FI Evening Grain Comments 01/19/23

PDF Attached

 

USDA
announced private exporters reported sales of 195,000 tons of corn for delivery to Mexico during the 2022/2023 marketing year. The soybean complex ended lower on rain prospects for Argentina (despite a downgrade in crop conditions by
the BA Grains Exchange), along with corn. Wheat traded mostly lower on improving US weather prospects, lower EU wheat futures, and Black Sea competition. A Farm Futures survey calls for US 2023 soybean plantings to end up near 88.915 million acres, corn at
90.531 million acres, and all-wheat at 48.840 million acres. Spring wheat (including durum) was seen at 13.948 million acres and winter wheat at 34.892 million. 

 

 

 

Weather

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE COMING WEEK

• Relief
  is still expected in Argentina during the next ten days to two weeks
• Precipitation
  Wednesday and early today was not very great, but rain will impact most crop areas during the coming ten days and enough will occur to stop the decline in crop conditions and actually improve some of the crops
• Friday
  and Saturday will bring the first round of significant rain to southern and some eastern most parts of the nation
• Showers
  and thunderstorms are likely in the north later in the weekend
• The
  middle to latter part of next week will likely be the next wetter period with central and northern areas getting the greatest rain
• Improvements
  in late season corn, peanuts, sorghum and soybeans as well as cotton is expected
• Some
  citrus and sugarcane improvement is also expected
• So
  far this year peanuts and sugarcane have experienced the best weather while sunseed and early season corn have lost the most production potential
• Far
  southern Brazil (Rio Grande do Sul mostly) will not see a good distribution of rain for a while, though some showers and thunderstorms will pop up infrequently and lightly
• The
  state will continue to have low soil moisture in parts of the region and greater rain will soon be needed
• World
  Weather, Inc. anticipates greater rainfall for far southern Brazil, Uruguay and Paraguay during the last week in January.
  
• Most
  of Brazil will experience a routine occurrence of rain and thunderstorm activity over the next two weeks, though the intensity and frequency of rain will be a little less than that of recent weeks
• Some
  of the wettest areas in the nation will continue wet – mostly in southern Minas Gerais and northern Sao Paulo; other areas will see enough sunshine and lighter rain to improve crop maturation and harvest conditions
• Much
  of Brazil reported limited rainfall Wednesday
• Impressive
  snowfall occurred in central Nebraska Wednesday with nearly two feet of accumulation in a small region
• Most
  of the snowfall ranged from 6-14 inches with only the southeast reporting limited accumulations
  
• Northwestern
  Kansas reported up to 5 inches of snow accumulation while northeastern Colorado had 4 to 12 inches
• Moisture
  totals in Nebraska varied from 0.20 to 0.85 inch with a few areas getting close to 1.00 inch of moisture
• Western
  Kansas moisture totals varied from 0.20 to 0.50 inch with similar totals in northeastern Colorado.
  
• Significant
  moisture also occurred in the U.S. Midwest Wednesday and early today from the same storm system that produced heavy snow in the central Plains
• Moisture
  totals of 1.00 to 3.00 inches from southeastern Missouri to southwestern Indiana while 0.25 to 1.25 inches occurred in many other areas
• The
  lower Ohio river Basin, Tennessee River Basin and northern Delta were wettest
  
• Additional
  storminess is likely in the central U.S. Plains late Friday into the weekend
  
• Some
  heavy snowfall is expected in western Kansas where moisture totals will vary from 0.20 to 0.65 inch
  
• Snow
  accumulations may range from 5 to 12 inches
• rain
  and snow will impact eastern Kansas while mostly light rain occurs in northern and eastern Oklahoma
• Southwestern
  U.S. Plains; including most of West Texas will not get much precipitation over the next two weeks
• South
  Texas will receive “some” rain over the next two weeks, but most amounts will be less than 0.50 inch for the entire period leaving need for more rain prior to planting in late February and early March
• California’s
  active weather pattern is winding down with some lingering rain and mountain snow today
  
• Ten
  days of drier weather may occur, although complete dryness is not expected in the north
• The
  break in the precipitation will help end flooding concerns and give recent moisture a chance to soak into the ground, but more rain and snow will be needed to seriously raise water supply over that of recent past years and to curb this multi-year drought
• U.S.
  Midwest, Delta and southeastern states will experience a frequent occurrence of rain and some snow (mostly in the Midwest) during the next couple of weeks maintaining and, in some cases, improving topsoil moisture for use in the spring
• U.S.
  Northern Plains and Canada’s Prairies will experience light amounts of precipitation during the next ten days to two weeks
• Snow
  cover remains significant in central and eastern North Dakota, Minnesota and in random locations across central and especially far eastern South Dakota
  
• Snow-free
  conditions are present in portions of the southwestern Canada Prairies and in portions of both Montana and western South Dakota
• Snow
  cover in Canada is greatest near the U.S. border in Manitoba and across the northern most portions of crop country
• Concern
  will rise over some of the drier areas in southwestern Canada where drought has lasted six years in some areas
• A
  band of significant snow will occur from northern Saskatchewan into Manitoba this weekend and early next week
  
• U.S.
  temperatures will turn colder next week while this week’s readings are near to below normal in the western states and above normal in the central and east
  
• Temperatures
  in the last week of this month will be cooler than usual in the central and western states with emphasis on the north-central states and south-central Canada
• Bitter
  cold weather may hold off until sometime in the first half of February
• India
  rain potentials are improving for a few north-central and many eastern winter crop areas next week
  
• The
  moisture will favor wheat, winter rice and some pulse production areas, but may not impact rapeseed production areas
• Rainfall
  will be light and the need for follow up rain will be high except from parts of Uttarakhand into Jammu and Kashmir where frequent precipitation of significance is expected
• Eastern
  Australia summer crop areas will begin experiencing periodic showers and thunderstorms during the weekend and especially next week
• The
  rain will help improve dryland sorghum, cotton and other crops
• Eastern
  China’s precipitation will resume in the Yangtze River Basin this weekend and especially next week
• The
  moisture will help maintain a very good outlook for future rapeseed and minor wheat production areas
  
• Some
  rain and snow will also impact the rest of the nation, but resulting moisture will not be great enough for serious changes to soil moisture
• North
  Africa will begin receiving routine bouts of rain in northern Algeria and coastal Tunisia the remainder of this week and next week
  
• The
  moisture boost will be ideal for improving wheat and barley establishment and raising the potential for better crop performance in the spring
• Some
  rain will also fall in northern Morocco, but southwestern Morocco and interior parts of Tunisia are expected to miss most of the significant rain resulting in ongoing dryness
• Europe
  precipitation will be greatest from southern Italy into Hungary and Romania during the next week
• Some
  flooding is expected in southern Italy and in the eastern Adriatic Sea region due to rainfall varying from 2.00 to 6.00 inches by this time next week
  
• Precipitation
  elsewhere across Europe is expected to be relatively brief and light
• Temperatures
  will be cool in the west and warm in the east through the weekend and then near to above normal next week
  
• Far
  western Russia, Belarus, western Ukraine and the Baltic States are expecting frequent snow and rain events over the next ten days to two weeks
• Most
  other areas in Russia and Ukraine will only receive a light amount of moisture
• South
  Africa will be mostly dry in the northeast (mostly Limpopo) through the coming week while showers and thunderstorms slowly increase in other areas
• Heavy
  rain is expected in parts of Eastern Cape and Natal during the coming week causing some local flooding and disrupting some farm activity
• Southeastern
  parts of the nation will continue wettest next week
• Southeast
  Asia (Indonesia and Malaysia in particular) will experience slowly increasing rain frequency and intensity in the next week to ten days
  
• Recent
  precipitation was erratic and sometimes very light
• Philippines
  rainfall has been heavy at times in eastern production areas of the nation this winter due to a strong northeast monsoon flow
• Rain
  Tuesday and Wednesday was lighter and less threatening, but flooding has occurred recently from northeastern Mindanao through Samar to southeastern Luzon Island
• The
  unsettled weather will resume over the next two weeks with more frequent rain and eventually some additional heavy rainfall and flooding are expected in the east again
• Some
  forecast models suggest a tropical cyclone may evolve and threaten Mindanao late this weekend into early next week, but confidence is low
• Lower
  coastal areas of Vietnam may receive some rain periodically during the next ten days, but no heavy rain is expected
• Western
  Turkey will continue to receive frequent rain over the next ten days with some mountain snow
• Central
  and eastern Turkey will be drier biased for the next ten days
• Middle
  East rainfall is expected to be erratic over the next couple of weeks with only pockets of significant moisture
• 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 lighter.
  
• Coffee
  and cocoa conditions should remain favorable in all production areas, despite the anomalies
• West-central
  Africa dryness will continue through the next ten days to two weeks except near the coast where periodic precipitation is likely
  
• Dry
  conditions are normal at this time of year
• No
  excessive heat is expected in this coming week, although warmer than usual conditions are expected into the first days of February
  
• Today’s
  Southern Oscillation Index was +18.19 today and it is likely to drift lower as time moves along

Source:
World Weather and FI

 

Bloomberg
Ag calendar

Thursday,
Jan. 19:

• Global
  Forum for Food and Agriculture, Berlin, Jan. 18-21

• European
  cocoa grindings
• North
  America cocoa grindings
• EIA
  weekly US ethanol inventories, production
• Port
  of Rouen data on French grain exports
• New
  Zealand Food Prices
• USDA
  red meat production, 3pm

Friday,
Jan. 20:

• Global
  Forum for Food and Agriculture, Berlin, Jan. 18-21

• Malaysia’s
  Jan. 1-20 palm oil exports
• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various US futures and options
• US
  net- export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• US
  cotton ginnings
• US
  cattle on feed

Monday,
Jan. 23:

• MARS
  monthly report on EU crop conditions
• Brazil’s
  Unica to release sugar output, cane crush data during the week (tentative)
• HOLIDAY:
  China, Hong Kong, Malaysia, Indonesia, Korea, New Zealand, Singapore, Vietnam

Tuesday,
Jan. 24:

• EU
  weekly grain, oilseed import and export data
• HOLIDAY:
  China, Singapore, Hong Kong, Malaysia, Korea, Vietnam

Wednesday,
Jan. 25:

• EIA
  weekly US ethanol inventories, production, 10:30am
• Malaysia’s
  Jan. 1-25 palm oil exports
• US
  cold storage data for pork, beef and poultry, 3pm
• National
  Coffee Association’s webinar on 2023 US coffee outlook
• USDA
  total milk production, 3pm
• US
  poultry slaughter, 3pm
• HOLIDAY:
  China, Hong Kong, Vietnam

Thursday,
Jan. 26:

• Paris
  Grain Conference, day 1
• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• USDA
  to release its outlook for world orange and orange-juice production
• Port
  of Rouen data on French grain exports
• HOLIDAY:
  China, India, Australia, Vietnam

Friday,
Jan. 27:

• Paris
  Grain Conference, day 2
• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various US futures and options
• US
  cattle inventory, 3pm
• HOLIDAY:
  China

Source:
Bloomberg and FI

 

Macros

US
Initial Jobless Claims Jan 14: 190K (est 214K; prev 205K)

US
Continuing Claims Jan 7: 1647K (est 1655K; prev 1634K)

US
Housing Starts Dec: 1382K (est 1358K; prev 1427K)

US
Building Permits Dec: 1330K (est 1365K; prevR 1351K)

US
Housing Starts (M/M) Dec: -1.4K (est -4.8%; prev -0.5%)

US
Building Permits (M/M) Dec: -1.6K (est 1.0%; prevR -10.6%)

US
Philadelphia Fed Business Outlook Jan: -8.9 (est -11.0; prevR -13.7)

US
Philadelphia Fed Business Conditions January -8.9 (Consensus -11.0) Vs December -13.7

Philadelphia
Fed Prices Paid Index January 24.5 Vs December 36.3

Philadelphia
Fed New Orders Index January -10.9 Vs December -22.3

Philadelphia
Fed Employment Index January 10.9 Vs December -0.9

Philadelphia
Fed Six-Month Business Conditions January 4.9 Vs December -0.9

Philadelphia
Fed Six-Month Capital Expenditures Outlook January 10.5 Vs December 16.2

US
EIA NatGas Storage Change (BCF) 13-Jan: -82 (est -76; prev +11)

–
Salt Dome Cavern NatGas Stocks (BCF): +12 (prev +25)

US
DoE Crude Oil Inventories (W/W) 13-Jan: +8.408M (est -3.000M; prev +18.961M)

–
Distillate: -1.939M (est -200K; prev -1.069M)

–
Cushing: +3.646M (prev +2.511M)

–
Gasoline: +3.483M (est +2.400M; prev +4.114M)

–
Refinery Utilization: +1.2% (est +3.5%; prev +4.5%)

 

 

US
RIN Generation

2022

U.S.
GENERATED 583 MLN BIODIESEL (D4) BLENDING CREDITS IN DECEMBER, VS 582 MLN IN NOVEMBER

U.S.
GENERATED 1.21 BLN ETHANOL (D6) BLENDING CREDITS IN DECEMBER, VS 1.27 BLN IN NOVEMBER

 

2021

U.S.
GENERATED 576 MLN BIODIESEL (D4) BLENDING CREDITS IN DECEMBER, VS 464 MLN IN NOVEMBER

U.S.
GENERATED 1.30 BLN ETHANOL (D6) BLENDING CREDITS IN DECEMBER, VS 1.26 BLN IN NOVEMBER

 

 

Corn

·        
CBOT corn
ended
lower from Black Sea export competition and forecasts for rain to fall across Argentina over the next week. US offers for Egypt’s corn import tender fell short but were close to the lowest offer presented. They ended up picking up Romanian wheat, but some
noted the terms of the import tender blocked out much of the competition. USDA announced 195,000 tons of corn was sold to Mexico, and that may have limited losses.

·        
Funds sold an estimated net 4,000 corn contracts.

·        
US weekly ethanol production was better than expected and ethanol stocks dropped for the third consecutive week.

·        
The Buenos Aires grains exchange cut its estimate for Argentina’s 2022-23 corn harvest to 44.5 million tons, down from 50 million tons previously and 52 million tons last year. Corn plantings are running 89 percent.

·        
Argentina’s BA Grains Exchange reported the combined good and excellent corn rating at 5 percent and poor condition at 48 percent. Last week they were 7 and 47 percent, respectively. Rosario last week lowered their corn estimate
to 45 million tons.

 

 

·        
African swine fever is spreading throughout the Thailand island of Penang and far west-central Thailand, a sign the disease has not gone away in Southeast Asia. 

·        
USDA reported US eggs set in the US down slightly from a year ago and chicks placed up 1 percent. Cumulative placements were up 2 percent from the same period a year earlier.

·        
Cattle on Feed is due out Friday.

·        
CME hog futures fell on Wednesday as wholesale pork price declined to near a 2-year low. Demand from China has slowed as they saw a surge in pork production late last year.

 

US
ethanol production
for the week ending January 13 increased a more than expected 65,000 barrels to 1.008 million and stocks decreased 398,000 barrels to 23.402 million. A Bloomberg poll looked for weekly US ethanol production to be up 41,000 thousand barrels stocks up 107,000
barrels. The recovery in US ethanol production was aided by above normal temperatures since late December and very good ethanol margins since the start of the year. The average production change over the past four weeks is down 5,000 barrels while stocks are
off 166,000. Early September 2022 through January 13 ethanol production is still running well below, by 5.2%, from the comparable period year ago and 4.2 percent below pre pandemic levels. US gasoline stocks increased by 3.5 million barrels to 230.3 million
barrels, and implied gasoline demand increased 496,000 barrels to 8.054 million. US gasoline demand is down about 2 percent from the same week a year ago and off nearly 6 percent from mid-January 2020. Refinery and blender net input of oxygenates fuel was
834,000 barrels, up 66,000 from the previous week. Net production of combined finished reformulated and conventional motor gasoline with ethanol was 8.223 million barrels, up 649,000 barrels from the previous week and represents 91.1 percent of total finished
motor gasoline, same percentage blending rate as the previous week. We remain 25 million bushels below USDA for US 2022-23 corn for ethanol use.

 

US
DoE Crude Oil Inventories (W/W) 13-Jan: +8.408M (est -3.000M; prev +18.961M)

–
Distillate: -1.939M (est -200K; prev -1.069M)

–
Cushing: +3.646M (prev +2.511M)

–
Gasoline: +3.483M (est +2.400M; prev +4.114M)

–
Refinery Utilization: +1.2% (est +3.5%; prev +4.5%)

 

 

 

Export
developments.

·        
Egypt bought 50,000 tons of Romanian corn at $339 per ton c&f for shipment Feb. 10-25 and payment at sight. Some noted the specifications of the tender excluded many offers. Lowest offer earlier was $336/ton of Ukrainian origin.
Lowest US offer was $337.93/ton. Egypt tends to buy South American corn followed by Ukraine origin.

·        
USDA: Private exporters reported sales of 195,000 metric tons of corn for delivery to Mexico during the 2022/2023 marketing year.

 

 

 

 

Updated
01/19/23

March
corn $6.50-$7.25 range. May
$6.25-$7.20

 

Soybeans

·        
CBOT soybean
complex traded lower as traders digest improving Argentina weather. It’s uncertain at this point is soybean production will improve from the 39 trade estimate, what we think is worked in. But not a 100 percent has been planted yet, and La Nina is abating.
We are using 40.5 million tons for the Argentina crop. Soybean meal and soybean oil traded lower. Meal saw a good amount of bear spreading from a slight erosion in SA meal premiums.

·        
Funds sold an estimated net 4,000 soybeans, 3,000 soybean meal and 3,000 soybean oil.

·        
Argentina soybean and corn conditions worsened from the previous week.

·        
Argentina’s BA Grains Exchange reported the combined good and excellent soybean rating at 3 percent and poor condition at 60 percent. Last week they were 4 and 56 percent, respectively. Soybean plantings are running at 96 percent.

 

 

·        
Malaysian palm futures ended higher.

·        
A Reuters poll calls for 2023 will average 3,800 ringgit a ton in 2023, down 23% from last year’s record average of 4,910 ringgit. 

·        
Two Brazilian soybean cargoes destined for Argentina showed on shipping lineup reports earlier this week, one expected to sail February 5 and another February 8.

·        
Russia proposed increasing its export tariffs on soybeans by 20 percent to 50 percent to increase domestic processing.

·        
China is looking to increase its domestic soybean area by 6 percent or 667,000 hectares for the 2023 crop to reduce its dependency on imports. 2022 China soybean plantings were up 22 percent and production was up nearly 24 percent
to 20.3 million tons.

 

March
soybean oil share

Source:
Reuters and FI

 

Export
Developments

·        
The trade is waiting for results on the Philippines seeking up to 45,000 tons of soybean meal. The soybean meal was sought for April 18 and May 25 shipment.

·        
Today the USDA seeks 50,160 tons of soybean meal for March 1-10 shipment, for the Food for Progress program.

 

Updated
01/19/23

Soybeans
– March $14.75-$15.75, May $14.75-$16.00

Soybean
meal – March $450-$520, May $425-$550

Soybean
oil – March
60.00-68.00, May 58-70

 

Wheat

·        
US wheat futures traded two-sided and ended lower for Chicago and KC and higher for front month MN. The bearish undertone for Chicago and KC was tied with large Russia grain export prospects and good winter grain conditions for
Russia. EU wheat fell to near a 10-month low. US winter grain growing area soil moisture levels are improving as precipitation falls across the Great Plains. NE saw a good anow event over the past day. US SRW wheat growing areas are good shape. 

·        
Funds sold an estimated net 4,000 Chicago wheat contracts.

·        
March Paris milling wheat officially closed down 3.75 euros, or 1.3%, at 294.75 euros a ton ($308.38/ton).

·        
Some western countries pledged to supply Ukraine weapons, a signal the Russia/Ukraine situation has no near term end in sight. The Ukraine/Russia conflict turns one year old next month.

·        
After Russia’s President announced earlier this week the country needs to become more focused on grain reserves to ensure supply by controlling exports, the Russian AgMin estimated grain exports this season are expected to end
up between 55 and 60 million tons through June 2023. This compares to IKAR’s 55.5 million ton estimate.

·        
Russia’s AgMin reported about 94 percent of the winter crops were rated in satisfactory condition, 3 points below this time year ago.

·        
India domestic wheat prices hit a record high this week and now the government is considering some type of policy to cool prices. They already curbed exports during the FH of 2022.

·        
China plans to auction off 140,000 tons of wheat on February 1, that includes stocks from the 2014-2017 crop years.

 

Export
Developments.

·        
Tunisia’s state grains agency bought 125,000 tons of optional origin durum wheat in five consignments of 25,000 tons an estimated $489.49, $492.68, $492.29, $494.49, and $493.09/ton C&F for shipment between Feb. 15 and April 5.

·        
The Philippines bought around 110,000 tons of Australian feed wheat. No prices were provided. The wheat was sought for April 16 and June 25 shipment.

·        
Japan bought 77,763 tons of food wheat for Feb 21-Mar 20 shipment. Original details as follows:

·        
Japan seeks 70,000 tons of feed wheat and 40,000 tons of barley on January 25 for arrival in Japan by March 16.

 

Rice/Other

·        
(Bloomberg) — China Dec. Cotton Imports +24.9% Y/y.  China’s exports of rare-earth products fell 2% from a year ago in Dec., according to figures released by the Beijing-based Customs General Administration.

·        
(Bloomberg) — The Philippines is planning to import 450,000 tons of sugar to boost domestic supplies and temper prices, an official from the Sugar Regulatory Administration said.

·        
(Bloomberg) — Florida’s Orange Crop Is Smallest In Decades, Hit by Weather, Disease.  Florida orange growers are harvesting their smallest crop in nearly 90 years, the result of an ill-timed freeze, two hurricanes and citrus
disease that is laying waste to its groves.

·        
(Reuters) – India is not looking at allowing more sugar exports, government and industry officials said on Thursday, dampening speculation that the world’s biggest producer of the sweetener would permit a second tranche of overseas
shipments.

 

 

Updated
01/19/23

Chicago
– March $7.00 to $8.00, May $7.00-$8.25

KC
– March $7.75-$9.00, $7.50-$9.25

MN
– March $8.75 to $10.00,
$8.00-$10.00