FI Evening Grain Comments 10/24/21

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Mixed
trade to end the week in the soybean complex.  Soybeans and SBO were lower and meal higher.  Corn and wheat were higher on technical and end user buying.  US ECB corn basis remains firm and wheat caught a bid from renewed concerns over tight global high protein
supplies.  Nearby Minneapolis wheat traded above $10, first time since 2012.  Export developments were quite other than Tunisia buying 100,000 tons of barley and 50,000 tons of soft wheat.  We adjusted out MN wheat price range projections. 

 

 

 

Weather

 

 

 

 

7-day

 

World
Weather Inc.

MOST
IMPORTANT WEATHER AROUND THE WORLD

• Another
  round of flooding rain is expected along the central Vietnam Coast beginning this weekend and lasting through Monday
• Rain
  totals of 6.00 to 12.00 inches and locally more will result from the Hue and Da Nang areas southward to the Qui Nhon area to be most impacted
• Some
  of this area was already impacted with flooding rainfall last weekend early on Monday of this week
• A
  tropical cyclone may impact the same region during the middle part of next week further perpetuating the flood conditions
• Personal
  property damage has been and will likely continue to be greater than that on agriculture with a human impact likely greatest
• A
  tropical disturbance will evolve over the Philippines this weekend and it will organize into a weak tropical cyclone over the south China Sea Sunday and Monday while trekking to the west toward Vietnam
• The
  storm may move across Vietnam’s Central Highlands raising some concern over coffee and other crops in the region
• The
  developing system will need to be closely monitored, but its size and intensity is expected to be low
  
• Very
  heavy rain will impact the central coast and into much of the Central Highlands
• Flooding
  and landslides will be possible
• Some
  damage to coffee from either bean droppage or from landslides will be possible, although the losses should be low
• No
  excessive wind is expected in coffee areas unless then storm gets stronger than expected.
  
• Northern
  California and southwestern Oregon will experience a succession of heavy rain events through the weekend into Monday resulting in some flooding
• Very
  heavy mountain snow fall is expected with 2-4 feet of accumulation possible in the highest elevated areas
• Favoring
  the northern Sierra Nevada and other mountains in northern California
• Moisture
  totals will range from 2.00 to 6.00 inches along the Washington and northern two-thirds of the Oregon coast; however, moisture totals along the northern California and far southwestern Oregon coast will range from 5.00 to 9.00 inches and in the northern Sierra
  Nevada mountains will range from 5.00 to 11.00 inches
• Flooding
  may cause damage to personal property, infrastructure and some agriculture
• Runoff
  into river s and streams will improve water reservoirs in northern California
• Southern
  California will receive a more restricted amount of rain and the southwestern desert region of the U.S. will remain dry
  
• Stormy
  weather in the northwestern U.S. this weekend into early next week will also bring some welcome moisture to the drought areas of the Yakima and Columbia River Basins as well as some light rain in the Snake River system
• These
  areas have all be drought stricken for much of the past year
• U.S.
  Great Plains weather will be mostly dry during the next ten days especially in the west
• This
  will be a greater concern for the unirrigated high Plains region from southwestern Nebraska and eastern Colorado to the Texas Panhandle where dryness is already a factor
• Wheat
  emergence and establishment will be poor in unirrigated areas
• Montana
  dryness is also a concern for winter crop establishment
• Many
  other wheat areas to the east will dry down, but crop weather in recent weeks has supported good planting progress and favorable emergence and early establishment
• U.S.
  Midwest, Delta and southeastern states will be a little more disrupted by precipitation this weekend through much of next week
• Moderate
  to heavy rain is expected in parts of the Midwest from a couple of weather systems
• Harvest
  delays should be expected, but improved weather is likely in the final days of October and early November
• Rainfall
  in the Delta will be light to moderate next week, but it should be of short duration
• Concern
  over cotton fiber quality may resume
• Delays
  in harvesting are likely for a little while
• The
  best alternating pattern of rain and sunshine will be in the southeastern states
• Montana
  and portions of neighboring Canada will be drier biased for the next ten days
• A
  Low pressure center moving off the Tunisia, Africa coast this weekend will move over the central Mediterranean Sea and intensify next week
• This
  system has potential to possibly become a subtropical storm with impacts on Sicily and far southern Italy next week
  
• The
  storm could produce torrential rainfall and strong wind speeds
• Confidence
  is low, but the potential storm will need to be closely monitored
• There
  is also some potential that it could impact Greece as well
• Greece
  has already endured too much rain this month and the potential for more rain coming from the Mediterranean Sea storm next week might not go over well for Cotton and other crops sensitive to the wet bias.
  
• A
  tropical disturbance 250 miles south of Acapulco, Mexico today will evolve into a tropical storm tonight or Saturday before turning into Mexico over Michoacan Sunday or Monday
  
• The
  storm may also impact western Guerrero and southeastern Jalisco with heavy rain and strong wind speeds
• Rainfall
  may reach 6.00 to 12.00 inches near the point of landfall in southeastern Michoacan and northwestern Guerrero
  
• Coastal
  crops and personal property will be at risk of damage, although this will be small storm
• Excessive
  rain and flooding will be the greatest threat, especially in coastal areas
• Moisture
  from this storm will stream into the Texas coastal region and may help enhance rain in U.S. Gulf of Mexico coastal areas; including Louisiana sugarcane areas next week
• Argentina
  started to receive rain in the southwest overnight and it will receive additional moisture in the remainder of the nation today into Sunday
• Coverage
  will be high, but resulting rainfall may be a little light varying from 0.15 to 0.75 inch and locally more
• Net
  drying is expected after this for Sunday afternoon through most of next week
  
• Argentina
  still needs greater rain in northwestern parts of the nation where dryness is still significant in the topsoil
• Subsoil
  moisture is still low over a larger part of the west-central and north parts of the nation
  
• Next
  week’s temperatures will likely trend warmer than usual while dry weather prevails resulting in notable drying for much of the nation
• There
  is some potential for rain in northwestern Argentina during the second weekend of the forecast and in southwestern areas again during the following week
• Eastern
  Argentina may trend driest over the next couple of weeks
• Southern
  Brazil’s forecast continues to have a lighter than usual rainfall bias for the next couple of weeks, although some showers will occur briefly this weekend and possibly again in the second weekend of the outlook
• Net
  drying in southern Brazil, Uruguay, southern Paraguay and eastern Argentina is not unusual for La Nina events during late spring and summer
• La
  Nina is still evolving, but as it does this potential for dryness is likely to be reinforced during November warranting a close watch
  
• Center
  west, center south and interior southern parts of Brazil will continue to experience a good mix of rain and sunshine over the next two weeks resulting in favorable planting, germination and emergence conditions for corn and soybeans
• Cotton
  will also benefit from the pattern
• Sugarcane,
  citrus and coffee crops are rated favorably and expected to continue benefiting from alternating periods of rain and sunshine during the next two weeks
• Australia’s
  western and southern crop areas will experience a good mix of rain and sunshine over the next two weeks
  
• The
  environment will be ideal for support of reproducing and filling winter crops
• The
  nation is well on its way to a huge winter wheat, barley and canola crop
• Interior
  Eastern Australia is expecting dry weather for the next week to ten days favoring sorghum and cotton planting in irrigated areas and in areas with good soil moisture, but dryland production areas need moisture
• Winter
  wheat, barley and canola will continue performing very well with good yields possible
• Queensland
  harvesting is likely done or winding down
• World
  Weather, Inc. is still looking for a rainfall boost in November for eastern Australia that might threaten some of the wheat, barley and canola quality in New South Wales and Victoria.
  
• Northern
  and eastern China will experience a mostly good weather pattern for summer crop maturation and harvest progress
  
• Winter
  crop planting in the North China Plain and Yellow River Basin will advance well
• Southwestern
  China will see some periodic rainfall maintaining moist conditions in those areas
• Central
  and northern India’s weather will be mostly good over the next couple of weeks
  
• Summer
  crop harvesting and winter crop planting should advance well
• Southern
  India rainfall is expected to be locally heavy  during the next week to ten days possibly raising some concern over sugarcane, cotton, rice and other crops produced in the region
• Russia’s
  Volga River Basin will continue in need of greater moisture, although winter crops are semi-dormant and established well enough to survive winter if there is good snow cover during period of extreme cold
• Soil
  conditions are little dry, but moisture was present when crops were emerging
• Ukraine
  and most of Europe away from the North and Baltic Seas will see tranquil weather for a while allowing late season farming activity to wind down
• Winter
  crop planting and summer crop harvesting continues to advance well across the European Continent and little change is likely
• A
  few periods of snow and rain will impact a part of Canada’s Prairies over the next two weeks, but resulting precipitation will not break the drought
• Harvesting
  of this year’s crops is complete, but the rain is needed to restore soil moisture after a multi-year drought seriously reduced production in 2021
• Southeastern
  Canada crop conditions and harvest progress has been varied
• Southwestern
  Ontario is too wet and fieldwork has been slowed
• Most
  of Quebec weather has been more favorable for fieldwork to advance normally
• These
  conditions may prevail for a while
• South
  Africa will receive periodic rainfall during the coming ten days and that will bolster soil moisture for improved conditions for late season wheat development and early planting of summer crops
• Eastern
  parts of North Africa will receive rain this weekend into Monday impacting Algeria and Tunisia most significantly
• No
  heavy rain is expected except in a few coastal Tunisia locations
• Morocco
  will remain dry
• Central
  Africa will continue to experience periodic rainfall during the next ten days maintaining good coffee, cocoa, sugarcane, rice, cotton and other crop conditions
• Drier
  weather will soon be needed in some cotton and cocoa areas
• Rainfall
  in the next seven days is expected to be greater than usual mostly near coastal areas
• Weather
  in the second week of the forecast will trend drier favoring better crop maturation conditions
• Rain
  will fall frequently in Indonesia, Malaysia and Philippines through the next ten to 12 days maintaining a good outlook for palm oil, coconut, corn, rice, sugarcane, citrus and many other crops
• Mexico
  rainfall will be erratic over the next week with pockets of the nation a little wetter biased while other areas are a little drier biased
• Southern
  areas will be wetter biased mostly in association with this late weekend and early next week’s land-falling tropical cyclone in the southwest
• Central
  America rainfall will be below average in the coming week except in Costa Rica, Panama and El Salvador and Guatemala where rainfall will be near to above normal
• Central
  Asia cotton and other crop harvesting will advance swiftly as dry and warm conditions prevail
• Today’s
  Southern Oscillational Index was +11.58 and it was expected to move erratically over the next week with an upward bias.
  
• New
  Zealand weather is expected to be a little drier than usual and temperatures will be seasonable.
  

 

Bloomberg
Ag Calendar

Friday,
Oct. 22:

• ICE
  Futures Europe weekly commitments of traders report (6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• FranceAgriMer
  weekly update on crop conditions
• U.S.
  cattle on feed; cold storage data for pork, beef and poultry, 3pm
• USDA
  NASS Chicken and Eggs. 
• HOLIDAY:
  Thailand

Monday,
Oct. 25:

• Monthly
  MARS bulletin on crop conditions in Europe
• USDA
  export inspections – corn, soybeans, wheat, 11am
• U.S.
  poultry slaughter, 3pm
• U.S.
  cotton condition; corn, soy and cotton harvesting; winter wheat planting, 4pm
• Malaysia
  Oct. 1-25 palm oil exports
• Ivory
  Coast cocoa arrivals
• HOLIDAY:
  New Zealand

Tuesday,
Oct. 26:

• EU
  weekly grain, oilseed import and export data
• EARNINGS:
  WH Group

Wednesday,
Oct. 27:

• EIA
  weekly U.S. ethanol inventories, production
• Brazil’s
  Unica releases cane crush, sugar output data (tentative)

Thursday,
Oct. 28:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Port
  of Rouen data on French grain exports

Friday,
Oct. 29:

• ICE
  Futures Europe weekly commitments of traders report (6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• Vietnam’s
  General Statistics Office releases October trade data
• FranceAgriMer
  weekly update on crop conditions
• U.S.
  agricultural prices paid, received, 3pm

Source:
Bloomberg and FI

 

ADM
cancelled 1,165 KC wheat registrations Thursday afternoon from two KS locations.  KC registrations that have been sitting at 1,273 since late September dropped to only 108 as of Friday. 

 

 

 

CFTC
Commitment of Traders

 

 

 

 

Macros

Canadian
Retail Sales M/M Aug: 2.1 (est 2.0%; prev -0.6%)

–
Retail Sales Ex-Auto M/M Aug: 2.8 (est 2.6%; prev -1.0%)

US
Swaps Price In a 70% Probability of June Rate Rise By The Fed

 

Corn

·        
Corn ended 3-5.75 higher (bull spreading) with emphasis on bull spreading as wheat is sharply higher.  The US ECB corn cash market is tight.  End users raised their offers this week to entice selling.  Harvesting delays were noted
across the northern ECB this past week.  Ontario was also too wet to harvest.  Many producers that were harvesting across the ECB and eastern Canada were focused on soybeans. 

·        
News in the corn market was light and has been all week. 

·        
USDA’s export sales report yesterday showed decent corn commitments, but sales need to increase to reach USDA’s export projection.  There is still plenty of time to commit and export, and after Mexico said they will allow US GMO
corn imports this week, we think this brought some relief to the trade.

·        
At around 7:12 am CT, paper paid 11 1/4 for 2000 July 700 calls.

·        
We expect US soybean and corn harvest activity to slow this weekend across the heart of the Midwest due to rain, especially Sunday bias IA through central and northern IL.  The ECB will see harvest disruptions early next week
through at least Wednesday. 

·        
FranceAgriMer reported 32% of the French corn crop had been harvested by October 18, up from 15% a week earlier, well below 75% around the same time a year ago.  The corn crop development is running about 10 days behind the average
rate of the past five years-FranceAgriMer.

·        
Cattle on Feed:  We see this report as slightly bearish corn for feed demand, and positive for back month cattle futures. 

 

 

Export
developments.

• None
  reported

 

Updated
10/12/21

December
corn is seen in a $4.85-$5.55 range

March
corn is seen in a $5.00-$5.70 range

 

Soybeans

·        
In a choppy trade, CBOT soybeans were mixed, ending lower, in part to selling in soybean oil.  Global vegetable oil values eased on Friday after appreciating earlier this week.  Meal remained higher throughout the day on higher
corn and product spreading.  Note Paris November rapeseed extended losses, down 12.25 euros to 674.50/ton.  Look for rapeseed contract losses in the deferred months to be limited going forward.  High natural gas and energy prices could hinder EU crushing operations
during the winter months. 

·        
Some traders noted global supply concerns for soybeans, particularly with a potential back to back South American weather problem (ENSO pattern). 

·        
We expect US soybean and corn harvest activity to slow this weekend across the heart of the Midwest due to rain. 

·        
Rumors earlier this week China may have secured around 40 cargoes of soybeans from various origins since last week’s USDA report is not out of reach.  Problem is, we wonder if they will be able to keep up with product demand with
power outages affecting crush rates. 

·        
China cash crush margins on our analyses improved from the previous week to 247 cents/bu (240 previous) versus 206 cents late last week and 95 cents around a year ago.  China futures were mixed on Friday (vegetable oils ended
lower).  China soybean oil prices overnight did trade near a 10-year high on tight stocks, and the high prices are supporting crush margins. 

·        
Malaysian palm futures were down 44 ringgit overnight and for the week posted a nearly 1% decline.  Cash palm was down $5.00/ton. 

·        
Offshore values this morning were leading soybean oil 101 points higher (89 lower for the week to date) and meal $1.60 short ton higher ($5.30 lower for the week)

 

Export
Developments

·        
None reported

 

 

Updated
10/18/21

Soybeans
– November $11.50-$13.00 range, March $11.50-$13.50

Soybean
meal – December $295-$335, March $300-$360

Soybean
oil – December 59-65 cent range, March 56-65

 

Wheat

·        
US wheat futures prices traded sharply higher led by the KC and MN markets (bull spreading) on technical buying and renewed concerns over tight global stocks.  MN December ended up 31.75 cents, its session high, at $10.18, highest
since 2012.  Chicago was up 14.75 and KC up 26.25 cents basis December. 

·        
Matif and Minneapolis wheat hit fresh contract highs.

·        
ADM cancelled 1,165 KC wheat registrations Thursday afternoon from two KS locations.  KC registrations that have been sitting at 1,273 since late September dropped to only 108 as of Friday. 

·        
The December/March KC wheat spread ripped higher as a result.  KWH2-KWZ1 (KC March premium) below…

·        
Export developments were quite other than Tunisia buying soft wheat and barley. 

·        
FranceAgriMer reported 40% of the expected French soft wheat area had been planted by Oct. 18, up from 13% a week earlier and in line with year ago.  Winter barley sowing was 59% complete, slightly above year earlier. 

·        
Russia will raise their floating export tax to $67/ton from $61.30 (in effect since Oct. 20) and is using a base price of $295/ton from $287.60 previous week. 

·        
Paris December wheat was up 3.50 euros at 280.00, a new contract high settlement. 

·        
Ukraine harvested 77% of their 2021 grain crop, including 32.3 million tons of wheat, 9.6 million tons of barley, 11.2 million tons of corn. 

·        
US Wheat Associates updated their wheat quality report. 
https://www.uswheat.org/crop-quality/

 

Below
chart was run just before the rally into the close ($10.18 session high), a new contract high, and highest since 2012. 

 

FI’s
2022 initial winter wheat projections (late October/early November)

G/E
estimated by FI at 56 percent versus 41 percent year ago and 52 for the 5-year average. 

 

 

Export
Developments. 

·        
Tunisia bought about 50,000 tons of optional origin soft wheat and 100,000 tons of animal feed barley.  The wheat was bought in two 25,000 ton consignments at an estimated $373.45 a ton c&f.  The barley was bought in two 25,000
ton consignments at an estimated $349.22 a ton c&f and $346.05 a ton c&f.  The wheat is for shipment between Nov. 15 and Dec. 15 and barley for shipment between Nov. 25 and Dec. 20.

·        
Pakistan seeks 90,000 tons of wheat on October 25. 

·        
Turkey seeks 235,000 tons of feed barley on October 26. 

·        
Ethiopia seeks 300,000 tons of milling wheat on November 9.

·        
Ethiopia seeks 400,000 tons of wheat on November 30. 

 

Rice/Other

·        
Maldives seeks 25,000 tons of parboiled rice with offers due by October 28. 

·        
Mauritius seeks 6,000 tons of white rice on October 26 for January 1-March 31 shipment. 

 

Updated
10/22/21

December
Chicago wheat is seen in a $7.00‐$7.75 range, March $6.50-$7.75

December
KC wheat is seen in a $7.10‐$7.95, March $6.82-$8.25

December
MN wheat is seen in a $9.25‐$10.30 (up 25, up 30), March $9.00-$10.50
(unch, up 50)