FI Evening Grain Comments 03/10/23

PDF Attached

Soybean
meal net longs hit a record as of Feb 21.

Note
most US time zones change clocks over the weekend (spring forward). US Jobs report sent the USD lower. WTI crude oil rallied, and US stocks were down by 1:15 pm CT. The collapse of Silicon Valley Bank pressured US equities. They were the 16^th largest
US bank, and second largest bank to fail, behind Washington Mutual during the height of the 2008 financial crisis. Grains rallied on short covering and the soybean complex was lower bias the nearby contracts. SBO oil share failed to stage a rebound. For the
week May soybean oil was down 7.5% and May meal was up 1.0%. The US weather outlook was unchanged this morning while Argentina slightly improved.

Weather

7-days
through March 9

Map

Description automatically generated

MOST
IMPORTANT WEATHER FOR THE DAY

North
Africa remains too dry and needs rain in interior Tunisia, northeastern Algeria (away from the coast) and in a few areas of northwestern Algeria and northeastern Morocco

Not
much rain is expected for at least ten days and perhaps longer resulting in more crop stress as seasonal warming evolves

India’s
rainfall in the coming week will be minimal, but southern and eastern parts of the nation may experience greater rain in the March 18-24 period

A
boost in precipitation during the second week of the outlook may be good for late season crops especially in quality, but it will come too late to improve yields

Rice
and late season pulses may benefit most from the rain

Greater
rain advertised for central and eastern Argentina after March 17 would be good for improving soil moisture, but many summer crops are too far advanced to benefit much.

Late
season crops that have received some periodic rain will benefit most from the rain

Rio
Grande do Sul, Brazil and some neighboring areas will be drying out over the next ten days

A
new round of crop stress is likely which may impact soybeans more than corn because the corn is already far advanced and already drought damaged
Rice
maturation and harvesting in the state should advance well in the dry environment, although production is down because of dryness this year

Rain
will fall frequently in other Brazil crop areas benefiting planted Safrinha crops and late full season crops most

The
precipitation will keep soybean harvesting and late season Safrinha planting advancing poorly in some areas

Europe
weather has turned more active and the pattern will continue for the next ten days with France, Germany and the U.K getting some of the most significant moisture

The
change should improve water supply and long term soil moisture for use this spring

Eastern
Europe and the western CIS will also see a boost in precipitation this weekend through next week maintaining or inducing moisture abundance in those areas
Drought
remains a concern in Norway, eastern Spain and the lower Danube River Basin

Rain
in France and Germany will improve river and stream flow and some water supply, although the wet bias needs to last for a while to fully restore water reservoirs

Central
through southeastern Queensland, Australia rainfall will continue through Sunday with another 1.00 to 4.00 inches of rain and locally more by early next week

Central
Queensland rainfall Wednesday and Thursday has already bolstered topsoil moisture, but southeastern parts of the state have not seen much rain yet
Southwestern
Queensland and New South Wales will also receive a few showers, but resulting rainfall will not be enough to counter evaporation resulting in additional net drying.

China’s
Yangtze River Basin and areas southward into to a part of the coastal provinces will receive periodic rain

Moisture
totals will vary from 0.75 inch to more than 4.00 inches over the next ten days
Other
areas in China will continue drier biased with temperatures above to well above normal through the next ten days

Canada’s
southern Prairies will get some welcome snow this weekend

Accumulations
of 2 to 8 inches will result in southern Saskatchewan and a part of southern Manitoba while lighter snow falls elsewhere
Once
the snow melts this spring it should help to moisten the topsoil
Central
parts of the Prairies have been snow free for an extended period of time and soil moisture is low in many areas

Another
wave of snow will move through the northern U.S. Plains and upper Midwest this weekend

Snowfall
of 3 to 9 inches and local totals to 11 inches will result with southern Saskatchewan, northern and eastern North Dakota and northern and central Minnesota getting some of the greatest amounts along with northeastern South Dakota

Flood
potentials are still rising for the Red River Basin of the North and in a part of the upper Mississippi River Basin; however, most of the moisture will help improve water levels on the Mississippi River and will improve soil conditions for spring planting
once the ground firms up

Some
of the moisture will help end drought conditions
Flooding
is not a sure thing – much will depend on how it snow melts and whether significant rainfall occurs while it is melting

A
gradual melting will limit flood potentials

A
North America weather pattern trend change is expected next week with a northwesterly flow pattern expected in Canada and the north-central through the northeastern U.S.

This
change should squelch the frequent precipitation pattern in the northern Plains and upper Midwest – at least for a while

Three
areas of abundant U.S. precipitation are expected in the coming week to ten days

Central
and northern California through the Cascade Mountains of Washington and Oregon will see abundant to excessive precipitation again

Some
of the mountainous locations already have snow water equivalents in the snow of 1.5 to more than 2.0 times normal
The
southern Sierra Nevada may get 30-70 inches of snow over the next two days possibly setting a record and possibly raising the potential for avalanches

Northern
Plains and upper Midwest will be wetter than usual as will a part of the Great Lakes region, although their greatest precipitation will fall this weekend
The
northern and central Delta and Tennessee River Basin into Georgia will also be wetter than usual over the next week to ten days

The
ground is already saturated in this region and the additional moisture could induce some additional flooding

Flooding
is already underway from Illinois and Indiana into Arkansas and western Tennessee

Some
flooding is also impacting a few Louisiana locations

West
and South Texas, the Texas Coastal Bend and northeastern Mexico will continue to receive restricted rainfall and remain in a drought

Greater
rain is needed and may evolve next week, though any precipitation next week is expected to be light and yet welcome

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
Mainland
areas of Southeast Asia will receive very little rain of significance for a while which is normal for this time of year
South
Africa weather will be favorably mixed during the next two weeks with alternating periods of rain and sunshine likely

More
sun than rain will occur for a while leading to a firming of the topsoil, but crop development will continue favorably for a while

West-central
Africa rainfall has been increasing recently and additional rain is expected and needed in some areas

Resulting
rainfall will be good for coffee and cocoa flowering and for sugarcane development and rice planting

Greater
rainfall may still be needed in some areas
Western
and central Ivory Coast has been wettest recently

Recent
temperatures have been heating up, but that is not unusual prior to the start of seasonal rainfall, but it has been stressful for some coffee and cocoa producing trees

Middle
East precipitation is expected to be erratic with some areas getting heavier rain than others

A
better distribution of precipitation is needed to ensure the best rice and cotton planting conditions and to ensure the best wheat yields.

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

Eastern
Mexico and portions of Central America will receive rain during the next ten days

The
precipitation will be most organized in Central America with Costa Rica and Panama wettest, but some areas in western Honduras, northwestern Nicaragua and Guatemala this weekend into next week

Moisture
totals may be enough to stimulate premature coffee flowering and that potential event should be closely monitored

Most
likely the advertised rain is overdone and will be reduced in future forecast model runs.

Today’s
Southern Oscillation Index was +7.38 and it was expected to move erratically lower over the coming week

Source:
World Weather, INC.

Bloomberg
Ag calendar

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

Monday,
March 13:

USDA
export inspections – corn, soybeans, wheat, 11am
New
Zealand food prices

Tuesday,
March 14:

EU
weekly grain, oilseed import and export data

Wednesday,
March 15:

EIA
weekly US ethanol inventories, production, 10:30am
FranceAgriMer
monthly grains balance sheet
Malaysia’s
March 1-15 palm oil export data
Eurasian
agri-commodities conference, Kazakhstan, day 1
Grain
Export Conference, Paris

Thursday,
March 16:

IGC
grains market report
USDA
weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
Eurasian
agri- commodities conference, Kazakhstan, day 2
Port
of Rouen data on French grain exports

Friday,
March 17:

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
USDA
cattle on feed

Source:
Bloomberg and FI

CFTC
Commitment of Traders as of February 21

Traditional
funds for soybean meal took out their respected net long positions for futures only and futures and options combined, and managed money futures & options combined. Traditional funds rose above previous net records set back on 5/1/2018. For managed money, the
recent net long was recent.

Table

Description automatically generated

Reuters
table

SUPPLEMENTAL
Non-Comm Indexes Comm

Net Chg Net Chg Net Chg

Corn
133,635 -23,421 350,867 -4,819 -404,840 21,017

Soybeans
147,426 3,102 134,999 -3,354 -234,674 1,440

Soyoil
10,522 10,608 101,442 -2,507 -123,287 -13,846

CBOT
wheat -76,365 -8,202 95,256 -3,665 -20,029 7,792

KCBT
wheat -1,793 1,723 49,825 119 -47,229 -2,063

FUTURES
+ OPTS Managed Swaps Producer

Net Chg Net Chg Net Chg

Corn
215,928 -18,937 219,726 -311 -404,585 17,113

Soybeans
189,009 6,801 78,822 -3,427 -225,624 1,332

Soymeal
154,141 1,742 79,193 -104 -268,550 -1,989

Soyoil
34,301 11,978 100,651 12 -145,629 -15,322

CBOT
wheat -72,045 -12,088 65,931 -445 -15,586 8,581

KCBT
wheat 15,974 4,368 36,016 -558 -47,425 -1,878

MGEX
wheat 3,136 1,192 2,776 925 -9,236 -2,380

———- ———- ———- ———- ———- ———-

Total
wheat -52,935 -6,528 104,723 -78 -72,247 4,323

Live
cattle 108,582 3,936 45,916 37 -156,897 -3,988

Feeder
cattle -122 888 1,690 -69 2,962 -944

Lean
hogs 6,056 9,304 45,079 -469 -49,670 -8,517

Other NonReport Open

Net Chg Net Chg Interest Chg

Corn
48,593 -5,088 -79,661 7,223 1,647,324 -38,500

Soybeans
5,544 -3,518 -47,751 -1,186 860,772 -7,742

Soymeal
19,549 1,291 15,667 -942 517,351 4,647

Soyoil
-645 -2,412 11,322 5,745 507,077 1,821

CBOT
wheat 20,562 -124 1,138 4,076 441,354 -16,174

KCBT
wheat -3,763 -2,151 -802 221 198,418 -8,505

MGEX
wheat 2,982 658 343 -395 58,427 -1,877

———- ———- ———- ———- ———- ———-

Total
wheat 19,781 -1,617 679 3,902 698,199 -26,556

Live
cattle 16,870 1,534 -14,471 -1,519 407,364 14,522

Feeder
cattle 3,004 637 -7,534 -513 59,134 -394

Lean
hogs 2,426 4,178 -3,891 -4,495 272,345 -21,555

Macros

100
Counterparties Take $2.188 Tln At Fed Reverse Repo Op. (prev $2.230 Tln, 101 Bids)

US
Change in Nonfarm Payrolls Feb: 311K (exp 225K; prev 517K)

Change
in Private Payrolls Feb: 265K (exp 215K; prev 443K)

Change
in Manufacturing Payrolls Feb: -4K (exp 10K; prev 19K)

US
Unemployment Rate Feb: 3.6% (exp 3.4%; prev 3.4%)

US
Average Hourly Earnings (M/M) Feb: 0.2% (exp 0.3%; prev 0.3%)

Average
Hourly Earnings (Y/Y) Feb: 4.6% (exp 4.7%; prev 4.4%)

Average
Weekly Hours All Employees Feb: 34.5% (exp 34.6%; prevR 34.6%)

Canadian
Net Change in Employment Feb: 21.8K (exp 10.0K; prev 150.0K)

Unemployment
Rate Feb: 5.0% (exp 5.1%; prev 5.0%)

Hourly
Wage Rate Permanent Employees (Y/Y) Feb: 5.4% (exp 5.1%; prev 4.5%)

Participation
Rate Feb: 65.7% (exp 65.7%; prev 65.7%)

Full
Time Employment Change Feb: 31.1K (prev 121.1K)

Part
Time Employment Change Feb: -9.3K (prev 28.9K)

Corn

·
Corn futures
rallied on higher wheat and fund short covering ahead of the weekend. Ideas the US soybean area will have a slight edge over corn for the upcoming spring planting season resulting in less than expected corn acres prompted some unwinding in soybean/corn spreads.
The acreage fight will continue well into next month.

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

·
News was light today.

·
Brazil and Australia opened talks on trade agreements. This could boost Brazil pork exports to Australia and Australian wheat to Brazil. Some local Australian animal unit producers may not like this, nor Argentina wheat producers
that currently supply Brazil.

Export
developments.

South
Korea’s Feed Leaders Committee (FLC) bought 68,000 tons of optional origin corn at $318.99 a ton c&f for arrival around July 30.
Turkey
seeks 18,000 tons of sunflower oil on March 15 for March 22-April 28 shipment.

Ethanol
Producer – March 9, 2023

By
Erin Voegele. The U.S. exported 117.82 million gallons of ethanol and 770,344 metric tons of distillers grains in January, according to data released by the USDA Foreign Agricultural Service on March 8. Exports of both products were down when compared to January
2022. The 117.82 million gallons of ethanol exported in January was up significantly when compared to the 74.17 million gallons of ethanol exported in December, but down slightly when compared to the 123.82 million gallons ethanol exported in January 2022.
The U.S. exported ethanol to more than a dozen countries in January. Canada was the top destination for U.S. ethanol exports in January at 47.49 million gallons, followed by the U.K. at 17.87 million gallons and 14.49 million gallons. The value of U.S. ethanol
exports reached $325.65 million gallons in January, up from both $231 million the previous month and $325.65 million in January 2022.

Updated
03/7/23

May
corn $5.80-$6.80

July
corn $5.75-$7.00

Soybeans

·
Soybeans, meal, and oil traded choppy today, ending lower for the front months (meal settled mixed/bear spreading). Products saw a wide trading range. Soybean oil rallied before the day session open but fell into negative territory
after funds stepped in and pared losses in soybean meal. Soybean oil share was all over the place today, ending at fresh contract lows. For the week May soybean oil was down 7.5% and May meal was up 1.0%.

·
Funds sold an estimated net 3,000 soybean contracts, sold 1,000 meal and sold 2,000 soybean meal.

·
Safras and Mercado reported Brazil soybean harvest progress at 48.9% versus 60.5% year ago. Patria Agronegocios reported 52.9% versus 64.3% last year.

·
Rosario Grains Exchange warned the Argentina drought could reduce the 2023 GDP by $19 billion from 2022 (they mentioned a 3 point decline). The government officially looks for only 2% in 2023. Grain export taxes could decline
$2.3 billion for the 2022-23 season.

·
Both Malaysia March 1-10 shipments and MPOB palm S&D were supportive for palm oil, but Malaysia May palm futures fell about 2.5%, following yesterday’s move in outside related vegetable oil markets. For the week, palm lost 5.8%,
snapping a four-week gain.

·
AmSpec reported Malaysia March 1-10 palm oil exports at 474,830 tons, a 52 percent increase from 312,092 tons reported during the same period in February. ITS reported a 45.3% increase to 501,514 tons from 345,080 tons prior
period.

·
(Reuters) – U.S. soda and food maker PepsiCo Inc PEP.O and Dutch dairy producer FrieslandCampina N.V. have asked their suppliers to cease buying palm oil from plantation owner Astra Agro Lestari AALI.JK, accused by environmental
groups of land and human- rights abuses.

·
China’s Sinograin will start buying soybeans from Inner Mongolia and Heilongjiang province. This is to help boost producer income and encourage plantings for the upcoming 2023 season, in part to the government’s initiative to
increase production of food crops and lower dependency on imports (food security).

Malaysia’s
end-February palm oil stocks fell by a more than expected 149,000 tons (86,530 tons below average trade guess) to a six-month low of 2.120 million tons. Stocks could dip below 2.0 million tons by end of April, according to private estimates. February Malaysia
palm oil production hit a one year low at 1.251 million tons, nearly 10,000 tons below trade expectations. Exports hit a 10-month low of 1.1 million tons.

Export
Developments

·
Tunisia bought 9,000 tons of crude degummed soybean oil at $1,185.99/ton c&f, optional origin. Delivery was sought between March 30 and April 12.

Updated
03/10/23

Soybeans
– May $14.50-$16.00

Soybean
meal – May $430-$520

Soybean
oil – May 55-61

Wheat

·
US wheat was traded higher on fund short covering after prices slid earlier this week on ample global supplies and optimistic views over the extension of the Black Sea grain deal. Some traders thought the rally could have tied
to renewed Black Sea grain deal concerns.

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

·
Next week the trade could see a decision reached for the Black Sea grain deal.

·
Russia’s Hydrometeorological Centre mentioned 5-6% of Russia’s winter crops saw damage over the winter, across the North Caucasus, the Volga region and Siberia. Most of the other areas were in good to satisfactory condition.

·
French wheat crop conditions as of March 6 of 95 percent good/excellent were unchanged from the previous week and up from 92 percent year earlier.

·
May Paris milling wheat officially closed down 2.00 euros, or 0.8%, at 261.75 euros a ton (about $278.55/ton).

·
China will auction off up to 140,000 tons of wheat from state reserves on March 15.

Export
Developments.

·
South Korea’s Major Feedmill Group (MFG) bought 125,000 tons of feed wheat. 65,000 tons was bought at $309.90 a ton c&f for arrival around Sept. 5. Another 60,000 tons was bought at $305.00 a ton c&f for arrival around Sept.
15.

·
Saudi Arabia seeks 480,000 tons of wheat for July – August shipment.

·
Jordan seeks up to 120,000 tons of feed barley on March 15. Possible shipment combinations are for Aug. 1-15, Aug. 16-31, Sept. 1-15 and Sept. 16-30.

·
Jordan seeks up to 120,000 tons of milling wheat, optional origin, on March 14, for shipment during Aug. 1-15, Aug. 16-31, Sept. 1-15 and Sept. 16-30.