market perspectives - u.s. grains council · follow this link to view current u.s. and...

For more information on the contents of this newsletter or the U.S. Grains Council, its mission and programs, please contact Cary Sifferath at (202) 789-0789.

The U.S. Grains Council is a private, non-profit partnership of producers and agribusinesses committed to building and expanding international markets

for U.S. barley, corn, grain sorghum and their products. The Council is headquartered in Washington, D.C. and has ten international offices that oversee

programs in more than 50 countries. Financial support from our private industry members, including state checkoffs, agribusinesses, state entities and

others, triggers federal matching funds from the USDA resulting in a combined program value of more than $26 million.

Market Perspectives

February 21, 2019

CONTENTS

Chicago Board of Trade Market News .................................................................................................. 2

CBOT March Corn Futures ................................................................................................................... 3

U.S. Weather/Crop Progress ................................................................................................................ 4

U.S. Export Statistics ............................................................................................................................ 5

FOB ...................................................................................................................................................... 6

Distiller’s Dried Grains with Solubles (DDGS) ....................................................................................... 7

Country News ....................................................................................................................................... 8

Ocean Freight Markets and Spread ...................................................................................................... 9

Ocean Freight Comments ................................................................................................................... 10

Phone: (202) 789-0789 Fax: (202) 898-0522 Internet: www.grains.org E-mail: [email protected]

20 F St. NW, Suite 600 Washington, DC 20001 []

Chicago Board of Trade Market News

Week in Review: CME Corn March Contract

$/Bu Friday

February 15 Monday

February 18 Tuesday

February 19 Wednesday February 20

Thursday February 21

Change 0.000 - -5.000 1.00 4.750

Closing Price

374.75 - 369.750 370.750 375.500

Factors Affecting the Market

March corn was unchanged and barely above its uptrend line. Demand has been steady with South Korea a large buyer. Basis is strong, due partly to demand but also inclement weather. Corn export sales are up 19 percent versus last year. Outside markets were mixed.

Markets were closed for the U.S. President's Day holiday.

Corn survived a late-day plunge in soybean and wheat prices to close down only 5 cents. News is scarce, meaning today's selloff was largely technical in nature. Corn is being tugged lower by wheat, and China's purchase of Ukrainian corn. Outside markets were steady.

Corn traded both sides of unchanged amid selling pressure from beans and wheat. Brazilian weather looks good for the 2nd corn crop, which is pressuring U.S. futures. Yet U.S. cash basis remains firm, with poor Midwest weather. Outside markets were higher.

USDA pegged the U.S. corn crop at 92 mln. acres in its first 2019 forecast. The agency also pegged 2019 corn prices at 5-year highs. A U.S.-China MOU was rumored to have supported corn prices as well. The EIA said ethanol production fell as stocks grew last week.

Outlook: March corn futures are up ¾ cents (0.2 percent) from last Thursday as the market continues to move sideways. The weather remains favorable for Brazil’s 2nd crop corn, keeping some pressure on prices. Yet U.S. corn demand remains strong, which is helping prices find a floor. Recent positive geopolitical/trade news put a bid under the market early today and could be important in dictating market direction moving forward. In its annual Ag Outlook Forum, the USDA’s first forecast for the year pegged the U.S. corn crop at 92 million acres, slightly higher than the average trade guess but under some private estimates of 93 million acres. If realized, the USDA’s latest estimate would represent a 3.3 percent increase in acreage versus 2018. The agency said the U.S. average corn price would reach a new five-year high in 2019 as well. More details about the USDA’s first look at the 2019/20 crop year will be released Friday. USDA’s weekly Export Sales report is delayed until tomorrow. The latest Export Inspections report, released 2/18, showed a bullish 942 KMT were shipped, a volume equal to that of the same week in 2018. Year-to-date shipments are up 45 percent vs. USDA’s projection of a modest decrease in corn exports. The rapid pace of U.S. corn exports, recently buoyed by South Korean purchases, is keeping corn demand in a bullish posture. Cash prices remain firm across the Midwest nearing eight-month highs, with poor weather hampering grain movement amid strong end-user purchases. Basis levels firmed significantly on the CBOT’s Tuesday dip and are expected to remain so with transportation issues dogging grain movement. Shuttle rates to the PNW are strong at 130 cents over March futures while the secondary market for rail cars has jumped sharply higher. These higher rates are not only impacting shipments to the PNW but also to the Gulf as well. From a technical standpoint, March corn fell below key indicators but broke back above those on Thursday’s trade news. This action could be indicative that the move lower was a bull trap and that prices have upward potential going forward. The seasonal trend is higher and commercial buying has been active on breaks. The

http://www.grains.org/



CFTC data is still delayed from the government shutdown, leaving the market largely uninformed as to managed money’s position in the market. For now, the trend in corn seems destined to continue sideways.

*Last price as of 3:44 PM EST.

CBOT March Corn Futures

Source: Prophet X




Current Market Values:

Futures Price Performance: Week Ending February 21, 2019

Commodity 21-Feb 15-Feb Net Change

Corn

Mar 19 375.50 374.75 0.75

May 19 384.25 382.75 1.50

Jul 19 392.25 390.50 1.75

Sep 19 396.25 394.25 2.00

Soybeans

Mar 19 911.00 907.50 3.50

May 19 924.25 921.50 2.75

Jul 19 937.50 935.00 2.50

Aug 19 943.00 940.25 2.75

Soymeal

Mar 19 305.90 306.50 -0.60

May 19 309.80 310.50 -0.70

Jul 19 313.80 314.60 -0.80

Aug 19 315.60 316.40 -0.80

Soyoil

Mar 19 30.49 29.95 0.54

May 19 30.82 30.28 0.54

Jul 19 31.15 30.62 0.53

Aug 19 31.31 30.78 0.53

SRW

Mar 19 486.50 504.25 -17.75

May 19 491.00 507.00 -16.00

Jul 19 493.50 509.25 -15.75

Sep 19 503.50 518.50 -15.00

HRW

Mar 19 455.25 476.50 -21.25

May 19 463.25 484.50 -21.25

Jul 19 473.50 493.25 -19.75

Sep 19 486.00 505.00 -19.00

MGEX (HRS)

Mar 19 557.75 573.00 -15.25

May 19 557.75 567.00 -9.25

Jul 19 561.00 570.25 -9.25

Sep 19 568.25 575.75 -7.50 *Price unit: Cents and quarter-cents/bu (5,000 bu)

U.S. Weather/Crop Progress U.S. Drought Monitor Weather Forecast: A steady parade of storms will continue to traverse the country, delivering periods of rain and snow to the West; additional snowfall in the upper Midwest; and torrential rainfall across the interior Southeast, northward into the Ohio Valley. The largest storm during the next 5 days will emerge from the Southwest on February 22-23 and cross the upper Midwest on February 23-24. Five-day




rainfall totals could reach 2 to 4 inches or more across the mid-South, while blizzard conditions could engulf the upper Midwest and neighboring regions, especially on February 23-24. In contrast, little or no precipitation will occur during the next 5 days in the lower Rio Grande Valley. The NWS 6- to 10-day outlook for February 26-March 2 calls for the likelihood of near- or below-normal temperatures nationwide, except for warmer-than-normal weather across the lower Southeast. Temperatures will remain significantly below average across large sections of the northern, western, and central U.S. Meanwhile, near- or above-normal precipitation across most of the country should contrast with drier-than-normal conditions from southern California to the southern Plains and parts of the mid-South. Follow this link to view current U.S. and international weather patterns and future outlook: Weather and Crop Bulletin.

U.S. Export Statistics Note: Per USDA-FAS, a combined export sales report for the weeks ending January 10-February 14, 2019, will be published on February 22, 2019 (with the regular reporting schedule to resume thereafter). Updated U.S. export sales data will be published in the February 28, 2019 edition of Market Perspectives.

U.S. Export Inspections: Week Ending February 14, 2019

Commodity (MT)

Export Inspections Current

Market YTD Previous YTD

YTD as Percent of Previous

Current Week Previous

Week

Barley 0 122 6,852 20,606 33%

Corn 941,811 751,419 24,170,438 16,680,509 145%

Sorghum 118,255 84,378 799,017 2,688,556 30%

Soybeans 1,031,294 1,067,180 23,664,973 37,014,033 64%

Wheat 357,131 562,706 15,747,362 17,568,207 90% Source: USDA/AMS. *Marketing Year is June 1-May 31 for wheat and barley and Sept. 1-Aug. 31 for corn, sorghum and soybeans. Week-to-week reports will vary due to exporter reported conditions & cancellations to previous week’s reports.


http://www.usda.gov/oce/weather/pubs/Weekly/Wwcb/wwcb.pdf

http://www.usda.gov/oce/weather/pubs/Weekly/Wwcb/wwcb.pdf



USDA Grain Inspections for Export Report: Week Ending February 14, 2019

Region YC % of Total

WC % of Total Sorghum % of Total

Lakes 0 0% 0 0% 0 0%

Atlantic 0 0% 0 0% 0 0%

Gulf 539,381 58% 4,371 93% 108,093 91%

PNW 246,018 26% 0 0% 0 0%

Interior Export Rail 151,730 16% 311 7% 10,162 9%

Total (Metric Tons) 937,129 100% 4,682 100% 118,255 100%

White Corn Shipments by Country (MT)

4,371 to Japan

24 to Ireland

287 to Mexico

Total White Corn (MT) 4,682

Sorghum Shipments by Country (MT)

31,500 to Eritrea

36,593 to Italy

5,000 South Africa

35,000 to Spain

10,113 to Mexico

49 to UK

Total Sorghum (MT) 118,255 Source: USDA, World Perspectives, Inc.

FOB

Yellow Corn (USD/MT FOB Vessel)

YC FOB Vessel Max. 15.0% Moisture

GULF PNW

Basis (#2 YC)

Flat Price (#2 YC)

Basis (#2 YC)

Flat Price (#2 YC)

LH March 0.78+H $178.53 - -

April 0.64+K $176.47 1.04+K $192.21

May 0.60+K $174.89 1.07+K $193.39

#2 White Corn (U.S. $/MT FOB Vessel)

Max. 15.0% Moisture March April

Gulf $196 $196

Sorghum (USD/MT FOB Vessel)

#2 YGS FOB Vessel Max 14.0% Moisture

NOLA TEXAS

Basis Flat Price Basis Flat Price

April 0.95+K $188.67 0.85+K $184.73

May 0.95+K $188.67 0.82+K $183.55




Corn Gluten Feed Pellets (CGFP) (FOB Vessel U.S. $/MT)

March April May

New Orleans $170 $165 $160

Quantity 5,000 MT

Corn Gluten Meal (CGM) (FOB Vessel U.S. $/MT)

Bulk 60% Pro. March April May

New Orleans $550 $545 $540

*5-10,000 MT Minimum

DDGS Price Table: February 21, 2019 (USD/MT) (Quantity, availability, payment and delivery terms vary)

Delivery Point Quality Min. 35% Pro-fat combined

March April May

Barge CIF New Orleans 202 200 198

FOB Vessel GULF 229 221 218

Rail delivered PNW 220 217 216

Rail delivered California 224 220 219

Mid-Bridge Laredo, TX 219 215 215

FOB Lethbridge, Alberta 204 204 203

40 ft. Containers to South Korea (Busan) 239 238 238

40 ft. Containers to Taiwan (Kaohsiung) 236 235 235

40 ft. Containers to Philippines (Manila) 246 245 246

40 ft. Containers to Indonesia (Jakarta) 249 246 246

40 ft. Containers to Malaysia (Port Kelang) 248 243 243

40 ft. Containers to Vietnam (HCMC) 252 250 250

40 ft. Containers to Japan (Yokohama) 251 249 249

40 ft. containers to Thailand (LCMB) 242 241 242

40 ft. Containers to China (Shanghai) 235 234 235

40 ft. Containers to Bangladesh (Chittagong) 273 272 273

40 ft. Containers to Myanmar (Yangon) 273 272 273

KC Rail Yard (delivered ramp) 195 192 192

Elwood, IL Rail Yard (delivered ramp) 187 186 186 Source: WPI, *Prices are based on offer indications only; terms of delivery, payment and quality may vary from one supplier to another, impacting the actual value of the price.

Distiller’s Dried Grains with Solubles (DDGS) DDGS Comments: Cash corn values are $3.43/bushel this week while FOB ethanol plant DDGS are mostly unchanged from last week. The DDGS/cash corn value is 111 percent, above the two-year average of 107 percent. DDGS indications were generally up this week from last. At the U.S. Gulf, March delivery is becoming hard to find, and values have increased accordingly. FOB vessel U.S. Gulf for April delivery is at $221/MT. Barge logistics continue to be challenged by winter storms that have brought rain, ice and snow to the U.S. Midwest. U.S. rail rates were up $3/MT on average for nearby delivery. 40-foot containers to Southeast Asia (March delivery) were up $5/MT for March delivery, on average.




Source: World Perspectives, Inc.

Country News Algeria: Government grain buyer OAIC is seeking 50 KMT of barley after paying high prices ($252-255/MT) late last year. (AgriCensus) Brazil: JBS ordered its first shipments of imported corn for the year into Santa Catarina. Domestic farmers are holding back supplies at the same time domestic freight costs present legal uncertainty. Safras lowered slightly its forecast for corn production to 93.305 MMT, a less than one-half percent drop. (Reuters; MercoPress) Canada: Low demand from China and Saudi Arabia sent barley prices tumbling. Barley is also being drummed lower by cheap corn prices. (Reuters; FarmLead) China: Feed demand will be hit as the Ministry of Agriculture and Rural Affairs reports that breeding sows have slumped 15 percent as ASF has spread to nearly all provinces. Demand was met by corn and barley from Uruguay where trade tensions are absent. Kazakhstan is also an approved source for feed. (Bloomberg; Reuters) EU: Strategie Grains notes that European barley prices have been tracking Australian values and they lowered their EU export forecast from 5.8 MMT to 5.0 MMT due to lower priced competition from corn and feed wheat. At the same time, Strategie Grains increased their forecast for EU barley production to 62 MMT, up 11 percent from last season’s troubled crop. (FarmLead) India: The government’s tender for domestically produced corn could reveal the appetite for imported corn. Drought and pests have ravaged the domestic summer crop, cutting production by perhaps 21 percent and sending prices 30 percent higher. (AgriCensus; Agriculture.com) South Africa: Supply concerns have re-emerged due to insufficient corn production in Zimbabwe. South Africa has imported more maize. (AgriCensus)




South Korea: Brazil’s impending corn supply led to lower prices and the appeal of a swath of tenders. Nearly a million tons of feed were purchased. Feed maker Nonghyup Feed bought 60 KMT of feed wheat and had tendered for 66 KMT of corn. NOFI had passed on such purchases but bought 69 KMT of corn for $205.48/MT. KOCOPIA issued a tender for 55 KMT of corn and MFG bought 275 KMT. KFA paid $206.63/MT for 60 KMT of corn and FLC paid $205.48/MT for 65 KMT. (AgriCensus; Reuters) Turkey: Lower domestic production of barley likely increases import needs. (AgriCensus) Ukraine: Competition from CPT allowed FOB prices to ease as exporters sought to get ahead of Argentina entering the corn market. (AgriCensus)

Ocean Freight Markets and Spread

Bulk Freight Indices for HSS — Heavy Grain, Sorghum and Soybeans*

Route and Vessel Size Current Week

(USD/MT)

Change from

Previous Report

Remarks

55,000 U.S. Gulf-Japan $39.00 Unchanged Handymax at $40.00/MT

55,000 U.S. PNW-Japan $22.25 Up $0.25 Handymax at $21.75/MT

66,000 U.S. Gulf-China $37.75 Unchanged North China

PNW to China $21.75 Up $0.25

25,000 U.S. Gulf-Veracruz, Mexico $16.00 Unchanged 3,000 MT daily discharge rate

35-40,000 U.S. Gulf-Veracruz, Mexico

$13.50 Unchanged Deep draft and 6,000 MT/day

discharge rate.

25/35,000 U.S. Gulf-East Coast Colombia

$19.50 Unchanged West Coast Colombia at $29.00

From Argentina $33.00 Down $1.00

40-45,000 U.S. Gulf-Guatemala $29.00 Down $0.50 Acajutla/Quetzal-8,000 out

26-30,000 U.S. Gulf-Algeria $32.00 Unchanged 8,000 MT daily discharge

$33.00 Unchanged 3,000 MT daily discharge

25-30,000 US Gulf-Morocco $34.00 Unchanged Discharge rate: 5,000

55,000-60,000 U.S. Gulf-Egypt $26.50 Unchanged 55,000-60,000 MT

PNW to Egypt $27.25 Unchanged Russia Black Sea Romania -Egypt $12.50-$13.00 (France

$16.50-$17.00)

60-70,000 U.S. Gulf-Europe-Rotterdam

$16.25 Up $0.25 Handymax at +$1.75 more

Brazil, Santos-China $27.75 Up $0.50 54-59,000 Supramax-Panamax

Brazil, Santos-China $27.50 Up $0.50 60-66,000 Post Panamax

Itacoatiara-Port Upriver North Brazil $30.75 Up $0.50 60-66,000 MT

56-60,000 Argentina/Rosario-China Deep Draft

$31.50 Up $0.50 Upriver with BB top-off $34.00

Source: O’Neil Commodity Consulting *Numbers for this table based on previous night’s closing values.




Ocean Freight Comments Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Since the end of the Lunar New Year holiday we have seen a small bump up in the Baltic Indices and physical dry-bulk rates, but the markets have now turned flat and sluggish while they seek new direction. This makes traders wonder about the potential for much more upside movement. Panamax daily hire rates for March are near $7,000/day with the Capesize market at just $8,300/day. We still have a substantial carry in dry-bulk daily hire rates which simply means that vessel owners are begrudgingly selling at values the current market will give – while they hold out hope for a better future. Much still depends on the outcome of the U.S-China trade war and the health of global economics. And, of course, the market needs to encourage vessel owners from building more vessels. This should not lead to big jumps in freight rates.

Baltic-Panamax Dry-Bulk Indices

February 21, 2019 This Week Last Week Difference Percent Change

Route

P2A: Gulf/Atlantic – Japan 10,814 10,584 230 2.2%

P3A: PNW/Pacific– Japan 6,377 5,740 637 11.1%

S1C: U.S. Gulf-China-S. Japan 17,494 16,614 880 5.3% Source: O’Neil Commodity Consulting

Source: O’Neil Commodity Consulting

U.S.-Asia Market Spreads

February 21, 2019 PNW Gulf Bushel Spread MT Spread Advantage

#2 Corn 0.99 0.59 0.40 $15.75 Both

Soybeans 0.67 0.38 0.29 $10.66 PNW

Ocean Freight $21.75 $37.75 0.41-0.44 $16.00 April Source: O’Neil Commodity Consulting

Capesize Vessel Freight Values Western Australia to South China (iron ore)

Four weeks ago: $6.50-$6.80

Three weeks ago: $5.10-$6.00

Two weeks ago: $4.75-$5.20

One week ago: $4.85-$5.20

This week $5.15-$5.50




Source: World Perspectives, Inc., O’Neil Commodity Consulting


market perspectives - u.s. grains council · follow this link to view current u.s. and...

Documents