FI Evening Grain Comments 10/26/21

PDF Attached

 

USDA
– Private Exporters Reported Sales Activity for China and Mexico

• 199,000
  tons of soybeans for delivery to China during the 2021/2022 marketing year
• 125,730
  tons of soybeans for delivery to Mexico during the 2021/2022 marketing year

 

CBOT
agriculture markets started the day in risk off type of trade, rallied midsession then gave up many or all gains on profit taking.  Some markets, like MN wheat, had a wild and wide trading range. 

 

 

 

 

 

Weather

 

World
Weather Inc.

MOST
IMPORTANT WEATHER AROUND THE WORLD

• U.S.
  harvest delays resulting from the heavy rainfall in the Midwest will continue for a while this week especially due to follow up rain expected to evolve Wednesday into Friday
• Portions
  of the U.S. Delta and southeastern states have also experienced a little rainfall recently and will see more later this week
  
• The
  precipitation has slowed fieldwork and raise some concern over cotton fiber quality, especially in the Delta
• Most
  of the weather adversity is still forthcoming in these two areas with rain and thunderstorms most likely Wednesday into Thursday with some lingering showers in the southeastern states Friday and Saturday
• Georgia
  crops should be least impacted
• West
  Texas cotton areas will continue to see favorable farming conditions over the next ten days with little to no rain likely and temperatures mild
• Western
  portions of the U.S. hard red winter wheat region will continue dry biased, but winter crops in the central and southwestern Plains seem to be better established than last year away from the high Plains region
• Central
  Montana and neighboring areas of Alberta and Saskatchewan, Canada will continue drought stricken with little potential for change
  
• Some
  rain in eastern Saskatchewan and a few areas in Manitoba will not likely change drought status, but will help maintain status quo field conditions
• Drought
  relief will be needed this winter and especially in the spring to allow for normal planting in eastern and southern Alberta and the western two-thirds of Saskatchewan
• Recent
  excessive rainfall in northern California has induced significant runoff improving river and stream flow and water reservoir levels
• Flooding
  has occurred in the past couple of days, but despite the damage resulting in some areas the moisture was badly needed and will improve irrigation potentials for 2022
• Southern
  California only received light rainfall Monday and it will continue quite dry with low water reservoir levels to prevail for quite a while
• Argentina
  was dry Monday and will be that way again today, but showers will develop in the west Wednesday and increase in the north Thursday
• The
  moisture will be of critical importance since the northwest part of Argentina has been chronically dry for an extended period of time limiting fieldwork
  
• Some
  of the region may receive 1.00 to more than 2.00 inches
• Showers
  elsewhere in Argentina will have a tough time producing enough rain to counter evaporation and a close watch on wheat, corn and sunseed development will be warranted for a while
• Totally
  dry weather is not expected, but the rain that falls may not counter evaporation very well with average temperatures above normal in this coming week
• Brazil’s
  crop areas experienced a drier day Monday except in southern Minas Gerais and a few neighboring areas
• The
  drier weather was welcome after recent rain, although there are still some areas in Mato Goias, Mato Grosso, northern Minas, Gerais, Tocantins and Bahia that need greater rainfall
• Most
  of Brazil’s crop country will get rain at one time or another over the next two weeks and that should prove to be sufficient to support additional planting, emergence and establishment of soybeans, corn, rice and cotton
• Sugarcane,
  coffee and citrus crops are rated favorably with little change likely
• South
  Africa will receive showers and thunderstorms during the next ten days that will help moisten up topsoil for more aggressive spring planting
• India’s
  greatest rain will be in the southern one-third of the nation for a while
• Some
  showers will occur in the eastern states as well
• The
  greatest drying will be in the central and north which will translate into a very good environment for winter wheat, rapeseed, millet, sorghum and pulse crop planting as well as supporting summer crop harvesting
• Northern
  and east-central China weather will be favorably dry over the next ten days supporting good summer crop maturation and harvest conditions
• Winter
  grain and rapeseed planting will also advance favorably
• Rain
  in southwestern China may disrupt farming activity for a while, but no serious harm will come to unharvested crop quality
• Xinjiang,
  cotton, corn and other crop harvesting is advancing relatively well, although periodic showers in northeastern production areas have slowed fieldwork at times and raised some cotton quality concerns as well
• Europe
  weather will remain very good for the next four days and then trend wetter from the northwest half of the Iberian Peninsula through France and into western Germany
• The
  moisture will be well timed for the recently planted winter crops and should help them emerge and establish favorably
• Eastern
  Europe will remain in a dry weather mode for a while along with the Ukraine and much of Russia’s winter crop region in the Volga River Basin
• Most
  of the crops in these areas should be establishing well enough to get through winter, but snow cover will be needed in parts of the region during extreme cold to protect crops – especially those that may not be as well established as they should be
  
• China
  weather has improved in the north and east-central parts of the nation after a very wet end to the growing season
• Crops
  are maturing and being harvested in a better environment now
• Winter
  wheat and rapeseed planting should also be advancing more aggressively especially in areas that have dried down sufficiently
  
• China
  may have a cold winter this year making the late planted winter crops possibly a little more vulnerable to the cold if they do not establish as well as usual.
  
• Vietnam’s
  weather improved briefly Monday after too much rain fell for the second weekend in a row
  
• A
  tropical disturbance in the South China Sea will move into Vietnam’s lower central coast over the next couple of days spreading more heavy rain into the region and farther to the west into the Central Highlands, as well
• Some
  flooding is expected and a close watch on  the situation is warranted
• Most
  coffee production areas should not be seriously impacted by the heavy rainfall and there should not be any high wind speeds
• Tropical
  Storm Malou was located 349 miles south southwest of Iwo To near 19.8 north, 138.8 east moving northeasterly at 6 mph and producing wind speeds to 63 mph near the storm center
• The
  storm will intensify to typhoon intensity in the next couple of days in the western Pacific Ocean
• The
  storm will stay to the southeast of Japan and will pose no threat to land
• A
  mid-latitude storm 400 miles east northeast of the U.S. North Carolina coast today will move to a point off the New England tonight and Wednesday. The storm will produce stormy weather for a quick day or two
• High
  wind speeds, heavy rain and rough seas will impact southeastern New England, southeastern New York and New Jersey during mid-week this week
• The
  storm will move southeasterly Wednesday and the east northeasterly Thursday and Friday taking the storm away from North America
• The
  system may acquire subtropical characteristics as the storm moves southeast from near the New England Coast Wednesday into Thursday
• Australia
  weather continues nearly ideal for the development of winter wheat, barley and canola
• A
  boost in rainfall is needed in the interior east to support better spring planting for cotton and sorghum
• Most
  winter wheat, barley and canola production areas will continue to experience highly favorable weather conditions, although there is some concern over the potential for wet harvest conditions in a part of the east.
• Southeast
  Asia will see routinely occurring rainfall maintaining moisture abundance in Indonesia, Philippines, Malaysia and the mainland areas of Southeast Asia.
• A
  low-pressure center in the south-central Mediterranean Sea will meander aimlessly this week staying mostly over open water; however, the system will produce some heavy rain in southern Italy and eastern Sicily
• This
  system has potential to possibly become a subtropical storm
• The
  storm could produce torrential rainfall and strong wind speeds
• Confidence
  is low, but the potential storm will need to be closely monitored
• Today’s
  forecast models suggest the storm may impact Sicily late this week resulting in some very heavy rainfall and some windy conditions
• 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
• North
  Africa will receive rain this week from northeastern Morocco through northern Tunisia through Wednesday ending Thursday
  
• Southwestern
  Morocco will remain driest
• Central
  Africa will continue to experience periodic rainfall during the coming week maintaining good coffee, cocoa, sugarcane, rice, cotton and other crop conditions
• Drier
  weather will soon be needed in some cotton, coffee 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
• Mexico
  rainfall will be erratic over the next week with southern parts of the nation wetter than usual
  
• Central
  America rainfall will be greater than usual in El Salvador and Guatemala and near to below average elsewhere
• Central
  Asia cotton and other crop harvesting will advance swiftly as dry and warm conditions prevail
• Today’s
  Southern Oscillational Index was +11.53 and it was expected to fall slightly week
• New
  Zealand weather is expected to be a little drier than usual except in central parts of North Island where rainfall will be greater than usual
  
• Temperatures
  will be seasonable.

 

Bloomberg
Ag Calendar

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

 

USDA
baseline tables
will be released on Nov. 5, ahead of the release in February of the full 100-page “Agricultural Projections to 2031” report.  These tables should offer USDA’s unofficial view on 2022 plantings, using the Oct WASDE report as a starting point. Full USDA press
release: https://bit.ly/3mglSZx
(Reuters)

 

Macros

US
New Home Sales Change Sep: 800K (est 756K; prev 740K)

–
New Home Sales (M/M): 14.0% (est 1.2%; prev 1.5%)

–
US Sept Median Sale Price $408,800 (+18.7% Y/Y)

US
CB Consumer Confidence Oct: 113.8 (est 108.0; prev 109.3; prevR 109.8)

–
Expectations: 91.3 (prev 86.6; prevR 86.7)

–
Present Situation: 147.4 (prev 143.4; prevR 144.3)

Archer-Daniels-Midland
Q321 Earnings:

Revenue:
$20.34B; est $18.16B

Adj
EPS: $0.97; est $0.88

84
Counterparties Take $1.423 Tln At Fed Reverse Repo Op. (prev $1.413 Tln, 77 Bidders)

 

Corn

·        
Corn opened lower but turned higher on US harvest delays, good ethanol margins and shortfall in the ECB corn pipeline for end users that is supporting US interior basis.   Corn basis jumped at several US elevator, river, and processor
locations, some by 5 cents.  We earlier hear November Chicago Platts ethanol and physical was up 10 cents today.  EU ethanol is getting expensive making some traders wonder if some US ethanol will make its way into the EU later this season.  We see low confidence
on this but there already have been some small 2021 sales.  The EU can easily stop this by increasing the import tax.  US exports of ethanol work for Brazil for 2022 we are hearing. 

·        
A Bloomberg poll looks for weekly US ethanol production to be up 1,000 barrels (1065-1120 range) from the previous week and stocks up 261,000 barrels to 20.341 million.

·        
Funds bought an estimated net 6,000 contracts. 

·        
CBOT December corn help its 20 and 50-day MA’s around $5.32.50-533, near the session low.  $5.4550 ($545.75 after the close today) was the 100-day MA traders were eying, and about halfway through the morning session December briefly
traded above that level.  

·        
Chinese corn prices remain firm and hog prices are appreciating. 

 

·        
The USD was 13 points in early afternoon trading and WTI was up 80 cents.   

·        
US Midwestern rains will occur across the WCB Wednesday, then move across the central areas Thursday, and southeastern areas Friday through Saturday. 

·        
China approved beef imports from Italy. They have recently been expanding their list of countries to import meats, and it at least the third announcement we have seen since early last week. 

·        
USDA’s Attaché estimated Argentina 2021-22 corn production at record of 54.5MMT, 1.5MMT above the USDA October estimate.  2021-22 exports are projected at 40.0MMT, 2.0MMT above USDA. 
https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Update_Buenos%20Aires_Argentina_10-20-2021 

 

 

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

·        
Earlier in the day we saw a risk off trade in most agriculture commodities with exception of soybean oil due to higher WTI crude oil and a higher trade in Malaysian palm oil.  But soybean oil sold off on profit taking and unwinding
of oil/meal spreads.  AgriCensus did note Brazil SBO fob fell $12/ton to $1,404/ton while Argentina was down $6.50/ton to $1,405.   Soybeans rebounded to traded sharply higher in part to strength in wheat but sold off after profit taking knocked out the gains
in Minneapolis wheat.  November was up 0.75 cent and January up 0.50 cents.  Paris November rapeseed, soon expiring, was 8.00 euros higher at 692.75 euros. That contract started the day lower.  USDA announced 24-hour soybean sales to China and Mexico.  Soybean
meal finished mixed while soybean oil fell 3-83 points, led by bear spreading.  The 3 point lower close occurred in the August 2022 contract.  December off 83 points and January off 64 points shows how fast these inverted spreads could narrow. 

·        
January CBOT soybeans are near their 20-day MA of $12.33325. 

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

·        
US soybean meal basis increased $5 in Chicago to 16 over, $2 in Decatur (IL) and Morristown (IN) to $15 over, and was up $7 for Frankfort, IN to $25 over. 

·        
Yesterday there were rumors China bought 10 cargoes of soybeans. 

·        
Brazil rains this week will favor Mato Grosso, Goias, south Minas, Sao Paulo, north MGDS through Saturday.  Lighter rains are expected in RGDS on Saturday.  Argentina will be dry through Friday.  La Pampa and SE BA may see rain
this weekend.  The 10-day for Argentina does show a sign of improvement. 

·        
Cargo surveyor SGS reported month to date October 25 Malaysian palm exports at 1,205,755 tons, 203,963 tons below the same period a month ago or down 14.5%, and 225,144 tons below the same period a year ago or down 15.7%. 

·        
Malaysian palm futures were up 43 ringgit overnight to 5,012.  Cash palm was up $20/ton to $1,290/ton. 

·        
Singapore plans to launch standardized guidelines for renewable energy certificates (RECs).  One certificate represents that one megawatt-hour (MWh) of electricity was generated from a renewable energy source and delivered to
the grid.

·        
The European Union soybean imports so far for the 2021-22 season (July-Oct. 24) reached 3.88 million tons, down from 4.58 million tons by the same week year ago.  EU rapeseed imports reached 1.44 million tons, compared with 2.12
million tons a year earlier.  Soybean meal imports were 4.50 million tons against 5.82 million a year ago, while palm oil imports were 1.72 million tons versus 2.10 million tons.

 

Export
Developments

·        
The USDA seeks 20 tons of vegetable oil in 4-liter cans  for Dec 1-13 shipment on November 2.

·        
USDA 24-hour: Private Exporters Reported:

199,000
metric tons of soybeans for delivery to China during the 2021/2022 marketing year

125,730
metric tons of soybeans for delivery to Mexico during the 2021/2022 marketing year

 

 

 

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 were surprisingly lower to start, then traded higher after selling dried, but prices collapsed in late trading on profit taking led by Minneapolis.  MN December saw a wide 30.75 cent range.  $10.47 was the high
for MN December wheat and many traders are not ruling out $11/bu over the short term.  Nearby rolling Minneapolis spring wheat traded to its highest level since June 7, 2011.  Chicago ended lower and KC was mixed. 

·        
The US Great Plains saw dry weather yesterday and the forecast for the week is unchanged.  Rains will occur across the central and northwestern areas today then move into the eastern areas Wednesday into early Thursday before
turning drier Friday through the weekend.

·        
Soft wheat exports from the European Union since July 1 reached 8.99 million tons by October 24, up from 7.23 million tons year earlier.

·        
Paris December wheat traded tow-sided, ending 2.25 euros higher at 284.75, a new contract high.  On a rolling basis Paris wheat is at a 2008 high.  

·        
Egypt said they have enough wheat reserves to last 6 months. 

·        
Initial US 2022 winter wheat conditions showed by class white wheat conditions well down from a 5-year average while SRW and HRW were above their 5-year averages using our adjusted crop condition adjusted basis. 

·        
We do look for the US winter white crop conditions to improve over the next week or two after heavy rains reached much of the growing areas over the past seven days.  Just over the past 24-hours the PNW saw little to 2.5” localized
rains. 

·        
USDA US all-wheat export inspections as of October 21, 2021, were 140,413 tons, below a range of trade expectations, below 141,450 tons previous week and compares to 399,645 tons year ago. Major countries included Taiwan for 37,087
tons, Japan for 34,826 tons, and Mexico for 29,239 tons.

 

KC
Wheat futures vs. Russian ruble

 

Export
Developments. 

·        
Turkey bought 235,000 tons of feed barley for Dec 1-20 shipment. 

·        
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
10/26/21

December
Chicago wheat is seen in a $7.15‐$7.90 range, March $6.75-$8.00 December KC wheat is seen in a $7.10‐$7.95, March $6.82-$8.25

December
MN wheat is seen in a $9.45‐$10.50, March $9.00-$10.50. 
some are calling for $11 MN wheat