From: Terry Reilly
Sent: Tuesday, March 24, 2020 8:05:19 AM (UTC-06:00) Central Time (US & Canada)
Subject: FI Morning Grain Comments 03/24/20

PDF attached

 

Morning.

 

US
Feds are rolling out additional stimulus packages.  Gold is up $99.  US stocks are higher. WTI was more than $1.00 higher. Traders are waiting to see what Washington will do with the relief package. 

 

 

 

Weather

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:

Sufficient
rain is expected in Argentina to support key crops from Cordoba and to northern and central Buenos Aires over the next couple of weeks. Other areas will get light precipitation that may slow drying, but a few pockets of moisture stress cannot be ruled out.
The bottom line is still good for late season crop development in most of that country.

            Brazil
soil moisture is still quite favorable for maintaining good crop conditions. There is need for greater rain in the south and some timely moisture will occur to ensure there is no serious stress to crops outside of Rio Grande do Sul where production cuts have
already occurred.

            U.S.
planting delays are expected to prevail through the first week of April due to wet field conditions and additional precipitation in the Delta and Tennessee River Basin with areas that are usually planted in early April also being impacted. Less rain and some
warming will occur for a little while in early April, but how significant that drying is remains to be seen.

           
India, China and Australia weather is mostly good for this time of year. Rain will have to fall in southern Australia by May to support autumn canola planting.

            Rain
in southern Europe has been and will continue to be good for early corn planting in Spain, Portugal, Italy and eventually in the southern Balkan Countries, although warming is needed.

            Southeast
Asia oil palm production areas are favorably moist in many areas, but greater rain is needed in parts of the northern and eastern Philippines and in northern Sumatra as well as the Malay Peninsula.

            South
Africa summer crops are developing favorably.

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

 

MARKET
WEATHER MENTALITY FOR WHEAT:
 

Winter
crop development prospects are favorable in portions of Europe, the CIS, India and China, although some of these regions did not experience good weather for establishment last autumn and it will be important that ideal weather and soil conditions are present
this spring to induce improvement prior to reproduction. More moisture is needed in the southern CIS, Romania and parts of Spain while less rain is needed to the north and that is exactly what should evolve this week, although Kazakhstan and Russia’s Southern
Region will stay too dry.

            Recent
North Africa rain was good for late developing wheat and barley, but much of the lost production in Morocco because of dryness was permanent. Additional rain is expected over the next few days with drying this weekend.

           
Australia needs rain to bolster soil moisture prior to planting in late April and May, but there is plenty of time for weather changes to evolve.

            Middle
East wheat areas will soon need drier weather to support grain maturation and the same will be true in Morocco.

            U.S.
small grain production areas are poised to develop favorably in this early spring, but greater moisture is needed in the west-central high Plains and less rain in the Midwest and Delta. Warming is needed too in some areas.

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

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

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

 

 

 

 

USDA
inspections versus Reuters trade range

Wheat                 
349,369                 versus   350000-600000  range

Corn                     
816,634                 versus   700000-1050000                range

Soybeans           
570,642                 versus   450000-650000  range

China
took 71.5k of sorghum. 

 

 

Macros

        
Wild swings in the outside markets. 

        
US Philadelphia Fed Non-Manufacturing Firm-Level Business Activity Index Mar: -12.8 (prev 36.1)

        
US February Building Permits Revised To -6.3% (prev -5.5%)

–         
Annual Rate To 1.452Mln Units From 1.464Mln Units

 

 

Corn.

        
Renewable Fuels Association estimated about 2 billion gallons of annualized ethanol production could be shuttered by the end of this week.  That is about 13 percent of total US ethanol blended into gasoline for the year.  When looking at
2 billion gallons, this equates to 685 to 715 million bushels, depending on what yield you use (2.8 or the average 2.92 for Q1 Sep-Nov).  But note this is on an annual basis.  About 3.100 to 3.150 billion bushels of corn is estimated to be used during the
September through March period. Assuming we take out 2 billion of ethanol capacity from April through August, then one could shave off about 250 to 300 million bushels from USDA 5.425-billion-bushel corn for ethanol usage projection for 2019-20. 

        
We look for the US weekly ethanol production to fall 20,000 barrels from the previous week to 1.035 million barrels. 

  • Soybean
    and Corn Advisory:

    • 2019/20
      Brazilian corn estimate was left unchanged at 98.0 million tons
    • 2019/20
      Argentina Corn Estimate Unchanged at 49.0 Million Tons

        
AgRural reported Brazil’s second crop reached 96 percent for the Center-South through last Thursday, compared to 100 percent last year and 97 percent average.  66 percent of the soybean crop had been harvested, one point below the previous
year. 

  • China’s
    Heilongjiang province will raise subsidies for corn growers in 2020 by 200 yuan.

        
China Jan-Feb pork imports were up 158 percent from year earlier to 560,000 tons.  December pork imports were a record 269,846 tons. 

        
US meat prices continue to see support on hopes China will buy large amounts from the US.  Some US processors are increasing wages and prices paid to producers to keep operations afloat. 

        
China’s WH group sees pork production running near normal despite the coronavirus outbreak. 

        
Like doctors and other industry specialists in the US, Canada is asking recently retired meat inspectors to come back to work. 

        
USDA US corn export inspections as of March 19, 2020 were 816,634 tons, within a range of trade expectations, below 985,206 tons previous week and compares to 996,165 tons year ago. Major countries included Japan for 257,475 tons, Mexico
for 171,937 tons, and Colombia for 142,937 tons.

 

FI’s
estimates for March USDA Prospective Plantings as follows:

        
Corn 92.5 million, up from 89.7 in 2019

        
Soybeans 87.1, up from 76.1 in 2019

Recall
prevented plantings for corn and soybeans combined in 2019 was 15.9 million acres.  Attached is our US acreage table.  This is subject to change based on prices, weather and CRP enrollment. 

 

Export
Developments

 

 

Soybean
complex
.

  • CBOT
    soybeans

    are
    seeing a correction after trading higher over the past five business days.  The USD collapsed and gold was up nearly $100 at the time this was written.  Meal is taking the blunt of the selling this morning while oil share recovers with soybean oil higher following
    higher US energy markets.  
  • China
    was quiet on Tuesday. 
  • Argentina
    is on holiday today.  Grain receivers in Argentina suspended their plant strike. 
  • Soybean
    and Corn Advisory:

    • 2019/20
      Brazil Soy Estimate Lowered 1.0 mt to 122.0 Million Tons
    • 2019/20
      Argentina Soybean Estimate Unchanged at 51.0 Million Tons
  • Brazil
    exported 7.2 million tons of soybeans so far in March, higher than the 5.0 million in February.  March exports could end up above 8 million tons, about inline and above earlier estimates.  Last year they exported 8.5 million tons during March. 
  • Rondonópolis
    in Brazil’s Mato Grosso state is on lockdown due to coronavirus crisis.  Cofco and Bunge have plants there.
  • Last
    we heard Gulf basis increased 25 points to 200 over. 
  • Offshore
    values are leading CBOT soybean oil 1 point lower and meal $4.90 lower.

        
Rotterdam vegetable oils this morning were mixed from the previous day.  Rotterdam meal when imported from SA were unchanged to 10 euros higher. 

        
China: 

        
China cash crush margins as of this morning, using our calculation, were 169 cents per bushel (194 previous), and compares to 168 cents a week ago and negative 60 cents around this time last year. 

        
Malaysian palm markets:
 Supply
concerns lifted prices higher. 

        
USDA US soybean export inspections as of March 19, 2020 were 570,642 tons, within a range of trade expectations, above 494,612 tons previous week and compares to 859,953 tons year ago. Major countries included Egypt for 127,808 tons, China
T for 80,558 tons, and China Main for 70,540 tons.

  • The
    European Union reported soybean import licenses since July 1 at 10.213 million tons, below 10.591 million tons a year ago, a 4 percent decrease. European Union soybean meal import licenses are running at 12.816 million tons so far for 2019-20, above 12.641
    million tons a year ago. EU palm oil import licenses are running at 4.025 million tons for 2019-20, down from 4.698 million tons a year ago, or down 14 percent.
  • European
    Union rapeseed import licenses since July 1 were 4.754 million tons, up 45 percent from 3.270 million tons from the same period a year ago.

 

Oilseeds
Export Developments

 

Wheat

        
US wheat is lower on profit taking and large increase in OK, TX, and CO winter wheat crop ratings.  Chicago wheat was previously up five consecutive sessions. 

        
USDA US all-wheat export inspections as of March 19, 2020 were 349,369 tons, slightly below a range of trade expectations, below 468,588 tons previous week and compares to 384,943 tons year ago. Major countries included China T for 54,761
tons, Indonesia for 53,792 tons, and Malaysia for 42,634 tons.

        
May Paris wheat is down 2.50 euros at 194.00 euros a ton.

        
The European Union granted export licenses for 330,000 tons of soft wheat exports, bringing cumulative 2019-20 soft wheat export commitments to 23.209 MMT, up from 13.501 million tons committed at this time
last year, a 72 percent increase.  Imports are down 54 percent from year ago at 3.487 million tons.