From: Terry Reilly
Sent: Thursday, February 06, 2020 8:12:08 AM (UTC-06:00) Central Time (US & Canada)
Subject: 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.

        
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.

        
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 4th consecutive day.

        
Malaysian palm markets:
 

 

Oilseeds
Export Developments

 

*