FI Evening Grain Comments 12/09/22

PDF Attached includes US S&D’s

 

USDA’s
December S&D update was mostly uneventful for futures prices. Many markets were influenced on swings in energy prices, unfavorable Argentina weather and investment fund sentiment. The investment funds sold a much larger amount of corn and soybean oil than
expected for the week ending December 6.

 

 

USDA
released their December S&D report

 

Reaction:
 Neutral

USDA’s
report was perceived neutral as prices did not change much post report.  We look for the trade to focus on weather and demand fundamentals going forward. Largest surprise in today’s report was an unchanged Argentina corn and soybean outlook as the country
is experiencing one of the worst droughts in 50 years. 

 

USDA
NASS briefing

https://www.nass.usda.gov/Newsroom/Executive_Briefings/index.php

USDA
OCE Secretary’s Briefing

https://www.usda.gov/oce/commodity-markets/wasde/secretary-briefing

 

2022-23
crop year in brief

US
soybean stocks 220 vs. 220 last month (0),  -18 million vs. trade

US
corn stocks 1257 vs. 1182 last month (75),  20 million vs. trade

US
wheat stocks 571 vs. 571 last month (0),  -5 million vs. trade

 

WLD
soy stocks 102.7 vs. 102.2 last month (0.5),  0.5 million vs. trade

WLD
corn stocks 298.4 vs. 300.8 last month (-2.4),  -2.5 million vs. trade

WLD
wheat stocks 267.3 vs. 267.8 last month (-0.5),  -0.1 million vs. trade

 

Brazil
Soy 152.0 vs. 152.0 last month (0),  -0.6 million vs. trade

Arg.
Soy 49.5 vs. 49.5 last month (0),  0.8 million vs. trade

Brazil
Corn 126.0 vs. 126.0 last month (0),  -0.5 million vs. trade

Arg.
Corn 55.0 vs. 55.0 last month (0),  1.5 million vs. trade

 

 

Other
highlights:

US
SBO for biofuel was down 200 million pounds

US
corn exports down 75 million bushels.

No
changes to Argentina and Brazil soybean and corn production – a surprise for Argentina

US
corn stocks down 75, no change in ethanol. No change in other US corn demand categories.

US
soybean stocks unchanged and US wheat unchanged

No
changes in US soybean and soybean meal S&D

US
soybean oil stocks were upward revised 42 million, imports lowered 200, food upward revised 150, carry in down 8, biofuel down 200 as mentioned.

All
wheat S&D unchanged, but SRW stocks were up 10, HRS down 5 and White wheat stocks down 5

 

Global
corn production was down 6.5MMT and stocks down 2.4MMT

Global
wheat production down 2.1MMT and stocks down 0.5

Global
soybean production was up 0.6MMT and stocks up 0.5MMT

 

Argentina
wheat production was downward revised 3.0MMT, Canada down 1.2, and Australia up 2.1MMT.

Ukraine
corn crop was lowered 4.5 million tons to 27.0 million tons, down from 42.13 million tons for 2021-22.

 

 

 

 

 

USDA
Wheat trade highlights

 

USDA
grain trade highlights

 

Weather

Argentina
will see restricted rainfall over the next two weeks. Not all areas will be dry. The west-central through northern parts of the nation will see some rain this weekend. Hot temperatures are abating from south to north, but warmer than usual bias will continue.
Brazil will see favorable weather bias central and northern areas while precipitation in the far south will be restricted. The US Midwest is getting a couple of storms, one today, that will improve soil moisture and replenish river levels. Tuesday through
Wednesday will be  a large event. The Texas Panhandle into southwestern Kansas and southeastern Colorado will be dry in the next seven days. Blizzard conditions in western Nebraska and possibly northern Colorado could occur Tuesday. The second week of the
forecast for the US turns cold.

 

 

Last
24-hours

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE DAY

• Rio
  Grande do Sul, Brazil will be drying out faster in the coming week to ten days than at any other time this spring
• Temperature
  extremes Thursday reached into the 90s Fahrenheit with one location getting to 102
• Temperatures
  will frequently be in the 80s and 90s during the next couple of weeks, although perhaps not quite as hot as that of Thursday
  
• Brazil
  crop areas were drier biased Thursday except in the heart of Goias where significant rain fell to improve topsoil moisture
• Net
  drying outside of Goias was welcome except in Rio Grande do Sul especially since a wetter bias is expected over the next ten days
• Brazil
  rainfall during the coming ten days will likely become heavy at times from southeastern Mato Grosso and portions of Mato Grosso do Sul to Sao Paulo, Minas Gerais and southern Bahia
• Some
  flooding might evolve, but much of the greater rain will be spread out over time allowing runoff to occur without a notable flood
• Argentina
  weather Thursday was dry biased in most of the nation once again, but showers are expected to develop in central areas today and advance to the north this weekend
• Most
  of central and northern Argentina will get rain this weekend into Monday with favorable coverage, but the greatest rain is expected from center west through northwestern parts of the nation
• Excessive
  rain may fall in some of the dry bean, citrus and sugarcane production areas in far northwestern Argentina, but missing most of the key grain and oilseed production areas
• Limited
  rainfall and warmer than usual temperatures will dominate Argentina during the week next week through the following weekend
• Today’s
  GFS model and GFS Ensemble both hinted at a possible trend change in which the upper air wind flow might shift to one that blows from northwest to southeast across the nation in the last ten days of this month
• That
  is different from the southwest to northeast air flow pattern that has dominated more recent weeks
• If
  this change occurs it would have the “potential” to increase rainfall across portions of the nation, but not before Dec. 20
• Argentina’s
  bottom line has not changed today. Crop moisture stress will continue, although this weekend’s scattered showers and thunderstorms in the central and north may offer a short term break from the most stressful conditions. The southwestern one third of the nation
  will experience the most persistent drying and warm weather over the next two weeks and resuming crop stress is most likely in that region. This weekend’s rain in northern Argentina will benefit cotton as well as some minor grain and oilseed production areas.
  For the most part, Argentina’s grain and oilseed areas will only briefly see relief from heat and moisture stress, although the excessive heat seen this week is unlikely to return for a while.
  
• Tropical
  Cyclone Mandous was located 88 miles southeast of Chennai, India at 0900 GMT today
• Landfall
  is expected early today, and it will quickly dissipate once it gets over land
  
• The
  storm will induce some pockets of flooding, but it’s a weak storm that will quickly fall apart resulting in a very low risk of serious damage to crops or property
• A
  tropical disturbance east of the Philippines is advertised to stay just to the east of Samar and Luzon Islands this weekend reducing some of the heavy rain potential that was once feared for those areas; however rain will fall abundantly and some flooding
  will be possible
• Northern
  Europe will be quite cold this weekend and early next week with that period being the peak of the current cold surge
• Temperatures
  will be well below normal and a strong need for supplemental heating fuels will be present
• Some
  moderation in the cold is expected late next week and into the following weekend that should relax the energy demand
• No
  winterkill is anticipated because of the cold, but winter crops will be pushed more deeply into dormancy
  
• Southern
  Europe is still expecting frequent precipitation in the forms of rain and snow
  
• At
  least two winter storms will impact eastern and some south-central parts of the continent while western Spain, Portugal, western Italy and the eastern Adriatic Sea coastal areas will see heavy rainfall and some flooding
• A
  first snowstorm is expected to move out of the Alps and into northwestern Russia, Belarus, the Baltic States and Poland early next week producing heavy snowfall and some strong wind speeds
• A
  second snowstorm will occur later next week and into the following weekend that will impact southeastern Europe, Ukraine and southwestern Russia with heavy snow and rain
  
• U.S.
  weather is expected to become more active over the coming week
• A
  blizzard is likely in the northern Plains with 6-12 inches and local totals of 18 inches or more possible Monday night into Wednesday of next week
  
• Moderate
  to locally heavy rain will fall from the Delta and interior southeastern states northward to the Great Lakes region and upper Midwest
• Rain
  totals of 0.50 to 1.50 inches will occur with numerous areas getting 2.00 inches or more
  
• There
  is a risk of severe weather in the southeastern states during the middle part of next week, although it is too soon to get specific about that situation.
  
• U.S.
  hard red winter wheat areas will experience net drying conditions in the west-central through the southwestern production region for the next ten days
• California
  and Arizona will receive weekend precipitation that will help improve soil moisture, but may delay farming activity
• Cotton
  harvesting in Arizona will be disrupted, although no harm to fiber quality is expected
• Mountain
  snowpack will increase in the Sierra Nevada that will be of use for spring and summer runoff and irrigation water, though much more precipitation is needed
• U.S.
  northern Delta and Tennessee River Basin will continue too wet for the next week with some areas of standing water possible in wheat fields
• West
  Texas harvest weather should continue to advance around brief precipitation events
  
• U.S.
  temperatures will turn much warmer in the eastern half of the nation through weekend while cool weather continues in western North America
• Cooling
  will become more amplified in next week
• South
  Africa weather is not likely to deviate very far from nearly ideal conditions during the next ten days
• 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 week with much drier weather to follow in the second week of the outlook
• 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 Tropical Storm Mandous  moving inland today
• 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
• Heavy
  rain and local flooding may result – see page 2 bullet regarding this event
• Southeastern
  China will receive erratic rainfall during the next two weeks maintaining moisture abundance in the Yangtze River Basin and southern coastal provinces
• Most
  of the precipitation will be quite light allowing runoff from previous rain to continue which may help reduce the risk of flooding when the next bout of heavier rain arrives
• 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 experience a more seasonable temperature regime through the weekend before colder weather returns in the Dec. 16-23  period
• Waves
  of light snow will occur, but resulting precipitation will be low relative to normal
• 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 +9.97 and it will move erratically over the next few days
  

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Monday,
Dec. 12:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• HOLIDAY:
  Thailand

Tuesday,
Dec. 13:

• Malaysian
  Palm Oil Board’s monthly data on stockpiles, production and exports
• France’s
  agriculture ministry to release estimates on crop production and winter plantings
• New
  Zealand Food Prices
• EU
  weekly grain, oilseed import and export data

Wednesday,
Dec. 14:

• EIA
  weekly US ethanol inventories, production, 10:30am
• FranceAgriMer’s
  monthly report on grains outlook

Thursday,
Dec. 15:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Port
  of Rouen data on French grain exports
• Malaysia’s
  Dec. 1-15 palm oil exports

Friday,
Dec. 16:

• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various US futures and options

Saturday,
Dec. 17:

• No
  major event scheduled

Sunday,
Dec. 18:

• China’s
  second batch of November trade data, including corn, pork and wheat imports

Source:
Bloomberg and FI

 

 

CFTC
Commitment of Trader Report

The
got it wrong for the fund position for corn and soybean oil, by a mile. Funds sold more than 55,000 contracts and 40,000 contracts than expected by trade estimates.  Funds and managed money were large sellers for the week ending December 6 for corn and soybean
oil, yet open interest went up for that period.

 

 

 

 

 

 

Reuters
table

SUPPLEMENTAL     
Non-Comm               Indexes                  Comm

                       
Net        Chg        Net        Chg        Net        Chg

Corn               
32,765    -76,615    358,503     -4,646   -352,865     87,394

Soybeans           
53,682      1,441    120,022     -7,382   -142,116     10,787

Soyoil             
32,867    -34,717     99,277     -6,372   -145,051     40,770

CBOT
wheat         -71,771     -6,379     99,826     -2,937    -26,505      8,158

KCBT
wheat         -10,288     -9,268     46,486     -1,320    -33,725     11,697

 

FUTURES
+ OPTS     Managed                 Swaps              Producer

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
120,213    -71,418    236,631     -1,175   -356,614     84,313

Soybeans           
99,454     -2,650     71,684     -7,596   -133,162     11,226

Soymeal            
98,509     23,648     80,529     -2,386   -221,016    -19,464

Soyoil
             62,584    -42,920     80,434        501   -161,011     37,971

CBOT
wheat         -63,382     -9,314     63,906       -401    -20,450      8,109

KCBT
wheat           9,729     -7,400     35,108       -411    -35,410     11,416

MGEX
wheat          -3,048     -1,619      1,759        285      1,061      3,527

                
———- ———- ———- ———- ———- ———-

Total
wheat        -56,701    -18,333    100,773       -527    -54,799     23,052

 

 

Live
cattle         59,317       -526     55,213      1,286   -118,064      2,344

Feeder
cattle       -3,246      4,989      2,858        -73      5,111     -1,843

Lean
hogs           49,754      8,271     44,802       -236    -73,913     -4,901

 

                     
Other             NonReport                  Open

                       
Net        Chg        Net        Chg   Interest        Chg

Corn               
38,174     -5,588    -38,404     -6,132  1,486,178     32,911

Soybeans           
-6,388      3,868    -31,588     -4,846    719,341     -2,272

Soymeal            
20,932       -964     21,045       -834    427,153     32,560

Soyoil              
5,085      4,128     12,908        319    485,549      5,563

CBOT
wheat          21,476        448     -1,548      1,158    404,705     36,923

KCBT
wheat          -6,956     -2,497     -2,473     -1,107    159,860      5,582

MGEX
wheat           2,380       -624     -2,151     -1,569     48,036      2,179

                
———- ———- ———- ———- ———- ———-

Total
wheat         16,900     -2,673     -6,172     -1,518    612,601     44,684

 

 

Live
cattle         11,837     -1,689     -8,304     -1,415    346,671     -7,786

Feeder
cattle       -1,219        659     -3,504     -3,733     56,908     -1,641

Lean
hogs           -9,897     -1,771    -10,747     -1,363    262,607     -2,021

 

Macros

96
Counterparties Take $2.147 Tln At Fed Reverse Repo Op (prev $2.176 Tln, 96 Bids)

Russia
May Cut Oil Output In Response To G-7 Price Cap, Putin Says – BBG

US
PPI Final Demand (M/M) Nov: 0.3% (est 0.2%; prev 0.2%)

US
PPI Core (M/M) Nov: 0.4% (est 0.2%; prev 0.0%)

US
PPI Final Demand (Y/Y) Nov: 7.4% (est 7.2%; prev 8.0%)

US
PPI Core (Y/Y) Nov: 6.2% (est 5.9%; prev 6.7%)

Canadian
Capacity Utilization Rate Q3: 82.6% (est 82.2%; prev 83.8%)

US
Univ. Of Michigan Sentiment Dec P: 59.1 (est 57.0; prev 56.8)

–
Current Conditions: 60.2 (est 58.8; prev 58.8)

–
Expectations: 58.4 (est 54.5; prev 55.6)

–
1-Year Inflation: 4.6% (est 4.9%; prev 4.9%)

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

9:02:04
AM livesquawk US Wholesale Inventories (M/M) Oct F: 0.5% (est 0.8%; prev 0.8%)

–
Wholesale Trade Sales (M/M) Oct: 0.4% (est 0.3%; prev R 0.1%)

 

Corn

·        
CBOT March corn closed 1.50 cents higher and December new-crop 1.50 cents lower. Higher domestic stocks reported by USDA were partially offset by a decline in global stocks.

·        
Corn futures
were higher before the USDA December update on Argentina crop concerns, technical buying and higher WTI crude oil.
Energy
prices sold off during the trade, and that weighted on most CBOT agriculture commodities. January WTI crude oil broke $71.00 during the session, lowest since early January 2022. The USDA report was seen noneventful for corn futures, according to price reaction
at the time of the report.

·        
USDA lowered their outlook for US corn by 75 million bushels, 25 more than what we expected. In a surprise move, USDA left Argentina’s corn estimate unchanged at 55 million tons. Most of the trade is around 45 to 48 million tons.
Look for USDA to adjust Argentina corn and soybean production in its January report, due out on the 12^th.

·        
USDA did cut global production by 6.5 million tons and lower global ending stocks by 2.4 million. This supported nearby corn futures. USDA cut Ukraine corn production 4.5 million tons to 27 million tons, 36 percent below 2021-22.
The area harvested is expected to decline 27 percent from 2022.

·        
China’s monthly CASDE report showed no monthly changes to their corn and soybean balance sheets. They lowered cotton consumption by 200,000 tons to 7.5 million, down 5.1% from 2021-22.

·        
Taiwan reported their first case of H5N1 bird flu resulting the culling over 5000 ducks.

 

Export
developments.

None
reported

 

Updated
12/6/22

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

 

Soybeans

·        
January soybean meal made a fresh contract high, settling $5.20 higher at $471.60. We would not rule out $500/short ton as a strong resistance. January soybeans traded near a 3-month high, ending lower from weakness in soybean
oil and lower US energy markets. Ongoing talk over Argentina drought conditions and improving US soybean export demand limited losses for soybeans.  USDA cut soybean oil for biofuel by only 200 million pounds. Some of the trade was looking for a much larger
downgrade. Remember if margins remain positive in the renewable fuel sector, there is no reason to slow down. And now that March soybean oil fell nearly 14 cents from its recent absolute high, the trade may start to see some pricing enter the market. January
soybean oil share settled just below 39 percent. We think it looks like a buy but need confirmation of a reversal before pulling the trigger. Ongoing Argentina woes may support meal, but keep in mind a downturn in Argentina crush also limits the amount of
soybean oil produced.

·        
Argentina was on holiday. Drought conditions are seen worst in 50 years and some projections for the soybean crop are hovering around the low 40 million ton area. The drought is limiting some producer selling, despite the first
“soybean dollar” program, and this reduced crushing during the September-November period. The second rollout of the soybean dollar could temporarily boost crushing in Argentina but going forward we see a downturn in use if crop production potential fails to
improve.

·        
The lowest estimate we heard was 39 million tons for the soybean crop.

·        
We were surprised USDA didn’t not revies the Argentina soybean crop in their December report. They are at 49.5 million tons, still too high. On trader noted some people are waiting to see if rain develops be December 25 before
making a dramatic reduction.

·        
An Indonesian senior energy ministry official mentioned that country may increase biodiesel blending to 35 percent as early as January 2023. They are currently using B30. The palm oil-based fuel allocation for 2023 is estimated
at 13 million kiloliters, up from 11.03 million projected for 2022.

·        
Starting December 26, China will allow international participants to trade soybean and soybean meal futures contracts.

 

Export
Developments

·        
None reported

 

January
soybean oil share

Source:
Reuters

 

Updated
12/9/22

Soybeans
– January $14.00-$15.15, March $14.15-$15.25

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

Soybean
oil
– January 57.00-67.00 range,
March 55.00-68.00

 

 

Wheat

·        
US wheat futures traded two-sided on lack of direction ahead of the USDA report. Prices failed to recover after the USDA report after the US all-wheat S&D was left unchanged from November. World wheat stocks were trimmed only
500,000 tons. An increase in Australia and Canada wheat production was offset by a 3.0 million ton decline in Argentina output. USDA reduced Argentina wheat exports by 2.5 million tons, but that was offset by a large, combined increase in exports by Austria,
EU, Ukraine and Russia. The USDA reported viewed as neutral.

·        
Paris March wheat was lower by 4.50 euros at 302.75 euros a ton, near a multi month low.

·        
French wheat ratings were rated 97% good/excellent for the week ending December 5, down one point from the previous week and compares to 98% year ago. Winter barley and durum wheat were unchanged on the week at 97% and 98%, respectively.

·        
(Bloomberg) — Farmers in India, the world’s second-biggest wheat grower, planted the crop in 25.58 million hectares (63.2 million acres) of land as of Dec. 9, up 25% from a year earlier, according to the farm ministry. 

·        
A third Ukraine humanitarian grain ship left Odesa on Friday, with 25,000 tons headed to Somalia. The other two that shipped were for Ethiopia.

 

Export
Developments.

• Egypt’s
  GASC bought 260,000 tons of Russian wheat in a private deal on Thursday at $354/ton for late December through February shipment.
  
• The
  Philippines seeks 110,000 tons of feed wheat today for shipment between February and May.
  

 

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