From: Terry Reilly
Sent: Thursday, April 02, 2020 8:17:41 AM (UTC-06:00) Central Time (US & Canada)
Subject: FI Morning Grain Comments 04/02/20

PDF attached

 

Morning.
China
said they plan to buy oil for reserves and a rally in crude oil might be helping stocks out. US jobless claims were about double estimates at 6.648 million.

 

 

 

Weather

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:

Weather
in South America, South Africa and India remains favorable for most oilseed development. India’s rapeseed will benefit from drier weather to help reduce a quality decline because of moisture during crop maturation and harvest season. Improving rainfall in
Southeast Asia will be good for palm oil production and corn planting.

            China’s
recent flooding rainfall in the south and that which is expected this weekend into next week will delay early season coarse grain planting and will keep rapeseed development a little sluggish as well. Dryness is also a concern in Yunnan.

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. Today’s somewhat drier biased outlook does offer a few pockets of drying, but the bottom line will
require much more precipitation.

           
Australia needs greater rain in the south prior to late April and May planting of canola. Rain in New South Wales and neighboring areas the remainder of this workweek will help to moisten some areas but follow up rain will be needed.

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 will 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 some 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. Morocco has been too dry this year and will come up quite short on production.

           
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.

Source:
World Weather Inc. and FI

 

 

World
Weather’s April US outlook appears to be cold and wet that could delaying plantings. 

 

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

 

Bloomberg
Ag Calendar

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

 

 

 

 

Brazil
selected export data for the month of March:

Commodity                     
March 2020      February 2020   March 2019

COFFEE(60
KG BAG)              3,041,400        2,810,200       3,205,400

CRUDE
OIL (TNS)                6,550,700        6,064,000       4,489,000

ETHANOL
(LTR)                  75,100,000      164,200,000    128,400,000

SOYBEANS
(TNS)                 11,644,300       5,115,700       8,458,700

IRON
ORE                       21,709,400       22,100,200     22,182,500

FROZEN
ORANGE JUICE (TNS)      38,200           29,000             26,600

NON-FROZEN
ORANGE JUICE (TNS)  120,500          115,100           141,700

SUGAR
RAW (TNS)                1,240,400        1,119,700         841,300

Source:
Reuters and FI

 

 

 

 

 

Macros

·        
US Initial Jobless Claims Mar-28: 6648K (exp 3800K; prev 3283K)

         
Continuing Claims Mar-21: 3029K (exp 4941K; R prev 1784K)

·        
US Trade Balance (USD) Feb: -39.9B (exp -40.0B; R prev -45.5B)

 

Corn.

·        
Corn futures are higher on higher WTI crude oil and US planting delay concerns. 

·        
USDA export sales for corn of 1.075 million tons were at the high end of expectation.  See text after the wheat comment. 

  • Precipitation
    for the Delta and lower Midwest early this month might be frequent enough to delay planting progress.
  • China’s
    commerce ministry said main grain supplies are sufficient for domestic demand and will not be in shortage even without any imports.  China’s ending stocks of wheat, corn and rice in 2019 totaled more than 280 million tons.  Consumption on average is more than
    200 million tons.
  • Ukraine’s
    grain exports were record 46 million tons in the first nine months of the 2019-20 versus 37.6 million year earlier, according to the Ministry for Development of Economy, Trade and Agriculture.
  • Ukraine’s
    grain and oilseed exports in 2019-20 July-June season were estimated by UGA at 57.2 million tons, above 55.6 million tons a month ago. Ukraine’s major traders union UGA said this week it agreed with an economy ministry proposal to limit wheat exports to 20.2
    million tons in the 2019-20 season to avoid a rise in domestic bread prices. -Reuters
  • US
    barge basis bids for corn were firmer by about 2 cents on Wednesday and fob was up about 5 cents. 

·        
US ethanol production is down 22 percent since late February.  Later in the day we heard ADM’s Columbus, NE ethanol plant will shut down. 

·        
US ethanol production declined a huge 165,000 barrels to 840,000, versus a Bloomberg poll looking for a 75,000-barrel decrease.  This is the lowest weekly level since September 20, 2013. 

·        
Ethanol stocks rocketed higher by 1.577 million barrels to a record 25.717 million barrels. 

·        
USDA’s Broiler Hatchery report showed eggs set in the selected US up 3 percent and chicks placed up 3 percent.  Cumulative placements from the week ending January 4, 2020 through March 28, 2020 for the United States were 2.48 billion. Cumulative
placements were up 4 percent from the same period a year earlier.

·        
USDA NASS corn for ethanol use during the month of February ended up above a Bloomberg average. 

 

 

Export
Developments

  • Algeria
    bought 40,000 tons of corn for late April and early May shipment at about $192 to $193 a ton c&f.  Origin was thought to be from the US. 
  • Today
    China was planned to auction off 20,000 tons of frozen pork from state reserves. 

 

Soybean
complex
.

  • CBOT
    soybean

    complex traded higher overnight but turned lower on lack of bullish news, despite a February US daily crush rate breaking January’s record (table below).  Real remains very weak and USD was up 32 points as of 8:03 am CT.  We see May/July spread firm this morning.
    SBO is getting a lift from higher WTI. 

·        
USDA export sales for soybeans were above expectations and included China for 131,000 tons. SBM meal sales were poor but shipments were good. SBO sales were a marketing year high at 67k.   See text after the wheat comment. 

·        
Offshore values are leading CBOT soybean oil 82 points higher and meal $1.30 higher.

·        
Rotterdam vegetable oils this morning down 1 euro for soybean oil from this time for the previous session and rapeseed oil was unchanged.   Rotterdam meal when imported from SA were mostly 3-5 euros lower. 

·        
China: 

·        
China cash crush margins as of this morning, using our calculation, were 205 cents per bushel (195 previous) and compares to 184 cents a week ago and negative 52 cents around this time last year. 

·        
Malaysian palm markets:
 The
Southern Palm Oil Millers Association estimated a 4% increase in palm oil production.

 

 

Oilseeds
Export Developments

 

Wheat

  • US
    wheat futures are lower again on technical selling. 
  • US
    export sales for wheat of 72,900 tons old crop were a marketing year low. New crop sales of 185,900 tons were below our expectations. 
  • Egypt
    canceled an import tender for wheat for May 5-20 shipment. Egypt’s GASC will require the supplier of wheat to bear the burden in freight difference if the origin changes.  Uncertainty for port loadings from coronavirus concerns is starting to spook traders. 
  • Russia
    plans to sell up to 83% of grain from its state stockpile on the domestic market, starting April 13, or up to 1.5 million tons, mainly for needs by the flour and bakery industry. They currently have 1.8 million tons of grain in reserves after already selling
    1 million tons. 
  • World
    food prices fell in March to 172.2 points last month, down 4.3% on February.
  • EU
    May milling wheat fell 2.75 euros to 191.25/ton as of early this morning. 

  • US HRW wheat area will see precipitation through early next week bias east and north.  Rain and snow in the Red River Basin into early Friday will likely
    to promote ongoing flooding. The Red River may reach major flood stage at some locations.

 

 

Export Developments.

  • In its third import tender in weeks, Algeria seeks wheat on Friday. 
  • After the close Egypt announced they are in for wheat on Thursday for May 5-20 shipment, then cancelled it a couple hours later.
  • Ethiopia seeks 400,000 tons of wheat on April 7. 
  • Jordan is in for 120,000 tons of wheat on April 6 for June-August shipment.
  • Jordan seeks 120,000 tons of feed barley on April 7 for September through October shipment. 
  • In an SBS import tender, Japan seeks 80,000 tons of feed wheat and 100,000 tons of barley on April 8 for arrival in Japan by July 31. 

 

Rice/Other

  • The Philippines said it has secured Vietnam’s commitment for continuous supply of rice.
  • The Philippines seek 300,000 tons of rice from Thailand and Vietnam.
  • Cambodia will ban rice exports on April 5. 

 

 

U.S. EXPORT SALES FOR WEEK ENDING 3/26/2020















 

CURRENT MARKETING YEAR

NEXT MARKETING YEAR

COMMODITY

NET SALES

OUTSTANDING SALES

WEEKLY EXPORTS

ACCUMULATED EXPORTS

NET SALES

OUTSTANDING SALES

CURRENT YEAR

YEAR
AGO

CURRENT YEAR

YEAR
AGO

 

THOUSAND METRIC TONS

WHEAT

 

 

 

 

 

 

 

 

   HRW    

54.1

1,812.1

2,563.3

170.3

7,492.2

6,073.0

82.2

522.4

   SRW    

5.6

279.2

922.8

15.9

2,060.1

2,320.3

16.0

178.4

   HRS     

-24.9

1,537.5

1,403.4

78.0

5,710.2

5,314.3

64.7

240.9

   WHITE   

37.9

1,148.5

1,102.9

9.2

3,830.3

4,142.4

23.0

59.0

   DURUM  

0.2

230.4

117.0

0.2

682.3

364.3

0.0

151.0

     TOTAL

72.9

5,007.7

6,109.5

273.5

19,775.1

18,214.2

185.9

1,151.7

BARLEY

0.2

10.7

24.7

0.8

38.7

34.7

0.0

31.0

CORN

1,075.4

13,600.8

13,154.3

1,258.5

18,306.6

30,041.1

20.3

1,761.0

SORGHUM

200.2

1,255.6

236.4

231.2

1,417.2

774.0

0.0

33.0

SOYBEANS

957.4

5,102.0

13,635.9

468.4

31,759.5

29,940.6