FI Evening Grain Comments 11/01/22

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CBOT
soybeans rallied on technical buying, Brazil roadblocks affecting deliveries to ports, net drying across southern Brazil, expectations for US Gulf soybean shipments to slow, and strength in global vegetable oil markets. Corn traded two-sided, ending higher
after Chicago wheat rebounded to close higher. Shipping along the Ukraine grain corridor is expected to slow over the next week. The UN, Turkey and Ukraine agreed not to plan any movement of vessels on Wednesday, as part of the safe passage deal. Negotiations
with Russia are ongoing. Many insurers have stopped offering insurance to cover for shipments out of Ukraine. About 65 ships are stuck in Ukraine, according to ICS analysis via Reuters.

 

Weather

Western
NE will see rain Thursday. NE, KS, western OK, and western TX will see rain Friday. The Midwest will see light rain Thursday through Friday bias northwestern areas. Northeastern areas of Brazil will see rain this week. Argentina will see net drying over the
next 5 days.

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE COMING WEEK

• Brazil
  dryness is weighing in on the market today
• A
  lack of rain for ten days is expected in center west and southern Brazil
• Soil
  moisture is already limited in eastern and southern Mato Grosso and parts of Goias and two states have produced 32% to nearly 40% of the nation’s soybeans in recent years
• Ten
  days of limited rain and warm temperatures will stimulate net drying and more concern over future crop development
• The
  Amazon River Basin and far northern South America are unusually dry today and there will not be much precipitation in the coming week
  
• Daily
  high temperatures in center west Brazil will be in the upper 70s and 80s the remainder of this week and then in the 80s and lower 90s this weekend into next week
  
• Strong
  evaporation rates are likely and rainfall today is not likely to be very great
• Net
  drying in Parana, Paraguay and some southern Mato Grosso do Sul locations and a few in Sao Paulo would be welcome after and abundantly wet spring
• Aggressive
  drying and planting should take place during this drier biased period
• Soybeans,
  corn, rice and cotton will all be planted
• Monsoonal
  precipitation should resume in Brazil near mid-month
• Brazil
  rainfall Monday was scattered in many areas across the nation, but resulting amounts were lighter than expected after abundant rain fell Sunday from Paraguay into Parana
• Argentina
  was dry Monday and cool temperatures dominated
• Argentina
  frost and freezes were noted this morning, but crop damage was localized
• Extreme
  lows slipped to 25 Fahrenheit (-4C) at Tandil, Buenos Aires, 28 (-2C) along the San Luis/Cordoba border and 28 (-2C) along the Cordoba/Santiago de Estero border
• Most
  lows were in the 30s Fahrenheit
• Crop
  damage was confined to local areas near the coldest temperatures noted above
  
• Patches
  of soft frost occurred in Rio Grande do Sul and southeastern Santa Catarina, Brazil this morning with no crop damage suspected
  
• Argentina
  will remain dry biased over the next ten days with as temperatures trend warmer
• Some
  showers will occur in the Nov. 9-15 period
• Tropical
  Storm Nalgae was 169 miles south southeast of Hong Kong at 1500 GMT today moving north northwesterly at 8 mph and producing maximum sustained wind speeds of 69 mph.
  
• The
  storm will move to the west side of the Hong Kong region and then move along the western Guangdong coast Wednesday and Thursday
• Heavy
  rain is expected in Guangdong and some immediate neighboring provinces, but crop damage does not seem very likely
  
• The
  storm should steadily weaken as it approaches the coast
• Tropical
  Depression 27W (Banyan) was dissipating over open water between Palau and Mindanao Islands in the western Pacific Ocean today
  
• The
  system and its remnants should not have much impact on land
• Australia
  weather should trend drier in much of the nation (especially in the east) starting this afternoon and continuing for the following week to possibly ten days
• Absolute
  dryness is not likely, but resulting rain amounts will be light and sporadic giving the ground a chance to firm up and flood water to recede
• China
  weather Monday was dry except in the northeastern provinces where up to 0.40 inch of moisture resulted
  
• Temperatures
  were mild

 

• China
  weather is not expected to change much in the coming ten days
• Showers
  will occur infrequently and resulting rainfall will be light
• The
  Yangtze River Basin still needs significant rain for its rapeseed and other winter crop planting, but areas south of the river and in the interior southeastern corner of the nation will continue in drought for an extended period of time
• India’s
  greatest rainfall over the next ten days will be in the far south leaving most other areas in a seasonably dry mode supporting summer crop maturation and harvesting as well as winter crop planting
• Areas
  from southern Andhra Pradesh and Tamil Nadu to Kerala will receive 4.00 to more than 12.00 inches of rain in the coming week
  
• Europe
  weather will become more active in the west, central and north during the coming week to ten days
• Rain
  will fall more often and should benefit wheat and rapeseed establishment
• Southeastern
  Europe, portions of Spain and southern France area still much too dry
• Western
  CIS crop areas will continue to see a good mix of precipitation and sunshine over the next ten days
• Soil
  moisture will remain favorably rated in most winter crop areas
• U.S.
  crop areas will be wettest from eastern portions of the central Plains into to the central Midwest Friday through the weekend with some rain in the lower and eastern Midwest early next week
  
• Rain
  will be most significant from Oklahoma to Wisconsin with amounts of 0.40 to 1.50 inches and local totals over 2.00 inches
• Significant
  precipitation is not likely in very many other U.S. crop areas during the next ten days with another frontal system will bring some showers to a part of the central and eastern U.S. during the latter part of next week and into the following weekend
• Resulting
  moisture will be light
• U.S.
  temperatures will be warmer than usual for the next ten days in the eastern half of the nation
• North
  America temperatures will trend colder than usual in Alberta and Saskatchewan later this week and into next week
  
• Temperatures
  in the western part of the U.,S. will be cool bias, but not nearly as cold as western Canada
  
• The
  northwestern states will be coolest
• West
  Texas rainfall will be minimal over the coming week to ten days, although a few showers might develop briefly during the weekend and then more drying will occur next week
  
• U.S.
  Pacific Northwest will receive some precipitation periodically with mountainous areas wettest and the Yakima Valley driest
  
• U.S.
  west-central hard red winter wheat areas will be drier biased over the next ten days while some rain falls in other areas late this week into early next week
  
• Canada
  Prairies weather will trend colder this weekend into next week
• Rain
  and snow will precede the colder weather with areas along the front range of mountains in Alberta and from southern Alberta through western Saskatchewan wettest
  
• Ontario
  and Quebec, Canada weather will be mostly good for summer crop harvest progress and winter grain planting during the coming ten days
• Less
  frequent and less significant rain is predicted with temperatures rising above normal
• Some
  precipitation will occur to slow field progress infrequently
• 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
• Mexico’s
  seasonal rains have largely diminished for the season and good crop maturation and harvest weather is expected into next week
• Some
  rain will evolve in the east and south briefly during the second week of the forecast
• Central
  America precipitation is expected to be light and sporadic for a while, but some increase in rainfall will occur from Belize through northern Guatemala to southern Chiapas, Mexico as a tropical cyclone moves inland
• Tropical
  Storm Lisa was located 320 miles east of Isla Roatan, Honduras and 430 miles east of Belize City near 16.3 north, 81.8 west moving westerly at 14 mph and producing maximum sustained wind speeds of 60 mph
  
• The
  system may become a hurricane tonight or Wednesday as the system continues moving west northwesterly
  
• Landfall
  is expected over Belize Wednesday night or early Thursday and the storm will then move through northern Guatemala with dissipation over southern Chiapas, Mexico Thursday night or early Friday
  
• Heavy
  rainfall of 5.00 to 10.00 inches and locally more will accompany the storm inland
• Tropical
  Storm Martin formed in the Atlantic Ocean 550 miles east northeast of Bermuda today and was expected to become a hurricane Wednesday or Wednesday night before losing its tropical characteristics
• The
  storm will then move to the northern Atlantic Ocean
• Martin
  poses no threat to land
• Interior
  areas of Mainland Southeast Asia will be a little drier than usual over the next ten days, although some moderate to heavy rain may impact central Vietnam coastal areas next week and some rain will fall periodically in southern Vietnam near the Mekong Delta
  and in a few southwestern Central Highlands crop areas
• Indonesia,
  Malaysia will experience frequent rain with some bouts of heavy accumulations
• Local
  flooding will still be possible, but no widespread serious problems are anticipated
  
• 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 near the coast except in Cameroon where there could be some heavy rain
• East-central
  Africa rainfall will be sufficient to support coffee and cocoa as well as a few other crops
• Rain
  will fall in portions of Ethiopia, Tanzania and Uganda
• Today’s
  Southern Oscillation Index was +19.61 and it will move erratically over the next few days

 

Source:
World Weather INC

 

Bloomberg
Ag Calendar

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

 

Brazil
selected October commodities exports:

Commodity                     
October 2022       October 2021

CRUDE
OIL (TNS)                5,550,947             5,850,041

IRON
ORE (TNS)                 26,792,828            30,770,817

SOYBEANS
(TNS)                 4,063,857             3,292,942

CORN
(TNS)                     7,199,803             1,797,038

GREEN
COFFEE(TNS)              199,898               188,843

SUGAR
(TNS)                    3,750,143             2,311,047

BEEF
(TNS)                     188,558               82,187

POULTRY
(TNS)                  362,940               361,913

PULP
(TNS)                     1,998,659             1,255,765

Source:
Brazil AgMin via Reuters

 

Macros

US
S&P Global Manufacturing PMI Oct: 50.4 (prev 49.9)

US
ISM Manufacturing Oct: 50.2 (est 50.0; prev 50.9)

US
ISM Prices Paid Oct: 46.6 (est 53.0; prev 51.7)

US
ISM New Orders Oct: 49.2 (prev 47.1)

US
ISM Employment Oct: 50.0 (prev 48.7)

US
JOLTS Job Openings Sep: 10717K (est 9750K; prevR 10280K)

US
Construction Spending (M/M) Sep: 0.2% (est -0.6%; prevR -0.6%

 

Corn

·        
Corn prices traded two-sided, ending higher on Black Sea shipping concerns. Some noted new month/new money.

·        
StoneX sees the Brazil 2022-23 corn crop at 129.9 million tons, up from previous estimate of 126.3 million. USDA is at 126 million tons. Soybean & Corn Advisor is at 125.5 million tons.

·        
There is a trifecta going on with transportation problems. Mississippi River barge shipping woes, Brazilian roadblocks slowing grain movement to ports, and a potential US rail strike on the horizon, not to mention ongoing Black
Sea shipping uncertainties. November will be an interesting month.

·        
The UN, Ukraine and Turkey agreed not to plan any vessel movements under the grain deal starting Wednesday.

·        
September US corn for ethanol use was 383 million bushels, slightly below a trade estimate of 394 million bushels.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 5,000 thousand to 1038k (1026-1057 range) from the previous week and stocks up 51,000 barrels to 22.342 million.

 

U
of I: Recent Disruptions and World Consumption of Corn, Soybeans, and Wheat

Zulauf,
C. “Recent Disruptions and World Consumption of Corn, Soybeans, and Wheat.” farmdoc daily (12):162, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, October 31, 2022.
https://farmdocdaily.illinois.edu/2022/10/recent-disruptions-and-world-consumption-of-corn-soybeans-and-wheat.html

 

 

 

 

Export
developments.

·        
South Korea’s KFA group bought 65,000 tons of corn from South America or South Africa for arrival around February 5.  

·        
South Korea’s MFG group rejected offers for 58,000 tons of corn and 8,000 tons of soybean meal from South America for December/January arrival. 

 

Updated
10/31/22

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

 

Soybeans

·        
CBOT
soybeans were up 28.75 cents basis November and 28.25 cents for the January. One of the reasons we think soybeans were higher earlier was the rise in soybean oil. The recent increase in global vegetable oil prices have supported SBO futures. Palm oil futures
and cash rallied last two days. Cash vegetable oils when imported into Rotterdam are sharply higher. Several other factors influenced soybeans. Soybean oil closed higher bias bear spreading. Soybean meal closed mixed on bear spreading. Earlier we heard there
was Asian interest for US soybean meal.

·        
Brazil’s southern states of Parana and Santa Catarina soybean plantings are delayed, Brazil truck protests blocking soybean movement to ports, good USDA export inspections (although slowing) despite Mississippi River problems,
lack of Argentina producer selling threatening soybean availability for December and January crush rates, and obviously Black Sea shipping uncertainty. Not to mention a potential US rail strike could hinder soybean movement later this month.

·        
January soybeans crossed the 50/100/200 – day moving averages.

·        
US harvest progress is moving along nicely.

·        
Renewed concerns over covid-19 lockdowns have eased after tests came back negative at Shanghai’s Disney Resort.

·        
Many Brazil truckers that supported outgoing President Jair Bolsonaro are staging a strike, blocking roads in 16 states. Today the
Brazil Supreme Court ordered police to remove the roadblocks
set up by the protesters. 271 points were blocked in 23 of Brazil’s 26 states. As of this morning the main access road for Brazil’s Paranagua port remained blocked.

·        
StoneX sees the Brazil 2022-23 soybean crop at 154.35 million tons, up from previous estimate of 153.8 million. They lowered the Brazil soybean export forecast by 4 million to 96 million tons for 2022-23 in part China imports.
USDA Attaché is at 148.5 million tons, below USDA official 152 million. Soybean & Corn Advisor is at 151 million tons. Most of the trade is between 150 and 155 million tons.

·        
We see no changes to new-crop SA production estimates when USDA updated their S&D’s on Wednesday, November 9.

·        
CBOT deliveries for November soybeans were (another) 440 contracts with no major commercial stoppers.

·        
Cargo surveyor SGS reported October Malaysian palm exports at 1,477,713 tons, 77,568 tons above month ago or up 5.5%, and 1,068 tons above October 2021 or up 0.1%.

·        
China plans to auction off 500,000 tons of soybeans from reserves on November 11.

 

India
oils and oilseeds stock limits lifted

https://pib.gov.in/PressReleseDetailm.aspx?PRID=1872841

 

US
soybean crush for
the month of September was 167.6 million bushels, 0.3 below a Bloomberg trade guess and up from 164.1 million September 2021. The September 2022 crush averaged 5.59 million bushels per day versus 5.65 million during August and 5.47 million September 2021.
End of September soybean oil stocks were 1.999 billion pounds, 32 million above Bloomberg’s average (but near Reuters estimate), down from 2.104 billion at the end of August and compares to 2.131 billion at the end of 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
under pressure early Tuesday. Even though Russia “suspended” their part of Black Sea grain safe passage agreement, ships still moved in and out of Ukraine Sunday-Tuesday. Three grain boats departed Ukrainian ports as of early Tuesday. This comes after twelve
left Ukraine Monday.

·        
But the bearish sentiment revered after a series of headlines reached the newswires during the day session and wheat rallied by the afternoon session.

·        
Shipping along the Ukraine grain corridor is expected to slow over the next week. The UN, Turkey and Ukraine agreed not to plan any movement of vessels on Wednesday, as part of the safe passage deal. Negotiations with Russia are
ongoing. Many insurers have stopped offering insurance to cover for shipments out of Ukraine. About 65 ships are stuck in Ukraine, according to ICS analysis via Reuters.

·        
The uncertainty over the Black Sea situation should keep traders nervous over the short term and may keep wheat futures prices bouncing around. Yesterday we raised our trading ranges for the three US December contracts.

·        
There are a few other issues in the wheat market.

·        
Argentina saw additional frosts on Tuesday and there was some damage to the wheat crop.

·        
Argentina this week is expected to announce measures to allow wheat exporters to delay export agreements, to ensure domestic supplies. About 8.9 million tons of 2022-23 Argentina wheat has been committed for exports. Consumption
stands at around 7.6 million tons. Currently The Rosario exchange estimates the crop at 13.7 million tons, down from 23 million tons in 2021-22.

·        
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.

·        
Paris December wheat was up 7.25 to 357.75 euros a ton.

·        
Egypt plans to import 1 million tons of wheat until the local harvest season arrives next year (harvesting starts late April).

 

Argentina
temps

Source:
World Weather Inc.

 

Export
Developments.

·        
Romanian wheat was lowest offered for Iraq seeking 50,000 tons of wheat at $469/ton c&f.

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

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

·        
Jordan issued an import tender for 120,000 tons of hard milling wheat set to close November 15 for March/April shipment.

·        
South Korea’s NOFI group bought 63,000 tons of feed wheat at $396/ton c&f for arrival around December 30, 2022.

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

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

 

Rice/Other

·        
South Korea’s Agro-Fisheries & Food Trade Corp. seeks 50,500 tons of rice from the US and/or EU on November 9 for arrival between February and June.

 

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