From: Terry Reilly
Sent: Friday, March 20, 2020 8:12:43 AM (UTC-06:00) Central Time (US & Canada)
Subject: FI Morning Grain Comments 03/20/20

PDF attached

 

Morning.

USDA
announced:

  • Export
    sales of 756,000 metric tons of corn for delivery to China during the 2019/2020 marketing year;
  • Export
    sales of 340,000 metric tons of hard red winter wheat for delivery to China during the 2020/2021 marketing year and;
  • Export
    sales of 110,000 metric tons of soybeans for delivery to unknown destinations during the 2019/2020 marketing year.

 

USDA
Prospective Plantings and Grain Stocks reports are due out a week from Monday.  This afternoon we get monthly US Cattle on Feed. 

 

USD
is lower and Euro is higher.  What corrects a bear market, even if its temporary, is low prices.  The soybean complex is higher led by sharply higher China soybean meal futures (up 2.4% to 5-month high) and good US soybean meal demand.  China was thought to
have bought up to 8 cargos of SA soybeans.  China cash crush margins as of this morning, using our calculation, were 168 cents per bushel (145 previous), and compares to 128 cents a week ago and negative 28 cents around this time last year.  Soybean oil share
dipped below 29% Thursday and overnight into Friday.  Corn is higher despite a mixed trade in Chicago wheat.  Rumored China bought 2 US HRW wheat cargos off of TX (first since 2017), and a couple soybean boats on Thursday. 

 

Second month rolling oil share

Source: Reuters
and FI

 

 

 

Weather

2020
Winter/Spring Flood Outlooks

https://www.weather.gov/marfc/WinterSpring_Flood_Outlook

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:

Today’s
weather will not provide much bullish support except from the United States where a wet bias will continue in the Delta and Tennessee River Basin as well as in parts of central and eastern crop areas of Texas into late this month. South Texas moisture will
be welcome and dry conditions in the far southeastern U.S. will support planting.

World
Weather, Inc.’s outlook for April and May were released today and offers some hope for better planting conditions in the second half of spring.

South
America weather is still advertised to be mostly good for Argentina and southern Brazil, although the distribution of rain over the next two weeks will have much to say about second season corn production in Brazil. Argentina has had enough rain in central
and southern areas recently that many crops will finish out the growing season without much potential for additional losses even though the next two weeks look dry and some warmer than usual weather will be returning.

South
Africa weather will be favorably mixed over the next two weeks supporting late season crop development. Limited rain in eastern Australia will be supportive of early season sorghum and other coarse grain and oilseed crop maturation and harvesting.

India
winter crops are still poised for excellence this year and drier weather will be needed in late March and especially April to protect crop quality.         

China’s
winter weather has spring planting prospects looking very good. Rain in Spain and Portugal will improve spring planting potentials and support improved winter crop conditions.

Rain
is still needed throughout Southeast Asia, but mostly in the mainland areas and in some of the northern palm oil and coconut production areas of Indonesia. Peninsular Malaysia also needs a boost in rain.

Overall,
weather today will maintain a mixed influence on market mentality, although a bullish move in the markets will likely continue for other reasons.

 

MARKET
WEATHER MENTALITY FOR WHEAT:
 

Weather
conditions around the world have not changed much and will not likely change much for a while. U.S. Plains crop areas have benefited from recent precipitation and will help improve early season crop development, although more rain is needed in the west central
parts of hard red winter wheat country. Some areas in the Midwest are too wet.

            Canada’s
Prairies are expected to experience a good start to spring planting this year, but May could trend wetter.

            Europe
winter crops are quite mixed with some areas in the northwest too wet. Improving soil moisture is expected in southeastern Europe which may improve crops after a poor environment for establishment last autumn. Lower area planted in parts of Europe will still
pull down production, but crops that did get planted may perform better than previously expected. That statement also pertains to Ukraine.

            Dryness
in Kazakhstan and eastern parts of Russia’s Southern Region will need to be closely monitored.

            China
has huge potential for crop improvements this spring. India’s winter crop will be very large as well. Rain is needed in southern Australia to improve planting potentials for late April through June.

            North
Africa’s rain and that in Spain will help improve some crops, but Morocco’s production losses because of drought will not be fully recoverable.

            Overall
weather today will likely contribute a mixed influence on market mentality, although recent reports of lower production because of dryness last autumn may give the market a little boost.

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

 

Bloomberg
Ag Calendar

FRIDAY,
MARCH 20:

  • 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
  • AmSpec,
    Intertek, SGS release palm oil export data for March 1-20
  • U.S.
    cattle on feed, 3pm

MONDAY,
MARCH 23:

  • USDA
    weekly corn, soybean, wheat export inspections, 11am
  • China
    grains, meat import data
  • Monthly
    MARS bulletin on crop conditions in Europe
  • EU
    weekly grain, oilseed import and export data
  • U.S.
    cold storage data for beef, pork, poultry, 3pm
  • Ivory
    Coast cocoa arrivals

TUESDAY,
MARCH 24:

  • U.S.
    poultry slaughter, 3pm
  • Brazil’s
    Unica may release sugar report (tentative)
  • EARNINGS:
    WH Group

WEDNESDAY,
MARCH 25:

  • EIA
    U.S. weekly ethanol inventories, production, 10:30am
  • Malaysia’s
    palm oil export data for March 1-25
  • China
    Soy import numbers
  • EARNINGS:
    JBS

THURSDAY,
MARCH 26:

  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
  • POSTPONED:
    Cocoa Association of Asia’s International Cocoa Conference and Dinner in Singapore postponed to June 1-2
  • International
    Grains Council monthly supply & demand report
  • Port
    of Rouen data on French grain exports
  • USDA
    hogs and pigs inventory, 3pm

FRIDAY,
MARCH 27:

  • ICE
    Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions ~2:30pm (~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

Source:
Bloomberg and FI

 

 

 

 

 

 

Macros

        
WTI Futures Turn Negative Earlier Rising Over 10%

        
USD trading lower. 

 

 

Corn.

        
There was no South Korean business.

 

Export
Developments

 

 

Soybean
complex
.

  • Under
    the 24-hour announcement system, private exporters sold 110,000 tons of soybeans for delivery to unknown destinations during the 2019/2020 marketing year. 
  • CBOT
    soybeans

    are higher led by strength in US soybean meal and sharply higher China soybean meal futures (up 2.4% to 5-month high).  Good US soybean meal demand continues to support CBOT soybean meal.  Soybean oil is higher from a boost in Malaysian palm oil prices. 
    China
    crush margins are good.  China was thought to have bought 7-8 cargos of Argentina and Brazil soybeans for May-July 2020 and March 2021, according to AgriCensus. 
  • The
    CNGOIC sees China importing more soybeans on a daily basis May onward.  March and April imports may be less than expected.  Inventories are expected to be tight through the end of April. 
  • US
    soybean meal basis was up $7-8 in several US domestic rail locations and truck basis was up $3-7 for some Indiana and Iowa locations.
  • Offshore
    values are leading CBOT soybean oil 37 points higher (68 higher for the week to date) and meal $3.50 higher ($5.10 higher week to date).

        
Rotterdam vegetable oils this morning were sharply higher from the previous day, by 5-30 euros. Rotterdam meal when imported from SA were up 8-13 euros. 

        
China:

        
China cash crush margins as of this morning, using our calculation, were 168 cents per bushel (145 previous), and compares to 128 cents a week ago and negative 28 cents around this time last year. 

        
Cargo surveyor SGS reported month to date March 20 Malaysian palm exports at 644,421 tons, 99,809 tons below the same period a month ago or down 13.4%, and 281,010 tons below the same period a year ago or
down 30.4%.

        
Malaysian palm markets:
 

 

Oilseeds
Export Developments

 

Wheat

        
US wheat is mostly higher on good US demand and rumors China may have bought 2 US HRW wheat cargos off of TX.  USDA announced 340,000 tons under the 24-hour announcement system. 

        
Rain is need for the Black Sea region. 

        
SovEcon 2020 Russian wheat crop was projected at 129.8 million tons, up 8.6MMT from last year.  Wheat was estimated at 84.4 million tons, up 9.9 million tons. 

        
May Paris wheat futures were up 1.00 euros as of early this morning to 190.25 euros.