FI Evening Grain Comments 01/14/22

PDF Attached

 

The
US will be on holiday Monday. CBOT agriculture markets will open Monday night. 

 

South
American weather and positioning ahead of the US holiday weekend dominated market action. The midday weather models turned little drier for Argentina and wetter Brazil for the 11-15 period.  1-5 and 6-10 were largely unchanged. 

 

 

Weather

World
Weather (Friday) midday weather highlights:

South
America (Week 1-Discussion of significant model changes)  

• The
  GFS model was wetter from southeastern Cordoba to the southern fringe of Entre Rios Wednesday into next Friday
  

     
This increase is likely overdone

• The
  GFS model reduced rain in parts of southern Parana and Santa Catarina Wednesday into next Friday
  

     
Some of this reduction was likely needed

 

South
America (Week 2-Discussion of significant model changes)  

• The
  GFS model reduced rain in northern Argentina Jan. 21-23

     
The latest run may be too dry

• The
  GFS model reduced rain from Mato Grosso to Goias to southern Minas Gerais Jan. 21-23

     
Some of this reduction was likely needed, but the latest run may be too dry

• The
  GFS model was wetter from southern Mato Grosso do Sul to central and western Mato Grosso do Sul and southern Paraguay Jan. 24-26

     
This increase is likely overdone

• The
  GFS model increased rain from northeastern La Pampa to Buenos Aires Jan. 24-26

     
This increase is likely overdone

• The
  GFS model was wetter in central and northern Argentina Jan. 26-28 with most of the rain light and most of the significant rain confined to far northern areas

     
The latest run is likely too wet

• The
  GFS model reduced rain from a large part of Mato Grosso do Sul to Parana to Santa Catarina Jan. 26-28

     
Some of this reduction was likely needed

 

Source:
BA Grains Exchange

 

 

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR JANUARY 14, 2022

• Crop
  stress and damage continues in Argentina.
• No
  soil moisture is present, no rain fell or will fall for two more days and temperatures have been and will continue in the range of 100 to 110 Fahrenheit (38-43) with a few extremes today and Saturday in the 110 to 116 degree range (43-45C).
  
• Dramatic
  cooling is expected Sunday through Wednesday and thunderstorms will produce 1.00 to 3.00 inches of rain, but mostly in the northeast half of Argentina.
  
• The
  southwest will not get nearly as much and will have to wait for a second storm system at the end of next week to get some additional relief.
  
• The
  bottom line remains one of relief for Argentina after Saturday, but the greatest improvement will occur in the northeast half of the nation. Additional rainfall may occur later this month, but another ridge of high pressure is possible in February.
  
• In
  Brazil, weather conditions are drying down beneficially
• Greatly
  improved early season soybean and corn maturation and harvest weather is expected for a while.
  
• Established
  and late planted crops will have good subsoil moisture to continue developing with.
  
• Timely
  rainfall will return for early season Safrinha crops later this month and next. 
  
• In
  the U.S., a snowstorm from North Dakota to Iowa and Missouri will occur today and tonight with 3-10 inches of accumulation
• The
  storm will become a raging nor’easter for the eastern United Sunday and Monday producing 6-12 inches and many 12-20 inch amounts in the northeastern parts of the nation and neighboring southeastern Canada.
  
• Outside
  of this weekend’s storm, U.S. weather will be tranquil for a while, but a big surge of cold is expected in the central part of the nation late next week.
  
• Northwest
  Africa remains quite dry
• Western
  Europe is drying out
• India’s
  weather is great after recent rain
• China’s
  weather is stable and mostly good.
• Bitter
  cold in Russia that had been advertised for the second week of the forecast has been reduced, but plenty of snow is on the ground to protect crops anyway.
  
• Additional
  snow will fall in western Russia and parts of Ukraine and Eastern Europe over the next ten days.
  
• New
  South Wales, Australia will get abundant rainfall in the next week to ten days while lighter and more sporadic showers occur in Queensland, Australia.
  
• South
  Africa may get a little too much rain in the coming week to ten days resulting in at least some flooding.
  
• Southeast
  Asia weather will continue wet from Indonesia and Malaysia into the Philippines with local flooding in eastern Malaysia and southern Philippines in the next week to ten days

Source:
World Weather, inc.

 

Bloomberg
Ag Calendar

Friday,
Jan. 14:

• China’s
  December trade data
• ICE
  Futures Europe weekly commitments of traders report, ~1:30pm
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm

Monday,
Jan. 17:

• China
  4Q pork output and inventory levels
• Ivory
  Coast cocoa arrivals
• HOLIDAY:
  U.S.

Tuesday,
Jan. 18:

• USDA
  export inspections – corn, soybeans, wheat, 11am

• China’s
  second batch of December trade data
• EU
  weekly grain, oilseed import and export data
• New
  Zealand global dairy trade auction
• HOLIDAY:
  Malaysia

Wednesday,
Jan. 19:

• European
  quarterly cocoa grindings report (tentative)

Thursday,
Jan. 20:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• EIA
  weekly U.S. ethanol inventories, production
• China’s
  third batch of country-wise December trade data
• Port
  of Rouen data on French grain exports
• Malaysia’s
  Jan. 1-20 palm oil exports
• New
  Zealand food prices
• USDA
  red meat production, 3pm

Friday,
Jan. 21:

• ICE
  Futures Europe weekly commitments of traders report, ~1:30pm
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• U.S.
  cattle on feed, 3pm

Source:
Bloomberg and FI

 

 

 

 

CFTC
Commitment of Traders report

Soybeans
going to rally over corn? Fund cycle suggest that…

 

 

 

 

 

 

SUPPLEMENTAL     
Non-Comm               Indexes                  Comm

                    
   Net        Chg        Net        Chg        Net        Chg

Corn              
240,207    -28,784    445,573      6,746   -657,116      1,120

Soybeans           
85,287       -562    193,613     12,704   -243,874    -16,208

Soyoil             
10,442      1,425    119,246     -1,724   -139,671     -2,593

CBOT
wheat         -45,177     -9,108    133,288      8,659    -78,392        720

KCBT
wheat          17,171     -4,314     53,223     -6,348    -74,185     10,322

=================================================================================

FUTURES
+ OPTS     Managed                 Swaps              Producer

                       
Net        Chg        Net        Chg        Net        Chg

Corn             
 344,379    -21,526    286,103     24,936   -651,582     -2,728

Soybeans          
106,879      7,961    149,123      9,067   -252,226    -19,490

Soymeal            
72,920      2,152     94,070      7,003   -216,516     -5,530

Soyoil             
55,907      2,719     88,570     -2,654   -145,139     -3,182

CBOT
wheat         -27,764     -7,920     87,148      9,751    -63,636     -1,198

KCBT
wheat          42,674     -9,138     21,770     -3,022    -61,753     10,460

MGEX
wheat           5,734     -3,747      2,334        691    -14,648      6,019

                
———- ———- ———- ———- ———- ———-

Total
wheat         20,644    -20,805    111,252      7,420   -140,037     15,281

Live
cattle         61,941    -10,405     80,445        168   -150,042      5,764

Feeder
cattle        6,470       -856      4,036        244     -2,433       -437

Lean
hogs           48,804     -6,870     59,402      2,577   -100,831      3,710

                     
Other             NonReport                  Open

                       
Net        Chg        Net        Chg   Interest        Chg

Corn               
49,764    -21,600    -28,664     20,918  1,861,529     -4,162

Soybeans           
31,250     -1,605    -35,026      4,066    833,968     44,628

Soymeal            
20,862     -5,026     28,663      1,400    454,258     17,979

Soyoil             
-9,322        226      9,984      2,891    430,663      7,966

CBOT
wheat          13,972       -362     -9,720       -271    455,595     16,109

KCBT
wheat          -6,483      1,360      3,792        341    242,770     -4,294

MGEX
wheat           3,813     -3,048      2,768         84     71,192     -5,969

                
———- ———- ———- ———- ———- ———-

Total
wheat         11,302     -2,050     -3,160        154    769,557      5,846

Live
cattle         17,341     -1,591     -9,686      6,065    372,991     -8,788

Feeder
cattle          628        269     -8,701        780     51,666      2,348

Lean
hogs            8,956        860    -16,330       -277    267,471      2,646

=================================================================================

 

 

Macros

80
Counterparties Take $1.599 Tln At Fed Reverse Repo Op. (prev $1.637 Tln, 79 Bids)

 

US
Retail Sales (M/M) Dec: -1.9% (est -0.1%; prev 0.3%)

–
US Retail Sales Ex. Auto (M/M) Dec: -2.3% (est 0.1%; prev 0.3%)

–
US Retail Sales Ex. Auto & Gas (M/M) Dec: -2.5% (est -0.2%; prev 0.2%)

–
US Retail Sales Control Group (M/M) Dec: -3.1% (est 0.0%; prev -0.1%)

US
Import Price Index (M/M) Dec: -0.2% (est 0.2%; prev 0.7%)

–
Import Price Index Ex-Petroleum (M/M) Dec: 0.3% (est 0.6%; prev 0.7%)

–
Import Price Index (Y/Y) Dec: 10.4% (est 10.8%; prev 11.7%)

US
Export Price Index (M/M) Dec: -1.8% (est 0.3%; prev 1.0%)

–
Export Price Index (Y/Y) Dec: 14.7% (est 16.0%; prev 18.2%)

US
Retail Sales (M/M) Prior Revised: 0.2%

–
US Retail Sales Ex. Auto (M/M) Prior Revised: 0.1%

–
US Retail Sales Ex. Auto & Gas (M/M) Prior Revised: -0.1%

–
US Retail Sales Control Group (M/M) Prior Revised: -0.5

 

Corn

·        
CBOT corn was higher led by the nearby months from technical buying and high soybean prices relative to alternative corn for fee demand. Slowing US ethanol production has weighed on corn but increases in global demand, notably
South Korea, has slowed bearish sentiment.   

·        
USD was 34 higher and WTI crude up 217 cents.

·        
The funds on Friday bought an estimated net 7,000 corn contracts.

·        
Safras & Mercado estimated the Brazil corn crop at 115.64 million tons versus 116.08 million previous. USDA at 115 million tons.

·        
For reference it was reported on Thursday:

o 
Argentina’s Rosario Grains Exchange lowered their Argentina corn crop by 8 million tons to only 48 million.  USDA is at 54 million tons for Argentina corn. 

o 
Argentina’s Buenos Aires grains exchange has yet to cut their estimate but it’s coming.  They trimmed the soybean planting area by 100,000 hectares to a total 16.4 million hectares due to dry weather.

o 
Agroconsult estimated the Brazil corn crop at 119.4 million tons (24.5MMT first crop), down from a late November projection of 124 million tons. Conab is at 112.9 million and USDA at 115 million tons. 

·           
Yesterday Agroconsult estimated a 32-million-ton year over year in Brazil corn production. We wonder how much of that will get exported in 2022, a hard category to forecast. USDA has 43 MMT Brazil corn exports for the Oct-Sep
period versus 19.5 MMT for 2020-21.  Brazil corn exports were slow last fall and have picked up over the winter. South Korea has been buying Brazil corn lately and interest is there from Japan. 

·        
China 2021 meat imports of 9.38 million tons were 5.4% below the 9.91 million tons in 2020. December’s meat imports of 654,000 tons were down 32% from a year ago.

 

India
Grain and Feed Update

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=India%20Grain%20and%20Feed%20Update%20%20-%20January%202022_New%20Delhi_India_01-03-2022.pdf

 

Export
developments.

·        
USDA reported 100,422 tons of corn sold to Mexico for 2021-22 delivery under the 24-hour announcement system.

·        
South Korea’s FLC bought about 65,000 tons of animal feed corn, optional origin, at an estimated $328.10 a ton c&f for arrival in South Korea around April 30.

·        
South Korea’s MFG bought 198,000 tons of corn in three consignments late April and early May arrival.  One consignment of 68,000 tons to be sourced from worldwide origins was said to have been sold at $328.20 a ton for arrival
in South Korea around April 30. A second consignment of 65,000 tons also to be sourced from worldwide origins was said to have been sold at $328.00 a ton c& for arrival in South Korea around May 3.A third consignment of 65,000 tons expected to be sourced from
South America or South Africa was said to have been sold at $327.69 a ton c&f for arrival in South Korea around May 8.

 

Updated
1/10/22

March
corn is seen in a $5.70 to $6.20 range

 

Soybeans

·        
US soybeans ended lower in a two sided trade as longs have been exiting positions ahead of the rain event slated for Brazil and Argentina. Not all of Argentina will see rains and we warn Tuesday’s market action could be very volatile. 
Safras was the latest private group to downgrade the Brazilian soybean crop. 

·        
The funds sold an estimated net 4,000 soybeans, sold 2,000 soybean meal and were net even for soybean oil.

·        
Morning weather models turned a little more favorable for Argentina and Brazil but the 11-15 day midday models removed some of the rain for Argentina and was wetter for Brazil. 

·        
Safras & Mercado estimated the Brazil soybean crop at 132.3 million tons versus 144.71 million previous. USDA at 139 million tons. For reference it was reported on Thursday:

o 
Agroconsult estimated the Brazil soybean crop at 134.2 million tons, down from a late November projection of 144.3 million tons. Agroconsult noted the average yield could reach a 6-year low.

o 
Conab is at 140.5 million tons for Brazil. 

o 
Argentina’s Rosario Grains Exchange lowered their Argentina soybean crop from 45 to 40 million tons, above USDA’s 46.5 MMT estimate. They also warned producers could see a $2.9 billion hit from drought conditions.

·        
China imported 8.87 millio0n tons of soybeans during the month of December (up 18% from year earlier) and for all of 2021 they amounted to 96.52 million tons, down from 100.33 MMT year earlier.

Source:
Reuters

 

·        
NOPA’s December crush report will be released on Tuesday due to the Federal US holiday.  The average trade guess is 185 million bushels, which could be a record for the month of December. Trade estimates below. 

·        
Cargo surveyor AmSpec reported Malaysian Jan 1-15 palm exports at 492,883 million tons, compared to a large 725,600 tons a month ago. Cargo surveyor ITS reported Malaysian palm exports at 426,111 tons, 45 percent below 772,137
tons from the same period a month ago.

·        
Malaysia will keep their February crude palm oil export tax unchanged at 8 percent.

·        
Malaysian palm futures traded lower by 38 ringgit to 5,123.

·        
China soybean cash crush values on our analysis were running at 195 cents/bushel (196 previous) versus 183 at the end of last week and 198 year ago. 

·        
Offshore values this morning were leading CBOT soybean oil 51 points higher (61 higher for the week to date) and meal $2.40 higher ($5.80 higher for the week).

 

 

Export
Developments

·        
USDA reported 100,000 tons of soybean meal sold to Spain for 2022-23 delivery under the 24-hour announcement system.

·        
The USDA seeks 7,540 tons of vegetable oil in 4-liter cans for Feb 16-Mar 15 shipment on January 19.

 

Updated
1/10/22

Soybeans
– March $13.00-$14.25

Soybean
meal – March $370-$435

Soybean
oil – March 54.50-61.00

 

Wheat

·        
US wheat futures extended losses from improving US weather conditions, slow US export demand and higher USD.

·        
Funds sold an estimated an estimated net 4,000 soft red winter wheat contracts. 

·        
Global import demand improved this week with Algeria the latest tender announcement with purchasing about 600,000 tons of wheat.

·        
A welcome snow event (for crops) across parts of the central and upper winter wheat country will occur through Saturday. 

·        
March wheat settled down 2.25 euros, or 0.8%, at 263.50 euros ($300.50) a ton, after earlier dropping to 259.75 euros, its lowest since Oct. 6.

·        
Russian wheat exports during the Jan-Nov period decreased to 30.0 million tons in the first eleven months of 2001 from 33.7 million tons a year ago.

·        
Ukraine’s AgMin does not plan to limit grain exports this crop year. 

 

Export
Developments.

·        
Algeria bought about 600,000 tons of milling wheat, expected to be sourced from South America and the Black Sea region, at $348-$350/ton c&f for March shipment. No sales of French wheat were reported.

·        
South Korea’s MFG bought 50,000 tons of feed wheat at $334/ton for shipment around March 20 and April. 

·        
Taiwan seeks 49,395 tons of US wheat on Jan 20 for LH March shipment.

·        
Jordan seeks 120,000 tons of wheat on January 18.  Possible shipment combinations are in 2022 between July 1-15, July 16-31, Aug. 1-15 and Aug. 16-31. 

·        
Turkey seeks 335,000 tons of milling wheat on January 18. 

 

Rice/Other

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

 

Updated
1/10/22

Chicago
March $7.20 to $8.40 range

KC
March $7.55 to $8.75 range

MN
March $8.75‐$10.00