FI Evening Grain Comments 11/04/22

PDF Attached

 

The
USD gave back 219 points by 3:15 pm CT after a sharp rise on Thursday. This move today lifted US agriculture futures higher. More jobs were added in the US during the month of October. WTI crude oil was very strong, up $4.38. China was in focus, whether or
not they are reopening by relaxing rules on Covid-19 lockdowns.  If China does reopen, some suggest a disinflationary environment through supply chains/commodities. 

 

 

 

Weather

Rain
will fall across eastern NE, KS, OK and northeastern TX today, and again eastern NE on Tuesday. The Midwest will see rain across the west central areas today before moving into the central areas Saturday before drying down Sunday int Monday. Brazil’s weather
will be good for plantings over the next several days. There is still some concern for plantings across southern Brazil where rain is needed. Rain will favor Bahia and Minas Gerais. Argentina will be dry through Monday.  China’s southern and central growing
areas are still experiencing drought and rain is needed for rapeseed development.

 

Source:
World Weather INC

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE COMING WEEK

• Another
  unusually cool day in Brazil Thursday
• High
  temperatures were in the 60s and 70s Fahrenheit in much of the nation with a few lower 80s in the northeast
• Such
  temperatures are rare at this time of year
• These
  are temperatures that would occur in the middle of winter rather than mid- to late spring
• The
  cool weather will prevail for two more days keeping evaporation rates low and that may help to conserve soil moisture for a while
• Warming
  is expected late this weekend into next week and rain will slowly return late next week and into the middle of this month
• Net
  drying is expected in Brazil for much of the coming week the next week except in the northeast where showers and thunderstorms will be possible
• Some
  scattered showers and thunderstorms will begin late next week in some western and southern Brazil locations, but most of the resulting rainfall will not be enough to counter evaporative moisture losses as temperatures trend warmer
• Greater
  rain will evolve in the Nov. 12-18 period
• La
  Nina pattern will keep eastern Argentina, Uruguay and Rio Grande do Sul in a below normal precipitation pattern for a few more weeks
  
• Soil
  moisture is not rated as poorly as one might imagine after two months of below normal rainfall, but a boost in rainfall will be needed soon
• Favorable
  monsoon precipitation should resume in Brazil during the second half of this month with frequent rain from Mato Grosso to northern Parana, Sao Paulo and Minas Gerais
• Some
  of the rainfall may continue lighter than usual, but sufficient amounts will occur to support crop needs
• Argentina
  was dry Thursday and it will experience limited rainfall over the next full week
• Showers
  in the November 11-17 period will favor the west and north parts of the nation and amounts are likely to vary greatly benefiting some crop areas more than others
• Temperatures
  are expected to trend warmer than usual through the weekend and into early next week and that will raise crop moisture stress for the driest areas in the nation
• Cooling
  is expected later next week and into the following weekend restoring more normal temperatures
• Eastern
  Australia will experience restricted rainfall over the next five to seven days favoring runoff and a slow decline in river flows
• Many
  rivers in New South Wales, southern Queensland and Victoria are experiencing high water flows with moderate to major flooding in numerous areas
• River
  flooding and farm land that is under way will not likely end over the coming week, but conditions should be improving
• Better
  harvest weather is expected in Queensland and northern New South Wales in wheat and barley production areas
  
• Rain
  will resume in southeastern Australia late next week and into the following weekend
  
• This
  favors central and southern New South Wales and Victoria
• Queensland
  and northern New South Wales harvest conditions may continue improving Nov. 11-17
• Western
  Australia winter crop conditions are nearly ideal and high yields and good crop quality is likely from that region
• Warming
  Thursday helped to accelerate crop maturation in the north
• China’s
  wheat region from the Yellow River Basin and North China Plain into the northern Yangtze River Basin will get rain next week and the moisture will be ideal for improved crop emergence and establishment
• The
  second half of next week and into the following weekend should be wettest
• China’s
  rapeseed production areas in the Yangtze River Basin have varying soil conditions with northern parts of the region sufficiently moist to support planting and early crop development
• Southeastern
  parts of China’s rapeseed region is suffering from poor soil moisture and only limited rainfall is forthcoming
• GFS
  computer weather forecast model has suggested improved rain for the Yangtze River Basin Nov. 11-17, but World Weather, Inc. is skeptical
• The
  European model keeps the basin dry for the next ten days
• Far
  southern India will continue to receive frequent rainfall over the next ten days to two weeks with some areas in Kerala and Tamil Nadu becoming too wet in time
• Some
  of the heavier rainfall will come from a possibly tropical cyclone that may influence the region late next week and into the following weekend
• Good
  weather for summer crop harvesting and winter crop planting is likely the remainder of the nation
• Europe
  weather will support some rain in central and western parts of the continent over the next several days, although Spain will not do well and it will continue drier than usual in the east
• A
  strong ridge of high pressure is expected over western Europe for a while during the middle to latter part of next week and into the following weekend limiting precipitation across the continent and inducing very warm temperatures
• Drought
  remains in the lower Danube River Basin and in eastern Spain
• European
  and Asian temperatures will be warmer than usual during much of the next ten days
  
• An
  exception is expected in a small part of central Asia where temperatures will be near to just slightly cooler biased
• Eastern
  Europe precipitation will be limited in both this week and the that of Nov. 11-17
• South
  Africa rainfall is expected to continue frequent and sufficient to support a boost in topsoil moisture and improved planting of corn, sunseed, soybeans, cotton, rice, sorghum, peanuts and other crops
• Winter
  wheat and canola maturation and harvesting is advancing, but rain may induce some delay for a few areas
• Canada’s
  Prairies will receive at least two additional waves of snow in the coming week to ten days after snow fell Wednesday from southern and eastern Alberta to west-central and northwestern Saskatchewan
• The
  snow will raise the potential for a boost in soil moisture when it melts
• 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 coming week
  
• Precipitation
  days will be limited and moisture totals should be light
• A
  boost in precipitation is likely Nov. 12-18
• 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 today and Saturday 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
• Totally
  dry is not likely, but the rain expected will be brief and light
• U.S.
  Delta will receive some rain this weekend with dry weather likely for several days thereafter
• Only
  light amounts of rain are expected and harvest delays will be brief
• Rain
  totals of 1.00 to 2.00 inches may help induce a slight rise in Mississippi River levels
• No
  serious threat to unharvested cotton fiber is 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
• California’s
  central Valleys will get a few showers in the coming week with moderate rain and snow expected in the Sierra Nevada
• A
  tropical or subtropical disturbance is expected near the Greater Antilles in the southwestern Atlantic Ocean and the northeastern Caribbean Sea this weekend that may drift north northwesterly toward the southeastern United States next week
• No
  excessive rain or wind is expected, but the moisture might help moisten parts of the region after recent weeks of drying
• North
  Carolina, Virginia and Florida will be wettest
• Indonesia,
  Malaysia, southern Vietnam and parts of the Philippines will continue wet over the next ten days with bouts of local flooding possible
• Tropical
  Depression Lisa moved over the Bay of Campeche overnight and will remain there until it dissipates late this weekend
• No
  adverse weather is expected in any key crop area, although some showers will occur in coastal areas
  
• Hurricane
  Martin lost its tropical characteristics Thursday and is now a massive mid-latitude storm system that will send a few waves of rain into Ireland, the U.K. and Norway late this weekend into next week
  
• The
  storm will mostly induce warmer than usual temperatures for most of Europe during the next two weeks.
  
• 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 fall lightly in the southeast periodically in the coming week due to the remnants of tropical depression Lisa lingering next week
  
• Central
  America precipitation is expected to continue periodically during the next ten days, but no large region of excessive rain is expected
• Costa
  Rica and Panama should be wettest
• 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
• 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 +16.91 and it will move lower over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Monday,
Nov. 7:

• China’s
  first batch of October trade data, including soybean, edible oil, rubber and meat imports
• USDA
  export inspections – corn, soybeans, wheat, 11am
• US
  crop harvesting for corn, soy, cotton; winter wheat plantation and condition, 4pm
• Vietnam’s
  customs dept releases Oct. coffee, rice and rubber export data

Tuesday,
Nov. 8:

• France’s
  agriculture ministry updates 2022 crop production estimates
• EU
  weekly grain, oilseed import and export data
• HOLIDAY:
  India

Wednesday,
Nov. 9:

• USDA’s
  monthly World Agricultural Supply and Demand (WASDE) report, 12pm
• France
  AgriMer monthly grains outlook
• China’s
  agriculture ministry (CASDE) releases monthly report on supply and demand for corn and soybeans
• EIA
  weekly US ethanol inventories, production, 10:30am
• Brazil’s
  Conab issues production, area and yield data for corn and soybeans

Thursday,
Nov. 10:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Malaysian
  Palm Oil Board’s data on stockpiles, production and exports
• Malaysia’s
  Nov. 1-10 palm oil export data
• Cane
  crush and sugar production data by Brazil’s Unica

Friday,
Nov. 11:

• ICE
  Futures Europe weekly commitments of traders report
• DELAYED:
  CFTC commitments of traders weekly report on positions for various US futures and options, usually released Fridays, will be published Monday, Nov. 14
• New
  Zealand Food Prices
• HOLIDAY:
  US, France, Canada

Saturday,
Nov. 12:

• Atlantic
  Council Global Food Security Forum, Bali, day 1

Sunday,
Nov 13:

• Atlantic
  Council Global Food Security Forum, Bali, day 2

Source:
Bloomberg and FI

 

 

 

 

Due
out November 9

 

 

 

CFTC
Commitment of Traders report

Traditional
funds missed the net short position for Chicago wheat. Thinking it was net long 10,100 contracts, it was reported net short about 16,000 contracts.
CFTC
reported money managers added long positions for the third consecutive week.

 

 

 

 

 

 

Reuters
table

SUPPLEMENTAL     
Non-Comm               Indexes                  Comm

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
196,686     11,982    358,695     -2,791   -502,977    -11,808

Soybeans           
57,214     30,332    119,378      3,834   -147,249    -28,177

Soyoil             
59,949      2,944    104,250      2,087   -178,009     -6,008

CBOT
wheat         -52,429     -1,822    105,375      2,831    -46,705     -1,018

KCBT
wheat           4,788     -1,039     47,911        917    -51,681        301

 

FUTURES
+ OPTS     Managed                 Swaps              Producer

                  
     Net        Chg        Net        Chg        Net        Chg

Corn              
271,960      7,586    221,802      3,172   -490,638    -14,286

Soybeans          
101,329     25,918     75,856      1,919   -140,670    -27,316

Soymeal            
93,417      7,388     79,479       -903   -221,230     -4,647

Soyoil            
100,118      4,957     81,135     -3,836   -193,309     -1,962

CBOT
wheat         -37,149     -1,097     63,635      2,400    -38,241       -413

KCBT
wheat          23,408     -1,218     28,618      1,115    -47,857        284

MGEX
wheat           3,814        331      1,176        167     -5,739       -336

                
———- ———- ———- ———- ———- ———-

Total
wheat         -9,927     -1,984     93,429      3,682    -91,837       -465

 

Live
cattle         66,048        326     53,153        269   -130,058       -333

Feeder
cattle       -6,494       -623      3,123         66      4,999        -53

Lean
hogs           59,568      4,135     46,149         23    -85,678       -879

 

                     
Other             NonReport                  Open

                       
Net        Chg        Net        Chg   Interest        Chg

Corn               
49,281        909    -52,405      2,618  1,916,119     53,532

Soybeans           
-7,171      5,468    -29,344     -5,989    669,123    -52,523

Soymeal            
19,953     -2,697     28,381        861    435,093      8,412

Soyoil             
-1,753       -137     13,809        977    493,168     10,245

CBOT
wheat          17,995       -899     -6,241         10    435,024     23,076

KCBT
wheat          -3,151         -3     -1,018       -178    179,185      4,203

MGEX
wheat           2,246       -135     -1,496        -27     57,724       -473

      
          ———- ———- ———- ———- ———- ———-

Total
wheat         17,090     -1,037     -8,755       -195    671,933     26,806

 

Live
cattle         18,959        342     -8,103       -604    357,579     10,913

Feeder
cattle       -1,054        270       -574        339     57,443     -4,248

Lean
hogs           -6,494     -2,009    -13,546     -1,271    257,819        921

 

Macros

108
Counterparties Take $2.231Tln At Fed Reverse Repo Op (prev $2.22Tln, 105 Bids)

US
Changes In Nonfarm Payrolls Oct: 261K (est 193K; prev 263K)

US
Unemployment Rate Oct: 3.7% (est 3.6%; prev 3.5%)

US
Average Hourly Earnings (M/M) Oct: 0.4% (est 0.3%; prev 0.3%)

US
Average Hourly Earnings (Y/Y) Oct: 4.7% (est 4.7%; prev 5.0%)

US
Change In Private Payrolls Oct: 233K (est 200K; prevR 319K)

US
Change In Manufacturing Payrolls Oct: 32K (est 12K; prevR 23K)

US
Average Weekly Hours All Employees Oct: 34.5 (est 34.5; prev 34.5%)

US
Labour Force Participation Rate Oct: 62.2% (est 62.3%; prev 62.3%)

US
Underemployment Rate Oct: 6.8% (prev 6.7%)

Canadian
Net Change In Employment Oct: 108.3K (est 10.0K; prev 21.1K)

Canadian
Unemployment Rate Oct: 5.2% (est 5.3%; prev 5.2%)

 

Corn

·        
Corn prices were 1.75-3.25 cents higher from a sharply lower USD (US jobs report was supportive), technical buying along with a $4.40+ rise in WTI crude oil.

·        
For the week December corn were up 0.25 cent to $6.81.

·        
The EPA and a biofuels trade group (Growth Energy) agreed to delay the EPA (final) proposal for 2023 biofuel blending obligations by two weeks. November 30 is now the final deadline to issue renewable fuel obligations. It was
originally set for November 16. Both parties agreed to extend the proposed deadline back in July.  The original proposed deadline was mid-June.

·        
Note US midterm elections are 4 days away. We see no major (US) market implication on the outcome.

 

Export
developments.

·        
None reported

 

Updated
11/3/22

December
corn is seen in a $6.60-$7.15 range. March $6.50-$7.50 range.

 

Soybeans

·        
Soybean oil futures were again sharply higher on ideas of tightening global vegetable oil supplies. Meal followed SBO and soybean higher. January soybeans were up more than 24 cents on talk China will soon increase buying from
the US and SA. This comes after rumors China may relax on Covid-19 lockdown rules. Nothing was official at the time this was written. There was also talk China was looking for US and SA soybeans today, but no specific trades were reported.

·        
January soybeans closed 25.25 cents higher at a 6-week high of $14.6225. December meal was up $5.30 at $412.80/short ton and December soybean oil up 167 points to 74.85, highest since June 14, 2022.

·        
For the week, January soybeans were up 62 cents, December meal down $5.00 and December SBO up a large 538 points (7.5% gain).

·        
CFTC reported money managers added long positions for the third consecutive week (as of Tuesday).

·        
Argentina soybean plantings are well below average from lack of precipitation, according to the Rosario Grains Exchange.  “It is the most difficult and uncertain planting of the last 12 years,” they said (via Reuters article).

·        
HedgePoint warned the Brazil soybean crop could fall below 150 million tons from adverse La Nina conditions. Conab is at 152.35 million tons, up 21 percent from 2021-22.

·        
Safras & Mercado 21% of Brazil’s new-crop soybeans sold, below 31 percent year ago and below an average of 34 percent. They have a production estimate of 151.5 million tons.

·        
Consultancy Datagro estimated Brazil’s 2022-23 soybean crop at 152.5 million tons, a 21% increase from 126.5 million tons collected in the previous crop and above the 151.8 million tons they projected in July.

·        
CBOT deliveries (Thursday evening) for November soybeans slowed to 21 contracts with Bunge stopping all of them.

·        
Malaysian palm futures appreciated 9 percent this week.

·        
A poll for October Malaysia palm oil stocks calls for a 9.3% increase from September to 2.53 million tons and production to increase 3 percent to 1.82 million. Trade estimates are above.

·        
At a palm oil conference, India’s SEA estimated about a 4 million ton increase in edible oils consumption by 2025-26, up from about 23 million tons for 2021-22. The Indonesia palm oil association looks for 2022 palm and kernel
oil production at 51.3 million tons versus 51.6 million tons in 2021. They also look for 2023 palm oil production and consumption to decline in 2023 due to weak demand due to an expectation of a global economic slowdown. Oil World sees world palm oil production
increasing by 2.9 million tons in 2022-23 from 2021-22.

 

Export
Developments

·        
South Korea’s NOFI group passed on 60,000 tons of soybean meal for arrival in South Korea around April 15. Lowest offer was believed to be $517.77/ton c&f.

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

 

Updated
11/03/22

Soybeans
– January $13.50-$15.00

Soybean
meal – December $390-$430, January $400-$475

Soybean
oil – December 72-77, January wide 64.00-74.00 range

 

Wheat

·        
US wheat futures ended 6.75-13.00 cents higher on technical buying after the USD sank (down 210 points as of 2:30 pm CT) after surging yesterday. Concerns over the Argentina wheat crop were renewed after the BA Grains Exchange
lowered their production estimate. There are also concerns with eastern Australia’s wheat crop areas.

·        
For the week December Chicago wheat was up 18.50 cents or 2.2%. December KC was up 28.25 cents or 3.1% and December Minneapolis gained 9.00 cents or 1.0%.

·        
Russia is again looking for the west to lift or ease sanctions, mainly for grains and fertilizers, by granting exemption for its state bank lender Rosselkhozbank. They asked the UN for help. Allowing the bank to process payments
and access vessels, insurance and ports, is essential for Russia’s grain and fertilizer trade, something needed to boost global exportable supplies.

·        
December Paris milling wheat closed 0.6% lower or 2.00 euros at 338.75 euros ($336.18) a ton. 

·        
FranceAgriMer reported soft wheat plantings at 84 percent, up from 63 percent previous week and ahead of 77 percent year ago.

·        
The UN food price index for the month of October eased to 135.9 points from 136.0 points in September (revised from 136.3).  The index is 2 percent higher than a year ago and well down from 159.7 record in March.

·        
Last week USDA reported the initial US winter wheat ratings at a record low (at least since ’88) at 28 percent good/excellent.  But that was with 87 percent of the area planted and only 62 percent emerged. Next week we look for
a 3-point increase as more and more states north and east of the problem states of TX, OK and KS get more accurate readings. Rain over the last seven days across KS, TX, and OK should have also aided crop development.

 

Export
Developments.

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

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

·        
Jordan is back in for 120,000 tons of barley for March/April shipment on November 16 for March/April shipment.

 

Rice/Other

·        
(Bloomberg) — US 2022-23 production seen 195,000 bales lower than USDA’s previous estimate, according to the avg in a Bloomberg survey of eight analysts.

•            
Avg est. at 13.62m bales, ranging from 13.42m to 13.81m bales

•            
US ending stocks seen lower at 2.73m bales vs 2.8m bales

•            
Global ending stocks seen 171,000 bales higher at 88.04m bales

 

Updated
11/3/22

Chicago
– December $8.00-$9.00, March $8.00 to $10.00

KC
– December $9.00-$10.25, March 8.50-$10.50

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