FI Evening Grain Comments 03/01/23

PDF Attached

 

New
month/new money. The soybean complex rallied today from technical buying. Rumors (for the second time today) of Chinese soybean interest added to the strength in soybeans but could not be verified. Earlier we heard China bought US corn. Soybean oil traded
two-sided. A rebound in WTI crude oil supported that market. Soybean meal ended higher from ongoing SA weather concerns. Corn ended higher for the front months. Chicago and KC wheat finished higher on bottom picking.
MN was lower following weakness in EU wheat futures.

 

 

Weather

First
day of meteorological spring. The morning weather forecast was unchanged for the US and SA. Argentina will see light rain through Saturday and Brazil will see scattered showers through the end of the week. A winter storm is rolling across a large portion of
the central US through Saturday, improving soil moisture levels. It’s early March meaning traders will become more focused on Northern Hemisphere plantings. For that growing season, there is already some concern that a quick transition to El Nino could yield
drier than normal conditions for the US Midwest and increase risks for Australia’s wheat crop during the second half of 2023. We have a long way to go but changes in the ENSO pattern should be monitored over the next several months.

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE DAY

• Drought
  continues to threaten Canada’s Prairies early 2023 planting, but there is still time for improved soil moisture and precipitation
  
• Recent
  snow in western and southern Alberta has attempted to improve topsoil moisture in the spring when the snow melts, but more moisture will be needed
• The
  driest areas are in central and western Saskatchewan and east-central through interior southern Alberta
• There
  is plenty of time for improvement before spring planting season begins, but the area needs to be more closely monitored over the next few weeks for signs of relief
• New
  data from Argentina reflects the parallel between this year’s drought and that of 2009 and in that year the drought did not ease until late in the autumn season
• There
  is no opportunity for rain in central or southern Argentina during the next ten days
• World
  Weather, Inc. is still looking for relief from drought much sooner than May, but May 2009 was the month of greatest change that eased drought in that year
• The
  latest study from World Weather, Inc. has revealed that abating multi-year La Nina events that develop into El Nino late in the same year tend to leave behind lighter than usual summer rainfall in the Midwest and Great Plains
• That
  does not mean drought
• Temperatures
  will have much more to say about the impact of dryness this summer
• 1976
  was the most similar year to that of 2023, but it was a milder summer and corn and soybean yields were higher than in the previous year
• This
  summer should be warmer than that of 1976 especially in the Plains and western Corn Belt which might make the below average precipitation bias a little more important and potentially impacting on summer production
• An
  excessive rain event is under way in peninsular Malaysia where torrential rain is expected over the next five days
• Already
  overnight the southern tip of the peninsula including the Singapore area reported up to 11.73 inches of rain
• The
  region has potential to end up with 15.00 to 20.00 inches of moisture before the stormy period is over
• Flooding
  will induce more damage to infrastructure and personal property than to agriculture, but there is potential for some damage to rice, sugarcane and other crops produced low to the ground
• Argentina’s
  weather is still poised to be quite dry in the central and south for the next ten days with above normal temperatures that will continue to stress crops
  
• Brazil
  weather has not changed overnight with waves of rain likely for most of the nation excepting the northeast half of Minas Gerais, Espirito Santo and Bahia where dry biased conditions are likely
• Delays
  in soybean harvesting and Safrinha harvest progress will continue for a while
• Weather
  in Mato Grosso and Rio Grande do Sul will be best over the next two weeks while the greatest delays in farming occur from Paraguay through Parana and portions of Mato Grosso do Sul to Sao Paulo and far southern Minas Gerais
• India’s
  potential for showers has improved for this weekend and next week, but resulting rainfall should be too light to have much impact on late reproducing and filling winter crops
• The
  moisture will help hold back temperatures a little which is needed after a warmer than usual and drier than usual February
• The
  last thing India needs is a hot, dry, March – if such a pattern evolves there may be an acceleration in production cuts.
  
• Eastern
  China’s rapeseed region is drying out and the process will continue for a while
• Rain
  will be needed later this month to maintain favorable yield potentials
• A
  boost in precipitation will also be needed for early season rice planting which should be getting under way near and south of the Yangtze River Basin
• China’s
  wheat region is also expecting warm temperatures, but the crop will not likely break dormancy for a while
• Dryness
  in the Yellow River Basin and North China Plain is not unusual during the late winter and early spring, but if temperatures get too warm too soon there might be a greater impact on wheat and other crops
  
• U.S.
  Red River Basin of the North is seeing spring flood potentials rise because of additional snow over nearly saturated soil and a deep snowpack
• Snowfall
  of 3 to 10 inches occurred from central through southern North Dakota into west-central Minnesota as well as in northern South Dakota
• Jamestown,
  N.D. reported 14 inches of new snow
• Snow 
  water equivalencies across the basin were running 2.00 to 6.00 inches prior to Tuesday’s snow event and there is more snow coming this weekend
• Spring
  flooding will also be possible this year in southwestern Russia and Belarus as well as some neighboring areas due to saturated soil and deep snowpack on top of the wet conditions
• Early
  season wheat development has begun in the lower U.S. Midwest, mid-south, southeastern states and far southern Plains due to recent warm temperatures and favorable soil moisture
• Cooling
  will be needed soon to keep crop development in check just a little while longer
• Cooling
  is expected in the second week of March
• Early
  season corn and other crop planting has begun in the lower U.S. Delta, South Texas and northeastern Mexico.
  
• A
  few areas in the far southeastern part of the U.S. may also be in their fields beginning spring planting
• Florida
  is becoming too dry, although irrigation is being used to support crops
• Rain
  is need across the state and it will soon be needed in southern and southern Alabama as well
• U.S.
  dryness remains a concern in southern Texas, portions of West Texas and in the high Plains of hard red winter wheat country
• No
  relief is expected in these areas for at least another week
• Some
  forecast models are offering a chance for relief in the second week of the forecast, but confidence is low in regard to the potential event
• Recent
  rain and snow in the U.S. central Plains has induced some short term improvement in soil moisture and crop conditions may improve if periodic precipitation continues while seasonal warming evolves
  
• Light
  precipitation Thursday into Friday and again March 8-9 will help maintain status quo conditions, but there will not be enough moisture to seriously improve the moisture profile until a more generalized precipitation event develops
• The
  high Plains region needs rain more than any other part of the Plains
• U.S.
  central and eastern Midwest, Delta and Tennessee River Basin will be the wettest crop areas for a while
• California’s
  precipitation today will be confined to the south and a few days of drying will then follow
• More
  storminess is expected next week that will further raise soil moisture and potential runoff for the spring when temperatures turn warm enough to melt mountain snow.
  
• North
  America temperatures into early next week will be colder than usual in the western parts of both the United States and Canada while temperatures are warmer biased in the Midwest, Delta, southeastern states, southern Plains and the Middle and North Atlantic
  Coast States
• Some
  of the cold in the west will begin spreading to the east in the second week of March including much of the Great Plains and  part of the Midwest
• South-central
  and southeastern Europe will receive additional precipitation over the next few days while other parts of the continent are dry or mostly dry
  
• A
  boost in precipitation would be welcome and good for agriculture across the continent
  
• Eastern
  Spain and the lower Danube River Basin continue driest
• Northern
  Europe will not be completely dry, but precipitation amounts will be very light until next week when France and Germany trend wetter
• Temperatures
  will also be cooler biased across much of Europe especially in the north into the weekend
  
• Europe
  should trend warmer in the second week of March
• Western
  CIS crop weather will continue wet over the next ten days with waves of snow and rain expected to continue
• Flood
  potentials continue to rise for this spring due to saturated soil and significant snow accumulations on top of the ground
• Additional
  moisture totals this week will vary from 0.30 to 1.00 inch with a few 1.00- to 2.00-inch totals
• Europe
  and Asia temperatures will remain warmer than usual during the coming two weeks except in Western Europe early this week and from Scandinavia through northwestern Russia next week when cooler than usual conditions are likely.
  
• Eastern
  Australia’s dryland cotton, sorghum and other summer crops are unlikely to get much precipitation over the next ten days resulting in additional crop stress and lower production potentials
• Some
  rain is expected near the Pacific Coast, but interior areas of Queensland and New South Wales will remain dry
• Irrigated
  crops in eastern Australia continue in good condition with normal to above normal yields expected
• Philippines
  rainfall will be light to locally moderate most days through the coming week
  
• Weather
  conditions in the next ten days should be mostly good for the nation
• Indonesia
  and Malaysia rainfall will occur abundantly during the next two weeks with all areas impacted and no area experiencing much net drying
• South
  Africa rainfall will be restricted for another day or two and then increase late this week through next week
  
• The
  improved rainfall will maintain a very good summer crop outlook
• West-central
  Africa rainfall should increase in the next two weeks
• A
  seasonal increase in rainfall is expected to continue gradually over the next two weeks helping coffee, cocoa, rice and sugarcane to begin development normally
• Middle
  East precipitation is expected to be erratic and sometimes light over the next couple of weeks raising some need for greater precipitation prior to cotton and rice planting season.
  
• Wheat
  conditions are rated favorably, but would benefit from additional rain
• Turkey
  should be wettest while Syria, Iraq and Jordan need greater rainfall
• Eastern
  Africa precipitation will be greatest in Tanzania during the next ten days which is not unusual at this time of year
• Some
  rain is expected to develop in Ethiopia, Uganda and Kenya over time, although amounts should be light
• Sunday’s
  Southern Oscillation Index was +10.51 and it was expected to move erratically over the next week

Source:
World Weather and FI

 

Bloomberg
Ag calendar

Wednesday,
March 1:

• Dubai
  Sugar Conference, day 3
• EIA
  weekly US ethanol inventories, production, 10:30am
• USDA
  soybean crush, DDGS production, corn for ethanol, 3pm
• Global
  Grain and Animal Feed Asia 2023, Singapore, day 1

Thursday,
March 2:

• Dubai
  Sugar Conference, day 4
• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Port
  of Rouen data on French grain exports
• Global
  Grain and Animal Feed Asia 2023, day 2

Friday,
March 3:

• FAO
  World Food Price Index, grains report
• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various US futures and options, 3:30pm
• FranceAgriMer’s
  weekly crop conditions reports
• Global
  Grain and Animal Feed Asia 2023, day 3

Source:
Bloomberg and FI

 

Selected
Brazil commodity exports via Reuters

Commodity                     
February 2023      February 2022

CRUDE
OIL (TNS)                2,527,864             6,474,032

IRON
ORE (TNS)                 23,412,934            18,654,057

SOYBEANS
(TNS)                 5,199,853             6,271,312

CORN
(TNS)                     2,276,989             768,396

GREEN
COFFEE(TNS)              122,402               208,279

SUGAR
(TNS)                    1,147,588             1,723,741

BEEF
(TNS)                     126,449               158,506

POULTRY
(TNS)                  353,421               339,409

PULP
(TNS)                     1,622,155             1,130,700

 

 

Macros

100
Counterparties Take $2.134 Tln At Fed Reverse Repo Op. (prev $2.188 Tln, 107 Bids)

US
ISM Manufacturing Feb: 47.7 (est 48.0; prev 47.4)

–
Prices Paid: 51.3 (est 46.5; prev 44.5)

–
Employment: 49.1 (prev 50.6)

–
New Orders: 47.0 (prev 42.5)

US
Construction Spending (M/M) Jan: -0.1% (est 0.2%; prev R -0.7%)

 

Corn

·        
Corn futures ended
higher in the front months on talk China bought 1.5 million tons of US corn for April and May shipment. Back months were under pressure from prospects for a large Brazil second corn crop. US corn is cheapest among the largest exporters through early June.

·        
Argentina confirmed a case of bird flu disease at an industrial poultry farm, prompting them to poultry exports ($350 million annual value).

·        
China’s sow herd fell by 0.5% at the end of January compared with the prior month, data from the Ministry of Agriculture and Rural Affairs showed on Wednesday. The herd of 43.67 million sows was 1.8% higher than a year earlier.

·        
Brazil as expected (gradually) resumed taxes on gasoline and ethanol at 0.47 real and 0.02 real per liter, respectively.

·        
StoneX: Brazil total corn crop 130.6MMT, a record. 100.8 second corn crop. 

·        
Agroconsult: Brazil total corn crop 128.5MMT, up 8.6% from the previous season. 2^nd corn crop 99.1MMT. 

·        
The Biden Administration is expected to go forward with year-round E15 gasoline sales this week. The EPA proposed that it would go into effect summer 2024.

·        
Global freight rates are starting to rise on increasing Chinese demand.

·        
USDA NASS reported corn for ethanol use was 444 million bushels during the month of January, above an average trade guess of 437 million and below 464 million year earlier. This may have little impact on corn price direction.
USDA did not release a corn for ethanol use annual report, at least on their web homepage.

 

 

EIA
reported weekly ethanol production
down 26,000 barrels to 1.003 million barrels and stocks down 813,0000 barrels TO 24.775 million. For reference, a Bloomberg poll looked for weekly US ethanol production to be down 5,000 thousand barrels and stocks up 188,000 barrels.
US
gasoline stocks decreased 874,000 barrels to 239.2 million and implied gasoline demand increased 202,000 barrels to 9.112 million. Net production of combined finished reformulated and conventional motor gasoline with ethanol was 8.607 million barrels, up 203,000
barrels from the previous week and represents 92.7 percent of total finished motor gasoline, down from 93.9% previous week.

 

US
DoE Crude Oil Inventories (W/W) 24-Feb: +1.166M (est +1.900M; prev +7.647M)

–
Distillate Inventories: +179K (est -500K; prev +2.698M)

–
Cushing OK Crude Inventories: +307K (prev +700K)

–
Gasoline Inventories: -874K (est -1.000M; prev -1.856M)

–
Refinery Utilization: -0.10% (est -0.30%; prev -0.60%)

EIA:
Weekly US Crude Exports Hit New Record High

EIA:
US Crude Stocks Rose Last Week To Most Since May

 

 

 

U
of I: Fertilizer Prices and Company Profits Going into Spring 2023

Schnitkey,
G., N. Paulson, C. Zulauf and J. Baltz. “Fertilizer Prices and Company Profits Going into Spring 2023.”
farmdoc
daily
(13):36, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, February 28, 2023.

https://farmdocdaily.illinois.edu/2023/02/fertilizer-prices-and-company-profits-going-into-spring-2023.html

 

Export
developments.

• No
  24-hour sales

 

 

Updated
02/28/23

May
$5.90-$7.00

 

Soybeans

·        
CBOT soybeans ended
higher on rumors China bought US PNW and/or Gulf soybeans. This was downplayed by the time CBOT day session opened but resurfaced by late morning trading. We could not verify the Chinese purchases. 

·        
Soybean oil and meal ended higher. A rebound in WTI crude oil supported soybean oil but a rally in meal limited gains. 

·        
Argentina producers launched a protest this week over taxes, exchange rates and financial support.

·        
StoneX: Brazil soybean crop 154.7MMT, above 154.2MMT previous.

·        
Agroconsult: Brazil soybean crop 153MMT, unchanged from previous.

·        
India will end their duty-free import quota of 2 million tons of crude sunflower oil for the next fiscal starting from April 1, which could increase imports of palm oil. This comes after they already decided to end duty free imports
of crude soybean oil for the new fiscal year.

·        
Cargo surveyor SGS reported February Malaysian palm exports at 1,131,939 tons, 18,647 tons above a month ago or up 1.7%, and 110,348 tons below a year ago or down 8.9%.

 

USDA
NASS reported
the January US soybean crush at 191.1 million bushels, 1.5 million above trade expectations and below 194.3 million year ago. 6.17 million bushels were crusher per day, below 6.27 million January 2022. Soybean oil stocks of 2.356 million were only 15 million
pounds below an average trade guess, and below 2.500 billion at the end of January 2022. The larger than expected crush should have inflated the bean oil carryout above trade expectations. So SBO demand during January was better than expected. The crush and
SBO stocks is slightly supportive for both commodities. Meal stocks are down a touch from last month and seen neutral for price reaction. Both soybean oil and meal yields were up month over month, so implied product demand was decent. The annual report was
also released today.

 

 

Annual
revisions

 

 

Export
Developments

·        
None reported

 

Updated
02/28/23

Soybeans
– May $14.50-$15.75

Soybean
meal – May $430-$490

Soybean
oil – May
57-64

 

Wheat

·        
Chicago and KC wheat futures appreciated on Wednesday after trading two-sided earlier. Headed into today, Chicago wheat was down five consecutive session and some longs took advantage of the significant price drop over the last
two weeks. Note Chicago wheat fell 66.25 cents since a week ago Friday (2/17). Minneapolis wheat ended lower, in part to EU wheat futures hitting a one year low during the session.  

·        
May Paris milling wheat officially closed down 3.50 euro, or 1.3%, at 274.25 euros a ton (about $290.00/ton).

·        
Ukrainian grain exports reached 5.2 million tons in February, above 5.05 million tons year ago. 2022-23 grain exports are running nearly 26% below year ago at 32.3 million tons. It included 11.3 million tons of wheat, 18.6 million
tons of corn and about 2 million tons of barley.

·        
Traders are waiting for news over the Black Sea grain export deal.

 

Export
Developments.

·        
Japan in a SBS import tender seeks 70,000 tons of feed wheat and 40,000 tons of barley for arrival in Japan by August 31 on March 8.

·        
Taiwan flour millers bought 48,975 tons of US wheat for PNW shipment between April 19 and May 3. Wheat types sought include dark northern spring, hard red winter and white wheat.

·        
Thailand bought 30,000 tons of Australian wheat at $336/ton c&f for May shipment.

• 32,550
  tons of U.S. dark northern spring wheat of a minimum 14.5% protein content bought at an estimated $367.76 a ton FOB U.S. Pacific Northwest coast
• 9,500
  tons of hard red winter wheat of a minimum 12.5% protein content bought at $360.76 a ton FOB
• 6,925
  tons of soft white wheat between a minimum 8.5% and maximum 10% protein bought at $306.26 a ton FOB. (Reuters)

·        
Jordan’s state grain buyer bought 100,000 tons of optional origin feed barley at $284/ton c&f for LH June and FH July shipment.

·        
Yesterday Turkey bought 790,000 tons of wheat for March 8-April 7 and April 10-May 10 shipment.

·        
Japan’s AgMin seeks 70,065 tons of food-quality wheat from the United States and Canada later this week.

·        
Turkey seeks 440,000 tons of feed barley on March 2.

 

Rice/Other

·        
(Reuters) – Indonesia’s rice output is estimated at 13.79 million tons for the January to April harvest period this year, up 0.56% from a year earlier, data from the country’s statistics bureau showed on Wednesday. The figure
represents rice produced for household consumption and do not include output used in industries and animal feed. Around 4.51 million hectares of rice plantations are expected to reach harvest between January and April this year, compared with 4.41 million
hectares in the same period last year, although the bureau warned the threat of heavy rain in some regions could disrupt production.

 

Updated
02/28/23

Chicago
– May $6.75-$7.75

KC
– May $7.50-$9.25

MN
– May
$8.00-$10.00