Row crop markets retreat on plunge in Dalian corn, rumors of imminent cut in PRC corn supports
and chuckerblocked US soy pipeline pressuing domestic meal basis lower desp8ite brisk meal export
sales.
Weather leans negative. CWG downplays potential damage to US HRW from another round of colder
than expected weeked temps due to snow cover. No major glitches in early Midwest planting
through mid April with upperMidwest temps the weekend not as cold as mps indicated yesterday.
Nearly all US crop areas wil be dry next week.
Trade awaits today’s winter wheat condition updates to guage impact of recent cold weather.
Corn bulls cite brisk US ethanol grind, accelerating corn export pace and potential for lower than
expected March 1 US corn stocks (5 of last 8 years) while bears cite pending freefall in PRC feed
grain imports, higher 2016 US corn area and early spring weather conducive to timely planting.
Managed funds trimming corn shorts while maintaining base position in hopes of massive change in
PRC policy on corn supports and PRC feed grain imports.
Positive soy complex seasonals kicking off yesterday detailed below.
New high in palm overnight supporting oil share along with bullish weekend Oil World comments.
Reuteres reporting “China imported a record of more than 40 million tonnes of corn and corn
substitutes in 2015â€â€”equates to 24% of total 15/16 world coarse grain trade (which does not
include DDG’s). Prominent analyst early today asking –“who will buy this surplus if PRC shuts off
feed grain imports?â€
Foreign Markets:
Palm market up 39 ringgits at 2762
• Paris milling wheat up 1.50 euros at 156.50
• Dalian beans up 0.75 cents/bu, meal up $0.80/ton, soy oil up 37 and corn down 16 cents/bu.
Ag Markets:
• PRC TV says Beijing will stop stockpiling corn and let market forces determine price. No
official confirmaiton however from government.
• USDA Friday reported 304 tmt US soy to unknown including 214 tmt O/C and 90 tmt N/C.
• Board crush Thur May through Jan up 1.75 cents-2.5 cents to 60.5-72 cents/bu.
• Last week corn up 3 cents, soy up 12.75 cents, wheat up 0.25 cents, meal $8.60 and soy oil
down 8..
• Oil World says soybean, soya oil & palm oil prices vulnerable to setback but renewed uptrend
in veg oils likely in April/June 2016.
• US corn export sales down 6.1 mmt (USDA off 5.35 mmt), soy sales down 4.6 mmt (USDA
off 4.16 mmt) and wheat sales off 3.8 mmt (USDA off 2.15 mmt) .
• Reuters reports Russia is number 2 wheat exporter after EU in 15/16 with loadings of 23 mmt
vs. EU’s 22.5 mmt and Canada’s 22 mmt. US 15/16 wheat exports pegged at 21.1 mmt.
• CRB eases 10 points last week on heels of weakness in crude (off $1.00) and gold (down
$36) while the dollar ralles on more hawkish Fed statements. Crude bottom may be in but
upside limited as higher prices trigger more production. Surge in managed fund crude oil
longs worrisome for bulls. Weekly US oil rig coung down 5 to 372 taking US production to
9038K BPD vs. 9068K BPD last week and peak 9604K BPD.
• (Reuters) China’s hog supplies are likely to stay tight this year as more provinces shut down
breeding firms due to tough environmental rules, keeping pork prices high, the Ministry of
Agriculture said; hog herds in China have been depleted over the past 37 months as rules –
imposed in the wake of food safety scandals – banned breeding activity around major rivers
and cities, while restocking by middle-sized farms has been limited by poor cash flows
brought about by years of losses.
• (Bloomberg) — A bipartisan group of farm-state senators called on the Treasury Department
Thursday to review a state- owned Chinese company’s proposed acquisition of Syngenta AG
over concerns that Chinese control could impact U.S. food security and farm interests.
“While this committee has not reached any conclusions regarding the proposed purchase of
Syngenta by ChemChina, we believe that any foreign acquisition of an important U.S.
agricultural asset should be reviewed closely for potential risks to our food system,†they
wrote. “It is not unreasonable to suggest that shifts in company governance; operational or financial health
particularly in light of the magnitude of this leveraged
transaction — could have consequences for food security, food safety, biosecurity, and the
highly competitive U.S. farm sector as a whole,†the lawmakers wrote. The fear is that China
farm interests, given that Basel, Switzerland-based Syngenta is a major producer of
pesticides and seeds.
• Bloomberg) — China’s economy still “emanating weakness,†according to first-quarter China
Beige Book report published by CBB International. Revenue growth steadied, capital
expenditure fell, job growth slid to 4-yr low, retail outperformed business spending
“Collectively, our data show that that firms first stopped borrowing, then cut spending, and
now are becoming allergic to hiring,†report says Interest rates rose at banks and non-banks,
loan demand remained anemic. “As has been true for three years, none of the talk or action
with regard to monetary stimulus has yet convinced firms to borrow,†report says.
• (Bloomberg) — Harvest is above 5-yr avg of 65%, according to crop forecaster AgRural
report.
• (Reuters) Palm oil output in Malaysia, the world’s second-largest producer, is estimated to fall
by 2 million tonnes from a year earlier in the oil year ending September 2016 due to the
effects of El Nino, leading industry analyst Dorab Mistry said.
• (Reuters) Malaysian palm oil futures surged to a two-year high on Monday, rising for a sixth
session out of eight, on persistent worries that a crop-damaging El Nino weather event would
curb yields; palm oil experts had forecast at a Kuala Lumpur industry conference earlier in
March that benchmark prices could soar to as much as 3,000 ringgit a tonne by mid-year, up
around 10 percent from current levels, due to the El Nino; the palm oil contract for June
delivery rose 1.1 percent to reach 2,752 ringgit ($684) per tonne by midday; it earlier hit
2,759 ringgit, the strongest since March 21, 2014
• Trade this week awaits PRC announcement on 2016 corn support price (talk of 500 yuan cut
to 1400 yuan) and plan for partial disposal of massive 150-200 mmt corn reserve.
• Friday’s All hogs and pigs clocks in at 100.4% (100.3% expected), kept for breedingat
100.0% (100.6% expected) and kept for marketing at 100.4% (100.2% expected). One
analyst noted on the report “it says that the kill will be very similar to last year. And last
year was bigâ€.
• 10 year seasonals of note include long SMN (up 8 of10 years 3/27-6/26), long July oil share
(up 8 of 10 years 3/27-4/27), and long SN (up 7 of 10 years 3/27-6/26).
• (Bloomberg) –Beef is making a comeback. After decades of diners shunning steaks and
burgers for healthier protein options such as chicken and turkey, Americans will eat an
estimated 54.3 pounds of the red meat this year — the first increase since 2006 and almost
half a pound more per person than in 2015, according to data from the U.S. Department of
Agriculture. Cheaper prices are spurring discounts and new menu items at restaurant chains,
including Chili’s and Wendy’s Co. Protein-centric diets such as the Paleolithic, or Paleo, and
Autoimmune Protocol that eliminate grains and sugar also are fueling the shift.
• (Virgina Tech University) Looking forward to the next Prospective Plantings report that will be
released on March 31, 2016, our findings imply that while these estimates will not be equal to
the June 2016 planted acreage numbers or the final planted acreage released in January
2017, they will be within a 3% margin of error for corn, soybeans and wheat and within a 1
million acre margin of error for cotton in the vast majority of the time. On average, we can
expect corn prospective plantings estimates to be 1.042 million acres or 1.48% different from
the final planted acreage numbers. Prospective plantings tend to be “off” from the final planted acreage by 1.538 million acres or 2.61% for soybeans, 0.915 million acres or 2.11%
for wheat and 0.628 million acres or 6.29% for cotton. Most of the time, Prospective
Plantings are unbiased estimates of final planted acreage, meaning that they neither
overestimate or underestimate the final numbers. However, the situations to watch out for
are associated with acreage contraction. Thus, if USDA will report that corn acreage will be
down from what it was last year, they will likely underestimate this acreage reduction by
0.77% or 640 thousand acres. Similarly, if cotton acreage is down from last year, USDA will
likely underestimate this acreage reduction by 3.53% or 419 thousand acres. No bias
associated with acreage contraction has been detected in soybeans or wheat.
• Grain Stocks: Trade estimates for March 31 Crop Report: Trade looking for Mar 1 corn stocks
at 7.801 bil bu (up 51 mb from YA)– the largest March 1 stocks since 1987 and the second
most in records dating to the 1920. Soy stocks at 1.556 (up 229 mb from YA) are the largest
since 2007 while the average trade guess on wheat stocks of 1.356 bil bu (up 216 mb from
YA) would be the largest since 2011.
Wheat Corn Soybeans
Average trade estimate 1.356 7.801 1.556
Highest trade estimate 1.460 7.975 1.615
Lowest trade estimate 1.325 7.700 1.425
USDA March 1, 2015 1.140 7.750 1.327
USDA Dec. 1, 2015 1.738 11.212 2.715
• Planted acreage: Trade looking for corn area at 89.97 ma vs. 88 ma LY and 90.0 ma USDA,
soy at 83.1 ma vs. 82.65 ma LY and 82.5 ma USDA while wheat at 51.7 ma vs. 54.65 ma YA
and 51 ma USDA.
Source Corn Soy All Winter Other Durum
Wheat Wheat Spring
Average trade estimate 89.972 83.057 51.702 36.925 12.838 1.875
Highest trade estimate 91.000 84.200 54.845 39.646 13.620 2.182
Lowest trade estimate 89.000 81.600 50.669 36.430 11.950 1.600
All Sorgo Barley Rice Oats
Cotton
Average trade estimate 9.412 7.827 3.566 2.744 3.041
Highest trade estimate 9.840 8.500 3.710 2.870 3.220
Lowest trade estimate 9.060 7.000 3.400 2.500 2.900
Weekly Ag Scorecard: Managed funds increase soy long 22K to +54K, wheat shorts up 14K
to -82K and corn short down 22K to -155K. Soil oil long up 24K to record 99K long.
Aggregrate managed fund short of C/B/W/ML/OIL down 77K to -105K.