FI Evening Grain Comments 10/19/22

PDF Attached

 

The
USD was strong today. Corn and soybeans were under pressure, at least at one point during the session, from US harvest pressure. Soybeans ended higher from a higher trade in soybean oil. Soybean oil gained on meal and oil share basis the December is highest
since June. Losses in corn were trimmed on late fund buying. Wheat traded tow-sided, ending lower. Russia plans to have a 25.5-million-ton grain export quota for February 15-June 30. This is common for Russia to impose a late season quota, and 25.5 million
tons if a large quantity. Logistical problems along the Mississippi River continue to hamper grain shipments. Argentina has a chance for erratic rains over the next week which should improve planting progress. Several wheat and barley tender announcements
were posted overnight.

 

 

Weather

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER OF THE DAY

• Australia’s
  rainy weather will continue over the next ten days finishing out the month with too much moisture and maintaining a big concern over grain and oilseed quality
  
• Wheat,
  barley and canola have already been negatively impacted in New South Wales and to a lesser degree in Queensland and Victoria
• Summer
  sorghum and cotton planting have been slow to evolve and field working delays will continue
• Cool
  temperatures and rainfall are contributing to the planting delay
• Western
  Australia crop weather remains nearly ideal for wheat, barley and canola development
• Argentina’s
  rainfall this week and into the weekend will be restricted, but all of it will be welcome
• Greater
  rain is expected next week with two rainfall events, one during the early to middle part of the week and another late in the week and into the following weekend
• Sufficient
  rain is expected to bolster soil moisture for improved winter crop development in the more immature crops in the south and to bolster soil moisture for better corn and sunseed planting, emergence and establishment
• Brazil’s
  weather will be well balanced for crop development and fieldwork over the next ten days
• Some
  much needed and welcome rain will fall in the northeast, including the region from Goias, eastern Mato Grosso and northern Minas Gerais into Tocantins and Bahia
  
• A
  few showers should also reach Piaui
• U.S.
  Pacific  Northwest will have opportunity for rain and/or snow this weekend and infrequently during the following 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
• Montana
  will receive some rain and snow briefly Friday into the weekend
• The
  moisture will be welcome for improved winter crop emergence and establishment, although more will be needed to establish a good stand of wheat
• Eastern
  Canada’s Prairies will see some rain and snow late this weekend and early next week that may help improve topsoil moisture
• Manitoba,
  far southeastern Saskatchewan, Minnesota and North Dakota will be most impacted.
  
• Some
  disruption to late season fieldwork is expected
• This
  moisture is needed for use in the spring of 2023
• Other
  areas in the Prairies are not likely to receive much moisture, although some areas in southwestern and far southern Alberta will get a little rain and snow briefly Friday into the weekend
• U.S.
  Midwest weather will be more active next week as a frontal system moves across the region
• Rain
  is expected to be light, though, and not much of a boost in river and stream flow is expected
• Temporary
  disruptions to harvesting are expected
• Good
  harvest progress and general farming activity is expected until then
• U.S.
  Delta may also see greater rainfall next week that may improve wheat planting conditions
• Some
  increase in runoff is possible, but river flow changes will be 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
• Some
  rain is expected in the southeast, but it should be brief and light warranting follow up moisture
• Quebec
  and Ontario, Canada crop areas have received rain frequently enough to slow farming activity and drier weather is needed to protect unharvested crop quality and to expedite fieldwork
  
• Precipitation
  is expected to be a little lighter and less frequent in the coming ten days than that of the past ten days
• Frost
  and freeze conditions occurred this morning deep into the Gulf of Mexico Coast States
• The
  freezes were much earlier than usual from the lower Delta into the interior southeastern states where such conditions do not normally occur until November and sometimes late in November
• Some
  crop quality declines are suspected 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
• The
  cold should help defoliate any cotton that has not been chemically defoliated already
• 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
• The
  bulk of Russia and Ukraine had a good planting season and establishment has gone relatively well
• India,
  Bangladesh and northwestern Myanmar’s most significant weather event in the coming ten days will be a possible tropical cyclone that should evolve in the Bay of Bengal later this week and during the weekend
• Landfall
  is possible farther north today than that suggested Tuesday with Bangladesh and northwestern Myanmar more impacted than India.
  
• 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 of 1.00 to 2.50 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 eastern and central portions of the basin especially south of the Yangtze River where drought remains most 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
• Tropical
  Storm Nesat was still in the South China Sea this morning passing well south of Hainan, China which is helping to minimize the storm’s impact on the island and its rice, and sugarcane
• Some
  rain from the storm will be sheared off to the north reaching Hainan and northern Vietnam over the next few days
• Flooding
  is expected in Hainan
• Nesat
  will eventually reach Vietnam to the north of Hue and near the Quang Tri area late Thursday of early Friday, but it will be an insignificant event when it arrives with most of its convection and strong wind dissipated prior to landfall
• Thailand
  and northern Laos will experience limited rainfall over the next ten days
• Rain
  will fall in Cambodia, central and southern Laos and much of Vietnam during the next ten days with some moderate to locally heavy rainfall possible
• 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
• A
  developing tropical cyclone along the lower west coast will become a tropical storm in the next day or two and it will follow the coast of Guerrero, Michoacan and Jalisco before moving inland over southern Sinaloa and Nayarit
• Some
  very heavy rain will fall near the point of landfall with flooding expected along with some high wind speeds
• Central
  America rainfall will continue periodically maintaining abundant soil moisture
• Today’s
  Southern Oscillation Index was +20.19 and it will move lower over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

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

US
MBA Mortgage Applications Oct 14: -4.5% (prev -2.0%)

US
MBA 30-Yr Mortgage Rate Oct 14: 6.94% (prev 6.81%)

US
Housing Starts Sep: 1439K (est 1461K; prev 1575K)

US
Housing Starts (M/M) Sep: -8.1% (est -7.2%; prev 12.2%)

US
Building Permits Sep: 1564K (est 1530K; prevR 1542K)

US
Building Permits (M/M) Sep: 1.4% (est -0.8%; prevR -8.5%)

Canadian
CPI (Y/Y) Sep: 6.9% (est 6.7%; prev 7.0%)

Canadian
CPI NSA (M/M) Sep: 0.1% (est -0.1%; prev -0.3%)

Canadian
CPI Core – Common (Y/Y) Sep: 6.0% (est 5.6%; prevR 6.0%)

Canadian
CPI Core – Median (Y/Y) Sep: 4.7% (est 4.8%; prevR 4.7%)

Canadian
CPI Core – Trim (Y/Y) Sep: 5.2% (est 5.1%; prev 5.2%)

 

Corn

·        
Corn futures
traded lower from US harvest pressure, improving SA weather and Mississippi River logistical problems. Losses were trimmed from higher soybeans. US ethanol production was supportive. US export developments have been very light over the past week. We look for
USDA export sales to be slow when updated Thursday. Our range is 250-550k, versus 200,200 tons for 2022-23 previous week.

·        
Funds sold an estimated net 4,000 corn contracts.

·        
River levels near Memphis hit a record low and part of the river shut near Hickman, Kentucky.

·        
The Midwest is expected to see rain later this week
bias western areas Sunday. Some northeastern areas will see a wintery mix today. US temperatures will significantly warm up next week bias upper Midwest, ideal for fieldwork progress.

·        
China plans to sell 20,000 tons of pork from reserves on October 21.

·        
The US plans to release additional crude oil, 15 million barrels, from the Strategic Petroleum Reserve as needed.

·        
The weekly USDA Broiler Report showed eggs set in the US up 4 percent and chicks placed up 6 percent. Cumulative placements from the week ending January 8, 2022, through October 15, 2022, for the United States were 7.73 billion.
Cumulative placements were up 1 percent from the same period a year earlier.

 

US
ethanol production was up a large 84,000 barrels to 1.016 million, largest for the week since early August. Traders were looking for a 30,000-barrel increase.  US ethanol stocks decreased 19,000 barrels to 21.844 million. Traders were looking for an 85,000-barrel
increase.  The increase in production is the third largest in our weekly history. For the week ending 3/5/21, production climbed 89,000 barrels and 2/26/21 by 191,000 barrels.  The production is supportive for corn, but production is still lagging last season.
Crop year to date (early Sep through Oct 14) ethanol production is running 5.6% below same period year ago. US gasoline stocks fell 114,000 barrels to 209.4 million and gasoline demand increased 402,000 barrels to 8.678 million.

 

EIA:
US Crude Oil Stocks In SPR Fell To Lowest Level In Since May 1984

 

US
DoE Crude Oil Inventories (W/W) 14-Oct: -1.725M (est +2.500M; prev +9.879M)

–
Distillate: +124K (est -2.000M; prev -4.853M)

–
Cushing: +583K (prev -309K)

–
Gasoline: -114K (est -2.000M; prev +2.022M)

–
Refinery Utilization: -0.4% (est -0.4%; prev -1.4%)

 

 

 

 

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

·        
Soybeans traded two-sided in many contracts, ending higher. Prices were lower earlier from US harvesting pressure but a rally in soybean oil supported soybeans. Cold temperatures are speeding up the harvest. Soybean oil is gained
again on meal. December oil share is at around 46.74%, highest since June. Malaysian palm oil traded near a 7-week high. December soybean oil was up 190 points and December meal down $0.10.

·        
Funds were even for soybeans, even for meal and bought an estimated net 6,000 soybean oil contracts. 

·        
Logistical problems along the Mississippi River continue to hamper grain shipments.  USDA soybean inspections were good last week but we expect that to slow. Water levels at some points at Baton Rouge, LA, are only 5 feet deep.

https://www.cnn.com/2022/10/18/us/mississippi-river-low-water-salt-levee-climate/index.html

·        
US recession concerns were again revisited after the Goldman Sachs CEO warned of it, adding to a growing list by the investment banks.

·        
Argentina will see much needed rain, although erratic, over the next week. Plantings are expected to increase but more rain will be needed to end the drought.

·        
ADM looks for 2022-23 Brazil soybean production at a record 152.4 million tons, a 21 percent increase from the 2021-22 season. USDA is at 152.0 million versus 127.0 for 2021-22.

·        
At least one trade estimate for October China soybean imports amounts to 5 million tons, annualized 60 million tons to put that figure in prospective. China domestic meal prices are strong from tight supplies, but January futures
have sold off a little this week.

 

Source:
Reuters Eikon

 

Export
Developments

• None
  reported

 

 

Updated
10/19/22

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

Soybean
meal – December $375-$430,
January $360-$475

Soybean
oil – December 65.00-75.00,
January wide 60.00-73.00 range

 

Wheat

·        
Wheat started higher this morning from technical buying after hitting a 4-week low yesterday but turned lower led by Chicago from a higher USD. Mixed views over the extension of the Black Sea safe passage agreement and lower corn
weighed on prices.

·        
Funds sold an estimated net 3,000 Chicago wheat contracts. 

·        
The US Great Plains will see net drying through Saturday. NE, northern CO and eastern Kansas will see rain Sunday.

·        
Ukraine’s AgMin noted grain exports during the first few weeks of October have returned back to pew-war levels. 2.13 million tons of grain were exported during October 1-17, compared to 2.18 million tons in the same period in
2021.

·        
SovEcon estimated the 2023 Russia wheat crop at 84.8 million tons, down from a record 100.6 million tons this year. The area is projected lower, at 18.8 million hectares versus 19.5 million for 2022. USDA is at 91 million tons
for 2022.

·        
Russia plans to have a 25.5-million-ton grain export quota for February 15-June 30. This is common for Russia to impose a late season quota, and 25.5 million tons if a large quantity.

·        
Russia bought 32,300 tons of grain for intervention, bringing cumulative purchases to 941,500 tons.

·        
Tunisia Jan-Sep 2022 grain imports are up 45.5% to $1.0 billion USD, in large part to higher wheat prices.

·        
Paris December milling wheat settled up 0.4% at 336.00 euros ($328.54) a ton. The euro was lower, providing some support but a lower trade in Chicago wheat limited gains.

 

Export
Developments.

·        
Egypt’s GASC was in private talks to buy wheat but passed. Lowest offer was $374/ton for Romanian wheat. Russia was $4.00 higher.

·        
Pakistan seeks 500,000 tons of wheat on October 26.

·        
A group of South Korean flour millers bought about 30,000 tons of milling wheat from the US at various prices for Jan 15-Feb 15 shipment.

·        
South Korea’s NOFI group passed on 95,000 tons of feed wheat. Lowest offer was $353.75/ton c&f for April arrival.

·        
South Korea’s NOFI group bought about 30,000 tons of barley at $332.25/ton for arrival around December 20.

·        
Jordan passed on 120,000 tons of barley. They reopened another import tender set to close October 26.

·        
Japan in a SBS import tender saw no offers for feed wheat and barley for arrival by February 24.

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

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

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

·        
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. 

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

 

Rice/Other

·        
Results awaited: 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.

·        
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.

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

 

Updated
10/19/22

Chicago
– December $8.15-$9.00,
March $8.00 to $10.00

KC
– December $9.25-$10.00,
March 8.50-$10.50

MN
– December $9.25-$10.25,
March $9.00 to $10.50