FI Evening Grain Comments 11/23/22

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After
a two-sided trade for many commodity markets, including agriculture, futures for the CBOT grains and oilseed complex ended higher on technical buying and lower USD. USDA reported (US) private exporters reported sales of 110,000 tons of soybeans for delivery
to China during the 2022-23 marketing year. News was light but a couple headlines caught traders attention. Indonesia announced they will restrict, again, palm oil exports starting early next year for six months. Brazil started shipping corn to China. US is
rumored to have bought EU wheat. Algeria is entertaining offers for durum wheat. WTI crude oil was sharply lower (down more than $3.00) and USD fell more than 100 points by 1:45 pm CT. The next U.S. Export Sales Report will be released on Friday, November
25, 2022. -FAS/USDA.  CFTC commitment of traders will be delayed until Monday. Expect a volatile trade on Friday. Export sales are up for grabs with a wide range of estimates.

 

 

Weather

7-day
weather outlook for the US suggests a pickup in rain bias southeast and Delta. Other parts of the US will see net drying. Some showers are seen for eastern TX. 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
  will experience excessive heat and dryness over the next full week with abbreviated rainfall late next week and some potential for hotter and drier weather to return for a second wave in early December
• Temperature
  extremes will rise up into the 90s to 105 degrees Fahrenheit often during the balance of this week and during the weekend with a few extremes approaching 108 in the northwest part of the nation
• Soil
  moisture is favorable in southwestern Argentina following rain in the past week, but dry weather and hot temperatures through Tuesday of next week will deplete that moisture and return some stress
• Argentina’s
  biggest problem area with dryness remains in Santa Fe, Entre Rios, southern Chaco, Corrientes and southern Santiago del Estero where not much rain has fallen over the past two weeks and there has already been some excessive heat periodically
• Crop
  moisture stress will be most serious in these areas during the coming week
• A
  trough of low pressure coming into Argentina late next week will produce scattered showers and thunderstorms, but the resulting rainfall cannot be as good as it needs to be because of a trough of low pressure that will be lingering over southern Brazil limiting
  moisture flux from the Atlantic ocean into Argentina’s crop areas
• As
  a result of this rainfall at the end of next week in Argentina may impact most crop areas, but it will likely be disappointing rain for many areas since the volume will be a little light following one of the most stressful weeks in this growing season
• Argentina’s
  longer range outlook is expected to improve, but not until mid-December at which time greater rain will fall in the west while the east continues to receive lighter than usual rainfall, but not complete dryness
• La
  Nina is expected to continue weakening over the next several weeks and by the end of this year it will be weak enough to bring on some better rain potentials in Argentina, but that may not occur soon enough – certainly not for the early corn and sunseed crops
  which are destined for low production
• Brazil
  weather remains mostly good, but there is low soil moisture in Mato Grosso that still needs to be dealt with
• Some
  of this dryness is also in northern Mato Grosso do Sul and a few neighboring areas of Goias, despite some rain in these areas earlier this week
• Soil
  moisture is still rated favorably in most other areas, although Rio Grande do Sul has reported well below normal precipitation for the past two months and for some areas a little longer than that
• Brazil’s
  weather will be wetter biased from eastern Mato Grosso, Tocantins and parts of Goias into Maranhao, Piaui, Bahia, Minas Gerais and Sao Paulo during the coming ten days
• Some
  northeastern Brazil crop areas will experience too much rain and flooding will become a potential threat in time late this coming weekend and mostly next week
• Some
  of the drier areas in western and southern Brazil will experience warmer temperatures during the weekend and early part of next week, as well, but temperatures will not be as hot as those in Argentina
• Nevertheless,
  the absence of rain for the coming seven days and warmer temperatures will accelerate drying rates while the soil is already dry or drying down which promises to lead crops into a period of moisture stress next week and on out deeper into December if there
  is no greater rainfall
• Southern
  and some western Brazil crop areas will also experience net drying in the second week of the forecast if Argentina’s rain late next week is not very great.
  
• The
  potential for a general soaking from Rio Grande do Sul to southwestern Mato Grosso and Mato Grosso do Sul in week two of the outlook is low, but there should be some timely rainfall to offer a short term bout of relief from dryness
• Paraguay
  will not receive much rain over the next full week and temperatures will trend hotter which may lead to increasing crop stress, although its moisture profile is mostly good going into this period of time
• Any
  crop stress next week will not likely threaten production unless it is allowed to persist more deeply into December
• U.S.
  weather outlook
• Significant
  precipitation is still being advertised from the southwestern Plains into the Midwest for late this week and into the weekend
  

§ 
This event may still be overdone by in the southwestern Plains, but rain will impact wheat and cotton areas in western Texas and the Texas Panhandle Thursday into Saturday

• Some
  snow will accumulate in the Texas Panhandle and western most parts of West Texas with accumulations of 2 to 6 inches and locally to 8 inches possible
• Areas
  near the New Mexico border will receive the greatest snow

§ 
Some of the 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 are expected and there may be a little concern over unharvested cotton fiber quality, although it is not likely to change much. Winter wheat will benefit from the moisture as will the
long term moisture outlook.

• 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

§ 
This event could become the next more significant storm system in the U.S. and should be closely monitored for possible blizzard development

• 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

§ 
A part of eastern Queensland may get some of this rain early to mid-week next week

• 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 this week bolstered topsoil moisture for wheat and rapeseed in east-central parts of the nation
• Rain
  in east-central China 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
  
• Seasonal
  cooling 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 lighter in Ethiopia
• Today’s
  Southern Oscillation Index was +5.80 and it will move erratically lower over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

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

95
Counterparties Take $2.069 Tln At Fed Reverse Repo Op (Prev $2.104 Tln, 92 Bids)

US
Initial Jobless Claims Nov 19: 240K (est 225K; prev 222K)

US
Continuing Claims Nov 12: 1551K (est 1520K; prev 1507K)

US
Durable Goods Orders Oct P: 1.0% (est 0.4%; prev 0.4%)

US
Durables Ex Transportation Oct P: 0.5% (est 0.0%; prev -0.5%)

US
Cap Goods Orders Nondef Ex Air Oct P: 0.7% (est 0.0%; prevR -0.8%)

US
Cap Goods Ship Nondef Ex Air Oct P: 1.3% (est 0.1%; prevR -0.1%)

US
S&P Global Manufacturing PMI Nov P: 47.6 (est 50.0; prev 50.4)

–
Services: 46.1 (est 48.0; prev 47.8)

–
Composite: 46.3 (est 48.0; prev 48.2)

US
New Home Sales Change Oct: 632K (est 570K; prev R 588K)

–
New Home Sales (M/M) Oct: 7.5% (est -5.5%; prev R -11.0%)

–
Median Sale Price (Y/Y) (USD): 493.0K or +15.4% (prev 470.6K Or +13.9%)

US
Univ. Of Michigan Sentiment Nov F: 56.8 (est 55.0; prev 54.7)

–
Conditions: 58.8 (est 57.8; prev 57.8)

–
Expectations: 55.6 (est 52.5; prev 52.7)

–
1-Year Inflation: 4.9% (est 5.1%; prev 5.1%)

–
5-10 Year Inflation: 3.0% (est 3.0%; prev 3.0%)

US
EIA NatGas Storage Change (BCF) 18-Nov: -80 (est -86; prev +64)

–
Salt Dome Cavern NatGas Stocks (BCF): -9 (prev +16)

 

FOMC
Minutes: Most Officials Backed Slowing Pace Of Hikes Soon

–
Several Officials Saw Increased Risks From Rapid Hikes

–
Various’ Officials Saw Rates Peaking At A Higher Level

–
A Few Officials Wanted To See More Data Before Slowing

–
A Few Officials Saw Slowing Hike Pace Reducing Instability

–
Officials Agreed On Importance Of Lags, Cumulative Action

–
Officials Discussed Market Resilience In Light Of UK Turmoil

 

Corn

·        
Corn futures were
higher on technical buying and lower USD. News was light. US exporters saw good news out of Mexico.  Meanwhile at least four cargoes of corn are set to sail out of Brazil to China this month.

·        
Mexico indicated they may relax on yellow corn GMO import rules after pushing to phase them out earlier this year. They may allow GMO yellow corn for animal feed use, which could keep US shipments to Mexico at healthy levels from
2024 onward. Most of Mexico’s corn imports are used for the livestock sector.

·        
More protests are starting to emerge across interior Brazil that could temporally slow corn shipments.

·        
USDA corn export sales could be interesting on Friday. Bloomberg’s high end of a range of expectations is 3.0 million tons while Reuters is 2.5 MMT.

·        
Brazil shipped their first notable corn shipment to China. 68,000 tons sailed from Santos today. Bloomberg noted three more vessels of corn will depart later this month.

·        
After the US holiday Friday, the CBOT closes early on Friday.

·        
December options expire Friday. Corn was heavy on the call side as of Wednesday morning.

·        
The USDA Broiler Report showed eggs set in the US down slightly and chicks placed down slightly. Cumulative placements from the week ending January 8, 2022, through November 19, 2022, for the United States were 8.66 billion. Cumulative
placements were up 2 percent from the same period a year earlier.

·        
EIA reported weekly ethanol production up a large 30,000 barrels per day to 1.041 million and stocks up 1.531 million barrels to 22.829 million. We like watching the 4-week average change, which is up 2,000 barrels for production
and up 135,000 barrels for stocks.  Back to the weekly changes, for comparison, a Bloomberg poll looked for weekly US ethanol production to be up 11,000 thousand and stocks up 6,000 barrels to 21.304 million. Early September to November 18 US ethanol production
is still running 4.8% below same period year ago and 1.9% below pre pandemic 2019. US gasoline stocks rose for the second consecutive week, by 3.058 million barrels to 211 million and demand for gasoline dropped 415,000 barrels to 8.327 million barrels. US
gasoline demand is down about 10 percent from this time year ago. We left corn for ethanol use unchanged, currently 25 million bushels below USDA’s 2022-23 estimate.

 

 

 

US
DoE Crude Oil Inventories (W/W) 18-Nov: -3.691M (est -2.614M; prev -5.400M)

–
Distillate: +1.718M (est +650K; prev +1.120M)

–
Cushing: (prev -1.624M)

–
Gasoline: +3.058M (est +1.150M; prev +2.207M)

–
Refinery Utilization: +1.0% (est 0.35%; prev +0.8%)

 

RFA’s
daily email update has several articles circulating around on higher US ethanol blending. This is not new as it was reported earlier this week, but several media outlets are analyzing the potential impact. Below is a recap from one article.

Energy
and ag groups seek permanent year-round E15 fix

https://www.agri-pulse.com/articles/18529-biofuels-groups-have-api-on-their-side-in-e15-push-will-that-be-enough

 

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 higher on long fund positioning and higher vegetable oil prices. 24-H private soybean sales to China was seen supportive.

·        
CBOT soybean oil was firm today on technical buying. Some traders found headlines out of Indonesia bullish as that country may again restrict palm exports during first half 2023. We don’t think it will boost US soybean exports
anytime soon. “Joko Widodo Indonesian President Makes Big Announcement on Antara TV ( Indonesian Government official News Channel)…’We are implementing New DMO Policy from 1/12/2022  in the Ratio of 1:5 from previous 1:9 ratio for the time period of Six Months.
So that People of Indonesia can continue getting benefit  of low Cooking oil price’ ” Thanks to Anil for that IM.

·        
Soybean meal futures traded two-sided, ending higher despite EU oilmeal prices softening earlier today. South American soybean meal, when imported into Rotterdam, was offered as much as $11 a ton lower from Tuesday, according
to Reuters. 

·        
Ongoing chatter of a new soybean dollar for Argentina continues to circulate and that may be causing a little selling in other countries as farmers try to get ahead of a potentially heavy soybean environment in Argentina.  Producer
selling may remain slow going forward until that rollout and that was the case last week. Argentina producer selling for the week ending November 16 was only 165,500 tons (641,700 tons year ago period), bringing cumulative shipments to 72.6% for the 44 million
ton 2021-22 crop, compared to 75.6% year earlier.

 

Export
Developments

·        
USDA: Private exporters reported sales of 110,000 tons of soybeans for delivery to China during the 2022-23 marketing year.

·        
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 traded two-sided, catching a bid during the day session on technical buying. Futures were lower earlier on follow through fund selling.  A surge in MN bull spreading left us a little baffled. December Mn was up
11.75 cents while May 2023 fell 0.25 cent.

·        
Improving weather for Argentina and Australia along with rumors of US importing new crop EU wheat (summer 2023) is still see bearish, but the trade ignored that. The wheat that was rumored bought by the US was thought to be Polish
or German origin.

·        
Note the investment funds (futures only) bought the most amount of contracts today for the combined wheat, corn, soybeans, meal and soybean oil (13K) since November 15 (22K).

·        
Algeria started buying wheat and prices were around $495 per ton, $502-503 earlier).

·        
There was talk of Russia selling wheat to Mexico.

·        
Ukraine’s AgMin reported Ukraine produced 51 million tons of grain in 2022, down sharply from 86 million tons year ago.

·        
A lower USD may limit losses but it’s unlikely the US will see an uptick in exports.

·        
December Paris milling wheat settled down 1.9% or 6.00 euros at 327.25 euros ($339.39) a ton. March was off 3.00 euros at 319.00.

 

Export
Developments.

·        
Results awaited: Algeria started buying wheat and prices were around $495 per ton, $502-503 earlier). The seek at least 50,000 tons of durum wheat for last half December and first half January arrival.

·        
China plans to auction off 40,000 tons of wheat from reserves on November 30.

·        
Thailand bought 60,000 tons of feed wheat from Australia at about $345/ton for Jan-Mar shipment.

·        
Turkey seeks 455,000 tons of milling wheat on November 29 for Dec/Jan shipment.

·        
Jordan passed on barley for March and April 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

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

 

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