-Global markets continue under significant pressure – energy markets in all-out collapse
-USDA ag attache sees Chinese corn feed demand well below USDA official estimates
-USDA reports modest soybean sale to unknown
-Argentine rains getting underway
-USDA WASDE report tomorrow
The combination of equity markets being under massive pressure again this morning on economic slowdown concerns due to the coronavirus epidemic and crude oil getting hammered on Saudi Arabia’s undercutting world oil markets (lowering prices and raising production) in response to Russia’s lack of agreement on production cuts is influencing commodity markets on a widespread basis to start the week. The 1.5-2.0% overnight losses in the grain markets pale in comparison to crude oil down more than 20%, RBOB 17% and heating oil 16%. USDA’s WASDE report is out tomorrow at 11:00 AM CT. A summary of the average trade estimates is on the following page. Our pre-report commentary/analysis can be found on Market Insights at https://portal.rjobrien.com/MarketInsights/Blog/Read/39206. ï‚· The USDA ag attaché in China continues to estimate their domestic corn feed/residual usage well below USDA official estimates for this year, as well as last year, prompting their ideas Chinese corn stocks are well above USDA WASDE-reflected numbers. The attaché is estimating 2019/20 Chinese corn feed/residual usage at 175.0 MMT, sharply below USDA’s 190.0 MMT official estimate, with 2018/19 feed/residual usage at 180.0 MMT vs USDA’s 191.0 MMT. Accordingly, the attaché reflects last year’s Chinese corn stocks at 220.3 MMT vs USDA’s 210.3 MMT (2017/18 222.5 MMT) and 2019/20 stocks forecast at 223.1 MMT by the attaché vs USDA’s 199.1 MMT current estimate. The attaché sees China’s 2019/20 corn imports at 6.0 MMT vs USDA officially at 7.0 MMT. ï‚· China reported preliminary Jan-Feb total soybean imports were 13.5 MMT vs 11.8 MMT last year, as China did not publish Januaryspecific trade data. Country-specific import data was not provided either. Total vegoil imports for Jan-Feb of 1.22 MMT were down from the previous year’s 1.38 MMT. ï‚· USDA reported the sale of 124k tonnes of soybeans to unknown destinations this morning. ï‚· South Korea bought 196k tonnes of optional-origin corn for May-July shipment period at $204.50-$207.01/tonne c&f with at least a third expected to be South America or South Africa origin. ï‚· Algeria tendered for an unspecified amount of wheat for April-May shipment depending on source. Offers are due by Wednesday. In their last tender February 11, Algeria bought 660k tonnes of optional origin wheat. Syria tendered for 200k tonnes of Russian, Bulgarian or Romanian wheat with offers due by Wednesday. ï‚· Friday’s CFTC Disaggregated COT data for futures/options combined for the week ended 3/03/20 showed fund activity largely in liquidation mode relative to existing positions, as they were net sellers of 26.6k contracts in CBOT wheat on the week and are now net long just 15.4k. Funds were net buyers of 10.6k contracts in corn (net short 84.9k), 39.4k soybeans (net short 35.8k) and 58.8k SBM (net short 18.3k), while being net sellers of 10.2k KCBT wheat (net short 2.0k) and 2.2k MPLS wheat (net short 16.5k). Funds were net sellers of 8.1k contracts in SBO to reduce their net long to just 15.0k contracts. Weather Argentina will see rains get going in earnest across the northern ½ to 2/3 of La Pampa and Buenos Aries, as well as the southern ½ of Santa Fe and Entre Rios today and continue in waves the remainder of the week. Totals in the next 5 days look to be in the .70-1.5†range, with areas of 1.5â€+ also possible. Dry weather looks to hang on across the remainder of the Argentine growing regions for the week ahead. In the 6-10 day period, totals of .70-1â€+ are expected in all growing areas. In Brazil, rains of .50-1â€+ fell across northern sections of Mato Grosso, Goias, Minas Gerais over the weekend, with conditions dry elsewhere. Rains will continue to fall in the northern ½ of Mato Grosso and Goias, as well as into the northern 1/3 of Minas Gerais in the next 5 days, with totals of 1-2†common. The 6-10 day outlook sees rains of .50-1â€+ with coverage of around 85% in all of the Brazilian growing regions