FI Evening Grain Comments 10/26/22

PDF Attached

 

Wild
downward trade in the USD supported some ag commodity markets. Soybeans ended mixed. Soybean meal lost ground against a higher soybean oil market. Corn ended lower and Chicago wheat and KC wheat higher. MN wheat settled lower.

 

The
US weather forecast was largely unchanged this morning. After rain falls across the northeastern areas today, the Midwest will dry down Thursday through Saturday. The southern, central, and eastern areas will see rain Sunday. The US Great Plains will see additional
rain today then again Sat-Sun. Brazil will see rain across the northern areas today, then southern and central areas Thursday through Sunday. Argentina will see rain today, then again Saturday (erratic showers). 

 

 

Weather

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE COMING WEEK

• Welcome
  rain fell in Argentina overnight
• Rainfall
  of 0.50 to 1.50 inches was common with local totals of 1.75 to 3.66 inches in a narrow band from central through northwestern Buenos Aires to southeastern Cordoba
• The
  precipitation was ideal in raising topsoil moisture, but follow up rainfall will be imperative for inducing a permanent fix in the moisture profile
• La
  Nina is still very much in control of the dominating weather pattern and that should lead to more drying after a follow up rain event occurs this weekend in the east and north
• Central
  and southern Argentina will face frost and freezes potentially late this weekend and Monday that could induce some crop damage to winter wheat and early season corn and sunseed
• The
  situation can still change, but the cold is impressive, and the potential event must be closely monitored
• Frequent
  frost and freezes have already been occurring in the southeastern corner of Argentina in recent weeks limiting the potential negative impact on crops in that region Sunday and Monday, but crops in Cordoba, Santa Fe and Entre Rios will need to be closely monitored
• Brazil
  weather is still expected to be well mixed in most of the nation during the next ten days with alternating periods of sun and rain expected along with seasonable temperatures
• Some
  dryness concerns remain from eastern Mato Grosso and parts of Goias to Tocantins, Bahia and Minas Gerais, but the odds are good for this dryness to be eased over time
• Nevertheless,
  until significant rain falls these areas should be closely monitored
• Southwestern
  parts of Western Australia will get rather chilly late in the weekend and early next week, but early indications suggest no damaging freeze event will occur
• This
  coolness needs to be closely monitored because any damage that would occur in Western Australia would raise greater concerns about Australia wheat, barley and canola production after recent bouts of excessive rain hurt crops in the east
• Eastern
  Australia’s wet weather bias is taking a break
• Totally
  dry weather is not expected, but rain frequency and intensity should slacken quite a bit over the next week to ten days offering some greater periods of sunshine and warmer temperatures that should improve crop and field conditions – at least somewhat for
  a little while
• Eastern
  Australia’s longer range outlook is still calling for more rainy weather in Queensland and northern New South Wales later this calendar quarter and possibly in Victoria, as well.
  
• U.S.
  rainfall over the past two days was ideal in raising topsoil moisture for many areas in Missouri and Illinois as well as some neighboring areas
• The
  greatest rain totals occurred in the Ozarks of Missouri and northwestern Arkansas where rain totals of 2.00 to 3.48 inches resulted, but key crop areas across central and the interior southeastern parts of Missouri into central Illinois and northwestern Indiana
  reported 1.00 to 2.40 inches
• Improved
  winter crop development conditions are expected
• Fieldwork
  was delayed, but the moisture was needed and welcome
• No
  harm came to any unharvested summer crop
• U.S.
  southern Plains will receive more rain Thursday into Friday, but hard red winter wheat areas in the west-central high Plains will not be seriously impacted and drought will prevail
• Rain
  will be greatest in southern Oklahoma and north-central Texas where some 1.00 to 2.00-inch rain totals are possible
• The
  southern Plains storm system Friday will turn toward the Delta late Friday and into the weekend with some 0.50 to 1.50-inch rain totals expected
• There
  is potential for more than 2.00 inches, but confidence is low
• The
  bottom line for U.S. rivers will continue to be one of concern.  A short-term rise in water levels on the Mississippi and lower Missouri rivers will occur over the next day or two, but the change will not be great enough to seriously impact barge traffic.
  Additional rain in the Delta and Tennessee River Basin this weekend will have a similar impact. Overall, any rises in river levels may allow some change in barge traffic, but the changes are not likely to be great enough or sustainable to seriously reduce
  shipping delays or greatly reduce the high expense for barge freight.
• U.S.
  Pacific Northwest will receive some periodic showers, but the greatest moisture will fall in the mountains
• The
  Yakima Valley will be driest
• Tuesday
  and Wednesday of next week will be wettest
• Dryland
  winter wheat, especially in Oregon, needs greater moisture
• Restricted
  northern and central U.S. Plains, western and northern Midwest and southeastern states rainfall during the next ten days will result in aggressive farming activity, but winter crops will be seeking greater rainfall in time
• North
  America weather pattern changes expected next week will produce a deep trough of low pressure in the western United States and a strong ridge of high pressure in the eastern states
• This
  may induce a southwesterly wind flow pattern aloft that might lead to greater rain and snow potential events in the central and eastern states late next week and on into week three of the outlook
• Confidence
  is not high, but a storm system in early November could occur in the upper Midwest with a follow up storm in the southeastern Plains and/or the Delta that will move northeast in week three
• Temperatures
  in Canada and the eastern United States will be warmer than usual during the next two weeks while western portions of the U.S. are mild to cool this week and more notably colder biased next week into the following weekend
• Snowmelt
  is expected in Canada’s central Prairies over the next few days as temperatures rebound back above normal after this week’s snowstorm
• Soil
  moisture either has been or soon will improve in far southern Alberta and southern and interior eastern Saskatchewan where the greatest snow fell this week
  
• Some
  areas will have to wait for the snow to melt before soil moisture increases
• Many
  areas in the central and southwestern Prairies still have need for more moisture of significance
• South
  Africa weather will continue to be well balanced over the next two weeks favoring fieldwork and crop development
  
• Sufficient
  rain will fall to maintain an excellent planting outlook
• Western
  wheat, barley and canola areas will experience good maturation and harvest weather
• Canada’s
  Ontario and Quebec are experiencing better harvest weather and little change in that pattern is expected for a while  
  
• Only
  short periods of light precipitation will impact the harvest and there should be no crop quality threats or prolonged harvest delays
• Mexico’s
  seasonal rains have largely diminished for the season and good crop maturation and harvest weather is now expected for the next couple of weeks
• Central
  America precipitation is expected to be light and sporadic for a while, but some increase in rainfall may occur later next week as a tropical wave advances toward the region
• China’s
  weather will remain largely dry or at least free of major storm systems except in a few west-central crop areas
• Upper
  portions of the Yangtze River Basin will get waves of rain
• Moisture
  totals over the coming ten days will vary from 0.50 to 1.50 inches and locally more impacting Sichuan, western Hubei, southern Shaanxi, northern Hunan and areas southwest into Yunnan
• The
  precipitation will improve rapeseed planting conditions
• Dryness
  in the lower half of the Yangtze River Basin will remain a serious concern over rapeseed planting and establishment, but there is still time for improved weather
• Xinjiang,
  China harvest weather has been and will continue favorable
• Field
  progress has likely advanced quite well with little change likely
• Harvesting
  should be winding down in some areas
• Seasonably
  dry weather will continue in China’s North China Plain and Yellow River Basin supporting fieldwork of all kinds; including wheat planting and summer crop harvesting
• Most
  areas in India will be dry during the next ten days, although some rain will fall periodically in the far south which is not unusual for this time of year
• Europe
  precipitation will be limited over the next ten days except in the North and Baltic Sea regions and from the Baltic States through Belarus to Ukraine where waves of rain are expected.
  
• Western
  Russia precipitation will be infrequent, but occasional
• Eastern
  parts of Russia will see periods of snow that will raise snow cover and help reinforce future colder biased weather in eastern Asia
• Australia
  will continue to experience periodic showers that will maintain wet field conditions, but flood water should slowly recede
• Western
  Australia is expecting some timely rainfall to support very good winter crop yield potentials and crop quality for wheat, barley and canola
• North
  Africa weather has trended drier for a while and not much precipitation is expected in the coming ten days
• Rain
  will be needed in November and December to support planting of wheat and barley
• Interior
  Thailand and northern Laos will experience limited rainfall over the next ten days
• Rain
  will fall in Cambodia and much of Vietnam during the next ten days with some moderate to locally heavy rainfall possible
• Waves
  of heavy rain will impact central Vietnam over the next ten days resulting in more flooding for areas that already experienced such conditions in recent weeks
• Indonesia,
  Malaysia and Philippines will experience frequent rain with some bouts of heavy accumulations
• Local
  flooding will still be possible, but no widespread serious problems are anticipated except possibly the northern Philippines…..see bullet below
• A
  developing tropical cyclone east southeast of Philippines will become the next larger storm to threaten Southeast Asia
• The
  European model forecast suggested this storm could be a very large event and may run across Luzon Island this weekend
  
• The
  GFS forecast model suggests the storm will stay east of the Philippines, but come close to the east coast of Luzon
• 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
• Limited
  rainfall is expected in Tanzania until late next week when some rain may develop
• Central
  America rainfall will continue periodically maintaining adequate to abundant soil moisture
• Today’s
  Southern Oscillation Index was +18.77 and it will move lower over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Wednesday,
Oct. 26:

• Asia-Pacific
  Agri-Food Innovation Summit, Singapore, day 1
• EIA
  weekly US ethanol inventories, production, 10:30am
• EARNINGS:
  Bunge, Pilgrim’s Pride
• HOLIDAY:
  India

Thursday,
Oct. 27:

• Asia-Pacific
  Agri-Food Innovation Summit, Singapore, day 2
• Virtual
  New Food Invest Conference, EMEA
• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am

Friday,
Oct. 28:

• Asia-Pacific
  Agri-Food Innovation Summit, Singapore, day 3
• FranceAgriMer
  weekly update on crop conditions
• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for
• various
  US futures and options, 3:30pm

Source:
Bloomberg and FI

 

 

Macros

101
Counterparties Take $2.187 Tln At Fed Reverse Repo Op (prev $2.196 Tln, 102 Bids)

Bank
Of Canada Hikes Key Rate By 50Bps To 3.75% From 3.25%, Most Analysts Saw 75bps Hike

US
New Home Sales Change Sep: 603K (est 580K; prev R 677K)  

–
New Home Sales (M/M): -10.9% (est -15.3%; prev R 24.7%)

–
Median Sale Price (Y/Y) (USD): 470.6K Or +13.9% (prev 436.8K or +8.0%)

US
Wholesale Inventories (M/M) Sep P: 0.8% (est 1.0%; prev 1.3%)

US
Retail Inventories (M/M) Sep: 0.4% (est 1.2%; prev 1.4%)

US
Advanced Goods Trade Balance Sep: -$92.2B (est -$87.5B; prev -$87.3B)

 

Corn

·        
Corn prices ended lower despite a sharply lower USD. Gains earlier were limited from US river shipment disruptions, slow US exports and harvesting pressure.

·        
Funds on Wednesday sold an estimated net 1,000 corn contracts.

·        
Some rain in the US Midwest over the next seven days may help water levels but much more is needed to free up the hundreds of stranded barges.

·        
South Africa’s CEC estimated the 2021-22 corn crop harvest at 15.329 million tons, down from 16.315 million tons (6%) last season. It includes 7.790 million tons of white corn and 7.539 million tons of yellow.

·        
As October closes out, November will be an important month for several issues, including US midterm elections, Black Sea safe passage extension, potential US rail strike, and US Midwest precipitation replenishing river water levels.
Note the G20 summit will be held during the third week of November.

 

US
weekly ethanol production was up 17,000 barrels per day to 1033k (traders were looking for up 1k) from the previous week and stocks up 447,000 barrels to 22.291 million (estimate was an increase of 43,000 barrels).
Ethanol
production, since the start of the corn marketing year (Sep. 1), has improved. Sep 1 to date production is running 3.9% below same period year ago, but up from an 8 percent decline during the month of September. Refinery and blender net input of oxygenates
fuel improved 7,000 barrels from the previous week to 915,000 barrels, highest since August 19^th. The ethanol blend rate was 91.1% into finished motor gasoline, down from 91.8% previous week. Gasoline stocks fell 1.5 million barrels to 207.89 million
and gasoline demand was up 252,000 barrels to 8.930 million, down 4.2 percent from this time year ago.

 

US
DoE Crude Oil Inventories (W/W) 21-Oct: +2.588M (est +1.500M; prev -1.725M)

–
Distillate: +170K (est -1.000M; prev +124K)

–
Cushing: +667K (prev +583K)

–
Gasoline: -1.478M (est -1.500M; prev -114K)

–
Refinery Utilization: -0.60% (est 0.00%; prev -0.4%)

 

 

 

 

Updated
10/09/22

December
corn is seen in a $6.50-$7.15 range. March $6.50-$7.50 range.

 

Soybeans

·        
CBOT soybeans
ended mixed, meal lower and soybean oil higher (talk of US SBO use for biofuel demand). Soybean meal was lower from a good amount of soybean oil buying against the contracts. Renewed increase for SBO for biodiesel demand was behind the soybean oil rally. Note
WTI crude oil ended lower.

·        
Argentina sold just over 70% of their soybean crop, below 74.2% sold year ago. Producers sold 164,900 tons of the harvest between October 13-18, far below the 750,000 tons sold in same period last year.

·        
We saw little fundamental reason for the rally in soybeans earlier today other than the US is nearing completion of the US harvest and USD is lower. However, SA product fob premiums were higher yesterday.

·        
China’s currency was up sharply overnight after banks reportedly sold US dollars. Buying US soybeans could be a good way to release US dollars, IMO.

·        
Funds on Wednesday were even for soybeans sold an estimated net 3,000 meal and bought 4,000 soybean oil.

·        
Indonesia is testing out B40 with domestic vehicles.

·        
Cargo surveyor SGS reported month to date October 25 Malaysian palm exports at 1,146,113 tons, 6,499 tons below the same period a month ago or down 0.6%, and 59,642 tons below the same period a year ago or down 4.9%.

 

Export
Developments

• Results
  are awaited on Egypt seeking vegetable oils for Dec 10-30 arrival, and some local vegetable oils. They are looking for 180-day letters of credit. Lowest offer was $1,425 per ton c&f for 6,000 tons of sunflower oil, and $1,600 per ton c&f for 14,000 tons of
  soybean oil.

 

Updated
10/21/22

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 68.00-76.00, January wide 60.00-73.00 range

 

Wheat

·        
US wheat futures ended higher for Chicago and KC and lower for MN (US not part of recent high protein wheat tenders). Another cut to Argentina’s wheat crop, this time by the Rosario Grain Exchange, to 13.7 million tons from 15
million previously, was supportive.

·        
Recent rains that fell across parts of the US Great Plains limited gains. More precipitation is needed for wheat establishment before winter dormancy. Last week some producers were planting in the dust. A lower USD may provide
some support today.

·        
Funds on Wednesday bought an estimated net 4,000 Chicago wheat.

·        
Oct 24-25 precipitation below…

·        
Paris December wheat was down 0.75 euro earlier at 336.50 euros a ton.

·        
The USDA Attaché sees the Argentina wheat crop at 15.5 million tons, 2 million below USDA official. Exports are seen at 10 million tons.

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Update_Buenos%20Aires_Argentina_AR2022-0019

·        
Seven ships recently left Ukraine for the EU and China, estimated at a combined 220,000 tons. It includes 30,000 tons of rapeseed for the EU and 50,000 tons of corn for the Netherlands.

 

Export
Developments.

·        
Algeria started buying wheat and results should be out sometime soon. Initial volume late Tuesday was 80,000 tons c&f and price at $381/ton. They are in for November 16-December 31 shipment.

·        
Lowest price for Pakistan seeking 500,000 tons of wheat was $373.00/ton c&f for Nov 13-Jan 10 shipment. 

·        
South Korea four millers seek 128,000 tons of wheat from the US, Australia and/or Canada on Thursday, for LH half Jan through Feb shipment.

·        
Jordan saw 4 offers for up to 120,000 tons of barley but ended up passing.

·        
Jordan is back in for 120,000 tons of barley on November 2 for March/April shipment.

·        
Taiwan seeks 38,515 tons of US wheat of various classes on Thursday for Dec 14-Dec 25 shipment out of the PNW.

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

·        
Iraq seeks 50,000 tons of wheat on October 30, nearly one week later than their original close date.

·        
Jordan seeks 120,000 tons of hard milling wheat on November 1 for March/April shipment.

 

Rice/Other

·        
Vietnam Jan-Oct rice exports may reach 6.07 million tons, up 17.2 percent from year earlier.

·        
Results are awaited on Egypt seeking 50,000 tons of sugar, optional origin, on October 29 (not 25) for arrival between Dec 1-31.

 

 

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