FI Evening Grain Comments 12/12/22

PDF Attached

 

This
Tuesday US CPI will be released and FMOC will meet Wednesday. WTI
crude oil was higher and USD higher. For CBOT ags, it was an interesting day as soybean meal plunged and soybean oil surged, a big reversal. Soybeans traded lower in part to weekend rains across Argentina. Grains were higher on renewed Black Sea grain transportation
concerns after Russia attacked energy grids over the weekend. China eased covid restriction even as cases continue to rise.

 

 

Weather

Argentina
saw hot temperatures over the weekend but also received some welcome rain Friday night into Saturday. Rain across BA was on the drier side. Second week of the forecast for Argentina calls for rain (map below). Brazil was on the dry side for the south and west
but will see good rain over the next couple of weeks. The US will see a welcome winter storm this week, boosting snow coverage. Temps will turn colder for the US over the next two weeks. Eastern Europe and the western CIS will see two winter storms this week.

 

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE DAY

• Argentina’s
  weekend precipitation was sufficient to improve planting conditions for soybeans, late corn, sorghum and some late peanuts.
  
• Cotton
  planting conditions should improve as well
• Despite
  the 1.00- to 2.00-inch amounts of rain, follow up moisture is still needed
• The
  precipitation bought the early crop some time to improve before being stressed once again
• The
  precipitation was especially good for planting of late season crops
• Follow
  up rain is a must and there is not much in the pipeline
• World
  Weather, Inc. still believes Argentina only needs to bide some time through the balance of December to keep crops viable until improved rainfall evolves as La Nina weakens
• The
  weekend precipitation was certainly welcome and no one will complain about the moisture even though it was not enough to seriously bolster soil moisture over the long term.
  
• If
  timely rain can continue to fall through the end of this month crops might be able to take full advantage of improved rainfall in January and February as La Nina weakens
• Argentina
  weekend precipitation
• Rain
  amounts were  little greater than expected in the very dry areas of Santa Fe, western Entre Rios, southeastern Santiago Del Estero and northern Cordoba where 1.00 to 2.00 inches occurred in several areas
• Rainfall
  farther to the north was more varied ranging from a trace to 0.50 inch with a few 1.00 to 2.00-inch plus totals
  
• Central
  Chaco was driest, and Formosa was wettest
• Rainfall
  in Buenos Aires varied from 0.15 to 0.72 inch with a few amounts to 1.25 inches
• All
  of the greatest rain was in eastern parts of the province
• La
  Pampa, San Luis, western Buenos Aires and a few areas in central Cordoba were left mostly dry
• Temperatures
  were quite hot Friday with highs in the 90s to 104 degrees in the south and in the range of 100 to 113 in the north
• Santiago
  del Estero, northern Cordoba, northern Santa Fe, Chaco and Formosa were hottest
• Cooling
  followed the weekend rain, but it may only be milder for a short period of time
• Argentina
  will be dry this week with temperatures near to above normal
• Temperatures
  next week will be near to above normal as well
• Readings
  will not be as hot as those of recent past days and weeks
• Argentina’s
  week two rainfall will be increasing in the west and a few areas in the south, but no general soaking is expected leaving crop moisture stress a potential serious issue
• Argentina’s
  bottom line is not very good. Early weekend precipitation was welcome and offered a short term bout of relief from excessive heat and chronic dryness, but much more rain is needed to induce a trend change and that is not expected. The coming ten days will
  be dry bias in many key crop areas and with temperatures near to above normal there is likely to be more crop stress and more downward pressure on production potentials.  The increase in western rainfall during the second week of the outlook will be welcome
  from La Pampa to Santiago del Estero, but the remainder of the nation will continue drought stressed with little to no relief.
• Brazil
  rainfall during the weekend was greatest in Goias, eastern Mato Grosso, eastern Minas Gerais and southeastern Bahia where some 0.70 to 2.72 inches of rain resulted
• Net
  drying occurred in Mato Grosso  and from southern Minas Gerais to Rio Grande do Sul
• Temperatures
  were mostly near normal with some hotter than usual conditions in western Rio Grande do Sul, western Parana, Paraguay and western Mato Grosso do Sul
• Brazil
  precipitation in the next two weeks will remain lighter than usual in portions of the west and south, but most crop areas will get rain at one time or another
• Heavy
  rain is expected in areas from Espirito Santo through Minas Gerais and Goias to portions of eastern Mato Grosso
• Some
  flooding may evolve over time in parts of Minas Gerais and Goias, although most of the precipitation will be spread out over multiple days which may help curb the potential for widespread serious flooding
• Rio
  Grande do Sul and some immediate neighboring areas will experience net drying, despite some showers and thunderstorms
• The
  rain that evolves will be extremely important in slowing down the region’s drying trend, but a close watch on its distribution and temperatures because there is a relatively good chance for net drying
• Rice
  and southern corn areas will be driest and will experience the greatest dryness issue
• Northern
  Rio Grande do Sul will receive 0.50 to 1.50 inches of rain and locally more, but that is over ten days and more rain will be needed to protect corn and soybean production potentials
• Brazil’s
  bottom line is good for the majority of the nation. A close watch on Rio Grande do Sul and a few of the western crop areas in the nation is warranted because limited rainfall at times and the potential for some net drying. Crop moisture stress is only expected
  to be an issue in some western and southern Rio Grande do Sul rice and corn production areas.
  
• South
  Africa rainfall is expected to be frequent and sufficient enough to support summer crops in a positive manner during the next ten days
• Recent
  drying supported a flurry of late season crop planting
• The
  nation’s production outlook is still very good
• Australia
  weather is expected to be mostly good for winter wheat, barley and canola harvesting in the south and summer crop development in Queensland and northeastern New South Wales
• Very
  little rain is expected in harvest areas and there should eventually be enough rain in cotton, sorghum and other summer crop areas in east-central parts of the nation to support a good outlook for development
• Australia
  weekend precipitation was minimal except in a few coastal areas and good harvest progress was likely made
• China
  precipitation during the weekend was very limited and the outlook is calling for similar conditions for the coming ten days
• Winter
  crops are dormant or semi-dormant with little change likely for a while
• Southeast
  Asia rainfall will continue most frequent and abundant in the Philippines, Indonesia and Malaysia during the next ten days to two weeks
• Crop
  development should advance normally, despite a few areas of heavy rain
• Tropical
  Cyclone Mandous brought heavy rain to the lower east coast of India Friday and early Saturday resulting in some flooding
• Rainfall
  reached 7.55 inches in northeastern Tamil Nadu and southern Andhra Pradesh
• A
  series of tropical disturbances will continue to march through southern India during the next ten days bringing additional waves of rain to the far south and inducing a little too much rain for some areas
• Central
  and northern India have been dry and will continue that way for a while, although some moisture from Tropical Cyclone Mandous has produced a little rain in south-central and west-central India and some of that may linger for a little while this week
• Resulting
  rainfall has not been and will not be very great
• Cold
  weather in Europe will continue this week and then begin to abate next week
  
• Southern,
  central and eastern Europe and western Russia will experience frequent bouts of snow and rain
• Two
  major winter storms are expected this week one in northeastern Europe and another that comes out of the Balkan Countries into Ukraine and southern Russia
• Substantial
  snowfall is expected in these areas with total accumulations by early next week varying from 5 to 12 inches and local totals to 18 inches
• Portions
  of western Russia and immediate neighboring areas will experience the greatest snowfall that will cause travel delays and livestock stress
• Some
  significant snow and some rain fell during the weekend in Ukraine and southwestern Russia
• Travel
  disruptions and stress to livestock resulted
• Cool
  temperatures and snow further stressed people in Ukraine who are already dealing with not electricity
• No
  bitter cold is expected in western Russia or Ukraine during the next ten days, but it will be cool and stormy enough to raise concern over those without electrical power
  
• Crop
  conditions will be fine
• Northern
  Europe precipitation this week will be restricted while that in the south is heavy and could result in some flooding
• Western
  Spain, Portugal, western Italy and the eastern Adriatic Sea countries will be wettest while the Baltic Plains, northeastern France and Low Countries will be driest
• U.S.
  weather will be quite active this week as much colder air moves into western parts of the continent
• 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
  
• Some
  of this will also impact western and northern Nebraska
• Cooling
  to follow the early week storm will perpetuate snowfall in the northern Plains and induce it in the northern Midwest
• Another
  2 to 6 inches of snow is likely into the end of this week
• Impressive
  new snow depths are likely in the Dakotas from this week’s storms and some healthy snow accumulations will also occur from Minnesota to the northern Great Lakes region
• Rain
  and thunderstorms will occur in many areas across the central and eastern Plains later today into Tuesday and then into the Midwest, Delta and southeastern states during mid-week
• Moisture
  totals for the week’s weather will vary from 0.50 to 1.50 inches and a few amounts getting more than 2.00 inches
• The
  Tennessee River Basin, northern Delta and Dakotas into Minnesota will be wettest with some local flooding possible
• Some
  risk of severe thunderstorms exists for the central Gulf of Mexico coast states during mid-week
  
• Drought
  relief is likely in the norther Plains and it will continue in the northern Delta and Tennessee River Basin
• No
  serious relief from dryness is likely in the west-central or southwestern U.S. Plains in the next week to ten days
• Additional
  rain and mountain snow is expected in California and the Pacific Northwest this week, although cooling will end most of the rain and much of the precipitation will end by mid-week
• Much
  colder air will funnel into the western and north-central United States and in western Canada this week dropping temperatures well below normal
• Temperatures
  in eastern North America will be trending much warmer than usual early this week and then progressively cool from west to east later this week, during the weekend and much of next week
  
• Colder-than-usual
  temperatures will impact many areas in the Plains and western Midwest this weekend and early next week with some shifting to the east briefly next week
  
• Eastern
  portions of Canada’s Prairies will receive waves of snow during mid-week this week
• Much
  colder weather is expected to resume throughout the Prairies this week
• Ontario
  and Quebec will receive additional waves of snow and rain over the coming week that will maintain moisture abundance in the region
• North
  Africa received some needed rain during the weekend, although most of the precipitation was light
• The
  moisture was good for improving wheat and barley emergence and establishment with some increase in planting possible
• Greater
  rain is still needed in parts of Morocco and northwestern Algeria which have been driest recently
• North
  Africa rainfall in the coming ten days will be sporadic and often light
• 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 late season harvest 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 coastal areas during the next two weeks
• 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 +9.17 and it will move lower over the next few days
  

Source:
World Weather INC

 

Bloomberg
Ag Calendar

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

 

USDA
inspections versus Reuters trade range

Wheat                 
218,460                 versus   200000-475000  range

Corn                     
505,014                 versus   400000-675000  range

Soybeans           
1,839,761             versus   1500000-2000000             range

 

 

 

GRAINS
INSPECTED AND/OR WEIGHED FOR EXPORT

                 
REPORTED IN WEEK ENDING DEC 08, 2022

                           
— METRIC TONS —

—————————————————————————

                                                  
CURRENT     PREVIOUS 

             ———–
WEEK ENDING ———-  MARKET YEAR  MARKET YEAR

 
GRAIN      12/08/2022  12/01/2022  12/09/2021    TO DATE     TO DATE  

 

BARLEY             
0           0           0        1,708       10,010 

CORN         
505,014     824,429     929,668    7,146,566   10,350,149 

FLAXSEED           
0           0           0          200          124 

MIXED              
0           0           0            0            0 

OATS               
0           0           0        6,486          300 

RYE                
0           0           0            0            0 

SORGHUM        
4,168      75,093     120,700      357,021    1,234,664 

SOYBEANS   
1,839,761   2,080,025   1,748,392   23,373,686   25,517,888 

SUNFLOWER          
0           0           0        2,160          432 

WHEAT        
218,460     341,674     268,962   11,135,594   11,421,810 

Total      
2,567,403   3,321,221   3,067,722   42,023,421   48,535,377 

—————————————————————————

CROP
MARKETING YEARS BEGIN JUNE 1 FOR WHEAT, RYE, OATS, BARLEY AND

FLAXSEED; 
SEPTEMBER 1 FOR CORN, SORGHUM, SOYBEANS AND SUNFLOWER SEEDS.

INCLUDES
WATERWAY SHIPMENTS TO CANADA.

 

Macros

Canada
Q3 Household Debt-To-Income Ratio Falls To 182.4% From 182.6% In Q2

Canada
Q3 National Net Worth Falls 3.3% To C$17.17 Trillion From C$17.75 Trillion In Q2

95
Counterparties Take $2.159 Tln At Fed Reverse Repo Op (prev $2.147 Tln, 96 Bids)

U.S.
Crude Oil Futures Settle At $73.17/bbl, Up $2.15, 3.03 PCT

 

Corn

·        
Corn futures were
higher following wheat and Black Sea grain shipment concerns.

·        
Funds bought an estimated net 6,000 corn contracts. 

·        
WTI crude oil rallied in part to the closure of the US Keystone pipeline. 600,000 gallons of oil were lost in the spill. It’s a small amount but the pipeline might be closed until December 20. Some analysts don’t see an impact
on gasoline prices.  WTI crude oil also may have been higher on expectations for the US to start replenishing the SPR. See paragraph four from a October statement
https://www.whitehouse.gov/briefing-room/statements-releases/2022/10/18/fact-sheet-president-biden-to-announce-new-actions-to-strengthen-u-s-energy-security-encourage-production-and-bring-down-costs/

·        
China’s National Statistics Bureau (or NBS) reported the 2022 soybean crop increased a large 24 percent to 20.3 million tons, and corn output up 1.7 percent from good weather, to 277.2 million tons. During the crop season we heard
the opposite when it came to weather. Rice production fell 2 percent to 137.72 million tons.  All wheat China crop production was 137.72 million tons, up 0.6 percent from 2021.  For comparison, China’s CASDE had 272.55 million tons for corn and 19.48 million
for soybeans.

·        
China hog futures sank Monday with prices hitting their lowest level since June, in part to weaker demand ahead of the Lunar New Year . China hog producers increased production ahead of holiday sales with an expectation for prices
to firm during the month of December but that backfired from slower than expected sales after slaughter.

 

Export
developments.

·        
None reported

 

Updated
12/6/22

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

 

Soybeans

·        
January soybeans were down more than 22 cents on weakness in outside related vegetable oil markets and weaker CBOT soybean meal. China is further easing China covid restrictions. Outside vegetable oil markets were lower, specifically
Malaysian palm oil and China palm oil, despite good Malaysian December 1-10 shipment data.

·        
Funds sold an estimated net 9,000 soybeans, 5,000 meal and bought 5,000 soybean oil.

·        
US crushers have been actively selling crush all the way out to early 2023. After 4-5 years of great US crush margins, maybe they know something the trade has not picked up. We see things steady as they go but could be wrong if
one of the products fail to live up to demand.

·        
Oil share rebounded with a massive reversal in product spreading, which was overdue. March oil share closed above 40.5 percent and should be monitored. The CFTC report as of last Tuesday confirmed commercials had some interest
in the buy side from declining soybean oil prices. 

·        
Argentina is back from a 2-day holiday. Argentina saw better than expected rains over the weekend that could boost soybean planting progress. Not all areas saw good rain. BA was on the drier side. Argentina drought conditions
are considered worst in 50 years.

·        
AmSpec reported Malaysia December 1-10 palm oil shipments at 480,404 tons, above 420,447 tons previous period month earlier. ITS reported a 6 percent increase to 492,960 tons from 466,943 month ago.

·        
We look for world feedstock for biodiesel to increase in 2023-24, led by palm and SBO demand.

 

 

Export
Developments

·        
None reported

 

Rebound
in March oil share – Reuters Eikon graph

 

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 sharply higher on renewed Black Sea shipping concerns. Algeria floated an import tender for milling wheat, only tender we saw since late last week. Russia over the weekend attacked Ukraine’s energy infrastructure.
Agriculture Minister Mykola Solky does not expect see a suspension of grain exports from Odesa after the attacks but did admit there were problems.

·        
Funds bought an estimated net 10,000 Chicago wheat contracts.

·        
US temperatures will be cold, at least for the 6-10 period, across the majority of the US and snow coverage is very light for this time of year, potentially raising the risk for winter grain crop damage.

·        
The winter storm expected to roll across the US early this week is badly needed.

·        
A major winter storm will impact the north-central United States this week with some of the storm’s snow reaching into Canada as well

 

 

·        
Paris March wheat was higher 2.00 euros earlier at 304.75 euros a ton.

·        
Last week the French AgMin reported 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.

·        
Two winter storms will impact eastern Europe and the western CIS this week producing significant snow events.

·        
Egypt has enough wheat for reserves sufficient for 5.5 month. Strategic reserves of sugar, rice, and cooking oil were sufficient for 3.4, 6.6, and 5.7 months, respectively.

·        
Russia wants to change the grain export deal as they prefer more shipments destined to poor countries.

 

 

 

Export
Developments.

·        
Algeria seeks milling wheat for February shipment on Wednesday.

·        
Results awaited: the Philippines seeks 110,000 tons of feed wheat 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.

·        
Congress may soon roll out a spending bill that may include a price support program for rice growers that are facing an increase in price increases.

·        
Cotton futures hit a two-week low.

 

Updated
12/6/22

Chicago
– March $7.00 to $8.50

KC
– March 7.75-$9.75

MN
– March $8.25 to $10.00