FI Evening Grain Comments 03/14/23

PDF Attached

Attached
is our US acreage table. CFTC Commitment of Traders as of February 28 showed a huge net long reduction in corn. Private exporters reported sales of 612,000 tons of corn for delivery to China during the 2022-23 marketing year.
Choppy
trade in the US agriculture markets. Most nearby soybeans, meal and soybean oil contracts were higher. CBOT crush reversed to close higher. Grains ended higher led by short covering in Chicago wheat. Most of the work in price direction was determined by mid-morning.
WTI crude oil fell more than $3.50 by 2:00 pm CT. US equities rebounded and remained higher at the time this was written. A Bloomberg poll looks for weekly US ethanol production to be up 10,000 thousand barrels to 1020k (1013-1025 range) from the previous
week and stocks up 58,000 barrels to 25.378 million.

Weather

Map

Description automatically generated

MOST
IMPORTANT WEATHER FOR THE DAY

Not
many Changes overnight
Argentina
received some significant rain in portions of Cordoba and in a strip from northwestern to south-central Buenos Aires overnight

Several
areas received 0.50 to 1.00 inch of moisture with portions of western and south-central Cordoba getting 1.00 to 3.25 inches

Argentina
weather in the coming week will continue to downplay precipitation in central and east-central parts of the nation, but rain “may” increase in the second week outlook

Be
sure to note that the second week wetter forecast appears every day in the outlook, but the second week never seems to verify

The
drought of 2008-09 which was as serious or more so did not break until late April and May

Brazil
rain frequency and intensity is expected to lighten up in this coming week in some of the wetter areas of Parana, Mato Grosso do Sul, Sao Paulo and southern Minas Gerais

A
perfect harvest and planting weather is certainly not expected, but there may be a little better environment for firming the topsoil over time and perhaps that will lead to some improved field progress

These
changes will come slowly

Rio
Grande do Sul, Brazil will continue to see erratic rainfall for a while, but enough should occur to support crops favorably
Wet
weather from Mato Grosso to Tocantins, Goias, Maranhao and Piaui, Brazil will slow fieldwork, but help ensure abundant post monsoon moisture for late season crops
India’s
showers expected late this week into next week may interfere with crop maturation, but could benefit a few late season crops

Rice
and sugarcane will benefit most

China
was dry biased Monday, but a period of unsettled weather will bring waves of significant rain to the Yangtze River Basin soon and it will prevail for about ten days

Sufficient
rain will fall to support ongoing rapeseed development and to improve rice planting conditions

Far
southern China may need greater rain to adequately recharge rice production areas with water the growth the early crop in
Corn
planting will benefit from greater rain in southern China as well

Eastern
Australia has slipped back into a drier weather mode for a while, but after recent rain in Queensland and northeastern New South Wales crops in those areas will continue improving for a while
Europe
soil moisture has been rising in the north recently brought on by recent precipitation
Southern
Europe soil moisture is still lacking in eastern Spain, and parts of the lower Danube River Basin where weekend precipitation was minimal once again
Europe
precipitation will be light and concentrated on the north for a while in the coming week

Relief
for eastern Spain and the lower Danube River Basin dryness is unlikely for a while
Temperatures
will remain warmer than usual

CIS
rain and snow will continue to fall frequently in western Russia and the Baltic States with lighter precipitation to the east into the Ural Mountain region

The
precipitation will occur while snow is melting resulting in some areas of standing and running water

U.S.
Midwest will see periods of light precipitation and experience mild to cool temperatures over the next ten days

Sufficient
moisture is expected to support spring planting when that time arrives, but warmer soil temperatures will be needed

U.S.
hard red winter wheat areas will get some light precipitation infrequently during the next couple of weeks, but resulting precipitation is unlikely to change drought status and most crop areas in the west will continue in need of significant moisture
U.S.
Northern Plains precipitation will be light and somewhat sporadic for a while, but colder than usual temperatures will limit snow melt
Concern
over snowpack in the Red River Basin of the North from the U.S. into southern Manitoba, Canada will continue especially while temperatures are cold

The
longer temperatures are cold and little of the snowpack is melting the higher the potential becomes that the snow will melt quickly later in the spring when temperatures suddenly turn warmer

The
region will be closely monitored for flooding if the snow melts too fast and occurs while significant rain is falling

Recent
precipitation from the lower Delta to southern Georgia and northern Florida has improved topsoil moisture and more precipitation is forthcoming to perpetuate that situation in this next two weeks
South
Texas and the Texas Coastal Bend planting of corn, sorghum and some cotton is underway, but dryland production areas (especially in the south) need significant rain

Some
precipitation is expected over the next ten days, but more will be needed to bolster soil moisture for long term crop development especially in unirrigated areas

West
Texas precipitation will continue restricted over the next two weeks, although totally dry weather may not occur

Some
parts of the dryland production region need a tremendous amount of rain to restore soil moisture and water supply

Precipitation
in California will continue periodically over the coming week, but its frequency and intensity should be reduced

The
second week of the outlook should be notably drier, although a few showers may still linger periodically

North
Africa rainfall will be minimal over the coming week

Some
rain is expected next week in northeastern Algeria and northern Tunisia
More
rain is needed throughout all production areas to induce better production potentials
Temperatures
will continue warm

West-central
Africa rainfall is expected to increase through Tuesday of next week bolstering soil moisture and improving conditions for flowering coffee and cocoa

Weekend
precipitation was limited and net drying occurred while temperatures were very warm

Turkey
will receive frequent bouts of rain over the next ten days bolstering soil moisture for wheat development and rice and cotton planting

Other
spring planting will benefit from the coming moisture boost

Other
areas in the Middle East are unlikely to get much volume of rain during the next two weeks, although some timely rain will fall in western Iran, northern Iraq and northern Syria during the middle and latter parts of this week
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 a little drier than usual, but the environment will be good for early season crop maturation and harvesting

Greater
rain will soon be needed to maintain the best possible late season crop conditions

Eastern
Africa precipitation is expected to scatter from Tanzania to Ethiopia over the next ten days

The
moisture will be good for ongoing crop development

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 +3.57 and it was expected to move lower over the coming week

Source:
World Weather, INC.

Bloomberg
Ag calendar

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 28

Huge
net long reduction in corn was posted this week. We will monitor the website if there is a correction. Corn saw a large crop in open interest. Funds for soybean meal did not post a new net record long position for futures only and futures & options combined.

Reuters
table

SUPPLEMENTAL
Non-Comm Indexes Comm

Net Chg Net Chg Net Chg

Corn
10,260 -123,374 329,526 -21,342 -263,080 141,760

Soybeans
102,837 -44,589 138,760 3,761 -194,390 40,285

Soyoil
2,437 -8,085 101,763 321 -111,821 11,466

CBOT
wheat -90,536 -14,171 90,437 -4,819 -1,706 18,323

KCBT
wheat -14,227 -12,434 46,971 -2,855 -29,899 17,330

FUTURES
+ OPTS Managed Swaps Producer

Net Chg Net Chg Net Chg

Corn
68,635 -147,294 225,058 5,332 -267,972 136,613

Soybeans
129,610 -59,398 102,473 23,651 -197,130 28,494

Soymeal
139,971 -14,170 82,663 3,470 -251,431 17,119

Soyoil
28,093 -6,208 100,443 -208 -134,984 10,645

CBOT
wheat -91,641 -19,596 65,427 -503 1,687 17,273

KCBT
wheat 337 -15,637 37,290 1,274 -31,405 16,021

MGEX
wheat 485 -2,651 2,357 -419 -3,429 5,808

———- ———- ———- ———- ———- ———-

Total
wheat -90,819 -37,884 105,074 352 -33,147 39,102

Live
cattle 112,449 3,869 46,380 463 -163,262 -6,365

Feeder
cattle 6,669 6,791 1,891 202 99 -2,863

Lean
hogs -334 -6,391 45,444 365 -43,859 5,810

Other NonReport Open

Net Chg Net Chg Interest Chg

Corn
50,986 2,393 -76,707 2,954 1,522,958 -124,366

Soybeans
12,256 6,713 -47,208 543 789,610 -71,162

Soymeal
16,273 -3,276 12,524 -3,142 462,185 -55,166

Soyoil
-1,173 -528 7,622 -3,700 463,290 -43,787

CBOT
wheat 22,722 2,161 1,804 666 407,327 -34,026

KCBT
wheat -3,379 384 -2,845 -2,042 180,456 -17,962

MGEX
wheat 2,188 -793 -1,602 -1,944 53,902 -4,525

———- ———- ———- ———- ———- ———-

Total
wheat 21,531 1,752 -2,643 -3,320 641,685 -56,513

Live
cattle 18,760 1,889 -14,328 144 439,320 31,955

Feeder
cattle 1,868 -1,137 -10,527 -2,992 64,608 5,473

Lean
hogs 8 -2,418 -1,259 2,632 283,179 10,834

Macros

US
CPI Core (Y/Y) Feb: 5.5% (est 5.5%; prev 5.6%)

US
CPI Core (M/M) Feb: 0.5% (est 0.4%; prev 0.4%)

US
CPI (Y/Y) Feb: 6.0% (est 6.0%; prev 6.4%)

US
CPI (M/M) Feb: 0.4% (est 0.4%; prev 0.5%)

US
Real Avg Hourly Earning (Y/Y) Feb: -1.3% (prevR -1.9%)

US
Real Avg Weekly Earnings (Y/Y) Feb: -1.9% (prevR -1.9%)

Canadian
Manufacturing Sales (M/M) Jan: 4.1% (est 3.9%; prev -1.5%)

Corn

·
Corn futures
traded two-sided, ending higher from strength in wheat, short covering, spreading against soybeans, and USDA reporting a large corn sale to China. One source noted the China sales could have been concluded a week or two ago.

·
Outside commodity markets had little influence over corn prices today. WTI crude oil was down more than $3.50 by 2 pm CT.

·
US economic concerns are ongoing, but eased after the US reported the inflation rate (CPI) softened to 6 percent. It’s unknown if the Fed will raise rates at their next meeting. We are under the impression they will go higher
later this year.

·
US corn plantings are moving along across the lower US Delta and Texas (30 percent). MS is 25 percent complete and LA 60 percent. This morning plantings may have stalled due to cold temperatures.

·
Brazil corn exports during February fell to 2.275 million tons, a 60 percent decline from January, as exporters shift to new-crop soybeans. Corn exports to China were 70,000 tons, down sharply from 983,700 tons in January. China
was Brazil’s largest customer during December and January.

·
Brazil’s second corn crop plantings reached 73 percent as of March 11, up 9 points from the previous week.

·
A Bloomberg poll looks for weekly US ethanol production to be up 10,000 thousand barrels to 1020k (1013-1025 range) from the previous week and stocks up 58,000 barrels to 25.378 million.

·
Chile confirmed its first case of bird flu in poultry, which triggered a suspension on chicken exports. (western part of central Chile’s Rancagua commune).

·
Switzerland reported a case of bovine spongiform encephalopathy (BSE) in the eastern region of Grisons. It is not known if any trade restrictions have been set.

·
Tyson Foods plans to shut two US chicken plants down with nearly 1,700 workers.
Locations
include Glen
Allen, Virginia, and Van Buren, Arkansas.

·
Bloomberg: US Cattle on Feed Placements Seen Falling 6.6%. February placements onto feedlots seen falling y/y to 1.75m head, according to a Bloomberg survey of ten analysts. That would be the sixth y/y decline in a row. Reuters
estimates below. Due out Friday after the close.

Export
developments.

South
Korea’s KFA bought 68,000 tons of corn from South America or South Africa at $318.40/ton c&f for June to early July shipment, depending on origin.
South
Korea’s MFG group bought 135,000 tons of corn for mid to late Aug shipment. 244.87 US cents over the Sep contract and $309.85/ton c&f was paid. Origin is unknown.
USDA
reported private exporters sold 612,000 tons of corn for delivery to China during the 2022-23 marketing year.
Algeria
seeks 35,000 tons of corn for April 1-15 shipment.

Updated
03/7/23

May
corn $5.80-$6.80

July
corn $5.75-$7.00

Soybeans

·
Soybeans started the day lower and most contracts ended higher. Soybean oil gained on meal on product spreading (rebound in oil share). Palm oil futures hit a three week low and may have trimmed gains in soybean oil. US crush
margins reversed to the upside. The noon weather maps suggested additional net drying for Argentina. The US soybean meal cash market was quiet today as many end users have coverage for the near term.

·
EU soybean imports reached 7.71 million tons so far for 2022-23, down from 9.63 million tons for the same period year earlier. Meanwhile rapeseed imports were 5.76 million tons, up from 3.67 million year earlier. Soybean meal
imports were 10.88 million tons, down from 11.65 million same period year ago.

·
Patria Agronegocios estimated Brazil 2022-23 soybean production at 149 million tons. USDA is at 153 million tons up from 129.5 million year ago.

·
Brazil’s soybean harvest reached 53 percent as of March 11, nearly up 10 points from the previous week but below 63 percent year ago.

·
According to Bloomberg article, US producers might boost winter canola plantings across the deep south this fall. “Chevron Corp. is teaming up with grains handler Bunge Ltd. and seed company Corteva Inc. to plant as many as 10
million additional acres of canola in the southern US. The initial plan calls for farmers in Louisiana, Mississippi and Tennessee to sow the oilseed as a second seasonal crop after soybeans or cotton, boosting revenue potential and providing vegetable oils
that are in high demand, according to Corteva.” The 10 million acres seems to be optimistic. 2022 US canola plantings totaled 2.2 million acres. We have not altered our US canola planting estimate as we would like to get additional information. This expansion
to canola acres could become a gamechanger, if realized. Either way, we look for the percentage of soybean oil used for biofuel to continue to decline as other feedstock use continues to climb.
https://www.eia.gov/biofuels/update/

·
Egypt said vegetable oil reserves are sufficient enough for 5 months.

·
Argentina’s soybean oil export premium has been declining since early February and the spread between fob Argentina SBO and RBD Malaysian palm olein is narrowing to levels not seen since July 2022.

·
Oil World noted Paraguay soybean exports are starting to pick up, but cumulative Jan-Feb soybean exports are below expectations. Most of Paraguay’s soybeans are destined for the export market. Jan-Feb exports are running at 507,000
tons versus 440,000 year ago. Crush is off to a slow start at 170,000 tons for the combined two months, below 430,000 tons year ago.

·
NOPA is due out on Wednesday for February US soybean crush and trade estimate have a wide range for US soybean oil stocks at the end of February. There is a 1,775-2,025 million pounds range for SBO, with an average of 1,886 million,
up 3 percent from 1,829 million at the end of January and compares to 2,059 million a year earlier. Crush is seen at 166.06 million bushels, down from 179.0 million during January and compares to 165.1 million during February 2022. Estimates for the February
2023 crush ranged from 162.000 million to 173.015 million bushels, another wide range. Look for price reaction post release. We are under the impression crush could end up slightly below expectations and soybean oil stocks to weigh in if there is a 100+
million pound discrepancy from the 1,886 million pound estimate.

·
The UK is looking into removing import tariffs on Malaysian palm oil, part or a Asia-Pacific trade deal. The import tariffs would be cut to zero. Current is up to 12 percent.

Export
Developments

·
None reported

Updated
03/10/23

Soybeans
– May $14.50-$16.00

Soybean
meal – May $430-$520

Soybean
oil – May 55-61

Wheat

·
US wheat futures traded mixed before appreciating by mid-morning, largely due to short covering. The higher prices were worked in by 11 am, before geopolitical headlines came out. Wheat prices saw little reaction, if any, to the
Black Sea headlines (drone, export deal).

·
Traders have mixed views over the Black Sea grain deal extension that will be in place for only 60 days. Some take the current agreement as a gesture of “good faith” by Russia. Ukraine and other countries were looking for 120
days. Ukraine agreed to continue shipping grain under current guidelines. It’s uncertain if major importers will risk buying Black Sea grain over the 60 day period.

·
Vessels are still loading Ukraine grains although inspections are still behind.

·
Russia stressed they want to see an improvement on their grain and fertilizer export barriers. They later notified the UN that they have no objection to extend the grain deal for 60 days instead of 120, then went onto say they
have not officially received a response over the 60-day deal. The UN said they are working with parties to facilitate Russian grain and fertilizer exports.

·
Meanwhile, the conflict escalated in eastern Ukraine with additional Russian troops headed to the frontlines.

·
US winter wheat conditions fell for OK and Texas from the previous week. Rain is need for the lower US. Central and northern areas are in good shape.

·
Paris May wheat was higher by 1.50 euros at 269.25 per ton.

·
EU soft wheat exports for the season to date 2022-23 crop year totaled 21.54 million tons (as of March 12), up from 19.84 million tons year ago.

·
Japan plans to raise the domestic price of importer wheat (for flour mills) from April by 5.8%, on average, from the previous year to reflect higher prices over the past six months. For the six months starting April 1, the ministry’s
wheat selling price to local millers will average 76,750 yen ($575) per ton, up from 72,530 yen the previous year. (Reuters)

·
Egypt said wheat reserves are sufficient enough for 3.3 months.

·
Australia’s Board of Meteorology mentioned La Nina officially ended. Meanwhile, Japan’s agency sees a 50 percent chance for El Nino developing sometime by the end of 2023.

Export
Developments.

·
Algeria bought at least 540,000 tons of wheat for May shipment. Most of it was bought at $312/ton c&f.

·
Japan seeks 73,518 tons of food wheat later this week from US, Canada, and Australia.

·
Tunisia bought 234,000 tons of soft milling wheat for March 20-May 30 shipment. 292
eros per ton was believed to be the lowest price.

·
Jordan bought 60,000 tons of milling wheat (120k sought), optional origin, for shipment during Aug 1-15, at an estimated $309.75 a ton c&f.

·
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.