From: Terry Reilly
Sent: Friday, January 24, 2020 8:24:10 AM (UTC-06:00) Central Time (US & Canada)
Subject: FI Morning Grain Comments 01/24/20

PDF attached

 

Morning.
USDA export sales were very good. MPOB and CBOT ag futures are under pressure on Friday in large part over coronavirus outbreak fears. Agri Foods released initial Canadian 2020 production estimates and they look for lower canola and higher
wheat. Algeria passed on corn.

 

 

 

Weather

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:
 

Worry
in the market place over wet weather in parts of northern Brazil and drying in southern Brazil as well as Argentina will continue to direct the market from a weather perspective for a while. However, some caution is needed here because conditions in both countries
have been and still are extremely good. A week to ten days of these anomalies may not hinder crops as much as some folks want to believe and some caution is needed. The only states in Brazil that will become too wet are Goias and Minas Gerais and that will
only be the case for a week to maybe ten days. Most of the areas expected to dry out for a while will see subsoil moisture carry crops for a while limiting the period in which crop stress is expected to be a threat to production. The key to production will
be what happens late in the first week of February and on into the second week C if drying prevails there will be a threat to some crop yields. 

            In
the meantime, South Africa rainfall will be erratic for a while with eastern areas more favored for rain than the west. A greater need for moisture will soon evolve in the western production areas.

            Recent
rain in eastern Australia improved some of the irrigated summer crops and more rain is expected in eastern and northern Queensland and northeastern New South Wales through Saturday before the region dries out and heats up again.

           
India’s winter oilseed crop is suspected of being in better than usual condition and China will see improved establishment in the spring when seasonal warming occurs. China’s winter crops were not well established last autumn, but have experienced improved
precipitation in recent weeks that will be of use to establishment when it warms up once again.

            Overall,
weather today may provide a mixed bias to market mentality.

 

MARKET
WEATHER MENTALITY FOR WHEAT:
 

Not
much has changed relative to that of Wednesday.

Little
to no winterkill has likely occurred in key wheat production areas in the Northern Hemisphere so far this winter, although a few crops in Montana might have been negatively impacted by recent cold weather.

            In
the meantime, India is poised to have a high yielding crop this year. Crops in the Middle East are expected to yield relatively well and China weather has improved in recent weeks and that should translate into better crop establishment during the spring.
Hebei, China still needs moisture.

            Southeastern
Europe crops are not as well established as they should be, but winter weather has been mild leaving very little threat of crop damage thus far. Much of Russia has snow on the ground, but temperatures are well above average and expected to stay warm minimizing
the threat of winterkill. Some snowmelt is expected in Russia, however.

            Overall,
weather today should have a neutral to slightly bearish bias 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

 

Source:
World Weather Inc. and FI

 

 

Bloomberg
Ag Calendar

FRIDAY,
JAN. 24:

  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, 8:30am
  • 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
  • U.S.
    poultry slaughter, cattle on feed (25 jan 1.30 am)
  • HOLIDAY:
    China

MONDAY,
JAN. 27:

  • USDA
    weekly corn, soybean, wheat export inspections, 11am
  • MARS
    crop bulletin – monthly report on crop conditions in Europe.
  • EU
    weekly grain, oilseed import and export data
  • Ivory
    Coast cocoa arrivals
  • HOLIDAY:
    China, Australia, Hong Kong, Malaysia, Singapore

TUESDAY,
JAN. 28:

  • AmSpec,
    Intertek, SGS: Malaysia’s Jan. 1-25 Palm Oil Exports, Kuala Lumpur
  • HOLIDAY:
    China, Hong Kong

WEDNESDAY,
JAN. 29:

  • EIA
    U.S. weekly ethanol inventories, production, 10:30am
  • HOLIDAY:
    China

THURSDAY,
JAN. 30:

  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, 8:30am
  • GUS
    Polish pig population data, Warsaw
  • HOLIDAY:
    China

FRIDAY,
JAN. 31:

  • 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
  • U.S.
    agricultural prices paid and received, cattle inventory
  • Paris
    Grain Day conference. Topics include outlook for Black Sea/Europe grains and challenges facing the oilseed market
  • AmSpec,
    Intertek, SGS: Malaysia’s Jan. 1-31 Palm Oil Exports, Kuala Lumpur

Source:
Bloomberg and FI

 

No
changes in CBOT registrations

 

 

 

 

Weekly
Bloomberg Bull/Bear survey: taken Wed.

        
Soybeans: Bullish: 3 Bearish: 12 Neutral: 8

        
Corn: Bullish: 8 Bearish: 5 Neutral: 10

        
Wheat: Bullish: 4 Bearish: 10 Neutral: 9

        
Raw sugar: Bullish: 5 Bearish: 1 Neutral: 2

        
White sugar: Bullish: 4 Bearish: 1 Neutral: 3

        
White-sugar premium: Bullish: 2 Bearish: 1 Neutral: 5

 

 

USDA
US export sales.

        
US soybean meal sales of 641,900 tons were robust with several countries booking the product, led by the Philippines, Mexico, Spain, and Germany. 

        
Soybean export sales of 790,000 tons current crop and 120,700 tons new-crop were within expectations. 

        
Soybean oil sales of 55,600 tons were well above expectations and the previous week. 

        
Corn export sales of 1.007 million tons were above expectations.

        
All-wheat export sales were good at 696,000 tons for 2019-20.

        
Pork sales were over 30,000 tons and shipments were robust at 44,400. 

 

 

 

 

Macros

Canada
Retail Sales (M/M): 0.9% (est 0.6%, prev R-1.1%)

 

 

Corn.

        
Corn futures
are
lower, but losses may be limited today on robust export sales and another USDA 24-hour announcement system.  Despite widespread talk of US corn quality problems (northern US), US PNW exporters are still able to reach number 3 yellow corn minimum requirements,
but it’s difficult for number 2.  Remember, exporters can always still sell corn at a discount, and when the US is one of the last options to source spot corn in the world, when prices are competitive, importers will continue to take it. 

        
The BA Grains Exchange reported Argentina corn plantings at 95 percent, up from 91 percent previous week and compares to 93 percent last year and 94 average. 

        
Weekly US ethanol production declined by 46,000 barrels to 1.049 million, largest weekly decrease since September 20.  US weekly stocks increased by a large 1.025 million barrels to 24.031 million, largest
inventory since July 26, 2018.  Four weeks ago, stocks were at 21.034 million.  September 2018 to date US ethanol production is running 1.1 percent below the same period a year ago. 

        
According to Twitter circulation, IEG Advantage apparently reported the following:

2020
Corn estimate

Acres
93.4

Yield
178

Output
15.3 billion

        
USDA Attaché estimated Argentina corn production at 48 million ton, 2 MMT below official USDA s. The said “unexpected primary election defeat in August 2019 by former President Macri, farmers changed planting
intentions for 200-400,000 hectares from corn to soybeans in anticipation of a regime change.”

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Update_Buenos%20Aires_Argentina_01-16-2020

 

 

USDA
Attaché also has a lower corn production for South Africa at 13.340 million tons relative to USDA (14.0 million).

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Update_Pretoria_South%20Africa%20-%20Republic%20of_01-16-2020

 

Agriculture
and Agri-Food Canada (AAFC) released their 2020-21 Canada crop outlook: Lower canola, higher soybeans, higher wheat.

 

Export
Developments

  • Algeria
    rejected 20,000 tons of corn.  Lowest offer was said to be at $212.25/ton c&f (Ukraine).  Results are still awaited for Algeria in for 30,000 tons of soybean meal for February 10-25 shipment.

 

 

 

Soybean
complex
.

        
CBOT soybeans are lower on concerns over China domestic meat demand from repercussions from the coronavirus outbreak.  USDA export sales for the products were excellent.  See above corn comment.

        
We like owning meal over oil. 

        
China restricted travel to 10 major cities affecting 20 million people.  The lunar new year holiday started today. 

        
In a down market on Thursday, CBOT soybean OI was up 10,500 contracts. 

        
The BA Grains Exchange reported Argentina soybean plantings at 98 percent, up from 95 percent previous week and compares to 99 percent last year and 99 average. 

        
Brazilian real was weaker at 4.1848.  USD was up 15.  

        
Offshore values are leading CBOT soybean oil 5 points lower (9 lower for the week) and meal $1.50 higher ($4.10 higher for the week to date). 

        
Rotterdam vegetable oils this morning were down 8 euros for nearby soybean oil positions and 8 euros lower for rapeseed oil. Rotterdam meal when imported from SA were unchanged to 5 euros higher.