This week we discuss the Charts support and resistance areas and managing the downside risk of unsold corn bushels. We also have a special commentary by Ed Vallee of Empire Weather talking about US and SA weather.
https://attendee.gotowebinar.com/recording/2396118823674083587
Overnight trade has SRW Wheat up roughly 11 cents, HRW up 10; HRS Wheat up 6, Corn is up 1 cent; Soybeans up 7; Soymeal up $2.00, and Soyoil down 2 points.
Chinese Ag futures (May) settled down 47 yuan in soybeans, down 13 in Corn, up 38 in Soymeal, down 164 in Soyoil, and down 154 in Palm Oil.
Malaysian palm oil prices were down 95 ringgit at 3,702 (basis March) —-earlier chart snapshot—looking at weaker January exports.
South America Weather Forecast
Conditions will still be very good in much of Brazil; though, some pockets of the far south may become drier than preferred after a rain event in this upcoming weekend.
Another notable rain event will impact central and northern Argentina Friday into Saturday due to a frontal boundary. This rain will be important due to the lengthy period of dryness that is expected to follow it. Last evenings GFS model removed plenty of rain that was in the midday GFS model run for the Jan. 24 – 26 period for central and northeastern parts of Argentina. Some shower and thunderstorm activity will be possible; though, it may be erratic.
The player sheet had funds net sellers of 3,000 SRW Wheat; sold 12,000 Corn; net sold 4,000 Soybeans; bought 7,000 lots of Soymeal, and; sold 7,000 lots of Soyoil.
We estimate Managed Money net long 11,000 contracts of SRW Wheat; long 320,000 Corn; net long 193,000 Soybeans; net long 96,000 lots of Soymeal, and; long 106,000 Soyoil.
Preliminary Open Interest saw SRW Wheat futures down roughly 4,000 contracts; HRW Wheat down 335; Corn down 3,700; Soybeans down 9,700 contracts; Soymeal up 1,600 lots, and; Soyoil down 3,700.
Deliveries were ZERO Soymeal; ZERO Soyoil; Rice 15; and 70 Soybeans.
There were changes in registrations (Rice up 13)—Registrations total 49 contracts for SRW Wheat; ZERO Oats; Corn ZERO; Soybeans 131; Soyoil 1,289 lots; Soymeal 175; Rice 671; HRW Wheat 91, and; HRS 1,023.
TODAY—DELIVERABLE STOCKS—USDA ANNUAL CROP REPORTS—
Tender Activity—Egypt seeks optional-origin wheat—Japan seeks 116,000t optional wheat—Turkey seeks 400,000t optional wheat—S. Korea bought 50,000t U.S. wheat—Syria seeks 200,000t optional wheat—
USDA January crop supply/demand, stocks report estimates – Reuters News
U.S. quarterly stocks as of Dec. 1, in billions of bushels:
| USDA Dec. 1 | Average of | Range of | USDA | USDA | |
| estimate | analysts’ | analysts’ | Sept. 1, | Dec. 1, | |
| estimates | estimates | 2020 | 2019 | ||
| Wheat | _________ | 1.695 | 1.585-1.827 | 2.159 | 1.841 |
| Corn | _________ | 11.951 | 11.590-12.305 | 1.995 | 11.327 |
| Soybeans | _________ | 2.920 | 2.775-3.215 | 0.523 | 3.252 |
USDA 2020-21 U.S. corn and soybean crops (production in billions of bushels, yield in bushels per acre, harvested area in millions of acres):
| USDA Jan. | Average of | Range of | USDA Nov. | |
| 2020-21 | analysts’ | analysts’ | 2020-21 | |
| estimate | estimates | estimates | estimate | |
| CORN | ||||
| Production | ______ | 14.470 | 14.319-14.997 | 14.507 |
| Yield | ______ | 175.3 | 173.8-178.2 | 175.8 |
| Harvested area | ______ | 82.543 | 82.000-84.160 | 82.527 |
| SOYBEANS | ||||
| Production | ______ | 4.158 | 4.084-4.260 | 4.170 |
| Yield | ______ | 50.5 | 49.4-51.7 | 50.7 |
| Harvested area | ______ | 82.305 | 81.986-82.670 | 82.289 |
U.S. winter wheat seedings for 2021 harvest, in millions of acres:
| USDA Jan. | Average | Range of | USDA 2020 | |
| estimate | of analyst | analyst | wheat | |
| estimates | estimates | plantings | ||
| All winter | ________ | 31.528 | 30.395-32.500 | 30.415 |
| Hard red winter | ________ | 22.140 | 21.352-22.900 | 21.362 |
| Soft red winter | ________ | 5.884 | 5.441-6.260 | 5.564 |
| White winter | ________ | 3.514 | 3.400-3.700 | 3.489 |
USDA 2020-21 U.S. grain and soybean ending stocks, in billions of bushels:
| USDA Jan. | Average of | Range of | USDA Dec. | |
| 2020-21 | analysts’ | analysts’ | 2020-21 | |
| end-stocks | estimates | estimates | end-stocks | |
| estimates | estimates | |||
| Wheat | _______ | 0.859 | 0.837-0.900 | 0.862 |
| Corn | _______ | 1.599 | 1.400-1.782 | 1.702 |
| Soybeans | _______ | 0.139 | 0.105-0.166 | 0.175 |
USDA 2020-21 world grain and soybean ending stocks, in millions of tonnes:
| USDA Jan. | Average of | Range of | USDA Dec. | |
| 2020-21 | analysts’ | analysts’ | 2020-21 | |
| end-stocks | estimates | estimates | end-stocks | |
| estimates | estimates | |||
| Wheat | ________ | 315.37 | 310.00-318.36 | 316.50 |
| Corn | ________ | 283.53 | 269.00-287.96 | 288.96 |
| Soybeans | ________ | 82.66 | 75.00-85.00 | 85.64 |
USDA 2020-21 South American corn and soy production, in millions of tonnes:
| Jan. USDA | Average of | Range of | Dec. USDA | |
| 2020-21 | analysts’ | analysts’ | 2020-21 | |
| estimate | estimates | estimates | estimate | |
| ARGENTINA | ||||
| Corn | ________ | 47.41 | 45.00-49.00 | 49.00 |
| Soybeans | ________ | 48.44 | 46.00-49.50 | 50.00 |
| BRAZIL | ||||
| Corn | ________ | 107.74 | 102.00-110.00 | 110.00 |
| Soybeans | ________ | 131.42 | 128.00-133.00 | 133.00 |
USDA world production, in millions of tonnes:
| Jan. USDA | Dec. USDA | Jan. USDA | Dec. USDA | |
| 2019-20 | 2019-20 | 2020-21 | 2020-21 | |
| estimate | estimate | estimate | estimate | |
| Argentina wheat | _____ | 19.76 | _____ | 18.00 |
| Australia wheat | _____ | 15.20 | _____ | 30.00 |
| Canada wheat | _____ | 32.67 | _____ | 35.18 |
| Russia wheat | _____ | 73.61 | _____ | 84.00 |
| Argentina corn | _____ | 51.00 | _____ | 49.00 |
| Brazil corn | _____ | 102.00 | ____ | 110.00 |
| South Africa corn | _____ | 16.00 | ____ | 16.00 |
| China corn | ______ | 260.78 | ______ | 260.00 |
| Ukraine corn | _____ | 35.89 | _____ | 29.50 |
| Argentina soy | _____ | 48.80 | _____ | 50.00 |
| Brazil soy | _____ | 126.00 | _____ | 133.00 |
As if the grain markets needed any additional excitement to start off the year, the U.S. Department of Agriculture will be piling on with its largest annual data dump on Tuesday, and the expectations are mostly price-supportive. That goes along with the latest storyline of shrinking U.S. and global supplies, which has sent Chicago-traded corn, soybean and wheat futures to the highest levels in more than six years. But although stocks are seen smaller on Tuesday, analysts have abandoned their recent “group think” tendency when it comes to U.S. corn and soybean production. Those wide harvest scenarios could potentially set up a large and unexpected impact on domestic inventory.
U.S. winter wheat planted acres for the 2021 harvest are seen at 31.528 million acres, more than 1 million above last year’s 111-year low. If realized, that would be the first yearly rise in U.S. winter wheat acres in eight years.
Trade estimates for USDA grain export inspections were – Reuters News
| Range | Previous week | |
| Wheat | 250,000-450,000 | 324,983 |
| Corn | 800,000-1,200,000 | 912,802 |
| Soybeans | 1,000,000-2,000,000 | 1,305,786 |
U.S. weekly grain/soybean export inspections – USDA – Reuters News
WEEK ENDED: 01/07/2021 12/31/2020 12/31/2020 01/09/2020
Prelim. Revised Previous
– Wheat 279,390 475,524 324,983 561,774
– Oats 0 0 0 100
– Barley 0 0 0 168
– Corn 1,130,744 1,089,440 912,802 483,559
– Sorghum 133,461 156,802 82,687 20,319
– Soybeans 1,778,581 1,760,974 1,305,786 1,151,583
MARKETING YEAR-TO-DATE INSPECTIONS
Current Year Last Year
– Wheat 15,290,265 15,469,064
– Oats 2,393 2,395
– Barley 20,944 16,928
– Corn 16,215,819 9,086,667
– Sorghum 2,479,272 957,753
– Soybeans 40,828,732 22,972,099
Wheat exports are running down 1% vs a year ago with the USDA currently forecasting a 2% increase
Corn up 78% (USDA up 49%)
Soybeans up 78% (USDA up 31%)
The Trump administration is expected to grant some waivers to oil refiners that would exempt them from requirements to blend biofuels into their fuel mix for the 2019 compliance year. The move would be one of the last actions by President Donald Trump’s Environmental Protection Agency to seek to balance the competing desires of the biofuel and oil industries over biofuel blending laws. The decision, however, would be a blow to the biofuel industry and corn producers that say the exemptions hurt demand for their products, though the oil industry rejects that claim.
China’s agriculture ministry raised its forecasts for corn imports in 2020/21 year amid rising domestic prices and healthy demand from a steadily recovering pig herd. China was expected to import 10 million tonnes of corn in the 2020/21 marketing year, the ministry said, raising its forecast from 7 million tonnes the previous month, as the “price difference between domestic and international corn keeps enlarging”. Domestic corn prices hit record highs this week.
Corn consumption in feed was seen at 185 million tonnes, up 2 million tonnes from its previous forecast, as pig production recovery is better than expected. Industrial demand for corn, however, was expected to fall to 82 million tonnes as soaring prices further squeeze margins for processing firms and cut operation rates at their plants
It lowered its forecasts for corn output in 2020/21 to 260.67 million tonnes from 264.71 million the previous month.
China was expected to import 98.1 million tonnes of soybeans in the 2020/21 marketing year, up from a previous forecast of 95.1 million tonnes, on rising demand to produce soymeal to feed the livestock sector.
China said on Monday it was set to approve the safety of another genetically modified (GMO) corn variety and a GMO soybean, both produced by Beijing Dabeinong Technology Group Co Ltd. The move comes after China last year approved three domestically designed GMO crops as safe, the first in a decade, in a fresh push towards commercial planting of GMO crops in the world’s top soybean importer and a major corn buyer. Beijing has never permitted planting of GMO soybean or corn varieties but it permits their import for use in animal feed. The government has said recently, however, that it wants to support biotech breeding to boost food security, leading the industry to expect progress towards commercialisation in the coming year.
China’s Dalian Commodity Exchange on Monday said it would raise the margin requirement on speculative trades in its corn futures to 11% from 9% after settlement on Wednesday. The margin requirement for hedging trades remains unchanged at 7%, the bourse said, after its most active contract corn contract for delivery in May, hit a record 2,911 yuan ($449) a tonne on Monday.
China will sell 30,000 tonnes of frozen pork from its state reserves on Jan. 15, according to a notice published by the China Merchandise Reserve Management Center on Tuesday. China has released several batches of pork from its reserves in the past weeks to boost supply ahead of a jump in consumption over the approaching Lunar New Year holiday in February. Total sales of pork from the reserves were more than 670,000 tonnes for the whole year of 2020.
Brazilian farmers in a few areas have begun their soybean harvest, but at a slower pace than in previous years because of dry weather at the start of the season that delayed planting, according to agricultural consultancy AgRural. The delays were expected and the area harvested is still very small. Good rain and favorable temperatures during the growing season have left the crop in good shape in most parts of Brazil, and only parts of the states of Rio Grande do Sul, Bahia and Piaui are having problems with dry weather. Those problems are unlikely to cause relevant declines in productivity. AgRural has forecast a record soybean crop of 131.7 million metric tons for the 2020-2021 growing season currently underway.
Argentine farmers said they would continue their ban on selling crops despite the government’s decision to amend the corn export suspension that has triggered a sales strike. The government replaced the two-month export suspension with a temporary daily limit of 30,000 tonnes of corn that can be sold into the international market. But the country’s main farm groups said they objected to the new policy as well. “For us, it’s the same,” said the president of the Argentine Rural Society (SRA). He said the SRA would continue the ban on sales. The Argentine Rural Confederation (CRA) announced that it would continue the sales strike. This kind of government intervention in the market alters the rules and undermines growers’ confidence, generating uncertainty about next season’s sowing.
Russia is considering raising its wheat export tax from the currently planned 25 euros ($30) per tonne between Feb. 15 and June 30, the head of the Russian Union of Grain Exporters said. Russia is trying to stabilise domestic food prices with the wheat export levy as well as a grain export quota and a series of other measures after President Vladimir Putin criticised the impact of excessive inflation. The wheat export tax is aimed at stabilising domestic grain prices. However, the planned 25 euro (levy) has been almost completely absorbed by the global markets. Russian export prices for wheat have risen since the measures were approved in mid-December. So, the government has no other choice but to consider raising the duty to an amount that can have a significant impact on the domestic market.
Euronext wheat rose to its highest in over two years on Monday, as rising prices in Russia and reports the country could increase an export levy put attention back on supply risks in the leading wheat supplier. Euronext also was also supported by a sharp fall in the euro against the dollar and an earlier rise in Chicago wheat as investors adjusted positions before widely followed U.S. government crop forecasts on Tuesday. March milling wheat at 218.00 euros ($265.22) a tonne.
This morning—EURONEXT FRONT-MONTH WHEAT RISES TO 221.50 EUROS/T IN OPENING TRADE, HIGHEST LEVEL SINCE APRIL 2014 – Reuters News
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