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Global Ag News for Jan 21


Overnight trade has SRW Wheat up roughly 4 cents, HRW up 5; HRS Wheat up 2, Corn is up 7 cents; Soybeans up 10; Soymeal up $2.50, and Soyoil up 20 points.

Chinese Ag futures (May) settled up 38 yuan in soybeans, up 7 in Corn, down 13 in Soymeal, down 2 in Soyoil, and down 16 in Palm Oil.

Malaysian palm oil prices were up 62 ringgit at 3,283 (basis April) as floods raise output concerns.

South America Weather Forecast: The bottom line for the official weather outlook in most production regions is unchanged.

In Brazil, conditions will still be mostly good for crops. There are a few exceptions including northeastern areas that will continue to be too dry, especially from central Minas Gerais through Bahia where little to no moisture is expected through week 1 of the outlook, and pockets of Parana and Sao Paulo that may be a little too wet.

In Argentina, rain is still likely to increase in the nation this weekend and especially Monday and Tuesday of next week. The rain will provide some relief from this week’s heat and dryness; though, there remains a notable difference between the GFS model and yesterday’s midday European Model run. Last evening’s GFS model was similar to the midday GFS of showing significant rain Monday into Tuesday from Cordoba through northeastern Buenos Aires. The European Model was much drier in this area though with some erratic showers that would be mostly unable to counter evaporation and the significant rain mostly limited to the north. Concern for some increase of crop stress remains greatest in southern Argentina.

The player sheet had funds net sellers of 3,000 SRW Wheat; sold 9,000 Corn; net sold 10,000 Soybeans; sold 5,000 lots of Soymeal, and; net bought 5,000 Soyoil.

We estimate Managed Money net long 18,000 contracts of SRW Wheat; long 380,000 Corn; net long 134,000 Soybeans; net long 74,000 lots of Soymeal, and; long 90,000 Soyoil.

Preliminary Open Interest saw SRW Wheat futures up roughly 3,400 contracts; HRW Wheat up 900; Corn up 13,000; Soybeans up 790 contracts; Soymeal down 700 lots, and; Soyoil down 3,600.

There were no changes in registrations—Registrations total 49 contracts for SRW Wheat; ZERO Oats; Corn ZERO; Soybeans 169; Soyoil 1,289 lots; Soymeal 175; Rice 732; HRW Wheat 91, and; HRS 1,023.

Tender Activity—Turkey seeking 400,000t optional-origin wheat—Japan bought 2,000t U.S./Canadian wheat— Jordan bought 120,000t optional wheat—Algeria bought 390,000t optional wheat—

China within the last year has bought historic volumes of U.S. corn and soybeans at prices significantly lower than those today, conjuring up memories of an American trade fiasco involving the Soviet Union a half-century ago. The two events are distinctly different, though they seem to share at least one theme: the resulting arrangement played right into the hands of the Soviets and Chinese, both of whom used their own weaknesses to their advantage. Some industry members have likened China’s recent surge in U.S. grain purchases to the so-called Great Grain Robbery of 1972, when the Soviet Union secured a massive amount of U.S. wheat at low prices with undisclosed motivation. The biggest parallel between China’s latest spree and the 1972 event may be the United States’ grave misunderstanding of the underlying dynamics. The lack of timely global data and land monitoring satellites 50 years ago meant that most market players, including the U.S. Department of Agriculture, were unaware of how badly the 1972 Soviet wheat crop had failed and the impending impact on global supplies.

Refinitiv’s trade flows tracked 94.9 million tons of soybean imports from the top four origins (U.S., Brazil, Argentina and Uruguay) in 2020, up 18% from a year ago, which account for 95% of total imports reported by China customs (100.3 million tons). Specifically, we tracked 27.4 million tons of soybean imports from the U.S. (up 59% from 2019), 60.2 million tons from Brazil (up 12%), 5.9 million tons from Argentina (down 22%), and 1.4 million tons from Uruguay (down 34%). Strong imports continue in January 2021.

Despite recent favorable rains, disappointing crop recovery from earlier season dryness fractionally lowers 2020/21 total Brazil corn production to 105.1 [95-111] million tons. Total corn area is maintained at 18.9 million hectares, still 5% above last season mostly due to increases in second crop corn area.

Brazil soybean crops benefiting from recent rain, but concerns in the Center West continue – Refinitiv Commodities Research

Argentine farmers have dramatically accelerated sales from the upcoming 2020/21 corn harvest, due to concern that the government may yet again try to limit international sales. The agriculture ministry has caused uncertainty by going back and forth in recent weeks on policies seeking to ensure ample food supplies by limiting international shipments of corn. Between January 7 and 13, producers sold 1.07 million tonnes of 2020/21 corn to exporters, up from 334,300 tonnes in the same period last year, according to Ministry of Agriculture data. The higher-than-normal sales have also been motivated by high prices caused by low supply from other exporting countries. In the last week of December, just before the government first said it would put a hold on exports, a policy that was soon abandoned, farmers sold 104,000 tonnes of corn.

Timely precipitation and continued cool temperatures raise Argentina corn yields – Refinitiv Commodities Research

Continued cool conditions keep Argentina soybean yields afloat despite volatile weather – Refinitiv Commodities Research

Impacts of dryness continue for Paraguay soybean production despite recent rains – Refinitiv Commodities Research. 2020/21 Paraguay soybean production: 9.3 [8.6–10.1] million tons, down <1% from last update.

Ukrainian milling wheat export prices exceeded $300 per tonne on Wednesday supported by a sharp upward trend in Russia, analyst APK-Inform said, Asking prices for 12.5% milling soft wheat added $2 a tonne and were quoted between $292 and $303 per tonne FOB Black Sea.

Euronext wheat fell on Wednesday, easing back from a 7-1/2 year high, as beneficial rainfall for South American crops curbed an international grain rally. Wheat traders were also assessing initial reports of an Algerian purchase in a tender, with estimates the importer bought between 120,000 and 300,000 tonnes at around $312-$314 a tonne, cost and freight (c&f) included. March milling wheat settled 1.75 euros, or 0.7%, lower at 234.00 euros ($283.23) a tonne, moving away from Tuesday’s peak of 240.25 euros, a level not seen since May 2013.

Indonesia will import 502,000 cattle and 85,500 tonnes of beef to help plug a supply gap of meat in the domestic market, Fadjar Sumping Tjatur Rasa, an Agriculture Ministry director said on Thursday.

In addition, Indonesia is also planning to issue import permits for 100,000 tonnes of Brazilian beef and water buffalo meat from India, he said in a statement. The ministry estimated Indonesia’s beef and buffalo meat consumption in 2021 at nearly 696,956 tonnes, up around 64% from last year, resulting in a 223,142 tonne supply gap.

Malaysia’s commodities ministry on Thursday forecast crude palm oil production at 19.7 million tonnes in 2021, rising from 19.14 million tonnes last year.

Palm oil production in the world’s top two producing countries is expected to recover and drive volatility in prices this year, which are likely rise to nine-year highs, a Reuters poll showed.

Malaysia’s benchmark palm oil contract kicked off the year at near decade-high levels of 3,800 ringgit ($940.13) due to a supply crunch in global edible oils.  Prices are, however, forecast to average at 2,800 ringgit ($694.96) a tonne this year, its highest since 2012, compared with 2,685 ringgit last year.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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