FI Evening Grain Comments 10/31/22

PDF Attached

 

RUSSIA
PRESIDENT PUTIN SAYS WE ARE NOT ENDING OUR PARTICIPATION IN BLACK SEA GRAIN EXPORT DEAL, JUST SUSPENDING IT – Reuters News

 

US
winter wheat conditions were only 28 percent good and excellent, down from 45 year ago. The initial fall rating was lowest since at least 1987 when USDA started reporting.

 

Calls:

Soybeans
4-8 higher

Soybean
meal $1-3 higher

Soybean
oil 10 to 30 points higher

Corn
5-7 higher

Wheat
10-15 higher

 

Russia
said they will not extend the Ukraine grain safe passage agreement and that is sent CBOT agriculture commodities higher. We are hearing many firms and major importers were prepared for this announcement.  Officials are noting up to 218 vessels are “blocked”
after the decision. Traders should monitor grain movement over the next few weeks. Twelve vessels embarked from Ukrainian ports early Monday.

 

 

 

 

 

 

Weather

US
rainfall over the weekend was as expected, favoring southern OK and northern and central TX, southeastern MO, southern IL, southern IN, and southern IN and KY. Western NE will see rain Thursday. NE, KS, western OK, and western TX will see rain Friday. The
Midwest will see light rain today and again Thursday through Friday bias northwestern areas. Northeastern areas of Brazil will see rain this week. Argentina will see net drying over the next 5-7 days.

 

 

World
Weather, INC.

WORLD
WEATHER HIGHLIGHTS FOR OCTOBER 31, 2022

• A
  tropical cyclone is forming in the Caribbean Sea south of Jamaica today that will bring heavy rain and flooding to Belize, northern Guatemala and southern Chiapas, Mexico Thursday and Friday
• Tropical
  Cyclone Nalgae brought torrential rain and flooding to southern Luzon Island, Philippines with 5.00 to more than 15.00 inches or rain resulting 
• Areas
  in the Manila region were wettest
• Nalgae
  will move toward Hainan China later this week, but will diminish after reaching typhoon intensity briefly Tuesday and early Wednesday
• West-central
  Argentina crop areas experienced some frost and light freezes conditions overnight and similar conditions are expected in the southeast part of the nation Tuesday morning
• Frost
  occurred overnight mostly in La Pampa, western Buenos Aires, San Luis and southern Cordoba with extreme lows to 28 Fahrenheit (-2C) in San Luis.
  
• Most
  crop areas were not seriously impacted by the cold
• U.S.
  rain from eastern Texas to the Delta during the weekend induced some runoff, but changes in the lower Mississippi River levels should be light
• Another
  bout of rain is possible in the eastern Plains and western Corn Belt this weekend into early next week that may help add a little more runoff to the river systems, but big water level changes are not anticipated
• U.S.
  west-central high Plains will miss out on most of the significant rain potential that may occur this weekend into next week in the eastern Plains and western Midwest
• Snow
  will fall from Montana and southern Alberta into western and northern Saskatchewan during mid-week this week slowing travel and stressing some livestock while raising the potential for a little improved soil moisture when the snow melts
• Australia
  will experience one more bout of significant rain today into Tuesday morning in the east and then a week of drying is likely
• South
  Africa will receive sufficient rain to support spring and summer crop planting and emergence
• Brazil
  will receive widespread rain early this week and then experience a full week of drying in center west and southern parts of the nation after that
• Aggressive
  fieldwork should occur during the drier period
• Europe
  weather will trend wetter later this week into next week especially in the central and west
• Drought
  will prevail in the lower Danube River Basin and greater rain will still be needed from eastern Spain into southern France

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Monday,
Oct. 31:

• Malaysia’s
  Oct. 1-31 palm oil export data

• USDA
  export inspections – corn, soybeans, wheat, 11am
• Agricultural
  prices paid, received, 3pm
• US
  crop conditions and harvesting for corn, cotton, soy; winter wheat planting, 4pm
• HOLIDAY:
  Chile

Tuesday,
Nov. 1:

• Australia
  commodity index
• EU
  weekly grain, oilseed import and export data
• New
  Zealand global dairy trade auction
• Purdue
  Agriculture Sentiment. 9:30am
• USDA
  soybean crush, DDGS production, corn for ethanol, 3pm
• US
  winter wheat condition, 4pm
• Honduras,
  Costa Rica monthly coffee exports
• International
  Cotton Advisory Committee releases monthly outlook
• HOLIDAY:
  France, Chile

Wednesday,
Nov. 2:

• Indonesian
  Palm Oil Conference in Bali, day 1

• EIA
  weekly US ethanol inventories, production, 10:30am
• HOLIDAY:
  Brazil

Thursday,
Nov. 3:

• Indonesian
  Palm Oil Conference in Bali, day 2

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• HOLIDAY:
  Japan

Friday,
Nov. 4:

• Indonesian
  Palm Oil Conference in Bali, day 3

• FAO
  World Food Price Index
• 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

 

 

USDA
inspections versus Reuters trade range

Wheat                 
137,082                 versus   100000-500000  range

Corn                     
422,288                 versus   225000-650000  range

Soybeans           
2,574,060             versus   1200000-2650000             range

 

 

 

GRAINS
INSPECTED AND/OR WEIGHED FOR EXPORT

                 
REPORTED IN WEEK ENDING OCT 27, 2022

                 
          — METRIC TONS —

—————————————————————————

                                                  
CURRENT     PREVIOUS 

             ———–
WEEK ENDING ———-  MARKET YEAR  MARKET YEAR

 
GRAIN      10/27/2022  10/20/2022  10/28/2021    TO DATE     TO DATE  

 

BARLEY             
0         147       1,596        1,561        9,743 

CORN         
422,288     472,594     671,085    4,192,383    5,474,286 

FLAXSEED           
0           0           0          100           24 

MIXED              
0           0           0            0            0 

OATS               
0           0           0        6,486          300 

RYE                
0           0           0            0            0 

SORGHUM       
72,154      31,424      77,108      213,269      496,496 

SOYBEANS   
2,574,060   2,918,705   2,675,334   10,204,854   11,278,684 

SUNFLOWER        
384         288          96        2,064          432 

WHEAT        
137,082     133,319     130,721    9,645,874    9,668,076 

Total      
3,205,968   3,556,477   3,555,940   24,266,591   26,928,041 

————————————————————————–

CROP
MARKETING YEARS BEGIN JUNE 1 FOR WHEAT, RYE, OATS, BARLEY AND

FLAXSEED; 
SEPTEMBER 1 FOR CORN, SORGHUM, SOYBEANS AND SUNFLOWER SEEDS.

INCLUDES
WATERWAY SHIPMENTS TO CANADA.

 

Macros

US
Chicago PMI Oct: 45.2 (est 47.0; prev 45.7)

EIA:
US Crude Oil Production Rose 102K Bpd In Aug To 11.975M Bpd (Vs Revised 11.873M Bpd In Jul)

–
July Oil Production Revised Up By 73K Bpd To 11.873M Bpd

US
Crude Production Grew 0.9% To 11.98Mln BPD In August, Highest Since March 2020 – EIA

OPEC
Maintains View That World Oil Demand To Plateau After 2035

OPEC
Raises 2023, Medium-Term And 2045 Oil Demand Forecasts; 2022 World Oil Outlook

European
inflation 10.2%

 

Corn

·        
Corn prices traded higher, led by bull spreading, on Black Sea shipping concerns after Russia announced they will not extend the Ukraine safe passage agreement. There is no known timeline if it will be extended but expect Russia
to lay out demands if talks resume. Fertilizer shipments from Russia could become a topic in future discussions.

·        
Funds bought an estimated net 7,000 corn contracts.

·        
US corn harvest progress of 76 percent was 1 point above expectations and above 64 percent average.

·        
USDA US corn export inspections as of October 27, 2022 were 422,288 tons, within a range of trade expectations, below 472,594 tons previous week and compares to 671,085 tons year ago. Major countries included China for 144,283
tons, Mexico for 121,649 tons, and Japan for 97,421 tons.

 

 

·        
Temperatures in Argentina and southern Brazil will fall again tonight, bringing potential frosts to some of the growing areas.

 

World
Weather inc.

 

 

 

Export
developments.

·        
None reported

 

Updated
10/31/22

December
corn is seen in a $6.75-$7.25 range. March $6.50-$7.50 range.

 

Soybeans

·        
CBOT
soybeans ended higher on spillover strength in wheat and higher soybean oil despite a sharply higher trade in the US dollar (up 85 points). Palm oil ended higher. Part of the reason for palm and soybean oil rally was related to Black Sea sunflower oil supply
concerns. Meal was mixed to start but ended higher after soybeans made another leg higher.

·        
Funds bought an estimated net 9,000 soybeans, 2,000 meal and 5,000 soybean oil.

·        
US soybean harvest progress of 88 percent was 1 point below expectations and above 78 percent average.

·        
USDA US soybean export inspections as of October 27, 2022 were 2,574,060 tons, within a range of trade expectations, below 2,918,705 tons previous week and compares to 2,675,334 tons year ago. Major countries included China for
2,076,606 tons, Mexico for 141,886 tons, and Taiwan for 88,606 tons.

·        
Oil share was higher and CBOT crush margins firmed. January crush stands at $2.7750.

·        
Brazil elections: Lulu likely won. Supports anti-poverty programs, broad-based coalition, and environmental concerns.

·        
Many Brazil truckers that supported outgoing President Jair Bolsonaro are staging a strike, blocking roads in 16 states.

·        
First Notice Day CBOT deliveries for November soybeans were a large 440 contracts with no major commercial stoppers.

·        
Renewed concerns over covid-19 lockdowns in China could hinder upside movement in soybeans this week.

·        
Egypt’s vegetable oil stocks are sufficient for 5.3 months.

·        
ITS reported October Malaysian palm oil exports increased 5 percent to 1.496 million tons from 1.425 million during September. AmSpec reported 1.475 million tons, a 11.7 percent increase from 1.320 million.

·        
(Reuters) – Indonesia on Monday said it has extended its policy to waive a palm oil export levy until the crude palm oil reference price breaks $800 per tons and above, the economic ministry said in a statement on Monday. The
waiver was initially due to expire at the end of October.

 

 

We
look for US soybean crush for the month of September to average 5.59 million bushels per day versus 5.65 million during August and 5.47 million September 2021.

 

 

Export
Developments

• None
  reported

 

 

 

Updated
10/31/22

Soybeans
– November is seen in a $13.75-$14.30 range, January $13.25-$15.00

Soybean
meal – December $400-$440, January $400-$475

Soybean
oil – December 71-76, January wide 64.00-74.00 range

 

Wheat

·        
US wheat futures were sharply higher after Russia announced they will not extend the Ukraine safe passage deal. Chicago rallied 53 cents (49 modified session) to its highest level since mid-October. Look for heavy negotiations
over the next few weeks to get this deal extended. Russian exports will be one of the main focusses for future talks.

·        
Funds bought an estimated net 20,000 Chicago wheat contracts. 

·        
US winter wheat conditions for the combined good and excellent categories were only 28 percent (worst since at least 1987), well below an average trade guess of 41 percent, below 45 percent year ago and 50 average.

·        
Only 9 percent of OK’s topsoil moisture was rated adequate/surplus, and Texas stands at only 26 percent.

 

 

·        
Nearby December Chicago, KC and MN futures gapped higher, above major moving averages; a signal prices could break out to the upside if the Black Sea situation escalates.  We see no major upside if Ukraine is still able to move
grain but did hear a couple grain tugboats were attacked earlier today.  Fighting escalated over the weekend across Ukraine and Crimea.

·        
Several headlines are out this morning surrounding the Russian announcement, but we looked past many of them. Apparently, several ships left Ukraine on Monday carrying grain.

·        
USDA US all-wheat export inspections as of October 27, 2022 were 137,082 tons, within a range of trade expectations, above 133,319 tons previous week and compares to 130,721 tons year ago. Major countries included Mexico for 29,539
tons, Taiwan for 26,355 tons, and Korea Rep for 26,322 tons.

·        
Egypt said they have enough wheat to cover 5.1 months of supply. Look for them to tender soon.

·        
Paris December wheat was up 14 euros (gapped higher) at 352.25 euros a ton, also highest since mid-October.

·        
US soft wheat exports, from July 1 to October 30 reached 11.54 million tons, compared with 11.44 million tons by the same week in 2021-22.

·        
Ukraine’s AgMin reported October grain exports fell to 4.22 million tons from 5.05 million tons in the same month of the previous year. October 2022 included 1.9 million tons of wheat, nearly 2 million tons of corn and 313,000
tons of barley. Crop year to date grain exports were 12.9 million tons (July-October), versus 19.4 million tons in the same period of 2021-22.

·        
IKAR estimated 2023 Russia wheat production at 87 million tons from their current 101 million for 2022. 2022-23 Russia export potential for wheat was seen at 50 million tons, up 2 million from previous estimate.

·        
China plans to auction off 40,000 tons of wheat from state reserves on November 2.

·        
China sold 40,257 tons of wheat, crop-year 2014, 2015, 2016 and 2017, from reserves on October 26 at an average price of 2,843 yuan per ton ($392.14/ton).

 

Export
Developments.

·        
Pakistan bought 385,000 tons of wheat at $373.00/ton, optional origin, for LH November through FH January shipment. They were in for 500,000 tons.

·        
Result awaited: 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.

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

 

Rice/Other

·        
Egypt’s GASC bought 150,000 tons of sugar for Dec/Jan shipment.

·        
(Reuters) Vietnam’s rice exports in the January-October period are estimated to have risen about 17.2% from a year earlier to 6.07 million tons, government data showed on Saturday. Revenue from rice exports in the period is seen
up 7.4% to $2.7 billion. October rice exports from Vietnam, one of the world’s leading shippers of the grain, likely totaled 700,000 tons, worth $334 million.

 

 

Updated
10/31/22

Chicago
– December $8.50-$9.50, March $8.00 to $10.00

KC
– December $9.50-$10.25, March 8.50-$10.50

MN
– December $9.50-$10.30, March $9.00 to $10.50