FI Evening Grain Comments 10/09/22

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Calls for tonight vary on Black Sea trade concerns and US harvest weather.  We have a lower bias for the soybean complex and grains after the rally on Friday. 

For now, we are looking at soybeans 3-5 lower, corn 1-3 lower and wheat 3-6 lower.

 

 

US
CBOT agriculture commodities rallied despite heavy selling in equities and a USD up nearly 49 points. Otherwise, it was a slow trading day for the ags. Volume was down and fundamental news was light post US jobs report. Many traders were focused on the $4.75
per barrel increase in WTI and weaker US stocks. Look
for some harvest pressure to hit the US ag markets next week. The US weather outlook will be ideal for harvesting progress. Mississippi River water level problems are expected to continue over the next 7-10 days, at least. No deliveries were posted for meal
Friday night and registrations were unchanged. Note Reuters corrected their USDA trade estimates for US production and stocks. The investment fund positions as of last Tuesday were not as long as expected.

 

 

Weather

Last
seven days

 

 

No
major depressions are seen over the short term for the Gulf. Updated Sunday

 

 

World
Weather, INC.

• La
  Nina is peaking for the third and probably last time
• Weakening
  will begin slowly late this month and in November with a faster decay expected in December and January
• World
  weather patterns will show little to no change for several weeks
• Southeastern
  China will continue to be drier biased into the end of this quarter
• Abundant
  rain that will be heavy at times causing local flooding is expected in Southeast Asia over the next few weeks
• Eastern
  Australia will continue wetter than usual
• Eastern
  Argentina and far southern Brazil, Uruguay and southwestern Paraguay will trend drier than usual late this month into November
• Southeastern
  U.S. and parts of the Delta as well as a part of the U.S. central and southern Plains will be drier biased over the next few weeks as will the southwestern United States
• India
  will be wetter than usual especially in eastern portions of the nation, but possibly in the far north too later this quarter
• Central
  America, northern South America and central Africa will be wetter than usual over the next few weeks
• South
  Africa’s rainy season should begin favorably
• Southwestern
  U.S. hard red winter wheat areas will get some important rain along with West Texas cotton areas this weekend through the first part of next week
• This
  will be the last need for moisture in cotton country and it will be good for crops, but it is getting late in the season
• Cotton
  will require dry and warm weather over the next few weeks to allow bolls set in August to fully mature and open without an interfering frost or freeze
• No
  such cold is expected this month
• Winter
  wheat and livestock grazing areas will benefit most from this rainy period and sufficient moisture will fall to improve wheat emergence and establishment and to improve grazing conditions
• A
  word of caution, though…. some of the models are overdoing the rain
• 0.50
  to 1.50 inches is expected with the Panhandle of Texas wettest
• Good
  harvest weather will prevail in the U.S. Plains, Midwest, Delta and southeastern states next ten days
• Cold
  temperatures in the northern U.S. Plains this morning brought some extreme lows into the teens and 20s Fahrenheit across North Dakota and 20s and 30s in immediate neighboring areas
• Frost
  and freezes will occur in the upper U.S. Midwest this weekend and will possibly reach southward into Nebraska and parts of Iowa and Illinois
• The
  impact of frost and freezes will be minimal
• Canada’s
  Prairies will remain in drought for the next couple of weeks
• No
  significant improvement in U.S. river levels will occur over the next ten days
• If
  anything the levels may recede a little more
• Rain
  advertised for the Midwest next week is overdone and should have a minimal impact on river levels
• Argentina’s
  drought will remain without change for the next ten days
• Good
  rain fell across Brazil’s center west and center south crop areas Thursday and early today
• This
  was the best coverage of rain in Mato Grosso seen so far this season, although rain amounts were mostly light to moderate – it was all welcome
• Portions
  of Parana, Sao Paulo and Mato Grosso do Sul may be a little wet for fieldwork at times, especially with temperatures cooler than usual, but progress will be made
• Concern
  over wheat quality declines continue in Parana and surrounding areas
• Tropical
  Storm Julia has evolved and will become continue to intensify as it moves away from land
• This
  storm will eventually become a hurricane and should impact Nicaragua most severely, but flooding will also impact many other countries north to Guatemala
  
• Landfall
  is expected Sunday and the flooding rain will last into at least Tuesday and possibly Wednesday
• Damage
  to crops and property is expected
• Europe
  weather is expected to be mostly good over the coming week, with restricted rain allowing good harvest conditions for summer crops and improved winter crop planting, emergence and establishment conditions
• Western
  Russia and Belarus became too wet in late September and early October, but they are beginning to dry out and crop conditions will improve
• Russia’s
  Southern Region will get some welcome showers during the coming week to help induce a better outlook for wheat establishment
  
• China’s
  drought in the Yangtze River Basin is unlikely to change much in the coming ten days
• Rain
  in the northern Yangtze River Basin today and Saturday will be welcome, but a little disappointing with 0.30 to 1.00 inch and a few 1.50 inch totals expected
• Southeastern
  China is expected to receive below normal rainfall for the next several weeks
• Northern
  China weather will be favorably mixed during the next ten days
• Improvements
  in winter wheat and areas of the Yellow River Basin and North China Plain are expected after flooding rain earlier in this past week
  
• Xinjiang,
  China harvest weather will remain good
• Eastern
  Australia is expecting additional waves of rain over the next few weeks threatening wheat, barley and canola crops with a possible quality and production decline
• Cotton
  and sorghum areas in east-central Australia may be a little slow getting planted this year due to cooler than usual temperatures and frequent rainfall
• Western
  Australia weather is still nearly ideal for its winter wheat, barley and canola which should yield well
• Portions
  of Southeast Asia will experience flooding rainfall periodically over the next week to ten days
• India
  will be wettest through the weekend from eastern Gujarat and northern Maharashtra through southeastern Rajasthan and northwestern Madhya Pradesh to Uttar Pradesh and Uttarakhand causing delays to farming activity
• The
  moisture will be good for future wheat, rapeseed and pulse planting
• Only
  a very small amount of open boll cotton will be impacted by the rain
• Southern
  and eastern India will be wetter than usual next week
• No
  tropical cyclones are expected over the next week in the western Pacific Ocean
  
• Tropical
  cyclone 03S in the central India Ocean poses no threat to land as it moves southward over open water
  
• South
  Africa weather will be fine over the next ten days, but a boost in rainfall will be desired later this month as the summer crop planting season gets under way
• West-central
  Africa rainfall will occur frequently enough to support coffee, cocoa, sugarcane, cotton, rice and other crops during the next couple of weeks
• East-central
  Africa rainfall will be sufficient to support coffee and cocoa as well as a few other crops
• Ontario
  and Quebec are expecting only brief periods of light precipitation in the next ten days
• Harvest
  progress will advance around the moisture
• Mexico
  rainfall will be restricted through the weekend supporting crop maturation and harvest progress in many areas
• Central
  America rainfall will continue frequent and abundant during the next two weeks
• Some
  heavy rain is possible this weekend into next week when tropical storm Julia impacts the region
  
• Flooding
  is expected along with damaging wind especially in Nicaragua with flooding also possible northward to Guatemala
• North
  Africa showers at this time of year are always welcome, but usually have a minimal impact
  
• Rain
  over the coming week could range from 0.30 to 1.00 inch of moisture
• Morocco
  will be driest
• Autumn
  planting is still a few several weeks away
• Today’s
  Southern Oscillation Index was +19.90 and it will move erratically over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

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

Monday,
Oct. 10:

• Cane
  crush and sugar production data by Brazil’s Unica (tentative)
• HOLIDAY:
  US, Argentina, Canada, Chile, Japan, Korea, Malaysia

Tuesday,
Oct. 11:

• USDA
  export inspections – corn, soybeans, wheat
• US
  crop conditions and harvesting data for corn, soybeans and cotton; winter wheat planted
• France’s
  agriculture ministry releases monthly grain estimates
• Malaysian
  Palm Oil Board’s data on stockpiles, production and exports
• EU
  weekly grain, oilseed import and export data
• Malaysia’s
  Oct. 1-10 palm oil export data

Wednesday,
Oct. 12:

• USDA’s
  monthly World Agricultural Supply and Demand (WASDE) report, 12pm
• China’s
  agriculture ministry (CASDE) releases monthly report on supply and demand for corn and soybeans
• Bursa
  Malaysia Derivatives to host East Malaysia palm oil conference, day 1
• FranceAgriMer
  monthly grains outlook
• HOLIDAY:
  Brazil

Thursday,
Oct. 13:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• EIA
  weekly US ethanol inventories, production, 10:30am
• Malaysian
  Cocoa Board releases 3Q grind data
• Bursa
  Malaysia’s East Malaysia palm oil conference, day 2
• New
  Zealand Food Prices
• HOLIDAY:
  Thailand

Friday,
Oct. 14:

• China’s
  first batch of Sept. trade data, including soybean, edible oil, rubber and meat imports
• 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:
  Thailand

Source:
Bloomberg and FI

 

 

 

*US
ending stocks were revised by Reuters on Friday

 

 

World
ending stocks estimates

 

 

CFTC
Commitment of Traders

Funds
were not as long as expected as of last Thursday. The selling in wheat this week put the estimated net long position for Chicago in negative territory.

 

 

 

 

 

 

Macros

US
Change In Nonfarm Payrolls Sep: 263K (est 255K; prev 315K)

US
Unemployment Rate Sep: 3.5% (est 3.7%; prev 3.7%)

US
Average Hourly Earnings (M/M) Sep: 0.3% (est 0.3%; prev 0.3%)

US
Average Hourly Earnings (Y/Y) Sep: 5.0% (est 5.0%; prev 5.2%)

 

Canadian
Net Change In Employment Sep: 21.1K (est 20.0K; prev -39.7K)

Canadian
Unemployment Rate Sep: 5.2% (est 5.4%; prev 5.4%)

Canadian
Participation Rate Sep: 64.7% (est 64.8%; prev 64.8%)

Canadian
Hourly Wage Rate Permanent Employees (Y/Y) Sep: 5.2% (est 5.6%; prev 5.6%)

Canadian
Full Time Employment Change Sep: 5.7K (prev -77.2K)

Canadian
Part Time Employment Change Sep: 15.4K (prev 37.5K)

 

US
Wholesale Inventories (M/M) Aug F: 1.3% (est 1.3%; prev 1.3%)

 

Corn

·        
US corn ended higher on Black Sea shipping concerns, higher soybeans and dryness concerns slowing early planting progress for Argentina’s first corn crop. For the week December corn ended 0.8% higher. We look for a slight correction
in wheat/corn spreads next week. Chicago wheat ended the week down 4.5%. EU and US harvesting pressure is expected to keep a lid on gains in corn, but geopolitical headlines could easily trump that if they arise next week.

·        
France collected 67 percent of their corn crop as of October 3, up from 51 percent week earlier, 28 points above year ago and 18 points above average.

·        
Ukraine wrapped up barley and wheat harvesting for the 2022 crop, but corn collection is running behind normal. Storage issues is a problem.  Drier weather over the next week should aid corn harvest progress.

·        
Drier weather is in the forecast for eastern Europe.

·        
US corn harvesting this week is expected to increase about 14 percent points from October 2 to around 34 percent complete, above a 5—year average of 30 percent. Some corn has been left in fields on purpose to dry down, avoiding
elevator and/or on farm natural gas drying costs.

·        
Bird flu was detected in a commercial broilers breeding flock in Madison country, Arkansas.

 

Export
developments.

·        
None reported

 

Updated
10/09/22

December
corn is seen in a $6.50-$7.15 range. March $6.50-$7.50 range.

 

Soybeans

·        
CBOT soybean complex traded two-sided, ending higher on fund buying in a light trade, despite a higher USD and lower equities. Front month meal contracts were strong, supporting soybeans and limiting gains in soybean oil.

·        
CBOT meal registrations were up 25 contracts (Owensboro) Thursday evening and unchanged Friday night.
There
were no meal deliveries posted Friday evening. 

·        
China is back from holiday Sunday evening. Don’t discount them buying soybeans from SA and/or the US next week.

·        
Mississippi Memphis-Cairo barge freight (offer) rates were steady Friday.

·        
We heard two Miss R. locations for loading are closed. Dry weather is expected for Midwest and no major tropical depressions are seen over the short term for the Gulf that would impact the US. Look for water level problems to
last at least over the next 7 days. 

·        
Malaysia, Canada and Argentina are on holiday Monday.

·        
Palm oil production problems may hinder Indonesia over the short term with heavy rain that fell Friday into the weekend. 

 

Export
Developments

·        
South Korea’s KFA and FLC jointly bought 60,000 tons of soybean meal, optional origin (Reuters noted SA), at $524.80/ton c&f for arrival around March 10.

·        
South Korea’s NOFI group bought 60,000 tons of soybean meal at $531.92/ton c&f for arrival around February 20.

 

 

Updated
10/09/22

Soybeans
– November is seen in a $13.00-$14.50 range, January $13.25-$15.00

Soybean
meal – December $375-$440, January $360-$475

Soybean
oil – December 63.00-75.00, January wide 60.00-73.00 range

 

Wheat

·        
US wheat prices were higher Friday on Black Sea shipping concerns. Bloomberg noted grain shipments are backing up “while awaiting inspection at Istanbul under the terms of a grain-export deal, creating a logjam as farmers and
traders look to ship as much as possible before the accord expires next month.” 90 or more ships could be backlogged.

·        
We are unsure if the grain safe passage deal will be extended. If not, prices could easily appreciate $1.00 for wheat and $0.50 for corn over a short term.  November is when the deal is expected to be either renewed or declined.

·        
Winter grain planting concerns for the Black Sea region are also supporting wheat. But drier weather is projected for Ukraine over the next week that could boost fieldwork activity, including sunflower and corn harvesting.

·        
Technical buying can’t be ruled out on Friday as the Chicago contract was already down sharply headed into the day session open for the week. Dec Chicago wheat for the week was down 4.5%, KC Dec down 2.3% and MN off 1.4%.

·        
Paris December wheat was up 2.75 euros at 348.00 per ton. That contract swung in both directions on Friday after hitting a one week low on Thursday. 

·        
The world FOA food price index fell for the sixth consecutive month to 136.3 points from a revised 137.9 points for August. The record was 159.7 posted for March 2022. A drop in vegetable oils contributed to the decline for the
September index. Graphs are attached.

·        
Uttar Pradesh, India, saw recorded excess rainfall last week, negatively impacting agriculture production. Keep an eye out for USDA to lower selected crops in its October update.

·        
Australia’s NSW will see heavy rain through early Sunday, resulting in flooding, mainly near the coast, but did impact some grain areas.  Australia’s eastern areas recorded their wettest year since records began in 1858. Why this
is important to monitor? La Nina, for the third straight year, could also impact South America. 

 

US
Wheat Associates

“The
overall average durum grade is U.S. No. 1 Hard Amber Durum (1 HAD). U.S. Wheat Associates wishes to thank the people and organizations that make our annual Harvest Reports and Crop Quality Reports possible.”

 

“This
week, basis was up in both the Gulf and Pacific Northwest (PNW). Basis in the Gulf was driven primarily by increased barge freight in the Mississippi River. The weekly Grain Transportation Report (GTR) showed that rail efficiency has improved over the last
two weeks, with speeds for grain trains improving and more grain carloads moved. However, the report noted that rail performance still lags behind last year. The dollar also remains strong, stunting U.S. wheat’s competitiveness in the international market.
At the same time, tighter export capacity this time of year due to peak corn and soybean export programs adds to the overall basis cost. “

 

Export
Developments.

·        
Algeria earlier this week bought 200,000 to 250,000 tons of durum wheat at $496.3 to $512.6 a ton c&f, for LH October through November shipment. Origin was thought to be Canadian.

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

·        
Jordan seeks 120,000 tons of wheat set to close October 11.

·        
Jordan seeks 120,000 tons of barley on October 12 for March and April shipment.

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

·        
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.

 

Rice/Other

·        
South Korea plans to buy 450,000 tons of rice for reserves this year October 20 through December to stabilize domestic prices. This would be up from 350,000 tons last year.

·        
South Korea seeks 90,100 tons of rice from the US, Vietnam and other origins on October 19 for arrival between Jan 20 and Apr 30.

·        
Mauritius seeks 6,000 tons of rice on October 20, optional origin, for Jan-Mar shipment.

 

 

Updated 10/7/22

Chicago – December $8.16-$10.00, March $8.00 to $10.25

KC – December $9.25-$10.50, March 8.50-$10.50

MN – December $9.25-$10.50, March $9.00 to $10.50