FI Evening Grain Comments 12/07/22

PDF Attached

 

Higher
trade in soybeans led by another leg higher in soybean meal (new contract high). Soybean oil lost ground on lower global energy prices. Corn and wheat ended higher. The USD was lower.

 

Weather

The
SA weather outlook has not changed much. Argentina will see light rain today into Thursday bias southern Cordoba, southern Buenos Aires, and northern Cordoba through Saturday. Brazil will see additional rain this week. Europe will see two storms over the next
week. US improves for the Midwest and Delta. The US Great Plains should get rain favoring central and eastern OK, northern TX Wednesday, central KS, and other southern regions through the end of the week.

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE DAY

• Hot
  temperatures occurred again Tuesday in Argentina with highs in the 90s to over 100 degrees Fahrenheit
  
• Extreme
  highs of 100 to 108 were noted from Cordoba through Santiago del Estero while 95 to 104 occurred from northern Buenos Aires to Chaco and Corrientes
• Notable
  crop and livestock stress resulted from the excessive heat
• Hot
  conditions will continue until rain develops in the central and north Friday into Saturday at which time the heat will retreat to the north
• More
  seasonable temperatures are likely next week
• Argentina
  was dry again Tuesday, but showers popped up overnight from San Luis through southern Cordoba and northeastern La Pampa to central Buenos Aires
• Rainfall
  was as great as 0.92 inch in central Buenos Aires while most areas reported 0.05 to 0.25 inch
  
• A
  follow up rain event will impact east-central and northeastern parts of the nation Sunday into Monday with resulting rainfall more generalized
• The
  moisture from both events will be extremely important for crops due to the following week of weather expected to trend dry and warm once again
• Rainfall
  from the two events may vary from 0.50 to 1.50 inches and a few greater amounts will be possible, but in random locations
• Argentina’s
  bottom line will remain one of concern. The previously wettest areas of southwestern Argentina will experience the poorest distribution of rain in this next ten days and the ground will firm up with crop stress evolving once again. In the meantime, the shower
  activity expected late this week into Monday will bring a short-term bout of relief to central and northern parts of the nation, but much more rain is needed to bolster soil moisture in a more permanent manner. Crop stress will continue to worry producers
  and traders in Argentina for at least another couple of weeks, despite the showers expected late this week and into the weekend.  Good wheat harvest and maturation conditions are anticipated.
  
• Net
  drying in southern Brazil is expected to continue into the weekend, but some showers will occur briefly this weekend and more significantly during the early part of next week
• Rio
  Grande do Sul has not been dry enough yet this season to threaten crop development, but this coming week of warmer and drier weather may change that
• Timely
  rainfall will be very important in the second week of the outlook and there is rain predicted for that time period – if the rain fails crop stress could become more of an issue for far southern Brazil
  
• Most
  other areas in Brazil (including center west) will experience a good mix of rain and sunshine that will support long term crop development
• A
  few areas in the northeast may be trending a little too wet, but there is no sign of problems for the region as of today.
  
• U.S.
  northern Plains and upper Midwest are still advertised to be wetter early next week
  
• The
  storm is being fueled by warm temperatures in the eastern United States, cold air in Canada and the northwestern U.S. and an influx of moisture from the Gulf of Mexico
• The
  system seems to be a little too intense, but World Weather, Inc. sees the potential for a significant event as an active weather pattern begins to evolve
• Blizzard
  conditions may evolve in the northern Plains and some significant moisture could impact the upper Midwest, but the event is too far out in time to have strong confidence in the details
• Runoff
  from this storm system could offer a little improvement on Mississippi River flow, but frequent follow up precipitation would be necessary to make a bigger difference
• Confidence
  in the presence of a new storm is strong, but the details of this system are still of low confidence
• Tennessee
  River Basin rainfall continued Tuesday with parts of Kentucky and Tennessee reporting 0.60 to 1.57 inches maintaining saturated soil conditions and raising river water levels on the Tennessee River
• Lower
  Mississippi River water levels should increase this weekend and next week as a result of the frequent rain in the Tennessee River Basin
  
• Some
  cropland will experience areas of standing water
• U.S.
  lower Delta and southeastern states will receive little to no rain through Saturday, but may get some moisture later this weekend and next week to offer a short term boost in topsoil moisture
• U.S.
  hard red winter wheat areas will be mostly dry in the west-central Plains during the next ten days leaving winter crops poorly established and vulnerable to extreme weather this winter – at least until significant snow accumulates
• The
  coldest weather expected in the region will come next week
• Central
  and northern California will receive more rain and mountain snow Thursday through Sunday
• The
  increasing snowpack will help improve runoff in the spring and summer
• Late
  week precipitation is expected in the Cascade Mountains and coastal areas of Washington and Oregon resulting in greater mountain snowpack
• Restricted
  precipitation is likely east of the Mountains
• Additional
  precipitation is expected in the same areas during the weekend with some of that reaching California’s northern Sierra Nevada
• Russia’s
  New Lands were still quite cold overnight, but not as cold as Monday night
• Near
  zero degree Fahrenheit low temperatures earlier this week in northern parts of Russia’s Southern region remains snow free, but no permanent damage to winter crops was suspected and a warming trend is under way ending any further concerns over winterkill
• Western
  Russia and Ukraine will experience warming weather the remainder of this week into next week reducing concern over cold weather
• Northern
  Europe will be cooler than usual for a while in the next two weeks raising some demand for supplemental heating fuel, but the impact on winter crops will be minimal
• Precipitation
  is not likely to be very great, although there will be some brief bouts of rain and snow
• Central
  and southern Europe is poised to become stormier during the next two weeks with waves of snow and rain expected causing travel issues and stressing livestock
• Soil
  moisture increases are likely as time moves along and this will be good for Spain, southern France, Italy and eventually the Balkan Countries where moisture deficits remain from last summer
• Heavy
  snow may evolve this weekend in the Alps and then move northeast to Belarus, the Baltic States and northwestern Russia early next week
  
• South
  Africa weather is not likely to deviate very far from nearly ideal conditions during the next two weeks
• Routinely
  occurring rainfall and seasonably warm temperatures will promote the best possible environment for ongoing field operations and crop development
  
• Some
  greater than usual rainfall is expected in the coming ten days
• A
  tropical disturbance in the Bay of Bengal is expected to move west northwesterly the remainder of this week while intensifying
• The
  system will become a tropical cyclone that may run across southern India Thursday through the weekend
• Rainfall
  of 3.00 to 9.00 inches and local totals over 10.00 inches will result causing flooding in southern Andhra Pradesh and Tamil Nadu with lighter amounts in southeastern Karnataka and Kerala
• Open
  boll cotton in southern India will be vulnerable to a quality decline because of the rain and windy conditions accompanying the tropical cyclone inland
• A
  follow up storm is possible late next week and into the following weekend
• India
  weather is expected to be mostly good early this week with limited precipitation and seasonable temperatures
• Net
  drying is expected in the central and north favoring winter crop planting, emergence and establishment while also supporting summer crop harvesting
• Far
  southern India will receive some periodic showers in this coming week with a tropical disturbance possible in the second half of this week and into the weekend
  
• See
  the tropical disturbance bullet above
• Southeast
  Asia weather will continue to generate frequent rainfall that will be sufficient in maintaining wet field and paddy conditions
• Excessive
  rainfall will be limited to localized areas each day
• A
  couple of tropical waves in a strong easterly monsoon flow are expected during the next couple of weeks
• One
  of these tropical waves has potential to become a tropical cyclone that will impact the northern Philippines this weekend
• Heavy
  rain and local flooding may result
• Southeastern
  China will receive periodic rainfall during the next two weeks maintaining moisture abundance in the Yangtze River Basin and southern coastal provinces
• Most
  of the precipitation this week will be quite light allowing runoff from previous rain to continue which may help reduce the risk of flooding next week when greater rain resumes
• The
  moisture will be good for future rapeseed development and for early rice planting which is still several weeks away
• Winter
  crop conditions in northern China are rated favorably with little change likely anytime soon
• Recent
  colder weather has pushed some of the northern wheat crop into dormancy
• Ontario
  and Quebec will receive additional waves of snow and rain that will maintain moisture abundance in the region
• Canada’s
  Prairies will continue to experience cold weather and brief bouts of snow during the next couple of weeks
• Temperatures
  will not be nearly as cold as they were today
• Extreme
  lows fell to -40F in southeastern Saskatchewan this morning
• North
  Africa will get rain periodically over the next ten days, although it may not be well distributed in some areas
• Greater
  rain is needed in parts of Morocco and northwestern Algeria which have been driest recently
• The
  moisture will be well timed and good for wheat and barley emergence and establishment after recent dryness
• Australia
  will experience a favorable mix of weather during the coming two weeks
• A
  boost in precipitation is needed in western sorghum and cotton production areas in Queensland and New South Wales to maintain the best possible production potential
• Brief
  periods of light precipitation are expected in winter crop harvest areas where some disruption to fieldwork may occur, but most of the disruptions will be short termed enough to have a low impact
• Mexico’s
  rain is expected to be very erratic and light over the next two weeks which is not unusual for this time of year
• Any
  precipitation that falls will be good for winter rice and citrus, but may disrupt some summer farming activity
• Most
  of the precipitation will be light and have little to no impact of significance
• 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
• Net
  drying is likely in most coffee, cocoa, rice, sugarcane and cotton production areas away from the coast which is normal for this time of year
  
• 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, southern Kenya and Uganda while it is more sporadic and light in Ethiopia
• Monday’s
  Southern Oscillation Index was +8.82 and it will move erratically over the next few days – today’s index was not available.
  

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Wednesday,
Dec. 7:

• China’s
  first batch of November trade data, including soybean, edible oil, rubber, and meat imports
• EIA
  weekly US ethanol inventories, production, 10:30am

Thursday,
Dec. 8:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork, and beef, 8:30am
• Port
  of Rouen data on French grain exports
• Vietnam’s
  customs releases Nov. coffee, rice, and rubber export data
• EU
  Agricultural Outlook conference, Dec. 8-9, Brussels
• Brazil’s
  Conab data on area, yield and output of corn and soybeans
• HOLIDAY:
  Argentina, Chile

Friday,
Dec. 9:

• USDA’s
  World Agricultural Supply and Demand Estimates (WASDE), 12pm
• China’s
  agriculture ministry (CASDE) releases monthly report on supply and demand for corn and soybeans
• 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
• Cane
  crush and sugar production data by Brazil’s Unica (tentative)
• HOLIDAY:
  Argentina

Source:
Bloomberg and FI

 

 

 

 

 

Due
out December 8

 

 

Macros

US
Nonfarm Productivity Q3 F: 0.8% (est 0.6%; prev 0.3%)

US
Unit Labor Costs Q3 F: 2.4% (est 3.1%; prev 3.5%)

101
Counterparties Take $2.151 Tln At Fed Reverse Repo Op (prev $2.111 Tln, 97 Bids)

 

Corn

·        
Corn futures traded
two-sided, starting the day session lower from the slow start to the US export season, weakness in ethanol prices and improving US logistics along the Midwestern Rivers. Corn prices rebounded during the session on higher wheat, improvement in US ethanol production,
and lower USD. The yo-yo session could be an indicator for a short-term bottom, but we think with funds still net long more than 160,000 contracts there is still more room to the downside.

·        
Light rain this workweek across Argentina may increase plantings but expect the pace to remain below normal. Temperatures will be milder starting later this week. So far this week it’s been hot bias the northern growing areas.

·        
US October corn exports were reported by Census at 82 million bushels, below 104 million during September and well below 159 million for October 2021. We think USDA may shave off 50 million bushels to their corn export projection
later this week. 

·        
Conab is due out at 6:00 am Thursday and traders are looking for Brazil corn and soybean production to be up from the previous month.

·        
Traders are looking for USDA to lower Argentina soybean production by 1.5 million tons and corn by 0.8 million. For Brazil, they look for a 0.5 MMT increase for soybeans and corn to be up 0.6 MMT. 

·        
The USDA Broiler Report showed eggs set in the US up slightly and chicks placed down slightly. Cumulative placements from the week ending January 8, 2022, through December 3, 2022 for the United States were 9.03 billion. Cumulative
placements were up 2 percent from the same period a year earlier.

 

EIA
reported US weekly ethanol production
increased a large 59,000 barrels to 1.077 million, a surprise. Production has been swinging around over the past few weeks. The 1.077 million was highest since December 10, 2021.  The 4-week average change is up 7,000 barrels. US ethanol stocks were up 323,000
barrels to 23.257 million, up for the third consecutive week. For comparison, a Bloomberg poll looked for weekly US ethanol production to be down 1,000 thousand barrels and stocks down 50,000 barrels. Early September to date production is running 4.3% below
same period year ago and about 1.8% below the comparable period in 2019. US gasoline demand was up 41,000 barrels to 8.358 million, and gasoline stocks increased 5.32 million to 219.1 million.

 

 

 

 

Export
developments.

·        
Taiwan’s MFIG bought about 65,000 tons of corn sourced from Brazil at an estimated premium of 220.25 cents a bushel c&f over the May 2023 contract for shipment between Feb. 13 and March 4. US corn was offered at 244.50 cents.

·        
Reuters later noted another 130,000 tons of corn was sold to Taiwan, Brazil origin.

• Mitsui
  was said to have sold 65,000 tons for shipment from Brazil between Jan. 25 and Feb. 20, 2023.
  
• Another
  trading house was said to have sold 65,000 tons for shipment from Brazil in any 20 days between Feb. 15 and March 31, 2023. (Reuters)

·        
South Korea’s Major Feedmill Group (MFG) bought an estimated 65,000 tons of corn from South America or South Africa at an estimated $328.74 a ton c&f and 192.85 cents a bushel over the March 2023 contract for shipment in between
Jan. 17 and Feb. 17, 2023.

·        
Yesterday SK’s FLC and Taiwan’s MGIG bought corn.

 

Updated
12/6/22

March
corn $6.00-$7.15 range. May
$5.80-$7.10

 

Soybeans

·        
Soybeans were higher from another leg up in soybean meal, improving China soybean demand, a lower USD and technical buying.
Soybean
oil traded two-sided, ending lower. WTI crude oil was lower. There was talk yesterday and this morning that the EPA could soon allow for Canadian canola to generate a RIN credit. We think if allowed, it could be retro, and boots canola exports to the US.

·        
January soybean oil dropped more than $300 per ton since late November.

·        
China’s November imports of soybeans fell 14% from last year to 7.35 million tons but up from 4.1 million tons during October.  Some traders were looking for 9 million tons during the month of November. December could be 10 million
tons. That could put 2022 imports at around 90.5 million tons. 

·        
China soybean crush margins are starting to improve.

·        
Palm oil traded lower in part to the EU earlier this week passing a law to prevent companies from selling into its market commodities (softs, oilseeds, and some other commodities) linked to deforestation.  There is some debate
if this new law could be upheld.

·        
Russia’s Institute for Agricultural Market Studies (IAMS) estimated oilseed capacity could grow to 7.5 million tons over the next five years, that would require an additional 0.5 to 1 million hectares of oilseed area.

·        
A $400 soybean crush plant was announced near Grand Forks in the Red River Valley region, set to open late 2025 that can handle 42 million bushels annually.

 

Export
Developments

·        
South Korea’s Agro-Fisheries & Food Trade Corp. bought about 65,000 tons of non-GMO soybeans on Dec. 5. It included 25,000 tons for arrival in South Korea in January 2024, 20,000 tons for arrival in February 2024 and 20,000 tons
for arrival in June 2024.

·        
South Korea’s Agro-Fisheries & Food Trade Corp. issued a new import tenser for 25,000 tons of non-GMO soybeans. The deadline is Dec. 13, for arrival between December 2023 and June 2024.

 

Palm
oil, soybean oil and Brent crude oil

Source:
Reuters

 

Updated
12/6/22

Soybeans
– January $14.00-$15.15 (unch), March $14.15-$15.25

Soybean
meal – January $425-$480, March $4.00-$500

Soybean
oil – January 57.00-68.50 range,
March 55.00-69.00

 

Wheat

·        
US wheat futures traded higher on technical buying, lower USD and improving global export developments. Wheat prices hit a one year low yesterday. Other news was light.

·        
There is still uncertainty over the Russia/Ukraine situation for Black Sea exports. But Russian grain exports improved over the past couple of months and Russia’s Union of Grain Exporters projected December grain exports at 4.5
million tons compared to 3.4 million tons year earlier. This would put first half 2022-23 grain exports near 26 million tons, up from 23.6 MMT previous year.

·        
SovEcon sees 2022-23 Russia wheat exports at 43.9 million tons, up 200,000 from previous.

·        
Paris March wheat was higher by 5.00 euros at 307 euros a ton.

 

Export
Developments.

·        
Taiwan Flour Millers’ Association bought an estimated 42,750 tons of US milling wheat for shipment between Jan. 25 and Feb. 8.

• 29,150
  tons of U.S. dark northern spring wheat of a minimum 14.5% protein content bought at $401.60 a ton FOB U.S. Pacific Northwest coast.
• 9,100
  tons of hard red winter wheat of a minimum 12.5% protein content bought at $382.10 a ton FOB and 4,500 tons of soft white wheat of a maximum 9.5% protein bought at $322.68 a ton FOB.
  

·        
Thailand bought 65,000 tons of feed wheat at an estimated $339.90/ton for Feb 5.-Mar. 5 shipment.

·        
Japan’s AgMin in a SBS import tender seeks 70,000 tons of feed wheat and 40,000 tons of feed barley on December 14 for arrival by March 9.

·        
China plans to auction off 40,000 tons of wheat from reserves on December 14. 

·        
Japan seeks 154,957 tons of wheat later this week for arrival by March 5.

 

Rice/Other

·        
Bangladesh seeks 50,000 tons of rice on December 21 for shipment with 40 days of contract signing.

 

Updated
12/6/22

Chicago
– March $7.00 to $8.50

KC
– March 7.75-$9.75

MN
– March $8.25 to $10.00