FI Evening Grain Comments 01/05/22

PDF Attached

 

USDA:
Private exporters reported sales of 132,000 metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year.

 

This
morning the weather models were wetter for Argentina for the second week of the forecast. Traders were eying the second week of the midday weather outlook for South America, and the GFS models were wetter for some areas and drier for others. World Weather
noted the following for the second week of the SA forecast:

-The
GFS model was wetter from Mato Grosso and northern Mato Grosso do Sul to Goias Jan. 12-14

-The
GFS model reduced rain in Parana and nearby Sao Paulo Jan. 12-14

-The
GFS model reduced rain in most of northern Argentina and far southern Brazil Jan. 15-17

-The
GFS model was wetter from San Luis and Cordoba to Entre Rios Jan. 15-17

-The
GFS model was wetter in northwestern Brazil as well as from Sao Paulo to eastern to southern Parana Jan. 15-17

-The
GFS model reduced rain from La Pampa to central and southern Buenos Aires Jan. 17-18

-The
GFS model was wetter in southern Brazil Jan. 17-19

Soybeans
still ended up higher after trading two-sided. Soybean oil rallied led by the front months in part to higher palm oil, and that underpinned soybeans. Soybean meal traded two-sided and settled lower. Grains traded lower. 

 

 

Weather

Week
two

 

Midday
– rain 17-19 Jan

 

World
Weather Inc.

WEATHER
EVENTS AND FEATURES TO WATCH

• Argentina’s
  soil moisture is nearly depleted in a large part of the nation
• The
  latest soil assessment shows marginally adequate to slightly short subsoil moisture from southern Cordoba and northeastern La Pampa to central Buenos Aires where the best moisture has been present over the past couple of weeks
• Argentina
  was mostly dry Tuesday and early this morning and temperatures Tuesday afternoon were mostly in the upper 80s and lower 90s Fahrenheit except in southern Buenos Aires and southern La Pampa where 80s and a few upper 70s were noted.
• In
  contrast a few upper 90- and lower 100-degree highs continued in Formosa and neighboring areas of Chaco and northwestern Corrientes
• Argentina
  will receive very little rain of significance during the coming ten days
• Any
  showers that occur (and there will be some) will fail to counter evaporative moisture losses for the period resulting in a further depletion of soil moisture and a notably rising level of plant stress
• Some
  livestock stress is expected, as well which may impact milk production and reduce animal weight gains
• Excessive
  heat will be returning to Argentina this weekend and lasting through the middle part of next week with highs of 96 to 110 Fahrenheit common with a few extremes near and above 113
• Week
  two weather in Argentina, Jan. 15-19, will offer some scattered showers and thunderstorms, but it is unclear today how significant that rain may or may not be
• Temperatures
  may also trend a little less hot during that period of time
• Brazil
  weather will include showers and thunderstorms to the entire nation’s crop areas at one time or another during the next week to ten days
• The
  lightest rain is expected in the far northeast
• The
  greatest rain is still predicted from Tocantins and some eastern Mato Grosso locations into Goias and Minas Gerais where the ground is already saturated and vulnerable to flooding if daily rainfall gets too great
• Southwestern
  Brazil (Mato Grosso do Sul and western Parana) rainfall may be greatest from late this weekend through next week at which time the greatest bolstering of moisture in the soil is expected
• Brazil’s
  week two outlook, Jan. 13-19, will bring less frequent and less significant rain to many areas, although complete dryness is unlikely
• The
  drier bias will be welcome for early soybean and corn maturation and harvesting, early Safrinha corn and cotton planting and for improving summer crop conditions in the wettest areas noted above
• Temperatures
  may also trend a little warmer as the rain subsides for a while, but no excessive heat is expected
• Paraguay
  is unlikely to get nearly as much rain as neighboring areas of Brazil may get and crop stress in the nation will remain serious – like that of Argentina
• Rio
  Grande do Sul is the one state in Brazil that will see ongoing declining crop and field conditions during the next ten days, although not all areas will be dry
• Brazil
  weather Tuesday and early today included scattered showers and thunderstorms in much of the nation along with mostly near to slightly below normal temperatures
• Rainfall
  was most beneficial in interior western and central Mato Grosso do Sul where 0.40 to 1.81 inches resulted
  
• One
  unconfirmed rain amount of 4.20 inches was received from northwestern Mato Grosso do Sul
• Northern
  Parana received rain with 0.43 to 0.92 inch resulting and central Rio Grande do Sul reported 0.05 to 0.39 inch
• Precipitation
  elsewhere was concentrated on Sao Paulo, Goias, central and eastern Mato Grosso and western and southern Minas Gerais that was not heavy, but sufficient in maintaining wet field conditions
• U.S.
  weather was relatively tranquil Tuesday and overnight, but snow and blowing snow did impact the upper Midwest as the next surge of bitter cold air arrived on strong northerly winds
• Some
  rain and mountain snow continued in the Pacific Northwest with the next three days to bring some strong wind speeds and heavier precipitation
  
• Southwestern
  British Columbia and the Puget Sound ports could be impacted by the adverse weather the next few days
• Warming
  Tuesday melted snow from the central U.S. Plains, but snow will fall later today and Thursday to help put back some protection to winter wheat against the coming bitter cold
• Winterkill
  is not likely to be significant if it occurs at all in hard red winter wheat areas due to some snow cover
• Lowest
  temperatures may slip into some negative teens Fahrenheit in Nebraska and northeastern Colorado while positive and negative single digits will occur in other areas southward through Kansas
• Some
  concern over possible winterkill also exists in the lower Midwest where low temperatures Friday morning will slip near or slightly below zero Fahrenheit from parts of Missouri to Indiana
• Most
  of the temperatures in this region will not be low enough for permanent crop damage, but the lack of snow cover in the region will leave crops at least vulnerable to damage if conditions get unexpectedly cold
• A
  weak nor’easter will bring light to locally moderate snow up the middle and northern U.S. Atlantic Coast Thursday into Friday result in 3 to 8 inches of accumulating snow
• This
  storm is much weaker than that advertised Tuesday and additional weakening may occur
• U.S.
  temperatures will turn warmer in the second week of the forecast after this first week is quite cool in the central and eastern states for a few days
• West
  and South Texas precipitation will be restricted over the next ten days to two weeks
• Not
  much rain will fall in California’s central valleys for a while and the heavy snow in the Sierra Nevada is over for a while
• Heavy
  rain, flooding and strong wind will impact the U.S. Pacific Northwest and British Columbia coasts the remainder of this week impacting shipping in the region
• The
  adverse conditions may be greatest later today into Friday
• Some
  flooding is possible
• Not
  much precipitation will impact U.S. hard red winter wheat areas during the next two weeks, although a few brief bouts of snow and a little rain might occur, but moisture content in the precipitation will not change drought status
• Today
  and early Thursday will be the best chance of moisture in the north with several inches of snow expected in the northwest
• The
  southwestern Plains will stay dry during much of the next ten days to two weeks maintaining drought status
• U.S.
  Delta and interior parts of the southeastern U.S. along with most of the central and eastern Midwest will remain plenty moist over the next two weeks
• Drying
  is needed near and south of the Ohio River into the Tennessee River Basin and northern Delta
• Canada’s
  Prairies will receive waves of snow during the next two weeks with southern and eastern areas getting the greatest amounts
• East-central
  and southern Alberta and west-central and southwestern Saskatchewan are still in a serious drought and the snowfall in those areas will be light and provide very little relief when it melts
• Temperatures
  will trend much warmer next week
• Northern,
  central and eastern India will receive waves of rain over the next ten days that will moisten the topsoil and help support crop development ahead of reproduction
• Wheat,
  millet, rapeseed and some pulse crops will be among the beneficiaries of the precipitation
  
• Southern
  India will be relatively dry, although significant rain fell along the lower east coast during the weekend
• Europe
  weather has been and should continue to be good for dormant winter crops
• Concern
  about dryness in Spain may continue for a while, but soil moisture and snow cover should be sufficient for crops elsewhere over the next ten days
• North
  Africa precipitation will increase during mid- to late week this week in north-central and northeastern Algeria and northern Tunisia, but precipitation in Morocco will be quite limited
• Southwestern
  Morocco continues to be a notable multi-year drought and dryness is also a concern in northwestern Algeria
• Crops
  elsewhere are doing relatively well
• Warmer
  temperatures in parts of Ukraine and Russia’s Southern Region recently induced a little rain while snow fell frequently to the north
• Snow
  cover has been receding from eastern Europe, Ukraine and Russia’s Southern Region, but there is no threatening cold coming anytime soon
• Cooling
  next week and into the following weekend will reverse the trend putting back some of the snow lost
• No
  threatening cold weather is expected anytime soon in Europe or the western CIS
• Snow
  cover will remain widespread across much of Russia and the northernmost part of Ukraine as well as some areas in eastern Europe
• Winter
  crops are in good conditions no change is expected
• China’s
  weather will continue mostly uneventful for a while, although periods of rain and a little snow will impact the Yangtze River Basin during the next couple of weeks.
  
• The
  moisture will preserve the integrity of the 2022 rapeseed and southern wheat crops
• Snow
  will fall periodically in the far northeast while the Yellow River Basin and southern coastal provinces receive little to no precipitation
• Temperatures
  will be near to slightly warmer than usual
• Southeast
  Asia oil palm, citrus, sugarcane, coffee, cocoa, rice and other crop areas of Indonesia, Malaysia and Philippines will receive frequent bouts of rain over the next two weeks
• Some
  heavy rain is possible, but no serious widespread flood problem is expected
• Local
  flooding will be possible, though
• Mainland
  areas of Southeast Asia will be mostly dry during the next ten days except Vietnam coastal areas where some moderate to heavy rain will be possible late this week and into the weekend
• Australia
  weather outlook has not changed much
• Thunderstorms
  are expected in central and eastern parts of New South Wales and a few interior southeastern Queensland locations during the second half of this week and into the weekend
• Rainfall
  will be greatest along the western slopes of the Great Dividing Range in New South Wales
• The
  precipitation may continue next week as scattered showers and thunderstorms that will benefit summer crops in both Queensland and New South Wales, although the rain in Queensland will be most restricted
• Southeastern
  Australia will be wettest including southeastern crop areas of New South Wales and central through eastern crop areas of Victoria
• Temperatures
  will be near to above normal
• Late
  season winter crop harvesting in the south should not be seriously impacted by rain since most of the crop has been harvested
• South
  Africa will experience a good mix of rain and sunshine during the next two weeks
• The
  long term summer outlook remains favorable
• Western
  summer crop areas have the greatest need for rain, and they should get at least some periodically
• Temperatures
  will be seasonable
• West-central
  Africa precipitation will be limited to coastal areas and temperatures will be a little warmer than usual
• East-central
  Africa will be erratic, but it is expected daily through the next ten days supporting coffee, cocoa, rice sugarcane and other crops
• Middle
  East precipitation is expected to be erratically distributed over the next couple of weeks
  
• Winter
  crops will benefit from whatever rain falls, but it is not expected to be evenly distributed for a while
• Mexico
  weather will trend wetter in far southern and some extreme eastern crop areas during the coming week
• Some
  showers may evolve in north-central areas during the Jan. 13-19 period, but confidence is low
• Central
  America precipitation will be greatest along the Caribbean Coast , but including a fair amount of Panama and Costa Rica during the next ten days
• A
  few showers will occur in Guatemala periodically as well, although rainfall will be light
• Western
  Colombia and western Venezuela precipitation is expected to occur periodically in coffee, corn, rice and sugarcane production areas during the next ten days,  but no excessive rain is expected
• Today’s
  Southern Oscillation Index was +11.33 and it was expected to drift lower for a while this week
• New
  Zealand rainfall is expected to continue getting less than usual precipitation this week with temperatures near to above normal

Source:
World Weather, inc.

 

Bloomberg
Ag Calendar

Wednesday,
Jan. 5:

• EIA
  weekly U.S. ethanol inventories, production
• Malaysia’s
  Jan. 1-5 palm oil exports
• HOLIDAY:
  Russia

Thursday,
Jan. 6:

• FAO
  World Food Price Index
• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Port
  of Rouen data on French grain exports
• HOLIDAY:
  Russia

Friday,
Jan. 7:

• ICE
  Futures Europe weekly commitments of traders report (6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• HOLIDAY:
  Russia

Source:
Bloomberg and FI

 

 

Macros

US
ADP Employment Change Dec: 807K (est 410K; prev 534K)

Canadian
Building Permits (M/M) Nov: 6.8% (est 1.8%; prev 1.3%; prevR 2.4%)

69
Counterparties Take $1.493 Tln At Fed Reverse Repo Op. (prev $1.496 Tln, 72 Bids)

 

US
DoE Crude Oil Inventories (W/W) 31-Dec: -2144K (est -3650K; prev -3576K)

–
Distillate Inventories: +4418K (est -1000K; prev -1726K)

–
Cushing OK Crude Inventories: +2577K (prev +1055K)

–
Gasoline Inventories: +10128K (est 1750K; prev -1459K)

–
Refinery Utilization: 0.10% (est 0.40%; prev 0.10%)

 

Corn

·        
CBOT corn ended lower following weakness in wheat, build in US ethanol stocks, selloff in WTI crude oil and sharply lower close in US equity markets after the FED released hawkish minutes. Improvement to the week two weather outlook
for South America kicked off the selling, but a higher close in soybeans limited losses for corn. News has been thin this week and global export developments are stagnant. Its possible major importers are waiting for a break in prices so some business might
develop tonight into Thursday.   

·        
Technical selling should be noted today after prices traded sharply higher on Tuesday.

·        
Funds were net sellers of an estimated net 6,000 corn contracts. 

·        
We still think March corn could trade up into the $6.25-$6.35 area if SA weather fails to improve. March settled today at $6.0950. 

·        
The USDA Broiler Report showed eggs set in the US down slightly from this time year ago and chicks placed down slightly. Cumulative placements from the week ending January 9, 2021 through January 1, 2022 for the United States
were 9.64 billion. Cumulative placements were up slightly from the same period a year earlier.

·        
IHS Markit will issue its January US and world crop reports Thursday.

·        
US weekly ethanol production declined 11,000 barrels per day to 1.048 million, more than expected (trade looking for 7,000 decline) and stocks increased a very large 683,000 barrels to 21.359 million, largest level since mid-August
2021.  Blender net input of ethanol during the holiday was only 782,000 barrels, lowest since mid-February 2021 (pandemic levels). Imports were zero and implied in-transit ethanol were 339,000 barrels, in line with previous weeks. 

 

 

 

Export
developments.

·        
None reported

 

Retail
gasoline prices rose across the United States in 2021 as driving increased

https://www.eia.gov/todayinenergy/detail.php?id=50758&src=email

 

Updated
1/3/22

March
corn is seen in a $5.60 to $6.20 range

 

Soybeans

·        
In a two-sided trade, CBOT soybeans settled 4.25-5.50 cents higher. Some SA weather maps indicated meaningful rain will occur across Argentina during the 17-20^th January period. This week hot temperatures are still
expected to counter rain across Argentina. Soybean meal eased while soybean oil rallied following higher palm oil prices. 

·        
We see March soybeans now trading near $14.25 if the rains for southern portion of South America fail to shape up during the mid-January period. $14.5450 is the absolute contract high. We would not rule out $14.75 but next week
expect USDA to increase its 2021-22 US carryout amid a cut in US exports. 

·        
Today the funds bought 2,000 soybeans, sold 2,000 soybean oil and bought 3,000 soybeans.

·        
Soybean basis at Burns Harbor, IN, was up 10 cents to 30 under the March.

·        
March canola was up $1.60 to $1,023 per ton. One broker noted canola was overbought relative to other oilseeds.

·        
We picked up earlier that AgRural lowered their Brazil bn crop to 133.4MMT, down 11.3 from previous with Parana taking a bit hit of 5.5MMMT. 

·        
Malaysian palm futures were up four consecutive sessions and hit a 6-week high overnight. Flooding is slowing production across the Peninsular Malaysia and Sabah.

·        
ITS: Malaysia 1-5 Jan 2022 vs. 1-5 December 2021 palm oil exports – 125,205 vs. 255,500.

·        
A Reuters poll looks for Malaysia’s palm oil inventories at end-December to sink 4.9% from the previous month to 1.73 million tons, lowest in five months.

 

Export
Developments

·        
The CCC today seeks 12,000 tons of soybean oil for Feb 5-15 delivery for the Dominican Republic.

·        
Under the 24-hour reporting system, USDA announced 132,000 tons of soybeans were sold to unknown for 2022-23 delivery. 

 

 

Updated
1/5/22

Soybeans
– March $13.00-$14.25 (unch, up 25 cents)

Soybean
meal – March $370-$435

Soybean
oil – March 53.00-61.00
(up 100 both sides)

 

Wheat

·        
US wheat traded lower on technical selling. A lower USD during much of the agriculture trade did little to slow the selling.

·        
Funds sold an estimated net 5,000 SRW wheat contracts. 

·        
EU wheat basis the March position was 3.25 lower at 276 euros a ton. 

·        
China plans to sell 500,000 tons of wheat from state reserves on January 12 to flour millers.  Results are awaited on China selling 500,000 tons of wheat from state reserves on January 5 to flour millers. The sold an estimated
891,938 tons of wheat from reserves in October.

 

Export
Developments.

·        
Tunisia bought about 125,000 tons of soft wheat, 75,000 tons of durum wheat and 75,000 tons of animal feed barley. The soft wheat was bought in five 25,000 ton consignments, at $365.93, $365.93, $369.18, $367, and $369.95. Shipment
of the soft wheat was requested on various dates between Feb. 1 and March 25. The durum was bought at $693.68, $698.68 and $703.68, with shipment between Jan. 25 and Feb. 25. The barley was bought at $344.46, $345.46 and $346.46, with shipment due between
Feb. 1 and March 5.

·        
Jordan’s state grain buyer bought 60,000 (out of 120,000 tons sought) of milling wheat, optional origin at an estimated $326 a ton c&f for shipment in the first half of August 2022.

·        
Results awaited: Iraq seeks 50,000 tons of wheat on January 3 from the US, Canada and Australia.

 

Rice/Other

·        
Bangladesh seeks 50,000 tons of rice on January 16.

·        
Results awaited: Bangladesh
seeks 50,000 tons of non-basmati parboiled rice for delivery 50 days from contract award and letter of credit opening.

 

Updated
12/9/21

Chicago
March $7.40 to $8.60 range

KC
March $7.55 to $9.00 range

MN
March $9.50‐$11.00