FI Evening Grain Comments 09/08/22

PDF Attached

 

RIP
Queen Elizabeth II

 

Look
for positioning Friday ahead of USDA S&D report day (Monday). Wheat prices today saw a correction on global demand uncertainty and ongoing Ukraine sales despite Russia’s comments over the unfairness of the safe passage agreement. Corn was weaker but losses
limited from a rebound in corn for ethanol use. The White House predicts the Ukraine export corridor will remain open. Russia is in negotiations with the UN to increase fertilizer exports. The soybean complex was mixed, with a rebound in oil share with technical
buying in soybean oil after some global cash vegetable prices reached a one year low (EU sunflower oil). Soybeans were higher on light spreading against grains.

 

 

Conab
updated their 2021-22 Brazil crop estimates. They upward revised soybeans by 1.5 MMT to 125.6 million tons and lowered total corn by 1.4 MMT to 113.3 million.  There was no poll conducted by the news wires for trade comparison. 2021-22 soybean exported were
increased to 77.2 million tons versus 75.2 million previous. Conab estimated 2022 wheat production at 9.37 million tons, a 22 percent increase from 2021.

 

 

US
weather forecast was mostly unchanged although the midday increased precipitation for central and eastern IA, and central WI. Rain will fall across the upper WCB and southeast through this weekend. Rest of the growing areas will see light or no rain. US CPC
reported chances for La Niña are expected to decrease from 91% in the coming season to 54% during January-March 2023.

 

Weather

 

 

 

World
Weather, INC.

WEATHER
EVENTS AND FEATURES TO WATCH

• Not
  many changes today, but….
• Gujarat,
  India gets rain nearly every day for the coming week to 8 or 9 days keeping parts of that state a little too wet
• Far
  northern India (Haryana, Punjab and far northern Rajasthan) were advertised to receive rain after day ten of the outlook today on both the ECMWF and GFS models suggesting at least some threat to cotton fiber quality in open boll crops
• The
  event is many days away leaving plenty of time for a change in the outlook
• Rain
  was removed from central South Africa during the second week of the forecast which was a necessary change after both the GFS and ECMWF models falsely predicted rain in Wednesday’s model runs
• Eastern
  China will continue to dry out over the next ten days
• Areas
  from the Yangtze River Basin to the North China Plain will receive very little rain
  
• Drying
  in the northern part of this region will be good for summer crops after a long summer of frequent rain
  
• Drought
  in the central Yangtze River Basin is prevailing and another ten days of drought could further damage rice and a few other crops in the heart of the basin where the worst conditions are prevailing
• A
  new tropical cyclone (Tropical Storm Muifa) evolving in the western Pacific  Ocean well to the east of the northern Philippines will move northwesterly over the next few days moving across the southwestern Ryukyu Islands of Japan early next week before moving
  close to the east-central China Coast during mid-week next week
• The
  storm could impact eastern China, but will most likely move across North Korea and impact northeastern China toward the latter part of next week
• Xinjiang,
  China weather is expected to be mild to warm with rain mostly impacting the far northeast periodically
• This
  pattern will be very good for cotton and corn maturation as well as early harvesting in most areas, but there will be some disruption due to the showers in the far northeast
  
• Europe
  will receive dryness easing rainfall over the coming week, but more will be needed to fully restore soil moisture to normal
• Western
  France, Spain and Portugal may get some significant rain next week from the remnants of Hurricane  Danielle arrive from the west
• Russia
  and Ukraine precipitation is expected to slowly ramp up over the next couple of weeks with Russia’s Southern Region last to get rain in the middle to latter part of next week
• Moisture
  is needed for winter crop emergence and establishment
• Recent
  frost and light freezes in parts of Russia have had a minimal impact on crops and additional bouts of cool weather will continue to have a low impact.
  
• Australia
  is still expected to see frequent bouts of rain over the next two weeks
• The
  moisture will be good for some crop areas in Queensland and South Australia, but New South Wales and Victoria may turn a little too wet over time
• Rain
  will fall in New South Wales and Victoria today and early Friday followed by five to six days of drier weather then more rain late next week and into the following weekend
• India
  will continue plenty wet across the central, southern and eastern parts of the nation this week
• Pakistan
  has benefited from drier weather recently and it should remain mostly dry for the next ten days
  
• Improved
  cotton, rice and sugarcane conditions are expected, but production losses in Sindh because of late August flooding will not be reversible in some areas
• Argentina
  rainfall is expected to be quite restricted over the next ten days raising concern very early summer crop planting prospects later this month and next
• Dryness
  will also be a concern for the nation’s wheat crop
• Brazil
  is expecting waves of rain in the southern part of the nation during the next ten days which should translate into ongoing good wheat development in the far south, but drier weather may soon be needed in wheat areas of Parana
• Showers
  advertised near mid-month in center west Brazil would be welcome if they verify, although early indications suggest the resulting rainfall will be sporadic and light which is normal for the first rain of the season
• The
  precipitation may offer some sign that seasonal rainfall will begin on time, but World Weather, Inc. urges a little caution because October rainfall is expected to be lighter and more sporadic and usual
• Canada’s
  Prairies will continue drier biased during the next ten days to two weeks favoring spring and summer crop maturation and harvest progress
• Soil
  moisture in the southeast is still favorable for late season crops
• Cooler
  air is expected in Canada and the north-central U.S. into the weekend
• Frost
  and a couple of light freezes may occur in parts of Canada’s Prairies, but no hard freezes are expected
• Friday
  and Saturday will be coldest  
• U.S.
  upper Midwest and northern most Plains temperatures will be no cooler than middle and upper 30s with no freeze expected, but a few patches of soft frost will be possible this weekend near the Canada border
• The
  impact of soft frost should be very low
• High
  temperatures will slip into the 50s and 60s Fahrenheit in Canada and in the 60s and lower 70s in the northern U.S. Plains and upper Midwest
  
• Rain
  is possible tonight into Saturday in a part of the western U.S. Corn and Soybean production areas, but most of the precipitation will be brief and light
• Pockets
  of soybean production areas may not get much precipitation over the next couple of weeks leading to some concern of poor filling conditions in a part of the western production areas
  
• U.S.
  weather will be dominated by a trough of low pressure over the southeastern United States during the coming week
• This
  pattern will restrict northbound moisture from the Gulf of Mexico from reaching into much of the western Midwest or Great Plains
• Moisture
  will also be restricted into Canada’s Prairies where net drying is likely
• Rain
  will fall frequently in the Tennessee River Basin, eastern Delta and especially the southeastern United States with some rain continuing periodically in the lower eastern Midwest through early next week
  
• Texas
  and Oklahoma weather is advertised drier this week than advertised last Friday
  
• Restricted
  rain will fall in the Great Plains over the next ten days allowing topsoil moisture in hard red winter wheat areas to become depleted
• Drought
  is worsening in the central U.S. Plains where recent daily high temperatures have been in the 90s and over 100 Fahrenheit without much rain falling
  
• South
  Africa precipitation is expected to be limited over the next ten days
• Today’s
  forecast model runs removed the big rain event advertised in the second week of the outlook in Wednesday’s model runs
• winter
  crops are still semi-dormant and unlikely to develop aggressively until later this month leaving time for improved rainfall before the reproductive season arrives
• Winter
  crops are still poised to perform well this spring as long as timely rain evolves late this month and in October.
  
• Central
  America, Colombia and parts of Venezuela are expected to trend wetter than usual in the next few weeks due to the persistent La Nina influence on the region
• Tropical
  Storm Danielle was located far to the northwest of the Azores at 0500 EDT today.
  
• Danielle
  will change little over the next couple of days, but will gradually weaken back to tropical storm status
  
• The
  storm poses no immediate threat to land, but its remnants may enhance rainfall in parts of western Europe next week
• Hurricane
  Earl was located well south of Bermuda at 0500 EDT today
• Earl
  will turn to the northeast in the next couple of days and will intensify to a major hurricane
• The
  system will pass southeast of Bermuda Friday into the weekend
• Earl
  will lose its tropical characteristics next week and become a large mid-latitude storm well to the east of Newfoundland
• North
  Africa showers at this time of year are always welcome, but have a minimal impact and that will be the case over the next ten days
• Ontario
  and Quebec weather remains mostly good for corn and soybeans with little change likely
• the
  environment will be good for late season crop development,  maturation and early season harvesting
• Mexico’s
  drought in the northeast continues and will not likely end without the help from a tropical cyclone
• With
  that said some significant rain fell last weekend in a few locations bringing some notable relief.
  
• This
  coming week’s weather will be trending drier again
• Southern
  and western Mexico will get some rain periodically. through the next couple of week
  
• Central
  America rainfall has occurred routinely and will continue to do so favoring many crops
• 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
  
• Local
  flooding is expected
• Central
  Africa showers and thunderstorms have recently increased in some key coffee and cocoa production areas during the next two weeks.
  
• Recent
  rain in Ivory Coast and Ghana has brought relief to seasonal drying and will likely support mid-crop flowering if follow up rain occurs as needed
• Nigeria,
  Cameroon, Benin and other coffee and cocoa production areas should see relatively good crop weather over the next couple of weeks
• East-central
  Africa rainfall will continue to occur most frequent and significantly in Ethiopia, Uganda and southwestern Kenya over the next two weeks
• Good
  coffee, cocoa and other crop development conditions will prevail
• Today’s
  Southern Oscillation Index was +8.96 and it will move higher over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Friday,
Sept. 9:

• 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
• Vietnam’s
  customs department releases August coffee, rice and rubber exports
• Brazil’s
  Unica to release cane crush and sugar output data (tentative)
• HOLIDAY:
  Korea

Source:
Bloomberg and FI

 

 

 

 

Bloomberg
estimates for USDA

 

 

 

Macros

US
Mortgage Rates In Jump To 5.89%, Highest Level Since 2008

ECB
Interest Rate Decision was as expected, +75 basis points.

US
Initial Claims  222k Expected 235K

US
Continuing Claims 1473K  Expected 1430K

104
Counterparties Take $2.21 Tln At Fed Reverse Repo Op (prev $2.207 Tln, 103 Bids)

 

Corn

·        
CBOT corn was weaker, but losses limited from a rebound in corn for ethanol use and higher WTI crude oil.

·        
Funds were net seller of an estimated 3,000 contracts.

·        
The midday weather forecast increased precipitation for central and eastern IA, and central WI.

·        
The White House predicts the Ukraine export corridor will remain open.

·        
Black Sea trade developments will be closely monitored.

·        
Russia is in negotiations with the UN to increase fertilizer exports.

·        
Look for positioning Friday ahead of USDA S&D report day (Monday).

·        
USDA S&D report reaction for corn?
We are bullish headed into the report and would not discount December to reach above $7.00 next week if US stocks come in 100+ million bushels below the average trade guess of 1.217 billion (Reuters), currently 171 million below USDA August.  By crop-year
end, we look for US corn stocks to end up below 1.0 billion bushels.

·        
FI is 193 million bushels below the average trade guess for US corn production of 13.895 billion, and at the low end of 18 houses that were polled by Reuters. 

·        
China planned to sell 37,700 tons of pork from reserves.

·        
The US EIA weekly petroleum status report showed ethanol production increased 19,000 barrels to 989,000 barrels per day from the previous week and stocks fell 395,000 to 23.138 million barrels.  For comparison, a Bloomberg poll
looked for production to be down 5,000 thousand (950-980 range) and stocks down 207,000 barrels. US gasoline stocks increased 333,000 barrels to 214.8 million from the previous week and gasoline demand was up 136,000 barrels to 8.727 million. Over the past
4 weeks (average), gasoline demand is running 6.4 percent below the comparable period year ago. Percentage of ethanol blended into finished motor gasoline was 90.5% for the week ending September 2, slightly below 90.7 percent previous week.

·        
Looking forward, ethanol producers may have to use a slightly larger amount of corn to keep up with ethanol volume as ethanol yields are projected to drop due to lower quality.  We may lower our corn for ethanol use and leave
it near unchanged from this year due to high prices, poor quality, slowing gasoline demand comparable to year ago, and poor ethanol margins in outlaying states

 

 

 

USDA
Attaché: China livestock update

The
Attaché sees 2023 pork imports to decline to 1.850 million tons from projected 2.000 million tons for 2022.

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Livestock%20and%20Products%20Annual_Beijing_China%20-%20People%27s%20Republic%20of_CH2022-0096

 

Export
developments.

·        
There were no USDA 24-H sales

 

Updated
9/7/22

December
corn is seen in a $6.00-$7.25 range.

 

Soybeans

·        
The soybean complex was mixed, with a rebound in oil share on technical buying in soybean oil after some global cash vegetable prices reached a one year low (EU sunflower oil). Soybeans were higher on light spreading against grains.

·        
WTI was higher and that lent support to soybean oil.

·        
Funds sold 1,000 soybeans, sold 2,000 meal and bought 1,000 soybean oil.

·        
The euro made another leg down this morning on ECB comments over inflation but rebounded by mid trading after the USD turned lower.

·        
China covid lockdowns are a concern, but that is not stopping importers from buying NA and SA soybean cargoes. .

·        
Argentina domestic producers have thought to have sold 3.1 MMT of soybeans over a three day period (Mon-Wed), according to the Rosario Board of Trade.

·        
We estimate 3.2 million tons of Argentina soybeans were sold over the Monday through Wednesday period, and sales today slowed due to the fall in domestic prices.

·        
China bought an estimated 12-15 Argentina soybean cargoes this week. Estimates ranged from 10 to 20 boats from various traders. China was looking around for US soybeans today, but we didn’t hear of any sales.

·        
According to AgriCensus, Argentina soybean oil sales have been slow despite the massive increase in soybean producer sales as traders waits to see how the market rebalances. Cash SBO premiums have been under pressure so far this
week.

·        
Reuters 2:50 pm CT “ARGENTINA CENBANK SAYS SOY FARMERS WHO HOLD ONTO MORE THAN 5% OF THEIR PRODUCE WILL BE SUBJECT TO HIGHER FINANCING COSTS”

·        
Ukraine plans to build a sunflower oil pipeline to Poland, 600-km length (373 miles) with a capacity of 2 million tons per year.

·        
EU sunflower oil cash prices in Europe hit a 1-year low of $1,275/ton FOB, according to AgriCensus. Rapeseed oil futures have also been under pressure recently.

·        
Paris November rapeseed futures settled down 1.5% at 600.00 euros a ton. Earlier it hit a one year low.

 

 

University
of Illinois: A Revised Estimate of Soybean Production From the 18 Leading Soybean States

Ibendahl,
G. “A Revised Estimate of Soybean Production From the 18 Leading Soybean States.”
farmdoc
daily
(12):136, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, September 7, 2022.

https://farmdocdaily.illinois.edu/2022/09/a-revised-estimate-of-soybean-production-from-the-18-leading-soybean-states.html

 

Export
Developments

·        
Results awaited. South Korea’s Agro-Fisheries & Food Trade Corp. seeks 30,000 tons of GMO-free soybeans on September 6 for arrival in SK between November 12 and Dec 12, and another arrival period of October 30 and November 30.

 

Updated
9/6/22

Soybeans
– November is seen in a $13.00-$15.50 range

Soybean
meal – December $350-$440

Soybean
oil – December 62.50-70.00

 

 

Wheat

·        
Wheat prices today saw a correction on global demand uncertainty and ongoing Ukraine sales despite Russia’s comments over the unfairness of the safe passage agreement. One of the issues Russia addressed yesterday was the lack
of wheat flowing out of Ukraine destined to poor countries. Overnight the UN announced 280,000 tons of food will be exported soon for the World Food Program. Around 2.37 million tons of food have been shipped from Black Sea ports, including 1.04 million tons
for Asian countries and 470,000 tons for African states.

·        
Funds sold an estimated net 5,000 soft red winter wheat contracts. 

·        
December Paris wheat fell 1.1% at 325.25 euros ($324.24) a ton.

·        
IKAR looks for Russia 2022 wheat production total 97 million tons, after harvesting already surpassed a previous record of 86 million. Exports are seen at 46 million tons.

·        
French soft wheat was estimated at 33.6 million tons per growers group AGPB, down from 33.87 previous.

 

Export
Developments.

·        
The Taiwan Flour Millers’ Association bought 55,375 tons of milling wheat from the United States in one consignment of various types for Nov. 2 and Nov. 16 off the PNW.

• Dark
  northern spring wheat of a minimum 14.5% protein content bought at $405.28 a ton FOB U.S. Pacific Northwest coast.
  
• Hard
  red winter wheat of a minimum 12.5% protein content bought at $437.16 a ton FOB
• Soft
  white wheat of a maximum 9.5% protein bought at $380.02 a ton FOB. (Reuters)

·        
Jordan seeks 120,000 tons of wheat on September 13 for March and April shipment.

·        
Jordan seeks 120,000 tons of barley on September 14 after passing September 7 for Feb-Mar shipment. 

·        
Japan in a SBS import tender seeks 70,000 tons of feed wheat and 40,000 tons of barley on September 14 for arrival in Japan by February 24.

·        
Bangladesh seeks 50,000 tons of milling wheat on September 18.  It’s for optional origin with shipment within 40 days of contract signing.

 

Rice/Other

·        
India imposed a 20 percent duty on rice exports of various types.

·        
Thailand looks to export 7.5 million tons of rice this year, up from previous 7 million tons previous.

 

Updated
9/6/22

Chicago
– December $7.25-$10.00

KC
– December $7.50-$10.75

MN – December
$8.00-$11.00