FI Evening Grain Comments 08/27/22

PDF Attached includes CFTC, daily estimate of funds, and some Pro Farmer charts.

 

USDA
24-H: Private exporters reported sales of 146,000 metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year.

 

US
equities traded sharply lower (Dow down 1008 points) from Fed Chairman Jerome Powell comments over inflation and warning that the Feb could roll out an economic plan. CBOT ag markets rallied on crop concerns. US weather forecast was unchanged. The US Midwest
will see rain northwest Saturday and western areas Sunday. Parts of HRW wheat country will see rain on and off bias the southwestern areas over the next 7 days. Delta saw too much rain.

 

Pro
Farmer crop tour was viewed bullish corn and neutral and bearish soybeans.

 

Pro
Farmer crop tour reported the US corn yield at 168.1, well below USDA’s 175.4 bu/ac. Production was pegged at 13.759 billion, below USDA’s 14.359 billion and compares to 15.115 billion a year ago. Trade expectations before the release of the report for the
Pro Farmer yield was 172 to 174 bushels per acre. Implied harvested area is near USDA. Using Pro Farmer’s supply and USDA’s demand, 2022-23 US corn ending stocks would fall 600 million bushels to 789 million. Demand destruction would prevent that, in our opinion.

 

Pro
Farmer crop tour reported the US soybean yield at 51.7, below USDA’s 51.9 bu/ac. Production was pegged at 4.535 billion, slightly above USDA’s 4.531 billion and compares to 4.435 billion a year ago. We were hearing around 50 bushels per acre estimate before
the release of the report. This implies a crop tour harvested area well above USDA. The yield was likely above trade expectations.

 

 

 

 

 

 

 

Weather

 

World
Weather Inc.

WEATHER
EVENTS AND FEATURES TO WATCH

• U.S.
  forecast is drier today for areas from the southwestern Plains into the Midwest for next week
• This
  change was needed and should verify well
• A
  close watch on the Atlantic Ocean and Caribbean Sea is warranted for the week ahead for signs of a developing tropical cyclone
• Confidence
  is rising over the presence of such a storm that would be threatening North America during the second weekend of the two-week outlook, but more likely in the week of Sep. 5
• Changes
  in the landfall forecast are expected multiple times over the next several days as the models make further adjustments.
  
• Coffee,
  sugarcane and other crops in the Greater Antilles could be impacted in the second weekend of the outlook
• A
  large ridge of high pressure is expected over central North America next week that will provide a great opportunity for crop maturation and harvest progress in Canada’s Prairies and the northern U.S. Plains.
  
• Some
  of this dryness and warming will also impact the U.S. central Plains and Midwest later next week and into the following weekend providing a more aggressive period of net drying
• U.S.
  Gulf of Mexico Coast will see frequent showers and thunderstorms next week
• Some
  of the rain could be enhanced by a weak tropical wave that might influence a part of Texas or Louisiana
  
• U.S.
  Midwest, Central and southern Plains, northern Midwest and southeastern states will see a mix of showers and sunshine during the next two weeks favoring crop development, maturation and some harvesting
• The
  period from mid-week next week through the following week should be driest – at least until a tropical cyclone brings a threat to the nation in the week of Sep. 5
• Western
  Russia and parts of Ukraine will experience light rain showers and cooler temperatures in the second half of next week through Sep. 8
• The
  change will be welcome after an extended period of warm and dry conditions that depleted soil moisture, but the resulting rainfall in key Russian wheat areas is still expected to be too light to fix moisture deficits
• Drying
  will continue from parts of Ukraine to Belarus and in Russia’s Southern Region during the next ten days
• Europe’s
  greatest rain in the coming ten days will be in southern France, northern Italy and from a part of the Balkan Countries into eastern Germany and western Poland
• Northwestern
  Europe: including northern France, the U.K., Belgium, Netherlands and western Germany, will be drier than usual over the next ten days, despite some increasing shower activity
• Western
  Europe temperatures will continue warmer biased for the next ten days, although not nearly as hot as earlier this summer
• Western
  Russia and Eastern Europe will experience some cooling during the second half of next week and into the following weekend slowing evaporation rates and crop development
• Northeastern
  China and northern parts of the North China Plain will experience less frequent and less intensive rain and that will prove to be good for most crops in the region
• South-central
  parts of the Yangtze River Basin in eastern China will not get relief from dryness during the next ten days
• Northern
  parts of the Yangtze River Basin in east-central China will receive some rain and needed relief to drought in the coming week to ten days
• Sichuan
  to Jiangsu will be wettest
• Crop
  moisture stress will continue in areas to the south
• Xinjiang,
  China weather is expected to remain a little milder than usual with a few showers periodically, but summer crop conditions have been seriously altered by the pattern which has been relatively persistent in recent weeks
• Northwestern
  India and Pakistan area expected to dry down during the coming ten days while rain falls elsewhere in India
• The
  improved weather will help crops recently threatened by excessive rain
• Some
  crop damage will not be reversed
• Damage
  to some rice and cotton has likely occurred this summer in Pakistan and a few neighboring areas of far northwestern India
• Ontario
  and Quebec weather remains mostly good for corn and soybeans with little change likely
• Mexico’s
  drought in the northeast continues and will not likely end without the help of a tropical cyclone
• Western
  and southern Mexico rainfall is expected to be sufficient to support crop needs for a while, but summer monsoon has not been as good of a performer as predicted and greater rain is needed to prevent drought from being ongoing into 2023
• Central
  America rainfall has occurred routinely and will continue to do so favoring many crops
• Argentina’s
  two week forecast continues to promote lighter than usual rainfall in the west while eastern areas get a little more routine occurrence of rain to maintain a favorable winter crop outlook
• Southern
  Brazil weather is expected to continue favorably moist over the next two weeks
• Rain
  in Australia is expected to become more limited for a while
• Western
  Australia will be driest in the coming week and then showers will develop later in the second week of the outlook
• 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
• 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
  
• Today’s
  Southern Oscillation Index was +9.03 and it will move erratically lower over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

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

Monday,
Aug. 29:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• US
  crop conditions for corn, soybeans and cotton; spring wheat harvesting, 4pm
• EU
  weekly grain, oilseed import and export data
• Canada’s
  Statcan publishes data on production of wheat, canola and barley
• Vietnam’s
  general statistics department releases coffee, rice and rubber export data for August
• HOLIDAY:
  UK

Tuesday,
Aug. 30:

• No
  major event scheduled

Wednesday,
Aug. 31:

• EIA
  weekly US ethanol inventories, production, 10:30am
• Malaysia’s
  August palm oil export data
• US
  agricultural prices paid, received, 3pm
• HOLIDAY:
  India, Malaysia

Thursday,
Sept. 1:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Cocoa
  Association of Asia hosts International Cocoa Conference, day 1
• Australia
  Commodity Index
• USDA
  soybean crush, DDGS production, corn for ethanol
• HOLIDAY:
  Vietnam

Friday,
Sept. 2:

• FAO
  world food price index, grains supply and demand outlook
• 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
• Cocoa
  Association of Asia hosts International Cocoa Conference, day 2

Source:
Bloomberg and FI

 

As
of Friday night…

 

Friday

 

 

 

 

 

CFTC
Commitment of Traders

 

 

 

 

 

Reuters
table

SUPPLEMENTAL     
Non-Comm               Indexes                  Comm

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
120,914     50,191    373,820      1,431   -439,168    -51,958

Soybeans           
39,123      7,087    143,283       -673   -149,759    -11,105

Soyoil             
11,582      5,576    102,733        515   -124,101     -9,279

CBOT
wheat         -60,560     -4,569    117,961       -631    -54,586      3,635

KCBT
wheat         -11,698      3,245     51,006          7    -39,420     -2,877

 

FUTURES
+ OPTS     Managed                 Swaps              Producer

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
182,216     28,376    236,948     -4,766   -428,404    -44,884

Soybeans          
104,471      5,136     83,378     -3,961   -145,936     -8,539

Soymeal            
95,718      9,454     88,851       -143   -228,251    -11,135

Soyoil             
42,208      8,973     85,303       -318   -138,853     -9,157

CBOT
wheat         -26,069     -7,960     67,751     -2,012    -47,484      4,367

KCBT
wheat           9,425      1,904     30,438        777    -36,013     -3,365

MGEX
wheat          -1,464       -707      1,506       -194        167      1,024

                
———- ———- ———- ———- ———- ———-

Total
wheat        -18,108     -6,763     99,695     -1,429    -83,330      2,026

 

 

Live
cattle         66,556        520     58,621       -491   -137,204     -1,503

Feeder
cattle        1,164     -1,050      3,174         14      2,692        890

Lean
hogs           64,807     -7,150     49,641     -1,098   -100,915     12,050

 

                     
Other             NonReport                  Open

                       
Net        Chg        Net        Chg   Interest        Chg

Corn               
64,807     20,937    -55,567        337  1,848,801     45,554

Soybeans           
-9,266      2,673    -32,647      4,691    789,452     33,180

Soymeal            
17,902      1,776     25,779         47    474,763     12,046

Soyoil              
1,557     -2,686      9,786      3,188    472,042      9,170

CBOT
wheat           8,616      4,041     -2,814      1,564    432,194     11,867

KCBT
wheat          -3,962      1,056        112       -374    176,942      2,405

MGEX
wheat           2,491        -44     -2,700        -77     57,943     -2,229

                
———- ———- ———- ———- ———- ———-

Total
wheat          7,145      5,053     -5,402      1,113    667,079     12,043

 

Live
cattle         17,631      1,216     -5,605        257    335,752      9,902

Feeder
cattle         -535     -1,497     -6,495      1,645     58,468      1,173

Lean
hogs           -3,632     -5,491     -9,901      1,690    280,797    -15,173

 

 

Macros

US
Personal Income (M/M) Jul: 0.2% (est 0.6%; prev R 0.7%)

–
Personal Spending (M/M): 0.1% (est 0.5%; prev R 1.0%)

–
Real Personal Spending (M/M): 0.2% (est 0.4%; prev 0.1%)

US
PCE Deflator (M/M): -0.1% (est 0.0%; prev 1.0%)

–
PCE Deflator (Y/Y): 6.3% (est 6.4%; prev 6.8%)

–
PCE Core Deflator (M/M): 0.1% (est 0.2%; prev 0.6%)

–
PCE Core Deflator (Y/Y): 4.6% (est 4.7%; prev 4.8%)

US
Wholesale Inventories (M/M) Jul P: 0.8% (est 1.4%; prev R 1.9%)

US
Wholesale Inventories (M/M) Jul P: 0.8% (est 1.4%; prev R 1.9%)

US
Advance Goods Trade Balance (USD) Jul: -89.1B (est -98.5B; prev -98.6B)

 

US
Univ Of Michigan Sentiment Aug F: 58.2 (est 55.5; prev 55.1)

–
Current Conditions: 58.6 (est 55.6; prev 55.5)

–
Expectation: 58.0 (est 55.0; prev 54.9)

–
1-Year Inflation: 4.8% (est 5.0%; prev 5.0%)

–
5-10 Year Inflation: 2.9% (est 3.0%; prev 3.0%)

 

Traders
Price In 50% Chance Of 75bp ECB Rate Hike At September Meeting

 

Corn

·        
Corn futures traded higher from ongoing concerns over US, EU and China crop conditions. For the US, traders expect new-crop stocks to get tighter than USDA’s outlook after the Pro Farmer crop tour indicated a US yield well below
USDA’s estimate. The next major report will be USDA’s S&D September 12^th update, followed by grain stocks and small grains summary September 30.

·        
US equities were sharply lower. The USD traded two-sided and was higher at the end of the day. WTI crude oil sold off during the ag session (front month contracts ended higher) while natural gas futures traded higher on winter
demand concerns for the EU and US. 

·        
Pro Farmer crop tour reported the US corn yield at 168.1, well below USDA’s 175.4 bu/ac. Production was pegged at 13.759 billion, below USDA’s 14.359 billion and compares to 15.115 billion a year ago.

·        
French corn crop conditions as of August 22 fell 3 points to 47 percent (91% year ago), an all-time low for this time of year, and down about 35 points since early July.

·        
Half of China is now thought to be experiencing some type of drought.

·        
The Rosario Grain Exchange estimated Argentina’s 2022-23 corn plantings at 1.66 million acres, below their previous estimate, and down about 10 percent from 2021-22.

·        
CBOT corn deliveries are expected to be low, if any, on FND August 31 (Wednesday). Registrations stand at zero.

 

Export
developments.

·        
None reported

 

Updated
8/23/22

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

 

Soybeans

·        
The soybean complex rallied on technical buying, after Thursday’s decline, and concerns Pro Farmer would report a low US yield, which did not materialize. USDA reported 146,000 tons of soybeans sold to unknown. US Board crush
margins remain favorable led by the nearby positions through at least July 2023.

·        
Front month spreads rallied for soybeans, oil and meal. FND deliveries are Wednesday. We look for no deliveries for soybeans and meal next week, and little, if any deliveries for soybean oil. Some crushers in need to clear out
space for new-crop soybean oil production could deliver old crop next week.

·        
Nearby soybean meal futures rallied over October and December after 61 receipts were cancelled Thursday out of Quincy, IL, leaving registrations at zero. We heard a commercial was loading it out. On Friday there were 24 soybean
oil receipts cancelled out of Creve Coeur, IL (Cargill).

·        
Pro Farmer crop tour reported the US soybean yield at 51.7, below USDA’s 51.9 bu/ac. Production was pegged at 4.535 billion, slightly above USDA’s 4.531 billion and compares to 4.435 billion a year ago. This implies a crop tour
harvested area well above USDA.

·        
Additional unwanted rain fell across the Delta fell over the past day. Traders are getting concerned over the quality of the soybean crop.

·        
Offshore values were leading SBO flat (86 lower for the week) earlier this morning and meal $0.70 short ton
higher
($0.60 higher for the week).

 

Export
Developments

·        
Private exporters reported sales of 146,000 metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year.

·        
China sold 27,333 tons of soybeans out of the 500,000 tons offered, after selling nothing last week.

·        
For China’s 14^th weekly soybean auction set for September 2, they look for sell 500,000 tons.

 

 

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
futures traded higher following strength in corn and soybeans. Fundaments have been neutral and slightly bearish this week. Global import demand announcements slowed, the southwestern HRW wheat areas will see rain, and Ukraine wheat shipments are expected
to increase next month. But while December corn and November soybean prices are trading well off July lows, Chicago December wheat remains near the low end of its 7-month trading range, and funds are likely unwilling to gamble on shorts. 

·        
Chicago wheat registrations are at zero but there could be some deliveries next week. 0-100 is our current range. KC deliveries are expected at zero based on registration but would not  be surprised if we see some put out. MN
are expected be 0-50.

·        
Paris December wheat was up 2.00 euros at 319.25 per ton.

·        
The German agriculture ministry estimated wheat production will rise 4.6% from last year to 22 million tons, better than expected from previous. Average protein content is 11.8%, down from 12.7% last year, according to the AgMin.

·        
There were no export developments reported Friday.

·        
821,547 tons of grain/oilseeds/products, or 39 ships, departed Ukraine so far during August, according to Russian National Defense Control Center head Mikhail Mizintsev.

·        
Ukraine’s 2022 wheat harvest is nearly complete. July through August 26 grain shipments total 3.41 million tons (2.18 MMT corn), half of what was exported same period year ago.

·        
Russia’s wheat export tax is set to decline next week, for the third consecutive week. Table attached after the text.

·        
The US weather forecast was unchanged. Parts of HRW wheat country will see rain on and off bias the southwestern areas over the next 7 days. Rain across Texas will start Monday. 

·        
Statistics Canada is scheduled to release its first estimates of this year’s Canadian crop production on Monday. Estimates are above the corn section.

 

US
Wheat Associates

“The
HRW harvest is winding down with less than 10% remaining. With more than half the SW crop in the bin, protein, moisture and test weights are looking very good. HRS and northern durum harvests are advancing though at far behind the average pace.”

 

“Basis
was mixed this week. In the Gulf basis was down while in the Pacific Northwest (PNW) basis was down for HRS but up for HRW and soft white wheat. The wheat market broke from its pedestrian streak, rallying on bullish corn and soybean production news. The recent
rally in wheat futures has also put U.S. wheat at a price disadvantage slowing export sales. Harvest pace is tightening storage space as wheat bins fill, decreasing storage space and consequently pushing up elevation costs further out.”

 

Export
Developments.

·        
Jordan seeks 120,000 tons of barley on August 31 for Dec-Feb shipment. 

·        
Jordan seeks 120,000 tons of wheat on August 30.

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

 

Rice/Other

·        
India is looking at restricting 100 percent broken rice exports, used mainly for feed. India accounts for about 40 percent of global exports.

·        
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