FI Evening Grain Comments 10/10/22

PDF Attached

 

Developing:
Reports Railroad Union Has Rejects The Tentative Labor Deal Backed By US Pres. Biden.  This raises a potential rail strike.

 

Grains
were up sharply on Black Sea shipping concerns despite a higher USD and lower WTI crude oil market. The soybean complex sold off well from session higher. We think the reopening of two Miss. River points and currency strength pressured the complex. It was
a light trade. US government offices and banks were closed today for Columbus Day. US export inspections and crop progress will be released Tuesday. Russia threatened Ukraine with more strikes after a key bridge linking Crimea was blown up over the weekend.
Bloomberg noted infrastructure facilities in eight Ukraine regions were hit in the missile strikes Sunday into early Monday, including the city of Odessa, a major grain hub.

 

Mississippi
River water levels are still low. The back end of the US Midwest forecast calls for rain. Weekend weather for the US was as expected for the US, with some rain falling across NE, KS, parts of TX and OK, followed by MN and other upper Midwestern areas. Parts
of the Midwest will see rain mid this week, bias southwestern areas. Brazil will see widespread rains this week while Argentina will dry down again after seeing some rain over the weekend. India and eastern Australia saw flooding over the weekend.

 

 

 

 

Weather

 

World
Weather, INC.

MOST
IMPORTANT WEATHER AROUND THE WORLD

• India
  weekend rainfall was heavy enough to induce flooding in northwestern Uttar Pradesh and Uttarakhand where rainfall varied from 3.50 to more than 7.00 inches.
• Flooding
  resulted and some damage to crops and property resulted
• Some
  of the heavy rain also impacted southern Haryana, eastern Rajasthan and far northern Madhya Pradesh where up to 3.58 inches resulted
• A
  small part of cotton in the open boll stage may have been negatively impacted, but the bulk of cotton is produced farther away from this heavy rain event
• Rainfall
  elsewhere was sporadic and mostly light, although more than 2.50 inches of rain did occur in cotton and peanut areas of southern Gujarat without much of incident to crop conditions
• Unusually
  great rainfall is expected in central and northeastern portions of India during the next several days
• Sufficient
  rain will fall to stall summer crop maturation and harvest progress raising some concern over crop quality
• Maharashtra,
  Madhya Pradesh, Uttar Pradesh, Chhattisgarh and neighboring areas will be most impacted.
• Drier
  weather will soon be needed
• The
  moisture will be good for future winter crop planting, but it could have a negative impact on some unharvested pulse crops and could also reduce soybean quality in a few areas where the crop is mature. Some rice areas also need drier weather in central India
  where rain is expected in this coming week
• Tropical
  Storm Julia was 40 miles west of San Salvador, El Salvador at 13.5 north, 89.7 west at 0700 CDT today moving west northwesterly at 15 mph and producing maximum sustained wind speeds of 40 mph
• The
  storm produced 85 mph wind speeds along the Caribbean Coast of Nicaragua when landfall occurred early Sunday and produced more than 15 inches of rain near the coast
• Wind
  speeds dropped to 60 mph during much of the day Sunday, but that impacted many coffee, sugarcane, and other crop areas
  
• Heavy
  rain also impacted across a large part of the nation and likely impacted portions of both Honduras and El Salvador overnight
• Rain
  will fall heavily into Wednesday from El Salvador and western Honduras through Guatemala to southern Mexico with some flooding expected
• Julia’s
  wind has dropped below the damage threshold and will continue diminishing over the next couple of days
• Damage
  to crops and property has occurred in Nicaragua, but several days will be needed before assessments become available
• Argentina
  will be dry for the coming week
• Northwestern
  and a few west-central areas will get some rain Sunday into Monday of next week
  
• Rainfall
  will vary from 0.20 to 0.75 inch and locally more
• Most
  of the moisture will miss key grain and oilseed production areas leaving a strong need for rain
  
• Argentina’s
  moisture stress is expanding and significant rain is needed as soon as possible
• Rain
  in Argentina during the weekend was mostly confined to central and southern Buenos Aires with amounts to 0.60 inch
  
• Temperatures
  were warm
• Brazil
  weekend rainfall scattered from Mato Grosso through central and southern Goias and much of Mato Grosso do Sul into northern Sao Paulo and southernmost Minas Gerais while also occurring from Paraguay to southern Parana and Santa Catarina and northern Rio Grande
  do Sul. Rain totals varied from 0.20 to 0.88 inch most often with local totals to 2.14 inches
  
• Much
  of the early weekend was drier biased making the environment Friday through Sunday mostly ideal for fieldwork and crop development because of the mix of rain and sunshine
• Brazil
  weather over the next ten days will include scattered showers and thunderstorms, but there will be many periods of sunshine as well
• Rainfall
  will be lighter than usual in many eastern Mato Grosso locations as well as in Goias, Sao Paulo and Minas Gerais, although not totally dry
• Central
  and southern Rio Grande do Sul should also dry out during this period of time
• Field
  progress and crop development should advance well after recent rain, but many areas will dry down
• This
  week’s greatest rain will fall in northern Rio Grande do Sul, Santa Catarina, southern and western Parana and southwestern Mato Grosso do Sul where a net increase in soil moisture is likely
• Week
  two rainfall should bring greater rainfall to eastern Mato Grosso, Minas Gerais and Sao Paulo while not changing much in other areas.
  
• U.S.
  weather was largely dry during the weekend in all key crop areas
• Temperatures
  were mild to cool with temperatures briefly colder than usual across parts of the Midwest
• Hard
  freezes occurred in the northwestern Corn Belt Saturday morning with lows deep into the 20s Fahrenheit from eastern South Dakota and eastern Nebraska through the heart of Iowa to southwestern Wisconsin
• Lows
  in the 30s occurred in the Midwest
• Little
  to no crop damage was suspected because of the cold, although any immature crops might have been negatively impacted by the coldest temperatures in the lower to middle 20s Fahrenheit
• U.S.
  weather through Friday of this week will be generally dry, but some rain showers will occur across the Great Lakes region and from Kansas and parts of Oklahoma into Illinois and Indiana
  
• Rainfall
  will vary from 0.10 to 0.60 inch with a few totals to 1.00 inch
• The
  moisture will not be enough to induce significant runoff or change water levels on any of the navigable rivers
• Rain
  will scatter additionally across 40% of the southern Plains today and early Tuesday with rainfall of a trace to 0.50 inch and then dry for the balance of this week
• Temperatures
  will be near to above normal
• U.S.
  weather this coming weekend and next week will trend colder than usual in the Midwest, Delta and southeastern states while still quite warm in the far western U.S.
  
• Rainfall
  will be lighter than usual during most of the week, but totally dry is not likely
• Restricted
  rain is predicted in the southern Plains, Delta and southeastern states, despite the European model advertising some significant rain
  
• Rain
  is most likely from Oklahoma to Indiana and Ohio with some rain in the Delta
  
• Much
  of the Plains and western Corn and Soybean Belt should be dry biased
• Europe
  weather during the weekend was generally dry biased and mild to slightly warm favoring aggressive autumn planting and late summer crop harvest progress
  
• Europe
  weather is expected to be favorably mixed over the next ten days with some increase in rainfall next week relative to this week
• Fieldwork
  will advance around the precipitation anticipated this week and the moisture will be good for recently planted and emerged winter crops
  
• Temperatures
  will be a little warmer than usual
• Most
  of the western CIS experienced restricted rainfall during the weekend while mild temperatures were mild to warm for this time of year
• CIS
  weather during the coming week to ten days will be similar to that of the weekend with erratic rainfall and mild to warm temperatures
  
• Winter
  crops will continue to become favorably established
• Xinjiang,
  China harvest weather should be favorable for most of this week with limited rainfall and seasonable temperatures
• Eastern
  China temperatures will be a little cooler than usual this week while rainfall is very limited
• Not
  much precipitation is expected next week from the Yangtze River Basin and interior southeastern provinces into the North China Plain and parts of the northeastern provinces
• Drought
  will continue in the Yangtze River Basin, despite recent rain in the north
• Eastern
  China weekend rainfall was greatest near and immediately north of the Yangtze River where some relief from drought occurred
• Rain
  totals varied from 0.40 to 1.35 inches with a few amounts reaching up to 2.00 inches from eastern Hubei to northern Zhejiang and southwestern Jiangsu
• Rain
  also fell from Liaoning to Heilongjiang with amounts of 0.40 to 0.80 inch with local totals to nearly 2.14 inches in Jilin.
  
• Eastern
  China’s bottom line is still good for field progress of all kinds; including the harvest of summer crops as well as the planting of winter crops. However, dryness is still a big concern for rapeseed areas in the Yangtze River Basin where significantly greater
  rainfall is still needed to ease months of below average rainfall. The weekend moisture was certainly the greatest seen for quite a while and that should help to temporarily improve soil moisture.
  
• Southeast
  Asia rainfall is expected to continue frequent and abundant over the next ten days resulting in flooding for some areas
• The
  excessive rain will be sporadic limiting the flooding to small regions
• As
  long as La Nina continues at this strong level the potential for flooding rainfall will continue and that should be for several weeks
  
• Australia
  rainfall during the weekend was greatest in northeastern and north-central New South Wales and south-central and southwestern Queensland resulting in rainfall of 1.00 to 3.00 inches with a few amounts approaching 4.00 inches
  
• The
  ground is saturated with some flooding under way, but dry weather early this week should keep flooding from becoming widespread and excessive
  
• Australia
  rain later this week will be greatest in South Australia, Victoria and some central and southern New South Wales locations
• The
  precipitation may be enough to induce some local flooding in those areas while Queensland and northern New South Wales dry down
• Western
  Australia continues to dry out and may require some timely rain soon to protect yield potentials
• Most
  of the state’s crops are in very good shape and expected to yield very well
• Canada’s
  Prairies will remain in drought for the next couple of weeks even though there will be a few showers infrequently
• Ontario
  and Quebec are expecting more frequent rain late this week through much of next week resulting in harvest delays and possibly some concern over crop quality
• West-central
  Africa rainfall will occur periodically enough to support coffee, cocoa, sugarcane, cotton, rice and other crops during the next couple of weeks
• There
  is some evidence of a southward shift in seasonal rainfall which should help to support maturing cotton in the north
• East-central
  Africa rainfall will be sufficient to support coffee and cocoa as well as a few other crops
• Mexico
  rainfall will be greatest in the south beginning during mid-week this week and lasting into the weekend
• Much
  of this will come from the remnants of tropical storm Julia
• Central
  and northern Mexico rainfall will be more restricted
• Central
  America rainfall will continue frequent and abundant through Wednesday because of tropical Storm Julia
• Flooding
  is expected in portions of northwestern Nicaragua, western Honduras, El Salvador and Guatemala
  
• Drier
  weather is expected after mid-week
• North
  Africa showers and thunderstorms will continue to improve topsoil moisture for better planting conditions later this month and especially in November.
  
• Rain
  over the coming week could range from 0.30 to 1.00 inch of moisture with a few 1.50 inches
  
• Today’s
  Southern Oscillation Index was +20.29 and it will move erratically over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

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:

• US
  CPI
• 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

 

 

CBOT
Current Daily Price Limit

https://www.cmegroup.com/trading/price-limits.html

 

Macro

Eastward
Gas Flows Resume Via Yamal-Europe Pipeline – RTRS Citing Gascade Data

Fed’s
Evans: Biggest Challenge Facing Fed Is Inflation

Fed’s
Evans: JOLTS Data Goes In ‘The Right Direction’, But Job Vacancies Remain High

Fed’s
Evans: Demand For Goods Has Been ‘Ferocious And Has Persisted’

Fed’s
Evans: Need To See Inflation Coming Down, Has Been Much More Persistent Than Fed Thought It Would Be

–
Says There Isn’t Much Difference In Policy Paths Being Laid Out

Fed’s
Evans: The Important Thing Is Getting To An Appropriately Restrictive Rate And See How The Economy Evolves

Fed’s
Evans: FOMC Is Very Clear In How It Is ‘Clustered’ Around A Rate In Range Of 4.5% Next Year

 

Corn

·        
Corn futures were higher on Black Sea shipping uncertainties after Ukraine/Russia war efforts escalated over the weekend. December corn reached above $7.00 per bushel, something not seen since June 22, 2022, for that contract.
Prices ended up well off highs but were very strong. The opening of the Miss. River over the weekend, higher USD, and soybeans selling off from their session highs limited gains.

·        
RBOB traded lower after rising sharply last week. Two refineries, one in California and Ohio were offline last week, for maintenance.

·        
A few outside related reports and decisions will be released this week that could influence agriculture commodities. The largest could be the US CPI report due out on Thursday. After the US jobs report last week, most analysts
expect the feds to increase interest rates by 75 points in November. The CPI report this week is not expected to change the Feds mentality to raise rates over the short term.

·        
Midwest river logistical problems may increase this week with little rain in the forecast for the heart of the US, affecting late October and November barge shipments to the Gulf.
Logjams
may ease after some points of the Miss. River were opened on Sunday but will take time for about 2,000 barges to clear.
It
will be important to monitor grain inspections over the next 4-6 weeks. We
heard two Miss R. locations for loading are closed. USDA is due out to report inspections Tuesday morning. Note they were good last week in part to supply that already reached the Gulf prior to the low water drafts.

·        
Over the weekend freezing temperatures ended the summer growing season for several crop areas in the northern Midwest. This is not uncommon.

·        
China set import quotas for corn at 7.2 MMT for 2023 and wheat at 9.636 MMT. The corn import quota could be at the low end for total imports, depending on China production, which is still an unknown. Harvesting progress in China,
from what we hear, is moving along.

·        
China will release additional pork stocks from reserves this week.

·        
US corn harvesting last 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.

 

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 in wide range. Perhaps the Black Sea situation has a less impact on the oilseed than grains but can’t forget about Ukraine sunflower and sunflower oil export disruptions. A higher USD and lower energy
markets pressuring soybean oil were negative for soybeans. US Gulf soybean meal basis remains firm and earlier talk of China shopping around for SA meal, which is unusual, supported the high protein CBOT market.

·        
Miss. River logjams may ease after some points of the river were opened on Sunday. One was reopened near Memphis, Tennessee, and another near Stack Island, Mississippi.

·        
ITS reported October 1-10 Malaysian palm oil shipments at 350,767 tons, down 17.3% from 423,912 tons previous period last month.

·        
China was back from holiday. Hog futures traded at a record high (tight supplies), up 5.3%. Soybeans were down 1.2% (harvest), meal 2.3% higher, soybean oil 4.0 percent higher (following CBOT) and palm oil 5.4% higher.

·        
Tuesday will be a busy day with Malaysia back from holiday, USDA inspections and USDA crop progress. Also look for positioning ahead of the USDA report. Trade estimates for global soybean stocks widely range.

·        
AgRural: Brazil soybean plantings 9.6% versus 10.1% last year. With area expanding, we see this as a good start.

 

Export
Developments

·        
Tunisia seeks 9,000 tons of soybean oil and/or rapeseed oil on October 11 fir November 21-December 5 shipment.

 

 

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 sharply higher on Black Sea shipping concerns after several Ukraine cities were attacked over the weekend. During the session December Chicago wheat hit its highest level since July 11.

·        
Paris December wheat was up an impressive 16.50 euros at 364.50 per ton, highest contract level since June. It gapped higher from Friday’s close, so we caution a fill sometime this week.

·        
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 saw 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. 

·        
Argentina will dry down this week after seeing light rain over the weekend.

 

Export
Developments.

·        
Algeria seeks at least 50,000 tons of soft milling wheat on October 11 for November shipment, earlier if from SA or Australia. 

·        
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.

 

Russia harvest progress

 

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