From: Terry Reilly
Sent: Monday, December 23, 2019 8:17:33 AM (UTC-06:00) Central Time (US & Canada)
Subject: FI Morning Grain Comments 12/23/19

PDF attached

 

Good
morning. 

 

CME Group Holiday Calendar

https://www.cmegroup.com/tools-information/holiday-calendar.html

 

 

Weather

Traders
will be watching the high-pressure ridge building in Brazil that could yield rain across the dry areas of Argentina if it to shift south. 

 

From
World Weather Inc.

MARKET
WEATHER MENTALITY FOR CORN AND SOYBEANS:
 

Brazil
and Argentina weather will be favorable over the next two weeks, although the ridge of high pressure in southern Brazil will have to be monitored this week to make sure it is only going to prevail this workweek. If it stays too long there could be a negative
impact on some crops.

            Argentina
should see timely rainfall in most of the nation over the next two weeks, although there will still be areas of lighter than desired rainfall. Temperatures will be warm, but not excessively hot. Crops are still stressed in the southwest, despite some recent
rain. More precipitation is needed in all central and southern crop areas.

            South
Africa rainfall will be erratic over the next ten days leaving some areas a little too dry while some beneficial crop and field conditions evolve in other areas.

            Eastern
Australia’s summer coarse grain and oilseed crops have been stressed in recent heat and dryness, but irrigated areas remain in the best shape. Rain later this week will likely be too close to the coast to benefit very many crops, but some eastern sorghum might
benefit from a little rain this workweek. Temperatures will not be as oppressively hot this week in eastern crop areas.

            Winter
rapeseed conditions have not changed much in Europe central Asia of China, but some rain in each of these areas will either improve crop conditions later this week or in the spring when seasonal warming returns.

            Late
season harvest progress in the U.S. will only be able to advance slowly in the next couple of weeks. Warm temperatures and limited precipitation through mid-week this week will help some areas. Snow melt and muddy field conditions will not allow much progress,
however.

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

 

MARKET
WEATHER MENTALITY FOR WHEAT AND OTHER SMALL GRAINS: 

Winter
wheat conditions in the west-central and southwestern U.S. Plains may improve later this week if the southwestern U.S. storm comes into the Plains as advertised today. The region needs moisture for improved crop establishment in the spring.

            Additional
rain in the Midwest later this week will maintain wet field conditions in soft red wheat production areas. Crop conditions will not change much, although rising soil temperatures may reduce winter hardiness as this week moves along especially in the south.

           
Argentina wheat harvesting will advance relatively well for a while as rainfall continues erratic and light. Last week’s rain briefly disrupted harvest progress, but might have been good for the most immature crops

           
Turkey and Syria will receive some needed rain this week improving their establishment potential. Most other areas in the Middle East have seen a good mix of weather this season.

            Winter
crops in Eastern Europe and the western CIS will not be vulnerable to any winterkill this week as temperatures remain well above average. Snow cover remains minimal

            North
Africa wheat is rated favorably, but more rain is needed in southwestern Morocco, Tunisia and some interior eastern Algeria locations.

            Recent
rain in Spain and Portugal has improved winter crop prospects for early spring crop development in February. Additional rain would be welcome.

           
Overall, weather today will likely produce a slightly bearish bias to market mentality.

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Source:
World Weather Inc. and FI

 

Bloomberg
Ag Calendar

MONDAY,
Dec. 23:

  • USDA
    weekly corn, soybean, wheat export inspections, 11am
  • China
    wheat, corn, cotton and sugar imports
  • USDA
    hogs and pig inventories, cold storage, 3pm
  • EU
    weekly grain/oilseed trade data
  • Ivory
    Coast cocoa arrivals

TUESDAY,
Dec. 24:

  • Unica
    cane crush, sugar production
  • U.S.
    poultry slaughter, 3pm

WEDNESDAY,
Dec. 25:

  • Christmas
    Day

THURSDAY,
Dec. 26:

  • Boxing
    Day
  • AmSpec
    releases Malaysia’s Dec. 1-25 palm oil export data, 10pm Monday (11am Kuala Lumpur); SGS data due at 3pm KL

FRIDAY,
Dec. 27:

  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, 8:30am
  • EIA
    U.S. weekly ethanol inventories, production, 11am
  • U.S.
    agricultural prices paid, received, 3pm
  • ICE
    Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions ~1:30pm (~6:30pm London)

SATURDAY,
Dec. 28:

  • Nothing
    major scheduled

SUNDAY,
Dec. 29:

  • Nothing
    major scheduled

MONDAY,
Dec. 30:

  • USDA
    weekly corn, soybean, wheat export inspections, 11am
  • CFTC
    commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm

TUESDAY
DECEMBER 31

  • AmSpec
    releases Malaysia’s Dec. 1-31 palm oil export data, 10pm Monday (11am Kuala Lumpur); SGS data due at 3pm KL

WEDNESDAY,
Jan. 1:

  • Nothing
    major scheduled

THURSDAY,
Jan. 2:

  • Australia
    commodity index
  • USDA
    Soybean crush, DDGS production, corn for ethanol, 3pm

FRIDAY,
Jan. 3:

  • USDA
    weekly crop net-export sales for corn, soybeans, wheat, 8:30am
  • EIA
    U.S. weekly ethanol inventories, production, 11am
  • ICE
    Futures Europe weekly commitments of traders report on coffee, cocoa, sugar positions ~1:30pm (~6:30pm London)

Source:
Bloomberg and FI

 

CBOT
soybean registrations were down 110 to 1194. 
COFCO
INTERNATIONAL GRAINS US LLC   CHICAGO, IL

 

 

 

CFTC
Commitment of Traders

·        
As of 12/17/19

·        
The traditional fund net long position in soybean oil has taken off to the upside while meal continues to struggle. 

·        
Managed money in soybean oil futures and options increased their net long position by 25,670 contracts to 103,340 lots, largest position since November 2016.  The record is 126,543 contracts in early November
2016.  Prices back then were around 37-38 cents/pound. 

·        
Traditional futures only funds bought 19,500 corn, 36,100 soybeans, 700 meal, 30,500 soybean oil and 14,300 Chicago wheat for the week. 

·        
Open interest in soybeans dropped 57,100 futures only contracts, a sign short covering was a major theme. 

·        
Funds were much less long than expected for corn (by 29,500), and meal (by 12,100). 

 

 

 

 

 

 

 

Macros.

·        
US Durable Goods Orders (M/M) Nov P: -2.0% (est 1.5%; prev 0.5%)


Durables Ex-Transportation (M/M) Nov P: 0.0% (est 0.2%; prev 0.5%)


Cap Goods Orders Nondef Ex-Air (M/M) Nov P: 0.1% (est 0.2%; prev 1.1%)


Cap Goods Ship Nondef Ex-Air (M/M) Nov P: -0.3% (est 0.0%; prev 0.8%)

·        
Canadian GDP (M/M) Oct: -0.1% (est 0.0%; prev 0.1%)


GDP (Y/Y) Oct: 1.2% (est 1.4%; prev 1.6%)

 

 

Corn.

·        
Corn futures were up 0.50 cent earlier on speculation China will buy US ags and hopes some of the world import tenders will switch to US origin as Black Sea corn prices are increasing. 

·        
Futures volumes overnight are low as we enter holiday mode. 

·        
China November pork imports reached 229.707 tons, highest since 2016 and up 150 percent y-o-y. 

·        
A Bloomberg poll looks for monthly US Dec 1 hog herd to increase to 77.146 million head from 74.915 million head as of December 1, 2018. 

·        
Cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 12.0 million head on December 1, 2019. The inventory was 2 percent above December
1, 2018. Placements in feedlots during November totaled 2.09 million head, 5 percent above 2018. Net placements were 2.03 million head. During November, placements of cattle and calves weighing less than 600 pounds were 620,000 head, 600-699 pounds were 500,000
head, 700-799 pounds were 423,000 head, 800-899 pounds were 310,000 head, 900-999 pounds were 130,000 head, and 1,000 pounds and greater were 110,000 head.  Marketings of fed cattle during November totaled 1.81 million head, 3 percent below 2018.  Other disappearance
totaled 65,000 head during November, 19 percent below 2018.

 

Export
Developments

 

 

 

Soybean
complex
.

·        
CBOT soybean
s
are higher on hopes China will buy US soybeans.  But with light volume and little news, don’t discount a two-sided trade. However, USDA reported export sales to China this morning, indicating they are still searching for product to fill February requirements. 
USDA also reported switches from unknown to other countries, so the trade may read this as less soybeans to China as some count the “unknown” destination as China. 

·        
There is growing speculation whether or not China could materially buy the amount of agriculture products from the US as stated last week in various reports. 

·        
Indonesia will be launching B30 mandatory initiative on Jan 1 and Malaysia will be following with B20 in Feb. Cash palm was up another $2.00 today.

·        
Gapki reported end of October stocks of palm fell 0.5 percent to 3.71 million tons from Sep. and production was 4.52 million tons, down from 4.59 million in September. 

·        
Offshore values are leading CBOT soybean oil flat and meal $0.90 higher.   

·        
China prices:

·        

·        
Malaysian palm markets:
 

 

Oilseeds
Export Developments

 

Wheat

·        
US wheat futures are higher on technical buying. 

·        
Russian wheat export prices appreciated for the sixth straight week.  12.5% protein wheat was up a large $6.00/ton to $216/ton fob as of late last week, according to IKAR.  SovEcon reported a $3.00/ton increase
to $216/ton. 

·        
Taiwan plans to buy more agriculture goods, likely from the US, as their trade surplus widens. 

·        
News is extremely light.