FI Evening Grain Comments 02/06/23

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Volatile trade. Not much news.

 

Weather

 

World Weather, INC.

MOST IMPORTANT WEATHER FOR THE COMING WEEK

• Not many changes overnight
• Another day of favorable drying occurred in center west and northern parts of center south Brazil Thursday and early today
• There have been several days like this recently that have helped to begin firming the topsoil or at least reducing the surplus moisture for faster early season soybean maturation and harvest progress
• This trend will not last much longer with a resumption of more frequent precipitation expected this weekend and next week
• Field progress (including planting of Safrinha crops) will continue, although it must advance around the precipitation which should slow the pace a bit
• Argentina rainfall diminished Thursday as expected and the outlook now promises nine days of dry or mostly conditions with warming temperatures
• Crop stress will be greatest in the northeastern one-third to one half of the nation where the ground is already too dry
• Crop moisture in western Argentina is rated favorably today, but it will become short to very short of moisture by the end of next week and into the following weekend
• Brazil rainfall will be increasing across center west and some center south crop areas later this weekend through all of next week to slow fieldwork, but to ensure moisture abundance continues in the soil
• U.S. hard red winter wheat areas will not receive significant precipitation in the west during the next two weeks
• Some rain is expected during mid-week next week from central Oklahoma into eastern Kansas, but the heart of wheat country should not be impacted
• U.S. Delta and southeastern states, including the Tennessee River Basin, will continue to receive waves of rain through the next ten days keeping the ground wet, but winter crops should stay favorably rated
• The moisture abundance will be good for spring planting which begins in March
• California will receive a few waves of light rain and mountain snowfall during the next ten days to two weeks resulting in status quo conditions in soil moisture and mountain snowpack.
• Snow water equivalents in the mountains are still near and greater than those of the April 1 norm
• West Texas will be drier biased over the next ten days with little to no precipitation expected
• Far South Texas precipitation is expected to be minimal during the next ten days
• Coastal Bend crop areas in the state will see a little more rain, but might also need greater precipitation later this month ahead of spring planting
• Eastern North America will be bitterly cold today and Saturday with extreme wind chills and “some” light snow
• Livestock stress and a strong energy demand is likely in Ontario and Quebec Canada with some impact on the U.S. Great Lakes region and northeastern states as well
• Big warm up  likely in North America this weekend in the central U.S. and Canada Prairies and in the eastern parts of the continent next week
• No threatening cold is expected in Europe or Asia through the next ten days, although Europe temperatures will trend briefly colder next week
• Western Europe will continue drier than usual for the next week to ten days while eastern Europe receives periods of snow and rain
• Western areas will begin to receive precipitation again in the second week of the forecast
• Western Russia, the Baltic States and Belarus as well as Ukraine will receive brief periods of light precipitation through the next ten days
• Winter crops are still dormant, and most are sufficiently buried in snow
• Winterkill has been low so far this winter
• South Africa rainfall is expected to ramp up over the coming week and greater than usual rainfall is expected this weekend and especially next week
• The wetter bias will help return favorable field moisture and better reproductive conditions for many summer crops
• Production potentials are still high in most of the nation
• India’s recent rain was welcome, but not nearly enough to seriously change soil or crop conditions in the majority of winter crop areas
• Vegetative health indies suggest crops are in mostly good shape, but perhaps a little less so in a part of Uttar Pradesh and eastern pulse production areas
• Greater rain is needed in all winter crop areas
• Production should be average if excessive heat is avoided in February, but if it gets hot too soon the crop will do poorly because of the limited moisture situation
• Dry and warm weather is expected over the next ten days
• Southeastern China will be trending wetter over the next ten days
• Areas near and south of the Yangtze River will become abundantly wet soon which should help reduce market concerns about moisture in the region
• Rapeseed is still poised to perform well this year – at least from World Weather, Inc.’s perspective
• North Africa rainfall has diminished, and net drying is expected over the coming week
• Soil moisture is rated favorably in northern Algeria and near the coast in both northern Morocco and northern Tunisia, but all other areas need rain
• Rain should resume in the second week of the outlook, but mostly in northern Algeria and coastal Tunisia once again
• Eastern Australia soil moisture briefly improved earlier this week because of rain, but net drying is expected for the next few days
• The most abundant rain has been in the Darling Downs region of northeastern New South Wales and far southeastern Queensland
• Net drying is expected through the weekend
• The next best opportunity for rain will evolve next week and it should fall in mostly the same areas impacted earlier this week
• Middle East weather is expected to turn a little wetter during the coming week to ten days and the precipitation will help improve soil moisture for future wheat development and eventual cotton planting later in the year
• Turkey will be one of the wetter nations
• Central and southern Iraq and southeastern Syria along with portions of Iran will be driest and a net decline in soil moisture may result in those areas
• West-central Africa will receive some coastal showers in the coming week with some of the precipitation expected to drift northward into coffee, cocoa and sugarcane production areas
• Any rain that reaches into crop areas will be sporadic and light for a while, but mid- to late-week next week is advertised to be the best chance for rain in Ivory coast and southern Ghana production areas
• Seasonal rains usually develop in February
• Southeast Asia rainfall will be most significant in Indonesia and Malaysia as well as eastern portions of central and southern Philippines over the next ten days
• The moisture will be good for ongoing crop development, although a few areas may become a little too wet
• Central Sumatra may be one of the drier areas
• East-central Africa rainfall will remain most significant in Tanzania and southern Uganda while more limited in areas north into Ethiopia which is not unusual for this time of year
• Today’s Southern Oscillation Index was +10.00 today and the index is expected to move erratically over the next week

Source: World Weather and FI

 

Bloomberg Ag calendar

Friday, Feb. 3:

• FAO World Food Price Index
• FAO Cereal Supply and Demand Brief
• ICE Futures Europe weekly commitments of traders report
• Suspended – CFTC commitments of traders weekly report on positions for various US futures and options

Monday, Feb. 6:

• USDA export inspections – corn, soybeans, wheat, 11am
• HOLIDAY: Malaysia, New Zealand

Tuesday, Feb. 7:

• New Zealand commodity prices
• EU weekly grain, oilseed import and export data
• Canada’s StatCan to release wheat, soybean, canola and barley reserves data, 8:30am
• New Zealand global dairy trade auction

Wednesday, Feb. 8:

• USDA’s World Agricultural Supply & Demand Estimates (WASDE), 12pm
• China’s agriculture ministry (CASDE) releases monthly supply and demand report
• EIA weekly US ethanol inventories, production, 10:30am
• Brazil’s Conab issues production, area and yield data for corn and soybeans
• RESULTS: Yara

Thursday, Feb. 9:

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

Friday, Feb. 10:

• ICE Futures Europe weekly commitments of traders report
• CFTC commitments of traders weekly report on positions for various US futures and options, 3:30pm
• Malaysian Palm Oil Board’s January data on stockpiles, production and exports
• Brazil’s Unica to release sugar output, cane crush data (tentative)
• Malaysia’s Feb. 1-10 palm oil export data

Source: Bloomberg and FI

 

 

 

 

 

Special Announcement: Commitments of Traders Market Report

February 2, 2023: An ongoing issue with a third-party service provider is impacting some reporting firms’ ability to provide the CFTC with timely and accurate data. As a result, the Commitments of Traders report for publication date February 3, 2023, will be delayed. A report will be published upon receipt and validation of data from those firms.

 

CFTC Statement on ION and the Impact to the Derivatives Markets

https://www.cftc.gov/PressRoom/SpeechesTestimony/cftcstatement020223

 

Macros

US Change In Nonfarm Payrolls Jan: 517K (est 189K; prevR 260K) 

US Unemployment Rate Jan: 3.4% (est 3.6%; prev 3.5%)

US Average Hourly Earnings (M/M) Jan: 0.3% (est 0.3%; prevR 0.4%)

US Average Hourly Earnings (Y/Y) Jan: 4.4% (est 4.3%; prev 4.6%)

US Labour Force Participation Rate Jan: 62.4% (est 62.3%; prev 62.3%)

US Underemployment Rate Jan: 6.6% (prev 6.5%)

US Change In Private Payrolls Jan: 443K (est 190K; prevR 269K)

US Change In Manufact. Payrolls Jan: 19K (est 7K; prevR 12K)

US ISM Services Index Jan: 55.2 (est 50.5; prev 49.2)

– Prices Paid: 67.8 (prev 68.1)

– Employment: 50.0 (prev 49.4)

– New Orders: 60.4 (prev 45.2)

101 Counterparties Take $2.050 Tln At Fed Reverse Repo Op. (Prev $2.038 Tln, 100 Bids)

US Crude Oil Futures Settle At $73.39/Bbl, Down $2.49 Or 3.28%

 

 

Corn

·         CBOT corn traded higher, on unwinding of soybean/corn spreads, IMO, and $ positioning.

 

Export developments.

·         South Korea’s KFA bought an estimated 126,000 tons of corn for Arrival around April 20. 60,000 tons was sourced from South America at $337.80/ton c&f and 66,000 optional origin at $336.60/ton c&f.

 

Updated 01/31/23

March corn $6.60-$7.00 range. May $6.25-$7.00

 

Soybeans

·         Bear spreading. Perhaps spreading might have been in play from Chinese pricing?

·         Soybean oil gained over meal , but look for that market to lose against over the long run,

·         Funds sold an estimate 6,000 soybeans, 4,000 meal and bought 1,000 oil,

 

Export Developments

·         USDA reported private exporters sold 132,000 tons of soybeans to unknow destinations for 2022-23 delivery.

 

 

Updated 01/31/23

Soybeans – March $15.00-$15.80, May $14.75-$16.00

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

Soybean oil – March 60.00-67.00, May 58-70

 

Wheat

·         Chicago wheat ended lower in a volaille trade. KC was higher on US crop eorries?

 

 

Export development & Rice/Other

·         SK bought 65,000 tons of feed wheat, optional origin, at $334.50/ton for arrival around LF August.

·         Algeria seeks 50,000 tons of wheat for March and April shipment, Feb 7-8, and may double down on the import tender.

·         Jordan seeks 120,000 tons of optional origin milling wheat on February 7 for May-June shipment.

Taiwan seeks 48,100 tons of milling wheat from the US on February 9 for March 29 and April 12 shipment.

 

Updated 02/02/23

Chicago – March $7.25 to $7.90, May $7.00-$8.25

KC – March $8.40-$9.10, $7.50-$9.25

MN – March $9.00 to $9.75, $8.00-$10.00