FI Evening Grain Comments 11//02/22

PDF Attached

 

Ukraine
corridor reopens Thursday after Russia agreed to allow gain shipping to resume. The Russian defense ministry received written guarantees from Ukraine not to use the grain corridor for military action against Russia. Tensions are still running high. This afternoon
Ukraine’s president said Russia fired missiles that flew across the Black Sea corridor. Wheat and corn prices sank. Soybean oil was very strong, lifting soybeans higher. Meal ended moderately lower. China green lighted imports of Brazilian corn. World export
developments were light on Wednesday.

 

 

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’s
  western and southern crop areas have turned drier and will remain in this mode for the next full week
• Showers
  that develop late next week will be erratic and light initially, but should increase in the following weekend with a more “normal” weather pattern for a La Nina year expected by the middle of this month
• Northeastern
  Brazil will see the most active weather over the balance of this week with some locally heavy rainfall possible
• Temperatures
  turned quite cool across Brazil, Paraguay, Bolivia and eastern Argentina earlier this week and that trend will prevail into Friday
• Argentina
  will trend much warmer late this week and into the weekend with some cooling expected once again during the second week of the forecast
• Argentina
  was dry Tuesday and will continue dry for a full week with some rain expected to begin again in portions of the nation during the Nov. 10-16 period
  
• The
  precipitation will not likely be very great in eastern areas
• Little
  change in the U.S. outlook was noted overnight
• Mostly
  dry conditions will prevail in the high Plains region from western Texas through eastern Colorado and western Kansas to western South Dakota during the next ten days
• Rain
  is expected Friday into Sunday from Oklahoma, eastern Texas and Arkansas through Missouri and eastern Kansas to Wisconsin and Illinois
• The
  moisture may give rise to a slight increase in runoff, but no changes of significance are likely for the lower Missouri, Mississippi or Ohio Rivers
• Limited
  rain is expected in eastern U.S. Midwest and Southeastern States during the coming seven days
• U.S.
  Delta will receive some rain late this weekend and early next week with dry weather likely for several days thereafter
• Only
  light amounts of rain are expected
• Recent
  rain in the U.S. Pacific Northwest was welcome, but much more is needed
• Additional
  rain is expected this weekend into next week
• The
  precipitation should occur in waves disfavoring the Yakima Valley while the mountainous areas are wettest
• Bitter
  cold air will pool in western Canada the remainder of this week and it will seep into the northern U.S. Plains and far western United States during the weekend and especially next week
• Snow
  cover will increase in Canada’s Prairies during the coming week to ten days
• Warm
  soil temperatures will help limit frost development in the ground so that melting snow in the spring might get into the ground a little better for improved planting moisture in 2023
• The
  snow cover may help improve the potential for colder weather in the U.S. later in November and December
• Ontario
  and Quebec weather will be mostly good for advancing corn and soybean harvesting and winter crop planting during the next ten days
• Precipitation
  days will be limited and moisture totals should be light
• Western
  Europe will begin getting more significant rain  Thursday through the weekend
• Eastern
  Europe will remain drier biased for much of the next ten days
• Temperatures
  will be warmer than usual for an extended period of time
• Drought
  remains in the lower Danube River Basin
• Dryness
  will also prevail in parts of Spain
• Relief
  from low water supply in western Europe will resume, albeit slowly in the next ten days
• Western
  CIS crop moisture is still rated favorably and precipitation will continue to come and go periodically over the next ten days ensuring favorable soil moisture for the winter
• Seasonal
  cooling has most winter crops becoming dormant or semi-dormant except in Russia’s Southern Region, Ukraine and parts of Belarus where crop development is still occurring
  
• Temperatures
  will be warmer than usual for much of the next ten days west of the Ural Mountains
  
• Southern
  India will receive frequent rainfall over the next ten days maintaining concern over the potential for flooding in Tamil Nadu, far southern Andhra Pradesh and parts of Kerala
• Good
  harvest and planting weather will continue elsewhere in the nation
• Indonesia,
  Malaysia, southern Vietnam and parts of the Philippines will continue wet over the next ten days with bouts of local flooding possible
• Tropical
  Storm Nalgae was located 58 miles southeast of Hong Kong at 1500 GMT today moving north northwesterly at 7 mph with maximum sustained wind speeds getting to 46 mph.
  
• The
  storm will turn to the west and possibly west southwest today moving it away from Hong Kong, but rain from the system will continue in many southeastern China crop areas into Friday
• Very
  little damage is expected from the system due to light wind speeds and an absence of excessive rain
• Hurricane
  Lisa was located 60 miles north of the Isla Roatan, Honduras moving westerly at 15 mph and producing maximum sustained wind speeds of 75 mph.
  
• Lisa
  will move across Belize tonight and northern Guatemala Thursday before impacting southeastern Mexico late Thursday and Friday
• The
  storm will be downgraded as a tropical storm over northeastern Guatemala late tonight and early Thursday and then to a depression late Thursday night or early Friday as its center moved toward the Gulf of Campeche
• The
  storm is not expected to redevelop into a threatening storm, but its circulation center will persist over the Gulf of Campeche through the weekend and waves of rain will continue in coastal areas
• There
  is no potential for this storm to come northward to impact the United States
• Tropical
  Storm Martin was located over open water in the northern Atlantic Ocean 755 miles east northeast of Bermuda moving east northeasterly at 15 mph and producing maximum sustained wind speeds of 65 mph
• Martin
  will become a hurricane today and will lose its tropical characteristics Thursday going into to Friday, but it will be viable mid-latitude storm system producing rough seas, strong wind and heavy rain – over open water
• The
  storm may have some influence on the U.K. next week, but mostly the storm will help produce a warm and moist airflow across the European continent keeping temperatures above normal and inducing some waves of rain in the central and west
• An
  area of disturbed tropical weather near the Greater Antilles late this week has some potential to evolve into a tropical or subtropical depression during the weekend and movement of this system could bring a little rain to the Carolinas and/or Virginia next
  week
• The
  system will be closely monitored, but there is no active weather in the Greater Antilles this morning associated with this potential event
• Australia
  reported light rain in southeastern parts of the nation Tuesday and early today
• The
  precipitation will linger today and end Thursday
• Drier
  biased weather is expected for a full week in eastern Australia immediately after this disturbance passes off to the east Thursday
• The
  drier weather will be ideal for maturing winter crops and their harvest in Queensland and northeastern New South Wales
• Drier
  weather in eastern Australia may be ending just in time to protect crops from a more serious decline in production and quality following weeks of heavy rain, but much of that will be determined by rainfall later this month and in December when crops are maturing
  and being harvested
• China
  will experience restricted precipitation during the coming week, although some rain will fall over the next few days in the far southeast and in crop areas from Sichuan into Yunnan and Guizhou
• Most
  of the precipitation will be light
• China’s
  wheat production region is expecting some very well timed rainfall next week from the Yellow River Valley southward into the northern Yangtze River Basin
• The
  moisture could vary from 0.30 to 1.00 inch and locally more collectively over the week next week
  
• Improved
  wheat emergence and establishment is expected
• Some
  of this moisture will also reach into northern Rapeseed production areas improving  crop establishment there as well
• 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 southeast briefly Thursday into the weekend because of moisture from the tropical cyclone Lisa
• Central
  America precipitation is expected to be light to moderate and sporadic for a while, but heavy rain is likely from Belize through northern Guatemala to eastern Chiapas and Tabasco, Mexico as a tropical cyclone moves inland
• West-central
  Africa rainfall will occur periodically enough to support southern 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 +19.18 and it will move erratically lower over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

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

 

 

Macros

FOMC
Hikes By 75Bps; Target Range Stands At 3.75% – 4.00%     

–
Interest Rate On Reserves Balances Raised By 75Bps To 3.90% From 3.15%

108
Counterparties Take $2.230 Tln At Fed Reverse Repo Op (prev $2.201 Tln, 102 Bids)

US
ADP Employment Change Oct: 239K (est 185K; prev 208K)

US
DoE Crude Oil Inventories (W/W) 28-Oct: -3.115M (est -200K; prev +2.588M)

–
Distillate: +427K (est -500K; prev +170K)

–
Cushing: +1.267M (prev +667K)

–
Gasoline: -1.257M (est -1.000M; prev -1.478M)

–
Refinery Utilization: +1.70% (est +0.50%; prev -0.60%)

 

Corn

·        
Corn futures were sharply lower on the Black Sea shipping deal and China customs posting an updated list of approved Brazilian corn exporters. The list includes 136 corn export facilities. With China posting the list, we think
it’s a green light for importers to start sourcing Brazilian corn, but how much will they take before the second crop get harvested remains questionable. We think the bulk of Brazil corn imports will not happen until June 2023, when the second crop gets cut.
Brazil tends to use their first crop for domestic use, and with the recent ethanol boom and rising animal unit population, they will need it more than ever.

·        
China’s 2023 import quota for corn is 7.2 million tons, same as 2022. USDA’s Attaché back in early October forecast MY2022-23 corn imports at 18 MMT and estimates MY2021-22 corn imports at 23 MMT.

·        
Note Brazil October corn exports were 7.2 million tons versus 1.8 million tons year ago.

·        
Iran, Egypt, Japan and Vietnam are major importers of Brazilian corn.

Pulled
from the USDA Brazil grain and feed annual

·        
StoneX estimated the US corn crop at 14.109 billion bushels from previous 14.056 billion (174.5 versus 173.9 previous). USDA is at 13.895 billion. We are using 13.831 billion.

·        
For the USDA a week from today, we look for the US corn yield to be lowered from 171.9 bu/acre to 171.4 based on the last US crop rating. We see USDA trimming US corn exports by 50 million bushels to 2.100 billion.

·        
The US could see a rail strike as early as November 19.

·        
USDA’s weekly Broiler Report showed eggs set in the United States down 2 percent and chicks placed up 3 percent.  Cumulative placements from the week ending January 8, 2022, through October 29, 2022, for the United States were
8.10 billion. Cumulative placements were up 2 percent from the same period a year earlier.

·        
US weekly ethanol production increased 7,000 barrels to 1.040 million and stocks decreased 59,000 barrels to 22.232 million. A Bloomberg poll looked for weekly US ethanol production to be up 5,000 thousand and stocks up 51,000.
US ethanol production is highest since end of July 2022. Stocks are highest since the third week of September. US gasoline stocks decreased 1.26 million barrels to 206.6 million and gasoline demand fell 270,000 barrels to 8.660 million.

 

 

 

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 traded two-sided, ending higher from strength in soybean oil and uncertainty over the impact of the recent roadblocks across Brazil affecting soybean deliveries to ports and crush plants. Soybean meal finished moderately lower.

·        
Soybean oil was sharply higher after Malaysian palm oil reached a 12-week high. Brazil is expected to increase their biodiesel mandate from 10 percent to 14 percent sometime in January, then again to 15 percent in March. 

·        
There was talk of Canadian canola oil making its way to Houston for the energy pipeline.

·        
Canadian canola imports have been long used for biodiesel production. Earlier this year the EPA approved Canadian canola for renewable diesel, but this still might have to be finalized. The import rumor may reflect stock building
(may go into storage). The latest EIA biodiesel report showed SBO oil use during the month of August rising 14 percent from Aug 2021, while the combined major feedstock use increasing 23 percent from a year ago. Jan-Aug SBO use is up 19 percent from the same
period in 2021. For the month of August, canola accounted for roughly 6 percent of the combined feedstock use (Jan-Aug 5%). Feedback welcome.

·        
StoneX estimated the US soybean crop at 4.413 billion bushels from previous 4.442 billion (50.9 versus 51.3 previous). USDA is at 4.313 billion. We are using 4.309 billion.

·        
Argentina sold 71 percent of their 44 million ton soybean crop . October 20-26 sales were 323,100 tons, up from 164,000 tons previous week.

·        
CBOT deliveries for November soybeans were 401 contracts with no major commercial stoppers.

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

 

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

·        
CBOT wheat traded sharply lower after Russia agreed to allow gain shipping to resume across the Black Sea grain export corridor. The Russian defense ministry received written guarantees from Ukraine not to use the grain corridor
for military action against Russia. Russia warned they can pull the plug at any time if they find Ukraine using the corridor for war efforts.

·        
Argentina may postpone wheat export licenses to ensure local supplies. We are hearing its official. The local Argentina cash price of wheat softened. Brazil is expected to turn to North American supplies to fulfill any shortfalls
in imports.

·        
Paris December wheat was down 17 euros earlier at 341.25 euros a ton.

 

Export
Developments.

·        
Jordan passed on 120,000 tons of barley for March/April shipment.

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

·        
Today China planned to auction off 40,000 tons of wheat from state reserves.

·        
China plana to auction off 40,000 tons of wheat from state reserves on November 9.

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

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