Early Ag Weather Watch - Feb 10

EARLY LOOK WEATHER REPORT

NATIONAL TEMPERATURE/RAINFALL EXTREMES:

HIGH SUN...84 AT DRYDEN TX

LOW  SUN...27 BELOW ZERO AT CRANE LAKE MN

24 HOUR RAINFALL ENDING AT 06:00 PM CT...SACRAMENTO 1.36 INCHES

US OUTLOOK AND MODEL DISCUSSION:

The US and European models are in fair to good agreement during the next 10

days, although there are differences as it concerns timing of features and

movement. The more significant differences are noted through the east coast

states and in the western Atlantic.

The longer range maps, days 6-10, continue to show the high latitude

blocking ridge well north and west of Alaska. There is a major upper level

trough covering the Gulf of Alaska, approaching the west coast of Canada during

this period. There is a moderate to strong trough centered north of Hudson Bay

in Canada during this time. The flow pattern across the US is a fast west to

east flow with embedded short wave troughs moving through this flow. There area

indications of a continued stormy weather pattern for the west coast states

from northern California northward, possibly a little south of here as well.

The fast flow through the middle of the US means mostly below normal

precipitation.. The precipitation may be somewhat heavier towards the east

coast. The heights in the southern US appear to be heading towards above

average. This means that after some fairly cold weather in the short range

period the region will turn warmer and drier later in the period. Temperatures

through the central and northern US may be more variable in nature but could

still trend towards below normal.

MAJOR WORLD HIGHLIGHTS/IMPACT:

SOUTH AMERICA: The strong ridge of high pressure remains in place over southern

Brazil and in the Atlantic east of Brazil today. There are signs on the models

that the ridge will weaken with time and eventually move off to the east. This

may allow for increasing shower activity and more seasonal temperatures in the

Brazil crop areas. The first to benefit from this change would be soybean areas

from RGDS and MGDS to Parana but not before 2-3 more very hot and mostly dry

days. The last to benefit from this would be the major sugarcane, coffee and

citrus areas of Sao Paulo and Minas Gerais Brazil. Argentina may also benefit

when troughs begin to move further north and east as it could trend drier.

However, not before 2-3 more days with the chance for heavy thunderstorms.

ARGENTINA: Soybeans and corn will benefit from adequate to surplus soil

moisture, except in areas where recent heavy storms has caused serious

flooding. A few more days with thunderstorm activity may be followed by a

welcome break in the action.

BRAZIL SOYBEANS: Extreme heat and dryness will continue to stress filling

soybeans for another 2-3 days. Beyond that showers and more seasonal

temperatures may develop which could help ease stress to soybeans. However,

continued rains will be needed during the weeks ahead to prevent further stress

to this crop.

BRAZIL COFFEE AND SUGARCANE AREAS: Temperatures are expected to average above

normal and rainfall below normal during the next 7 to 10 days. This likely

means continued stress to coffee trees and developing sugarcane during this

period. The longer range charts suggest a weakening of the current blocking

ridge over the area which should allow for increasing shower activity and less

heat but there is some uncertainty in this outlook.

CENTRAL/SOUTH PLAINS: Cold weather early this week will give way to warmer

weather late in the week. This change will mostly favor the dormant wheat crop,

except that it will melt the protective snow cover. Improving conditions for

livestock in the area, after the very cold and somewhat snowy start to the

week.

MIDWEST: Another surge of very cold weather is moving in early this week. The

pattern may moderate somewhat later in the week. The storm track is well south

and east during this period, likely remaining south and east of the Midwest

areas.

SOUTH AFRICA: The region looks to be drier and somewhat hotter during this

week. This will bear watching but as of today the maize crop is likely in

mostly good condition. It will take awhile before significant stress will occur

to the crop.

UKRAINE/WEST RUSSIA: Winter wheat areas will be warmer than normal during this

week. Not major concerns for the dormant wheat at this time but the warming

trend may melt some protective snow cover.

CHINA: Moderate to locally heavy snow and rain has occurred through central and

southern winter wheat areas of eastern China and through most winter rapeseed

areas during the past week. This will help to replenish soil moisture and it

will favor crops when they break dormancy in the spring. Snow to the north was

not as heavy but still fairly significant for this time of the year. Snow and

ice and to a lesser extent rain will delay transportation somewhat.

EXPANDED SUMMARIES/FORECASTS:

Midwest corn, soybean and winter wheat

Summary...

WEST: Light snow, mostly less than 0.10 inch melted, occurred in the region

during the weekend period. Temperatures averaged well below normal. The coldest

lows will likely occur this morning. Readings at or below minus 10 F can be

expected from central Iowa and northeast Nebraska northward.

EAST: Light snow and a few snow squalls, mostly 0.15 inch melted or less but

with some locally heavier, occurred during the weekend period. Temperatures

averaged below to well below normal.

Forecast....

WEST: Mostly dry today and early Tuesday. Chance for light snow or snow showers

through northern and eastern areas later Tuesday or Tuesday night. Drier again

Wednesday. Temperatures continue extremely cold today and early Tuesday, not as

cold Wednesday.

Episodes of light snow or snow showers through northern and eastern areas

Thursday through Saturday. Temperatures vary somewhat. Warmer temperatures are

especially likely in the west and south areas.

EAST: Mostly dry today and Tuesday. Dry or with only a little light snow during

Wednesday or Wednesday night. Temperatures average well below normal. The

coldest low temperatures will likely be for Tuesday morning when lows fall to

near zero F in southern Illinois and southwest Indiana and below zero elsewhere

in the region.

CAFÉ: TEMPERATURAS ALTAS E ESTIAGEM VÃO CONTINUAR NOS PRÓXIMOS DIAS -INMET

No Verão brasileiro, o sol se posiciona com mais insolação

e radiação sobre o hemisfério Sul. Esse período geralmente caracteriza-se

por chuvas abundantes no centro-sul. Esta região inclui as áreas produtoras de

café (norte do Paraná, São Paulo, Mato Grosso do Sul, Minas Gerais e

Espírito Santo) onde os totais acumulados nos 3 meses do Verão ultrapassam os

650 milímetros.

    "Neste ano está ocorrendo um sistema de bloqueio atmosférico no oceano

Pacifico Sul, impedindo a entrada de frentes frias e consequente aporte de

umidade da frente fria e da Amazônia (convergência de umidade), e em

conseqüência nós temos ausência de chuvas nas áreas de café", explica

Expedito Rebello, meteorologista do Instituto Nacional de Meteorologia (Inmet).

As informações partem da assessoria de comunicação do Ministério da

Agricultura, Pecuária e Abastecimento (Mapa). E o clima deve permanecer assim

nos próximos dias.

    Rebello acrescenta que essa estiagem já pode ser comparada com a de 2004,

quando ocorreu uma forte seca na região Sudeste, prejudicando as lavouras de

café. Em 2013, ocorreram chuvas normais para a época do ano com totais

superando os 200 mm em média e temperaturas dentro da normalidade. Em janeiro

de 2014 os totais de chuva foram irregulares, não ultrapassando os 100 mm nas

áreas de café com poucos dias de chuva. A média das temperaturas máximas

médias tem sempre registrado valores acima dos 30C.

    Os efeitos da estiagem na produção de café neste ano, aliando a falta de

chuva às temperaturas altas, causam o estresse hídrico nas plantações. De

acordo com técnicos da área, há previsão de baixa produtividade e a

qualidade dos frutos ficará prejudicada, o grão do café fica menor, se

desenvolvendo muito pouco.

    De acordo com os modelos numéricos de previsão de tempo do Inmet, nos

próximos 8 dias permanecerá esse quadro, com ausência de frentes frias,

convergência de umidade da Amazônia para o Sudeste. "Teremos somente chuvas

localizadas e continuando com temperaturas máximas médias no período

ultrapassando os 30C", conclui o meteorologista do Inmet.

SECA NO BRASIL FAZ FUNDOS FICAREM COMPRADOS

A criação de vagas no mercado de trabalho americano em Dezembro foi menor do que estimada, e a taxa de desemprego no país melhorou módicos 0.1%. A percepção é que nada deve mudar sobre as reduções de compras de títulos pelo Banco Central local.

A maioria das principais bolsas acionárias fechou em alta na semana passada, enquanto o dólar americano desvalorizou e as commodities tiveram destaques de valorização.

Dentre elas o café em Nova Iorque mais uma vez liderou, com os ganhos de US$ 13.89 a saca, impulsionado pelas perspectivas de perdas de produção em função da seca no Brasil, e com os fundos “virando a mão” e estando agora com uma posição comprada depois de tanto tempo ganhando dinheiro com as quedas.

Os comerciais, leia-se origens e tradings, aproveitam para dar liquidez as compras dos especuladores. O COT (relatório de participantes) aponta que o volume vendido na bolsa pelos produtores foi de mais de 5 milhões de sacas até a terça-feira dia 4 de fevereiro. Certamente venderam ainda mais nos últimos três dias.

A semana foi extremamente agitada com intervalos diários de negociação ao redor de 10 centavos por libra em todos os dias – com exceção de uma sessão, e um recorde de volume de contratos negociados, 376,892 lotes, ou mais de duas vezes o total de contratos em aberto.

O incremento acentuado da margem-inicial requerida pela bolsa também pode ser responsabilizado pela cobertura de posições (e o rallye), inclusive de agentes que estavam “hedgeados” e foram forçados a levantar hedges – atitude questionada por muitos que talvez aponte mais para o erro da ICE em deixar a margem demasiadamente baixa até duas semanas atrás.

Londres não conseguiu sustentar ganhos. Na verdade o robusta listado na LIFFE escorregou US$ 2.10 a saca fazendo com que a arbitragem alargasse para 57.70 centavos por libra (2ª posição).

O físico, principalmente no Brasil, movimentou bastante café e a valores acima do preço de exercício das opções. A maior parte dos analistas já fala em perdas maiores do que as 3 milhões de sacas que seriam compradas pelo governo, sendo que é claro é café que desaparece no caso da seca.

A produção mundial de 14/15, portanto deve ser deficitária, e o quadro também prejudicará o ciclo de 15/16, fatores que se somam a problemas de fungos na América Central e baixos tratos culturais que agravam o quadro.

Mesmo que as chuvas comecem a cair, o que alguns institutos de meteorologia crêem que acontecerá já no próximo final de semana, o tempo seco e as temperaturas elevadas de janeiro já causaram um estrago, o que fará que compradores provenham suporte ao terminal de US$ 130 centavos para baixo.

Os produtores de robusta tem tudo para verem seu produto ganhar mais rapidamente participação no mercado, mas para isso precisam ser confirmadas safras acima de 30 milhões de sacas no Vietnã como alguns sugerem que aconteça já no próximo ano.

Uma boa semana e muito bons negócios a todos.

Rodrigo Corrêa da Costa escreve este relatório sobre café semanalmente como colaborador da Archer Consulting

Coffee to Soybean Wagers Climb on Brazilian Drought: Commodities

Bloomberg  -  Luzi Ann Javier  Feb 10, 2014

Hedge funds raised bullish commodity bets to a 15-week high after a drought in Brazil threatened crops from coffee to soybeans.

The net-long position across 18 U.S.-traded commodities climbed 15 percent to 900,330 futures and options in the week ended Feb. 4, the biggest gain since August, U.S. Commodity Futures Trading Commission data show. Investors turned bullish on arabica coffee for the first time since July 2012 and soybean wagers rose by the most in almost three months. Brazil is the biggest exporter of both crops.

The Standard & Poor’s GSCI Agriculture Index of eight commodities rose 3.3 percent last week, reaching an eight-week high Feb. 6. In Brazil, also the top sugar grower, the driest January since 1954 drained dams and scorched plants. Extreme global weather also is threatening other crops with too much rain hampering Indonesia’s cocoa harvest and freezing temperatures damaging U.S. wheat.

“Agriculture is probably the best hope for a decent commodity run this year,” said Peter Sorrentino, who helps manage $4.4 billion at Huntington Asset Advisors in Cincinnati. “These weather issues will definitely have a decided positive influence on prices.”

The S&P GSCI Spot Index of 24 raw materials gained 2.1 percent last week. The MSCI All-Country World index of equities rose 0.8 percent, while the Bloomberg Treasury Bond Index slid 0.1 percent. The Bloomberg Dollar Spot Index, a gauge against 10 major trading partners, dropped 0.8 percent. The S&P GSCI Agriculture Index fell 0.3 percent today.

Coffee Bulls

Money managers held a coffee net-bullish position of 7,981 contracts on Feb. 4, the CFTC data show. That’s the first bet on a rally since July 2012. Prices for arabica, the variety favored by Starbucks Corp., surged 23 percent since Dec. 31, the best start to a year since 1997.

Plantations in Brazil are enduring dry weather just when rain is needed the most for tree roots to absorb nutrients as the beans begin to grow inside the coffee cherries. Rain may be “too late” and there isn’t enough time to reverse the damage to trees and beans, Terra Forte, a Sao Joao da Boa Vista-based shipper, said in a report.

Hot, dry weather cut potential soybean yields in as much as 40 percent of Brazil’s growing areas, Commodity Weather Group LLC in Bethesda, Maryland, said in a report Feb. 7. In Kansas, the top winter-wheat-growing state, 35 percent of the crop was in good or excellent condition, down from 58 percent on Dec. 30 after sub-zero temperatures swept the nation, the government said Feb. 3. The Indonesian Cocoa Association sees the nation’s crop dropping to the lowest in a decade as rains in the third-biggest grower hurt flowering and delay the harvest.

Goldman, Citi

Raw materials from copper and corn to sugar and coffee will be have supply surpluses this year after a decade-long bull market spurred producers to build new mines, drill more wells and expand planting of crops. Banks led by Goldman Sachs Group Inc. and Citigroup Inc. say commodities are heading for losses in 2014. The S&P GSCI Agriculture Index tumbled 22 percent last year, the most since 1981, after U.S. crops recovered from the worst drought since the 1930s.

Inventories of soybeans around the world will equal 26.7 percent of consumption this season, up from 23.5 percent a year earlier, the U.S. Department of Agriculture said Jan. 10. Corn stockpiles will equal 17.1 percent of use, compared with 15.4 percent a year earlier. Global coffee production is set to exceed demand for a fourth season, pushing stockpiles to a five-year high, according to the USDA.

Supply ‘Buffer’

“We’re not in a precarious situation for crop supplies like we were a year ago,” Kelly Wiesbrock, a managing director at Harvest Capital Strategies in San Francisco, which oversees $1.8 billion. “We do have a buffer today in the event that we have below-trend yields this year. It’s unlikely we see drastic price reaction.”

World food prices fell in January to a 19-month low, the United Nations’ Food & Agriculture Organization said Feb. 6. The Rome-based group’s index of 55 food items is 4.5 percent lower than a year ago.

The S&P GSCI Enhanced Commodity Index, Goldman’s preferred measure, will drop 3 percent in the next 12 months, the bank said in a Jan. 12 report. Precious metals will lead losses with a 15 percent drop, while agriculture will decline 11 percent.

Money managers increased their net-bullish soybean holdings by 20 percent to 146,533 contracts, the highest this year. Prices gained 3.8 percent last week, the most since August. Cocoa wagers gained 7.2 percent to 83,038, a second straight increase. Investors held a net-short position of 52,963 in wheat, compared with 62,501 a week earlier.

Gold Wagers

Wagers on a gold rally slid 2.1 percent to 59,408 contracts, the first decline this year, the CFTC data show. Federal Reserve officials said Jan. 29 they would trim monthly purchases of bonds to $65 billion from $75 billion, after a $10 billion cut announced in December. Bullion rose 70 percent from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system.

Gold rebounded 5.8 percent this year after a 28 percent decline in 2013 that was the biggest since 1981. About $1.6 trillion was erased from the value of global equities in 2014 amid signs of slow economic growth in China and a slump in emerging-market currencies. Sales of gold coins by the U.S. Mint rose 63 percent in January to the highest since April, while silver purchases almost tripled.

Copper Inventories

Investors became bearish on copper before prices capped the biggest rally this year. Funds are holding a net-short position of 6,832 contracts, compared with a net-long of 11,735 a week earlier. Futures in New York rose 1.2 percent last week, the most since Dec. 27. Inventories at warehouses monitored by the London Metal Exchange declined 16 percent this year to the lowest since December 2012.

“Commodities, especially base metals, might be getting to close to a point where investors have discounted something close to a worst-case scenario,” Sameer Samana, a senior international strategist at Wells Fargo Advisors LLC, which oversees about $1.4 trillion. “There will be pockets of strength. The issue in Brazil could be a catalyst.”