FI Evening Grain Comments 12/21/22

PDF Attached

 

Main
CBOT agriculture markets open Tuesday morning after Christmas. Other selected markets do open Monday night.
https://www.cmegroup.com/tools-information/holiday-calendar.html

 

Official
US winter starts today. The intensity of the snow for the US winter storm has been downgraded but temperatures will remain brutally cold. Around noon there was a weather forecaster suggesting the storm will be fast moving across the Midwest, decreasing the
amount of accumulated snow. The unusually cold temperatures pose a risk for US winter grain damage over the next week for uncovered areas. Lack of snow coverage stretches across a majority of Kansas, Texas, and Oklahoma. As of 1:10 pm CT, the USD was up about
14 points, WTI crude up about $2.08, and US equities higher. The soybean complex and grains opened higher supported by dry weather across southern South America and a surge in covid cases in China. Soybean oil turned lower on product spreading despite higher
energy markets.

 

Weather

Weather
models are now predicting less than expected snow accumulations across the Great Plains and Midwest for today into Saturday. The jet stream may now keep the bulk of the rain bias southern US. The morning weather forecast turned slightly unfavorable for the
US Great Plains. Midwest forecast is mostly unchanged. South America’s weather forecast is unchanged.

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE COMING WEEK

• Rain
  is expected in Argentina Thursday into Sunday offering some relief to dryness that has been occurring this week
• Resulting
  rainfall is not likely to be enough to end drought, but some temporary relief is expected
• Rainfall
  of 0.30 to 0.85 inch and local totals of 0.85 to nearly 1.50 inches is expected with coverage of 75% of the nation
• Some
  showers will begin in the southwest today
• Rain
  overnight in Argentina was most significant from southern Cordoba into eastern La Pampa and far westernmost Buenos Aires
• Rain
  totals through dawn today varied from 0.05 to 0.50 inch, although a local total of 1.18 inches occurred in southeastern Cordoba
• Temperatures
  were still quite warm across the nation with 90-degree highs common
• Argentina
  weather next week will be a little milder with some showers popping up infrequently with light intensity
• Some
  net drying is expected, but the dry down may be slowed by cooler temperatures and the infrequent shower activity
  
• Southern
  Brazil will be dry through the weekend
• Most
  areas from southern Mato Grosso and Paraguay into Rio Grande do Sul will receive restricted amounts of rain and temperatures will be briefly warm enough to accelerate drying
• Rain
  will then evolve next week and sufficient amounts should occur to bring relief back to much of the region that driest out of the next several days
• Not
  all of southern Brazil will do well with next week’s rain and pockets of dryness are expected for a while favoring Rio Grande do Sul
• Northern
  Brazil weather will stay plenty wet over the next couple of weeks
• Rain
  will fall frequently and significantly enough to maintain saturated soil and to possibly raise the risk of a little flooding
• Areas
  from eastern Mato Grosso and southern Tocantins into Minas Gerais and will be wettest
• Crop
  damage is not likely
• Brazil
  rainfall Tuesday was mostly concentrated on areas from Mato Grosso to Minas Gerais and a part northern and eastern Sao Paulo
• Amounts
  varied greatly with more than 3.00 inches in central Minas Gerais and 2.43 inches in northeastern Sao Paulo
• Most
  areas received 0.20 to 0.80 inch with local totals of 1.00 to 2.00 inches
• Temperatures
  were cooler than usual in many areas
• Extremely
  cold temperatures will be impacting central parts of North America during through the weekend bringing all kinds of problems
• Blizzard
  conditions are likely from the eastern U.S. Plains to the Great Lakes region tonight night into Friday
• Snow
  will fall as far south as the Tennessee River Basin
• Extreme
  low temperatures in the -30s and -20s Fahrenheit are likely in the northern Plains
• Subzero-degree
  low temperatures will occur southward to the Texas Panhandle, central Oklahoma, central Illinois, and northern Indiana
• Freezes
  will occur southward to South Texas and the entire central Gulf of Mexico Coast
• Sugarcane
  will experience notable freezes in Louisiana
• Fruits
  and vegetable crops will be damaged in South Texas
• Citrus
  areas in Florida will be exposed to some frost and freezes, although it is unclear whether there is a viable threat to the crop yet – late weekend and early next week temperatures will be coldest
• Upper
  20s and 30s are quite likely
• Wind
  speeds gusting between 30 and 60 mph will occur with the blizzard from eastern Nebraska and eastern Kansas through Iowa and northern Missouri to the Great Lakes region
• Snowfall
  will range from 1 to 4 inches from the central Plains into the western Corn Belt and 3 to 8 inches with local totals to 10 inches or more will occur in the Great Lakes region
• Snowfall
  of 1 to 3 inches will be possible in the northern Delta and a part of the Tennessee River Basin
• Considerable
  blowing and drifting of snow is expected
• Wind
  chill warnings will be issued for many areas and frost bite potentials will rise greatly
• A
  huge increase in energy demand is expected in the central U.S. for a few days beginning today and lasting into the weekend
• Cold
  air in the eastern United States is expected to be brief and not as potent as that in the central states
• Livestock
  stress will be very high in the western Corn and soybean production areas
• Strong
  warming is likely next week
• Southwestern
  U.S. hard red winter wheat areas may be left snow free or get a minimal amount of snow ahead of the bitter cold raising the potential for some crop damage
• Less
  than 1 inch of snow will occur form southwestern Texas into the Texas Panhandle and western Oklahoma where there may be some risk of winterkill
• U.S.
  Midwest snow cover should be sufficient to protect winter crops from extreme temperatures through the weekend
• Strong
  warming is expected in the western United States this weekend and early next week with the warming trend spreading east across the nation during the balance of next week
• The
  short duration of cold weather will limit the impact on supplemental heating fuel demand
  
• California
  precipitation will resume next week with waves of rain and mountain snow to bolster soil moisture and increase mountain snowpack for better runoff potentials in the spring
• U.S.
  Midwest, Delta, and southeastern states will get rain during the latter part of next week and into the first days of January as a couple of weather systems move through the eastern United States
• Western
  U.S. weather will trend cooler again next week and especially in the following weekend
• Europe
  temperatures are trending warmer and this will continue through the coming week with readings rising above normal in time
• The
  warm weather will continue into early January
• Western,
  central and northern Europe will experience greater rainfall and a little snow during the coming week
• Most
  of the precipitation will occur as rain with 1.00 to 2.50 inches and locally more possible by Tuesday in France, Germany, Belgium, Netherlands, and the U.K.
• Heavy
  rain will continue to occur in northern Portugal and northwestern Spain into the weekend possibly expanding some flooding in the region
• Southern
  Europe precipitation will be more limited during the coming ten days and northern Europe’s precipitation should diminish over time late next week and into the following weekend as well
• 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
• Waves
  of snow and rain will impact the western CIS over the next ten days bolstering soil moisture and raising snow depths for a higher risk of flooding in the spring
• India
  and China weather will be relatively quiet over the next couple of weeks with limited precipitation and seasonable temperatures
• A
  tropical cyclone may evolve in the Bay of Bengal during the coming week and it will  need to be closely monitored for possible impact on India
  
• 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 over the next week to ten days
  
• Greater
  precipitation is still needed especially in southwestern and northeastern Morocco, northwestern Algeria and Tunisia where recent rain has not been well distributed
• 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 +12.36 today and it will move higher over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

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 Tuesday morning, not Monday night as previously indicated
• https://www.cmegroup.com/tools-information/holiday-calendar.html
  

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

 

 

Macros

105
Counterparties Take $2.207 Tln At Fed Reverse Repo Op (prev $2.159 Tln, 98 Bids)

 

US
Existing Home Sales Change Nov: 4.09M (est 4.20M; prev 4.43M)    

–
Existing Home Sales (M/M): -7.7% (est -5.2%; prev -5.9%)

Sales
down 35.4% year over year; tenth straight monthly decline

–
Median Home Price (Y/Y) (USD): 370.7K or +3.5% (prev 379.1K or +6.6%)

 

US
CB Consumer Confidence Dec: 108.3 (est 101.0; prev R 101.4)

–
Present Situations: 147.2 (prev R 138.3)

–
Expectations: 82.4 (prev R 76.7)

 

US
MBA Mortgage Applications Dec 16: 0.9% (prev 3.2%)

US
MBA 30-Yr Mortgage Rate Dec 16: 6.34% (prev 6.42%)

 

Canadian
CPI NSA (M/M) Nov: 0.1% (est 0.0%; prev 0.7%)

Canadian
CPI (Y/Y) Nov: 6.8% (est 6.6%; prev 6.9%)

Canadian
CPI Core – Median (Y/Y) Nov: 5.0% (est 4.9%; prev 4.8%)

Canadian
CPI Core – Trim (Y/Y) Nov: 5.3% (est 5.3%; prev 5.3%)

 

US
DoE Crude Oil Inventories (W/W) 16-Dec: -5.895M (est +2.500M; prev +10.231M)

–
Distillate: -242K (est +1.500M; prev +1.364M)

–
Cushing: +853K (prev +426K)

–
Gasoline: +2.530M (est +2.000M; prev +4.496M)

–
Refinery Utilization: -1.3% (est 0.0%; prev -3.3%)

EIA:
US Crude Stockpiles In SPR Fell In Latest Week To Lowest Since Dec 1983 –

 

Corn

·        
CBOT corn futures were
higher on ongoing concerns over dry weather across southern South America and slow US export developments. Higher wheat aided corn futures. 7,000 March corn contracts hit stops around $6.5950 around 9:25 am CT. The contract session high was hit at $6.6225.
March corn closed near its day high.

·        
The US storm starting today accompanied by cold temperatures could support feed demand.

·        
Russia set their fertilizer export quota at 11.8 million tons for the January through May period. Russia accounts for about 13 percent of the global production of potash, phosphate and nitrogen-containing fertilizers, or 50 million
tons. Jan-Nov Russia fertilizer exports were 25 million tons.

·        
Ukraine’s AgMin estimated 2022 corn production at only 22-23 million tons, down from 41.9 million tons in 2021, due to a large reduction in the harvested area. The estimate is down from 25-27 million tons projected back in September. 
Only 70 percent of the 2022 area had been harvested, or 18.4 million tons. Next year the AgMin expects Ukraine producers to plant much more sunflowers, and less corn. 

·        
Corn basis in Blaire, NE, was around 83 over the March (up 13 cents today), which is very strong. Demand from ethanol plants and feedlots have supported cash prices for that area.

·        
The Baltic Dry Index increased 8 percent to 1,726 points.

·        
January options expire Friday.

 

EIA
weekly ethanol update

·        
The US weekly EIA ethanol data was viewed neutral to slightly bullish for US corn futures.

·        
Weekly US ethanol production decreased 32,000 barrels from the previous week to 1.029 million barrels per day (bbl), second consecutive weekly decline.  

·        
Ethanol stocks decreased 342,000 barrels to 24.067 million, snapping a 4 consecutive week of a build. 

·        
For comparison, A Bloomberg poll looked for weekly US ethanol production to decrease 20,000 barrels from the previous week and stocks to decrease 4,000 barrels.

·        
US ethanol production of 1.029 million barrels per day is about 2.1% below from about the same time a year ago.

·        
Over the past 4 weeks, production changes averaged down 3,000 and stock changes up 310,000. 

·        
Early September 2022 to date (15 weeks) US ethanol production is running 4.0% below the same period a year ago. At this time last year ethanol production was advancing 8.6% above the Sep 1, 2021-Dec 17, 2021 period. 

·        
Padd2 production was 975,000 barrels, down 26,000 from a week earlier. Padd1 was unchanged and Padd3 off 5,000.

·        
There were no ethanol imports reported this week.

·        
Ethanol stocks of 24.067 million barrels are up about 16.2% from a year ago and 4.9% above the last previous 4-week average.  The record for ethanol stocks was 27.689 million barrels set on 4/17/20, but today’s inventories are
still considered high.

·        
Days of inventory of 23.7 compares to 20.5 a month ago and 19.9 during comparable period a year ago.

·        
Weekly ending stocks of total gasoline were up 2.53 million barrels to 226.1 million barrels. Implied gasoline demand was up 459,000 barrels to 8.714 million barrels.

·        
The net blender input of fuel ethanol was down 3,000 from the previous week at 876,000 bpd, same as its previous 4-week average of 876,000 bpd.

·        
Net production of finished reformulated and conventional motor gasoline with ethanol, decreased 2,000 to 8.612 million barrels, or 90.5 percent of the net production of all finished motor gasoline, down from 91.1 percent for the
previous week.

·        
For 2022-23, we are using 5.250 billion bushels, compared to 5.275 billion by USDA and compares to 5.326 billion for 2021-22. 

 

US
DoE Crude Oil Inventories (W/W) 16-Dec: -5.895M (est +2.500M; prev +10.231M)

–
Distillate: -242K (est +1.500M; prev +1.364M)

–
Cushing: +853K (prev +426K)

–
Gasoline: +2.530M (est +2.000M; prev +4.496M)

–
Refinery Utilization: -1.3% (est 0.0%; prev -3.3%)

EIA:
US Crude Stockpiles In SPR Fell In Latest Week To Lowest Since Dec 1983 –

 

 

 

Export
developments.

·        
None reported

 

 

Updated
12/6/22

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

 

Soybeans

·        
Soybeans and meal ended higher while soybean oil turned lower, exception January soybean oil, on product spreading despite higher US energy prices. January and March soybean oil settled higher (modified close March was slightly
lower). Some of buying in January could be technical and positioning ahead of FND deliveries a week from Friday. Nearby soybean spreads were under pressure.

·        
The entire soybean complex opened higher supported by dry weather across southern South America and a surge in covid cases in China. Argentina is still slated to see two rain events over the next week but amounts will not be great
enough to end the drought.

·        
We heard Argentina sold more than 240,500 tons of soybeans on Monday, bringing late November (28^th) to December 19^th bookings to 4.27 million tons. The $230 exchange rate will last through December 31.

·        
India’s market regulator extended their ban on trading derivative products in  selected commodities, including palm oil, wheat, and paddy, until December 20, 2023.

·        
Malaysian palm oil rallied in part to heavy rains this week potentially disrupting palm production. ITS reported Malaysian palm oil exports during the December 1-20 period at 952,592 tons, down 4.5% from November 1-20.

 

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 were sharply higher on US temperature concerns, Iraq buying US wheat, and President Volodymyr Zelenskyy’s visit to the US. What does the visit have to do with wheat? Speculation is that Ukraine may get additional
funding/supplies to support their efforts for the Russia/Ukraine conflict. A potential escalation of war is renewing concerns over Black Sea grain shipments.

·        
Chicago wheat hit a 2-week high during the session.  

·        
March Paris milling wheat officially closed up 8.25 euro, or 2.8%, at 304 euros a ton ($322.48/ton).

·        
Unusually cold temperatures pose a risk for US winter grain damage over the next week. Lack of snow coverage stretches across a majority of Kansas, Texas, and Oklahoma.

·        
Ukraine grain exports since July 1 are running 32 percent below previous season at 20.6 million tons through December 21, including 7.6 million tons of wheat (down 51 percent), 11.3 MMT of corn (up 25%) and 1.6 million tons of
barley (down 70%).

·        
South Africa’s CEC estimated the wheat production at 2.249 million tons for 2022, down from 2.285 million last year, a 1.6% decrease.

 

Export
Developments.

·        
Iraq purchased 150,000 tons of US and Australian wheat. The US wheat went for $496/ton and Australian wheat at $460/ton.

·        
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.

 

Rice/Other

·        
(Bloomberg) China Nov. Cotton Imports +85% Y/y, Corn -5.8% Y/y: — China’s exports of rare-earth products fell 19.7% from a year ago in Nov.

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

·        
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 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