grains Exchange. 

http://www.bolsadecereales.org/imagenes/userfiles/images/1(3).png

 

Oilseeds
Export Developments

 

Wheat

        
US wheat futures
are
higher this morning and we don’t expect them to move much higher from current appreciation of 4.25-4.75 cents basis Chicago and KC.  MN may have room to the upside today. Traders are looking for about a 100 year low in US winter wheat seedings, US ending stocks
to decline, and world ending stocks to tick down about 2 million tons. 

        
FAO: World food price index averaged 181.7 in December, up 2.5% from the previous month. For all of 2019 it averaged 171.5, up 1.8% from 2018.  The vegetable and sugar indexes were recorded at a 5-year high.

        
Yesterday Egypt paid about $10/ton more for wheat than their mid-Dec import tender. 

        
Egypt said they have enough wheat reserves to last until the second week of June. 

        
March Paris wheat futures earlier were up 1.00 at 191 euros as of early this morning.

        
Russian wheat exports are running 14 percent below the previous season. 

        
Chicago March resistance is seen at $5.5600, then $5.5900. 

 

Export
Developments.

  • Results
    awaited: Morocco seeks to import about 354,000 tons of US durum wheat on January 9 for arrival by May 31.
  • Mauritius
    seeks 95,000 tons of optional origin wheat flour on Jan. 10, 2020, for shipment between July 1, 2020, and June 20, 2021. 
  • Turkey
    seeks 550,000 tons of red milling wheat on January 14, minimum protein content of 13.5% for January 21-February 15 shipment. 
  • Jordan
    seeks 120,000 tons of wheat on January 14.
  • Turkey
    seeks 100,000 tons of durum wheat on January 14 for Jan 25-Feb 25 shipment.

  • Japan seeks
    120,000 tons of feed wheat and 200,000 tons of feed barley on January 15 for arrival by March 19. 

        
Syria seeks 200,000 tons of soft wheat from Russia on January 20, 2020. 

  • Results are awaited on Ethiopia in for
    80,000 tons of durum wheat and another 75,000 tons of soft wheat.

 

Rice/Other

Details of
the new tender are as follows:

    TONNES(M/T) 
ORIGIN  PRICE ($/T)   ARRIVAL/PORT

        20,000  
U.S.A.  $799.14       Sept.1-Oct.31/Busan

        10,764  
U.S.A.  $789.14       Sept.1-Oct.31/Gwangyang

  • Results awaited: Syria seeks 45,000
    tons of white rice on Jan. 6, 2020.  (Reuters) Short grain white rice of third or fourth class was sought. No specific country of origin was specified in the tender, traders said.  Some 25,000 tons was sought for supply 90 days after confirmation of the order
    and 20,000 tons 180 days after supply of the first consignment.  The rice was sought packed in bags and offers should be submitted in euros.  A previous tender from the agency for 45,000 tons of rice with similar conditions had closed on