FI Evening Grain Comments 12/16/22

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Soybeans ended higher from strength in soybean meal over ongoing Argentina crop concerns. Soybean oil was lower from weakness in US energy prices. Corn ended moderately lower.
That market was in limbo from higher soybeans and lower wheat.

 

 

 

Weather

Argentina
may see light rain across Cordoba and western La Pampa through Saturday. Rains next week will be limited. Most of Brazil will see rain bias central and northern areas. Most of the US will be on the dry side over the next week. US snow coverage could be better
across the central Great Plains after temperatures turned colder.

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE COMING WEEK

• Argentina
  rain chances will improve late next week with some unsettled weather possible in the Dec. 25-28 period
• The
  improvements will be welcome, but “normal” rain is still unlikely and that will maintain concern over the long term outlook
• With
  that said, though, there will be some periodic showers that might offer a little more support for slow crop development during that second week of the forecast
  
• Dramatic
  changes are unlikely, though
• Argentina
  temperatures will warm up for a little while this weekend and early next week and then cool down once again
• Oppressive
  heat like last week is not likely
• Southern
  Brazil and Paraguay will be in a net drying model for the next ten days and possibly two weeks
• Completely
  dry weather is not likely, but the rain that falls will often be light and offer only a temporary break from the drying trend
• Northeastern
  Brazil will see abundant to heavy rain for a while next week which may lead to local flooding
• Most
  crops will handle the situation relatively well
• Brazil
  temperatures will continue to be cooler biased for a while
• U.S.
  weather will continue snowy in the northern Plains and upper Midwest today and in the northern Midwest Saturday
• A
  small northern Atlantic Coast storm will impact New England, Pennsylvania and a few other areas today into the weekend with heavy snow inland and rain changing to snow on the coast
• Snowfall
  of 6-15 inches will be possibly in the interior of the northeastern U.S. and 4 to 10 inches in southeastern Canada
• This
  week’s snowstorm in the northern Plains has produced upwards to 28 inches of snow in south-central South Dakota, 26 inches in southeastern North Dakota, 29 inches in northeastern Minnesota and 48 inches in the Black Hills of southwestern South Dakota
• Reports
  of snow drifts between 5 and 10 feet have been received from South Dakota
• Another
  snow and rain event will develop in the southeastern U.S. Plains and a part of the southwestern Corn Belt early next week bringing snow down to the Tennessee River Basin and lower Midwest
  
• Moisture
  totals from snow and rain in the Delta and southeastern states will vary from 0.30 to 1.00 inch with a few 1.00 to 2.00-inch totals
• Snow
  may fall significantly from eastern Kansas and Missouri into the lower Ohio River Valley and parts of Oklahoma and Arkansas.
  
• Snow
  may reach the Tennessee River Basin briefly during mid-week next  week
• Bitter
  cold air coming into the central U.S. this weekend through most of next week will be very impressive
  
• Extreme
  lows in the -30s and -20s Fahrenheit will impact the northern Plains with -20s and negative teens into western Nebraska and negative teens and negative single digits possible in the central Plains – although confidence is low because the cold is too far out
  in the forecast to get more specific
• Freezes
  may impact the central Gulf of Mexico coast including sugarcane areas and Florida could see some freezes, but most of that is still a week to ten days away leaving plenty of time for change
• U.S.
  hard red winter wheat production areas will not likely receive significant precipitation for a while, although some light snow will be possible
• Most
  of the forecast models are trying to generate at least a little snow before the bitter cold arrives, but the situation will be closely monitored
• Western
  North America will be warming up Dec. 24-29
• Europe
  temperatures will be trending warmer this weekend and especially next week
• Northwestern
  Europe may trend a little stormier for a while next week as warming evolves
• East-central
  Europe into western Russia will receive significant snow through the weekend with deep accumulations likely
• Some
  areas will get 12 to 20 inches of new snow and the region is already deeply buried in previous snow
• Flood
  potentials could be high in the spring if the deep snow cover remains in southwestern Russia since the ground underneath it is excessively wet
• India
  and China weather will be relatively quiet over the next couple of weeks with limited precipitation
• Australia
  weather will continue to support good late season wheat, barley and canola harvest progress, although a few more periodic showers will pop up at times in the coming week
• Interior
  Queensland and  north-central New South Wales need significant rain to improve topsoil moisture in support of unirrigated summer crops
• The
  situation is not a crisis, though precipitation would help ensure the best early season crop development
• South
  Africa crop weather is expected to be very good over the next two weeks with alternating periods of rain and sunshine likely supporting aggressive crop development and support some periodic fieldwork
• Southeast
  Asia will continue to experience periodic rainfall and some periods of sunshine supporting most crops throughout the region
• Mainland
  areas of Southeast Asia will experience the driest conditions and that is normal for this time of year
• North
  Africa weather will continue to include an erratic rainfall distribution.
• Greater
  precipitation is still needed
• West-central
  Africa temperatures have not been very warm this season and there have been no seriously strong Harmattan Wind speeds noted protecting coffee, cocoa and sugarcane from any adversity.
• East-central
  Africa rain will continue routinely supporting coffee and cocoa
• Today’s
  Southern Oscillation Index was +8.95 today and it will move erratically over the next few days

 

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Sunday,
Dec. 18:

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

Monday,
Dec. 19:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• MARS
  monthly report on EU crop conditions
• USDA’s
  total milk production, 3am

Tuesday,
Dec. 20:

• China’s
  third batch of November trade data, including soy, corn and pork imports by country
• New
  Zealand global dairy trade auction
• EU
  weekly grain, oilseed import and export data
• Malaysia’s
  Dec. 1-20 palm oil exports

Wednesday,
Dec. 21:

• EIA
  weekly US ethanol inventories, production, 10:30am

• Weekly
  USDA Broiler Report

Thursday,
Dec. 22:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• US
  cold storage data for beef, pork and poultry, 3pm
• US
  red meat production, poultry slaughter, 3pm
• Port
  of Rouen data on French grain exports
• Sugar,
  cane and ethanol production data by Brazil’s Conab (tentative)

Friday,
Dec. 23:

• ICE
  Futures Europe weekly commitments of traders report, 1:30pm (6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various US futures and options, 3:30pm
• USDA
  hogs and pigs inventory, cattle on feed, 3pm

Monday,
Dec. 26:

• HOLIDAY:
  US, UK, Australia, Hong Kong, Singapore, several other countries
• CBOT
  hard open for nighttime session

Tuesday,
Dec. 27:

• Malaysia
  Dec. 1-25 palm oil exports
• HOLIDAY:
  UK, Australia, Hong Kong

Wednesday,
Dec. 28:

• Weekly
  USDA Broiler Report

Thursday,
Dec. 29:

• EIA
  weekly US ethanol inventories, production, 10:30am
• Vietnam’s
  general statistics department releases monthly coffee, rice and rubber export data

Friday,
Dec. 30:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am

• CFTC
  commitments of traders weekly report on positions for various US futures and options, 3:30pm
• ICE
  Futures Europe weekly commitment of traders report, 1:30pm (6:30pm London)

Saturday,
Dec. 31:

• Malaysia’s
  Dec. 1-31 palm oil export data by cargo surveyor AmSpec

Source:
Bloomberg and FI

 

 

CFTC
Commitment of Traders

Funds
and commercials changed their tune for the week ending December 13, exception soybean oil and wheat. There were no major surprises to the fund positions. For soybeans, traditional funds were a little more long than expected and Chicago wheat 11,000 contracts
more short than what the trade estimated.

 

 

 

 

 

 

 

Reuters
table

SUPPLEMENTAL     
Non-Comm               Indexes                  Comm

                       
Net        Chg        Net        Chg        Net        Chg

Corn               
53,133     20,369    346,837    -11,666   -365,732    -12,867

Soybeans           
77,962     24,279    124,630      4,607   -169,282    -27,166

Soyoil             
18,835    -14,031     98,911       -365   -130,984     14,068

CBOT
wheat         -71,197        574     98,062     -1,764    -25,284      1,223

KCBT
wheat          -9,888        401     46,317       -169    -35,497     -1,772

 

FUTURES
+ OPTS     Managed                 Swaps              Producer

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
127,106      6,892    229,535     -7,096   -367,770    -11,156

Soybeans          
119,580     20,126     76,275      4,591   -160,124    -26,963

Soymeal           
114,486     15,977     78,699     -1,830   -231,434    -10,418

Soyoil             
53,349     -9,235     84,357      3,923   -150,651     10,360

CBOT
wheat         -63,004        378     64,729        823    -20,231        220

KCBT
wheat           8,540     -1,191     34,736       -372    -36,776     -1,366

MGEX
wheat          -3,922       -874      1,761          2      1,521        460

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

Total
wheat        -58,386     -1,687    101,226        453    -55,486       -686

 

Live
cattle         66,919      7,602     53,186     -2,026   -122,356     -4,293

Feeder
cattle         -747      2,499      2,733       -126      4,020     -1,092

Lean
hogs           40,116     -9,638     46,853      2,051    -68,702      5,212

 

                     
Other             NonReport                  Open

                       
Net        Chg        Net        Chg   Interest        Chg

Corn               
45,369      7,195    -34,239      4,165  1,457,563    -28,616

Soybeans           
-2,421      3,967    -33,310     -1,720    744,707     25,365

Soymeal            
19,286     -1,645     18,961     -2,084    438,398     11,245

Soyoil               
-292     -5,377     13,237        329    464,030    -21,520

CBOT
wheat          20,088     -1,388     -1,582        -33    405,051        346

KCBT
wheat          -5,567      1,389       -933      1,540    165,081      5,221

MGEX
wheat           2,651        272     -2,011        140     49,229      1,192

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

Total
wheat         17,172        273     -4,526      1,647    619,361      6,759

 

Live
cattle         10,570     -1,268     -8,319        -16    354,855      8,184

Feeder
cattle       -1,978       -760     -4,028       -523     57,281        372

Lean
hogs           -8,164      1,732    -10,104        643    256,091     -6,516

 

Macros

100
Counterparties Take $2.127 Tln At Fed Reverse Repo Op (prev $2.124 Tln, 98 Bids)

Fed’s
Mester Says She Expects Fed To Raise Rates By More Than Its Median Forecast – BBG TV

–
Says Her Rate Forecast Is ‘A Little Higher Than Median Dot’

–
Rate Path Is ‘A Little Stronger’ Than Median Path In 2023

–
Once Rate Hikes Done, Fed Will Need To Maintain Rates For An Extended Period

Fed’s
Mester: Seeing Tentative Signs Inflation Rises Are Stabilizing, ‘Not Calling A Peak’

–
Have Not Seen Improvement On Service-Price Inflation

–
Volatility In Inflation Numbers Expected

Fed’s
Mester: Expects It Will Take Time For Inflation To ‘Ebb’

Fed’s
Mester: Timing Of Rate Cuts Isn’t Tied To A Calendar, Is Tied To Evidence Of Slower Inflation

–
Will Need To Keep Funds Rate Above 5% Next Year

Fed’s
Mester Says She Sees Growth Slowing But Doesn’t Forecast ‘Negative Activity’

Fed
Officials Reinforce Hawkish Message On Need For Higher Rates – BBG 

 

Corn

·        
CBOT corn futures were
near unchanged at the electronic close and settled moderately lower. Prices were caught between lower wheat and higher soybeans. There were no export developments.

·        
Mexico and two US agencies look for an agreement over GMO corn imports. Mexico imports about 17 million tons of corn from the US a year. The USTR and USDA will review proposals when those are formally presented. 

·        
Southern Brazil corn crop prospects are falling. StoneX estimated Brazil’s southern state of RGDS corn crop at 4.51 million tons (early crop), down from 5.38 million previous. Recall Conab cut corn production for several southern
states, for the first crop, in their latest supply update.

·        
Argentina’s BA Exchange reported 43% of the corn crop was planted against 57 % last year.  The Argentina corn crop was rated 18% G/E.

·        
India is looking to soon boost its ethanol blend to 20 percent from current 10 percent.

 

Export
developments.

·        
None reported

 

Updated 12/6/22

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

 

Soybeans

·        
CBOT soybeans ended higher from strength in soybean meal. Soybean oil was lower on weakness in WTI crude oil, down more than $1.80 by late afternoon trading. We understand there is good export demand for soybeans out of the Great
Lakes. At least one panamax in Ontario is/will be loading soybeans.

·        
The soybean meal market continues to be supported by the poor weather in Argentina and good global demand. Earlier this week there was talk of US export interest out of the Gulf.

·        
January soybean meal is only $11.40 off its contract high of $474.40.  We think meal could take out the contract high sometime before First Notice Day deliveries.

·        
Board soybean crush was active Friday, including new-crop.

·        
Argentina producer selling of soybeans has been slower during the second rollout of the “soybean dollar” relative to the September program. Producers like holding inventory as a hedge for inflation and anticipation of rising domestic
prices if a short crop from drought conditions occurs. Another reason to hold onto the soybean crop is for hopes another support initiative would be rolled out this spring.

·        
There is uncertainty over the size of the Argentina soybean crop for next season. Oil World had a low 39.5 million tons while the highest estimate we have seen is 49.5 million tons by USDA.  We think USDA will slash Argentina
soybean production by 3.5+ million tons in their January update. We are gravitating more towards a 40 million ton estimate given the weather forecast calling for below than normal precipitation over the next 30 days.

·        
Argentina’s BA Exchange reported 51% of soybeans are planted and rated 19% G/E (11% last week).

·        
WTI crude oil for the January contract is hovering around $74.30/barrel, up from $71 that traded a week ago. Support could be seen at $70, a level that would entice the US to replenish the SPR (reserves).
https://www.qcintel.com/article/us-will-buy-back-spr-crude-at-low-70s-b-biden-energy-advisor-10010.html

·        
Indonesia plans to roll out B35 on January 1, 2023, up from current B30. India raised the import base price of palm oil.

·        
Offshore values earlier this morning were leading SBO lower by about 37 points earlier this morning (off 352 points for the week to date) and meal $6.20 short ton higher.

 

Canada:
Outlook for Principal Field Crops

 

Export
Developments

·        
Turkey seeks 24,000 tons of crude sunflower oil on December 23 for delivery between January 2 and February 15, 2023.

 

Updated 12/16/22

Soybeans
– January $14.50-$15.10,
March $14.15-$15.25

Soybean
meal – January $445-$485,
March $4.00-$500

Soybean
oil – January 61.00-65.50 range,
March 55.00-70.00

 

Wheat

·        
US wheat futures traded lower led by the KC wheat contract technical selling, higher USD and weaker outside related commodity markets.

·        
Part of Ukraine’s capital lost power from additional Russian strikes. Ongoing Black Sea shipping concerns may limit losses.

·        
Paris March wheat was lower 0.75 euro at 297.50 euros a ton, near a nine month low.
Paris
wheat was down 1.7% for the week.

·        
Russia will increase their wheat export taxes for the December 21-27 period. Table is attached.

·        
A Reuters article warned insurance companies with annual (Jan-Dec) contracts with shipping and airline companies that sail and fly in and out of Ukraine may not renew them for 2023. They have already lost money. Reinsurers “are
particularly concerned about the loss of planes owned by aircraft leasing companies which are stuck in Russia and have already generated $8 billion in legal claims.”

·        
India planted 28.65 million hectares of wheat (70.8 million acres) since Oct. 1, up nearly 3% from a year ago.

 

 

Canada:
Outlook for Principal Field Crops

 

Export
Developments.

·        
Iraq seeks 50,000 tons of milling wheat on Sunda, December 18.

 

Rice/Other

·        
South Korea’s Agro-Fisheries & Food Trade Corp. seeks 83,672 tons of rice from the United States for arrival in South Korea in 2023 between Feb. 1 and June 30. 

·        
India’s Bulog plans to import 500,000 tons of rice from now through February 2023. 200,000 tons have already been secured for the month of December arrival.

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

·        
Bangladesh also seeks 50,000 tons of rice on December 27.

 

Updated 12/16/22

Chicago
– March $7.00 to $8.50

KC – March
8.00-$9.50

MN – March
$8.50 to $10.00