Wasde april will move the markets
On Thursday, the auction was held, it seems to us, mainly on the account of investors of additional measures of the Federal Reserve System aimed at supporting the country's economy. Another $ 2.3 trillion has been announced to support small and medium-sized businesses, as well as states and municipalities. The Fed intends to create a $ 350 billion loan fund support mechanism, which is part of the $ 2 trillion stimulus package approved in March, to create a new $ 600 billion Main Street Lending Fund lending fund to help medium-sized businesses. In addition, $ 500 billion was allocated for the repurchase of short-term bonds of states, districts and cities. These measures by the Fed are strategic and should cover the falling standard of living of citizens due to the growing loss of jobs - according to the latest report of the Ministry of Labor, another 6.6 million Americans applied for unemployment benefits , which is 1.1 million more than forecast. Over the past 3 weeks, 16.7 million Americans have lost their jobs.
Investors, with such unprecedented support from the Government, continued to enter the position, as a result - the Dow Jones Industrial Average rose by 1.22%, the S&P 500 by 1.45%, the Nasdaq Composite by 0.77%.
Perhaps yesterday, bidders expected positive results from a conference of representatives of G20 countries to regulate the oil product market. The results, analysts say, turned out to be less significant than the markets expected, and today we could expect a market collapse if it were not for the day off on the occasion of Good Friday.
In Europe, the indices continued to grow for the fourth consecutive session, and the British dynamics were higher than the rest, despite the published annual GDP growth of 0.3%, with a forecast of 1.1%, and a trade deficit in February of 11.487 billion pounds, with an estimated 6 billion pounds. At the same time, in Germany, on the contrary, there was a surplus of 21.6 billion euros in February, with a forecast of 17.5 billion euros. So, the sessions ended with the growth of the British FTSE 100 by 2.90%, the French CAC 40 by 1.44%, the German DAX by 2.24%. Regional Stoxx Europe 600 up 1.57%.
At Asian trading session ended in different directions. The Chinese Shanghai Composite and Shenzhen Composite decreased by 1.04% and 1.95%, respectively, obviously, as the reaction of investors to published data on inflation: consumer price index (CPI) in March rose by 4.3% per annum with 4.8% forecast, for the month - a decline of 1.2% with the expected increase of 0.7%. Japanese Nikkei 225 grew by 0.79%, Topix by 0.92%. South Korean Kospi increased by 1.33%. In Japan, the growth leaders were Chiba Bank and Mitsubishi - plus 4.4%, SoftBank Group - 3.9%, Nissan Motor - 3.1%. In Korea, Samsung Biologics is up 18.8%! after information about the agreement with the American Vir Biotechnology on the organization of co-production of a drug possibly suitable for the treatment of COVID-19.
Agricultural sites yesterday reacted very sluggishly to the April forecast for production and trade in agricultural raw materials (WASDE), although the changes are quite significant. For wheat, with constant total production (764.46 million tons) and reduced consumption compared to the March document, by 1.96% (5.1 million tons), the expected residues were increased by 5.6 million tons. If traders take this difference into account, the market should go down on Monday - Tuesday, according to this factor. A significant reduction of 2.0 million tons for China, 1.9 million for India and 1.0 million for the EU. In Russia, the forecast for consumption was increased by 500 thousand tons, and exports were reduced by 1.5 million tons to 33.5 million.
In part, quotes rise, in part, should extend the extension of the state of emergency in Romania until May 15. By this decision, the export of a number of products, including wheat, barley, oats, rice, soy.
In corn, the mentioned report also significantly increased balances, by 5.8 million tons due to lower domestic consumption in the United States, with other indicators practically unchanged. Obviously, analysts attribute these changes to the decline in corn processing into bioethanol, which we wrote about many times. The latest report by the Energy Agency (EIA) recorded a record decline in ethanol production in the United States immediately to 672 thousand barrels per day (that is, minus 168 thousand barrels per week or minus 330 thousand barrels from the average during the year), which became the lowest level of production for the whole history of the country's ethanol industry. Ethanol stocks rose to a record 27 million barrels. The volume of corn processing for ethanol during the week decreased by another 0.56 million tons to 1.7 million tons, whereas last year it averaged 2.8 million tons.
According to soy, a decrease in world production by 3.7 million tons is expected to 338.1 million due to a reduction in production in Argentina and Brazil. Production in Argentina is projected to decline by 2 million tons to 52 million, due to droughts in late February and early March in major growing regions. Brazil's soybean production fell by 1.5 million tons to 124.5 million, also due to the drought in Rio Grande do Sul, during seedlings and ripening. World soybean exports were reduced by 0.4 million tons to 151.5 million. Import to China was increased by 1 million tons to 89 million, while exports from Brazil were increased by 1.5 million tons, just like production. End stocks are down 2.0 million tons, Brazil's decline is partially offset by higher stocks in the US and China.
As you can expect, the effect on the beans and the movement of quotations of vegetable oils will continue. On palm oil, an increase of 1.8% was recorded yesterday to $ 542.4 / t. We believe this is due to an increase in oil prices the day before, as well as a decrease in production in Malaysia due to the closure of quarantine plantations and the logistical problems in Brazil and Argentina that we wrote about. Soybean oil futures rose 1.1% to a month high of $ 610 / t. In the negative direction, record oil reserves in China should work in the oil market. At the end of February, they amounted to 1.05 million tons, which is the highest level since 2018. In addition, India in March reduced import of vegetable oils by 32% compared with last year's level, from 1.39 million tons to 941.2 thousand. tons it is obvious that after quarantine cancellation these factors will turn in the opposite direction.
According to rice, the forecast is reduced for stocks, consumption and trade. World crude production was reduced by 2.8 million tons to 671.8 million, mainly due to a reduction in several countries in Southeast Asia - in Vietnam, Burma and the Philippines. And global production of white rice is reduced by 3.2 million tons. World consumption in 2019/20 was reduced by 2.1 million tons to 490.2 million. World trade fell by 2.2 million tons to 42.2 million, mainly due to export restrictions recently introduced by several exporters of rice from Southeast Asia in the form of bans, licenses and quotas due to problems with domestic supplies. Together, projected exports for Burma, Cambodia, and Vietnam this month fell by 1.7 million tons, or 15 percent. In addition, exports from India fell by 0.3 million tons to 10.2 million, due to general quarantine. These factors, we wrote about them, contributed to raising world rice prices to the highest levels in the last seven years. The projected world end stocks are reduced by 0.7 million tons, but are still at a record high of 181.6 million, with China accounting for 65 percent of the total.
In an April forecast (WAP), USDA estimates rice production in Vietnam in 2019/20. 27.4 million tons (in cereal equivalent), which is 3 percent lower than last month’s forecast, but 25,000 tons higher than last year. The sowing area is estimated at 7.5 million hectares, which is 2 percent less than in the forIecast for March and 30,000 hectares less than last year. Productivity is estimated at 5.83 tons per hectare, which is 1 percent less than last month, but slightly higher than last year.
Vietnamese rice is grown in three seasons: winter-spring, summer-autumn and Lua Mua or the 10th month. Winter, spring harvest usually brings 46 percent of the total rice production, then the harvest should be followed by summer-fall harvest, 35% and the Lua Mua harvest - 19 percent. The early end of the rainy season this year influenced farmers' decision to plant in the winter-spring crop in the Mekong Delta. However, the recorded water levels on the two hydrological monitors of the Tau Chau and Chau Dok stations, on the Mekong show a level significantly below normal, why the forecast for the collection itself is lower.
Quotes of sugar over the past two sessions rose by 5.4%. We believe that this, in part, is the reaction of the market to a decline in the dollar index and the oil rally. In addition, concerns about disruptions in Indian exports are a rising factor for sugar. Sugar Exim Corp, director general of India, said the country would not reach the planned sugar export of 5 million tons, as the coronavirus pandemic causes labor shortages in ports and sugar factories. Several ports and terminals in India announced a force majeure event due to pandemic shutdowns. The Indian Sugar Mill Association (ISMA) said the reed harvest will be affected by a three-week quarantine imposed by the Indian government to slow the spread of the lesion. ISMA said Wednesday that sugar production in India) fell 22% YoY to 23.27 million tons in October-March.
Overall, global sugar production in 2019/20 (April / March) fell 4.8% to 166.7 million tons, after rising 0.6% yoy to a record 185.2 million tons in 2018/19. . (ISO). The global sugar balance in 2019/20 decreased to a deficit of 9.4 million tons, the largest in 11 years, from a surplus of 1.7 million tons in 2018/19. Sugar production by Brazil, the largest sugar producer in the world, in 2019/20. will grow by 17.4% yoy to 34.1 mln tons, after falling in 2018/19. (April / March) by 17.2% to an 11-year low of 31.4 million tons (Conab). Sugar production by India, the second largest sugar producer in the world, will fall 15% in 2019/20 to a 3-year low of 28 million tons due to drought and delayed monsoon season (National Sugar Federation of India).
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