FI Evening Grain Comments 12/20/22

PDF Attached

 

Attached
is our updated US soybean oil balance sheet. We adjusted the 2022-23 SBO yield lower. Higher trade in the soybean complex from a lower USD and unfavorable weather forecasts for Argentina. Some of the weather models turned drier for Argentina’s two rain events.
Corn and wheat ended higher. Gains in Chicago wheat were limited as a major winter storm will sweep across the US Great Plains and Midwest starting Wednesday. We look for March soybeans to test their recent contract high of $14.9725 by the end of the week
if Argentina misses out on some of their rains. The US will see a large winter storm starting Wednesday. Temperatures will be extremely cold well into next week before trending above average for the second week of the forecast. Livestock stress and unfavorable
travel conditions are expected through Friday.

 

Weather

 

La
Nina is
predicted to stick around but fad away by US planting season. We see this as an indicator for a normal North American growing season. South American crop production will be monitored.

 

 

 

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE COMING WEEK

• Argentina
  rainfall as predicted by the computer forecast model runs today is drier than that of Sunday or Monday, especially in the second week of the outlook
• The
  reduction in rainfall was most noted in the GFS forecast and World Weather, Inc. believes too much rain was removed from the outlook
• An
  unsettled week-two weather outlook in the upper atmosphere over Argentina suggests there is going to be more opportunity for scattered showers in early January.
  
• As
  La Nina weakens during that month the rainfall will become a little more significant
• Rainfall
  in Argentina during the balance of December will be sufficient to leave soil and crop conditions mostly near where they are today, although a bout of short term improvement is expected following the rain of Thursday through Sunday
• Coverage
  will be close to 100% during the four day period
• Rainfall
  will range from 0.30 to 1.00 inch most often with a few totals of 1.00 to 1.50 inches
• All
  of the moisture will be welcome and temporary improvements to topsoil moisture will result, but the change may not last long
• Follow
  up rainfall will be very important and early indications suggest the follow up moisture may not be all that great for a while
• Argentina
  temperatures should be milder than they were earlier this month and that will help conserve soil moisture a little longer between rain events
• Argentina’s
  bottom line remains a little tenuous with most crop areas expecting some rain, but not many will get enough to soak the soil for a prolonged period of time. Greater rain will be needed to improve production potentials
  
• Brazil
  weather is still advertised to be mostly good for summer crops
• Western
  and southern Rio Grande do Sul and a part of Paraguay and Uruguay may be exceptions, though, with restricted rainfall and net drying expected for a while
• Northern
  Brazil rainfall will be frequent and moderate to heavy at times during the coming week with slightly less intensive rain expected in the last days of December and early January
• Some
  areas of excessive moisture are likely during much of the two week forecast, but crops should weather the situation relatively well
• Temperatures
  will continue to be mostly seasonable with a slight cooler than usual bias – especially in the north.
  
• Brazil’s
  bottom line should be favorable for summer crops and production potentials for the entire nation will remain high, despite some pockets of limited soil moisture in the southwest and some pockets of excessive moisture in the northeast
• U.S.
  bitter cold will have big implications for the nation during the next five days
• Temperature
  extremes will include -40 Fahrenheit in Montana, -30s and -20s in other areas in the northern Plains, subzero degree temperatures as far south as the southern Texas Panhandle, central Oklahoma, northern Arkansas, southern Illinois and central Indiana
• Freezes
  will occur through all of Texas and into northeastern Mexico as well as along the entire central Gulf of Mexico coast and into northern Florida later this week and into the weekend
• Crop
  damage to sugarcane is likely in both Texas and Louisiana
• Fruit
  and vegetable crops will be negatively impacted by freezes in South Texas
• Florida
  citrus areas will be vulnerable to frost and freezes this weekend into early next week
• Livestock
  stress is expected to be high from the northwestern U.S. Plains to Texas, the Delta and interior parts of the southeastern states
• Midwest
  animal stress is expected as well
• Snow
  and strong wind will combine in the eastern Great Plains and western through northern parts of the Midwest to induce blizzard conditions
• Travel
  delays on roads and in a few airports are expected due to blizzard like conditions
• Some
  road closures are possible in the western and northern Midwest because of snow and blowing snow
  
• Strong
  heating fuel demand is expected across the Midwest and Great Plains because of the changing weather the remainder of this week
• U.S.
  weather will trend warmer next week and only a few small weather disturbances are expected
• Europe
  temperatures will be trending warmer this weekend and especially next week
• Elsewhere
  in Europe weather conditions are likely to be a little more tranquil for a while
• Recent
  heavy snow in eastern Europe and the western CIS buried a lot of farmland, roadways and railways with snow delaying travel and stressing livestock, but conditions are expected to slowly improve
• 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 and seasonable temperatures
• 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 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 +11.13 today and it will move erratically higher over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

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

 

USDA
Calendar

https://www.nass.usda.gov/Publications/Calendar/reports_by_date.php?view=c&month=13&year=2022

 

Soybean
and Corn Advisor

2022/23
Brazil Corn Estimate Unchanged at 125.5 Million Tons

2022/23
Brazil Soybean Estimate Unchanged at 151.0 Million Tons

2022/23
Argentina Soybean Estimate Lowered 2.0 mt to 45.0 Million

2022/23
Argentina Corn Estimate Unchanged at 47.0 Million Tons

 

 

Macros

TC
Delays Full Restart Of Keystone Pipeline, Targets Dec. 28-29

BoJ
Keeps Monetary Policy Steady

–         
Maintains Short-Term Interest Rate Target At -0.1%

–         
Maintains 10-Year JGB Yield Target Around 0%

US
Housing Starts Nov: 1427K (est 1400K; prevR 1434K)

US
Building Permits Nov: 1342K (est 1480K; prevR 1512K)

US
Housing Starts (M/M) Nov: -0.5% (est -1.8%; prevR -2.1%)

US
Building Permits (M/M) Nov: -11.2% (est -2.1%; prevR -3.3%)

Canadian
Retail Sales (M/M) Oct: 1.4% (est 1.5%; prevR -0.6%)

Canadian
Retail Sales Ex Auto (M/M) Oct: 1.7% (est 1.4%; prevR -0.8%)

Philadelphia
Fed Non-Manufacturing Regional Business Activity Index -17.1 In Dec Vs -13.6 In Nov

Philadelphia
Fed Non-Manufacturing Firm-Level Business Activity Index 3.4 In Dec Vs -2.6 In Nov

Philadelphia
Fed Non-Manufacturing New Orders Index -6.1 In Dec Vs -6.3 In Nov

Philadelphia
Fed Non-Manufacturing Full-Time Employment Index 3.4 In Dec Vs 10.0 In Nov

Philadelphia
Fed Wage And Benefit Cost Index 42.9 In Dec Vs 41.5 In Nov

98
Counterparties Take $2.159 Tln At Fed Reverse Repo Op (prev $2.135 Tln, 95 Bids)

 

Corn

·        
CBOT corn futures
traded higher as computer model forecasts vary for Argentina’s two rain events over the next week. Christmas is generally thought to be the pivot point for Argentina crop production. Uncertainty over the long term (January forecast) is keeping traders on edge.
Many crop production forecasts have been slashed already for soybeans, and corn could be next. Argentina is expected to get 0.30-1.50″ rain later this week (Thur-Sun) , which is badly needed as 62 percent of the soybean crop had been planted and corn was 63
percent complete.

·        
Recession concerns were renewed. The US is expected to roll out a 1.7 trillion dollar spending bill. The 4000+ page bill was passed by the House. US housing data was better than expected exception longer term outlook with building
permits coming in much lower than expected.

·        
The US will see a major storm later in the work week accompanied by cold temperatures which should support feed demand. More snow could fall bias west over the weekend. US Midwest temperatures in the second week will be above
average.

·        
Anec sees Brazil December corn exports reaching 6.579 million tons from 6.715 million previous.
Reuters
shipping data suggests 1.15 million tons of Brazilian corn is booked by China and will ship over the next 30 days (17 vessels). 44 million tons of corn could be exporter by Brazil, according to Anec.

·        
Ukraine may see a 22 percent decrease in 2023 grain plantings to 8.7 million hectares, according to UBN media outlet, but oilseeds could see a 32 percent increase to 9.7 million hectares  – Ukrainian Agribusiness Club. Grain production
may end up near 34 million tons, a 37 percent decrease from 2022.

·        
There is some talk over US gasoline demand (below pre pandemic levels) and low ethanol blending rates along with poor margins and cold temperatures slowing ethanol production into early 2023.  A poor start of the corn crop year
for industrial demand may prompt USDA to trim usage when they update S&D figures mid-January. 
https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/agriculture/121922-feature-ethanol-plants-in-us-to-face-hard-choices-in-2023?utm_campaign=oktopost-global-agriculture-news&utm_content=oktopost-twitter&utm_medium=social&utm_source=twitter

·        
January options expire Friday.

·        
A Bloomberg poll looks for weekly US ethanol production to be down 20,000 thousand barrels to 1041k (1023-1059 range) from the previous week and stocks down 20,000 barrels to 24.405 million.

·        
(Bloomberg) —   The US hog herd as of Dec. 1 seen falling 1.5% from a year earlier to 73.31m head, according to the average in a Bloomberg Survey of seven analysts.

·        
The USDA is scheduled to release its quarterly estimates at 3pm ET on Dec. 23

·        
Bloomberg: LIVESTOCK SURVEY: US Cattle on Feed Placements Seen Falling 4.6%

November
placements onto feedlots seen falling y/y to 1.88m head, according to a Bloomberg survey of ten analysts. That would be the third y/y decline in a row after falling 6.1% in October.

 

U
of I: China and the World’s Increasing Need for Cropland

Zulauf,
C. “China and the World’s Increasing Need for Cropland.” farmdoc
daily
(12):192, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, December 19, 2022.

 

 

Export
developments.

·        
None reported

 

 

Updated
12/6/22

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

 

Soybeans

·        
CBOT soybeans, soybean meal and soybean oil were all higher from a weaker USD and unfavorable South American weather. There was talk some of the weather models for Argentina turned drier. Traders will be watching the upcoming
rainfall for Argentina later this week. Note long term models are not promising.

·        
Chicago soybean meal basis was down $2.00/short ton to 6 under. KC, Missouri was up $5 to 5 under.

·        
Interior US soybean basis was a little firmer in the east and flat in the west, according to Reuters.

·        
European Union soybean imports in the 2022-23 season (July – June) reached 5.06 million tons by December 18, against 6.08 million previous season. Rapeseed imports reached 3.27 million tons, compared with 2.33 million ton a year
earlier. Soybean meal imports were 7.36 million tons versus 7.47 million tons prior season.

·        
AmSpec reported Malaysian palm oil exports for the 1-20 December period at 921,811 tons, about unchanged from the previous period month earlier.

·        
China November soybean imports were 7.35 million tons, down 14 percent from year ago. Of that, 3.38 million tons were from the US, down from 3.63 million year earlier. Brazil supplied 2.45 million tons, down 32.3%. Jan-Nov total
China soybean imports were 23.01 million tons, down from 26.2 million previous year. China imports from Argentina reached 1.15 million tons during November.

·        
Anec sees Brazil December soybean exports reaching 1.750 million tons from 1.772 million previous. Meal exports were seen at 1.523 million tons from 1.599 million tons previous.

·        
US soybean exports improved during the November through mid-December period. Since September 1, US soybean exports to China reached 17.3 million tons, below 17.7 million comparable week year ago. We raised our export forecast
for the 2022-23 season to 2.030 billion bushels from 1.990 billion previous, below USDA’s 2.045 billion bushels and compares to 2.158 billion year ago.

 

 

We
lowered out US soybean oil yield to 11.65 from above 11.70 previous, based on the recent November NOPA crush report, and may slightly adjust it in January after the NASS October crush report. Below is a table of October NOPA crush versus NASS.

 

Export
Developments

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

 

 

Updated
12/20/22

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

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

Soybean
oil – January 62.00-68.00 range,
March 55.00-70.00

 

Wheat

·        
US wheat futures ended mostly higher after opening mixed. Higher corn and soybeans lent support. A major storm system will hit the Great Plains starting Wednesday, boosting soil moisture. Not all winter growing areas have enough
snow coverage. KS, TX and OK are at risk. Several ships are ready to leave Ukraine this week. There are some delays but that should improve by the end of this week, with at least 950,000 tons sailing.

·        
The US will see very cold temperatures later this week (Wed-Thur), potentially damaging winter crops. Some areas of the Great Plains could see temperatures as low as -15F. High winds accompanies with this system will create blizzard
conditions, possibly with some snow blown off fields. The storm is expected to reach the Midwest by Thursday.

·        
Paris March wheat was 0.75 euro lower at 296.50 euros a ton, near a 9-month low.

·        
EU soft wheat exports reached 15.70 million tons through December 18, above 14.88 million for the same week in 2021-22.

 

 

 

Export
Developments.

·        
Taiwan Flour Millers’ Association seeks 56,000 tons of grade 1 US milling wheat on Dec. 22 for shipment from the U.S. Pacific Northwest coast between Feb. 10 and Feb. 24, 2023.  Wheat types sought include dark northern spring,
hard red winter and white wheat.

·        
Japan seeks 144,441 tons of wheat later this week from the US and Canada for arrival by March 5.

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

 

Rice/Other

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

·        
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