From: Terry Reilly
Sent: Tuesday, April 14, 2020 8:07:28 AM (UTC-06:00) Central Time (US & Canada)
Subject: FI Morning Grain Comments 04/14/20

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Morning
We could see a volatile day in US markets
led by poor earnings and outlooks by banks and choppy energy markets.  USD was 33 lower, WTO off more than $1.00 basis nearby and natural gas down 2 percent, as of around 7:40 am CT. 

 

Outside vegetable oil markets were mixed.  China imported 4.28MMT of soybeans during March, but higher than year ago. 
BRL is slightly weaker. Jordan passed on barley and traders await Egypt’s import tender for wheat. More than 100 US meat processing plants were thought to have idled.  Two AFS cases popped up in China. 

 

 

 

Weather

 

 

World
Weather’s take on the 06z run this morning:

The
bottom line continues a frequent succession of weather systems through the eastern Plains, Midwest, Delta and southeastern states over the next two weeks. But precipitation in this next ten days will be near to below average in portions of the Plains and Midwest.
Near to above average precipitation will impact parts of the Delta and southeastern states. The last five days of the two-week outlook will likely provide another round of rain followed by some drier weather and another shot of temporary cooling before greater
warming occurs briefly in the last days of April and early May.

 

No
serious changes in the general outlook were noted this morning. The GFS model was a little good anxious to increase rainfall in parts of southern Argentina April 24-26 and in easternmost parts of the nation into Paraguay and Rio Grande do Sul April 27-28. 
Otherwise, the changes were not very great this morning.

 

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:
 

Concern
over U.S. planting progress will rise over the next couple of weeks due to cool temperatures at times and some precipitation. However, the environment may not be as bad as feared. Warming is certainly needed, but rainfall does not seem to be abnormally great
in very many Midwestern locations and many are expecting below average amounts. Fieldwork would advance quickly if temperatures would warm up, but warming will be slow to come and may only be temporary for some areas.

            In
South America, conditions will remain favorable in Argentina over the next week to ten days, although soil moisture will decline in some areas and that may lead to some need for timely rain in a few of the very latest maturing crop areas. Brazil crop weather
will be favorably mixed for mostly good conditions during the next ten days, but greater rain may be needed in the drier pockets of the south.

            China
will see a good mix of rain and sunshine in east-central areas which may promote some planting, but it will be slow for a little while longer. Planting in southern China will remain very slow until better drying conditions evolve.

            India’s
weather will be good for winter oilseed maturation and harvest progress. South Africa weather will remain good for both late season crop development and early season harvesting, but it will not be long before the need for drier weather will evolve.

            Southeast
Asia oil palm and coconut production is advancing well except in parts of the Philippines where dryness is prevailing.

            Europe
dryness may raise some worry among a few coarse grain producers, but the areas that usually plant first have some moisture to work with. Rapeseed in France, Germany and the U.K. may need some moisture soon and they should get.

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

Source:
World Weather Inc. and FI

 

MARKET
WEATHER MENTALITY FOR WHEAT:

No
permanent crop damage is expected as a result of unusually cold air. Much of the U.S. hard red winter wheat production areas have either not been cold enough for permanent damage or have had some snow protection during the coldest periods. Cooling in the Midwest
will also have little to no impact on crop production.  Some vegetation burning is expected in both areas, however.

           
Dryness in parts of Europe and a few areas in Ukraine, southern Russia and Kazakhstan will continue a concern, but there is still plenty of time for improved weather before crops are at risk of a change in production potential. Temperatures have been cool
which has kept the need for greater moisture low, but as seasonal warming occurs the need for moisture will rise. Some light rain will bring temporary relief to Ukraine and northern parts of Russia’s Southern Region during the next few days.

            China
and India wheat production potentials still look very good as do yields in Pakistan. Southern Australia’s long range outlook is also improving for planting conditions late this month and especially in May and June, but the next ten days will be dry biased.

            Planting
in South Africa may get off to a better than usual start this year because of recent precipitation and that which is coming. Planting usually begins in May.

Some
areas in southern Brazil will need rain soon for planting and establishing its winter wheat.

            Overall
weather today will have a mixed influence on market mentality.

Source:
World Weather Inc. and FI

 

 

Source:
World Weather Inc. and FI

 

Seven-day
outlook:

 

 

 

 

Bloomberg
Ag Calendar

TUESDAY,
April 14:

  • China
    soybean import data
  • Vietnam
    trade data for rice, rubber and coffee
  • HOLIDAY:
    India, Bangladesh

WEDNESDAY,
April 15:

  • EIA
    U.S. weekly ethanol inventories, production, 10:30am
  • AmSpec,
    Intertek palm oil export data for April 1-15
  • FranceAgriMer
    monthly cereals balance sheet
  • New
    Zealand food prices
  • Malaysia
    CPO export tax
  • India
    monsoon forecast (tentative)

THURSDAY,
April 16:

  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, cotton, 8:30am
  • Port
    of Rouen data on French grain exports
  • EARNINGS:
    Barry Callebaut half-yearly results

FRIDAY,
April 17:

  • 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

·        
IMF Sees World GDP Shrinking 3% In 2020, Growing 5.8% In 2021

-Sees
China Economy Expanding 1.2% In 2020, 9.2% In 2021

·        
NY Fed Accepts $23.5B Of $23.5B In Bids At Overnight Repo Operation

·        
US Import Price Index (M/M) Mar: -0.1% (est -0.2%; prev 0.2%)

US
Import Price Index (Y/Y) Mar: -4.1% (est -5.0%; prev -1.2%)

US
Export Price Index (M/M) Mar: -1.6% est -1.9%; prev -1.1%)

US
Export Price Index (Y/Y) Mar: -3.6% (prev -1.3%)

 

 

Corn.

·        
Corn futures
are mostly moderately higher on light technical buying, but lack of fresh news and demand woes will limit any rallies,
in our opinion. 

·        
USD was 33 lower, WTO off more than $1.00 basis nearby and natural gas down 2 percent, as of around 7:40 am CT. 

·        
Goldman Roll – last day. 

·        
US corn planting progress is at 3 percent complete, near average.  Note this is predicated on 97 million acres. 

·        
Cold weather for the US for the remainder of the week will slow evaporation rates. 

·        
US meat processing plant closures were thought to have topped 100 facilities.  Recall cold storage inventory remains high, but logistical problems could create a short-term storage depending on retail locations. 

·        
US hog and cattle futures limits expand today after a limit lower move yesterday. 

·        
China March pork imports were 391,000 tons, up from 127,218 tons in March 2019.  Q1 imports were 951,000 tons, nearly double than Q1 2019.  Imports of beef in the first quarter reached 531,000 tons, up 65%. 

  • China
    announces more cases of ASF this week in two separate provinces.
  • The
    EU awarded 750,000 tons of duty-free corn imports, from Ukraine. 
  • Kazakhstan
    exported 6.4 million tons of grain and flour since July 1, 2019, just short of their 7-million-ton target for the crop year. 

·        
Corn and Soybean Advisory:

o  
2019/20 Brazil Corn Estimate Unchanged at 98.0 Million Tons

o  
2019/20 Argentina Corn Estimate Unchanged at 49.0 Million Tons

  • USDA
    US corn export inspections as of April 09, 2020 were 1,029,886 tons, within a range of trade expectations, below 1,279,364 tons previous week and compares to 1,191,442 tons year ago. Major countries included Mexico for 348,402 tons, Japan for 262,124 tons,
    and Korea Rep for 131,115 tons.

·        
Vietnam update on ASF
https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Vietnam%20African%20Swine%20Fever%20Update_Hanoi_Vietnam_04-08-2020

 

Corn
Export Developments

  • Results
    awaited: Syria seeks 50,000 tons of soybean meal in a combo with 50,000 tons of corn on May 12.

 

 

 

Soybean
complex
.

  • CBOT
    soybean
    s,
    meal and soybean oil were lower at the electronic pause.  China vegetable oils were weaker overnight, but palm oil closed higher.  May soybean meal is below $287/short ton to a fresh contract low.  CBOT crush basis July is at 83.25 cents, down from peaking
    at $1.23 on March 24.  Argentina soybean meal and Brazilian soybean exports continue to flow.  

·        
China March soybean imports were 4.28 million tons, down from 4.91 million a year ago and lowest since February 2015.  April imports are expected to increase on a daily adjusted basis with SA arrivals.  Q1 2020 China soybean imports were
17.8 million tons, or 71.2MMT annualized, up 6.2 percent from a year ago. 

·        
China agriculture imports from the US were up 110 percent from year ago.

  • Brazil
    soybean exports during the first 12 days of April were 6.1 million tons, up from 5 million during the April 1-14 period year ago. 

·        
Argentina grain inspectors are working shorter hours, causing loading delays in Bahia Blanca, according to Ciara-Cec. Inspectors and exporters are in labor talks over working conditions.

·        
Corn and Soybean Advisory:

o  
2019/20 Brazil Soybean Estimate Unchanged at 121.0 Million Tons

o  
2019/20 Argentina Soybean Estimate Unchanged at 50.0 Million Tons

·        
The BRL has weakened this morning to around 5.1622.

·        
The Trump Administration may announce their coronavirus phase one farm aid of $15.5 billion this week. 

·        
Offshore values are leading CBOT soybean oil 45 points higher and meal $0.40 higher. 

·        
Rotterdam vegetable oils this morning  were 1-8 euros higher and Rotterdam meal when imported from SA were unchanged to  5euros lower. 

·        
China: 

·        
China cash crush margins as of this morning, using our calculation, were 201 cents per bushel (213 previous session) and compares to 214 cents a week ago and negative 55 cents around this time last year.