FI Evening Grain Comments 09/26/21

PDF Attached

 

Choppy
trade with higher USD limiting rallies in selected CBOT ag markets.  US harvest weather looks good for the upcoming week and traders should monitor local reports on yield and test weights.  Global power shortages/outages are raising concerns.  USDA’s hogs
report is seen bearish for US feed demand. 

 

 

Weather

7-day

 

Last
seven days as of Sunday morning

 

Tropical
storms are non-threatening for the US but will be a major concern for the Caribbean region. 

 

World
Weather Inc.

MOST
IMPORTANT WEATHER FOR THE COMING WEEK

• U.S.
  hard red winter wheat production areas will receive showers and thunderstorms during the middle to latter part of next week and into the following weekend

o  
Sufficient rain will fall to improve field moisture for much improved wheat planting, emergence and establishment potential

o  
The change will be extremely well timed and will represent a very good opportunity for farmers to plant aggressively immediately following the rain event

• Southern
  U.S. Plains will also receive frequent bouts of rain starting during mid-week next week and lasting through the following weekend
  

o  
The moisture will delay summer crop maturation and harvest progress

o  
Cotton will not benefit from the moisture and there will be some concern over crop quality

• Too
  much rain in West Texas will not only slow maturation, but it could raise a little fiber quality issue for some of the open boll crop and if the rain lasts too long there might be some risk of boll rot (although this is not a very likely problem)
  
• Northern
  U.S. Plains will also receive some rain for a brief period next week, but mostly in the southeastern part of the region; including South Dakota and southern Minnesota

o  
Some forecast models suggest a boost in rain might occur a week to ten days from now in the east, but confidence is low

• Drought
  will prevail in the northwestern U.S. Plains and the heart of Canada’s Prairies during the next ten days to two weeks because of persistent dryness

o  
Harvesting of this year’s crops continues to advance swiftly in the absence of rain

o  
Some rain may fall briefly in a small part of the region in this coming week, but resulting amounts will not be great enough to seriously impact soil moisture or cause a serious impact on field progress

o  
Some forecast models have suggested rain for the southeastern Prairies in the second weekend of the outlook, but confidence is low

• Not
  much relief is expected to dryness in the far western U.S. during the next ten days, although rain will fall in Cascade Mountains and areas west to the Pacific Coast and in a part of the mountainous areas of Idaho.
  
• Hurricane
  Sam in the central tropical Atlantic Ocean will become major hurricane in the coming week
  

o  
The storm’s path is such that it should stay over open water in the Atlantic passing to the northeast of the northern Leeward Islands early during the middle part of next week and then threatening Bermuda late next week before
possibly turning to the northeast in the early days of October.

• Remnants
  of Tropical Storm Odette will shift southeast toward the Azores this weekend and early next week raise the potential for it organize into a tropical or subtropical cyclone

o  
The system poses no threat to major land masses, but could threat the Azores

• A
  wave coming off the West Africa coast this weekend will be closely monitored for possible development into a tropical cyclone next week

o  
The system should move to the central North Atlantic and not be a threat to land

• A
  disturbance near Bermuda today will be watched for possible development into a tropical or subtropical depression this weekend before being absorbed by a mid-latitude trough of low pressure off the northeastern U.S. next week
  
• Tropical
  storm Dianmu moved through Vietnam and Laos to eastern Thailand Thursday and early today

o  
The storm produced heavy rain over a part of Vietnam’s Central Highlands as well as other central Vietnam and Laos locations

• Some
  flooding resulted, but the storm’s impact on agriculture and personal property was suspected of being quite low
• Tropical
  Storm Mindulle was located northwest of Guam today and was expected to intensify to typhoon intensity this weekend as it moves northwesterly over open water. The storm will move toward Japan next week, but may turn to the northeast prior to making landfall
  over Honshu

o  
If this path verifies, Japan should be spared from the storm’s intense wind and torrential rainfall, but it will need to be closely monitored

o  
The storm has potential to become a super typhoon for a while early next week

• Tropical
  Cyclone 3B has formed in the Bay of Bengal today 211 miles south of Chittagong moving northwesterly at 17 mph and producing wind speeds to 40 mph near its center.
  

o  
Landfall is possible over Odisha, India Sunday producing some heavy rain and strong wind speeds

o  
The system may reach the coast with wind speeds near hurricane force

• Russia’s
  Volga River Basin started receiving rain Wednesday and it continued Thursday with shower likely to linger into next week
  

o  
The moisture is badly needed with top and subsoil moisture rated very short prior to this period

o  
The precipitation will offer a temporary reprieve from dryness, but will not be a fix all

• Improved
  winter seed germination, emergence and establishment conditions should result

o  
Drier biased weather resume and last for a full week thereafter

• Some
  areas in Ukraine would benefit from greater rain as would Russia’s Southern Region, but these areas will not be completely dry during the next two weeks and winter crops will emerge and establishment regardless
  
• Russia
  and Ukraine summer crop harvest progress will be slowed by this week’s rain
• China’s
  Yellow River Basin and North China Plain will experience a new round of frequent moderate to heavy rainfall during the coming week stalling winter crop planting and summer crop harvest progress

o  
Some flooding will be possible, but damage to crops should be mostly low

o  
A little replanting of wheat may be needed in the wettest areas, although the planting season has just begun and there is not likely much fieldwork that has already been completed

o  
China’s minor cotton production areas in the Yellow River Basin will experience a decline in crop quality because of the coming week of rain

• Xinjiang
  China weather will not be ideal during the next ten days

o  
Rain will fall periodically in northeastern parts of the province causing a rise in cotton fiber quality concerns

o  
Cold temperatures in the northeast should not be a problem since the crop is already being defoliated

o  
Cotton in central and western production areas of Xinjiang will continue to mature more favorably with limited rain

• Cold
  weather is expected at the end of next week and into the following weekend which may bring on a little frost and a few freezes
• Other
  areas in China will experience a mostly favorable weather pattern, although drying is needed in the northeastern provinces and across the interior southeast
• India’s
  monsoon should begin to withdraw from the far north next week and more definitively in the first week of October

o  
The delayed withdrawal of seasonal rainfall will be good for rapeseed, millet, wheat and other winter crop planting

o  
Some delay in summer crop maturation and harvest has occurred because of wet weather and a few crops may be suffering a quality decline because of too much moisture

• Cotton
  fiber quality declines have likely impacted a part of the far north; including Punjab, Haryana and neighboring areas
• Eastern
  Australia’s forecast remains wetter today for the second half of next week.
  

o  
If the outlook is correct some badly needed rain may impact Queensland and New South Wales

o  
The moisture will be good for reproducing winter crops in New South Wales and improve planting moisture for cotton and sorghum in Queensland

• Confidence
  is high over rainfall in early October, but low on how much rain should be expected
• Western
  Australia will receive some needed rain this weekend

o  
The moisture will improve topsoil moisture for wheat development

• Argentina
  and most of Brazil were dry Thursday reported rain in Buenos Aries Wednesday
• Brazil
  will continue very warm to hot in the center west and center south into the weekend
  

o  
Showers will occur in the far south, but significant moisture will not be very great

o  
Showers will develop in center west and center south this weekend and continue periodically next week

• Sufficient
  rain will fall in “a few” areas to lift topsoil moisture for better early season soybean and early corn planting. Greater rainfall will still be needed before aggressive fieldwork can begin; however, any precipitation will be better than none.
  
• Rain
  is advertised to increase in many areas during first week in October
• Argentina
  is not likely to see much precipitation for a while, but showers will pop up from time to time next week offering some moisture for a part of the nation

o  
The middle to latter part of next week will be wettest in the east and south with many areas getting a least some rain

o  
Significant rain is needed in the north and west-central crop areas where it has been driest

• Europe
  weather in the coming week is expected to be favorably mixed with a little rain and more sunshine. Southern parts of the continent will be wettest

o  
Next week’s weather is expected to be wetter biased in France, the U.K., Germany and northern Italy

o  
Eastern Europe will be drier than usual next week

o  
Temperatures will be near normal this week and then cooler than usual in the west and warmer usual in the east

• Belarus,
  southwestern Russia and parts of Ukraine received some significant rain over the past week and lingering showers are expected through the weekend
  

o  
The precipitation will be lighter than that which has been occurring, but still beneficial in ensuring much improved winter wheat, rye and barley establishment in areas that were considered to dry a week ago

• Much
  lighter rain has occurred in farther to the east and north as well as in Ukraine, but rain will impact the Volga Basin through the weekend
• Central
  Africa rainfall will occur favorably over the next two weeks

o  
Sufficient rain will fall to support normal coffee, cocoa, sugarcane, rice and other crop development from Ethiopia to northern Tanzania and from Ivory Coast to Cameroon and Nigeria

• South
  Africa weather through early next week is not likely to have much precipitation in it

o  
Showers will develop in the central and east next week

• Southeast
  Asia rainfall is expected to be frequent and sufficient to support long term crop needs and boost runoff for winter water supply

o  
This is true for the  mainland areas as well as Philippines and a part of both Indonesia and Malaysia

• Mexico
  precipitation will continue frequent this week, but it will turn drier next week

o  
Most of this week’s rain will concentrate on western and southern parts of the nation while the northeast is dry biased.

o  
Rain next week will be limited a few showers in the west and more generalized rain in the far south

• Today’s
  Southern Oscillation Index was +8.84 and will likely move lower over the next few days
• New
  Zealand weather will include some periodic rainfall favoring western parts of South Island

o  
Temperatures will be near to below average

Source:
World Weather Inc. 

 

Bloomberg
Ag Calendar

Saturday,
Sept. 25:

• Globoil
  India – international vegetable oil conference, day 3

Monday,
Sept. 27:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• U.S.
  crop conditions – corn, cotton, soybeans; winter wheat planted, 4pm
• Ivory
  Coast cocoa arrivals

Tuesday,
Sept. 28:

• EU
  weekly grain, oilseed import and export data

Wednesday,
Sept. 29:

• EIA
  weekly U.S. ethanol inventories, production
• Vietnam’s
  General Statistics Office releases Sept. trade data
• Brazil’s
  Unica releases sugar output and cane crush data (tentative)

Thursday,
Sept. 30:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• USDA
  quarterly stocks – corn, soy, wheat, barley, oat and sorghum, noon
• U.S.
  wheat production, noon
• U.S.
  agricultural prices paid, received, 3pm
• Ivory
  Coast farmgate cocoa prices to be announced
• Malaysia
  September palm oil exports
• Port
  of Rouen data on French grain exports
• HOLIDAY:
  Canada

Friday,
Oct. 1:

• ICE
  Futures Europe weekly commitments of traders report (6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• New
  cocoa season in Ivory Coast starts
• U.S.
  DDGS production, corn for ethanol
• USDA
  soybean crush, 3pm
• Australia
  commodity index
• FranceAgriMer
  weekly update on crop conditions
• HOLIDAY:
  China, Hong Kong

Source:
Bloomberg and FI

 

Below
is data as of Friday evening. 

 

 

 

 

 

 

Commitment
of Traders

Funds
were more long in corn, Chicago wheat and meal while soybean oil and soybeans were less long, but we don’t see any price implications given the small discrepancies between estimates and actual positions as of last Tuesday.  Index funds added to their long
position in corn and sold soybeans. 

 

 

 

 

 

 

 

Macro

78
Counterparties Take $1313.657 Bln At Fed’s Fixed-Rate Reverse Repo (prev $1352.483 Bln, 77 Bidders)

 

Corn

·        
Corn ended lower on slow news and higher USD.  China liquidity crises was partially in focus.  The December corn contract seems to be stuck in the $5.10 to $5.30 trading range at the moment but don’t discount a breakout above
$5.3550, a recent contract high, if US field yield reports fail to live up to expectations.  Note we are look for an upward revision to the October US yield next month despite crop conditions remaining near a 5-year low for this time of year.  Consensus we
are gathering, is that yields across the lower US are coming in above average and yields in the northern Corn Belt vary. 

·        
China sold 10,507 tons of GMO corn or 9 percent what they offered at auction.  “GMO” sales are considered Ukraine import reserves. 

·        
Note China hog prices are off more than 56% since January. 

·        
France is off to a slow start in gather its corn crop with only 1 percent complete versus 15 percent year ago.  Crop maturity and drying are running about 10 days below average. 

·        
Argentina corn plantings are off to a good start.  Brazil corn sowings are just underway. 

·        
China plans to buy 30,000 tons of pork on October 10 for state reserves.  Year ago, they were selling pork out of reserves to combat rising price.  China hog futures ticked higher over the past couple of sessions (up 2.1% Friday)
but are near contract lows. 

 

US
hog inventories were bearish as they are running 96.1 percent from a year ago versus 98.3 percent trade estimate.  June-to-August pig crop that was down 6% from last summer, supportive for winter month hog prices but bearish for feed.  Friday afternoon pork
carcass cutout value jumped $6.48 to $110.77 per cwt, highest since Aug. 27.  Side note, cattle on feed beat expectations and inventories as of September 1 were second largest on record. 

 

 

US
cattle on feed was better than expected as of September 1 and placements were much higher than expected at 102.3 percent.  September 1 on feed was second highest on record. 

 

 

 

Export
developments.

• South
  Korea’s KFA bought 60,000 tons of corn at an estimated $329.90 a ton c&f plus a $1.75 a ton for shipment in December.  They earlier rejected offers on 138,000 tons of corn. 
  
• Taiwan’s
  MFIG seeks 65,000 tons of corn September 28 for shipment between Dec. 6 and Dec. 25, 2021, or later if from the PNW. 
  

 

Updated
9/14/21

December
corn is seen in a $4.75-$5.75 range

 

Soybeans

·        
Soybeans ended moderately higher in a two-sided trade ahead of the weekend from a higher USD and lower energy prices.  Global power shortages/outages are raising concern.  Back month soybean contracts were mixed. Both Canada canola
and European rapeseed contracts were higher on Friday, limiting losses in soybeans.  Soybean meal dropped while fund buying in soybean oil pulled the October contract 87 points higher. 

·        
We are hearing ECB soybean yields are down from last year (last year record for many plots) and WCB yields look good.  It will be a couple weeks to get a solid outlook on yield prospects per local field reports from the advancement
in US harvest progress. 

·        
We picked up China bought 9 cargoes of soybeans off the PNW this week for January, yet 24-hour announcements were lacking. 

·        
Rapeseed futures traded higher, ending slightly lower from its all-time contract high of 619.50. 

·        
China power outages spreading to local crushing facilities are gaining attention.  Some speculate China will now need to import soybean meal and with Argentina lineups already spoken for, they may need to seek the product from
the US.  This is something we need to monito as it could create volatility in oil share.

·        
We look for a good advancement of US harvest progress over the past week into this coming week. 

·        
For US soybean shipments when updated Monday, we look for USDA inspections to be below their respected 5-year average. 

·        
Dorab Mistry: Malaysian crude palm oil prices are seen bullish over the next five months “because of Indonesia’s high export levy and a peak in supply tightness expected at the start of 2022,” per Reuters.  They see a range from
4,000 ringgit to 4,400 ringgit during October to February before they ease in March.

·        
GAPKI: El Nino seen limiting Indonesia’s palm production for a second straight year.  33.3 million tons projected for 2021 for total palm exports, down 2 percent.  Indonesia’s 2021 CPO production could rise by 0.9 % to 47.46 million
tons. 

·        
AmSpec: Malaysian palm exports for the September 1-25 period were 1.283 million tons, up 30 percent from same period during August. 

·        
ITS: September 1-25 Malaysian palm shipments 1.375 million tons, up from 984,431 tons previous month, a 40 percent increase. 

·        
Keep an eye on Argentina’s soybean production potential.  The current 33 percent soybean export tax (31% products) is expected to lower soybean plantings this year. 

·        
Reuters poll:  Brazil soybean production 143.75 million (+5.8% yoy). 

·        
Talk of Brail’s Mato Grosso and surrounding areas seeing slightly more than expected rain Thursday into Friday may ease some concerns prior to planting progress.  Brazil producers want to avoid planting twice in the event of an
early disruption for their crop as input costs such as fertilizer are extremely high this year.

·        
Pakistan 2021 oilseed imports are projected at 3.53 million tons, a record, and up 20% from 2020, according to comments made by the chairman of Pakistan Edible Oil Refiners Association told the Globoil India conference.

·        
China cash crush margins improved on Friday to 159 cents/bu on our analysis from 143 previous versus 162 cents late last week and 92 cents around a year ago. 

 

Brazil
Starts Planting Grain Crop with Forecast of a New Record

Colussi,
J. and G. Schnitkey. “Brazil Starts Planting Grain Crop with Forecast of a New Record.” farmdoc daily (11):136, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, September 22, 2021.

https://farmdocdaily.illinois.edu/2021/09/brazil-starts-planting-grain-crop-with-forecast-of-a-new-record.html?utm_source=rss&utm_medium=rss&utm_campaign=brazil-starts-planting-grain-crop-with-forecast-of-a-new-record&utm_source=farmdoc+daily+and+Farm+Policy+News+Updates&utm_campaign=ca6cd772f1-WEEKENDER_RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_2caf2f9764-ca6cd772f1-173649469

 

Export
Developments

• Last
  week USDA bought 1,260 tons of vegetable oil in 4 liter cans and 1,071 tons in plastic bottles, under the PL480 program.  Prices for the cans ranged from $1,900.94 to $2,525.26 per ton. The plastic bottles were done at a price of $1,783.83 per ton.

 

Updated
9/14/21

Soybeans
– November $11.75-$13.75 range, short term $12.70-$13.30. 

Soybean
meal – December $310-$385

Soybean
oil – December 53-62 cent range

 

Wheat

·        
Wheat futures were higher in Chicago (2-week high), lower in KC and higher in nearby MN on lack of direction  The USD gained about 18 points by the end of Friday.  It was a light trade and quiet day for news. 

·        
Paris wheat started the day off its 5-week high, but December rallied to settle 1.00 euro higher at 253.25 euros. 

·        
The USD was up about 18 points on Friday.

·        
Ukraine is about 18 percent complete on winter grain plantings of the expected 6.7 million hectares.  Summer grain harvest is near 66 percent complete. 

·        
Ukraine was a strong producer of milling wheat, accounting to about 60 percent of this year’s crop and about the same as 2020. 

 

Export
Developments. 

·        
Algeria seeks 50,000 tons of wheat, optional origin, on September 28, with results likely September 29, for November 1-15 and November 16-30 shipment. 

·        
Japan bought 113,067 tons of food wheat from the US and Canada, this week for October 21-November 20 loading.  Original tender details…

·        
Pakistan seeks 640,000 tons of wheat on Sep. 29
for
shipment between January and February 2022. 

·        
Jordan seeks 120,000 tons of wheat on September 29. 

·        
Results awaited: Mauritius seeks 47,000 tons of wheat flour, optional origin, on Sept. 21 for various 2022 shipment.

 

Rice/Other

·        
Results awaited: Lowest offer $428.94/ton CIF.  Bangladesh seeks 50,000 tons of rice on September 23. 

·        
Bangladesh seeks 50,000 tons of rice on October 4. 

 

Updated
9/9/21

December
Chicago wheat is seen in a $6.50‐$7.80 range

December
KC wheat is seen in a $6.40‐$8.00

December
MN wheat is seen in a $8.45‐$9.50