FI Evening Grain Comments 09/13/22

PDF Attached

 

US
inflation data was released, and traders were surprised with core inflation, namely food and energy prices.

 

 

A
US rail strike, if launched early Friday, is expected to cripple parts of the US economy, but not a majority of it as many union groups have agreed to a labor deal. Reuters reported @ 10:50 am CT that a ninth railroad union reached a deal, leaving 3/12 unions,
representing 60,000 workers, without a deal.

FREIGHT
RAILROADS REACH ANOTHER TENTATIVE AGREEMENT

https://raillaborfacts.org/news/freight-railroads-reach-another-tentative-agreement/

 

Soybeans
fell on late profit taking and lower meal. Corn ended lower on technical selling after rallying Monday. Wheat found support on Black Sea shipping concerns despite a sharply higher USD. Next month the trade could see additional downward revisions to the US
harvested area and yield for corn and soybeans if crop conditions continue to deteriorate. US weather is unchanged for the Great Plains and Midwest.  Rain returns to the central Plains Wednesday, stating with the Dakotas before moving into MN, NE and western
KS Thursday. The Midwest will see rain across the northwestern areas Thursday through Saturday. 

 

Weather

 

World
Weather, INC.

WEATHER
EVENTS AND FEATURES TO WATCH

• Typhoon
  Muifa will be located 165 miles northeast of Taipei, Taiwan at 1500 GMT today and it will be moving north northwesterly at 8 mph while producing maximum sustained wind speeds of 104 mph out 35 miles from the center of the storm.
  
• A
  steady weakening trend is expected with landfall likely over northeastern Zhejiang, China around 1200 GMT Wednesday and moving across the Shanghai area of China a few hours later
• Wind
  speeds at the time of landfall will vary between 90 and 100 mph, but the speeds will be less than 75 mph when the storm reaches Shanghai
  
• Port
  closures are expected, but damage to the ports and infrastructure is not expected to be very serious
• Two
  tropical disturbances in the tropical Atlantic are being monitored by the U.S. National Hurricane center for possible development late this week and into the weekend
• One
  of the two events does have some potential to evolve into a tropical cyclone as it moves toward the northern Leeward Islands, but such an evolution is still at least a few days away
• European
  model has increased rainfall in parts of center west and center south Brazil overnight raising the potential for some increase in topsoil moisture for Mato Grosso and possible in a few Minas Gerais locations
• World
  Weather, Inc. does not believe rainfall will be great enough in Sul de Minas, Cerrado Mineiro or Zona de Mata to induce coffee flowering of significance – at least not yet
• Argentina
  is still advertised to receive restricted rainfall during the next ten days, but some rain is still possible for a little while late this weekend into early next week
• Greater
  rain will still be needed to induce a serious change in winter crop development
• Lower
  eastern U.S. Midwest, Delta and southeastern states will experience little to know rain over the coming week and possibly the next ten days
• Good
  summer crop maturation and harvest conditions will result
• U.S.
  central and southwestern Plains are a little wetter for next week in today’s forecast model runs
• A
  cool front cutting through the Plains during mid- to late-week next week may pull tropical moisture out of Mexico and into West Texas as well as a part of the hard red winter wheat region
• Confidence
  is low
• A
  tropical cyclone moving northward along Mexico’s west coast next week may bring tropical moisture into a part of the southwestern desert region of the United States and then into the southwestern Plains; including West Texas
• Northern
  U.S. Plains weather is expected to be mixed with a few showers and some periods of sunshine during the next two weeks
• Eastern
  Canada’s Prairies may get some significant rain next week as colder air pushes through the western production area
• Western
  U.S. Corn Belt crop areas will get rain next week as cooler air drops into the Plains and Midwest
• Until
  then rainfall will be limited
• No
  significant drought relief is expected in California or the U.S. Pacific Northwest through the next two weeks
• Significant
  frost and freezes will be possible next week in parts of Canada’s Prairies
• Drought
  continues in China’s central Yangtze River Basin where more damage continues to unirrigated rice and other crops
• No
  change is expected for the next ten days
• Recent
  drying in North China Plain and interior northeastern China has been ideal in speeding along summer crop maturation and supporting some early season harvesting
• Central
  and eastern Heilongjiang, southeastern Jilin and southeastern Liaoning are still rated too wet on, but should be drying down
  
• Moisture
  from Typhoon Muifa could re-saturate the ground with moisture again possibly leading to some flooding and fieldwork delay late this week into the weekend
• China’s
  weather will change little over the next ten days; however, Typhoon Muifa will move along the central China coast during mid- to late week this week producing some very heavy rain and strong wind speeds from northeastern  Zhejiang to eastern Shandong
• Most
  interior areas of eastern China and a large part of the northeastern provinces will continue to dry out over this forecast period.
  
• Drought
  conditions will prevail in the heart of the Yangtze River Basin
• Beneficial
  drying will continue in portions of the Northeast Provinces as well as western parts of the North China Plain
• China’s
  weather bottom line will be good for the start of winter wheat planting in the Yellow River Basin and North China Plain and for the maturation and early harvest of summer crops in interior parts of the northeast. Flooding rain could impact a part of the central
  east coast as Typhoon Muifa impacts those areas later this week.  Not much crop damage is expected because of the tropical cyclone, but some port closures are possible in the Shanghai area briefly during mid-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
  
• India
  will continue plenty wet across the central and eastern parts of the nation during the next ten days
• Some
  Local flooding is possible especially in parts of Gujarat, northern Maharashtra and Madhya Pradesh as well as areas from northern Chhattisgarh to Bangladesh, West Bengal and northeastern Odisha
  
• Net
  drying will occur in the far northern and southernmost parts of the nation, despite some light showers
• Temperatures
  will continue quite warm to hot in northwestern India and Pakistan
• Pakistan
  has benefited from drier weather recently and it should remain mostly dry for the next ten days along with neighboring areas of far northwestern India
• 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
• CIS
  weather over the next ten days will spread rain from western Russia, Belarus and Ukraine into the remainder of Russia west of the Ural Mountains
  
• Some
  rain totals will vary from 1.00 to 3.00 inches in Russia’s Southern Region
• Sufficient
  rain will fall to improve winter wheat and rye emergence and establishment
• Some
  delay to summer crop maturation and harvest progress is expected as a result of the predicted rain.
  
• Europe
  rainfall Monday was limited to a few areas in Portugal, Spain, Ukraine, Romania, southern Belarus and in random North Sea locations
• Rainfall
  was less than 0.45 inch except in Portugal where up to 1.65 inches was reported through dawn today with more coming since then
• Europe
  rainfall will be greatest later this week through mid-week next week from Germany, Belgium and northeastern France to Ukraine, northern Romania, southern Belarus and parts of western Russia
  
• Rainfall
  will vary from 0.75 to 2.5 inches ensuring sufficient moisture for long term winter crop emergence and establishment
• Rainfall
  elsewhere will be more limited and net drying may occur more often than not
• The
  exceptions are in Portugal and far western Spain – due to remnants of Hurricane Danielle – and in a few areas of central Italy and the western Balkan Countries where local areas of greater rain are likely
• Some
  of the rainfall in these areas will vary from 2.00 to 4.00 inches and a few amounts could reach above 5.00 inches
• Europe’s
  bottom line look good for improving soil moisture and long term winter crop emergence and establishment from northeastern France and Germany into Ukraine and far western Russia. Locally heavy rain in Portugal, central Italy and from Slovenia into Bosnia could
  lead to a little flooding and a minor amount of crop damage. In contrast, more rain will be needed in France, the United Kingdom and Germany as well as from Italy into the lower Danube River Basin where relief to dryness will only be partial.
  
• Australia
  is still expected to see periodic bouts of rain over the next two weeks
• Rain
  will be greatest from Victoria to central and eastern New South Wales late Wednesday and Thursday when 0.50 to 1.50 inches will result
• Showers
  will also occur in Western Australia early this week and again periodically during many other days through the end of next week
• Queensland
  and South Australia will experience the least significant rainfall during the next ten days and net drying will result
• Australia’s
  bottom line still looks very good for winter wheat, barley and canola development. As long as the crop region warms up a little more in coming weeks and rain frequency does not get excessive, this year’s production will be huge. There is some concern about
  a wet bias in October and November that could harm the quality of some crops.
  
• Argentina
  rainfall is expected to be quite restricted over the next ten days maintaining concern over early summer crop planting prospects later this month and next
• Dryness
  will also be a concern for the nation’s wheat crop – especially in the west
• Some
  showers are expected, but they are not likely to be great enough for a last boost in soil moisture
• The
  earliest that rain will impact the nation is during the weekend and especially next week
• Southern
  Brazil is expecting waves of rain during the next ten days which should translate into ongoing good wheat development in the far south, but drier weather may eventually be needed in wheat areas of Parana to protect grain quality
• Showers
  advertised near and beyond mid-month in center west Brazil should 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
• Brazil
  coffee, citrus and sugarcane areas may get some rain after Sep. 18, but advertised rainfall is light
  
• Ontario
  and Quebec, Canada weather remains mostly good for corn and soybeans with little change likely
• Alternating
  periods of rain and sunshine will continue along with seasonable temperatures
• the
  environment will be good for late season crop development,  maturation and early season harvesting
• South
  Africa precipitation is expected to be limited over the next ten days
• Winter
  crops are still semi-dormant in some areas and beginning to green up and resume development in other areas
• Showers
  will be infrequent and light while temperatures are warm which will stimulate some additional development
• 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
• 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
• 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 earlier this month in a few locations bringing some notable relief.
  
• This
  coming week’s rainfall will be trending lighter than usual once again
• Southern
  and western Mexico will get some rain periodically through the next couple of weeks with sufficient amounts to maintain moisture abundance
• 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
• West-Central
  Africa showers and thunderstorms will continue frequently benefiting coffee and cocoa production areas during the next two weeks.
  
• Some
  rice, cotton and sugarcane will also benefit from this pattern
• Weekend
  precipitation was minimal, but it will be increasing later this week and next week
• 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 +10.29 and it will move a little higher over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Tuesday,
Sept. 13:

• China’s
  agriculture ministry (CASDE) releases monthly report on supply and demand for corn and soybeans
• EU
  weekly grain, oilseed import and export data
• France’s
  agriculture ministry updates 2022 production estimates
• New
  Zealand Food Prices

Wednesday,
Sept. 14:

• EIA
  weekly US ethanol inventories, production, 10:30am
• France
  AgriMer monthly grains outlook

Thursday,
Sept. 15:

• UkrAgroConsult’s
  Agro&Food Security Forum, Warsaw
• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Malaysia’s
  Sept. 1-15 palm oil export data

Friday,
Sept. 16:

• 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
• HOLIDAY:
  Malaysia

Source:
Bloomberg and FI

 

 

Macros

US
CPI (M/M) Aug: 0.1% (est -0.1%; prev 0.0%)

US
CPI Core (M/M) Aug: 0.6% (est 0.3%; prev 0.3%)

US
CPI (Y/Y) Aug: 8.3% (est 8.1%; prev 8.5%)

US
CPI Core (Y/Y) Aug: 6.3% (est 6.1%; prev 5.9%)

US
Real Avg Hourly Earning (Y/Y) Aug: -2.8% (prev -3.0%)

US
Real Avg Weekly Earning (Y/Y) Aug: -3.4% (prev -3.6%)

Fed
Funds Futures Now Pricing 19% Chance Of 100 Bp Fed Rate Hike And 81% Chance Of 75 Bp Hike At Sept Meeting – RTRS

Biden
Officials Said To Weigh Buying Oil At Around $80 To Refill SPR

 

Corn

·        
CBOT corn traded lower in part to a sharply higher USD (up nearly 140 points by 12:50 pm CT) and disappointing US inflation data pressuring outside related markets such as WTI crude oil. 

·        
Funds sold an estimated net 4,000 corn contracts. 

·        
The threat of US railroad strikes still loom. Some speculate grain shipments could stop as early as Wednesday but not for all locations. A strike may cripple parts of the ethanol industry, resulting in a slowdown in corn for ethanol
use. Reuters late in the morning reported a ninth railroad union reached a deal, leaving 3/12 unions, representing 60,000 workers, without a deal.

·        
France lowered their corn estimate to 11.33 million tons from 12.36 million, lowest level since 1990. They put 2022 rapeseed production at 4.50 million vs. 4.35 million previous. 

·        
China in its monthly CASDE report made no changes to its 2022-23 corn, soybean and cotton outlooks.

·        
The EPA is working with USDA and DOE over biofuel blending requirements that would extend beyond 2022, allowing for year round E15 to be sold.

·        
Anec sees Brazil corn exports during Sep at 7.880 million tons, up from 6.310 million previous.

·        
USDA may resume the weekly export sales report September 15. Last weeks (FI) estimates are attached.

·        
(Bloomberg) — Drought will likely continue in parts of China, especially regions south of the Yangtze River, which will be unfavorable for crops, according to the National Meteorological Center. 

·        
The UN and Russia have continued talks on increasing Russian exports of fertilizer and this morning the UN announced a deal for ammonia to move through Ukraine. No amounts or details were provided at the time this was written. 

·        
A Bloomberg poll looks for weekly US ethanol production to be down 9,000 thousand to 980k from the previous week and stocks down 126,000 barrels to 23.012 million.

·        
We left our US corn yield unchanged at 171.6 bushels per acre, but lowered production based on a lower harvested area. Crop conditions still vary across the heart of the Midwest. Late planted soybeans, for example, in central
IN, have a late chance for improvement. We are hearing early harvest moisture levels for corn in western IL are around mid-20’s. If this is true for other areas, it’s going to take some time to dry down the product.

 

 

Export
developments.

·        
Taiwan’s MFIG seeks 65,000 tons of corn on September 14 for Nov 1-20 shipment, later if PNW and/or South Africa origin.

 

 

Updated
9/7/22

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

 

Soybeans

·        
Soybeans settled lower on late session profit taking. They were higher earlier on follow through bullish sentiment from the USDA report.  Meal ended lower following weakness in corn and a higher USD. Soybean oil finished higher.
We still like soybeans to trade back above $15 but outside markets need to rally for that to happen.

·        
Funds sold 5,000 soybeans, sold 5,000 meal and bought 2,000 soybean oil. 

·        
Meal and oil sales increased in South America today.

·        
Anec sees Brazil soybean exports for the month of September at 4.471 million tons, vs. 3.916 million previously projected. For meal they have 2.115 million, up from 2.048 million previous.

·        
Abiove reported Brazil’s total oilseed processing capacity grew 4.1% in the 2020-22 period (2 years), fastest pace since 2016. Capacity stands at 66.7 million tons a year. The average rate of increase is 2.5% in the last decade.
The increase over the past two years in capacity is in response to higher biodiesel production, although the mandate still stands at 10 percent.

·        
Brazil producers started soybean plantings and should ramp up LH September. A good crop is needed to make for the deficit un US supplies.

·        
We are hearing rumors that Argentina may extend the soy dollar until the end of the year, but at this time cannot confirm that.

·        
India’s palm purchases in August jumped considerably to close to 1.0MM tons and September’s imports are expected to be large. August was highest in 11 months. Palm oil is trading significantly lower than soybean oil.

 

 

 

 

Export
Developments

·        
No developments.

 

Updated
9/13/22

Soybeans
– November is seen in a $13.25-$15.50 range

Soybean
meal – December $390-$480

Soybean
oil – December 63.00-72.00

 

Wheat

·        
Chicago wheat settled higher despite a big reversal in the USD (about 140 points higher @ ag session close) and a good US winter wheat planting progress pace of 10 percent as of Sunday, 3 points above average. Spring wheat harvesting
pressure should also be noted (85 percent versus 89 average), but KC wheat also found support on light technical buying. Ongoing concerns over Black Sea wheat shipments was noted.

·        
Funds bought an estimated net 1,000 SRW wheat contracts.

·        
Canada’s Prairies will be warmer than usual over the next week with below average precipitation.

·        
Paris December wheat was up 0.75 euros at 336.25 per ton.

·        
Ukraine started winter wheat plantings with 3.5 percent complete. The area may fall to 3.8 million hectares from 4.6 million year earlier. Ukraine’s winter barley sowing area for the 2023 harvest could also fall by 20% from last
year while the winter rapeseed area would remain unchanged.

·        
UN reported 7 ships left Ukraine for Spain, Turkey and Israel.

·        
Statistics Canada will have its next crop estimate on Wednesday, September 14.

 

Export
Developments.

·        
Japan seeks 97,373 tons of food wheat later this week for arrival by December 31.

·        
Jordan passed on 120,000 tons of wheat for March and April shipment.

·        
Jordan is back in September 20 for 120,000 tons of wheat.

·        
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

·        
None reported

 

Updated
9/6/22

Chicago
– December $7.25-$10.00

KC
– December $7.50-$10.75

MN
– December $8.00-$11.00