FI Evening Grain Comments 10/18/22

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Spreading
was active in soybean oil. Other than that, US harvest pressure, softening US river barge freight rates, and optimistic talks between Russian and UN officials over the safe passage agreement were negative US agriculture futures. La Nina is still a threat.

 

 

Weather

 

World
Weather, INC.

MOST
IMPORTANT WEATHER OF THE DAY

• Argentina
  will get three waves of rain potentially over the next ten days
• Each
  will produce light rainfall, but the coverage will eventually become widespread and short term improvements in wheat development and corn and sunseed planting conditions will occur at least for a little while
• Rain
  totals by the end of next week will vary from 0.50 to 1.50 inches with a few areas to get more than 2.00 inches
  
• Is
  it a trend change?
• Most
  likely not….Atmospheric indicators suggest the environment has become less hostile to convection, but the big rains that are needed are unlikely for a while
• La
  Nina is still very near its peak intensity and should hold here for a while
• A
  shift in the driest weather is expected in the next few weeks allowing more rain to eventually fall in western Argentina while eastern areas and Uruguay along with far southern Brazil trend drier.
  
• Brazil
  weather will be very well balanced over the next couple of weeks with alternating periods of rain and sunshine expected for all production areas
• The
  season’s first rain of significance will reach Tocantins, Bahia, northern Minas Gerais and neighboring areas this weekend and next week
• The
  moisture is needed to improve planting conditions for summer crops and induce better coffee and sugarcane conditions
• U.S.
  Pacific  Northwest and northwestern U.S. Plains will have opportunity for rain and/or snow this weekend and infrequently next week
• The
  moisture boost may benefit some winter crop areas, but the Yakima Valley and portions of central Oregon may not get the kind of rain that is needed to support crops
• Follow
  up rain will be a must
• Canada’s
  Prairies will see some rain and snow this weekend and early next week that may help improve topsoil moisture, but only in northern crop areas. The driest areas near the U.S. border may not be relieved
• This
  moisture is needed for use in the spring of 2023
• Some
  areas in southwestern Canada’s Prairies have been in drought for six years
• U.S.
  Midwest weather will be more active next week, but this week’s weather is unlikely to be much different
  
• Good
  harvest weather is prevailing with little change likely
• U.S.
  Delta may see greater rainfall next week that may improve wheat planting conditions
• Some
  increase in runoff is possible, but river flow changes will small for a while
• More
  rain will be needed
• U.S.
  hard red winter wheat production areas will not get a general soaking of rain anytime soon leaving some crop areas with an environment that is not very conducive for ideal establishment
• Quebec
  and Ontario, Canada crop areas are getting rain frequently enough to slow farming activity and drier weather is needed to protect unharvested crop quality and to expedite fieldwork
  
• Bitter
  cold temperatures in the northwestern Corn Belt this morning had a low impact on crops, but it was a shocker to some of the livestock in the region
• Extreme
  lows fell to +9 in northwestern Iowa  and were in the teens and 20s throughout a huge part of the region
• Some
  cold had already impacted the region, but this was certainly the coldest morning of the season
• Freezes
  and frost will occur in the lower Midwest, Delta and Tennessee River Basin tonight and Thursday night
• The
  growing season will end and for many areas this will be an earlier than usual occurrence of frost and freezes
• Some
  crop quality declines are expected because of the freeze occurring in areas where some crops were not fully mature
• The
  event should have low impact on production, but a quality decline is anticipated for immature soybeans, and sorghum
• Western
  and northern Europe will receive rain frequently in the next ten days
• The
  moisture will bolster topsoil moisture and improve runoff in areas that have continued to deal with low water reservoir and river flows
• The
  precipitation will be most welcome in northern France, but Germany, the U.K, and northwestern Spain will benefit as well
• Southeastern
  Europe still needs moisture with the lower Danube River Basin having the biggest need in unirrigated areas
• Too
  much moisture during the autumn in some western Russia locations has left some winter crop areas unplanted, but the bulk of planting went well.
  
• It
  is too late for planting now, but weather conditions will remain favorable for previously planted crops to establish well
• India’s
  most significant weather event in the coming ten days will be a possible tropical cyclone that should evolve in the Bay of Bengal late this week and during the weekend
• Landfall
  is expected along the upper India coast next where heavy rain and snow wind speeds will be possible
• Bangladesh
  may be impacted as well
• In
  the meantime, routinely occurring rain is expected in southern India
• China’s
  upper Yangtze River Basin will receive rain next week
• Sichuan,
  Hubei and northern Hunan will be impacted by 0.30 to 1.00 inch of moisture and few amounts to 1.50 inches
• It
  will not be a “fix all” for drought in the region, but the moisture will be good for future rapeseed planting
• Much
  more rain is needed in the basin especially south of the Yangtze River where drought remains serious
• Xinjiang,
  China harvest weather should be favorable for most of the coming week with limited rainfall and seasonable temperatures
• Seasonably
  dry weather will continue in China’s North China Plain and Yellow River Basin
• Typhoon
  Nesat was still in the South China Sea this morning and it will be steadily weakening over the next few days.
  
• The
  storm will pass south of Hainan, China and its impact on the island is not likely to be more than rain and some breezy conditions.
  
• Some
  rain from the storm will be sheared off to the north reaching western Guangdong and southern Guangxi, China
• Nesat
  will eventually reach northern Vietnam, but it will be an insignificant event when it arrives with most of its convection and strong wind dissipated prior to landfall
• Eastern
  Australia rain will resume over the next few days and continue frequently through next week
  
• Rain
  will fall frequently and significantly across some key crop areas in eastern New South Wales, Queensland and Victoria during the next ten days
• Moisture
  totals for all three states by Saturday will vary from 0.75 to 2.00 inches with local totals of 2.00 to 4.00 inches
• Wettest
  in Queensland and northern New South Wales
• Flooding
  will resume and/or worsen in New South Wales with some expansion and development of it in Queensland
• Lighter
  waves of rain will continue periodically through Oct. 31 maintaining a wet bias, but no new flooding is expected
  
• Western
  Australia is still unlikely to receive much rain through the next ten days, but some showers will occur in portions of the south with rainfall to 0.60 inch
• Greater
  rain may impact the far south during the Oct. 27-31 period
• Thailand,
  Laos and parts of Vietnam will experience limited rainfall over the next ten days
• Drying
  will be welcome after recent stormy weather
• Cambodia
  and southern Vietnam (including portions of the Central Highlands) will receive moderate to heavy rainfall later this week and into next week
  
• Indonesia,
  Malaysia and Philippines will experience frequent rain, but not much excessive rain
• Local
  flooding will still be possible, but no widespread serious problems are anticipated
• South
  Africa rainfall is expected to improve over the next ten days bringing needed moisture for soybean, corn, sunseed, cotton, rice and peanut planting which normally begins in the second half of this month.
  
• La
  Nina should help the summer weather be plenty moist – at least into December
• There
  is some potential for a drier finish to the growing season
• North
  Africa will be dry over the next ten days
• Recent
  rain improved topsoil moisture in several areas, but much more rain is needed
  
• A
  multi-year drought remains in Morocco
• The
  greatest rainfall in recent weeks has been in northern Algeria with central parts of the region experiencing adequate topsoil moisture for the first time since last winter.
• West-central
  Africa rainfall will occur periodically enough to support coffee, cocoa, sugarcane, rice and other crops during the next couple of weeks
• The
  precipitation will be greatest in the south with Cameroon getting some heavy rainfall
• There
  is a southward shift in seasonal rainfall occurring which should be helping 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
• Southern
  Ethiopia and Uganda will be wettest
• Limited
  rainfall is expected in Tanzania
• Mexico
  rainfall will be greatest in the south and east through the next ten days
• Western
  and northern Mexico rainfall will be more restricted
• Central
  America rainfall will continue periodically maintaining abundant soil moisture
• Today’s
  Southern Oscillation Index was +20.67 and it will move erratically lower over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

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

99
Counterparties Take $2.227 Tln At Fed Reverse Repo Op (prev $2.172 Tln, 98 Bids)

 

Corn

·        
Corn futures traded lower after USDA reported a favorable US harvest progress of 45 percent, a 14 point increase from the previous week.  Not much news was released.

·        
The Midwest is expected to see rain later this week, improving river drafts. Some river points, one in KY, closed this week. Funds were estimated net sellers of 2,000 corn contracts.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 30,000 thousand to 962k (940-986 range) from the previous week and stocks up 85,000 barrels to 21.948 million.

 

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

·        
Higher prices tend to correct higher prices.

·        
Funds were estimated sellers of 4,000 soybeans, sellers of 3,000 meal and net buyers of 4,000 soybean oil.

·        
Favorable US weather is advancing the corn and soybean harvest and we see this lasting well into the weekend for the majority of the Midwest.

·        
Soybean oil spreads were very active with talk of rising demand for the use of soybean oil for biofuel. EIA is expected to report strong SBO use for biofuel when they close out the old crop reporting season.

·        
Soybean meal was following weakness in soybeans after USDA reported 63 percent of the US soybean crop harvested and nearly all of the soybean crop is dropping leaves. We caution the trade over yields bias ECB and look for a national
decline for the November report. Field reports widely vary. WBC is in better shape.

·        
Safras: Brazil plantings for soybeans 19.1% as of October 14 vs. 9.7% week earlier and 21% year ago.

·        
SGS reported Malaysian palm oil exports for the October 1-15 period at 640,119 tons, a 0.9% decrease from 646,070 tons Sep 1-15.

 

Export
Developments

• None
  reported

 

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 was mostly lower (MN higher) from optimistic views that Russia will extend the safe passage agreement. Outside markets appear to have little influence on US wheat futures. News is light other than routine export business
developments.

·        
Funds sold an estimated net 4,000 Chicago wheat contracts.

·        
Paris December wheat was off 11.75 euros at 334.75 per ton. (that’s a large 3.4% decrease to a one month low).

 

Export Developments.

·        
Jordan seeks 120,000 tons of wheat on October 25 after buying 60,000 tons this week at $374/ton c&f for FH March shipment. 

·        
Turkey seeks 495,000 tons of wheat on October 21 for November through FH December shipment.

·        
Japan seeks 97,482 tons of food wheat from the US, Canada, and Australia later this week for arrival by Jan 31.

·        
Iraq is in for 50,000 tons of wheat on October 24, valid until October 27.

·        
South Korean millers bought 77,000 tons of wheat at various prices depending on quality for Dec 16-Jan 15, 2023, shipment.

·        
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 $8.15-$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