FI Evening Grain Comments 10/13/22

PDF Attached

 

PDF
includes updated US corn balance sheet.

 

Private
exporters reported the following sales activity:

-264,000
metric tons of soybeans for delivery to China during the 2022/2023 marketing year

-242,000
metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year

 

The
US CPI (negative sentiment) and macro headlines (ECB) dominated fund flows today. The USD was higher early this morning post CPI report, sending commodities lower until the European Central Bank said they may not be as aggressive with increasing rates, which
sent the USD sharply lower. The massive fluctuation in the USD from higher to lower created a wide trading range for major US equities and commodities. Before the majority of commodities rallied, wheat found strength from a Reuters exclusive story. The Russia
Geneva U.N. ambassador warned Moscow submitted concerns to the United Nations over the Black Sea safe passage agreement and may not renew the deal next month unless  demands are met.

 

 

USD-Daily

 

Dow
– Daily

 

 

There
were no major changes to the US weather forecast. Brazil is unchanged and Argentina turned slightly unfavorable. The Midwest will see light rain across the northeastern and central areas today. Parts of the southern Great Plains will see rain to return to
OK and  TX late this weekend. Brazil will see additional rain while Argentina will be dry over the next week.

 

Weather

 

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER OF THE DAY

• Rain
  in the interior southeastern U.S. Wednesday and early today has improved topsoil moisture in many areas from the northern Delta to Georgia, but runoff will probably not make much difference to the lower Mississippi River water levels
• Follow
  up rain is expected this weekend and again later next week in the Delta and that could temporarily improve river and stream flow on the navigable rivers, but the change is unlikely to be sustainable and restricted barge traffic may resume a short time later
  after each rain event
• Light
  rain in the U.S. Midwest Wednesday was too light for a change in river or stream flow and low water levels will continue
  
• Drought
  will continue in U.S. hard red winter wheat areas through the next two weeks
  
• Drought
  will continue in Canada’s Prairies for the next two weeks, although after Oct. 22 there may a temporary boost in topsoil moisture for a part of the dry region
• Summer
  crop harvest progress is advancing well except in Manitoba where cool temperatures and periods of rain, drizzle and some wet snow are expected into the weekend
• Drought
  will continue in the northwestern United States, but showers will begin after Oct. 21 that will offer a little moisture
• California
  drought will change little over the next two weeks
• Rain
  in the U.S. southern Plains late this weekend into next week will be welcome and good for improved grazing conditions and better winter wheat emergence and establishment, but the moisture will slow cotton maturation and harvesting
  
• Some
  reduced cotton fiber quality is possible in the wetter areas of West Texas, although any decline in quality will be temporary
• Argentina
  drought will continue into next week without any change
• Some
  computer weather forecast models have been suggesting a better change for showers starting in the second half of next week and lasting into the following weekend
• Any
  rain will be welcome, but the nation needs a general soaking to restore favorable soil moisture and improve long term crop development potential
• Brazil
  wheat harvest as of October 8 was 25.5% complete with Parana 43% harvested, Sao Paulo 55% harvested, Santa Catarina 1.7% harvested, and Rio Grande do Sul has not begun harvesting yet.
  
• Harvesting
  was 34.7% complete a year ago
• Some
  winter crop quality declines have occurred because of rainy weather recently and this trend may continue for a while
• Brazil
  milo planting was 27% done on October 8, soybean planting was 11% done compared to 12.4% completed a year ago and up from 4.6% in the week ending Oct. 2.
  
• Brazil
  rice planting was 14% done Oct. 8 down from 19% done in 2021
• Dry
  bean planting was 17.7% done as well
• Brazil
  weather remains favorably wet from center south into western parts of center west with little change likely over the next ten days
• Rain
  is needed in eastern Mato Grosso, Goias and some Minas Gerais locations, but it is still early enough to minimize these concerns for a while longer
• Australia
  rain Wednesday was mostly confined to New South Wales and Victoria and today it will continue in most of the same areas
• A
  break in the wet pattern is expected Friday through Monday, but then more rain is expected Tuesday through the following weekend in all of eastern Australia
• The
  wet weather is threatening lower protein levels and could greatly harm grain and oilseed quality if it stays wet in November and December when the bulk of harvesting occurs
• Western
  Australia winter crop conditions are nearly ideal with little change likely
• South
  Africa will receive some welcome rain in the coming week to ten days that should start to boost topsoil moisture for better spring and summer crop planting, germination and emergence conditions
• Eastern
  China crop areas will receive very little rain over the next ten days
• Drought
  will prevail in the southeastern corner of the nation for an extended period of time
• Planting
  of winter wheat and rapeseed as well as the harvest of summer crops will continue to advance well
• Xinjiang,
  China harvest weather should be favorable for most of the coming week with limited rainfall and seasonable temperatures
• India’s
  monsoon is withdrawing from central parts of the nation in this coming week
• Rain
  will fall frequently in southern and eastern crop areas slowing some harvest progress
• Winter
  crop planting should begin soon if it has not already started in central and northern parts of the nation
• Western
  Europe rainfall in the next ten days will bring moisture to parts of France, the U.K. and Germany
• Drying
  is expected to continue in Spain, Portugal and many other areas in central and eastern Europe
• Winter
  crops in the western CIS and eastern Europe are suspected of emerging and establishing well
  
• A
  good mix of rain and sunshine is expected over the next couple of weeks in Russia and Ukraine maintaining a good environment for winter crop establishment
• Lower
  Danube River Basin remains drought stricken and  needs significant rain
• Dryness
  is also continuing in parts of France, Germany and the Iberian Peninsula
• Some
  relief from dryness is likely in France and Germany, but not Spain, Portugal, southern France or the lower Danuta River Basin
  
• Ontario
  and Quebec, Canada will be a little wet and cool for a while in this coming week slowing harvest progress
• North
  Africa showers are still occurring routinely to help improve topsoil moisture for the coming winter crop planting season
• Greater
  rain will be needed though
• A
  multi-year drought remains in Morocco
• A
  tropical disturbance in the South China Sea could become a tropical depression or tropical storm as it moves toward Vietnam
• Landfall
  is now expected along the central Vietnam coast near Hue
• Rain
  from the storm may impact a part of the Central Highlands coffee areas, but no damaging conditions are likely
• Greatest
  rainfall will occur along the central Vietnam Coast from Da Nang to Quang Tri where some significant flooding may occur in the next few days
• Rainfall
  of 6.00 to 15.00 inches will result
• Tropical
  Depression 21W formed near the Mariana Islands overnight and it will intensify to a tropical storm and possibly to a typhoon over the next few days
• The
  storm will move between Luzon Island, Philippines and Taiwan Sunday into Monday before moving toward the central Vietnam coast next week
• Tropical
  disturbance expected in the Andaman Sea next week may impact eastern India after Oct. 23
• Tropical
  Storm Karl was located 250 miles north northeast of Veracruz, Mexico at 22.1 north latitude, 94.1west longitude moving southeasterly at 2 mph and producing maximum sustained wind speeds of 50 mph
• Tropical
  storm force wind was occurring out 90 miles from the storm center
• Landfall
  is expected in southern Veracruz Saturday
• Rainfall
  of 3.00 to 7.00 inches will be possible near the center of the storm where landfall occurs
• Local
  amounts may come close to 12.00 inches
• 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
  
• 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 and east through the next ten days
• Some
  of the rain in the east will come from Tropical Storm Karl which is expected to move into southern Veracruz Saturday
• Western
  and northern Mexico rainfall will be more restricted
• Central
  America rainfall will become lighter and more sporadic in the north for a while, but increasing rainfall is expected from Panama through Costa Rica
• Today’s
  Southern Oscillation Index was +20.40 and it will move erratically over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Thursday,
Oct. 13:

• US
  CPI
• EIA
  weekly US ethanol inventories, production, 11:00am
• 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:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am

• 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

Monday,
Oct. 17:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• US
  crop conditions and harvesting for corn, soybeans and cotton, winter wheat planting, 4pm
• Argus
  Fertilizer Europe conference, Madrid, day 1

Tuesday,
Oct. 18:

• China’s
  second batch of September trade data, including corn, pork and wheat imports
• China’s
  3Q pork output, hog inventory
• Oils
  & Fats International Congress, Kuala Lumpur, day 1
• Argus
  Fertilizer Europe conference, Madrid, day 2
• New
  Zealand global dairy trade auction
• EU
  weekly grain, oilseed import and export data

Wednesday,
Oct. 19:

• EIA
  weekly US ethanol inventories, production, 10:30am
• Oils
  & Fats International Congress, Kuala Lumpur, day 2
• Argus
  Fertilizer Europe conference, Madrid, day 3

Thursday,
Oct. 20:

• China’s
  third batch of September trade data, including soybean, corn and pork imports by country
• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• International
  Grains Council report
• Malaysia’s
  Oct. 1-20 palm oil export data
• USDA
  total milk, red meat production, 3pm

Friday,
Oct. 21:

• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various US futures and options, 3:30pm
• Asia
  3Q 2022 cocoa grind data
• FranceAgriMer
  weekly update on crop conditions
• US
  cattle on feed, 3pm

Source:
Bloomberg and FI

 

 

Macros

102
Counterparties Take $2.244 Tln At Fed Reverse Repo Op (prev $2.247 Tln, 103 Bids)

US
CPI (M/M) Sep: 0.4% (est 0.2%; prev 0.1%)

US
CPI (Y/Y) Sep: 0.6% (est 8.1%; prev 8.3%)

US
CPI Core (M/M) Sep: 8.2% (est 0.2%; prev 0.6%)

US
CPI Core (Y/Y) Sep: 6.6% (est 6.5%; prev 6.3%)

US
Real Avg Hourly Earnings (Y/Y) Sep: -3.0% (prev -2.8%)

US
Real Avg Weekly Earnings (Y/Y) Sep: -3.8% (prev -3.4%)

US
Initial Jobless Claims Oct 8: 228K (est 225K; prev 219K)

US
Continuing Claims Oct 1: 1368K (est 1365K; prevR 1365K)

 

Corn

·        
Corn futures started lower from broad based commodity selling after a negative US CPI report was released early morning, but after the USD swung lower and wheat prices gained, corn appreciated and ended 3.50-5.0 cents higher.
US and global inflation concerns were in play until the European Central Bank said they may not be as aggressive with increasing rates, sending the USD sharply lower. The massive fluctuation in the USD from higher to lower created a wide trading range for
major US equities and commodities.

·        
Funds bought an estimated net 3,000 corn contracts.

·        
Short term resistance for December corn is seen at $7.2050, then $7.2575.

·        
Attached is our US corn balance. We left demand unchanged and increased the 2022 US yield to 171.4 from 170.1 previous. USDA @ 171.9.

·        
China might import Brazil corn as early as December, according to a Bloomberg article, in effort to replace.

·        
Parts of the Ohio River are closed for shipping. Some barges are grounded. Barge freight levels for Nov/Dec are tuning back up.

 

The
US weekly EIA ethanol data was viewed neutral for US corn futures and neutral for the US ethanol cash market. Weekly US ethanol production increased 43,000 barrels from the previous week to 932 thousand barrels per day (bbl), still low for this time of year,
but has improved over the past two weeks. Ethanol stocks increased 178,000 barrels to 31.863 million. For comparison, a Bloomberg poll looked for weekly US ethanol production to be up 35,000 thousand and stocks up 16,000 barrels to 21.701 million. US ethanol
production of 932 thousand barrels per day is about 9.7% below from about the same time a year ago. For Over the past 4 weeks, production changes averaged down 8,000 and stock changes down 245,000 barrels. Early September 2022 to date (5 weeks) US ethanol
production is running 5.2% below the same period a year ago and 7.2% below pre pandemic levels (September 2019). Padd2 production was 881,000 barrels, up 41,000 from a week earlier. Padd1 was up 7,000 and Padd3 down 7,000. There were no ethanol imports reported
this week. Weekly ending stocks of total gasoline were up 2.02 million barrels to 209.5 million barrels and demand fell 1.2 million to 8.276 million. Average gasoline demand for the past 4 weeks is running 4.1% below year ago level and 5.7 percent below pre
pandemic levels for the comparable period in 2019.

 

 

 

 

Landmark
emissions-reduction project in Louisiana announced; CF Industries, ExxonMobil, EnLink Midstream to collaborate

https://corporate.exxonmobil.com/news/newsroom/news-releases/2022/1012_landmark-emissions-reduction-project-in-louisiana-announced

 

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

·        
The soybean complex traded two-sided, ending 0.25 lower for the November contract, 0.50 higher for January, and 1.50 cents higher for the March position. Soybean meal fell $2.00-3.30/short ton lower. Soybean oil rebounded and
closed 73-84 points higher, following strength in WTI crude oil.

·        
The bear spreading in soybeans was  due in part to slow US export pace from competition from SA. USDA export sales will be released Friday morning. Trade estimates are above.

·        
Funds bought an estimated net 1,000 soybeans, were float in meal and bought 3,000 soybean oil.

·        
USDA reported additional sales announcements, bringing sales this week to a combined 1.032 million tons or 37.9 million bushels, 790,000 for China and 242,000 tons for unknown. We look for China to buy more soybeans by the end
of the week. China purchases during August and September were slow. We heard they are back in for US PNW soybeans.

·        
Yesterday USDA lowered US crop year soybean exports by 40 million bushels to 2.045 billion. We are at 2.000 billion based on a slow start to the export season and large SA crop prospects that could hit the export market as early
as FH February from a decent start to Brazil plantings. 

·        
Argentina producers sold 70 percent of their 2021-22 crop (44MMT), according to the AgMin, above 68.4% year earlier (46MMT). September 29-October 5 sales were 375,000 tons, below 1.7 million tons sold week earlier.

·        
NOPA is due out on Monday the 17^th (15^th falls on a weekend) and we look for the crush rate during the month of September to decline slightly on a daily adjusted basis from August to 159.9 million bushels,
up from 153.8 million year earlier. Soybeans were hard to source FH September across parts of the ECB, so that figure could end up on the high side of expectations when trade estimates are released.

·        
India September palm oil imports increased 18% from August to 1.17 million tons and soybean oil was up 7% to 261,815 tons. All edible vegetable oil imports rose 17% to 1.64 million tons, according to SEA.

 

Export
Developments

·        
China plans to auction off 500,000 tons of soybeans from reserves on October 14, consisting of the 2019, 2020, and 2021 crop years.

·        
Under the 24-hour announcement system, USDA reported

-264,000
metric tons of soybeans for delivery to China during the 2022/2023 marketing year, and

-242,000
metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year

 

 

 

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 futures traded two-sided, ending 11.25-12.25 cents higher for the from three months for the three US markets  after Russia threatened not to renew the Black Sea safe passage agreement set to expire November. US wheat
prices started the day lower on follow through bearish sentiment from the USDA report and widespread commodity selling post US CPI report.

·        
Funds bought an estimated net 5,000 SRW wheat contracts.

·        
Paris December wheat was up 2.25 euros at 356.25 per ton.

·        
French strikes are causing fuel shortages that are starting to impact the agriculture and shipping industries.

·        
Before the majority of commodities rallied, wheat found strength from the Reuters exclusive with a Russia official. The Russia Geneva U.N. ambassador warned Moscow submitted concerns to the United Nations over the Black Sea safe
passage agreement and may not renew the deal next month unless  demands are met. Russia has been hit hard with western sanctions that slowed trade flows, including grain and fertilizers.

·        
Despite the lower trade in the USD today, USDA’s large cut to US wheat exports yesterday to a multiple decade marketing year low was a reminder that the rise in the USD over the past year to a 20-year high could hinder US shipments.

·        
The BA grains exchange lowered their Argentina 2022-23 wheat crop production from 17.5 million tons to 16.5 million tons on Thursday. Last year it was record 23 million tons. Yesterday the Argentina Rosario exchange lowered Argentina
wheat production to 16 million tons from 16.5 million previous. USDA official is at 17.5 million tons after revising it down 1.5 yesterday. Meanwhile, late today government officials where to meet with wheat millers and exporters to discuss potential shortages
for the domestic market.

·        
Argentina’s weather outlook this morning was unchanged and net drying is expected over the next week, further stressing the wheat crop. We think USDA’s estimate  is about 1-1.5 million tons too high.

 

Export
Developments.

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

·        
Iraq cancelled their import tender for 50,000 tons of wheat. They were in earlier this month.

·        
The Philippines are in for 165,000 tons of feed wheat on October 13 for Jan-Mar shipment.

·        
Japan bought 94,140 tons of food wheat from the US, Canada and Australia for arrival by January 31.

·        
Jordan opened another import tender for 120,000 tons of feed barley, set to close October 19.

·        
Japan in a SBS import tender seeks 70,000 tons of feed wheat and 40,000 tons of barley on October 19 for arrival by February 24.

·        
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