From: Terry Reilly
Sent: Friday, March 27, 2020 8:17:55 AM (UTC-06:00) Central Time (US & Canada)
Subject: FI Morning Grain Comments 03/27/20

PDF attached

 

Morning.
Russia
plans to limit grain exports.  US stocks are lower, USD slightly higher and gold lower.  US agriculture markets are mostly higher, with exception of corn. 

 

There
are reports the virus may peak in early to mid-April in the US, but time will tell.  This is for sure something that will be in the history books for children to read in years to come. 

 

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:

A
good mix of weather is still anticipated for most of Brazil and Argentina crop areas over the next two weeks resulting in further support for good yields and crop quality. Production losses have occurred in Rio Grande do Sul this year along with some of the
early season corn and sunseed crop in Argentina because of dryness. The bulk of other crops have done favorably in both countries.

            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.

 

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 improvements 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. Kazakhstan and Russia’s Southern Region
will stay too dry for at least another week with some rain potential rising in the April 3-9 period.

           
Recent North Africa rain has been good for late developing wheat and barley, but much of the lost production in Morocco cannot be reversed. Additional rain is expected over the next several days.

           
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. Some rain is expected in New South Wales next week, but confidence is low on its significance.

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

           
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

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

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

 

 

 

 

 

 

 

 

 

 

 

 

Macros

US
Personal Income Feb: 0.6% (exp 0.4%; prev 0.6%)

–      
   Personal Spending Feb: 0.2% (exp 0.2%; prev 0.2%)

–         
Real Personal Spending Feb: 0.1% (exp 0.2%; prev 0.1%)

–         
PCE Deflator (M/M) Feb: 0.1% (exp 0.1%; prev 0.1%)

–         
PCE Deflator (Y/Y) Feb: 1.8% (exp 1.7%; R prev 1.8%)

–         
PCE Core Deflator (M/M) Feb: 0.2% (exp 0.2%; R prev 0.2%)

–         
PCE Core Deflator (Y/Y) Feb: 1.8% (exp 1.7%; R prev 1.8%)

Bank
Of Canada Lowers Benchmark Overnight Rate To 0.25%

 

 

Corn.

·        
China was to sell 20,000 tons of pork from reserves on Friday. 

·        
Argentina’s BAGE reported combined good and excellent corn conditions at 32 percent, down from 35 percent last week and compares to 54 percent year ago.  Two weeks ago, they were at 38 percent.  They left their Argentina corn crop production
unchanged at 50 million tons. 

  • The
    quarterly USDA hogs and pigs report was viewed at slightly bearish in that there were more all hogs as of March 1.  Hog inventories expanded 4 percent from 2019, one percentage point above expectations.  Kept for breeding was up 0.4 percent from the previous
    year, 1.7 points below expectations, and kept for market expanded 4.3 percent, 1.2 points above expectations.  This report could confirm a pause in the recent rally.  Hogs ended lower on the CME today. 
  • The
    USDA will allow parents to pick up free meals without having their kids with them.  School districts have been distribute meals this week amid multi city lockdowns. 

 

University
of Illinois: Irwin, S. and T. Hubbs. "The Coronavirus and Ethanol Demand Destruction."
farmdoc daily (10):56,  Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, March 26, 2020. 
https://farmdocdaily.illinois.edu/2020/03/the-coronavirus-and-ethanol-demand-destruction.html?utm_source=farmdoc+daily+and+Farm+Policy+News+Updates&utm_campaign=8f5962f0f7-FDD_RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_2caf2f9764-8f5962f0f7-173649469

 

Export
Developments

 

 

Soybean
complex
.

  • CBOT
    soybean

    complex is getting a lift this morning on technical buying and higher wheat, but don’t discount profit taking ahead of the weekend.  Meal market turned around overnight in part to China. Spreads are firmer. Argentina had a meeting yesterday on worker leave
    for 15 days.

·        
China cash crush margins are strong as meal prices increase on tighter meal stocks. However, China buying slowed this week to about 18-22 cargos (6-8 Friday), less than half of what they bought last week. 
They slowed purchases of 2021 deliver, but at least one cargo for new crop out of Brazil traded on Friday.  Separately, China pledged to boost vegetable oil output, but no details were provided.

  • Offshore
    values are leading CBOT soybean oil 2 points lower (79 lower for the week to date) and meal $3.20 higher ($5.60 higher for the week to date).

·        
Rotterdam vegetable oils this morning were about 10 euros lower for soybean oil from this time yesterday morning and rapeseed oil was down 5 euros from earlier this week.  Rotterdam meal when imported from
SA were unchanged to 14 euros higher.  Argentina premiums have been very choppy this week.

·        
China: 

·        
India’s lockdown for three weeks that just started is already yielding social unrest.

·        
China cash crush margins as of this morning, using our calculation, were 184 cents per bushel (177 previous), and compares to 168 cents a week ago and negative 60 cents around this time last year. 

·        
Indonesia will lower its 3 percent palm export tax to zero percent in April. 

·        
Malaysian palm markets:
 nearly
4 percent higher for the week.  Higher on slowing production, higher energies and higher soybean oil.