FI Evening Grain Comments 12/07/21

PDF Attached

 

There
was no formal EPA announcement at the time this was written.

 

Private
exporters reported the following: 123,000 metric tons of soybeans to unknown during the 2021/2022 marketing year.

 

Corn
and wheat ended higher while the soybean complex sold off. Throughout the session several newswire headlines highlighted potential EPA mandate and waiver decisions. The trade viewed the leaked mandates as negative for the biofuel industry. USDA also announced
grants/relief to biofuel companies negatively impacted by Covid-19 economic slowdown. 

 

 

Weather

                                                                                                                    

World
Weather Inc.

WEATHER
EVENTS AND FEATURES TO WATCH

• Crop
  moisture stress is evolving in western Parana and some immediate neighboring areas in Mato Grosso do Sul and Paraguay
• Rain
  is needed in these areas and some may evolve, but not before Sunday and more likely next week when scattered showers and thunderstorms evolve
• That
  rain will be very important since without moisture stress could become significant to slow crop develop and raise production worries
• Rio
  Grande do Sul, Uruguay, eastern Entre Rios, Argentina and Corrientes along with southern Paraguay are expecting to dry out as well, but moisture stress for these areas will not evolve as quickly as that of western Parana.
  
• Dryness
  in these areas will be more persistent and will raise the potential crop moisture stress as mid-month approaches
• Some
  minor crop stress may evolve next week
• Other
  crop areas in Argentina will remain in favorable condition for the next ten days to two weeks with good plant development expected
• Wheat
  yields in Argentina are still looking favorable with more of that crop filling and maturing with accelerating harvest progress under way
• Center
  west and center south Brazil crop development will continue to advance favorably
• The
  region may run into excessive rainfall during the soybean harvest season late this month and in January, but it is too soon to predict how impactful that may or may not be
  
• Australia
  winter crop harvest weather has improved and will continue more favorably through the next ten days to two weeks
• No
  more crop quality concerns are expected through at least Dec. 17.
• Australia
  summer crop conditions are improving after abundant to excessive rain last month
• China’s
  weather will continue rather tranquil through the next ten days to two weeks with brief periods of precipitation and more sunshine
  
• Temperatures
  will be non-threatening to wheat, rapeseed and livestock
• Southern
  India weather has been improving this week and this trend will continue for a while
• Too
  much rain in November hurt the quality of some late season crops and raised the need for replanting of many winter crops
• Absolute
  dryness is not likely, but rain expected should be brief and light enough to allow some crop development and farming activity to advance relatively well.
  
• Central
  and northern India weather will remain good for winter crop planting and establishment.
• Most
  winter crops are likely in the ground and are establishing well
• Early
  planted wheat and other small grains may be in the vegetative to early joint stage of development
• Harvest
  progress for summer crops has advance well recently and little change is expected
• Morocco
  and northwestern Algeria remain too dry and significant rain must fall soon to get crops planted and established properly
• Soil
  moisture and rainfall have been sufficient in northeastern and north-central Algeria and far northern Tunisia, but greater rain is needed in interior crop areas
• Rain
  prospects for the drier areas are not very good for the next ten days
• Europe’s
  more active weather of late is expected to shift a little more to the east over the next week to ten days
• Romania
  and Spain are the two driest counties in the continent today and some relief should come to Romania by mid-month, but Spain may be left dry for a while
• Soil
  moisture elsewhere in Europe has been will continue favorable for winter crops which are moving into dormancy in many areas
  
• Western
  parts of Russia, Belarus and central and western Ukraine will get periods of rain and snow through the next ten days maintaining favorable soil moisture for use in the spring
• No
  crop threatening cold is expected in any winter crop region
• Limited
  precipitation will continue in the lower half of the Volga River Basin, far eastern Ukraine and Russia’s Southern Region for a while
• South
  Africa summer crops will experience a good mix of rain and sunshine over the next ten days supporting additional planting and establishment
• Production
  potentials are good this year especially with La Nina prevailing
• West-central
  Africa rainfall is expected to be greatest in Liberia and Sierra Leon during the next ten days
• Coastal
  areas of Ivory Coast will also be wet biased while most other coffee, cocoa, sugarcane, rice and cotton areas in the region will be left dry
  
• Favorable
  harvest conditions will prevail outside of the wettest areas
• Ethiopia
  rainfall will be minimal over the next ten days resulting in net drying conditions which are not unusual at this time of year
• Showers
  and thunderstorms will occur routinely in coffee, cocoa, rice and sugarcane areas from Tanzania into Uganda and Kenya through December 17
• Indonesia,
  Malaysia and Philippines rainfall will be abundant during the next couple of weeks.
  
• Some
  flooding may evolve, although western parts of Luzon Island and a part of Mindanao will only receive light precipitation
• Mainland
  areas of Southeast Asia will see seasonable drying over the next ten days, although coastal areas of Vietnam will receive frequent rain
  
• U.S.
  weather outlook has not changed much today relative to that of Monday
• Hard
  red winter wheat areas will experience little to no rain during the next ten days
• Much
  of Texas will be dry except in the far east
• Brief
  periods of light snow and some rain will impact the northwestern U.S. Plains
  
• Snow
  will fall late this week from southern and eastern South Dakota and far northern Nebraska into southern Minnesota and upper Michigan where 3 to 6 inches and local totals to nearly 10 inches will be possible
• U.S.
  Delta, Tennessee River Basin and lower eastern parts of the Midwest along with the Carolinas and Virginia will get periodic rainfall much of which may occur tonight and again this weekend
• Greater
  rain and mountain snow is expected in California beginning this weekend and continuing next week
  
• The
  precipitation will increase runoff potentials in the spring by accumulating some significant mountain snowpack
• The
  moisture will also improve topsoil moisture in the central Valleys
• Some
  wetter biased weather is also expected in the Pacific Northwest, but mostly outside of the Yakima Valley
• Florida
  will continue drier than usual
• U.S.
  temperatures will be warmer than usual during the next ten days with some of the readings well above normal
  
• Bitter
  cold in the far northern fringes of the U.S. Plains and upper Midwest Monday and early today resulted in high temperatures below zero Fahrenheit in northeastern North Dakota and northern Minnesota Monday as well as in parts of Canada’s Prairies
• This
  cold will not be allowed any farther to the south and will likely retreat northward during the balance of this week and weekend
• Cold
  air did reach down into the lower Midwest briefly overnight with low temperatures in the teens as far south as central Illinois, central Indiana and west-central Ohio with subzero degree temperatures in Wisconsin and northern Minnesota
• Waves
  of rain are expected in southwestern British Columbia and western most Washington State including some of the more important ports from the Puget Sound into Vancouver and neighboring areas of British Columbia
• Delays
  in the loading and shipping of some goods and services may result due to flooding, but the worst of the stormy pattern may be passing
• Frequent
  rain could still induce some delays
• Friday
  through the weekend coming up will be the next stormy period
• Ontario
  and Quebec weather will not be nearly as stormy in the next couple of weeks, although some brief bouts of snow and rain are still expected through the weekend
• Next
  week will be drier biased
• Mexico
  precipitation will be limited to the east coast over the next ten days with areas from Tamaulipas to Veracruz and Chiapas most impacted
• Resulting
  rainfall will rarely bolster soil moisture for very long
• Net
  drying is expected in most other areas
• Central
  America precipitation will be greatest along the Caribbean Coast , but including a fair amount of Panama and Costa Rica
• Middle
  East weather is a little dry from Syria, Iraq, Israel and Jordan to Iran while portions of Turkey have favorable soil moisture.
  
• Not
  much change is expected through Monday
• Rain
  next week may impact a few northern Iraq and western Iran locations while other areas from Syria to Jordan and Israel will remainder biased through most of next week
• Colombia
  and Venezuela precipitation is expected to occur periodically in coffee and sugarcane production areas during the next ten days,  but no excessive rain is expected
• Today’s
  Southern Oscillational Index was +12.92 and it was expected to move a little more erratically over the next few days
• New
  Zealand rainfall is expected to lighten up after heavy rain along the west coast of South Island
• Near
  to below average precipitation is expected
• Temperatures
  will be seasonable

 

Bloomberg
Ag Calendar

Tuesday,
Dec. 7:

• China’s
  first batch of November trade data, including soybean, edible oil and meat imports
• Abares’
  quarterly agricultural commodities report
• French
  agriculture ministry’s monthly crop production estimate
• New
  Zealand global dairy trade auction
• EU
  weekly grain, oilseed import and export data

Wednesday,
Dec. 8:

• EIA
  weekly U.S. ethanol inventories, production
• Fitch
  ESG Outlook Conference Asia Pacific, day 1
• FranceAgriMer’s
  monthly grains report

Thursday,
Dec. 9:

• USDA’s
  monthly World Agricultural Supply and Demand (WASDE) report, noon
• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• China
  farm ministry’s monthly crop supply-demand report (CASDE)
• Brazil’s
  Conab report on yield, area and output of corn and soybeans
• Fitch
  ESG Outlook Conference Asia Pacific, day 2
• Port
  of Rouen data on French grain exports

Friday,
Dec. 10:

• 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
• Malaysian
  Palm Oil Board’s data on November palm oil reserves, output and exports
• Malaysia’s
  Dec. 1-10 palm oil exports
• HOLIDAY:
  Thailand

Source:
Bloomberg and FI

 

 

 

 

 

 

 

 

Macros

US
Trade Balance (USD) Oct: -67.1B (exp -66.8B; R prev -81.4B)

US
Nonfarm Productivity Q3 F: -5.2% (exp -4.9%; prev -5.0%)

–         
Unit Labour Costs Q3 F: 9.6% (exp 8.3%; prev 8,.3%)

Canadian
International Merchandise Trade (CAD) Oct: 2.09B (exp 2.08B; prev 1.86B)

73
Counterparties Take $1.455 Tln At Fed Reverse Repo Op. (prev $1.488 Tln, 74 Bids)

 

Corn

·        
CBOT corn started lower then turned higher after leaked EPA biofuel mandate headlines came out. Also, the USDA is offering financial assistance to biofuel companies impacted by the economic slowdown during the pandemic. Higher
WTI and rally in US equities was seen friendly for CBOT corn.

·        
Fund bought an estimated net 2,000 CBOT corn contracts.

·        
USDA announced they will provide $700 million in new biofuel grants to help companies that were impacted by the Covid-19 pandemic (USDA Pandemic Assistance for Producers initiative). Some traders thought this announcement was
a smokescreen as the EPA was expected to come out with disappointing ethanol blend biofuel mandate. 

·        
The EPA may also deny 65 small refinery applications for biofuel waivers. 

·        
For the total biofuel program, using Reuters leaked figures from a previous story, the EPA naturally reduced the 2020 RVO, slightly increased 2021 from a leaked story and raised 2022.  Bloomberg noted for 2020, the EPA is revising
down the total renewable fuel quota to 17.13 billion gallons, from a 20.09 billion-gallon target established in December 2019.

·        
Leaked Reuters: CONVENTUAL BIOFUEL MANDATES

• 12.6
  billion gallons for 2020
• 13.8
  billion for 2021
• 15
  billion for 2022.

·        
There was talk China bought US and Ukrainian corn this week. We can’t verify that but do know they were active buyers of Ukraine corn over the last couple of weeks. 

·        
October US corn exports were 150 million bushels, 50 million above September (hurricane month) and 5 million above October 2020.

·        
Brazil corn exports were projected at 3.470 million tons for the month of December according to ANEC, compared to 3.822 million tons during December 2020.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 11,000 barrels to 1.046 million (1025-1071 range) from the previous week and stocks up 130,000 barrels to 20.431 million.

 

Export
developments.

·        
Taiwan’s MFIG bought about 130,000 tons of corn from Argentina at 224.78 cents/bu c&f over the Chicago May contract and 210.79 cents over the July. Shipment was between Feb. 17 and March 8, 2022 and March 10 and March 29.

 

 

Updated
11/23/21

March
corn is seen in a $5.25-$6.25 range

 

Soybeans

·        
Buy the rumor, sell the fact? The soybean complex ended lower led by selling in soybean oil after leaked headlines came out over EPA’s biofuel mandate. Some traders were looking for higher biofuel mandates. January soybeans fell
11.25 cents, January SBO down 76 points and January meal down $2.90/short ton.  Another two cargoes were announced under the 24-hour reporting system, but this did little to cool the selling in soybeans. Bear spreading in soybeans was a feature. 

·        
Funds sold an estimated net 6,000 soybean contracts, sold 3,000 soybean meal and sold 4,000 soybean oil. 

·        
After the open the newswires ran headlines that the EPA was expected to release the long delayed biofuel mandates today. RIN prices sold off ahead of the announcement and earlier this morning were trading at about 80 cents each,
lowest since January. RIN prices eroded before pairing some losses.

·        
Then SBO started to selloff. It recovered only to trade and settle lower.  Some spreading among the soybean products limited losses in meal. 

·        
USDA announced they will provide $700 million in new biofuel grants to help companies that were impacted by the Covid-19 pandemic. 

·        
USDA also announced they will provide $100 million in new biofuel infrastructure aid to help companies that were impacted by the Covid-19 pandemic. That was a supportive headline, IMO. 

·        
The mandates rumored today were not as high as what some of the trade expected. 

·        
Leaked Reuters: ADVANCED BIOFUEL MANDATES

• 4.63
  BLN GLNS FOR 2020
• 5.2
  BLN GLNS FOR 2021
• 5.7
  BLN GLNS FOR 2022

·        
No official announcement was out at the time this was written.

Old
2020 official RVO below.

 

From
Scott Irwin from U of I via Twitter.   We agree with his other comments that were posted.
https://twitter.com/ScottIrwinUI

 

·        
Malaysian palm rallied 179 points and cash  was up $25/ton. Indonesia rejected a bid to reinstate two company palm oil plantation permits in Papua. The plantations are small but will still have a slight impact on production.

·        
The January/March soybean complex spreads were active today. The Goldman Roll started today. 

·        
Brazil’s crush was up 15 percent last month. Soybean oil premiums in Brazil have been under pressure from the increase in crush and government announcement to keep the biodiesel blend rate at 10 percent. Premiums are below Argentina
SBO. Argentina offers for soybean oil are drying up after that country committed a large number of exports to India. 

·        
Argentina will be on holiday Wednesday. 

·        
Brazil soybean exports were projected at 2.579 million tons for the month of December according to ANEC, compared to 161,024 tons during December 2020.

·        
October US soybean exports of 386 million bushels were less than expected (411 FI estimate), above 80 million in October and below 428 million during October 2020. Sep-Nov soybean exports are estimated at 856 million bushels,
235 million below Sep-Nov 2020. We lowered our crop year export projection by 10 million bushels to 2.020 billion, 30 million below USDA’s 2.050 billion and compares to 2.265 billion for 2020-21. 

·        
US producer selling is slow this week.

·        
China November soybean imports were 8.57 million tons, up from 5.11 million in October. Jan-Nov imports were 87.65 MMT, down 5.5% from same period year ago. 

·        
China imported 673,000 tons of vegetable oils in November and Jan-Nov year were 9.573 million tons, up 1.6% on the year.

·        
Part of the Mississippi River was closed near Rosedale, Miss, after several barges ran aground.

 

USDA
on India: Oilseeds and Products Update

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Oilseeds%20and%20Products%20Update_New%20Delhi_India_12-01-2021.pdf

 

CME:
Approved Application for Decrease in Soybean Oil Regularity

South
Dakota Soybean Processors, LLC.

(registrations
are zero at that location)

https://www.cmegroup.com/notices/market-regulation/2021/12/MKR12-03-21.html

 

Export
Developments

·        
Private exporters reported the following:

-123,000
metric tons of soybeans to unknown during the 2021/2022 marketing year

 

 

November
MPOB estimates via Reuters

 

 

Updated
11/30/21

Soybeans
– January $11.75-$13.00 range, March $11.75-$13.50

Soybean
meal – January $320-$370, March $315-$380

Soybean
oil – January 54.00-59.00, March 54.00-62.00

 

Wheat

·        
US wheat started lower and ended higher on lack of direction.  We think after fund selling dried there was light short covering. Higher corn added to the support.   

·        
Funds bought an estimated net 2,000 Chicago soft red winter wheat contracts.

·        
October US all-wheat exports were 45 million bushels, well below 85 million during September and 64 million during October 2020.

·        
Look for traders to monitor the Ukraine/Russia situation.

·        
Egypt said they have enough wheat stocks to last 5.3 months. 

·        
March Matif Paris wheat was 1.00 euro lower at 290.75.

·        
France estimated the soft winter wheat area at 4.92 million hectares, down from 4.96 million year before.  Winter barley area was pegged at 1.23 million hectares, up from 1.20 million hectares the prior year. 

 

France
winter area estimates

 

 

Export
Developments.

·        
The Philippines seeks 125,000 tons of feed barley and 300,000 tons of feed wheat on December 9 for Feb-Jun arrival.

·        
Japan seeks 260,312 tons of food wheat from the US and Canada.

·        
Jordan seeks another 120,000 tons of wheat on Dec 9 and seeks 120,000 tons of barley on Dec 8. 

·        
Bangladesh seeks 50,000 tons of milling wheat on Dec. 8. 

 

Rice/Other

·        
South Korea seeks 22,000 tons of rice from the US on December 9 for arrival in South Korea from May 2022 and from August 2022.

 

Updated
11/26/21

Chicago
March $7.50-$8.75

KC
March $7.75-$9.25

MN
March $9.50-$11.50