FW: FI Morning Grain Comments 02/06/20

PDF attached

 

Morning.
USDA
export sales were within expectations. GS roll starts Friday.

 

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS: 

Weather
continues supportive of crops in most of Brazil and Argentina. There is some concern over rainfall in Brazil delaying some of this year’s soybean harvest, but the bottom line should not impact production for most areas. A few areas in Argentina may become
too wet in the next few days after some heavy rain already occurred overnight.

            Australia’s
summer crops will get some additional rainfall in this coming week and India crops will remain in good shape. China still has potential for improving rapeseed production potential once spring arrives due to recent precipitation and improving soil moisture
in parts of southeastern Europe into Kazakhstan may do to the same for those areas in the spring.

            Southeast
Asia weather will trend a little wetter in the coming week restoring favorable soil moisture to many Indonesian and Malaysian crop areas. Rain is needed most in parts of Peninsular Malaysia.

            Overall,
weather today is likely to contribute a bearish bias on market mentality.

 

MARKET
WEATHER MENTALITY FOR WHEAT: 

There
is very little risk of crop threatening cold for small grain crops around the world. Cooling in the U.S. this week in the west-central and southwestern Plains will prove to be beneficial since recent temperatures were so very warm. No crop damage occurred
in the west-central high Plains region this morning as temperatures dropped near and below zero Fahrenheit due to snow cover.

            Improving
precipitation in southeastern Europe and the southwestern grain areas of the Commonwealth of Independent states may improve production potentials in the spring. China’s winter crops are still expected to improve in the early spring if there are a few timely
rain events as temperatures trend warmer

           
India is still expecting a huge winter wheat crop and the only thing needed would be a few timely rain events this month and no extreme heat. Some of those conditions will be met in this coming week.

            Rain
in east-central Australia this week will be great enough to bolster topsoil moisture and possibly improve a few water reservoir levels, but much more rain will be needed before autumn planting begins in April. The recent weather trends have looked appealing
with rain falling more frequently easing some of the dryness.

            North
Africa wheat is still a concern with southwestern Morocco production already expected to be down. Timely rain will be needed later this month and in March to support reproduction and filling throughout northern Africa. Early February will be dry and warm biased.

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

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

THURSDAY,
FEB. 6:

• UN’s
  FAO World Food Price Index, 4am
• USDA
  weekly crop net-export sales for corn, soybeans, wheat, 8:30am

FRIDAY,
FEB. 7:

• 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
• Agricultural
  conference organized by consultancy IKAR, Moscow
• Guatemala
  Coffee Exports

Source:
Bloomberg and FI

 

 

 

 

CBOT
registrations

・        
No changes

 

 

 

USDA
Export Sales

・        
USDA export sales were within expectations for all the major commodities.  Soybeans, soybean oil and corn were near the higher end of expectations. 

・        
US corn commitments have a long way to go to catch up to last year’s pace (down 29 percent yoy).

 

・        
All-wheat sales are running 19 percent above last year’s pace. 

・        
SBO sales were very good at 52,900 tons. Remember USDA announced 30k was sold to Egypt under the 24-hour system. 

 

Pork: 
Net sales of 29,500 MT for 2020 were

 

 

 

 

 

Macros

・        
US Initial Jobless Claims Feb-1: 202K (exp 215K; R prev 217K)

–         
Continuing Claims Jan-25: 1751K (exp 1720K; prev 1703K) 

・        
US Nonfarm Productivity Q4 P: 1.4% (exp 1.6%; prev -0.2%)

–         
Unit Labour Costs Q4 P: 1.4% (exp 1.3; prev 2.5%)

 

 

Corn.

• Corn
  futures are
  moderately lower.  USDA
  export sales of 1.25 million tons help pair some losses before the market paused.
  

・        
Open Interest in corn was up 8,615 contracts.

・        
Goldman Roll starts Friday. 

• China
  plans to sell 2.96 million tons of corn from state reserves on February 7.
  
• Zimbabwe
  Finance Minister lifted the ban on GMO corn  imports.
• Bloomberg:
  Brazil January Beef Exports Rise 9.8% as Chinese Demand Double
• Bloomberg:
  USDA FAS Boosts Brazil Soybean-Output Est. by 1m Tons to 124.5m
• USDA
  Attaché estimated Ukraine 2019-20 corn exports at 28.1 million tons. https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Quarterly_Kyiv_Ukraine_01-31-2020
• The
  USDA Broiler Report showed eggs set in the US up 4 percent and chicks placed up 4 percent.  Cumulative placements from the week ending January 4, 2020 through February 1, 2020 for the United States were 953 million. Cumulative placements were up 4 percent
  from the same period a year earlier.
• US
  weekly ethanol production and stocks showed a big miss by the trade. US production was reported up 52,000 barrels to 1.081 million.  The trade was looking for unchanged.  US ethanol stocks declined by a large 770,000 barrels while the trade was looking for
  a 249,000 decrease (not a big miss when thinking about the recent large weekly swings).  We see this report as slightly supportive for corn.  Production last week was the third highest so far for the corn marketing year (Sep-Aug).  Stocks were third highest
  for the corn marketing year.

 

Export
Developments

• South
  Korea’s KOCOPIA bought 60,000 tons of corn sourced from the United States at about $221.82 a ton c&f for arrival in South Korea around April 25.
• China
  plans to sell 2.96 million tons of corn from state reserves on February 7.

 

 

Soybean
complex.

・        
China announced they will cut import tariffs on $75 billion of US imports on February 14, same time the US plans to scale back on China import tariffs, part of the Phase One trade deal.  China will cut the
additional tariffs by half, but the original retaliatory tariff will remain in place.  For soybeans, the import tariff will only decline to 27.5 percent from 30 percent.  This is a minor move, but a step in the right direction. Table below the export development
section is what they are currently set at.*

・        
The soybean complex was higher ahead of the USDA export sales report and rallied after USDA posted 703,800 tons, higher end of expectations. Back out 30k tons for soybean oil from the 52,900 tons reported
(24-h) and sales were decent. Soybean meal sales topped 200k. 

・        
Goldman roll starts on Friday.  Spreads have been active ahead of this roll all week. 

・        
Open Interest in soybeans was up 7,839 contracts. 

・        
The US$ is higher and the higher. The Brazilian Real was higher-last 4.2310.

• Brazil’s
  wet weather is starting to affect early soybean exports. We are hearing vessels at the ports in Santos and Paranagua are starting to pile up.  Heavy rain is expected to fall across many of the growing regions through mid-February. 
  
• The
  USDA Attaché estimated Brazil 2019-20 soybean crop at 124.5 million tons.
  
  • Soybean
    exports 75MMT, up from 74 in 2018-19.
  • Crush
    44MMT
  • https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Oilseeds%20and%20Products%20Update_Brasilia_Brazil_01-31-2020
• Welcome
  showers are expected for southeast Europe for the remainder of the week. 
  
• University
  of IL: Biodiesel Production Profits in 2019 https://farmdocdaily.illinois.edu/2020/02/biodiesel-production-profits-in-2019.html?utm_source=farmdoc+daily+and+Farm+Policy+News+Updates&utm_campaign=2746c0edd5-FDD_RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_2caf2f9764-2746c0edd5-173649469
  

・        
Offshore values are leading CBOT soybean oil 29 points lower and meal $1.70 higher. 

・        
Rotterdam vegetable oils this morning were up 9-10 euros for nearby soybean oil positions and 7 euros lower for rapeseed oil. Rotterdam meal when imported from SA were mixed. 

・        
China:

・        
China cash crush margins as of today, using our calculation, was 137 cents per bushel (130 previous), compared to 84 cents more than a week ago and 48 cents around this time last year. 

・        
Malaysian palm oil traded higher for its 4^th consecutive day.

・        
Malaysian palm markets:
 

 

Oilseeds
Export Developments

• We
  are hearing China may have bought upward to 20 cargos of soybeans from SA this week for March-June shipment.
  

 

*

 

 

 

Wheat

・        
US wheat futures are lower. USDA export sales of 338,600 tons were about half of last week’s level. 

・        
Goldman Roll starts Friday. 

・        
Some strikes are still ongoing (on and off) in France.

・        
March Paris wheat futures were down 0.75 at 193.00 euros as of early this morning.

・        
There is talk China bought wheat from France this week after picking up wheat from Australia last week. 

・        
Eastern Australia is going to see rain through mid-February which will benefit the sorghum crops. 

• USDA
  Attaché estimated Ukraine 2019-20 wheat production at 29.144 million tons from 25.057MMT year earlier.
  https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Quarterly_Kyiv_Ukraine_01-31-2020
• USDA
  Attaché pegged Turkey’s 2019-20 wheat imports at a record 8.5 million tons, up from 6.366 million tons year earlier. 
  
• The
  FAO world food price index for the month of January increased 0.7% mom to 182.5 from 181.2 in December and is 11.3 percent higher than a year earlier.  While meats declined 4 percent from December, cereals rose 7 percent and vegetable oils were up 5.5 percent. 
  

 

 

Export
Developments.

• Three
  South Korean flour millers bought around 99,200 tons of milling wheat from the United States and Canada.
  • Daehan
    Flour Mill bought 45,000 tons of U.S. wheat of various types for shipment April 1-20, traders said.
  • Sajo-DongAOne
    mill bought 27,100 tons of wheat from the United States also of various grades for shipment between April 20 and May 20.
  • CJ
    Cheiljedang mill bought about 27,100 tons of Canadian western red spring wheat at about $252.33 a ton.  (Reuters)
• Algeria’s
  OAIC bought around 150,000 tons of optional origin animal feed barley last week at around $214 to $216 a ton c&f, for shipment between Feb. 16-29.
• Jordan
  seeks 120,000 tons of optional origin wheat on Feb. 11. 
• Jordan
  seeks 120,000 tons of optional origin animal feed barley on Feb. 12, at various shipment periods thought to be May 1-15, May 16-31, June 1-15 and June 16-30.

• Japan
  bought 117,895 tons of milling wheat on Thursday.  Original details of the tender as follows:
  

• The
  Philippines might be in for wheat soon.
• Japan
  in an SBS import tender seeks 120,000 tons of feed wheat and 200,000 tons of feed barley for arrival in Japan by July 30, on Feb. 12. 
  
• Syria
  seeks 200,000 tons of wheat from Russia on February 17 for shipment within 60 days of contract signing. 
  

 

Rice/Other

・        
Turkey’s TMO seeks 20,000 tons of rice on Feb. 12 for shipment between Feb. 19 and April 6.

・        
India’s rice exports in 2019 fell 18.1 % from a year ago to their lowest in eight years.

・        
Mauritius has delayed the deadline for to buy up to 6,000 tons of long grain white rice to Feb. 10, for delivery between May 1 and July 31.

・        
Result awaited: South
Korea seeks 77,778 tons of non-glutinous brown rice for arrival between March and May, on Jan. 30.  Details of the tender are as follows:

   
TONNES(M/T)  GRAIN TYPE    ORIGIN    ARRIVAL/PORT

       
20,000   Brown Short   China     March 15-31/Gunsan

       
20,000   Brown Short   China     April 30/Masan

       
15,556   Brown Short   China     May 31/Donghae

       
22,222   Brown Medium  U.S.      May 31/Incheon