FI Evening Grain Comments 03/03/23

PDF attached

 

 

Soybean
futures and soybean meal ended Friday on a strong note but for the week were mixed by a slight amount. Soybean oil for the day was lower on spreading. Higher energy and palm prices did little to stop the selling in SBO. Corn rallied led by nearby contracts
on talk of Chinese demand, although USDA has not reported a 24-H sales announcement since mid-February. The lack in USDA sales sent corn futures lower for the week. Funds as of week one February for corn remained (very) long while wheat hit a mid-2019 low,
looking a traditional position. Wheat futures on Friday ended lower on ample global supplies and US cash export prices well overpriced from the global export market, along with improving soil moisture for US winter wheat ahead of spring emergence for the crop.

 

 

Weather

Most
of southern and central Brazil will see rain through the end of this week while net drying in the northeast may stress the corn crop. The far west of Argentina will see rain next week. Temperatures will remain hot  for Argentina resulting in net drying for
many areas. A wintery mix will continue to sweep across the central and eastern US over the couple of days. Lingering rain should favor the far southern and central Great Plains today.

 

World
Weather Inc. –

 

 

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE DAY

• Brazil
  rainfall in the center south is expected to slowly lighten up in the coming week
• That
  should translate into better soybean maturation and harvest conditions over time, but it may take a while for ideal harvesting and planting conditions to return in Parana, Sao Paulo and Mato Grosso do Sul
• Crop
  conditions in most other areas will be favorable, although drying in parts of Bahia, Espirito Santo and northeastern Minas Gerais may be of some interest to unirrigated coffee, sugarcane and cocoa production
• Some
  of the dryness reaches down into northern parts of the Zona de Mata coffee region
• Argentina
  was advertised slightly wetter in the southwest part of Buenos Aires, La Pampa and western and southern Cordoba for early and late next week, although the precipitation was advertised mostly light
• East-central
  and southeastern parts of the nation will continue dry biased for ten days
• The
  Antarctic Oscillation Index is trending more notably negative which should correspond to some increased potential for greater rain in Argentina as mid-month approaches
• India’s
  second week of the forecast was a little wetter today than Thursday
• The
  moisture boost will not be very great, but it will help to pull back the temperatures so that excessive heat is less likely to evolve for a while and after recent weeks of below normal rainfall and warm weather that could help protect production potentials
  from falling more significantly
• Europe
  was advertised wetter today in the second week of the forecast and the moisture boost will be good ahead of the start of spring crop development and planting
• Mostly
  dry conditions are likely this weekend
• U.S.
  hard red winter wheat areas may get some welcome moisture in the second half of next week with rain and snowfall expected, but confidence in the details of the outlook are low
• The
  southwestern Plains are unlikely to get significant amount of moisture from the event
• Another
  northern U.S. Plains and upper Midwest snowstorm is expected this weekend resulting in additional heavy snowfall in portions of central and southern North Dakota and northern South Dakota as well as central Minnesota      
  
• Snowfall
  of 2 to 6 inches will result with some potential for local totals of 6 to 10 inches
• The
  additional moisture tied up in the snowfall will maintain a risk of spring flooding in the red River Basin
• South
  Texas and northeastern Mexico are unlikely to get drought busting rainfall anytime soon, although a few showers might occur
• West
  Texas precipitation will be restricted for the next ten days to two weeks leaving the ground quite dry in some areas
• Recent
  excessive wind has induced blowing dust and raised concern about ongoing drought
• U.S.
  Gulf of Mexico Coast States will experience a boost in precipitation in the second week of the forecast which will slow or stall the development of dryness across the region
• U.S.
  temperatures will be cooler than usual in the far west and north-central states during the coming week, but starting late next week and prevailing through March 12 temperatures will fall below normal in the Great Plains and western Corn Belt as well
• Canada’s
  Prairies will continue dealing with drought this spring especially in east-central and southeastern parts of Alberta and across western and south-central Saskatchewan
  
• Recent
  snow near the Alberta mountains will improve topsoil moisture in the spring when it melts
• U.S.
  Midwest will remain abundantly moist over the next ten days, although the second week of the forecast will trend a little drier as a northwesterly flow pattern evolve aloft
• 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
• Eastern
  China is drying out, but temperatures have been mild enough recently to conserve soil moisture
• Rapeseed
  and some wheat areas will need rain later this month, but conditions for now are mostly good
• Rice
  and corn planting may require greater rainfall in southern China and some sugarcane and citrus crops would benefit from greater rain as well
• 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 in southwestern Russia and Belarus due to saturated soil and significant snow accumulations on top of the ground
• Additional
  moisture totals over the next ten days will vary from 0.30 to 1.00 inch with a few 1.00- to 2.00-inch totals
• 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 weather will be favorably mixed during the next two weeks with alternating periods of rain and sunshine likely
• 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
• Recent
  precipitation has been erratic and light
• 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
• Today’s
  Southern Oscillation Index was +10.71 and it was expected to move erratically over the next week

Source:
World Weather and FI

 

Bloomberg
Ag calendar

Monday,
March 6:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• New
  Zealand Commodity Price
• Malaysia’s
  March 1-5 palm oil export data
• Bursa
  Malaysia Palm Oil Conference and 2023 Outlook, Kuala Lumpur, day 1
• HOLIDAY:
  Thailand

Tuesday,
March 7:

• EU
  weekly grain, oilseed import and export data
• US
  Purdue Agriculture Sentiment
• New
  Zealand global dairy trade auction
• Bursa
  Malaysia’s palm oil conference and 2023 outlook, Kuala Lumpur, day 2
• ABARES
  Outlook 2023 conference, Canberra, day 1
• HOLIDAY:
  India

Wednesday,
March 8:

• USDA’s
  World Agricultural Supply and Demand Estimates (WASDE), 12pm
• China’s
  agriculture ministry (CASDE) releases monthly report on supply and demand for corn and soybeans
• Bursa
  Malaysia Palm Oil Conference and 2023 Outlook, Kuala Lumpur, day 3
• EIA
  weekly US ethanol inventories, production, 10:30am
• ABARES
  Outlook 2023 conference, Canberra, day 2

Thursday,
March 9:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Port
  of Rouen data on French grain exports
• Brazil’s
  Conab releases data on production, yield and area for corn and soybeans

Friday,
March 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 data on stockpiles, production and exports
• FranceAgriMer’s
  weekly crop conditions reports
• Brazil’s
  Unica may release cane crush and sugar output data (tentative)
• Coffee
  festival in Dak Lak province, Vietnam

Source:
Bloomberg and FI

 

USDA
March report estimates

 

 

 

 

Due
out March 9

 

 

CFTC
COT through February 7

Funds
in Chicago wheat shorts hit mid 2019 levels. Prices haven’t but appears bearish for futures. However, might be oversold relative to corn fund + futures price.

 

 

 

 

Reuters
table

SUPPLEMENTAL     
Non-Comm               Indexes                  Comm

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
131,566    -10,092    357,903      3,077   -405,295     16,330

Soybeans          
125,015    -10,298    135,752      4,903   -214,645      5,741

Soyoil             
-2,525     -7,031    104,649      3,408   -108,185      3,380

CBOT
wheat         -79,474     -7,247     98,519       -112    -17,716      8,287

KCBT
wheat          -8,637      3,482     48,860      2,445    -36,709     -5,879

 

FUTURES
+ OPTS     Managed                 Swaps              Producer

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
202,018    -17,905    218,556      3,013   -399,749     17,344

Soybeans          
165,075    -10,428     77,735      4,912   -203,823      4,922

Soymeal           
142,710      1,766     78,645      1,950   -252,683     -3,750

Soyoil             
22,495     -8,729     99,087      1,280   -127,541      7,039

CBOT
wheat         -71,391     -7,763     65,692      1,444    -14,808      8,228

KCBT
wheat           3,782      2,443     36,816      1,291    -36,380     -5,559

MGEX
wheat            -295      1,530      1,634        -12     -4,025     -2,038

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

Total
wheat        -67,904     -3,790    104,142      2,723    -55,213        631

 

 

Live
cattle         95,610      7,778     45,175      1,092   -144,166    -10,134

Feeder
cattle         -754      1,720      2,439         20      3,552       -570

Lean
hogs          -11,918     -4,052     46,046       -955    -36,785      2,524

 

                     
Other             NonReport                  Open

                       
Net        Chg        Net        Chg   Interest        Chg

Corn            
   63,349      6,863    -84,174     -9,315  1,622,738     20,283

Soybeans            
7,136        941    -46,123       -345    840,111     33,081

Soymeal            
16,105        598     15,224       -565    488,770     10,788

Soyoil               
-101        168      6,061        242    499,140     37,175

CBOT
wheat          21,835       -979     -1,328       -928    428,529     13,966

KCBT
wheat            -704      1,874     -3,514        -49    206,406      3,451

MGEX
wheat           2,185        575        501        -55     59,797       -808

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

Total
wheat         23,316      1,470     -4,341     -1,032    694,732     16,609

 

Live
cattle         14,766      3,719    -11,385     -2,455    377,029     -4,491

Feeder
cattle        1,121        963     -6,359     -2,134     59,322       -469

Lean
hogs               89      1,872      2,568        613    297,821      8,418

 

Macros

103
Counterparties Take $2.186 Tln At Fed Reverse Repo Op. (prev $2.192 Tln, 99 Bids)

Canadian
Building Permits (M/M) Jan: -4.0% (exp 1.5%; prevR -7.7%)

Canadian
Labour Productivity (Q/Q) Q4: -0.5% (prevR -0.3%)

Saudi
Arabia And UAE Clash Over Oil, Yemen As Rift Grows – WSJ

–   
UAE Debating Internally Whether to Leave OPEC

US
ISM Services Index Feb: 55.1 (est 54.5; prev 55.2)

–
Prices Paid: 65.6 (prev 67.8)

–
Employment: 54.0 (prev 50.0)

–
New Orders: 62.6 (prev 60.4)

 

Corn

·        
Corn futures were
sharply higher on Friday from strength in soybeans, deteriorating Argentina crop conditions, and talk of China buying five cargoes (not 1.5MMT rumored earlier this week) of US corn out of the PNW this week. Bloomberg noted at least 300,000 tons of corn was
bought earlier their week for May and June delivery.

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

·        
We heard a lot of rumors this week of China buying US corn and few cargoes of soybeans, but nothing has been reported under the USDA 24-hour sales.

·        
Brazil said another 90 firms were cleared to export corn to China, bringing the total to 446 companies.

·        
Brazil confirmed the Mad Cow disease in Para state was atypical. Beef exports to China may resume soon.

 

Export
developments.

• No
  USDA 24-H sales this morning.
• Taiwan’s
  MFIG seeks up to 65,000 tons of corn on March 8 for April 25 and May 25 shipment.
  

 

Updated
02/28/23

May
Corn $5.90-$7.00

 

Soybeans

·        
CBOT soybeans and soybean meal ended higher on follow through buying amid Argentina production concerns. Soybean oil was lower from product spreading despite a rebound in WTI crude oil and palm oil futures closing higher.  The
spread, or oil share, is debatable where you see it, but in the end good crush product sales for both products is no reason for US crushing’s to accelerate from month on month 2-year levels (SBO domestic demand and SBM export exports).

·        
We saw this Friday with good SA producer selling with the appreciation in in US futures.

·        
Funds bought an estimated net 5,000 soybeans, 5,000 soybean meal and sold 3,000 soybean oil.

·        
Yesterday Argentina’s BA Grains Exchange reported a one point decline in the combined good/excellent categories to only 2 percent for the soybean crop, and 7 point increase in the poor/very poor categories to 67 percent.

·        
Argentina will continue to see hot temperatures over the next several days.

·        
We look for USDA to lower Paraguay’s soybean crop estimate 1.0 million tons next week. USDA is currently at 10 million tons. Some private estimates are below 8.0 million tons. The country will see rain over the next week. 17%
of Paraguay’s soybean crop harvest progress was complete as of February 27.

 

 

·        
Palm oil futures ended the week increased 3.7%. Indonesia’s move to trim exports by offering palm to the domestic market before entertaining tenders, and flooding across Malaysia, supported futures this week.

 

Reuters
trade estimates for Malaysian palm oil S&D due out March 10.

 

Export
Developments

·        
None reported

 

Updated
03/03/23

Soybeans
– May $14.50-$16.00

Soybean
meal – May $440-$525

Soybean
oil – May
58-64

 

Wheat

·        
Wheat futures traded two sided, ending lower on lack of fresh bullish news, but (futures decline) limited on bottom picking, Black Sea shipping concerns. IMO prices traded mostly lower during the day session after the US saw widespread
precipitation over the past week, just in time for winter wheat emergence. For the week, Chicago wheat futures posted a third weekly decline. Funds have been sellers of wheat, so short covering may limit losses. Going forward, exports will dictate US wheat
direction.  The US spring crop is rebounding, production wise. Wheat is a weed.

 

 

·        
Funds sold an estimated net 1,000 Chicago wheat contracts.

·        
India plans to keep their wheat export ban in place, as expected. Yesterday one broker suggested they may need to import wheat during the 2023-24 crop year.

·        
Paris May wheat was higher by 0.50 euro earlier at 275.25 per ton. 

·        
French wheat crop ratings were unchanged for the week ending February 27 from the previous week. At 95 percent for soft wheat, they are 2 points above this time year ago.

·        
World food prices for the month of February fell to 129.8 points from 130.6 points for January, a 11-month low.

 

 

Export
Developments.

·        
Tunisia received a few offers for 25,0,00 tons of barley. Lowest was $299.95/ton c&f for shipment between March 20 and April 10.

·        
China will auction off 140,000 tons of wheat from state reserves on March 8.

·        
Recently Iran bought an unknown amount of Russian wheat.

·        
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.

·        
Jordan seeks 120,000 tons of wheat and 120,000 tons of barley on March 7 and March 8, respectively.

 

Rice/Other

·        
BB: Coffee Set for First Weekly Loss Since January

·        
(Bloomberg) — US 2022-23 ending stocks seen at 4.26m bales, little change from USDA’s previous estimate, according to the avg in a Bloomberg survey of seven analysts. The range of estimates varied from 4.05m to 4.5m bales. 
Global
ending stocks seen at 89.07m bales, on par with last month’s est.
NOTE:
In last report, USDA raised US ending stocks to 4.3m bales from 4.2m; and cut global stocks to 89.08m bales from 89.93m

 

Updated
03/03/23

Chicago
– May $6.50-$7.75

KC
– May $7.50-$9.25

MN
– May
$8.00-$9.75