FI Evening Grain Comments 11/29/22

PDF Attached

 

WTI
crude oil rallied on expectations for OPEC to cut oil production and rumors of China easing covid controls. Not all agree with that. A WSJ article this afternoon mentioned a group of delegates expect them to keep production levels flat. It will be interesting
how crude oil futures trade tonight. 

 

The
USD started lower but rallied by afternoon trading. CBOT agriculture futures ended mixed. US Winter wheat conditions improved two points but are far from normal for this time of year. The improvement reflects the improvement in rains across the southern Great
Plains and part of the reason why wheat futures are near multi week lows. The trade is waiting for the EPA to roll out their RVO mandates that are due out by end of November, for 2023, 2024, and 2025.
https://www.epa.gov/renewable-fuel-standard-program/news-notices-and-announcements-renewable-fuel-standard 
December CBOT First Notice Day deliveries will be out tonight.

 

 

 

 

Weather

The
weather outlook improved for the US Midwest, Delta and Brazil than that of yesterday. Precipitation will occur across the Midwestern south central and northwestern areas today, and eastern areas Wednesday. For the Great Plains, northern CO and NE will see
a wintery mix today. Rest of the Great Plains will see net drying through the end of the workweek. Argentina’s BA will see rain through today, while from Wednesday into Thursday, Argentina’s Cordoba, south Santa Fe, Buenos Aires will benefit from precipitation.
Brazil will see rain this week across most growing areas, drier bias MGDS and RGDS.

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE COMING WEEK

• Argentina
  will get some partial relief from dryness tonight into Thursday, but a general soaking is not likely and the need for significant rain will continue in many areas.
  
• Any
  rain will be better than none
• Northeastern
  and southwestern areas will remain driest relative to normal and in the absolute sense
• Drier
  and warmer than usual weather will resume again late this week into next week
• Argentina’s
  next best opportunity for showers and thunderstorms again after this week will be no sooner than mid-week next week and more likely later in that same week
• No
  general soaking is expected, though, and the need for additional moisture will continue strong
• Brazil’s
  drier biased areas in western and far southern parts of the nation will get some needed rain late this week and periodically through the weekend and all of next week
• Sufficient
  rainfall is predicted to support more crop needs
• A
  general improvement in the most moisture stressed crops is expected; including those in Mato Grosso, Mato Grosso do Sul and southwestern Goias
• Paraguay
  will remain quite dry during the next two weeks, although there will be a few showers periodically
• Crop
  moisture stress will be on the rise after soil moisture is depleted
• Portions
  of Bolivia will also remain drier biased for a while
• Less
  than usual rain will continue in Rio Grande do Sul, Brazil and immediate neighboring areas extending into east-central Argentina during the next ten days
• Timely
  rainfall, though will still support relatively good crop development
• Northeastern
  Brazil may trend a little too wet over time in the next two weeks
• Some
  potential for flooding will evolve in eastern Bahia and some neighboring areas this weekend into next week
  
• U.S.
  weather is not expected to change greatly in the next two weeks
• Central
  U.S. hard red winter wheat areas will continue drier than usual and poorly established

§ 
A few bouts of snow and a little rain may occur, but resulting precipitation will not be great enough to make a difference

• West
  Texas cotton areas may get rain briefly this weekend, but resulting rain should not be great enough to induce any changes in unharvested crop condition or soil moisture
• U.S.
  Delta, southeastern states and eastern Midwest will be subjected to periodic precipitation events that will maintain moisture abundance and slow farming activity

§ 
Winter crops will benefit from the moisture

• California
  will receive some valley rain and mountain snow during the next couple of weeks

§ 
Some heavy rain is possible along the upper California coast and in southwestern Oregon in time

§ 
Mountain snowfall will improve snow water equivalency, but greater snow will still be needed to get the snowpack to normal

• U.S.
  Pacific Northwest crop areas will experience a mostly good environment for dormant winter crops

§ 
Some increase in soil moisture is expected over the next ten days

• Northern
  Plains snowfall will occur periodically and should protect winter crops
• U.S.
  temperatures will trend colder in the central and eastern states next week, but some cooling is likely in the north-central states later this week
  
• Canada’s
  Prairies weather will continue to be a little more active in this coming week with waves of snow expected
• A
  short break in the precipitation is expected later this week, and then more moisture will evolve next week

§ 
The rising snowpack will be good for easing dryness in the spring of 2023

• Ontario
  and Quebec, Canada precipitation is expected to occur frequently over the next ten days
• Soil
  moisture will be plentiful and some snow is likely to accumulate after each weather system moves through the region
• Europe
  temperatures will trend colder than usual in the northeast along with western Russia later this week and into the weekend
• Temperatures
  in western and southern Europe will be mild to warm this week with some cooling in the northwest next week
• Negative
  North Atlantic Oscillation may bring more cold farther west in Europe this weekend and next week than advertised today
• Negative
  Arctic Oscillation and North Atlantic Oscillation may bring temperatures down across the central and interior eastern parts of the U.S. for a little week while next week
• Europe
  precipitation will occur in many areas this week, although it will be light
• Precipitation
  this weekend and next week will increase across southern parts of the continent; including the Mediterranean region
  

§ 
The moisture will be good for raising soil moisture for winter crops especially in the drier areas of Spain, Portugal, Italy and the Balkan Countries

§ 
This will occur in association with the negative phase of North Atlantic Oscillation

• Most
  of the CIS crop areas will experience waves or rain and snow during the next two weeks, although most of it should be light
• Cooling
  is expected in western Russia, the Baltic States, Belarus and northern Ukraine in the next week to ten days, but there is no risk of crop damaging cold
• Europe
  and western Asia snow cover is present from eastern Poland through the Baltic States, Belarus and northern and western Ukraine through the most other areas in Russia except the Southern Region. Northern Kazakhstan is also buried in snow
• North
  Africa will get rain early this week in northern Tunisia and northeastern Algeria, but changing weather late this week and especially next week should bring rain to Morocco and eventually across the remainder of northern Africa
• The
  moisture will be well timed and good for wheat and barley emergence and establishment after recent dryness
• China
  weather will be most active and wettest during the next ten days in the Yangtze River Basin and areas southward
  
• A
  wintry mix of precipitation types will occur today into Thursday of this week stressing livestock and slowing travel
  
• Weather
  elsewhere in eastern China will be less disruptive with only light amounts of snow and a little rain expected
  
• Cooling
  in China briefly this week will bring on greater energy demand and will push northern winter crops into at least semi-dormancy, although warming is expected again next week
• East-central
  and southern Australia will experience favorable drying conditions during the coming week
  
• Totally
  dry weather is not likely, but the resulting precipitation should be light enough to allow crop development and fieldwork to advance relatively well
• Eastern
  and northern Queensland us experiencing a boost in rainfall early to mid-week this week that will be good for sugarcane and eastern cotton production areas
• Drying
  in interior Queensland and New South Wales will be ideal for advancing winter crop maturation and harvest progress, although much of the harvest in Queensland should be complete
• 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 periods of rain will fall in the far south of India periodically which is not unusual at this time of year
• 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 rain
• Some
  of the precipitation may be heavy at times resulting in local flooding
• A
  tropical disturbance may develop near the southern Philippines this week before moving to the northern Malay Peninsula this weekend and into the Bay of Bengal nest week
  
• Mexico’s
  rains have largely diminished for the season and good crop maturation and harvest weather is expected for a while, but there is potential for a boost in southern and eastern Mexico rainfall later this week 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 should be mostly confined to southernmost coffee and cocoa production areas
• The
  precipitation will be greatest near the coast
• Some
  of the precipitation may drift northward this weekend and next week
• 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 is more sporadic and light in Ethiopia
• Today’s
  Southern Oscillation Index was +4.62 and it will move erratically over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Wednesday,
Nov. 30:

• EIA
  weekly US ethanol inventories, production, 10:30am
• Malaysia’s
  November palm oil exports
• US
  agricultural prices paid, received, 3pm

Thursday,
Dec. 1:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Port
  of Rouen data on French grain exports
• Australia
  commodity index
• USDA
  soybean crush, DDGS production, corn for ethanol, 3pm

Friday,
Dec. 2:

• FAO
  World Food Price Index
• Canada’s
  StatCan to release wheat, canola and barley production data, 8:30am
• 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

Source:
Bloomberg and FI

 

FI
First Notice Day Delivery estimates

No
changes in registrations as of early Tuesday (Wednesday TBT)

 

Due
out Friday @ 7:30 am CT

 

Soybean
and Corn Advisory

2022/23
Argentina Soybean Estimate Lowered 1.0 mt to 49.0 Million

2022/23
Argentina Corn Estimate Lowered 1.0 mt to 49.0 Million

2022/23
Brazil Soybean Estimate Unchanged at 151.0 Million Tons

2022/23
Brazil Corn Estimate Unchanged at 125.5 Million Tons

 

 

Macros

OPEC
and other big oil producers are likely to decide to keep output levels flat at their meeting Sunday, the group’s delegates say
https://wsj.com/articles/opec-leans-toward-maintaining-flat-production-delegates-say- 
@WSJ      meanwhile…

OPEC+
Seen Considering Deeper Output Cuts As Oil Market Falters – BBG

OPEC+
will hold its Dec. 4 meeting online, a change of plan for a gathering that had been scheduled to be conducted in person in Vienna

Canadian
GDP (M/M) Sep: 0.1% (est 0.1%; prevR 0.3%)

Canadian
GDP (Y/Y) Sep: 3.9% (est 3.8%; prev 4.0%)

Canadian
Quarterly GDP Annualized Q3: 2.9% (est 1.5%; prevR 3.2%)

Canada
GDP Seen Flat In Oct. After 2.9% Annualized Q3 Expansion

US
CB Consumer Confidence Nov: 100.2 (est 100.0; prev 102.5)

–
Present Situation: 137.4 (prev 138.9)

–
Expectations: 75.4 (prev 78.1)

 

Corn

·        
Corn futures ended
lower in the front four month contracts on improving South American weather. The USD was higher by early afternoon trading. WTI crude oil was higher.

·        
Mexico’s president and U.S. Secretary of Agriculture Tom Vilsack held a meeting yesterday afternoon over GMO corn. Some progress was made but the United States warned of legal action, citing economic losses and violation of the
USMCA agreement. Mexico previously announced they are banning GMO corn imports starting 2024. Then Mexico’s President Andres Manuel Lopez Obrador said on Tuesday he is seeking a deal with Washington. Lopez Obrador said the ban would affect imports of genetically
modified yellow corn for human consumption. Then also mentioned they are open to extend the term for two years in the case of allowing yellow corn for livestock use. Details of a “deal” were overall lacking, leaving producers left with questions. Mexico will
likely allow yellow corn used for animal feed, the bulk of what type of corn Mexico imports from the US, for years to come, in our opinion. We don’t see any major escalation in this matter. 

·        
A group of US Senators introduced a bill that would expand E15 to year round sales.

·        
US railroad strike could come as early as December 9. Latest news was the Biden Administration was putting pressure on unions and companies to get a deal done.  Roughly 30% of US freight, when measured by weight, is handled by
trains.

·        
(Bloomberg Government) — The Biden administration denied a request for truckers who transport livestock, insects, and aquatic animals to be exempt from some federal regulations on driving time…The Federal Motor Carrier Safety
Administration rejected the request, saying it wouldn’t meet an acceptable safety level, according to a notice set to publish in the Federal Register on Tuesday.

·        
South Africa’s CEC issued its final corn production estimate for the 2021-22 season and sees a 5.7% decrease from previous year (16.315MMT) to 15.387 million, including 7.790 million tons of white corn and 7.597 million tons of
yellow. 

·        
A Bloomberg poll looks for weekly US ethanol production to be down 3,000 thousand to 1038k (1025-1052 range) from the previous week and stocks down 100,000 barrels to 22.729 million.

 

USDA
Attaché on Brazil feedgrains

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Update_Brasilia_Brazil_BR2022-0059.pdf

 

Export
developments.

·        
South Korea’s MFG bought an estimated 70,000 tons of corn in a tender for up to 140,000 tons, either from South Africa or South America, at $336.45/ton c&f and $185.75 over the March contract, for March arrival.

 

 

 

 

Updated
11/25/22

March
corn $6.00-$7.15 range.

 

Soybeans

·        
CBOT soybeans
traded at a three-week high before trending lower on technical selling. There was soybean selling out of South America during the day session that limited gains. Soybean oil traded two-sided. It was higher earlier follow through buying,
but the front months sold off after soybeans broke and the USD pared losses. Soybean oil ended the day mixed. The trade is still waiting for the EPA to roll out their RVO mandates that are due out by end of November, for 2023, 2024, and 2025.
https://www.epa.gov/renewable-fuel-standard-program/news-notices-and-announcements-renewable-fuel-standard 
Some traders are looking for a 1.0-1.5 billion gallon increase, with conventional near 15 billion and rest increasing in advanced/renewable, for 2023.

·        
Soybean meal were lower on product spreading and lower corn futures. Prices were unable to recover unlike soybean oil and other commodities during the trade. Talk of Argentina producers boosting sales to crushers could increase
soybean meal exports from that country, undercutting US export demand.

·        
We heard Argentina soybean sales today were much lighter than yesterday (estimated 500k Monday).

·        
A Reuters story mentioned an access road to Brazil’s Paranagua port was blocked after heavy rainfall caused landslides. Port operations were running at normal levels.

·        
APK-Inform reported Ukraine soybean exports reached 465,000 tons so far in 2022-23 (September-August crop season), 150% more than last year and highest in three years. 

 

 

 

Export
Developments

·        
None reported 

 

Updated
11/25/22

Soybeans
– January $13.50-$15.00

Soybean
meal – January $375-$450

Soybean
oil – January 67.00-74.00 range

 

Wheat

·        
US wheat futures ended mixed in Chicago (front months higher) and lower for KC and MN. Chicago is near a three month low. The USD was higher in early afternoon trading. There were again rumors of additional wheat soon arriving
into the US east coast. US winter wheat ratings increased two points, one point above a trade average.

·        
Paris March wheat ended 3.00 euros lower at 312.75 euros a ton, near a three-month low from follow through selling on talk of cheaper Black Sea supplies. 

·        
USDA crop conditions for winter wheat increased 2 points to 34 percent, lowest since at least 1988 when USDA started reporting fall winter wheat crop conditions. US winter wheat crop rating was expected by the trade to increase
one point.  Estimates ranged from 32% to 35%. For the US winter wheat area, 75% was experiencing drought as of November 22. Kansas, which produced about a quarter of the winter wheat crop, was at 89% (46% exceptional). Note for the spring wheat area, 77 percent
was experiencing drought.

·        
Ukraine planted 4.5 million hectares of winter grains, 94 percent of the expected area, including 3.8 million hectares of winter wheat.  The winter area is down from 6.2 million year earlier.

 

Export
Developments.

·        
Turkey bought 455,000 tons of milling wheat for Dec/Jan shipment at various prices, between $322.89 and $344.00 per ton.

·        
Algeria seeks 50,000 tons of optional origin soft milling wheat on Wednesday (November 30), valid until December 1, for January shipment.

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

·        
China plans to auction off 40,000 tons of wheat mid this week. 

·        
Pakistan is in for 500,000 tons of wheat on November 30, two days later than previous announcement.

·        
Turkey seeks 495,000 tons of feed barley on December 1 for Jan through Feb shipment.

 

Rice/Other

·        
Rice futures hit their highest level since June 2020.

·        
(Reuters) – Vietnam’s rice exports in the January-November period are estimated to have risen about 16.3% from a year earlier to 6.7 million tons, government data showed on Tuesday.
Revenue
from rice exports in the period is seen up 6.9% to $3.2 billion. November rice exports from Vietnam, one of the world’s leading shippers of the grain, likely totaled 600,000 tons, worth $296 million.

 

Updated
11/25/22

Chicago
– March $7.75 to $10.00

KC
– March 8.50-$10.50

MN
– March $9.00 to $10.50