FI Evening Grain Comments 03/15/23

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NOPA’s
US crush was seen slightly supportive for soybean oil and neutral for soybeans and meal. USDA: Private exporters reported sales of 667,000 metric tons of corn for delivery to China during the 2022/2023 marketing year. Negative financial headlines sent global
equities and energy markets lower. Soybeans and meal ended lower. Soybean oil was also down but well-off session lows despite WTI crude oil off more than $4.00 as of 1 pm CT.
Nearby
soybean oil ended higher and back months lower. Nearby corn was also higher and back months lower. US wheat finished higher led by Chicago.

Weather

The
US and South American weather forecast were mostly unchanged from that of yesterday. For Argentina, heat and dryness will mainly prevail this week. Light rain does favor Santa Fe, Entre Rios, east Buenos Aires today, and La Pampa, southwest Buenos Aires this
weekend. Brazil will see additional showers for the central and southern areas this week. US temperatures are warming up.

Map

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MOST
IMPORTANT WEATHER FOR THE DAY

Rain
was favorably distributed in central and southeastern Buenos Aires Tuesday after occurring in western parts of the province and in areas northeast into southern and western Cordoba Monday night into Tuesday morning.

Overnight
rainfall varied from 0.30 to 1.77 inches, although most amounts were less than 0.75 inch
The
two-day precipitation has offered some relief from dryness and improved a few of the late season soybean, sunseed and peanut crops in the region.

Sorghum
might have also benefited from the rain

Showers
also occurred in central Argentina, but their distribution was very sporadic resulting in only a few pockets of relief from recent dryness

Argentina
weather has been so hot and dry in recent weeks that it will take much more rain than that reported in the past two days to break drought in Santa Fe, Entre Rios and immediate neighboring areas
Central
portions of Argentina will remain driest over the next ten days.

Showers
and thunderstorms will scatter across many areas in the nation, but the more significant rain is expected in western and southern parts of the nation, including many of the areas reporting rain in the past two days

Brazil
rainfall has become more sporadic and light allowing greater sunshine and some drying to occur in parts of soybean and corn country

Much
more drying is needed, but if the pattern prevails – as it should during the coming week – there should be some improvement in the potential for late season harvesting and planting
Mato
Grosso harvesting may be a little more sluggish than that from northern Rio Grande do Sul to Minas Gerais because of greater rain and greater rain frequency

Brazil’s
northern crop areas from center west to Tocantins, Goias, Maranhao and Piaui will likely see the highest degree of repetition in rainfall during the next two weeks

Some
fieldwork disruption is anticipated and concern over the quality of some soybeans may result

North
Africa drought like conditions are prevailing and limited rainfall over the next ten days will perpetuate the situation in many areas

Widespread
rain is needed and it is needed now more than any other time since wheat and barley are reproducing and filling
Lower
production is expected because of dryness this season

India’s
anticipated shower activity later this week into next week will slow winter crop maturation, but there may be a few immature crops that will see improved quality because of the moisture

The
greatest rain is expected in east-central through southeastern parts of the nation including Bangladesh and the far Eastern States

The
moisture will be most beneficial to winter rice and sugarcane

No
serious damage is expected to winter wheat because of shower activity, but the situation will need to be closely monitored due to the potential for a little too much moisture to develop in a small part of the production region.

Eastern
Australia weather has turned drier biased once again and that pattern will last for at least the next ten days

Recent
rain in Queensland was ideal for dryland sorghum, cotton and other crops, but more moisture is needed for the late season crops
Irrigated
crops have performed well this year and no change is expected, despite hotter temperatures coming up in the next seven days

Dryland
crops will become more stressed as the heat accelerates the region dry again

China’s
Yangtze River Basin will get abundant rainfall in the coming week to ten days improving rapeseed development conditions and improving early rice planting and early development potentials
China’s
Yellow River Basin and North China Plain may see a little shower activity over the next ten days, but resulting precipitation is unlikely to be great enough for a serious improvement in soil moisture

Recent
unusually warm temperatures depleted topsoil moisture and some precipitation will be needed in the next few weeks to ensure the best possible start to aggressive crop development

Wheat
has already broken dormancy and is greening up and beginning some minor crop development

Rain
will be needed soon to sustain new growth or cooling will be necessary to slow crop moisture demand and development potential

China
temperatures are advertised to continue warmer than usual over the next ten days
Western
CIS temperatures continue notably warmer than usual allowing snow to melt

Significant
runoff is suspected in many western Russia and Belarus locations due to the snow melt and recent precipitation

Europe
precipitation continues most significant in the north and it will remain greatest in that region and some western parts of the continent over the next ten days

Eastern
Spain and the lower Danube River Basin remain too dry and need significant moisture, but that is unlikely for a while
Other
areas in eastern Europe will be drying down in the coming ten days, but no other areas outside of the lower Danube Basin will experience enough dryness to raise market worries

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

Similar
situations led to serious flooding in 2011, 2009, 1997 and numerous other years in the past with many of the floods occurring in at the end of La Nina winters

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

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 +2.80 and it was expected to move lower over the coming week

Source:
World Weather, INC.

Bloomberg
Ag calendar

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

US
Acreage

Results
of the annual Allendale US acreage survey…corn +1.8 to 90.414, soybeans +0.3 to 87.768 and all-wheat +3.0 to 48.706.

Macros

101
Counterparties Take $2.056 Tln At Fed Reverse Repo Op. (prev $2.043 Tln, 95 Bids)

US
Retail Sales Advance (M/M) Feb: -0.4% (exp -0.4%; prev 3.0%)

Retail
Sales Ex-Auto (M/M) Feb: -0.1% (exp -0.1%; prev 2.3%)

Retail
Sales Ex-Auto And Gas Feb: 0.0% (exp -0.2%; prev 2.6%)

US
PPI Final Demand (M/M) Feb: -0.1% (exp 0.3%; prev 0.7%)

PPI
Ex Food And Energy (M/M) Feb: 0.0% (exp 0.4%; prev 0.5%)

PPI
Final Demand (Y/Y) Feb: 4.6% (exp 5.4%; prev 6.0%)

PPI
Ex Food And Energy (Y/Y) Feb: 4.4% (exp 5.2%; prev 5.4%)

US
Empire Manufacturing Mar: -24.6 (exp -7.9; prev -5.8)

Retail
Sales Ex-Auto (M/M) Feb: -0.1% (exp -0.1%; prevR 2.4%)

Retail
Sales Ex-Auto And Gas Feb: 0.0% (exp -0.2%; prevR 2.8%)

Canadian
Housing Starts Feb: 244.0K (exp 220.0K; prev 215.4K)

Canadian
Existing Home Sales (M/M) Feb: 2.3% (exp 3.0%; prev -3.0%)

Earlier:
Brent Crude Falls Below $75 A Barrel for First Time Since 2021

US
DoE Crude Oil Inventories (W/W) 10-Mar: +1.550M (est +1.500M; prev -1.694M)

–
Distillate Inventories: -2.537M (est -1.400M; prev +138K)

–
Cushing OK Crude Inventories: -1.916M (prev -890K)

–
Gasoline Inventories: -2.061M (est -1.617M; prev -1.134M)

–
Refinery Utilization: +2.20% (est +0.50%; prev +0.20%)

Corn

·
Corn futures ended higher in the nearby contracts following a pop in US wheat futures while back months were lower. China bought another large amount of US corn. News was light and lower energy markets capped gains in the nearby
positions.

·
USDA reported sales of 667,000 tons of corn to China for 2022-23 delivery, bringing cumulative two-day sales to 1.279 million tons. Sales to China was widely talked about 1-2 weeks ago, but seems it was recently finalized.

·
CFTC Commitment of Traders as of February 28 showed a huge net long reduction in corn.

·
Anec: Brazil corn exports seen reaching up to 845.063 million tons in March vs up to 803,219 tons forecast in previous week.

·
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.

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

Weekly
US ethanol production
increased a less than expected 4,000 barrels per day and stocks increased a large 1.074 million. For comparison, a
Bloomberg poll looked for weekly US ethanol production to be up 10,000 thousand and stocks up 58,000 barrels. Early September 2022 to date ethanol production is running 3.8 percent below year ago level. Gasoline stocks fell 2.06 million barrels to 236.0 million
and implied gasoline demand was up 32,000 barrels to 8.594 million.

Export
developments.

Algeria
seeks 35,000 tons of corn for April 1-15 shipment.
USDA:
Private exporters reported sales of 667,000 metric tons of corn for delivery to China during the 2022/2023 marketing year.

Updated
03/7/23

May
corn $5.80-$6.80

July
corn $5.75-$7.00

Soybeans

·
The soybean complex traded mostly lower. Soybean oil recovered a large amount from session lows despite sharply lower WTI crude oil. Nearby soybean oil finished higher and back months lower. The May and July oil share was seen
again oversold. There was talk China bought soybeans for April and May shipment but no confirmation was provided. However, soybean spreads were firm today. We heard China bought 6-7 cargoes of soybeans oil (likely SA origin) since late last week.

·
NOPA February crush was near expectations but soybean oil stocks fell from end of January. We raised our product crush for the US 2022-23 crop year by 3 million bushels to 2.230 billion bushels, ten million above USDA. February
crush came in above last year. US crush margins have eroded but remain favorable.

·
Germany’s association of farm cooperatives estimated the 2023 winter rapeseed crop will fall 1.1% to 4.23 million tons. The wheat area is expected to decline as well. Germany has been losing agriculture land every year due to
housing and solar expansion.

·
Anec: Brazil soy exports seen reaching 14.893 million tons in March vs 14.662 million tons forecast in previous week.

·
Anec: Brazil soymeal exports seen reaching 2.091 million tons in March vs 1.905 million tons forecast in previous week.

·
Palm oil futures ended a 3-day losing streak from an improvement in palm shipments.

·
India’s vegetable oil imports fell to 1.11 million tons in February from 1.66 million tons in January (SEA) (palm imports lowest in 8 months).

Palm
oil imports fell to 586,007 tons from 833,667 tons in January
Soybean
oil imports fell to 355,840 tons from 366,625 tons in January
Sunflower
oil imports fell to 156,628 tons from 461,458 tons in January

·
Indonesia’s trade minister mentioned palm oil producers in Indonesia sold 360,150 tons of cheap cooking oil to the domestic market in February, less than the government target of 450,000 tons. Exporters must now sell a portion
of their palm oil products at home at a capped price under a domestic market obligation (DMO) scheme, according to Reuters.

·
Cargo surveyor AmSpec reported Malaysian palm oil exports for FH March at 750,530 tons, a 72 percent increase from the same period month ago. ITS reported a 55 percent increase to 751,814 tons.

The
February soybean crush was reported by NOPA at 165.4 million bushels, 0.6 million below an average trade guess and compares to 179.0 month earlier and 165.1 million a year earlier. The 165.4 million bushels was second largest for the month of February. Year
on year the crush improved. Prior months it was lagging. On a daily adjusted basis, US crush was up 133,000 bushels from January and 13,000 above February 2022. NOPA reported end of February soybean oil stocks at 1.809 billion pounds, 77 million below the
1.886 billion trade guess, below 1.829 billion (20 mil) at the end of January and below 2.059 billion year earlier. The SBO yield of 11.85 improved from 11.80 for January. Soybean meal yield was reported at 47.51, above 47.32 for January and compares to 46.99
year earlier. The crude report is seen slightly supportive for soybean oil and neutral for soybeans and meal.

Export
Developments

·
Turkey’s TMO bought 18,000 tons of sunflower oil at $1,026.89, $1,025.00, and $1,043 a ton.
Delivery was sought between March 22 and April 28 to the ports of Iskenderun/Mersin or Tekirdag.

Updated
03/10/23

Soybeans
– May $14.50-$16.00

Soybean
meal – May $430-$520

Soybean
oil – May 55-61

Wheat

·
US wheat futures were higher after trading two-sided earlier. A sharply higher USD may have limited gains. Black Sea headlines were quiet but there is still uncertainty over the grain deal hanging over heads. Many countries are
disappointed the extension of the grain export deal will last 60 days rather than 120 days. Some countries are calling on Russia to extend the deal beyond 60 days.

·
US HRW wheat areas will see restricted rain over the next week.

·
China plans to auction off 140,000 tons of wheat from state reserves on March 22.

·
Anec: Brazil wheat exports seen reaching 728.594 million tons in March vs 612,824 tons forecast in previous week.

·
Germany’s association of farm cooperatives estimated the 2023 wheat crop will fall 2.3% to 22.01 million tons.

·
Paris May wheat was higher today by 3.00 euros at 272.00 per ton.

Export
Developments.

·
The Philippines bought about 40,000 tons of feed wheat from Australia this week at $310/ton c&f for June shipment.

·
Thailand seeks 21,000 tons of feed barley for July shipment.

·
Jordan bought 50,000 tons of feed barley at $275.50/ton c&f. Possible shipment combinations are for Aug. 1-15, Aug. 16-31, Sept. 1-15 and Sept. 16-30.