From: Terry Reilly
Sent: Monday, March 30, 2020 8:18:38 AM (UTC-06:00) Central Time (US & Canada)
Subject: FI Morning Grain Comments 03/20/20

PDF attached

 

Morning.

 

China
cut rates for loans to banks.  EU bond buying was active.  US traders will be watching the bond markets this week.  USD is higher and US stocks are higher.  VIX remains above 60.  Brent crude hit a 17-year low. Russian wheat export prices surged $10/ton to
$217/ton fob-SovEcon.  China soybean crush margins are higher from Friday. Vietnam bought corn from Ukraine late last week. 

 

 

 

 

Weather

 

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:

Weather
in South America, South Africa and India remains favorable for most oilseed development. Improving rainfall in Southeast Asia will be good for palm oil production and corn planting.

            China’s
recent flooding rainfall and that which is expected this week will delay early season coarse grain planting and will keep rapeseed development a little sluggish as well. U.S. early season grain and oilseed areas are facing similar conditions with frequent
precipitation and soggy field conditions to limit field progress for a while.

            Australia
needs greater rain in the south prior to late April and May planting of canola.

Europe’s
drier weather bias in place today will improve field conditions for planting, but warming temperatures are needed before much early corn will be seeded. Winter rapeseed may be breaking dormancy, but no aggressive crop development is expected for a while. Warming
next week will help improve the situation. Timely rain will be needed once seasonal warming becomes a little more significant.

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

 

MARKET
WEATHER MENTALITY FOR WHEAT:
 

India’s
drier weather this week will help protect winter crop quality after weekend weather trended a little too wet in the north. China winter crops are in mostly good condition with more aggressive development expected as soon as additional warming kicks in.

            U.S.
Russia and Europe winter crop conditions vary from fair to very good. Warming is needed in all production areas and there is need for timely precipitation in the drier areas of western Kansas, eastern Colorado central Washington, Kazakhstan, eastern portions
of Russia’s Southern Region, the lower Volga River Basin and southeastern Europe. Recent wet weather in Spain was ideal for its winter grains.

            North
Africa and the Middle East will need dry weather soon to promote grain maturation and harvesting. Too much moisture could result in a grain quality decline.

            Wheat
planting prospects for Australia and South Africa are good this year because of recent rain and that which is expected over the next few weeks.

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

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

MONDAY,
MARCH 30:

  • USDA
    weekly corn, soybean, wheat export inspections, 11am
  • EU
    weekly grain, oilseed import and export data
  • Ivory
    Coast cocoa arrivals

TUESDAY,
MARCH 31:

  • USDA’s
    annual prospective planting data for crops such as wheat, barley, corn, cotton, rice and soybeans, noon
  • U.S.
    agricultural prices paid, received, 3pm
  • AmSpec,
    Intertek palm oil export data for March 1-31

WEDNESDAY,
April 1:

  • EIA
    U.S. weekly ethanol inventories, production, 10:30am
  • Australia
    commodity index
  • Brazil
    soybean, sugar, corn, coffee exports
  • Honduras,
    Costa Rica monthly coffee exports
  • International
    Cotton Advisory Committee releases monthly outlook in Washington
  • U.S.
    soybean crush, DDGS production, corn for ethanol, 3pm

THURSDAY,
April 2:

  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
  • UN’s
    FAO World Food Price Index, 4am
  • Port
    of Rouen data on French grain exports

FRIDAY,
April 3:

  • ICE
    Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions
  • CFTC
    commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
  • FranceAgriMer
    weekly update on crop conditions

Source:
Bloomberg and FI

 

 

 

 

 

 

 

CFTC
Commitment of Traders

·        
As of 3/27/20

·        
Managed money traders were busy buying soybean meal and sold some soybean oil. 

·        
Traditional funds bought an estimated net 18,800 futures and options soybean meal contracts, while managed money bought a net 23,000 contracts.

·        
For soybean oil, money managed sold 1,500 soybean oil and traditional funds sold 2,500. 

·        
Managed money and traditional funds were good buyers of soybeans and Chicago wheat.

 

FUTURES
+ OPTS     Managed                 Swaps              Producer

                       
Net        Chg        Net        Chg        Net        Chg

Corn             
-108,549    -16,703    196,099     -8,174   -143,339     29,729

Soybeans           
-2,444     28,203    117,512        119   -149,126    -34,122

Soymeal            
39,099    
23,000    
96,573        299   -166,798    -24,281

Soyoil               
-746     -2,458     91,088     -5,270   -105,741      7,874

CBOT
wheat          17,670    
23,329    
66,046     -4,253    -76,558    -19,972

KCBT
wheat          -5,356      7,950     51,306      3,456    -46,039    -12,961

MGEX
wheat         -16,307      3,618      2,397        -61      4,381     -4,564

Source:
Reuters and FI

 

 

Macros

German
CPI (M/M) Mar P: 0.1% (exp 0.0%; prev 0.4%)

 

 

Corn.

·        
Safras & Mercado estimated the Brazil corn crop at 105.8 million tons, up from 104.7 million tons previously.  USDA is at 101.0 million tons for 2019-20, same as 2018-19.  The difference in Safras and USDA equates to 189 million bushels
for global trade balance consideration. 

  • Ukraine
    spring corn plantings began on improved weather.
  • Ukraine
    grain exports increased 31 percent to 45.4 million tons since July 1, 2019, according to the Ministry for Development of Economy. 

 

Export
Developments

 

RBOB/Ethanol
chart

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Soybean
complex
.

  • CBOT
    soybean

    complex is higher on strong US crush rates and light US export demand.  USDA announced 285,000 tons of soybeans were sold to Mexico under the 24-hour reporting system.  We like owning nearby meal spreads given strong US domestic feed demand and less availability
    of US DDGS. 
  • China
    was a small buyer of June/August Brazil soybeans over the weekend with one cargo for each mentioned shipment period.
  • BRL
    remains weak at around 5.10.
  • Argentina
    extended their mandatory quarantine until mid-April.  There is uncertainty on Argentina truck movement amid coronavirus concerns.  US social distance was extended through April. 
  • Strategie
    Grains estimated the EU rapeseed crop at 17.59 million tons for this year from 17.85 million tons previous and compares to 16.89 million tons last year (13-year low). 
  • Ukraine
    sunflower exports are up 72 percent since August to 2.94 million tons from 1.712 million tons during the same period last season. 
  • IL
    crude soybean oil at the end of last week was steady at nominal 25 over, East nominal 50 over and the West nominal 25 under. Gulf degummed oil was around 200 over, fob.  Argentina was nominally at 150 over and Brazilian degummed oil 120 over. 

·        
Offshore values are leading CBOT soybean oil 17 points higher and meal $4.80 higher.

·        
Rotterdam vegetable oils this morning were about unchanged for soybean oil from this time for the previous session and rapeseed oil was around 20 euros.  Rotterdam meal when imported from SA were mixed but
mostly higher. 

·        
China: 

·        
China cash crush margins are strong as meal prices increase on tighter meal stocks.

·        
China cash crush margins as of this morning, using our calculation, were 213 cents per bushel and compares to 184 cents a week ago and negative 52 cents around this time last year. 

·        
Malaysian palm markets:
 Palm
operations are slowing or shuttering.