From: Terry Reilly
Sent: Monday, February 24, 2020 7:59:56 AM (UTC-06:00) Central Time (US & Canada)
Subject: FI Morning Grain Comments 02/24/20

PDF attached

 

Morning. 
Global markets are turbulent Monday morning as COVID-19 was
reported to emerge in clusters outside of China.   Nearly 79,500 infected and more than 2,600 deaths have been confirmed.  The agriculture markets are not rolling over as hard as energy or equities.  CH corn failed to trade at $3.80 at the time this was written. 

 

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:
 

South
America weather remains favorable, but there may be a few more concerns today over net drying in Argentina and a wet bias from center south through center west Brazil during the next couple of weeks. No serious weather anomalies are expected in this week,
but rain will be needed in Argentina and far southern Brazil during March.

            Southeast
Asia weather is quite varied. World Weather, Inc. anticipates an erratic shower and thunderstorm pattern in March supporting early season moisture boosting.

           
Winter grain and oilseed crops will remain favorably rated and poised for improvement in the spring in China and southeastern Europe. India’s winter crops are expected to perform well this year because of greater than usual rainfall.

           
South Africa will get some timely rainfall along with parts of Australia to maintain a favorable outlook. With that said, eastern Australia production has not improved much, but some sorghum has received supplemental rainfall recently.

            Overall,
weather today will likely produce a neutral to slightly bullish bias.

 

MARKET
WEATHER MENTALITY FOR WHEAT:
 

There
is still not much risk to winter wheat from adverse weather for a while. Frost and freezes in the southeastern United States likely burned back some new vegetative development, but no permanent harm likely came to the region’s crops. Some additional moisture
will fall early this week in the central U.S. Plains, although amounts will be light in same areas that have been drier biased for a while, including western Kansas, eastern Colorado and neighboring areas.

           
Russia crops are going to come into spring favorably moist except in the far south where greater rain will be needed. Kazakhstan will also need greater rain in the spring while Ukraine already has enough moisture to induce some improvement just as soon as
seasonal warming arrives.

            North
Africa’s outlook has not changed for Morocco, but there is a little more rain slated for Tunisia and northeastern Algeria over the next two weeks. No general soaking of rain is expected, but any showers would be welcome.

           
Australia’s winter small grains will not be planted prior to late April which leaves plenty of time for improved weather and soil conditions.

            India’s
wetter outlook over the next two weeks will further ensure a significantly large-sized winter crop.

            France
and Spain need to warm up along with Italy to support spring planting and to stimulate early season crop development when weather conditions improve.

           
Overall, weather today will likely maintain a neutral environment for wheat trading.

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

MONDAY,
FEB. 24:

  • USDA
    weekly corn, soybean, wheat export inspections, 11am
  • EU
    weekly grain, oilseed import and export data
  • Ivory
    Coast cocoa arrivals
  • U.S.
    poultry slaughter; cold storage – pork, beef, poultry, 3pm
  • Malaysian
    Palm Oil Council Online POINTERS seminar

TUESDAY,
FEB. 25:

  • AmSpec,
    Intertek, SGS palm oil export data for Feb. 1-25

WEDNESDAY,
FEB. 26:

  • EIA
    U.S. weekly ethanol inventories, production, 10:30am (26 feb 2100)

THURSDAY,
FEB. 27:

  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, 8:30am
  • Port
    of Rouen data on French grain exports
  • International
    Grains Council monthly market report

FRIDAY,
FEB. 28:

  • 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
  • FranceAgriMer
    weekly update on crop conditions
  • U.S.
    agricultural prices paid, received, 3pm
  • AmSpec,
    Intertek, SGS palm oil export data for Feb. 1-28
  • EARNINGS:
    Olam, Golden Agri, Sime Darby

Source:
Bloomberg and FI

 

 

CBOT
registrations

·        
No changes

 

 

 

CFTC
Commitment of Traders

·        
Another record net short position for soybean meal futures and options combined was established, at net short 72,468 contracts. 

·        
Traditional funds F&O for soybean meal are approaching their record net short position. As of Tuesday, they were net short 39,377 contracts.  The record is 49,505 contracts as of early 2016. 

·        
Funds still hold a good amount of net longs in Chicago wheat and as of Tuesday, the traditional funds were 11,000 contracts more long than estimated.  The net short position in soybean meal was 8,300 contracts more short than expected. 
Corn and soybeans were near expectations while soybean oil net long was missed by 5,100 contracts. 

 

 

 

 

 

 

 

 

Macros

·        
US Dow futures were down nearly 800 points on coronavirus concerns. 

·        
China’s National Health Commission Official: Situation In Wuhan Still Grim And Complex With New Confirmed Cases Appearing – RTRS

·        
China’s National Health Commission Official: China Has Stopped Rapid Rise Of Infection Cases In Wuhan But Hasn’t Stopped The Epidemic Yet

·        
Canadian Wholesale Trade Sales (M/M) Dec: 0.9% (exp 0.4%; R prev -1.1%)

 

 

Corn.

·        
Corn futures
slipped
for its fourth consecutive session following widespread commodity selling.  Southern Brazil will see welcome rain through the end of the month before shifting north during the first week of March. 

·        
Crude oil was down more than $2.00/barrel as of early this morning.   CBOT ethanol futures were down 2.8 percent last week. 

·        
CH is below $3.80.  Prior to Monday it traded at the level since January 27. 

·        
June options available today in Corn, Beans, Chi and KC Wheat.

·        
EIA reported D6 RIN generation for the month of January at 1.25 billion credits, down from 1.31 billion in December. 

·        
South Africa will release its initial estimate for corn production on Wednesday and a Reuters poll looks for 14.504 million tons, up from 11.259 million tons in 2019. 7.99 million was estimated for white and
6.52 million for yellow. 

·        
China lifted a ban on US beef and beef products for cows more than 30 months old. 

·        
USDA Cattle on Feed showed February 1 on feed at 102.1 percent of previous year, slightly below expectations.   February 1 inventories for this month are highest since 2008.  Placements were less than expected by 2.1 percentage points at
99.3 percent of a year ago and marketings came in 4 tenths of percent above expectations at 101.1 percent. January marketings of 1,931,000 head for the month are highest since 2003.  Placements are about in line with average. 

 

 

Export
Developments

·        
South Korea’s KFA group bought 65,000 tons at around $210.20 for arrival around June 25. 

·        
South Korea’s FLC group bought 65,000 tons at around $215.00 for arrival around June 30. 

 

Soybean
complex
.

  • 1,032
    890H soybean calls were abandoned on Friday.  2,885 890 puts were exercised.

  • Northern
    Europe was wet again over the weekend while the southern areas were dry.  Too much rain has cut crop production across the UK. 
  • The
    Argentina BA Grains Exchange maintained their estimate for the Argentina soybean crop at 53.1 million tons but noted recent rains could increase production.  About 58 percent of the soybean crop is in the critical pod development stage. 

·        
Argentina will be closed for holiday Monday and Tuesday. 

·        
Soybeans in reals are sitting near a 4-year high so we should see some SA selling today. 

·        
EIA reported US D4 RIN generation for the month of January at 297 million credits, down from 376 million in December.  We believe soybean oil use for biodiesel production will end up somewhere between 500
and 550 million pounds, down from about 600-650 million in December. 

·        
APK-Inform reported Ukraine August to date sunflower oil exports at 2.438 million tons, up 66 percent from 1.466 million tons for the same period a year ago. 

·        
We last heard US Gulf soybean oil was 250 under (300 previous week) and IL basis at 25 over. 

·        
Offshore values are leading CBOT soybean oil 77 points lower and meal $0.70 lower.

·        
Rotterdam vegetable oils this morning were down 2 euros for nearby soybean oil positions and up 5 euros for rapeseed oil. Rotterdam meal when imported from SA were $2.00-6.00 lower. 

·        
China:

·        
China cash crush margins as of this morning, using our calculation, were 141 cents per bushel, compared to 159 cents a week ago and negative 12 cents around this time last year. 

·        
Malaysian Palm Oil Association forecast Feb. 1-20 production to increase by 17.4%.

·        
The Malaysian Palm Oil Council estimated palm oil prices (futures) to average 2,704 MYR during FH2020.  The have a target of 20.5 million tons for production in 2020. 

·        
Malaysian palm markets:
 near
5-month low

 

Oilseeds
Export Developments

 

Malaysian
palm oil – third month rolling contract

Source:
Reuters and FI
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