FI Evening Grain Comments 10/04/22

PDF Attached

 

USD
was down 158 points, WTI up $2.50 and US equities sharply higher. Soybeans ended higher, meal lower and soybean oil sharply higher. Corn settled higher and wheat was mostly lower.

 

US
Midwest weather conditions will remain drier than normal. Look for water levels for the Mississippi to continue to decline well into the workweek. Winter wheat plantings across the southwestern growing areas will remain a challenge with net drying while parts
of the central and northern Great Plains will see some rain. Argentina will see rain this week across the northern, central and southwestern areas, welcome after a slow start to the corn planting season. Southern and central Brazil will see rain. 

 

 

Weather

 

 

World
Weather, INC.

WEATHER
EVENTS AND FEATURES TO WATCH

• New
  South Wales, southwestern Queensland and Victoria, Australia will experience frequent waves of rain during the next week resulting in the saturation of topsoil moisture
• Rain
  totals will vary from 2.00 to more than 5.00 inches by this time next week
  
• Some
  flooding is expected
• Crop
  conditions may be threatened by the frequent rain
• Western
  Australia, South Australia and southeastern Queensland crop conditions are rated favorably and should remain that way
• Frequent
  rain will impact Brazil’s center west, center south and far southern crop areas during the next ten days
• All
  crop areas will get rain at one time or another and sufficient amounts will occur to support planting, germination and emergence of soybeans, corn, rice, cotton and other crops
• A
  few areas either have become too wet or will soon do so and a little drying might be necessary
•            
  Kansas City, October 4 (World Weather, Inc.) – Rain shifted to the north of many Sul de Minas crop areas Monday favoring Zona de Mata and Espirito Santo. The outlook brings a frequent bout of rain to the key coffee areas from northern Parana to Cerrado Mineiro
  and Zona de Mata during the next ten days. Sufficient rainfall is expected to support flowering, pollination and some early season cherry setting.
• Argentina
  will get “some” rain tonight and Wednesday in a part of the dry region, but much more will be needed
• Rainfall
  of 0.10 to 0.50 inch is most likely with a few totals to 0.75 inch
• Greater
  rain will fall Wednesday and Thursday in northeastern Argentina which should lead to better cotton, grain and oilseed planting and early development in time
• Argentina
  weather is expected to be much drier in the week following Thursday
• Rain
  chances may improve again around mid-month
• Western
  Russia, Belarus and the Baltic States may be a little too wet and some drying is needed
• A
  part of that need will be partially filled in the coming week, although totally dry weather is not likely
• Europe
  will experience a favorable weather period for general fieldwork, including the harvest of summer crops and the planting of winter grain during the next week and possibly for ten days
• China’s
  excessive rain event in the Yellow River Basin during the weekend is expected to shift southward today and Thursday impacting areas from northeastern Sichuan and southern Shaanxi into Anhui with 2.00 to 4.00 inches of rain and local totals over 6.00 inches
• Improved
  weather in the Yellow River Basin Monday should have reduced flooding after excessive rain fell during the weekend.
  
• The
  rain will diminish while shifting farther to the south into the northern Yangtze River Basin late this week
  
• Rainfall
  may vary from 0.50 to 1.50 inches and locally more
• Some
  relief is expected in northern drought areas of the Yangtze Basin, but southern areas will remain dry biased
• Southeastern
  China is expected to be drier than usual through the fourth quarter of this year
• China’s
  bottom line is good for winter wheat planting in areas that do not get excessive rain; however, some flooding is impacting a part of the region and it will continue periodically this week. Drought in the Yangtze River Basin will continue to expedite summer
  crop maturation and harvesting, but production has been cut especially in rice areas. Dryness may be a worry for southern rapeseed areas if that region stays drier biased as is suggested over the next 30 days. Northern rapeseed areas may do a little better
  with moisture, but the situation will need to be closely monitored. Weather in northeastern China will be mixed allowing summer crop harvest progress to advance, albeit a little slowly at times.
  
• Xinjiang,
  China harvest weather is mostly good, although some periodic showers in the northeast part of the province have caused some delay to the harvest and raised at least a little fiber quality concern
• Excellent
  drying conditions are prevailing in the bulk of other production areas in the province
• Europe
  weather will trend drier this week and that will translate into a better environment for fieldwork after recent rainfall
• There
  are still some moisture deficits of significance prevailing in France, Spain, Portugal, Germany and the lower Danube River Basin, although topsoil moisture has been improved in most areas to support autumn planting and winter crop establishment
  
• Enough
  moisture has fallen recently to support autumn planting, seed germination and plant emergence and establishment
• The
  drier weather was needed to promote faster fieldwork, including summer crop harvesting and winter crop planting
• Portions
  of the lower Danube River Basin in southeastern Europe are still too dry as well
• Eastern
  and southern winter wheat and rye areas of Russia will get light rainfall this week and that should be sufficient to support winter crop needs, although there are still some moisture deficits that are lingering
• India
  will experience a late season monsoon low coming west northwesterly from the Bay of Bengal producing rain for many key grain, oilseed, sugarcane, rice and coffee production areas during the next several days
• Northwestern
  India will likely stay dry along with Pakistan favoring harvest progress from Gujarat and Rajasthan northwestward
• Some
  rain may fall in Haryana this weekend into early next week possibly returning some concern over harvest delays and cotton quality declines.
  
• Normally,
  by early October monsoonal rainfall has withdrawn from northern and central India, but this week will still be quite wet with flooding in Uttarakhand, Nepal and parts of Uttar Pradesh
• Southeast
  Asia rainfall will be widespread and abundant during the next two weeks with nearly all areas getting significant amounts
• Local
  flooding will be possible every day, but no widespread serious flooding is expected
• Sarawak,
  Malaysia and western Kalimantan, Indonesia will be wettest
• No
  tropical cyclones were present in the western Pacific Ocean or Indian Ocean today, but a cyclone may evolve in the central Indian Ocean later this week with no land threat
• Hurricane
  Orlene dissipated in west-central Mexico Monday
• Some
  crop damage was suspected, but the storm was small in size and weakened quickly which should have limited its impact
• Two
  tropical disturbances in the Atlantic Ocean are being closely monitored for development
• The
  first tropical wave was in the central tropical Atlantic and was expected to move west northwesterly eventually moving through the Windward Islands later this week and then into the Caribbean Sea
• Development
  for this event will be slow especially while in the Atlantic Ocean
• The
  second tropical wave has a much better potential to become a tropical cyclone in the next day or two, but its movement will be northwest into the central Atlantic where it will be no threat to land
• U.S.
  central and lower eastern Midwest, Delta and southeastern states will receive lighter than usual precipitation during the next ten days to two weeks, although a few showers are likely
• Net
  drying is most likely
• Central
  and southwestern portions of the U.S. Plains will receive some rain periodically tonight into early next week
  
• 0.25
  to 0.75 inch with a few totals over 1.00 inch is likely
• The
  moisture will be welcome to winter wheat planting, emergence and establishment, although not enough to eliminate long term moisture deficits
• The
  moisture will also be good for late season boll development in cotton areas
• Scattered
  showers in the northern Plains and a part of Canada’s Prairies over the next ten days will not likely have a big impact, but some showers are expected that will produce 0.05 to 0.50 inch of moisture
• U.S.
  Pacific northwest, Great Basin and far western states will be drier than usual over the next ten days
• Ontario
  and Quebec are unlikely to get much moisture over the coming week to ten days which should improve harvest progress
• Recent
  precipitation was minimal
• Frost
  and freezes occurred during the weekend and a few areas experienced similar conditions this morning in northern parts of southern Quebec
• South
  Africa will experience a limited amount of rain this week, but winter crops will remain in good condition
• Quick
  drying is expected because of warmer than usual temperatures
• A
  boost in rainfall will be very important a little later this month to support spring planting of summer crops and to ensure the best possible wheat, barley and canola development
• Remnants
  of Hurricane Orlene will produce some additional rain in west-central Mexico today
• Mexico
  rainfall elsewhere will be greatest late this week into next week benefiting late season crops and delaying some farm activity
• Central
  America rainfall will continue frequent and abundant during the next two weeks
• Some
  heavy rain is possible late this week into next week when a tropical disturbance impacts parts of the region
  
• That
  system is approaching the southern Windward Islands today
• North
  Africa showers at this time of year are always welcome, but usually have a minimal impact
  
• Rain
  over the coming week could product 0.50 to 1.50 inches of moisture in northeastern Algeria and northern Tunisia
• Autumn
  planting is still several weeks away
• 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
• Cotton
  areas may soon need some drier weather
• 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 +18.89 and it will move erratically over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Tuesday,
Oct. 4:

• EU
  weekly grain, oilseed import and export data
• Global
  Grain Outlook conference in Baku, Azerbaijan, Oct. 4-7
• US
  Purdue Agriculture Sentiment
• New
  Zealand global dairy trade auction
• Australia
  commodity index
• HOLIDAY:
  China, Hong Kong

Wednesday,
Oct. 5:

• US
  Trade Data for August
• EIA
  weekly US ethanol inventories, production, 10:30am
• Malaysia’s
  Oct. 1-5 palm oil export data
• HOLIDAY:
  China, India, Bangladesh

Thursday,
Oct. 6:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• New
  Zealand commodity price
• Brazil’s
  Conab releases data on area, yield and output of corn and soybeans
• HOLIDAY:
  China

Friday,
Oct. 7:

• FAO
  World Food Price Index
• 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
  customs data on September coffee, rice and rubber exports
• HOLIDAY:
  China, Argentina

Source:
Bloomberg and FI

 

Macros

105
Counterparties Take $2.234 Tln At Fed Reverse Repo Op (prev $2.253 Tln, 102 Bids)

OPEC+
is considering a reduction in its production limit of as much as 2 million barrels a day, although the impact on global supply could be smaller.  (Bloomberg)

US
Factory Orders (M/M) Aug: 0.0% (est 0.0%; prev -1.0%)

–
Factory Orders Ex-Transportation (M/M): 0.2% (est 0.2%; prev -1.1%)

US
Durable Goods Orders (M/M) Aug F: -0.2% (est -0.2%; prev -0.2%)

–
Durables Ex-Transp: 0.3% (est 0.2%; prev 0.2%)

–
Cap Goods Orders Nondef Ex-Air: 1.4% (prev 1.3%)

–
Cap Goods Ship Nondef Ex-Air: 0.4% (prev 0.3%)

US
JOLTs Job Openings Aug: 10.053M (est 11.088M; prev R 11.170M)

 

Due
out October 6

 

Corn

·        
Corn was higher on fund buying and slower than expected US harvesting pace. A sharply lower USD and higher WTI is lent support. Some corn basis bids at selected US processors eased on Tuesday. We expect good US harvest weather
for the remainder of the week.

·        
Memphis-Cairo Barge Freight (offers) for the October position increased 300 percentage points to 2500 percent on Monday, and November was up 50 percentage points to 950 percent.

·        
US CIF corn was unchanged to up 30 cents for the nearby positions.

·        
Ukraine corn harvest progress is off to a slow start.

·        
Brazil’s 2022-23 first crop corn crop planting pace for the center-south was reported by AgRural at 34 percent complete, compared to 32.6% year ago. Southern Brazil corn planting progress was slow last week.

·        
Government and private estimates look for a bumper 2022-23 Brazil total corn and soybean crop of about 125.5 million and 150 million tons, respectively. StoneX is at 126.3 million tons for the Brazil corn crop and 153.8 million
for the soybean crop. Safras is at 151.5 million tons for the Brazil soybean crop, up 20 percent from 2021-22.

·        
A good Brazil corn crop could cut into second half US 2022-23 corn exports, especially if China approves Brazil corn imports by the end of this year. Near a 20-year high, a strong USD compounds to the uncertainty over upcoming
US corn exports.

 

 

 

·        
Algeria plans to subsidize fertilizer prices by 50 percent from the current season to reduce price increases for producers.

·        
US harvesting weather looks good over the next seven to ten days. US temperatures will be above average during the 11–15-day period.

·        
US corn harvest progress was reported 2 points below expectations at 20 percent complete, below 27 reported year ago and 22 percent average. Look for that to jump this week.

 

 

University
of Illinois on hogs: Still
Lower Inventories with No Intentions to Expand

Franken,
J. “Still Lower Inventories with No Intentions to Expand.” farmdoc
daily (12):150,
Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, October 3, 2022.

https://farmdocdaily.illinois.edu/2022/10/still-lower-inventories-with-no-intentions-to-expand.html

 

Export
developments.

·        
None reported

 

Updated
9/20/22

December
corn is seen in a $6.40-$7.30 range.

 

Soybeans

·        
November CBOT soybean futures traded higher despite USDA reporting better than expected US harvesting progress. Broad based commodity buying was noted. Soybean meal traded mixed, ended lower in part to soybean oil/meal spreading.
There are concerns over meal supplies backing up across the Midwest from slowing Mississippi barge shipments. Soybean oil was strong again following another leg higher in WTI crude oil. Egypt bought 38,000 tons of vegetable oils, 27k soybean oil and 11k sunflower
oil. Malaysian palm oil futures on Tuesday were higher for the fourth consecutive day on bargain buying and rebound in Brent & WTI mineral/crude oil.

·        
US barge soybean meal basis firmed today in part to low water levels along the Mississippi River.

·        
Argentina September soybean producer sales were about 16.1 million tons.

·        
Conab will release 2022-23 Brazil soybean and corn production estimates on Thursday. In late August they tentatively pegged soybean production at a record 150.36 million tons and corn at 125.5 million tons. Our estimates for the
Conab report can be found above the corn section.

·        
Brazil’s 2022-23 soybean crop planting pace was reported by AgRural at nearly 4 percent complete, same as year ago. Meanwhile Safras was at 4.5 percent through last Friday, above 4 percent year ago and 3.1 percent average.

·        
Ukraine producers completed winter rapeseed plantings on 989,000 hectares.

·        
The EU imported 415,825 tons of sunflower oil during the July 1-October 2 period, up from 377,955 tons year earlier. Soybean meal imports were 3.89 million tons versus 4.15 million year ago, soybean imports 2.90 million against
3.23 million year ago, and rapeseed imports at 1.65 million tons against 1.18 million year earlier.

·        
Cargo surveyor SGS reported September Malaysian palm exports at 1,400,145 tons, 90,344 tons above August or up 6.9%, and 305,568 tons below September a year ago or down 17.9%.

·        
Heavy rain will fall this week across parts of Indonesia’s palm production areas.

·        
Indonesia may extend its palm oil export levy waiver through the end of the year. They will continue to collect taxes.

·        
India September palm imports were 1.2 million tons, up 21 percent from August and highest in a year. Sunflower oil imports were 165,000 tons, up from 135,308 tons in August. Soybean oil imports were 370,000 tons versus 244,697
tons in August.

·        
Reuters noted palm oil when imported into India is about a $300/ton discount to soybean oil.

 

Export
Developments

·        
Egypt bought a combined 38,000 tons of vegetable oils. It included 11,000 tons of sunflower oil and 27,000 tons of soybean oil. Prices paid were $1,285 tons of sunflower oil and $1,320 tons for soybean oil. The import tender was
for
Nov. 25-Dec. 10 arrival for payment through 180-day letters of credit. GASC was also in for local vegetable oils, at least 3,000 tons of soyoil and 1,000 tons of sunflower oil for delivery Dec 1-15.

 

Updated
10/3/22

Soybeans
– November is seen in a $13.75-$15.00 range

Soybean
meal – December $380-$450

Soybean
oil – December 62.00-70.00

 

Wheat

·        
KC type wheat futures were leading the US markets higher earlier on slow HRW wheat planting pace. That contract remained above water throughout the day session until light fund selling towards the end of the session. KC ended
mixed with December unchanged, March and May lower and July unchanged. US winter wheat planting progress fell short of expectations by 4 points in large part to a big slowdown in Texas and Oklahoma seedings due to very dry conditions. At 40 percent, it compares
to 45 percent year ago and 44 percent average.

·        
Chicago wheat saw several rounds of selling during the session on soybean/wheat and corn/wheat spreading. December was off 9.0 cents to $9.03 per bushel.

·        
MN traded two-sided. The market started the day session higher from an increase in global export developments and ended mixed (bear spreading).

·        
Ukraine winter wheat plantings are off to a slow start with just only 1.1 million hectares planted compared to 1.3 million year ago. The 1.1 million represents 27% of the expected area. Rains and war are two key reasons for smaller
plantings. the area could fall to 3.8 million hectares from 4.6 million a year earlier because of Russia’s invasion, according to the AgMin. Some other analysts are near 3.4-3.5 million hectares.

·        
Ukraine’s AgMin estimated with the annexation of Russia, Ukraine could lose about 5 million tons of grain to Russia.

·        
Paris December wheat was down 0.50 euro at 349.75 per ton. The contract hit a 3-month high yesterday. A higher Euro capped earlier gains.

·        
EU soft wheat exports as of October 2 (season started July 1) totaled 9.15 million tons,  compared with 9.48 million tons year earlier. 

 

Export
Developments.

·        
South Korea’s Major Feedmill Group (MFG) bought 65,000 tons of feed wheat sourced from Australia at an estimated $349.90 a ton c&f for shipment between February 5 and March 5.

·        
Iraq seeks 50,000 tons of wheat, optional origin, on October 5. Russia is excluded from the import tender.

·        
Tunisia’s state grains agency seeks 150,000 tons of soft wheat, 100,000 tons of durum wheat and 100,000 tons of feed barley on October 5, all in 25,000-ton consignments. The wheat is sought for shipment between Nov. 1 and Dec.
15 depending on origin, durum between Nov. 1 and Dec. 15 and barley between Nov. 1 and Dec. 5.

·        
Jordan passed on wheat. Four trading companies participated.

·        
Jordan opened an import tender for 120,000 tons of wheat set to close October 11.

·        
Japan seeks 97,343 tons of food wheat later this week for arrival by January 31.

• Jordan
  seeks 120,000 tons of barley set to close October 5.

·        
Turkey seeks 495,000 tons of barley on October 11.

• Iraq
  seeks 50,000 tons of milling wheat on October 10, optional origin.
• Iraq
  seeks 50,000 tons of wheat on October 10.

·        
China plans to sell 40,000 tons of wheat from reserves on October 12, from the 2014-2017 crops.

·        
Mauritius seeks 25,800 tons of wheat flour, optional origin, on October 28 for January through September 30, 2023, shipment.

·        
Results are awaited on Algeria’s state grains agency OAIC buying wheat for November shipment. Origin was thought to include mostly EU and some from Russia. Initial prices were seen at $369, $370 and $372 a ton c&f.

 

Rice/Other

·        
Colombia Sept. Coffee Output Falls 31% Y/y to 834,000 (Bloomberg)

 

Updated
9/20/22

Chicago
– December $8.00-$10.50

KC
– December $8.75-$11.00

MN
– December $8.75-$11.00