FI Evening Grain Comments 08/23/22

PDF Attached adds updated FI estimates for US S&D’s, and revises corn, soy and wheat price forecasts for Nov/Dec

 

Futures
prices for the soybean complex and grains rallied on US yield concerns. We are concerned for the long term, for global production, as two more fertilizer companies in Poland pulled the plug on maximizing fertilizer production.
Under
the 24-hour announcement system, USDA reported 110,000 tons of new-crop soybeans sold to China. US weather outlook was unchanged. Rains will/have fall across ND, central TX (today) then central TX, SD, MN tomorrow. KS and MN may see rain this weekend.

 

 

Weather

 

World
Weather Inc.

WEATHER
EVENTS AND FEATURES TO WATCH

• Heavy
  rain moved out of West Texas and into the Texas Blacklands and a part of the Delta Monday
• Rainfall
  since last Friday has been impressive across the southern states with 1.00 to 4.00 inches common and local totals for 4.00 to more than 6.00 inches
• The
  Dallas area of Texas reported 15.00 inches of rain Sunday into Monday
• South
  Texas and a very small part of west-central Texas were missed by the rain this week, but remember a small part of South Texas received rain in the previous weekend from a weak disturbance that moved from the Louisiana coast into southern Texas
• All
  of these areas from the New Mexico to the middle and lower Delta are now sufficiently we and would benefit from drier weather
• Western
  U.S. Corn Belt precipitation is expected to be greatest Sunday into Tuesday of next week and if the forecast verifies the rain will be timely enough to support late season soybean development
• Drier
  weather that follows the rain event next week should prove ideal in giving the crop a good environment for normal late season development
• Eastern
  U.S. Midwest precipitation will be periodic enough to maintain a favorable late season outlook for crop development
• The
  lack of hot weather and relatively good soil moisture should be sufficient for late season crop evolution
• A
  mix of rain and sunshine advertised for Canada’s Prairies and the northern U.S. Plains should be good for late season crop development, such as corn, flax, soybeans and late canola, while supporting the maturation and harvest of early canola, lentils, early
  corn and most small grains
• U.S.
  far western states will remain dry and warmer than usual for the next ten days, but that is not unusual for this time of year
• Concern
  over late autumn and winter precipitation in California, the Great Basin and southern Rocky Mountains will run high this year due to low water supply
  
• U.S.
  Gulf of Mexico coast areas will be wettest over the next several days while much of the Midwest experiences net drying
• Too
  much rain may fall in a small part of the lower U.S. Delta today
• Heavy
  rain in India Monday was confined to northern Madhya Pradesh where the latest monsoon low shift to after passing through eastern Madhya Pradesh Sunday resulting in some flooding
• Rainfall
  reached over 7.00 inches Monday and some flooding was suspected since the region impacted was already saturated by previous rain
• India
  and Pakistan rainfall will be greatest today and Wednesday from Rajasthan and northern Gujarat into the lower and middle Sindh Valley with 3.00 to 6.00 inches and locally more expected to result in local flooding
• The
  remainder of central India will take a nice break from frequent excessive rainfall
  
• Net
  drying is needed for a while to improve crop conditions
• Recent
  flooding from Odisha and West Bengal to Madhya Pradesh has damaged some crops
• India
  rainfall is expected to be more sporadic with scattered showers and thunderstorms occurring daily during the next ten days, but not all areas will be impacted each day and the precipitation should be light enough to limit the potential for flooding
• Crop
  improvements are expected
• Hot
  weather continued in the Yangtze River Basin of east-central and southeastern China Monday with high temperatures in the upper 90s to 108 degrees Fahrenheit
• Sichuan
  remained hottest as it has frequently been
• The
  heat and dryness continued to stress crops throughout the region where drought has been prevailing for a while
• China’s
  Yangtze River Basin is expected to receive a few showers and thunderstorms later in this coming week with some cooler temperatures
• Much
  of the precipitation will not counter evaporation very well
• The
  relief is not expected to come very quickly
• A
  better mix of rain and sunshine will occur in the second week of the outlook, but it may be a while before China’s soil moisture profile is returned to normal
• Drought
  will prevail for at least the next ten days
• Xinjiang,
  China precipitation is expected to continue mostly in the mountains and temperatures will trend a little warmer.
  
• Europe
  Monday continued greatest from western Poland through Czech Republic and Slovakia to “parts” of the Balkan Countries
• Rainfall
  reached over 3.00 inches in western Czech Republic where some flooding has recently evolved due to persistent rainy weather since early in the weekend
  
• Net
  drying occurred elsewhere in the continent and drought remains deeply entrenched
  
• Highest
  temperatures were in the 70s and 80s north and in the 80s and 90s elsewhere.
  
• Warmest
  the Mediterranean region
• Coolest
  in the rainy areas of eastern Germany, Czech Republic and western Poland where some highs were limited to the upper 50s and 60s Fahrenheit
• Europe
  rainfall over the coming ten days will occur periodically, but western parts of the continent will be driest until this weekend and next week
• Austria,
  Czech Republic and Slovakia have been wettest along with parts of western Poland, western Romania and western Bulgaria
• These
  areas will start to dry down for a little while later this week
• Temperatures
  will be warmest over the next few days and will be more seasonable again next week
• Western
  CIS crop areas will continue to dry out over the next ten days
• Areas
  from Ukraine, southeastern Belarus through the entire Volga River Basin to Russia’s Southern Region, Ural Mountains and Western Kazakhstan will be driest, although not completely dry
• Rainfall
  will be less than 0.60 inch
• Warmer
  than usual temperatures will occur through mid-week next week and then will trend cooler during the balance of next week and into the following weekend
• Rain
  in Australia is expected to become more limited for a while, but favoring the southeastern part of the nation
• Western
  Australia will be driest
• The
  bottom line still looks very good for most of the nation’s crops even though Western Australia will experience net drying for the next ten days
• Temperatures
  will be seasonable
• Ontario
  and Quebec, Canada will see alternating periods of rain and sunshine over the next two weeks supporting crop develop.
• Rainfall
  may be a little light and sporadic in Ontario while greater in Quebec
• Brazil
  drying is expected over the next ten days in most areas except Rio Grande do Sul where some light rain is likely Friday into the weekend
  
• Western
  Argentina will continue struggling for good moisture over the next two weeks
• Net
  drying is expected, and temperatures will be rising a little warmer than usual both this week and next week
  
• Showers
  are expected in eastern Argentina periodically and that will prove to be good for future winter crop development
• Southeast
  Asia rainfall is expected to be frequent and significant during the next ten days to two weeks
  
• All
  areas are expected to be impacted and sufficient rain is expected to bolster soil moisture for long term crop development need
  
• South
  Africa will receive periodic showers of limited significance in the south, west and east leaving north-central areas dry
• Most
  of the resulting rain is not likely to be great enough for a serious impact on soil moisture, but some southern areas will get enough to maintain favorable early spring crop development potential
• Central
  Africa showers and thunderstorms will continue most frequent and significant in the northern coffee, cocoa and cotton production areas, but over time the rainy pattern should shift to the south
  
• Southern
  coffee and cocoa areas are not likely to get significant rain for a while especially not in Ivory Coast or Ghana
• North
  Africa precipitation over the next two weeks will be sporadic and light having little to no impact on soil moisture
  
• Mexico’s
  drought in the northeast will persist through the next ten days
• Rain
  will occur more routinely in western and southern Mexico where crop and soil conditions will be best
• Central
  America precipitation will continue frequent and significant keeping some rice, coffee, sugarcane, citrus and other crop areas plenty wet
  
• Some
  net drying might be welcome
• Today’s
  Southern Oscillation Index was +9.96 and it should rise additionally over the next couple of days.
  

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Tuesday,
Aug. 23:

• Sinofert
  1H results briefing

Wednesday,
Aug. 24:

• EIA
  weekly US ethanol inventories, production, 10:30am
• Brazil’s
  Unica may release cane crush, sugar production data (tentative)
• US
  poultry slaughter

Thursday,
Aug. 25:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Malaysia’s
  Aug. 1-25 palm oil export data
• USDA
  red meat production

Friday,
Aug. 26:

• 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
  weekly update on crop conditions

Source:
Bloomberg and FI

 

USDA
Prevented Plantings via Reuters

U.S.
corn and soybean plantings

Prevented
planting

(thousands
of acres)

Crop               
Aug 2022      Aug 2021

Corn                  
3,148           620

Soybeans                
987           316

Wheat                 
1,162           292

Rice                    
628           450

Barley                   
83            19

Sorghum                 
180            26

Cotton-Upland           
115           240

 

U.S.
corn and soybean plantings

Plantings

(thousands
of acres)

Crop               
Aug 2022      Aug 2021

Corn                 
86,768        90,309

Soybeans  
           86,488        85,287

Wheat                
47,445        48,808

Rice                  
2,196         2,466

Barley                
2,806         2,414

Sorghum               
5,757         6,829

Cotton-Upland        
13,348        10,857

 

Soybean
and Corn Advisory

2022
U.S. Corn Yield Unchanged at 173.0 bu/ac

2022
U.S. Soybean yield Unchanged at 50.5 bu/ac

2021/22
Brazil Corn Estimate Unchanged at 112.0 Million tons

2021/22
Argentina Corn Estimate Increased 1.0 mt to 51.0 Million

 

Macros

China’s
currency hit a 2-year low against the USD (reversed today). US natural gas prices reached 14 year highs. Euro hit parity against the USD yesterday. China’s drought is now worst since they started keeping records 61 years ago.

 

The
European Drought Observatory (EDO) reported 47% of Europe is under warning conditions, and the drought could end up worst in at least 500 years.

 

Corn

·        
Corn rallied, highest since early July, on US yield concerns. US weather has not changed much but crop scouts are reporting poor conditions. Corn futures ended up higher for the fifth consecutive session.

·        
Based on yesterday’s crop tour for OH and SD, yield results for corn call for implied production to end up 200 million bushels below USDA August.
For updates today, we heard conditions looked better than day 1.
Tour
results will be released soon.

·        
The funds bought an estimated net 15,000 corn contracts.

·        
The USD turned lower and WTI crude oil remained higher.

·        
The US Delta saw additional heavy rain and that is gaining attention as producers are concerned about the health of the corn (what has not been cut), soybeans, rice and cotton.

·        
USDA crop conditions dropped last week, and we lowered out US corn and soybean yield estimates. See attached US corn and soybean balances.

·        
Brazil Agroconsult looks for the grain/oilseed area for 2022-23 to grow by 2.5 million hectares, led by soybeans.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 7,000 thousand (965-985 range) from the previous week and stocks down 177,000 barrels to 23.269 million.

 

Export
developments.

·        
None reported

 

 

Updated
8/23/22

December
corn is seen in a $6.00-$7.00 range

 

Soybeans

·        
Soybeans
were higher led by strength in corn and soybean meal. USDA crop conditions declined last week, and Pro Farmer tour results for Day 1 were supportive.

·        
The funds bought an estimated net 11,000 soybean contracts, bought 4,000 soybean meal and bought 3,000 soybean oil.

·        
Higher WTI crude oil and related markets did support SBO.

·        
USDA announced 110,000 tons of 2022-23 soybeans sold to China. We heard they are looking around for US soybeans this morning, but rumors faded.

·        
India remains committed to buying about 2.6 million tons of palm oil from Indonesia, an Indonesia trade minister stated.

 

Export
Developments

·        
Under the 24-hour announcement system, USDA reported 110,000 tons of new-crop soybeans sold to China.

·        
USDA this week seeks 1,500 tons of vegetable oil for the AMS/CCC to use in export programs. Shipment was set for Oct 1-31, later if from plants at the port.

·        
Passed: Tunisia was in for 6,000 tons of crude degummed vegetable oil for August 27 to September 10 shipment.

 

 

Updated
8/23/22

Soybeans
– November is seen in a $13.75-$16.00 range

Soybean
meal – December $390-$445

Soybean
oil – December 63.00-71.00

 

Wheat

·        
US wheat
was higher on strong corn futures and concerns over global production.

·        
Funds bought an estimated net 6,000 Chicago wheat contracts.

·        
SovEcon reported July-August wheat exports at 5.9 MMT, down 27 percent year ago level.

·        
Concerns over the China wheat crop are mounting as that country is experiencing drought conditions across the southern areas.

·        
Germany may see a larger wheat crop according to DBV association, at 21.8 MMT from 21.0 MMT last year.

·        
Paris September wheat was up 9.50 euros at 326 per ton.

·        
Ukraine exported about 720,000 tons of grains/oilseeds since the safe passage agreement. About 33 cargo ships have departed ports.

 

Export
Developments.

·        
Jordan passed on 120,000 tons of wheat.

·        
Egypt’s GASC bought 240,000 tons of Russian wheat on Aug. 22, according to Reuters. Shipment is for Sep 20 through November 10. Additional purchases could still be made, they added. Average price was thought at $368 per ton.

·        
Japan seeks 118,881 tons of food wheat from the United States, Canada and Australia, on Thursday.

·        
Taiwan Flour Millers’ Association seek 34,025 tons of grade 1 milling wheat from the United States on August 25 for shipment out of the PNW between October 12 and October 26.

·        
Bangladesh seeks 50,000 tons of milling wheat on September 1, optional origin, for shipment within 40 days of contract signing.

 

Rice/Other

·        
Bangladesh seeks 50,000 tons of rice on September 6.

 

 

Updated
8/23/22

Chicago – December $7.25-$10.00

KC – December $8.00-$11.00

MN – December $8.00-$12.00