GAP Observations: February 19, 2021

GAP Observations


Welcome to GAP Observations – a bi-weekly, no-nonsense analysis of curated market drivers and data for global corn, wheat and soy complex futures, by industry consultant Emily French.


RANGES: CK = 550.50 — up 1.5¢ (544.50 – 551). WK = 666.25 — up 1¢ (660.75 – 669.50). KWK = 644.75 — up 1.75¢ (638 – 646.25). SK = 1380.75 — up 4.25¢ (1368 – 1387). SMK = 426.10 — up $1.10 (424 – 427.60). BOK = 4663 — up 38 (4592 – 4684)

USDA DAILY SALES: none — nothing flashed this week… Expected to remain quiet in the weeks ahead as the world market shifts to SOAM origination-logistics. 


March options — expire today. FND & month end next Friday.
Panamax 4TC index — above 20,000 — the first time since 2010.



  1. Risk for 11-15-day stress expands in southern Argentina/far southern Brazil.
  2. Russia winterkill risk more limited next week as snow potential improved and cold push slightly weaker.
  3. China wheat/rapeseed respond favorably to extensive showers next week, and mild temperatures spur growth.
  4. Showers remain active for north Africa wheat through the 6-15-day period, easing dryness; shortages linger in eastern 1/3.


U.S. EXPORT SALES — Week Ending 11 February

  • Wheat = 399.1KMT. New = 214.4KMT (Philippines). Exports = 379.7KMT.
  • Corn = 999.2KMT (Mexico. Costa Rica). New = 182.6KMT. Exports = 1.39MMT.
  • Sorghum = 100MT. Exports = 73.7KMT.
  • Soybeans = 455.9KMT (China not in the grid). New = 168KMT (Taiwan & China). Exports = 1MMT.
  • Soymeal = 322.2KMT (Philippines = 92.8KMT. Guatemala). Exports = 368.7KMT — MY high.
  • Soy oil = 4.4KMT (Guatemala). Exports = 18.6KMT.


U.S. EXPORT SALES BOOKINGS – Week Ending 11 February

U.S. soybean export bookings = 59.86MMT (59.46MMT LW) vs 33.36MMT LY- up 26.5MMT (26.6MMT LW, 26.4MMT 2W, 26.2MMT 3W) (USDA forecast exports = 61.24MMT/97.7% complete)

  1. China = 35.87MMT (35.85MMT) vs 12.15MMT LY – up 23.7MMT (23.71MMT LW, 23.33MMT 2W, 22.75MMT 3W, +22.8MMT 4W) or (89.6% of this year’s gains vs LY).
  2. Unknown = 3MMT vs 1.55MMT LY – up 1.45MMT (1.46MMT LW, 2MMT 2W, +2.22MMT 3W, 2.47MMT 4W) (5.5% of this year’s gains vs LY.
  3. Europe = 3.98MMT (3.83MMT) vs 3.81MMT LY – up 4.4% or 170KMT (+3% or 110KMT LW).
  4. Mexico = 4.17MMT vs 3.32MMT LY – up 850KMT or 25.6% (+26.5% or 860KMT LW).

U.S. Soymeal Export Bookings = 7.79MMT vs 7.69MMT – up 1% (-1% LW, -1% 2W, -2% 3W+2% 4W). USDA forecasts exports = 12.93MMT – up 1.3% vs LY (60.2% complete)

U.S. Soy Oil Export Bookings = 588.2KMT vs 683.4KMT LY – down 14% (-9% LW, -3% 2W, +4.7% 3W, + 6.6% 4W). USDA forecasts exports = 1.25MMT – down 3.1% vs LY (47% complete)

U.S. Corn Export Bookings = 58.55MMT (57.55MMT LW, 56.1MMT 2W) vs 25MMT – up 33.55MMT (33.79MMT LW, 33.3MMT 2Wvs LY (USDA forecast exports = 66.04MMT/88.6% complete

  1. China = 17.72MMT (17.72MMT LW) vs 61.1KMT LY – no change (17.66MMT LW) (accounts for 52.8% of the gains vs LY).
  2. Japan = 8.19MMT (8MMT LW) vs 4.81MMT LY – up 3.38MMT  (+3.69MMT LW) (10% of the gains).
  3. Mexico = 11.77MMT (11.54MMT LW) vs 10.3MMT LY – up 14.3% or 1.47MMT (+15.4% or 1.54MMT LW).
  4. Unknown = 7.91MMT (8.15MMT LW) vs 1.96MMT LY – up 5.23MMT (+6.33MMT LW) (15.6% of the gains vs LY) – portion of this will be China directed.

U.S. Wheat Export Sales Bookings = 23.4MMT (23MMT LW) vs 22.26MMT – up 5.1% or 1.1MMT (+5% or 1.09MMT LW) — export forecast = 26.81MMT vs 26.28MMT LY – up 2% vs LY (87.3%)

  1. HRW = 7.88MMT (7.76MMT LW) vs 8.34MMTLY – down 5.5% or 460KMT (-5% or 410KMT LW).
  2. SRW = 1.7MMT (1.71MMT LW) vs 2.22MMTLY – down 23.4% or 520KMT (-22.3% or 490KMT LW).
  3. HRS = 6.96MMT (6.9MMT LW) vs 6.39MMT LY – up 8.9% or 570KMT (+9.4% or 590KMT LW).
  4. SWW = 6.19MMT (5.98MMT LW) vs 4.49MMT LY – up 37.9% or 1.67MMT (+35.6% or 1.57MMT LW).
  5. Durum = 665.1KMT (657.9KMT LW) vs 828.2KMT LY – down 19.7% or 163.1KMT (-163.3KMT LW).


Rejected early, lower trade — led by BO recovery-upside leadership. U.S. BO sales weak — now down 14% vs LY. USDA 2021-22 balance sheets — pretty neutral. 

  1. USD weaker — down 0.4% (755AM CST) with YTD +0.4%.  
  2. Open interest — soy -237. SM -746. BO +13898.
  3. SK-SH spread — continues to widen (2.25¢ carry) ahead of FND next Friday. This is the widest carry we’ve seen in 2021 and back to levels of late Aug-September. The game — whether it is corn or soybeans, should now shift to 2021-22 in the weeks ahead if the market looks at it on a global basis (esp. on soybean side — with a record S crop ex-Brazil and logistics sorted through by late March, solid soy crop ex-Argentina and solid crush margins there…. on corn side — a lot of export biz already done… and plenty of questions for the U.S. when it comes to feed + ethanol). If the market wants to just trade the U.S. balance sheet, then there’s that…. remains the biggest question for soybean CME futures.
  4. U.S. soybean export bookings — now 59.9MMT — up 26.5MMT vs last year and is 97.7% complete vs USDA’s forecast.
  5. China U.S. soy ownership = 35.87MMT — up 23.7MMT and accounts for 89.6% of this year’s U.S. export bookings’ gains.
  6. China o/s sales = 1.93MMT vs 416KMT LY… about 2-3 weeks of load-outs (and again — some of this biz is August). Unknown = 3MMT vs 1.56MMT (call it 75% of that to China).
  7. U.S. o/s sales = 9.18MMT vs 5MMT LY — up 4.18MMT.
  8. U.S. new crop sales = 4.59MMT (again — a record new crop sales number for this time of the year). Unknown = 1.95MMT (42.4%). China = 2MMT (43.6%).
  9. U.S. soymeal export bookings — now up 1% or +10KMT vs LY and are 60.2% complete vs USDA’s forecast. Europe U.S. SM ownership = 431.8KMT vs 301.7KMT — up 130.1KMT — w/out Europe, U.S. soymeal export demand would be down on the year.
  10. U.S. o/s soymeal sales = 2.91MMT vs 3.56MMT — down 650KMT vs LY — this as soymeal premiums ex-SOAM continues to weaken, weaken and weaken further. Bids remain largely absent.
  11. U.S. soy oil export bookings = 588.2KMT vs 683.4KMT — down 14%.
  12. U.S. o/s soy oil sales = 193.2KMT vs 253KMT LY. BO did not hit the weekly need sales rate = 18.8KMT.
  13. U.S. 2021-22 soybean ending stocks = 145 mil bu/3.95MMT (120 mil bu this year). Production +389 mil bu vs LY.  Exports lower. Crush lower.
  14. U.S. 2021-22 soy oil ending stocks = 2210 mil lbs (2200 mil lbs this year). Domestic demand higher. Biodiesel lower. Exports lower.
  15. U.S. 2021-22 soymeal ending stocks = 400KMT vs 350KMT this year. Domestic use higher/export lowers.
  16. China snapshot — back from holiday and picks up where it left off — and that wasn’t so great. Daily soymeal is basically non-existent. Prices mixed-lower. Edible oil — market plays catch up with the higher move in both palm and soy oil while on holiday. Stocks of both — steady vs LW. Soy oil import margins are called positive — but nothing has traded. In-port soy stocks — very stable at 8MMT. China domestic soy supplies v. comfortable. In other words — can easily handle any load delays out of Brazil in the short-term. By April — would be more of a challenge but market v. aware of Sino’s reserves and the likely release of that as necessary or to buy time for Brazil to catch up. Crush margins remain quite weak/poor — so no crusher wants to extend ownership in this environment. Focus is on execution & logistics.
  17. Brazil snapshot — Real-USD trends weaker: 5.41:1 (640AM EST). Soy premiums slip to unders vs Chicago — first time since 2014/15 (and not on the back of farmer selling — simply lack of demand/no buying interest). Not a bullish factor and further weakness is expected given the load delays. So, what’s the point of buying March if it’s not going to load until April — no need to pay the inverse and no exporter wants to deal with demurrage given the current situation. Wait times called 15-25 days. Soymeal premiums — solidly lower with March influenced by the same situation as soybeans, but April-May forward was down another $5/TM (despite lower futures). Farmer selling muted. Harvest moves forward — should have a better handle-read on yields/quality by latter part of next week-month end. Truck lines are significant. Rains/mud also a challenge. In other words — in many areas, just another year of Brazil soy harvest. Much of the ports — it’s all about waiting on arrivals/stem to fill out the waiting vessels. Export line-up: soybeans = 15MMT (1.94MMT loaded). Soymeal = 838KMT (574KMT loaded). Soy oil = 109KMT (45KMT loaded).
  18. Argentina snapshot — steady. Soymeal premiums sharply lower over the past 30 days. Again, weaker into the weekend. Simple lack of bids/buying interest. SM export line-up = 2.53MMT. Crush margins slightly weaker but still profitable with Apr-May @ $27 ($30/MT earlier this week). Soy oil — weaker with no trades reported. BO export line-up = 482KMT and biodiesel = 90KMT.
  19. Indonesia January palm oil exports — (see chart below). Soy oil continues to be more competitive than palm oil… Indonesia will need to keep an eye on that… And while FH February palm oil exports were better than FH January — the bigger question, just how much demand is out there (esp. with the market in an inverse, with much of the world’s economy still in COVID lockdown/shut down).
  20. Reminder — how quick soymeal prices can move higher/lower given its “nature”? Case in point, from 14 Dec = 382 and on 12 Jan = 465.40 or $83.40/ST move. For short outright positions in SMK21 — use 20d MA = 429.40 to gut check/risk point. 50d MA = 421.60 and then a quick-$30/ST drop to the 100d MA (391.60).
  21. Key question remains just that: does the market trade the U.S. soybean balance sheet OR a record Brazil soy crop + bigger production prospects in Argentina + no change to Argentina export tax + truck strike now resolved + China weak crush margins + weakish demand ex-China for Brazil soy + widening discount Brazil to U.S. + weaker SM premiums in Argentina (now back to unders and still slipping despite lower futures) + India back in decent volume in the world SM grid? Fund length remains v. large/at record levels for this time of the year in both soy oil and soybeans.
  22. REPEAT: Brazil soybean discount to the U.S. — continues to widen. SOAM SM premiums continue to work lower — led by Argentina and lack of any buying interest. India is back in the world SM with decent volume MYTD. Europe SM imports down 7%. China soy stocks — v. comfortable and can handle any load delays ex-Brazil. Sino reserves releases are also “highly likely” to be released in the weeks ahead to take advantage of the current inverse.
  23. REPEAT: Brazil export tail going forward: China U.S. soybean import demand — will end up being closer to 38MMT than not (record = 36.1MMT) vs 16.3MMT LY. So, 21-22MMT more U.S. to China — despite China import demand +1.5MMT vs LY and the rest of the world soy importers have total demand +55KMT (basically one vessel) vs last year. Brazil exports are forecast down 7MMT vs last year’s record… Bottom-line: there are at least 13MMT of soybeans that are “unaccounted” for in this math equation and that “unaccounted” = Brazil long export tail into MY2021-22.
  24. World soy supply cushion = 83.2 days (98.2 days LY – 31 August 2020) — down 15 days. Daily consumption = 1.01MMT vs 971.4KMT/day. China soy imports = 100MMT (+1.5MMT vs LY). ROW imports are forecast to increase 55KMT (-33KMT in January) vs LY.

Indonesia palm oil export by destination dec '20 vs jan '21 - top ten



Mixed. U.S. 2021-.22 ending stocks first estimate v. similar to this year. Corn story shifts to Aug-Sept 2021 or MY2021-22.  

  1. Open interest +17847
  2. USD weaker –– down 0.4% (755AM CST) with YTD +0.4%        
  3. U.S. corn ending stocks 2021-22 = 1552 mil bu/39.43MMT vs 1502 mil bu this year. Production up nearly 1 bil bu/25.4MMT. Ethanol +5% or 250 mil bu/6.35MMT. Feed +200 mil bu/5MMT. Exports +50 mil bu/1.27MMT.
  4. Ocean freight (USGC) — This week has been one of exceptional volatility in dry-bulk markets. The excitement started in the Capesize sector and flowed into Panamax and Supramax markets. Market action was fundamentally unexplainable other than buyer euphoria carried the day. It was as though Reddit and Robinhood traders got a hold of freight markets. Conventional wisdom, if valid anymore, would lead one to believe the market will see profit taking and an adjustment in the coming days. There has not been a big influx of physical cargo demand that would justify such a market jump. Market participants should approach this week’s rate action with extreme caution.
  5. World DDG summary (USGC) — U.S. DDGS are higher this week with continued cold Midwest weather and high natural gas prices curtailing production. The DDGS/cash corn price ratio is down from the prior week at 118% and above the three-year average of 110%. The DDGS/soymeal price ratio stands at 0.51, down from the prior week and above the three-year average of 0.42. Merchandisers report that domestic and international customers are waiting to see how natural gas curtailments will impact ethanol production and DDGS supplies before booking. Trade is reported as “coming in waves” this week, with flurries of activity followed by quiet markets. The barge market has reportedly been volatile this week with early-week panic buying giving way to softer trade Wednesday afternoon and Thursday. Reasons for the lower late-week trade include more favorable weather forecasts and greater barge availability. As of Thursday afternoon, Barge CIF NOLA values are up $2/MT for March but down $4-5/MT for April/May. FOB NOLA offers are up $13/MT for March at $337 with April/May up $1-6/MT.
  6. U.S. corn export bookings — now = 58.55MMT, up 33.55MMT and 88.6% complete vs USDA’s forecast.
  7. China U.S. corn ownership = 17.72MMT — no change vs LW…and well above the one Panamax this time LY. O/s sales = 11.15MMT… China remains the key to the totality of the U.S corn export program for this year (and likely next year). Again — U.S. exports need to step up/pick up (having hit that “need” export rate only twice MYTD).
  8. U.S. o/s sales = 35.58MMT vs 12.36MMT — up 23.1MMT. Definitely sales are on the books to hit USDA’s export forecast…but I won’t be jumping on the “higher exports” train until we see some data points that actually support this idea.
  9. U.S. sorghum bookings = 5.93MMT vs 1.22MMT — up 4.71MMT vs LY. China = 5.06MMT vs 645.8KMT LY – up 4.41MMT or 93.7% of the gains.
  10. Brazil export line-up = 241KMT (352KMT loaded). Clearly much of the safrinha crop will be planted after the “prime” 20-28 February window — call it 2-3 week delay. Farmer selling minimal — already well sold and now waiting to see how the crop develops/shapes up given the planting window. Aug-Sept premiums called toppy/weaker with weak offers and weak bids.
  11. Argentina export line-up = 1.48MMT. Premiums weaker again — down another 3-5¢ with very few bids out there.
  12. U.S. ethanol production + stocks — out mid-a.m. Margins remain problematic as do U.S. temps and nat gas supplies (reflected in next week(s) report). Nat gas supplies are also being sold off to take advantage of the price spike.
  13. Bloomberg U.S. 2021-22 planting estimate = 92.9 mil acres (90.8 mil acres). Production = 15243 mil bu (14182 mil bu). Ending stocks = 1725 mil (1502).
  14. World corn imports are forecast to increase 13.7MMT in total. This as China corn imports are forecast +16.4MMT. Ergo — China accounts for 120% of the world’s corn increase. Said another way — no growth if China was not in the grid.
  15. World supply cushion = 38.3 days — loses 5.5 days vs LY — lowest level since 2010-11 (38.9 days). World consumption = 2.36MMT/day World feed demand cut again — basically flat or a “mere” 200KMT. FSI demand is forecast to increase 1.4% or 4.65MMT — this is a major risk given ethanol economics and potential off-ramp by China with its own domestic ethanol industry/use of corn as a fuel (vs food security).


Mixed. China rumors hover in the background. This time French W. Market will watch the MATIF delivery cycle given current values vs cash markets. 

  1. Open interest W +6101. KW +1065.
  2. USD weaker – down 0.4% (755AM CST) with YTD +0.4%.  
  3. U.S. wheat ending stocks 2021-22 = 698 mil bu/19MMT vs 836 mil bu this year. Production is basically unchanged. Exports down 60 mil bu (U.S. export program highly influenced/impacted by what happens in Black Sea, Europe and now Australia). Domestic higher (food use + feed use). If stocks decline again in 2021-22, would be the 5th straight year of a declining carry out. Still v. comfortable at +33% STU — but nonetheless. Likewise, USDA February outlook number — has proven to be lower than what U.S. ending stocks ultimately end up being. So yeah – there’s that too.
  4. U.S. export bookings — up 5.1% or 1.1MMT vs last year and are now 87.3% complete.
  5. China U.S. wheat ownership = 2.85MMT vs 194.1KMT — up 2.66MMT vs LY — w/out China’s gains — U.S. export bookings (o/s sales + exports), would actually be down 1.56MMT vs LY.
  6. China wheat reserve auction sales — from Oct to 9 February — reserve sales at 30MMT (or basically what USDA forecasts China’s feed wheat demand for the current MY — up 10MMT vs 2019-2020).
  7. Russia 2021-22 wheat production (SovEcon) = 76.2MMT (77.7MMT) — noting the likely decline of spring wheat plantings given the export tax (and high profitability of sunseed/oilseeds…if one can get the seeds to plant) and the general hedge against the dry fall planting season.
  8. WN-WK inverse…USDA’s 2021-22 U.S. ending stocks/balance sheet should be much more supportive to the N21 forward part of the curve. No change to view: Look for this to trend to a minor carry. No threat of world wheat supplies (thanks Australia). Northern hemisphere winter wheat conditions look v. good (save for U.S. freeze/winterkill — that will be more known post-breaking dormancy). Higher energy prices are positive for Russia’s economy…and currency. It continues to need foreign exchange, as such — would look for some revision in forthcoming months to the new crop tax ‘scheme’ as it’s basically an outright lose for Russian farmers/its ag industry and its role as a growing dominance in world export trade (not just wheat).
  9. REPEAT: The month of March is typically the weakest seasonally for wheat (although February has not been kind month-to-date).
  10. World import trade — reminder that it is CHINA that accounts for 110% of the increase in world wheat import trade vs LY. China imports are +4.622MMT higher vs LY. While world wheat imports are +4.22MMT higher vs LY. Ergo – no China, no growth.
  11. World wheat supply cushion = 87.3 days (88.1 days LY) – down 1/2 day. More upside to Australian production (market in that 32-33MMT vs USDA = 30MMT) and exports. Daily wheat consumption (w/out China) = 1.71MMT/day. U.S. will store 15.2% of the world (w/out China) wheat reserves and its own STU at 39%.
  12. Bottom-line: U.S .will continue to do what it does best –> act as a transparent backstop for a majority of world importers for various classes of wheat. So, no change there vs previous years. Certainly, no bullish theme on its own. Biggest question for 2020-21 is the demand side of the equation and the price relationship between corn-wheat in forthcoming weeks + months.


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