FI Evening Grain Comments 01/03/23

PDF Attached

 

Attached
is our updated US all-wheat S&D and US acreage table. Lower trade to the start of the year in a risk off session. Many outside markets sold off. The USD was up 151 points by midafternoon. Some noted long liquidation today on positioning. Argentina saw welcome
showers over the weekend.  Selected US states reported winter wheat crop conditions. Kansas, Nebraska, Montana, and South Dakota declined while Oklahoma and Colorado improved. 

 

 

Weather

 

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE COMING WEEK

• Argentina
  will be dry biased for the next week to ten days and temperatures will be trending hotter once again
• The
  environment will probe stressful for crops once again, but only after days of drying
  
• Argentina’s
  weekend rainfall verified well with short term relief occurring in much of the nation
• Rainfall
  varied from 0.40 to 2.00 inches from western and central Buenos Aires into La Pampa, San Luis and Cordoba
• One
  location in west-central Buenos Aires reported 4.49 inches of rain, but that was a rare occurrence
• Rainfall
  farther to the east and north varied from 0.05 to 0.75 inch with a few locally greater amounts
• Argentina
  temperatures were hot ahead of the rain event with highs in the 90s to 102 degrees Fahrenheit with extremes to 106 in northern cotton areas
• Argentina
  will be drying out for the next week to ten days and excessive heat will return again during the weekend and continue next week
• Argentina’s
  bottom line remains one of concern. Certainly, the rain reported during the weekend was welcome, badly-needed and supported a short term improvement in crop and field conditions. Eastern and northern parts of the nation experienced much less relief than west-central
  or southwestern areas. Argentina’s return to net drying will come quickly this week and its persistence into next week will keep the pressure on crop performance. Stressful conditions will continue to threaten production potentials.
  
• Brazil
  rainfall the past few days was erratic with some drying in northern and eastern Parana, eastern Santa Catarina and portions of southern Rio Grande do Sul.
  
• Some
  drying also occurred from northern Minas Gerais into Bahia.
• The
  greatest rainfall occurred from central parts of Mato Grosso do Sul to southern and central Minas Gerais
• Another
  area of significant rain occurred in western Parana, southeastern Paraguay and western Santa Catarina where rainfall varied from 0.68 to 1.30 inches and local totals of 2.00 to 3.00 inches
• Brazil
  temperatures the past few days were warm from Rio Grande do Sul to western Mato Grosso and eastern Bolivia with highs in the 90s to over 100 degrees Fahrenheit
• More
  seasonable temperatures were present elsewhere in the nation
• Brazil
  weather over the next two weeks will be well mixed with the possible exception of Rio Grande do Sul where rain frequency and intensity will not be as great as in other areas leading to some net drying
  
• Rio
  Grande do Sul may also be warmer than usual while other areas in Brazil will experience near to below normal temperatures
• Portions
  of  Rio Grande do Sul will be dry for at least 7 days with above normal temperatures
• Brazil’s
  bottom line will be quite favorable for its summer crops. Sufficient rain will fall along with seasonable temperatures to support aggressive crop development and good yield potentials. This is not just true for corn and soybeans, but for rice, cotton, citrus,
  cotton, sugarcane and coffee. Some worry will remain over southern and western Rio Grande do Sul crop conditions, but any losses in production from that area will be countered by high yielding crops from other areas in the nation.
  
• Impressive
  rain and mountain snowfall fell in California and coastal areas of Oregon and Washington during the weekend
• Portions
  of California reported more than 10.00 inches of weekend precipitation culminating in flood conditions in a part of the Sacramento and possibly the northern San Joaquin Valley.
  
• Snow
  water equivalency in the Sierra Nevada continues to rise significantly with the southern mountains reporting twice the normal amount for this time of year and 74% of the April 1 norm
• Snow
  water equivalency in the central Sierra Nevada is 183% of normal for this date and 68% of the April 1 norm
• Northern
  snow water equivalents were 135% of normal and 48% of the April 1 normal
• Light
  rain and mountain snow will continue today and Tuesday in California’s Valleys and Sierra Nevada, but the next round of heavy rain and mountain snow is expected to begin Wednesday and last into the first part of next week.
  
• Substantial
  improvements in mountain snowpack are expected with some additional risk of flooding in the northern valleys and coastal areas of the state
• Lighter
  precipitation will impact the Great Basin and Rocky Mountain region this week and again late next week
• U.S.
  hard red winter wheat production areas received rain, drizzle and some snow during the long holiday weekend. Most areas reported at least a trace of moisture and many areas reported a few hundredths of an inch; however, amounts greater than 0.25 inch occurred
  mostly in central and eastern crop areas of Kansas and in many areas across Nebraska
• Moisture
  totals in Nebraska and central and eastern Kansas varied from 0.25 to 0.67 inch
• Snow
  accumulations north and west of North Platte, Neb. reached 8 inches while a trace to 5 inches occurred from northeastern Colo0rado across the northwestern corner of Kansas to central Nebraska.
  
• Much
  heavier snow fell in minor wheat areas of northern Nebraska with Valentine reporting 13 inches through dawn today
• Central
  U.S. winter storm will continue into Wednesday and will produce 6-12 inches of snow with local totals of 12 to 20 inches favoring western and northern Nebraska and the Badlands of southern South Dakota
  
• Road
  closures are likely
• Unprotected
  livestock will be stressed and could be vulnerable to injury
• Snowfall
  of 6 to 12 inches will also occur from central and southern Minnesota to the western and northern Great Lakes region Tuesday night into Thursday morning
• Moisture
  totals of 0.30 to 1.00 inch and local totals to 1.50 inches will result
• U.S.
  lower and eastern Midwest, Delta, Tennessee River Basin and southeastern states will experience rain through Wednesday into early Thursday with 1.00 to 2.50 inches of rain resulting and locally more
  
• Another
  round of rain is expected in these areas Saturday and Sunday with another 0.20 to 0.75 inch of moisture likely with a few amounts over 1.00 inch
  
• Short
  term bouts of additional rain will occur in the second week of the two week outlook to maintain moisture abundance
  
• U.S.
  temperatures during the next two weeks will be warmer than usual in the central and especially the eastern states
• Temperatures
  in the west will be a little cooler biased for a while this week before warming slightly above normal during the weekend and next week
• Southwestern
  U.S. Plains will be drier than usual during the next two weeks; including most areas from the heart of Kansas into the Texas Panhandle and eastern New Mexico
• West
  Texas will also be mostly dry, especially in the high Plains region
• Northwestern
  U.S. Plains will receive minimal amounts of rain and snow in this next ten days and the light precipitation may continue through Jan. 18.
  
• Canada’s
  Prairies will experience limited precipitation and warmer than usual temperatures during the next week to ten days
• Central
  and eastern Russia was bitterly cold during the weekend, but none of that reached into winter wheat production areas.
  
• Cooling
  is expected in western parts of the CIS this week with temperatures falling well below normal late this week through much of next week
  
• Bitter
  cold temperatures are expected, but most of the impacted area will be covered in snow to protect wheat and rye from subzero degree Fahrenheit low temperatures
  
• Europe
  weather this week will continue wet across the North and Baltic Sea regions and from there through the Baltic Plain into western Russia, Belarus and northern Ukraine where moisture totals of 0.50 to 1.50 inches will result
• Southern
  Europe will trend drier than usual through this workweek
• A
  wetter bias is expected to impact all of Europe next week with the exception of central and eastern Spain and the southernmost Balkan Countries where precipitation will be less than 0.50 inch keeping soil moisture lighter in those areas relative to the remainder
  of Europe
• China
  precipitation will continue restricted over the next week to ten days as it was during the holiday weekend and much of last week.
  
• Precipitation
  will increase across east-central China during the middle to latter part of next week
  
• East-central
  parts of the nation may be wettest and some significant snow may accumulate, although confidence in the changes advertised is low
• India
  is expected to continue dry as it was in the past few days with the exception of a few far northern and extreme southern parts of the nation where some periodic showers are possible
• The
  bulk of India’s winter crop region needs precipitation to support the best yield potentials
  
• Winter
  crops will begin reproducing in the last days of January and February.
• Precipitation
  is not expected to be as abundant as it has been in recent past winters
• Turkey
  will be drier than usual over the next week to ten days, but December wetter biased in many areas.
  
• North
  Africa weather was dry the past three days and more of the same was expected over the next week
• Some
  increase in rainfall is possible next week
• NOAA
  satellite data suggests December precipitation was near to above normal from Morocco to Algeria and portions of Tunisia, but surface weather observations were often lighter than usual from Morocco into Tunisia
  
• World
  Weather, Inc. believes the satellite data may be in error
• East-central
  Africa precipitation is expected to be abundant in Tanzania over the next ten days to two weeks while that which occurs in Uganda, southwestern Kenya and Ethiopia is more sporadic and light.
  
• Coffee
  and cocoa conditions should remain favorable in all production areas, despite the anomalies
• South
  Africa weather will continue to be favorably mixed over the next two weeks supporting normal summer crop development
• West-central
  Africa dryness will continue through the next ten days to two weeks
• Dry
  conditions are normal at this time of year
• No
  excessive heat is expected in this coming week, although warmer than usual conditions may begin to evolve a week from now and continue into January 10.
  
• Indonesia,
  Malaysia and the Philippines rainfall has been and will continue to be erratic with pockets of excessive rain and local flooding expected to continue for a while
• Weekend
  precipitation was greatest in parts of Java where more than 8.00 inches occurred in a couple of locations
• More
  than 5.00 inches of rain fell in northeastern Luzon Island, Philippines
• Philippines
  rainfall may be abundant excessive at times in the coming ten days to cause some threat of damaging floods
• Lower
  coastal areas of Vietnam may be vulnerable to flooding rain from Wednesday of this week through the weekend
• Personal
  property and some agricultural areas may be negatively impacted by the excessive rainfall
• Australia
  winter and summer crop areas are unlikely to get much precipitation during the coming week
  
• The
  environment will be good for fieldwork, including late season harvest progress in southern winter crop areas
• Rain
  is needed in interior east-central portions of the nation, although the situation is not a crisis
• Unirrigated
  sorghum, cotton and other crops will need rain soon especially with temperatures trending hotter
• Some
  increase in precipitation is expected in the east next weekend and into the following week
  
• Rain
  is expected in parts of the Middle East this week, although the resulting precipitation should be mostly light to locally moderate
• Iran,
  Iraq, Saudi Arabia and Afghanistan will be wettest
• Today’s
  Southern Oscillation Index was +19.45today and it will likely stay strongly positive over the next few days due to the presence of two tropical low pressure systems in northern Australia near Darwin that will thwart the index anomalously high

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Tuesday,
Jan. 3:

• New
  Zealand global dairy trade auction
• EU
  weekly grain, oilseed import and export data
• US
  Purdue Agriculture Sentiment
• USDA
  soybean crush, 3pm, USDA corn for ethanol use
• HOLIDAY:
  Japan

Wednesday,
Jan. 4:

• No
  major event scheduled

Thursday,
Jan. 5:

• Census
  Trade Balance
• EIA
  weekly US ethanol inventories, production
• Port
  of Rouen data on French grain exports
• Malaysia’s
  Jan. 1-5 palm oil exports

Friday,
Jan. 6:

• FAO
  Food Price Index
• Net-export
  sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various US futures and options

Source:
Bloomberg and FI

 

 

Soybean
and Corn Advisory

2022/23
Brazil Soybean Estimate Unchanged at 151.0 Million Tons

2022/23
Argentina Soybean Estimate Unchanged at 43.0 Million Tons

2022/23
Brazil Corn Estimate Unchanged at 125.0 Million Tons

2022/23
Argentina Corn Estimate Unchanged at 46.0 Million Tons

 

BRAZIL
2022/2023 SOYBEAN CROP SEEN AT 153.8 MLN TNS VS 155 MLN TNS IN PREVIOUS FORECAST – STONEX

BRAZIL
2022/2023 CORN CROP SEEN AT 128.71 MLN TNS VS 130,3 MLN TNS IN PREVIOUS FORECAST – STONEX

 

Selected
Brazil December exports.

Commodity                 
    December 2022      December 2021

CRUDE
OIL (TNS)                8,791,431             5,911,884

IRON
ORE (TNS)                 32,023,061            31,135,491

SOYBEANS
(TNS)                 2,019,645             2,711,640

CORN
(TNS)                     6,411,802             3,410,600

GREEN
COFFEE(TNS)              182,101               207,640

SUGAR
(TNS)                    2,223,053             1,943,623

BEEF
(TNS)                     152,798               126,895

POULTRY
(TNS)                  353,629               383,517

PULP
(TNS)                     1,527,308             1,643,000

 

USDA
inspections versus Reuters trade range    

Wheat                 
85,672                   versus   250000-450000  range

Corn                     
667,010                 versus   650000-900000  range

Soybeans           
1,462,882             versus   1500000-1865000             range

 

 

 

GRAINS
INSPECTED AND/OR WEIGHED FOR EXPORT

                 
REPORTED IN WEEK ENDING DEC 29, 2022

                           
— METRIC TONS —

————————————————————————-

                                                  
CURRENT     PREVIOUS 

             ———–
WEEK ENDING ———-  MARKET YEAR  MARKET YEAR

 
GRAIN      12/29/2022  12/22/2022  12/30/2021    TO DATE     TO DATE  

 

BARLEY             
0           0           0        1,855       10,010 

CORN         
667,010     922,142     759,563    9,584,257   13,066,487 

FLAXSEED           
0           0           0          200          224 

MIXED              
0           0           0            0            0 

OATS               
0           0           0        6,486          300 

RYE                
0           0           0            0            0 

SORGHUM        
2,754      43,164       1,951      406,892    1,729,339 

SOYBEANS   
1,462,882   1,774,899   1,616,018   28,617,907   30,794,290 

SUNFLOWER          
0           0           0        2,160          432 

WHEAT         
85,672     313,707     230,361   11,839,979   12,200,420 

Total      
2,218,318   3,053,912   2,607,893   50,459,736   57,801,502 

————————————————————————–

CROP
MARKETING YEARS BEGIN JUNE 1 FOR WHEAT, RYE, OATS, BARLEY AND

FLAXSEED; 
SEPTEMBER 1 FOR CORN, SORGHUM, SOYBEANS AND SUNFLOWER SEEDS.

INCLUDES
WATERWAY SHIPMENTS TO CANADA.

 

Macros

99
Counterparties Take $2.188 Tln At Fed Reverse Repo Op (prev $2.554 Tln, 113 Bids)

 

S&P
Global US Manufacturing PMI Dec F: 46.2 (est 46.2; prev 46.2)

US
Construction Spending (M/M) Nov: 0.2% (est -0.4%; prev R -0.2%)

 

US
Natural Gas Falls Below $4 For First Time Since February (early Tuesday)

German
CPI Prelim Y/Y Dec:  8.6% (est 9.1%, prev 10.0%)

German
CPI Prelim M/M Dec: -0.8% (est -0.3%, prev -0.5%)

German
CPI EU Harmonized Y/Y Dec: 9.6% (est 10.2%, prev 11.3%)

German
CPI EU Harmonized M/M Dec: -1.2% (est -0.8%, prev 0.0%)

UK
Manufacturing activity slipped to a 31-month low in December – EY ITEM Club comments

China
Caixin Manufacturing PMI Dec: 49.0 (est 49.1; prev 49.4)

 

Corn

·        
CBOT corn futures
closed
lower led by the nearby contracts on widespread commodity selling and a higher USD. Some traders noted long liquidation from risk off positioning. May corn during the session saw a decent bounce off its 50-day MA of $6.6750.

·        
The USDA NASS November US corn for ethanol use was near trade expectations. 

 

 

·        
USDA US corn export inspections as of December 29, 2022, were 667,010 tons, low end of a range of trade expectations, below 922,142 tons previous week and compares to 759,563 tons year ago. Major countries included China for 348,414
tons, Mexico for 145,444 tons, and Japan for 69,530 tons.

·        
US feed demand is expected to be down about 20 million bushels for the Sep-Nov quarter from a year ago. USDA December 1 stocks and annual crop production report is due out January 12. 
https://www.nass.usda.gov/Publications/Calendar/reports_by_date.php

·        
Reuters noted the Baltic Dry Index fell 17.5% to 1,250 after returning from holiday. It was at 1,515 points as of December 23.

·        
Manufacturing data for selected countries showed a contraction.

·        
The December US employment report will be released on Friday, which is expected to show a slowdown. US trade balance will be released Thursday.

·        
Brazil exported 6.41 million tons of corn in December 2022, up from 3.41 million tons the year prior.

·        
Last week Brazil said they will keep their import tariff on ethanol unchanged for 2023, at zero percent. It was set to go back to 20 percent Jan 1.

·        
US ethanol exports to Brazil have slowed in recent years.

 

Export
developments.

·        
None reported

 

Corn
export sales
for week ending 12/29 are estimated in the 600 and 800 thousand ton range. Last week USDA reported 170,000 tons of corn sold to Japan, but in the latest USDA export sales report, USDA reported the same amount was sold to Japan. We wonder if this was additional
business.

 

Corn: 
Net sales of 781,600 MT for 2022/2023 primarily for Mexico (463,600 MT, including decreases of 37,200 MT), unknown destinations (102,600 MT), Colombia (68,500 MT, including decreases of 33,000 MT), Japan (65,600 MT, including 52,400 MT switched from unknown
destinations), and Honduras (28,100 MT, including decreases of 32,700 MT), were offset by reductions for China (9,300 MT).
Total net sales of 170,000 MT for 2023/2024 were for Japan. Exports of 1,012,500 MT were primarily to Mexico (441,600 MT), China (278,400 MT), Japan (124,200 MT), Colombia (45,400 MT), and Guatemala (33,700 MT).

 

 

 

Updated
01/03/23

March
corn $6.35-$7.10 range. May
$6.25-$7.25

 

Soybeans

·        
The soybean complex traded lower in a risk off session. Some traders noted positing, or the reduction of long positions, at the start of the year. Several other commodity markets sold off. USDA reported a lowered than expected
November soybean crush and soybean oil stocks. The NASS crush slightly constructive for products and neutral for soybeans.

·        
USDA US soybean export inspections as of December 29, 2022, were 1,462,882 tons, below a range of trade expectations, below 1,774,899 tons previous week and compares to 1,616,018 tons year ago. Major countries included China for
908,152 tons, Mexico for 132,942 tons, and Korea Rep for 60,588 tons.

·        
News was generally light for the start of the year.

·        
Argentina’s weather outlook turned slightly negative than that of last Friday. Mostly dry weather is seen through Saturday.

·        
Brazil’s largest soybean growing state, Rio Grande do Sul, will see net drying this week and hot temperatures. Some outfits have warned crop conditions in southern Brazil have deteriorated. Rest of Brazil is in good shape but
too much rain this week for Mato Grosso could slow harvesting progress. Brazil is still in the early stage for harvest progress. 

·        
Brazil’s government launched a fuel tax exemption for 1 year for diesel, and 2 months for gasoline. This could help the agriculture sector lock in fixed costs for transportation.

·        
March palm oil on Tuesday traded at its highest level since December 1, on ideas for tighter Malaysian palm oil stocks and an outlook for a decline in quarter one 2023 production. Southern Peninsular Palm Oil Millers Association
estimated production in December fell 1.68% from the month before. Last week India extended a policy to allow imports of vegetable oils at lower taxes by a year until March 2024. Indonesia plans to reduce exports for palm oil from January 1. “Starting next
year, exporters will be allowed to ship six times their domestic sales volume, smaller than the current ratio allowed of eight times, Indonesian Palm Oil Association (GAPKI).” – Reuters

·        
Cargo surveyor SGS reported December Malaysian palm exports at 1,512,468 tons, 7,092 tons below the same period a month ago or down 0.5%, and 51,977 tons below the same period a year ago or down 3.3%. AmSpec reported Malaysia
December palm exports at 1.457 million tons, down 2.8% from November. ITS reported a 1.7% decrease to 1.553 million tons.

·        
European Union soybean imports so far for the 2022-23 season that started in July reached 5.52 million tons by Jan. 1, against 6.55 million by the same week of the previous season. EU rapeseed imports reached 3.73 million tons,
compared with 2.71 million tons a year earlier.

·        
USDA reported the November soybean crush for the US at 189.5 million bushels, 0.5 million below an average trade guess and slightly below October on a daily adjusted basis. The November crush was third highest for the month in
history. Despite an expansion of US soybean crush capacity, it appears downtime was larger than expected. End of November soybean oil stocks were 2.108 billion pounds, 93 million below an average trade guess and highest since end of July 2022. Soybean meal
stocks fell to 348,000 short tons from 378,000 prior month. We see the NASS crush slightly constructive for products and neutral for soybeans.

 

 

Export
Developments

·        
South Korea’s state-backed Agro-Fisheries & Food Trade Corp. seeks 25,000 tons of GMO-free food-quality soybeans, optional origin, on January 4 for arrival between December 2023 and June 2024.

 

Updated
01/03/23

Soybeans
– March $14.55-$15.40

Soybean
meal – March $440-$490

Soybean
oil – March
58.00-70.00

 

Wheat

·        
US wheat futures opened and ended lower after the US Great Plains saw good precipitation over the past couple of days and lower Paris milling wheat. A sharply higher US dollar also pressured US wheat.

·        
Selected states reported winter wheat crop conditions. Kansas, Nebraska, Montana, and South Dakota declined while Oklahoma and Colorado improved. 

 

Kansas:
| V Poor | Poor | Fair | Good | Excel. | Excel.

Jan.
1 | 23| 26| 32| 17| 2| 19

Dec.
4 | 18 | 24| 36| 20| 2| 22

Difference
| 5| 2| -4| -3| 0| -3

 

Oklahoma:
| V Poor | Poor | Fair | Good | Excel. | Excel.

Jan.
1 | 4| 23| 35| 37| 1| 38

Nov.
27 | 12| 12| 45| 30| 1| 31

Difference
| -8 | 11| -10| 7| 0| 7

 

Colorado:
| V Poor | Poor | Fair | Good | Excel. | Good/Exc.

Jan.
1 | 5| 10| 35| 50| 0| 50

Nov.
27 | 17| 21| 32| 29| 1| 30

Difference
| -12| -11| 3| 21| -1| 20

 

Montana:
| V Poor | Poor | Fair | Good | Excel. | Good/Exc.

Jan.
1 | 1| 10| 67| 16| 6| 22

Nov.
27 | 0| 11| 45| 31| 13| 44

Difference
| 1| -1| 22| -15| -7| -22

 

Nebraska:
| V Poor | Poor | Fair | Good | Excel. | Good/Exc.

Jan.
1 | 10| 26| 46| 16| 2| 18

Nov.
27 | 16| 23| 41| 19| 1| 20

Difference
| -6| 3| 5| -3| 1| -2

 

South
Dakota: | V Poor | Poor | Fair | Good | Excel. | Good/Exc.

Jan.
1 | 5| 16| 63| 16| 0| 16

Nov.
27 | 5| 24| 44| 25| 2| 27

Difference
| 0 | -8 | 19| -9| -2| -11

Source:
Bloomberg

 

·        
USDA US all-wheat export inspections as of December 29, 2022, were 85,672 tons, well below a range of trade expectations, below 313,707 tons previous week and compares to 230,361 tons year ago. Major countries included Mexico
for 66,773 tons, and Italy for 18,899 tons.

·        
Paris March wheat was 6.25 euros lower at 303.00 euros a ton. Some noted Russia export competition. Black Sea wheat offered fob is much cheaper than European origin. On Friday SovEcon raised their Russian wheat export estimate
for the 2022-23 crop year (July-June) by 200,000 tons to 44.1 million tons.

·        
Fighting escalated over the weekend across Ukraine with more Russian drone strikes.

·        
Turkey extended their zero percent tariff on wheat, corn and barley imports until April 30^th.

·        
India is looking to sell 2.1 million tons of wheat on the open market and a final decision will come mid next week.

·        
EU soft wheat exports so far for the 2022-23 season that started in July reached 16.71 million tons by Jan. 1, compared with 15.79 million tons by the same week in 2021-22.

 

Export
Developments.

·        
None reported

 

Rice/Other

·        
Results awaited: South Korea’s state-backed Agro-Fisheries & Food Trade Corp. seeks 113,460 tons of rice on December 29 from the United States for arrival in South Korea in 2023 between Feb. 1 and June 30.

 

Updated
01/03/23

Chicago
– March $7.30 to $8.25

KC
– March 8.25-$9.40

MN
– March $8.90 to $9.75