FI Evening Grain Comments 03/17/23

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11^th
hour Black Sea export deal may prompt a lower trade Sunday for grains, led by wheat. Lower close Friday for the CBOT soybean complex with soybean oil share recovering due to rumors Argentina soybean imports will yield higher than expected meal exports. Ukraine
announced a 120-day grain deal expansion on Saturday, after grain prices rose Friday from uncertainty. US is not out of the woods for small bank closures, so economic uncertainty is expected to spill over for the short term. Two weeks from today USDA will
release the 2023 initial US planting survey and March 1 grain stocks. Look for positioning ahead of this report to gradually increase.

Private
exporters reported sales of 191,000 metric tons of corn for delivery to China during the 2022/2023 marketing year.

CFTC:
March 17, 2023: The cyber-related incident at ION prevented the submission of timely and accurate data to the CFTC last month. As a result, the weekly CFTC Commitments of Traders (CoT) report has been delayed. Today, staff will not issue the Commitments of
Traders report as data for this week will need to be reviewed and validated.

Our
fund/managed money estimates as of March 17.

Weather

Map

Description automatically generated

Source:
World Weather, INC.

MORNING
WEATHER UPDATE

WORLD
DROUGHT AREAS

Mexico
is still dealing with a winter drought and there is need for precipitation to support corn, sorghum and cotton in unirrigated areas

There
is also need for moisture in some citrus and sugarcane areas, although the situation for these two crops is not critical outside of the far northeast part of the nation

Drought
remains in eastern Spain and in the lower Danube River Basin in southeastern Europe

Dryness
is also a problem in Norway

Drought
continues in portions of northern Africa with some areas hurting for moisture more than other areas

Interior
parts of Tunisia are experiencing the biggest decline in crop conditions relative to those of last year
Southwestern
Morocco has seen improved rainfall this winter, although it was too dry to plant most of the irrigated wheat and barley in the region this year so production will still be down
Crop
conditions in Algeria seem to be similar to slightly poorer than last year at this time
Rain
prospects are poor for at least another week

India’s
winter rainfall was poor this year hurting some of the dryland winter crop production

Temperatures
were warmer than usual in February which added to the crop moisture stress
March
started off warmer than usual and quite dry, but the coming two weeks will be cooler than usual and there is a good chance for showers this weekend through early next week

Most
of the rain comes too late to improve yield potentials, but some late developing winter crops will see an improvement in crop quality

Argentina
remains the world’s most seriously drought impacted country

Recent
rain has improved topsoil moisture in central and southern Buenos Aires and in portions of western and southern Cordoba, San Luis and a few La Pampa locations, although much more rain is needed
Central
portions of Argentina have been most seriously impacted by dry and hot weather during the most recent 30-days
Rain
is expected Monday into Wednesday across central Argentina offering some relief to persistent dryness, but the drought will not end because of the rain

The
moisture comes too late in the season to benefit more than a few crops, but some improvement will be possible

Rain
totals will vary from, 0.75 to 2.50 inches from Cordoba to Entre Rios and northern Uruguay
Southern
Rio Grande do Sul, Brazil will also benefit from the early week rain event next week

Other
areas in Argentina will get some rain in the coming ten days, but the moisture will be sporadic and light

Warm
temperatures will keep evaporation rates high

Drought-like
conditions have been evolving in northeastern Brazil in the past few weeks, although the impact on agriculture has been low so far

This
area will be impacted by more dryness late this year and into early 2024 if El Nino evolves as expected

Dryness
in Rio Grande do Sul, Brazil has been an extension of drought from Argentina and it has had some negative impact on rice and corn production this year

Soybeans
have been impacted to a smaller degree of seriousness
Some
timely rainfall is possible in the state next week, but more rain will be needed to end long term dryness

Eastern
Australia has been struggling with some dryness in recent weeks, but rain a week ago in central through southeastern Queensland offered some welcome relieve for late season summer crops

New
South Wales was not as seriously relieved from dryness as Queensland, although northeastern parts of the state did get some significant moisture
Eastern
Australia summer crop areas have resumed a drier bias and will continue to experience limited rain for the next ten days
Summer
crop advancement is getting to the point that dryness is not likely to have a big impact on unirrigated crops in the future, but moisture is needed to improve field conditions for the planting of winter crops beginning in late April

Drought
continues a concern in Canada’s southwestern Prairies

Some
snow fell earlier this month in a part of the drought region, but snow water equivalents were not great enough to offer a tremendous improvement, although some benefit did occur as the snow melted
Not
much precipitation of significance will occur in the dry areas over the next couple of weeks

Drought
in the U.S. western Plains is the most serious out of all dryness in North America,
but it could also be fixed faster than some other areas because “normal” rainfall is not all that great

Dryness
is most serious from West Texas cotton and wheat areas north into western Kansas and eastern Colorado, although a part of the region from western Nebraska to Montana is also considered to be too dry

Relief
from dryness is unlikely in the next ten days and probably longer

U.S.
southeastern states had been drying out in recent weeks, but the region has not been seriously impacted except in Florida where drought is a concern for long term crop development

Relief
is expected in the interior southeastern parts of the United States in the coming ten days to two weeks with rain likely in many areas

Florida
will get “some” rain, but probably not enough to break drought status

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

WETTER
AREAS OF THE WORLD

Portions
of the U.S. Midwest, Delta and Tennessee River Basin are quite wet and need drier weather to improve planting conditions in the next few weeks
The
U.S. Red River Basin of the North and portions of the upper Mississippi River Basin have tremendous amounts of snow on the ground and could experience some flooding if the snow melts too fast while significant rain falls in the region

No
such forecast has been made for the coming two weeks, but cool temperatures will leave much of the snow in place raising the potential that when it does warm up the snow may melt fast resulting a sudden turn toward flooding

California
and western parts of both Washington and Oregon are very wet and there is potential for flooding this spring as the deep snowpack in the mountains melts
A
large part of northern Europe has become saturated with moisture in the past week, but dryness down deep in the soil should absorb much of the moisture in time limiting the potential for flooding

Many
rivers and streams are still flowing at below normal levels following last summer’s drought and a poor winter season of precipitation

The
low water levels will prevent major flooding from occurring event if Europe goes into a more active weather pattern this spring which is possible

Western
Russia continues saturated with moisture and significant snowmelt is under way now and will continue into early April

Some
flooding is suspected, although not confirmed
Any
abundance of rain that evolves in the next few weeks could raise the severity of flooding across the region

Portions
of Belarus and the Baltic States are quite wet as well

Many
areas in Indonesia and Malaysia have seen waves of significant rain in recent months leaving the ground saturated and inducing periodic flooding

This
pattern may continue for a while, but as La Nina’s lingering affects diminish so will the rainfall

REST
OF WORLD

South
Africa crop weather has been very good this year, although the nation is drying out now

Early
season maturation and harvesting should go well
Late
season crops will need some beneficial moisture later this season

Most
of Australia’s irrigated crops have performed well this summer and will likely finish out well
China’s
weather has been nearly ideal in recent weeks and months

Winter
crops should develop well, although some timely rain will be needed in the Yellow River Basin and North China Plain soon
Rain
in the Yangtze River Basin and areas to the south in the next ten days will improve soil moisture for aggressive rapeseed development and good rice planting and early development potential

Much
of the Russia’s Southern Region and Ukraine weather has been good since planting occurred last autumn and early spring crop development potential looks good
Europe
weather outside of the drier and wetter areas noted above will remain favorable for a while
Southeastern
Canada’s corn, wheat and soybean production region is favorably moist and poised for a good start to spring, although fieldwork is still a few weeks away
West-central
Africa rainfall is expected to increase through Friday of next week bolstering soil moisture and improving conditions for flowering coffee and cocoa
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 will also experience a boost in precipitation

Syria,
northern Iraq and much of Iran will receive significant rainfall as will some areas in Afghanistan and northern Pakistan

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 in this coming week, but a notable boost in rain may occur in the last week of this month
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.

Mexico
rainfall will continue erratic and light as it has been

Today’s
Southern Oscillation Index was +1.07 and it was expected to move lower over the coming week

Source:
World Weather, INC.

Bloomberg
Ag calendar

Monday,
March 20:

China’s
trade data, including country breakdowns for various commodities
MARS
monthly report on EU crop conditions
USDA
export inspections – corn, soybeans, wheat, 11am
Malaysia’s
March 1-20 palm oil export data
USDA
total milk production

Tuesday,
March 21:

New
Zealand global dairy trade auction
EU
weekly grain, oilseed import and export data
HOLIDAY:
Japan

Wednesday,
March 22:

EIA
weekly US ethanol inventories, production, 10:30am
EARNINGS:
Syngenta
HOLIDAY:
Indonesia

Thursday,
March 23:

USDA
weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
Port
of Rouen data on French grain exports
Rabobank
Farm2Fork Summit, Sydney
Russian
Grain Union holds conference in Kazan
Brazil’s
Unica may release cane crush and sugar output data (tentative)
USDA
red meat production, 3pm
US
cold storage data for pork, poultry and beef, 3pm
HOLIDAY:
Indonesia

Friday,
March 24:

Marine
Insurance London conference
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
US
poultry slaughter
HOLIDAY:
Argentina

Source:
Bloomberg and FI

Macros

Dozens
Of Banks May Have Risks Similar To Silicon Valley Bank, Economists Find – WSJ

Charles
Schwab Clients Pull $8.8 Billion From Prime Funds In Three Days

Canadian
Industrial Production Price (M/M) Feb: -0.8% (exp 0.2%; prev 0.4%)

Canadian
Raw Materials Price Index (M/M) Feb: -0.4% (exp -0.1%; prev -0.1%)

Canadian
International Securities (CAD) Transactions Jan: 4.21B (prevR 21.22B)

US
Industrial Production (M/M) Feb: 0.0% (exp 0.2%; prev 0.0%)

US
Capacity Utilisation Feb: 78.0% (exp 78.4%; prev 78.3%)

US
Manufacturing (SIC) Production Feb: 0.1% (exp -0.3%; prev 1.0%)

Corn

·
Corn was higher from follow through buying amid strength in wheat and US corn sales to China. We
think China is done buying for the short term. CBOT front
month contracts gained on back months, but the spreads settled down during the mid-session day trade. US corn remains competitive over Brazil through early June, but don’t discount additional Chinese second Brazil corn crop forward buying over the next few
months. Brazil second corn crop sales by producers stand at 14 million tons.

·
Soaking in the 2+ million tons of US corn sales to China, worth a note China imported 3.09 million tons last month.

·
US producers might be at least 20 percent locked in for new-crop corn and soybean sales.

·
There is no reason at these prices producers should be planting to the edge of the roads. We look for inflated March panting intentions to find the planted area lower by August.

·
China is still dealing with African swine fever disease as multiple cases were reported across various parts of the country over the winter. Something to monitor.

·
China announced more subsidies to incentivize producers to plant more soybeans to reduce import dependency. This may reduce the amount of China’s grain planted area.

·
USDA US cattle on feed was slightly higher than expected. While inventories are historically low, we see no major price movements from the monthly report.

U
of I: Will Brazil Emerges as the Number One Corn Exporting Nation?

Colussi,
J., G. Schnitkey and N. Paulson. “Will Brazil Emerges as the Number One Corn Exporting Nation?”
farmdoc daily (13):48, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, March 16, 2023.

https://farmdocdaily.illinois.edu/2023/03/will-brazil-emerges-as-the-number-one-corn-exporting-nation.html

Export
developments.

USDA
reported private exporters reported sales of 191,000 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

·
Soybeans opened lower on technical selling and lower soybean meal, and ended lower from technical selling led by soybean meal on rumors Argentina’s crush will exceed expectations from record soybean imports for the crush industry.
Soybean oil dropped from lower WTI crude oil. Palm oil futures were lower Friday and closed the week down 4.2%. Argentina may import 8 million tons of soybeans, a 4x fold from average. Argentina’s crush rates, percentage wise, are currently near at all-time
low per capacity.

·
However, with US and Argentina soybean oil export limitations for the rest of 2023, Brazil soybean oil exports could balloon LH 2023 and early 2024. Trade flows are at most difficult to predict.

·
Soybean meal might be backing up across the US with good crush rates and lack of export developments over the past week.

·
Brazil will increase their biodiesel blend requirement to 12 percent in April from current 10 percent, then increase it to 13 percent in 2024 and 14 percent in 2025. The gradual increase over the long term is conservative, but
near term the 2 point increase was as expected. No price reaction is expected from this announcement as the change in government powers already indicated a change. They can change long term blend rates anytime. 65 percent of Brazil’s biodiesel was made from
soybean oil.

·
Brazil is 63 percent harvested versus 72 percent year ago for soybeans. A good pace since production will be record this year.

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 were higher Friday on black Sea uncertainty (that changed Saturday) and reached a two-week high basis the nearby Chicago contract. Ukraine on Saturday said the Black Sea grain export deal was extended to 120
days. Don’t expect the backup in inspections to ease.

·
11^th hour deal – Look for a softer CBOT $ open on Sunday (evening).

·
Egypt bought 120,000 tons of Ukraine wheat for April 15-25 shipment.

·
French soft wheat crop ratings as of March 13 were 95% good/excellent, same as the previous two weeks and compare with 92% year earlier. Winter barley was 92%, also unchanged, and durum wheat 92%, up from 91% previous week. Spring
barley plantings are complete.

·
Long-term, the US weather service called for above normal temperatures and below normal precipitation for the southwestern US HRW wheat country. Short-term, the US HRW wheat areas will see restricted rain over the next week.

·
(Interfax) – The export duty on Russian wheat will decline 0.1% to 5,327.9 rubles per ton as of March 22 from 5,344 rubles per ton the previous seven-day period, and this will be the second consecutive week that the duty has decreased,
first time since January 25 this year, the Agriculture Ministry said in a statement. The duty on barley will rise to 3,298.2 rubles per ton from 3,016.6 rubles per ton, and the duty on corn will increase to 2,646.9 rubles per ton from 2,615.3 rubles per ton.