FI Evening Grain Comments 12/08/21

PDF Attached

 

Private
exporters report sales of:

-1,844,040
metric tons of corn for delivery to Mexico. Of the total, 1,089,660 metric tons is for delivery during the 2021/2022 marketing year and 754,380 metric tons is for delivery during the 2022/2023 marketing year

-130,000
metric tons of soybeans for delivery to China during the 2021/2022 marketing year

 

Yesterday’s
EPA announcement sent soybean oil. In other markets we saw positioning and spreading.  Soybeans rallied on renewed meal buying. Corn was mixed and KC & Chicago wheat sold off (MN mixed).

 

 

Weather

 

                                                                                                                    

World
Weather Inc.

WEATHER
EVENTS AND FEATURES TO WATCH

• Not
  much change occurred overnight in most of the world
• California,
  the Great Basin and portions of the Rocky Mountain region will encounter stormy weather this weekend through next week
  
• Significant
  snowfall will accumulate in the Sierra Nevada and some of the mountains to the east in the Rocky Mountain States
• Significant
  rainfall is also expected along the coast and in the central valleys
• Some
  strong wind will also occur in coastal areas
• Snowpack
  will improve in the mountains
• U.S.
  hard red winter wheat production areas will not likely see much “significant” precipitation for the next 8-9 days, although a few showers may occur briefly late next week
• A
  couple of weather disturbances coming from California and the southwestern desert region may pass through a part of the central and southern Plains Dec. 18-25 that may offer a little relief to dryness in wheat production areas
• Confidence
  is low, but there is potential for at least “some” precipitation during that week
• Snow
  is still expected from northern Nebraska and far southern South Dakota into southern Minnesota and Wisconsin Thursday into Friday
  
• Snow
  accumulations of 2 to 6 inches are expected with a few totals of 6-10 inches
• The
  area impacted will be relatively narrow
• U.S.
  Lower and eastern parts of the Midwest may be impacted by rain this weekend and again during mid-week next week
  
• A
  larger winter storm “may” impact the northern U.S. Plains, upper Midwest and eastern Canada’s Prairies in the second half of next week and into the following weekend
• Significant
  snow and some rain may accompany the event
• Rain
  will also occur from this system in the central and eastern Midwest, Delta and interior southeastern states – mostly during the second weekend of the forecast
• West
  Texas may get some needed moisture late next week and into the following weekend.
  
• U.S.
  southeastern states will see a mix of rain and sunshine during the next two weeks with more sunshine than rain
• U.S.
  temperatures will be warmer than usual during the next ten days with some of the readings well above normal
  
• 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
• Timely
  rainfall will occur, although it may be of light intensity at times
• Wheat
  yields in Argentina are still looking favorable with more of that crop filling and maturing with accelerating harvest progress under way
• Summer
  crop development will advance relatively well for the next ten days, despite declining soil moisture in the east
  
• Center
  west and center south Brazil crop development will continue to advance favorably
• Parts
  of 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.
  
• The
  driest weather is expected in the Dec. 15-22 period
• 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 advanced 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 in this coming week while the heart of 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 seven 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
• The
  second week of the forecast may trend drier in western parts of Indonesia
• Mainland
  areas of Southeast Asia will see seasonable drying over the next ten days, although coastal areas of Vietnam will receive frequent rain
  
• 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
• Next
  week’s weather will improve with much less storminess expected
• Ontario
  and Quebec weather will improve briefly after this weekend, but another storm system will bring significant moisture to the region late next week and/or in the following weekend.
• 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 +12.58 and it was expected to move a little more erratically over the next few days
• New
  Zealand rainfall is expected to be periodic during the next week to ten days with near to above average amounts expected except along the lower east coast of South Island where it will be lighter than usual
• Temperatures
  will be seasonable

 

Bloomberg
Ag Calendar

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

U.S.
EPA CONSIDERING MAKING ELECTRIC VEHICLES ELIGIBLE FOR RENEWABLE FUEL CREDITS WHEN IT UNVEILS 2023 BIOFUEL BLENDING MANDATES NEXT YEAR – OFFICIAL – Reuters News

 

US
DoE Crude Oil Inventories (W/W) 03-Dec: -241K (est -1521K; prev -909K)

–
Distillate Inventories: +2733K (est 1000K; prev 2160K)

–
Cushing OK Crude Inventories: +2373K (prev 1159K)

–
Gasoline Inventories: +3882K (est 2000K; prev 4029K)

–
Refinery Utilization: 1.0% (est 0.4%; prev 0.2%)

 

Corn

·        
A combination of higher soybeans, large increase in weekly US ethanol production and a large sale to Mexico supported corn futures, but they ended mixed (Mar-Sep slightly higher) in large part to a selloff in wheat futures.

·        
Southern Brazil could use some rain and rest of the country is in good shape. Argentina’s weather is good. 

·        
A Bloomberg survey for Brazil Conab crop supply calls for the soybean production to be 2.5 million tons higher from November and corn production to be up 2.0 million tons.

·        
Fund bought an estimated net 2000 CBOT corn contracts.

·        
Some company subsidies of a major Chinese hog breeder delayed payments on commercial bills, triggering selling in the market, with $3.5 billion wiped in just two days.  (Bloomberg)

·        
Yesterday EPA proposed retroactively to set total renewable fuel volumes at 17.13 billion gallons for 2020, 18.52 billion for 2021 and 20.77 billion for 2022. The 2020 and 2021 volumes are down from the final set in 2019, while
the 2022 indicates an increase. 

·        
The USDA Broiler Report showed eggs set in the US up 1 percent and chicks placed up 3 percent.  Cumulative placements from the week ending January 9, 2021 through December 4, 2021 for the United States were 8.89 billion. Cumulative
placements were up slightly from the same period a year earlier.

 

Weekly
US ethanol production increased a more than expected 55,000 barrels (trade looked for up 11,000)   to 1.090 million from the previous week, largest weekly gain in two months, and stocks increased 163,000 barrels (trade looked for up 130,000) to 20.464 million. 
Corn crop year (Sep-Aug) to date ethanol production is running 8.3% above the same period year ago and 1.4% above the same period two years ago. Gasoline stocks increased for the second consecutive week, by 3.88 million barrels to 219.3 million. Gasoline demand
on average (previous 4-weeks) is running near November 2019 levels. Ethanol blend percentage into finished motor gasoline was 91.6%, up from 89.4% previous week.

 

US
DoE Crude Oil Inventories (W/W) 03-Dec: -241K (est -1521K; prev -909K)

–
Distillate Inventories: +2733K (est 1000K; prev 2160K)

–
Cushing OK Crude Inventories: +2373K (prev 1159K)

–
Gasoline Inventories: +3882K (est 2000K; prev 4029K)

–
Refinery Utilization: 1.0% (est 0.4%; prev 0.2%)

EIA:
US Stocks In SPR At Lowest Level Since May 2003

 

 

 

Export
developments.

·        
Private exporters report sales of: 1,844,040 metric tons of corn for delivery to Mexico. Of the total, 1,089,660 metric tons is for delivery during the 2021/2022 marketing year and 754,380 metric tons is for delivery during the
2022/2023 marketing year.

 

The
large current crop-year sale to Mexico is not that uncommon for the month of December. 

Top
three sales to Mexico (corn) over past five years (12/8/21 does not include new-crop sale)

 

 

Updated
11/23/21

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

 

Soybeans

·        
Soybeans were lower to start but rallied 10.25-11.25 cents after meal surged higher by $6.00-$7.50/short ton. Soybean oil fell 88-158 points (bear spreading) after the EPA proposed a less than expected 2021 and 2022 advanced biofuel
mandate.

·        
Funds bought an estimated net 8,000 soybean contracts, bought 6,000 soybean meal and sold 5,000 soybean oil. 

·        
January soybean oil hit a session low of 54.46, still above a strong 54.00 cent support level.

·        
We are hearing Brazil soybean meal premiums firmed this week. Spot offers for Argentina soybean meal and soybean oil are thin in part to forward export bookings of products, poor crush margins and limited farmer selling.

·        
Keep an eye on global soybean oil import demand which is increasing. The product is still favored by India over palm oil imports.

·        
A Bloomberg survey for Brazil Conab crop supply calls for the soybean production to be 2.5 million tons higher from November and corn production to be up 2.0 million tons.

·        
D6 RINs rallied from yesterday and were around 95 cents earlier in the day.

·        
EPA proposed advanced biofuel at 5.2 billion for 2021 and 5.77 billion for 2022 (a new high). Some traders were looking for a higher 2022 RVO. The 2020 & 2021 is more in line with actual blending volumes.  They rejected all small
refinery exemptions.

 

Export
Developments

·        
Private exporters report sales of: 130,000 metric tons of soybeans for delivery to China 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 traded lower in a risk off trade ahead of the USDA report due out on Thursday.  The US will see light precipitation across the central Great Plains over the coming week. Snow recently fell across the far western Great
Plains, improving conditions. With a warmup across the US over the next week, that may improve winter wheat conditions ahead of dormancy.

·        
For the USDA report, traders are looking for an increase in global ending stocks after Australia’s government projected a record wheat crop.

·        
Argentina’s Rosario grains exchange increased their wheat production estimate at 22.1 million tons, up from 20.4 million previously.

·        
Funds sold an estimated net 8,000 Chicago soft red winter wheat contracts.

·        
We hear China resumed buying of western coast Canadian wheat, which is firming up the wheat spreads. 

·        
Australia weather looks good through the next ten days.

·        
Farm office FranceAgriMer lowered its non-EU French soft wheat exports from 9.4 to 9.2 million tons, still 24% above the volume last season.  Soft wheat shipments within the EU were projected at 7.8 million tons, unchanged last
month.

·        
Syria closed coastal ports due to bad weather. 

 

Export
Developments.

·        
Bangladesh’s lowest offer for wheat was $404.11/ton CIF.

·        
Jordan bought 60,000 tons of barley at $303.70/ton c&f for FH July 2022 shipment.

·        
Japan in a SBS import tender seeks 80,000 tons of feed wheat and 100,000 tons of barley on December 15 for arrival by March 10.

·        
South Korean flour mills bought 50,000 tons of milling wheat from the US and another 50,000 tons from Australia, for February and April shipment, respectively. 

               
U.S. wheat

• soft
  white wheat 11% protein bought low $390s a ton
• soft
  white wheat of 9% protein bought in the low $540s a ton
• hard
  red winter wheat of 11.5% protein bought in the mid $380s a ton
• northern
  spring/dark northern spring wheat of 14% protein bought in the mid $420s a ton

               
Australian wheat

• Australian
  standard white (ASW) bought in the mid $360s
• Australian
  hard wheat grade AH2 in the low $390s (Reuters)

·        
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. 

 

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