FI Evening Grain Comments 11/09/22

PDF Attached

 

USDA
updated their S&D’s and corn and soybean production for the US was upward revised. CBOT agriculture markets ended mixed. Soybeans and soybean oil were higher, meal lower and grains lower. Most markets traded two-sided. WTI crude oil was down about $3.00 and
US equities lower as of 1:25 pm CT.  China’s month CASDE (S&D) offered no surprises. Conab increased Brazil 2022-23 soybean production and trimmed corn output. Malaysia MPOB October S&D is due out later this evening CT. USDA export sales report and US CPI
are due out Thursday morning.

 

USDA
reported private exporters reported the following sales activity:

-264,000
metric tons of soybeans for delivery to China during the 2022/2023 marketing year

-198,000
metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year

 

 

USDA
released their November S&D report

 

Reaction:
initially
bearish soybeans and lessor extend grains. Largest
surprise to us was the US soybean and corn yield/production estimate, both increasing from the previous month. The corn yield was up 0.4 bu/ac from October and soybeans also up 0.4 bu/ac. Trade was looking for lower yields for corn and soybeans. 2022-23 US
soybean stocks were upward revised 20 million bushels and corn by 10 million. All-wheat US stocks were revised lower by 5 million bushels. USDA did not change US corn exports despite the slow start to commitments and inspections. USDA left Brazil corn and
soybean production unchanged. For Argentina, they lowered soybeans by 1.5 million tons and left corn production unchanged. We thought that would be the other way around due to some producers shifting away from corn to soybeans. Argentina wheat production was
taken down 1.5 million tons to 15.5 million tons. We think USDA is at least 2 million tons too high on Argentina wheat output.

 

Look
for prices to trade sideways over the short term unless geopolitical headlines move the markets, such as a concrete decision on the Black Sea grain shipping deal by Russia, and/or major changes in weather patterns develop. The November USDA S&D otherwise was
not that eventful. With USDA boosting US soybean production by an unexpected 33 million bushels, they had some room to lift crush higher by 10 million bushels to 2.245 billion, above 2.204 billion a year ago. US soybean meal domestic use was upward revised
250,000 short tons. SBO for biofuel use was left unchanged and food use was lifted higher by 150 million pounds. US soybean oil exports were lowered 100 million pounds to 1.300 billion, lowest since 2005-06 season. USDA raised corn for feed by 25 million bushels
and left exports unchanged. USDA made minor changes in the US wheat balance.

 

USDA
NASS briefing

https://www.nass.usda.gov/Newsroom/Executive_Briefings/index.php

USDA
OCE Secretary’s Briefing

https://www.usda.gov/oce/commodity-markets/wasde/secretary-briefing

 

New-crop
in brief

US
soybean stocks 220 vs. 200 last month (20),  8 million vs. trade

US
corn stocks 1182 vs. 1172 last month (10),  -25 million vs. trade

US
wheat stocks 571 vs. 576 last month (-5),  -7 million vs. trade

 

WLD
soy stocks 102.2 vs. 100.5 last month (1.7),  1.6 million vs. trade

WLD
corn stocks 300.8 vs. 301.2 last month (-0.4),  0.2 million vs. trade

WLD
wheat stocks 267.8 vs. 267.5 last month (0.3),  1.3 million vs. trade

 

Brazil
Soy 152.0 vs. 152.0 last month (0),  -0.2 million vs. trade

Arg.
Soy 49.5 vs. 51.0 last month (-1.5),  -1.1 million vs. trade

Brazil
Corn 126.0 vs. 126.0 last month (0),  -0.3 million vs. trade

Arg.
Corn 55.0 vs. 55.0 last month (0),  0.9 million vs. trade

 

 

 

Attached
PDF includes FI’s full snapshot

 

Weather

Tropical
storm Nicole intensified over the last day and is expected to hit Florida Thursday morning.

 

The
US central and lower Great Plains will see net drying this weekend. Light rain fell in the southern areas yesterday and parts of eastern NE, eastern KS, and OK will see rain Thursday into Friday. The Midwest will see showers across the northwestern areas through
Thursday and eastern areas Friday. Many areas of Brazil will see rain this week. Argentina should see rain return to western Santa Fe, Cordoba, La Pampa, and western Buenos Aires today through Sunday.

 

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE COMING WEEK

• One
  more day of limited rain today in Argentina, Uruguay, southern Brazil, Paraguay and center west Brazil
• Rain
  will develop in western Argentina tonight and Thursday with follow up rain expected Friday into Saturday
  
• The
  moisture will improve crop and field conditions from La Pampa and western Buenos Aires into San Luis, Cordoba, western Santa Fe and Santiago del Estero
• Rain
  totals of 0.75 to 1.50 inches and local amounts over 2.00 inches will occur by Saturday evening
• Eastern
  Argentina will be dry along with Uruguay, Rio Grande do Sul and portions of southern Paraguay
• Argentina’s
  rain will expand and eventually shift through eastern Argentina and into Paraguay, Uruguay and far southern Brazil during the late weekend and early part of next week
  
• Resulting
  rainfall will vary from 0.75 inch to 2.50 inches with the lightest rain in Uruguay, Rio Grande do Sul and some immediate neighboring areas
• Rain
  will also develop across center west and parts of center south Brazil during the late week and weekend, but the greatest rain is expected from Minas Gerais to Tocantins where 1.00 to 3.00 inches and local totals over 4.00 inches will result
• Rainfall
  in interior southern Brazil late this week through the weekend will vary from 0.20 to 0.,80 inch with a few local totals to 1.50 inches
  
• South
  America’s bottom line is good with most of the grain, oilseed and cotton areas getting rain over the coming week with sufficient amounts to bolster topsoil moisture – at least temporarily. Fieldwork will be slowed or stalled for a while, but the moisture will
  help carry crops during the following week which is expected to trend drier again from center west and far southern Brazil through Paraguay and Uruguay to Argentina. The distribution of rain will be closely monitored to ensure there are no large areas of limited
  soil moisture that would harm crop development in the following week of expected drier conditions.
  
• U.S.
  weather will be mixed over the next week
• Much
  of the hard red winter wheat region will be dry or at least receive insignificant rainfall
• Not
  much rain will fall in the Delta or Midwest through the weekend
• Rain
  will fall in the middle and lower Delta early to mid-week next week
• A
  blizzard will impact the northern Plains tonight and especially Thursday with 6-12  inches of snow and local totals to 15 inches expected
• Moisture
  totals from rain and snow in the upper Midwest and northern Plains will vary from 0.50 to 1.50 inches and locally more
• California’s
  rain and mountain snow noted Tuesday will end today
• Snow
  accumulations in the Sierra Nevada will be significant in the highest elevated areas
• Some
  beneficial rainfall has already impacted a part of the state
• Rain
  and mountain snow will impact the Pacific Northwest today with drier weather to follow into early next week
  
• The
  moisture and that which fell Tuesday will be good for long term water supply and soil moisture
  
• A
  new storm system may impact the region later next week
• Tropical
  Storm Nicole will be impacting Florida, Georgia and the Carolinas tonight into the weekend
• Some
  minor crop and property damage is expected
• The
  storm will move inland near Fort Pierce, Florida as a hurricane and then weaken to tropical storm status again as it moves to Cedar Key, Florida Thursday and northward to west of Valdosta, Ga. Friday
  
• The
  storm will then turn northeast through the Carolinas thereafter
• Low
  damage is expected from the tropical storm, central coastal areas of Florida will be most impacted
• Some
  citrus fruit droppage is possible, although it should not be widespread
• Sugarcane
  will be blown down, but it should right itself again in time
• Cotton
  fiber quality declines are possible from Georgia to the Virginia because of rain, although the impact should be low
• Very
  little cotton will be strung out of bolls to the ground, but some of the crop will be strung out
• U.S.
  Weather November 17-23
• Cold
  air will dominate the central and eastern portions of the nation
• A
  weather disturbance will move from the southeastern Plains through the Delta and into the southeastern states during mid- to late week next week
  
• More
  limited precipitation is expected elsewhere
• Net
  drying will continue in hard red winter wheat areas
• Restricted
  precipitation will continue in the eastern Midwest and northern Delta
• Waves
  of light precipitation will continue to  impact the Pacific Northwest, although it will be greatest in the mountains
• Ontario
  and Quebec, Canada weather will be mostly good for advancing corn and soybean harvesting and winter crop planting during this workweek
• Precipitation
  days will be limited and moisture totals should be light
• A
  boost in precipitation is likely Friday and Saturday as remnants of Tropical Storm Nicole pass through or near the region
• Showers
  of snow and a little rain will occur infrequently thereafter through Nov. 23
• Europe
  and western CIS temperatures will be warmer than usual over the next ten days, although portions of Russia will turn colder next week
• Southern
  Russia, Ukraine and Russia’s Eastern New Lands will be colder than usual Nov. 15-20
• Restricted
  precipitation is expected across Europe and western Asia during the next week to ten days
• Totally
  dry weather is unlikely, but the precipitation that falls should be light
• Western
  areas will be wetter than the east
• Snow
  cover will remain restricted in western Asia through much of the forecast period, although a little snow will accumulate in the New Lands over time next week when temperatures are colder
• China
  temperatures will be warmer than usual over the next ten days
• China
  precipitation late this week and into the weekend will be greatest in the Yellow River Basin and north China Plain
  
• This
  event will produce 0.20 to 0.80 inch of moisture with a few 1.00 to 2.00-inch amounts in a part of winter wheat country
  
• Winter
  crops will become better established because of this precipitation
• Some
  of this rain will reach the northern Yangtze River Basin this weekend with moisture totals of 0.10 to 0.75 inch
  
• Some
  moisture “may” reach the heart of rapeseed country in the Yangtze River Basin next week and into the following weekend, but confidence is low
• Interior
  southeastern China will be drier than usual for another week which is classic for La Nina and confidence is high for dry biased conditions in this region
• Waves
  of rain are still expected in far southern India over the next five days week keeping the ground abundantly to excessively wet
• Rainfall
  will vary from 2.00 to 6.00 inches and local totals over 7.00 inches
• Wettest
  along the lower east coast and in Kerala
• Indonesia,
  Malaysia, Philippines, southern Vietnam, southern Cambodia and southern Thailand will be wet over the next ten days to two weeks
  
• Some
  areas of local flooding are likely periodically
• Australia
  rainfall will be limited this workweek, although some showers are likely
• Net
  drying will continue favoring winter crop maturation in northern and some central areas as well as the harvest in northern areas
• Rain
  will resume in eastern Australia this weekend, but it should not be excessively great
• Fieldwork
  will be disrupted and rain amounts should vary from 0.65 to 2.00 inches
• No
  new flooding is expected
• A
  return of restricted precipitation is expected later next week
• Western
  Australia will be colder than usual the remainder of this week and into the weekend before the cool air spreads east during the late weekend and next week
  
• Temperatures
  this week will be near normal in the far east and a little warmer than usual in south-central parts of the nation
• Western
  Australia winter crops are still well on their way to yielding very well with high quality as well.
  
• Rain
  will be minimal until the second half of next week when some increase is likely in parts of the region
• South
  Africa has received rain frequently in recent days and more will fall periodically over the next two weeks
• Summer
  crop planting will advance around the moisture
• Some
  delay to farming activity will occur periodically, but progress will be made slowly
• Good
  harvest weather is expected for wheat and canola in the western part of the nation where rainfall is expected to be very limited over the next two weeks
• Temperatures
  will be seasonable
• 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 to ten days
  
• Central
  America precipitation is expected to continue periodically during the next ten days, but no large region of excessive rain is expected this week
• Panama,
  Costa Rica and portions of southern and eastern Nicaragua will be wettest
• Some
  increase in rainfall may occur next week
• 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 +11.14 and it will continue to move lower over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

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

 

 

 

 

 

Macros

US
Wholesale Trade Sales (M/M) Sep: 0.4% (est 0.5%; prev 0.1%)

–
Wholesale Inventories (M/M) Sep F: 0.6% (est 0.8%; prev 0.8%)

US
MBA Mortgage Applications Nov 4: -0.1% (prev -0.5%)

US
MBA 30 Year Mortgage Rate Nov 4: 7.14% (prev 7.06%)

US
DoE Crude Oil Inventories (W/W) 04-Nov: +3.925M (est +250K; prev -3.115M)

–
Distillate: -521K (est -500K; prev +427K)

–
Cushing: -923K (prev +1.267M)

–
Gasoline: -900K (est +1.450M; prev -1.257M)

–
Refinery Utilization: +1.5% (est +0.4%; prev +1.7%)

EIA:
US Crude Stockpiles Rise In Latest Week, Highest Since July 2021

101
Counterparties Take $2.238 Tln At Fed Reverse Repo Op(prev $2.232 Tln, 101 Bids)

 

Corn

·        
Corn futures ended lower after USDA increased US production and a sharply higher USD. South Korea bought SA corn, passing on US. This week is a contract roll period for several funds. The US corn carryout was raised 10 million
bushels to 1.182 billion, 25 million below an average trade guess.

·        
Mexico’s president said the government will no longer buy GMO corn. We don’t know how much Mexico’s government buys corn on an annual basis, and unsure if this affects private importers. More details are needed from this comment.
Mexico is currently not self-sufficient in corn production and imports almost 40 percent of total consumption.

·        
Conab in its monthly update lowered their projection for the Brazil corn production by 0.5 million tons to 126.4 million and was 1.3 million below a Bloomberg survey and 13.6 million tons above 2021-22. The 2022-23 area for soybeans
went up 350,000 hectares and corn down 82,000 hectares. First crop was seen at 28.153 million tons vs. 25.027 million year earlier and second 96.271 MMT vs. 85.614 million last year. Brazil’s third crop, although small, is expected to decline slightly from
2021-22.

·        
China in its monthly CASDE update left its 2022-23 corn and soybean balances unchanged.

·        
US CPI inflation data will be released on Thursday. 

·        
The USDA Broiler Report showed eggs set in the US down 1 percent and chicks placed up 5 percent. Cumulative placements from the week ending January 8, 2022 through November 5, 2022 for the United States were 8.29 billion. Cumulative
placements were up 2 percent from the same period a year earlier.

 

US
weekly EIA ethanol production for the week ending November 4 increased 11,000 barrels to 1.051 million, up 6 consecutive weeks, and highest since January 14^th, 2022. Ethanol stocks declined 40,000 barrels to 22.192 million.
For comparison a Bloomberg poll called for US ethanol production to be down 1,000 thousand barrels per day and stocks up 25,000 barrels. There were no ethanol imports. US ethanol production
since early September is running 5 percent below the same period a year ago. US gasoline stocks fell 900,000 barrels to 205.7 million, fourth consecutive week of a decline, and lowest since 11/14/2014. US gasoline demand increased 351,000 barrels to 9.011
million, highest since end of September. Refinery and blender net input of oxygenates fuel decreased 21,000 barrels to 884,000, below previous 4-week average of 908,000.

 

 

 

 

 

 

Export
developments.

·        
Taiwan’s MFIG bought 65,000 tons of corn from Brazil at an estimated 192.69 cents a bushel c&f over the March contract for Jan 8-27 shipment.

 

 

Updated
11/8/22

December
corn is seen in a $6.50-$7.00 range. March $6.50-$7.50 range.

 

Soybeans

·        
CBOT soybeans traded two-sided, ending higher on technical buying. Bull spreading lifted January 5.50 cents higher. March and May ended 4.0 cents higher. USDA increased its outlook for 2022-23 US ending stocks by 20 million bushels
to 220 million, 7 million above trade expectations. That and lower grains limited gains. SA weather improves for the balance of the week. USDA lowered Argentina soybean production by 1.5 million tons. World soybean ending stocks were increased 1.7 million
tons.

·        
Meal ended lower on gains in soybean oil. Soybean oil saw a wide trading range. USDA lowered US soybean oil exports by 100 million pounds and raised domestic food use by 150 million pounds, confirming domestic demand is strong.

·        
 Argentina producer soybean sales slowed today after a rumor the government may roll out a second “soybean dollar” program.

·        
USDA announced additional 24-hour sales this morning.

·        
Conab in its monthly update increased their outlook for 2022-23 Brazil soybean production by 1.2 million tons to 153.54 million, a record, 1.2 million above an average trade guess and 28 million above an unchanged 2021-22. The
2022-23 area for soybeans went up 350,000 hectares and corn down 82,000 hectares.

·        
China in its monthly CASDE update left its 2022-23 soybean balance unchanged, lowered sugar production by 30,000 tons and lowered edible vegetable oil production by 40,000 tons from October to 29.21 million tons, 1.66 million
above 2021-22. They raised old crop soybean imports by 0.580MMT to 91.60 million tons and left 2022-23 unchanged at 95.20 million tons. They imported nearly 100 million tons in 2021-22.

·        
There are rumors Argentina may introduce another round of a special soybean dollar. One source referenced rates between 215 and 220. This might occur late next month. Later in the day we heard soybean movement was near a standstill
after the rumor surfaced. https://www.iprofesional.com/economia/372448-sergio-massa-instrumentaria-un-nuevo-dolar-soja

·        
Malaysia MPOB October S&D is due out later this evening CT. 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.

·        
A majority of the US will turn colder (below normal) for the second week of the forecast. Much of the upper US will see temperatures dip below freezing.

 

 

Export
Developments

·        
Under the 24-hour announcement system, private exporters sold the following:

-264,000
metric tons of soybeans for delivery to China during the 2022-23 marketing year

-198,000
metric tons of soybeans for delivery to unknown destinations during the 2022-23 marketing year

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

 

Updated
11/8/22

Soybeans
– January $13.50-$15.00

Soybean
meal – December $400-$435, January $400-$475

Soybean
oil – December 73-77, January wide 67.00-76.00 range

 

Wheat

·        
US wheat futures traded lower on slow US export developments, daily shipments of grain leaving the Black Sea region, higher USD, and little change to US wheat supply and demand estimates. USDA raised global wheat production by
1.0 million tons and ending stocks by 0.3 million for 2022-23. The USD was up 91 points by 2:00 pm CT.

·        
Paris December wheat was down 1.75 euros at 328.75 euros a ton.

·        
France’s wheat professionals group Intercereales expects Tunisia to import 250,000 tons of French wheat in 2022-23 after being absent last season.

·        
UN and high-level Russian officials are set to meet Friday in Geneva to discuss the Ukraine grain deal.

·        
Earlier Russia was looking to include their fertilizer and grain exports in the Black Sea grain deal, where they have seen no progress. Note the deal official ends next week (November 19). Many traders are hopeful the deal will
be extended. We think relaxing rules for credit and financing for Russia’s main agriculture bank, specifically tied to Russian grain and fertilizers, would benefit global trade flows and help fight world inflation. 

 

Export
Developments.

·        
The Philippines seeks 60,000 tons of feed wheat on November 10 for shipment between November 20 to March 10, optional origin.

·        
Algeria bought around 510,000 tons of milling wheat for Dec 1-31 shipment. Purchases were reported around $368 a ton c&f.

·        
Japan in a SBS import tender seeks 70,000 tons of wheat and 40,000 tons of barley on November 16 for arrival by February 24.

·        
Japan is in for 94,603 tons of wheat later this week for arrival by February 28.

·        
Iraq seeks 50,000 tons of US wheat. Details are lacking.

·        
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

·        
None reported

 

Updated
11/9/22

Chicago
– December $7.75-$8.75, March $8.00 to $10.00

KC
– December $9.00-$10.15, March 8.50-$10.50

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