FI Evening Grain Comments 11/10/21

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US
inflation hit a 30-year high in October.  Higher trade in nearly all US agriculture markets led by wheat on fears the world’s top exporter, Russia, will claw back on grain exports.  USDA announced 22,000 tons of soybean oil sold to unknown.  Last time we saw
a USDA soybean oil announcement was on 12/28/2020.  USD was up a whopping 88 points as of 2 pm CT.

 

Weather

 

World
Weather Inc.

MOST
IMPORTANT WEATHER AROUND THE WORLD

• A
  tropical disturbance in the Bay of Bengal will intensify to tropical depression status today and may become a tropical storm before it reaches the upper east coast of Tamil Nadu and lower coast of Andhra Pradesh Thursday
• The
  system is not likely to bring much more than flooding rain to coastal areas and some moderate wind speeds
• No
  serious crop damage is likely, although local flooding is expected
• India’s
  central and north will experience good harvest weather over the next week to ten days due to generally dry weather and seasonable temperatures
• Planting
  of wheat, rapeseed, millet and other winter crops will advance swiftly as well
• Eastern
  and southern Australia will experience some frequent rainfall into Friday, but after that these areas will see less frequent and less significant rain
  
• The
  drier bias will help improve wheat, barley and canola harvest conditions and fieldwork should advance well next week while rainfall is more limited
• Rain
  through Friday will be most welcome in unirrigated areas of Queensland and New South Wales where recent rainfall has been restricted
• The
  moisture will improve livestock grazing conditions and raise soil moisture for unirrigated cotton and sorghum planting and development
• Brazil
  weather will remain mostly good for the next two weeks, based on the recent forecast model runs
  
• However,
  concern remains for Sao Paulo and northern Parana where rainfall will be restricted for another week
• Net
  drying has already been occurring for a while
• Rain
  advertised in the second week of the outlook for these areas will be very important
• Drying
  in far southern Brazil does not seem to last long enough to create any big problems for corn, soybeans or rice, but stay watchful of the area since La Nina does favor below average rainfall for the region
• The
  active Brazil weather pattern should last another ten days
• Argentina
  weather has been and will likely continue to be favorably mixed for planting and crop development
• No
  area looks to be left out of the timely rainfall pattern that should last for ten days
• The
  situation will be closely monitored, but there is no sense fighting the trend when the jet stream seems so strong and active.
  
• This
  will not likely prevail through all of November, but it will last long enough to get many crops planted and off to a favorable start
• Temperatures
  will be near to slightly cooler biased for the next ten days
• A
  mini-blizzard will evolve in the upper Midwest Thursday into Friday of this week
  
• The
  storm will produce 3 to 6 inches of snow and locally more in northern Minnesota, northeastern North Dakota and southern Manitoba, Canada as well as neighboring areas of western Ontario and northwestern Wisconsin
• Snowfall
  of a trace to 3 inches will occur in the remainder of North Dakota, southern Minnesota and eastern South Dakota as well as the remainder of Wisconsin
• Strong
  wind speeds of 25-35 mph and gusts to 45 will be possible during the height of the storm’s intensity Thursday and Friday
• Rain
  from the same blizzard noted above will move from west to east across the Midwest later today into Friday causing a brief disruption to farming activity
• Central
  and eastern U.S. Midwest farming weather today will be very good as it should be in Delta and southeastern states
• Moisture
  in will also occur in the Delta and southeastern states Thursday and Friday
  
• A
  couple of follow up storms in the northern U.S. Plains and northern Midwest this weekend into next week will produce additional snow and rain
• Snowfall
  of a dusting to 3 inches will occur from northwest to southeast across North Dakota and in northeastern South Dakota, southern Minnesota and areas east into southern Michigan
• Traces
  of snow are expected immediately to the south into northern Illinois, northern Indiana and northern Ohio
• Most
  of the rain from these systems will stay north of the Delta and southeastern states and may not impact the lower Midwest either
  
• No
  significant precipitation is expected in western U.S. hard red winter wheat production areas southward into West Texas during the next ten days
• Rain
  is expected in some eastern wheat areas today
• Moisture
  shortages in wheat areas from Colorado to the Texas Panhandle will maintain concern over unirrigated winter crop conditions
• West
  Texas harvest weather should be mostly good over the next week to ten days
• U.S.
  Pacific Northwest weather will remain active this week and into early next week before drier biased conditions evolve later next week
• Northern
  California stormy weather pattern has ended for a while with a period of more limited precipitation to follow for up to ten days
• Most
  U.S. crop areas were dry Tuesday, although rain continued from the northwestern and far northeastern corners of the nation
• Limited
  precipitation is still expected in the northwestern U.S. Plains and central parts of Canada’s Prairies through the next ten days, but these areas will start seeing some periodic shots of snowfall
• U.S.
  temperatures this week will be near to below normal with the coolest bias expected from the northern Plains into the heart of the Midwest this weekend through early next week
  
• Today
  will still be a warm biased day with the same will be true Wednesday in the eastern U.S.
  
• China’s
  big northeastern snowstorm that occurred this week is ending and much improved weather is expected over the next week to ten days, although not necessarily perfectly dry
• Much
  of eastern China’s wheat and rapeseed areas will be dry
• Harvest
  progress in late summer crop areas should advance well
• Winter
  crops are suspected of establishing well
• Recent
  freezes in China’s wheat region had a low impact on crops, although warming is needed to allow late planted crops a little more time to establish prior to dormancy
• Warming
  is expected gradually over the coming week
• Ukraine
  and areas northeast into the middle Volga River Basin will likely see very little precipitation of significance for a while
• Some
  of this region has restricted soil moisture, but winter crops are either dormant or semi-dormant limiting the need for moisture until spring
• Snow
  cover will be needed during times of bitter cold to protect crops from any potential for winterkill
• Snow
  cover in Russia is widespread in the New Lands except near the Kazakhstan border
• Western
  Russia is mostly snow free except near the Baltic States and east of Belarus where there is a little pocket of snow now on the ground
• Snow
  cover is expected to expand across much of western Russia during the coming week with the greatest depths in the north
• Temperatures
  will be near to above normal
• Europe
  weather is expected to remain relatively tranquil during the next ten days to two weeks with the exception of Italy and the Adriatic Sea region where rain will fall moderately this weekend and into next week
• No
  snow is on the ground in Europe except the higher elevated areas and none was expected anytime soon
• Temperatures
  will be near to above normal
• Coastal
  areas of central and eastern Algeria will receive rain over the coming week while most interior crop areas in northern Africa will be dry
• Morocco
  has the greatest need for rain followed by northwestern Algeria
• Southwestern
  Morocco has been in a multi-year drought
• Southwestern
  Morocco does have some potential to receive two bouts of rain briefly in the Nov. 18-25 period
• Western
  portions of South Africa need rain to support unirrigated summer crop planting
• This
  first week of the forecast does not provide much moisture to these drier areas
• Showers
  may evolve in the following week
• Eastern
  South Africa soil moisture is a little better than in western areas and some showers and thunderstorms are expected to occur over the next two weeks to slowly improve planting and emergence conditions
• Central
  Vietnam coastal areas will be impacted by copious amounts of rain later this week into next Tuesday
• Rainfall
  of 5.00 to 15.00 inches is expected with local totals possibly getting near 20.00 inches
• Flooding
  will result and property damage is possible once again
• This
  region experienced frequent floods in October
• The
  area does not produce many crops
• Vietnam’s
  Central Highlands should be west of the excessive rain event and mostly unaffected
• West-central
  Africa will experience a good mix of weather during the next ten days to two weeks
• Less
  frequent rain in cotton areas will translate into better crop maturation conditions
• Coffee,
  cocoa, sugarcane and rice will also benefit from less frequent and less significant rainfall, although completely dry weather is not likely for a while
• East-central
  Africa weather will be favorably mixed for a while supporting coffee, rice, cocoa and a host of tropical crops
• Indonesia
  and Malaysia weather will be wet biased over the next two weeks with frequent rain expected over saturated or nearly saturated soil causing some flooding
• Philippines
  weather will remain favorably mixed with rain and sunshine through the next two weeks
• Mexico’s
  weather will drier biased for the next ten days except along the lower east and southwestern coasts where periodic rainfall is expected
• Central
  America rainfall will be erratic over the next two weeks with the greatest rain expected in Costa Rica and Panama
• Colombia,
  northern Peru and Ecuador rainfall is expected to be light to moderate over the next week to ten days
• Coffee,
  sugarcane, corn and a host of other crops may have been impacted by too much rain earlier this season resulting in some harvest delay
• Conditions
  should be improving over the next ten days
• Today’s
  Southern Oscillational Index was +8.16 and it was expected to drift higher over the coming week
• New
  Zealand rainfall is expected to be near to above average except along the lower east coast of South Island where precipitation may be a little lighter than usual
  
• Temperatures
  will be seasonable.
  

 

 

Bloomberg
Ag Calendar

Wednesday,
Nov. 10:

• EIA
  weekly U.S. ethanol inventories, production
• Vietnam’s
  customs department publishes October commodity trade data
• Malaysian
  Palm Oil Board’s data on October output, exports, and stockpiles, 12:30pm Kuala Lumpur
• Malaysia’s
  Nov. 1-10 palm oil export numbers by cargo surveyors
• FranceAgriMer
  monthly grains report

Thursday,
Nov. 11:

• USDA
  weekly crop net-export sales for corn, soybeans, wheat, cotton, pork, and beef, 8:30am
• Port
  of Rouen data on French grain exports
• Brazil’s
  Conab releases data on yield, area and output of corn and soybeans (tentative)
• New
  Zealand Food Prices
• HOLIDAY:
  France

Friday,
Nov. 12:

• ICE
  Futures Europe weekly commitments of traders report (6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• FranceAgriMer
  weekly update on crop conditions

Source:
Bloomberg and FI

 

 

 

Macros

77
Counterparties Take $1.449 Tln At Fed’s Fixed Rate Reverse Repo (prev $1.377 Tln, 76 Bidders)

 

US
CPI (M/M) SA Oct: 0.9% (est 0.6%; prev 0.4%)

–
CPI (Y/Y) NSA Oct: 6.2% (est 5.9%; prev 5.4%)

–
Core CPI (M/M) SA Oct: 0.6% (0.4%; prev 0.2%)

–
Core CPI (Y/Y) NSA Oct: 4.6% (4.3%; prev 4.0%)

US
Initial Jobless Claims 6 Nov: 267K (est 260k; prev 269k; prevR 271k)

–
Continuing Jobless Claims 30 Oct: 2.160M (est 2.050M; prev 2.105M; prevR 2.101M)

 

US
DoE Crude Oil Inventories (W/W) 05-Nov: +1002K (est +1600K; prev +3290K)

–
Distillate Inventories: -2613K (est -1000K; prev +2160K)

–
Cushing OK Crude Inventories: -34K (prev -916K)

–
Gasoline Inventories: -1555K (est -1250K; prev -1488K)

–
Refinery Utilization: 0.4% (est 0.75%; prev 1.2%)

 

Corn

·        
Corn futures surged 7.75-14.50 cents on sharply higher wheat futures and technical buying despite US ethanol production dropping by a larger amount for the week ending November 5, and a sharply higher USD (up 87 points @ 2 pm
CT).  Recall USDA upward revised for US corn ethanol use on Wednesday by 50 million bushels, nearly
offsetting an upward revision in production.  The rally today was mainly driven by the rally in wheat following Russia’s comments that that may curb grain exports and adjust the wheat export tax formula.  We heard China bought Ukraine corn.  Black Sea corn
prices are down this week and freight rates are trending lower.  China typically does not commit to large amounts of corn around this time of year as producers are busy harvesting and the government is active is replenishing reserves. 

• French
  growers group Arvalis expects France to realize a record corn yield of 11 tons per hectare from favorable weather. 
  
• Germany
  reported another bird flu (H5N1) case, this one in north Germany, affecting about 39,000 ducks. 
  
• The
  weekly USDA Broiler Report showed eggs set in the US up 7 percent and chicks placed down 1 percent.  Cumulative placements from the week ending January 9, 2021, through November 6, 2021 for the United States were 8.16 billion. Cumulative placements were up
  slightly from the same period a year earlier.

 

US
weekly ethanol dropped by 68,000 barrels per day to 1.039 million, lowest in a month, and steepest drop since 2/19/21.  This was unexpected as the trade looked for a 10,000-barrel decrease.  Midwest PADD2 production fell 69,000 barrels.  We did hear there
was some power issued for at least one plant located in Illinois, but for US production to be down 68,000 for week ending 11/5 is unusual. Ethanol stocks increased 157,000 barrels to 20.286 million and stocks are now highest since early September.  Early September
to date ethanol production is running 8.1% from the same period year ago.  US gasoline stocks fell by 1.555 million barrels and are down for the fifth consecutive week, to 212.7 million barrels, lowest level since November 2017.  US gasoline demand fell from
the previous week by 245,000 barrels to 9.259 million, and looking back at the previous 4 weeks, gasoline demand is running only 0.6% below the comparable period two years ago. 

 

 

 

Year
to date

 

 

Export
developments.

• South
  Korea’s MFG bought 137,000 tons of SAS and/or South African.  The corn was bought in two consignments, the first of 69,000 tons at $317.00 a ton c&f.  Another 68,000 tons was bought at $317.15 a ton. 
  
• Turkey
  seeks 325,000 tons of corn on November 15 for shipment sought between Dec. 20 and Jan. 20.

 

Updated
11/01/21

December
corn is seen in a $5.30-$5.80 range

March
corn is seen in a $5.25-$6.00 range

 

Soybeans

·        
CBOT soybeans
traded higher but gains were capped by a surged in the US dollar, which was up 87 points by around 2 pm CT.  Soybean meal was under a touch of pressure by afternoon trading and settled moderately lower in the font month and higher in the back months.  Soybean
oil rallied 40-67 points on higher palm futures and USDA announcing 22,000 tons of soybean oil was sold to unknown destinations.  Some think it was for South Korea.  One source mentioned Central America while another India. 

·        
We heard China bought a few US PNW soybean cargoes and few boats out of Brazil, both for December. 

·        
Decatur, IL soybean meal basis was up $8.00 at 30 over the December. 

·        
Conab is due out Thursday morning with updated 2021-22 Brazil soybean and corn production estimates and traders are looking for a large 3.4 million ton increase in soybeans and 3 million tons for corn, to 144.15 and 119.29, respectively,
according to Bloomberg estimates. 

·        
Brazilian stock exchange B3 SA plans to launch a local soybean futures contract in partnership with the CME Group, tied to the Santos port export price that will be cash settled. It will start trading November 29.

·        
Cargo surveyor AmSpec reported Malaysian palm oil exports for the November 1-10 period at 543,944 tons, an 8.7% increase from the same period month earlier. 

·        
ITS reported an 8 percent increase to 571,450 tons. 

·        
Malaysian palm was up 128 ringgit, rebounding from a 5-week low, and cash palm increased $25/ton to $1257.50/ton.  Yesterday the futures market was down 103. 

·        
MPOB released Malaysian palm data and October stocks, production, exports, and imports were near expectations.  Stocks at the end of October increased 4.4% to 1.834 million tons, but well below normal for this time of year.  Malaysian
palm production was 1.726 million tons, a 13-month high. Exports were 1.418 million tons, down 12% from September and 15% from year ago. Imports fell 32.7% to 50,540 tons from the previous month.  

 

 

 

Export
Developments

• Under
  the 24-hour reporting system, private exporters sold 22,000 tons of soybean oil to unknown.  Last time we saw a USDA soybean oil announcement was on 12/28/2020. 
  
• Egypt
  cancelled their vegetable oil import tender.  They received offers for vegetable oils for arrival Jan. 5-Jan. 25.  Lowest offer for 11,500 tons of sunflower oil was $1,440.00 per ton c&f.  The lowest offer for 30,000 tons of soyoil was $1,444.00 per tons c&f.
  
• South
  Korea is in for 115,000 tons of GMO-free soybeans on November 17 for arrival in South Korea in 2023. 
  

 

 

 

Updated
11/8/21

Soybeans
– January $11.60-$12.50 range, March $11.50-$13.50

Soybean
meal – December $320-$340, March $310-$360

Soybean
oil – December 57-60 cent range, March 56-65

 

Wheat

·        
US wheat futures surged 15.50-24.00 cents on concerns Russia will further claw back on exports after they mentioned they plant to reevaluate the export formula.  Tight global supplies for high protein wheat have sent wheat futures
to multi-year highs recently.  EU wheat basis the March contract hit a 13-year high (based on rolling second month contract).  December Paris wheat is near its contract high.  The USD rocketed higher by 82 points by early afternoon trading.  The cost of US
wheat was up about 4 percent today if you were a foreign buyer. 

·        
Russia is looking to adjust its way to calculate its grain export tax in case of significant price increases.  The formula for wheat export tax may change is the price reaches $400/ton, about $75/ton greater than where fob was
quoted late last week.  The wheat tax is set at $69.9 per a ton of wheat for Nov. 10-16. They are also looking into setting grain export quotas, including wheat, by mid-February, around the time inventories tend to get tight.  They also plan to roll out tax-free
quotas for beef and pork imports.  Russian domestic inflation is near a 5-year high.  The quota for beef will be 200,000 tons for 2022, and for pork at 100,000 tons for the first six months of 2022. 

·        
FranceAgriMer lowered its 2021-22 forecast of French soft wheat exports for outside the European Union to 9.4 million tons from 9.6 million estimated in October.  Soft wheat sales within the EU 27 was estimated at 7.8 million
tons from 8.0 million seen last month. 

·        
Paris December wheat was up 8.25 euros at 289.75/ton.

·        
The US weather forecast calls for a follow up snowstorm to fall across the northern Plains and upper Midwest this weekend.  Snowfall of 2 to 6 inches will occur from northwest to southeast across North Dakota and 2 to 5 inches
in northeastern South Dakota, southern Minnesota, and areas east into southern Michigan, according to World Weather Inc. 

·        
Australia will see active weather for a few more days.  Drier weather is seen this weekend into early next week which will be good for the wheat crop. 

·        
Ukraine is still in need of more precipitation. 

 

Export
Developments. 

·        
Tunisia bought 100,000 tons of soft wheat and 50,000 tons of barley.  The wheat was bought at $380.89, $385.60, $380.30 and $381.30 a ton c&f.  The barley was bought at $356.49 and $358.49 a ton c&f.  The wheat was sought for
shipment between Dec. 1, 2021 and Jan. 15, 2022.  The barley was sought for shipment between Dec. 15, 2021 and Jan. 20, 2022.

·        
Jordan saw offers from 3 participants for their import tender for 120,000 tons of barley for shipment combinations of March 1-15, March 16-31, April 1-15 and April 16-30. 

·        
Japan’s AgMin in a SBS import tender seeks 80,000 tons of feed wheat and 100,000 tons of feed barley for arrival by February 24. 

·        
Japan seeks 157,987 tons of food wheat this week from the US, Canada, and Australia. 

·        
Results awaited: The UN is in for 110,000 tons of milling wheat for Ethiopia.  40,000 tons was for delivery between Dec. 20, 2021, and Jan. 5 2022, another 20,000 tons for delivery between Jan. 5–20, 2022, and 50,000 tons also
for delivery between Jan. 5–20, 2022. 

·        
Results awaited: Separate import tender.  Ethiopia seeks 300,000 tons of milling wheat on November 9.

·        
Ethiopia seeks 400,000 tons of wheat on November 30. 

 

Rice/Other

·        
None reported

 

Updated
11/01/21

December
Chicago wheat is seen in a $7.50‐$8.25 range,
March $7.25-$8.40

December
KC wheat is seen in a $7.50‐$8.35,
March $7.00-$8.50

December
MN wheat is seen in a $10.00‐$11.25,
March $9.00-$11.75