FI Evening Grain Comments 11/22/22

PDF Attached

 

The
next U.S. Export Sales Report will be released on Friday, November 25, 2022 -FAS/USDA. 
FI estimates attached.

 

US
rail strike concerns and ongoing China covid lockdowns sent US agriculture commodities lower. A rail union rejected a labor deal yesterday and that raises the threat for a US strike in about two weeks. Egypt bought a large amount of vegetable oils, first notable
purchase in about a month. US winter wheat conditions were unchanged from the previous week, one point below trade expectations, and signal a short 2023 crop if weather fails to improve. US Great Plains will remain mostly dry over the next week.

 

 

Disconnect
from palm oil versus soybean oil, futures, may widen in 2023 if some predictions for Asian palm oil production increase is realized. Fitch recently published a bearish palm oil price outlook.

 

Weather

Some
changes were seen Tuesday morning for the US and South America weather forecast. The US trends drier this week with a few showers for eastern TX and wintery mix for the Midwest areas of the northwestern states later this workweek. Rain should favor the US
Midwest southwestern areas Thursday. The Delta turned wetter for the rest of this week. Argentina will dry down through Friday. Brazil will see additional rain through Wednesday. West-central Brazil will begin to dry down soon and will remain dry throughout
the week.

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE COMING WEEK

• Argentina
  rainfall will be limited over the next two weeks
• Totally
  dry weather is not likely, but the rain that falls may be infrequent and often light
• Southern
  Buenos Aires and parts of La Pampa will be wettest with rain late this week and into the weekend
• The
  next nationwide precipitation event will hold off until mid-week next week and early indications suggest relief from dryness in central Argentina will be limited once again
• Central
  Argentina has the poorest soil moisture and is expected to suffer serious stress over the coming week
• Argentina
  temperatures will be quite warm to hot later this week and through the weekend into early next week
• Temperatures
  will rise into the 90s and over 100 degrees with the hottest conditions in the north
• The
  heat will exacerbate the stress on crops
• Brazil
  weather will be favorably mixed over the next two weeks for most of the nation; however, multiple days of drying are expected from Wednesday afternoon of this week through the first half of next week from southern Mato Grosso through Mato Grosso do Sul and
  southwestern Sao Paulo to Rio Grande do Sul
• Most
  of the region that dries down will also experience a brief bout of light rain today and Wednesday delaying the onset of dryness for a little while
• Temperatures
  will be seasonable which will help to keep drying rates slow enough to reduce concern over firming soil
• Recent
  rain in some of the drier areas of Mato Grosso and Goias have improved topsoil moisture and crop conditions, although more rain is needed
• The
  best rain potential for these drier pocketed areas will be today into Wednesday and again during the Nov. 30 – Dec. 6 period.
  
• Northeastern
  Brazil will experience frequent moderate to heavy rain during the latter part of this week through much of next week resulting in some rising flood potential
• Crop
  conditions will stay favorable in most of the region, but a few of the wettest areas will require drying after the middle of next week to protect long term crop development
• U.S.
  weather Monday was dry biased in most of the nation, but some rain fell again in southeastern Texas resulting a further boost in topsoil moisture after the same region received rain during the weekend
• Snow
  cover is still widespread in the northern Plains and Great Lakes region, although the accumulation is very light in southernmost Canada’s Prairies
• Temperatures
  began warming across the central and southern Plains Monday afternoon while still cool in the Midwest and the Pacific Northwest
• U.S.
  weather outlook
• Greater
  precipitation is being advertised from the southwestern Plains into the Midwest for late this week and into the weekend
  
• This
  event is likely overdone by some of the models, but precipitation will fall from the Texas Panhandle into the heart of the Midwest Thursday through Saturday
• Some
  snow will accumulate in the Texas Panhandle with accumulations of 2 to 6 inches and locally to 8 inches possible
• Some
  southwestern Plains wheat will benefit from the precipitation event
• U.S.
  west-central high Plains will be missed by the precipitation this weekend and will stay drought ridden for an extended period of time
• U.S.
  Delta and southeastern states will see waves of rain Thursday through the weekend and into early next week resulting in some needed runoff for the lower Mississippi River
  
• Delays
  to late season summer crop harvesting is expected and there may be a little concern over unharvested cotton fiber quality, although it is not likely to change much
  
• California
  will have another chance for precipitation next week with moderate snowfall possible in the Sierra Nevada while only light rainfall occurs in the central Valleys
• A
  new snow event “may” occur in the northern U.S. Plains and upper Midwest during the middle part of next week just ahead of returning cold air
• U.S.
  temperatures will trend warmer this week and then cool down in the north-central and western states next week along with western Canada
• Eastern
  Australia will experience favorable drying conditions during the coming week to ten days
  
• Queensland
  coastal areas may experience a boost in rainfall during the second week of the forecast benefiting some sugarcane and eastern most cotton production areas
• Drying
  in interior Queensland and New South Wales will be ideal for advancing winter crop maturation and harvest progress
• Western
  Australia crop weather remains very good for the normal maturation of winter crops and their harvest with little change likely for the next couple of weeks
• Any
  rain that evolves will only briefly disrupt field progress
• India
  weather will be fine for summer crop harvesting and winter crop planting, although a tropical disturbance pushing into southern parts of the nation will induce some local flooding near the lower Andhra Pradesh coast over the next couple of days
• China
  rainfall Monday and early today was in the heart of winter wheat and northern rapeseed production areas and it was all welcome and good for crops
• Rain
  in east-central China Monday will shift southward over the balance of this week and into the coming weekend producing waves of moisture that will improve southern rapeseed establishment and spring development potential
• The
  moisture will also be good for early rice planting in February 2023
• South
  Africa’s summer crop areas will continue to experience alternating periods of rain and sunshine during the next two weeks favoring normal planting and early season crop development
  
• Southeast
  Asia will continue to experience an active weather pattern with nearly all crop areas from Thailand and Vietnam to Indonesia, and the Philippines receiving frequent rain
• Some
  of the precipitation may be heavy at times resulting in local flooding
• Europe
  weather will continue active this week with rain and mountain snow likely in many areas, though the Baltic Plain will experience the lightest and most infrequent precipitation
• Most
  of the continent will either have favorable soil moisture or experience rising soil moisture during the coming week
  
• Cool
  temperatures will continue forcing winter crops in eastern Europe into dormancy or semi-dormancy, although temperatures in the next two weeks will trend a little warmer than usual
• CIS
  weather in the next ten days will be seasonable with waves of rain and a little snow occurring periodically along with seasonable temperatures
  
• Bitter
  cold will be confined to eastern Russia
• Some
  of the bitter cold in eastern Russia will seep into China this weekend and especially next week, but temperatures are unlikely to be a threat to winter wheat
  
• Mexico’s
  seasonal rains have largely diminished for the season and good crop maturation and harvest weather is expected for a while this week, but there is potential for a boost in southern and eastern Mexico rainfall later this week and into the weekend
• The
  moisture will be good for winter rice and citrus, but may disrupt some farming activity
• 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 with rain totals rising above normal
• Nicaragua
  and Honduras will experience lighter than usual precipitation
• 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 abundantly in Tanzania, southwestern Kenya and Uganda while it becomes more sporadic and light in Ethiopia
• Today’s
  Southern Oscillation Index was +6.40 and it will move erratically lower over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Tuesday,
Nov. 22:

• EU
  weekly grain, oilseed import and export data
• US
  cold storage data for beef, pork and poultry, 3pm
• EARNINGS:
  Sime Darby Plantation

Wednesday,
Nov. 23:

• EIA
  weekly US ethanol inventories, production, 10:30am
• USDA
  red meat production, 3pm
• HOLIDAY:
  Japan

Thursday,
Nov. 24:

• Port
  of Rouen data on French grain exports
• Cane
  crush and sugar production data by Brazil’s Unica (tentative)
• HOLIDAY:
  US

Friday,
Nov. 25:

• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various US futures and options
• FranceAgriMer
  weekly update on crop conditions
• Malaysia’s
  Nov. 1-25 palm oil export data

Source:
Bloomberg and FI

 

Macros

92
Counterparties Take $2.104 Tln At Fed Reverse Repo Op (prev $2.125 Tln, 93 Bids)

Canadian
Retail Sales (M/M) Sep: -0.5% (est -0.5%; prevR 0.4%)

Canadian
Retail Sales Ex Auto (M/M) Sep: -0.7% (est -0.6%; prevR 0.5%)

Philadelphia
Fed Non-Manufacturing Regional Business Activity Index -13.6 In Nov Vs -14.9 In Oct

Philadelphia
Fed Non-Manufacturing Firm-Level Business Activity Index -2.6 In Nov Vs 11.2 In Oct

Philadelphia
Fed Non-Manufacturing New Orders Index -6.3 In Nov Vs -5.5 In Oct

Philadelphia
Fed Non-Manufacturing Full-Time Employment Index 10.0 In Nov Vs 13.3 In Oct

Philadelphia
Fed Wage And Benefit Cost Index 41.5 In Nov Vs 49.9 In Oct

 

 

Corn

·        
Corn futures traded
tow-sided, ending lower after fund selling dried. Corn futures were higher earlier on technical buying, lower USD, higher WTI crude oil and good US domestic demand. But a US rail strike and weaker wheat prices weighed on corn futures. There was some chatter
China may import more corn to ease high domestic prices, but that is speculation in my opinion as they harvested a large 2022 crop. China’s recent CASDE calls for less corn imports for the 2022-23 season. Partial China CASDE below from November.

·        
The US corn harvest was 96 percent, 2 points below expectations.

·        
The trade will be monitoring the US rail situation, after a union rejected a White House broker deal. A strike could develop in about two weeks and cost the US economy 2 billion dollars per day.

·        
There was chatter Mexico will ban imports of GMO white corn.  This is a nonevent, IMO. Most white corn produced in North America is non GMO. Needless to say, Mexico is nearly self-sufficient with producing and consuming white
corn, and only imports what they need from the United States. Yellow corn on the other hand remains a issue if Mexico completely bans GMO from the human food chain.  It remains an unknown as details are lacking.

·        
One satellite / agriculture company is predicting USDA is too large on 2022 US corn and soybean yields. For December USDA’s update, we look for no changes in US supply but January USDA could make slight downward adjustments.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 11,000 thousand to 1022k (1004-1060 range) from the previous week and stocks up 6,000 barrels to 21.304 million.

 

Export
developments.

None
reported

 

 

Updated
11/17/22

December
corn is seen in a $6.50-$6.80 range. March $6.00-$7.15 range.

 

Soybeans

·        
CBOT soybeans
traded two-sided, ending lower. Higher soybean oil limited losses in back month soybean futures. Bear spreading in CBOT soybeans may have reflected Argentina’s intention to support physical farmer sales for soybeans with a second rollout of the “soybean dollar.” 

·        
Other news for the soybean complex was light.

·        
The US soybean harvest is nearly complete.

·        
Brazil is over 80 percent complete for soybean plantings while Argentina is catching up to average after getting rain last week.

·        
Brazil plans to keep its biodiesel mandate at ten percent until March 31. From April onward the mandate increases to 15%. Brazil’s feedstock for biodiesel accounts for about 70 percent soybean oil. Some traders are worried about
the large increase from 10 percent to 15 percent.

 

Export
Developments

·        
Egypt’s GASC bought 65,750 tons of vegetable oils for Jan 10-31 arrival.  30,750 tons was bought for sunflower oil and 35,000 tons for soybean oil. They paid $1380 for sunflower oil and $1,475 for soybean oil.  Note earlier this
year they nearly paid $2000 per ton for sunflower.

·        
China plans to auction off 500,000 tons of soybeans from reserves on November 25.

 

Updated
11/17/22

Soybeans
– January $13.50-$15.00

Soybean
meal – December $390-$420, January $375-$450

Soybean
oil – December 70.00-75.00, January 67.00-74.00 range

 

Wheat

·        
US wheat futures ended lower on slow US export demand despite a lower USD for the trading day. North America winter grain crop production concerns limited losses. Good global demand for high protein wheat limited losses for MN,
against Chicago and KC which saw fund selling.

·        
Not all traders share the same reasons mentioned above for the bearish undertone. Some cited EU wheat exports flowing into the US. The southeast US end users could benefit from cheaper feed wheat but high protein wheat we have
to think about. But EU 11 percent protein wheat is much cheaper than US 11.5% wheat. Remember Iraq recently contract for US high protein wheat so one would think US millers would be shying away from high protein imports.

 

 

·        
Eastern TX has a chance for rain Wednesday, but other areas will see net drying accelerate with temperatures warming above 40 degrees.

·        
US winter wheat ratings were unchanged from the previous week and remain lowest since USDA began reporting back in the mid 1980’s. At 32 percent they are below 44 percent year ago. Traders were looking for a one point improvement.
87 percent of the crop is emerged.

·        
Short squeeze was seen in in Paris December wheat. That contract was up sharply earlier but settled 1.75 euros higher at 333.50 euros a ton. Good demand for EU wheat was noted last week and again Monday.

·        
Ukraine winter grain plantings are 94 percent complete or 4.4 million hectares, including 3.8 million wheat. Plantings slowed in recent days after a storm rolled through some of the growing areas, boosting soil moisture levels.

 

Export
Developments.

·        
Taiwan bought 43,400 tons of milling wheat from the US for Jan shipment. It included 26,800 tons of dark northern spring wheat at $420.71 a ton FOB, 12,650 tons of hard red winter wheat at $425.12 a ton FOB, and 3,950 tons of
soft white wheat at $354.57 a ton,  FOB.

·        
Algeria seeks at least 50,000 tons of durum wheat on Wednesday for last half December and first half January arrival.

·        
Jordan seeks 120,000 tons of barley on November 23 for March and April shipment.

·        
Turkey seeks 40,000 tons of rice on November 25 for Dec 5-Feb 15 shipment.

·        
Pakistan is in for 500,000 tons of wheat on November 28.

·        
Jordan seeks 120,000 tons of hard milling wheat on November 29 for March/April shipment.

 

Rice/Other

·        
South Korea’s Agro-Fisheries & Food Trade Corp. passed on 50,500 tons of rice sourced from the United States. They floated another import tender for 63,600 tons of rice from the United States set to close Nov. 24.

 

Updated
11/17/22

Chicago
– December $7.75-$8.50, March $7.75 to $10.00

KC
– December $9.00-$9.75, March 8.50-$10.50

MN
– December $9.00-$10.00, March $9.00 to $10.50