FI Evening Grain Comments 12/28/22

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The
USD was up 31 points by midafternoon, WTI crude lower by about 77 cents and US equities lower. Soybeans and soybean meal ended sharply higher. Soybean oil sold off on product spreading and lower outside related vegetable oil markets. Grains ended higher. Argentina’s
weather forecast did not improve and only some areas will see beneficial rain on and off over the next ten days. 

 

 

Weather

The
US warmup will continue through this weekend. US temperatures started to warm bias far southwestern growing areas Saturday, central and upper northwest of the Great Plains along with the central and southern Midwest Sunday, and upper Midwest into the northeast
Monday. The South American weather forecast (unchanged) has not changed that much, and the theme is generally the same: good rain for central and northern Brazil and lighter rain for southern Brazil and Argentina. Showers should favor Argentina’s Cordoba today
and Saturday. World Weather Inc. warned “Opportunities to plant crops will begin to run out in the middle part of January.”

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE COMING WEEK

• Excessive
  heat occurred again Tuesday in South Australia stressing livestock and inducing a strong demand for cooling fuels
• High
  temperatures were 95 to 111 degrees Fahrenheit in most of the state; including the coast
• Australia’s
  heatwave will shift farther to the east into New South Wales, Victoria and Queensland over the next few days stressing livestock and unirrigated summer crops
• Australia
  winter and summer crop areas are unlikely to get much precipitation during the coming week to ten days
• The
  environment will be good for fieldwork, including late season harvest progress in southern winter crop areas
• Rain
  is needed in interior east-central portions of the nation, although the situation is not a crisis
• Unirrigated
  sorghum, cotton and other crops will need rain soon especially with temperatures trending hotter
• Additional
  heavy rain fell in eastern Mindanao, Philippines Tuesday after significant rain fell in parts of the island  during the holiday weekend
• One
  location in east-central Mindanao reported 8.86 inches of rain
• Waves
  of heavy rain will continue to impact the eastern Philippines during the next full week to ten days resulting in some additional flooding from time to time
• Some
  areas may receive 6.00 to more than 14.00 inches of rain by the end of next week
• Argentina
  is still expecting rain late this weekend into Monday
• Rain
  totals of 0.30 to 0.90 inch and local totals of 1.00 to 2.00 inches are expected
• The
  moisture will be welcome, but there is still much debate over whether the amounts will be sufficient to sustain crops through the following week of dry and warmer weather
• The
  odds are high that the rain will induce a short term benefit, but much more moisture will be required to support crops for an extended period of time
• Not
  much rain will fall from January 2 through January 8 and temperatures will be warmer than usual resulting in rising potentials for crop stress especially in those areas that only get light rainfall late this weekend into Monday
• Argentina’s
  bottom line remains one of concern over poorly distributed rainfall. The rain expected this weekend into Monday will be extremely important and producers may advance with planting to take advantage of the moisture boost while noting the lateness of the planting
  season. Opportunities to plant crops will begin to run out in the middle part of January. Previously planted and established crops in the nation will benefit most from the coming rain.
  
• Most
  of Brazil will be impacted by rain at one time or another during the next two weeks
• The
  most abundant and significant rain will fall from southern Minas Gerais through Sao Paulo to northern and eastern Parana and Mato Grosso do Sul
• Net
  drying is expected in some western and southern Rio Grande do Sul locations where stress to rice, corn and a few soybean plants is expected
• Limited
  rain in Bahia, northern Minas Gerais and Espirito Santo will support ongoing crop development and planting especially since the ground is saturated with moisture going into this drier period
• Brazil’s
  bottom line remains very good for most of its crops. There will be some pockets of excessive moisture, but the impact is not likely to be great enough to threaten production. Net drying in western and southern Rio Grande do Sul and some Paraguay and Uruguay
  locations may continue to raise some concern over crop conditions and production, but the impact should be low on the nation’s bottom line. Drying in Bahia will be great for planting cotton and other late season crops. Subsoil moisture in Bahia and neighboring
  states in northeastern Brazil will be sufficient to support normal crop development, despite lighter than usual precipitation
• Western
  U.S. precipitation in the next ten days will be abundant and significant especially for California, western Washington and western Oregon where the precipitation will be frequent and often substantial   
  
• Mountain
  snowpack is already abundant, and it will remain that way for the next ten days to two weeks
• Runoff
  potential in the spring is looking better all the time and frequent storms expected in the next two weeks should add to that situation, but the wetter bias must continue into spring to ensure a reversal of the recent years of poor runoff
• Some
  flooding will be possible in the lower elevated areas of northern California and western Oregon during the coming week
  
• U.S.
  central and southwestern Plains are unlikely to receive significant precipitation in the next two weeks, despite periodic storm systems moving across a part of the region
• Drought
  remains a concern in the southwestern Plains and there is still worry over crop damage that may have resulted from the past week of bitter cold without significant snow cover to protect crops
• U.S.
  Northern Plains are expecting snow and some rain again during the late weekend and early part of next week
• The
  precipitation will bolster snow depths and induce some significant runoff in the warmer areas of Minnesota
  
• Abundant
  precipitation will be falling in the U.S. Delta, the Tennessee River Basin and heart of the Midwest for a while during the next ten days
• Sufficient
  moisture is expected to induce some flooding in low-lying areas
• U.S.
  temperatures will be warmer than usual over the central and eastern parts of the nation later this week into next week with some cooler biased conditions evolving in the western states
• Snow
  fell abundantly across the Canadian Prairies Tuesday, and it will continue today
• The
  moisture from snow may improve runoff in the spring, though there is still need for much more soil moisture in southern Alberta and southwestern
  
• Drier
  weather is expected for a while later this week and into the weekend
• Europe
  and western Asia temperatures will be warmer biased over the next ten days to two weeks
• Cooling
  is expected in northern and eastern Russia during the coming ten days, but mostly to the east of winter crop areas
  
• Europe
  weather will be wet biased in the west and north over the coming week to ten days maintaining wet field conditions and improving the spring runoff expectations
• Most
  of the precipitation will occur as rain, but some mountain snow is likely as well
• Western
  Russia, northern Ukraine, Belarus and the Baltic States will continue in a wet weather mode during the next ten days maintaining some concern over wet biased soil conditions in the spring in western Russia where some flooding may evolve
• China
  weather this week will continue relatively quiet biased with a little rain and mountain snow in the southwest including areas from Sichuan to Yunnan
• Most
  other areas will receive limited amount of moisture and temperatures will be near to above normal
• India
  weather will be rather quiet as well with limited amounts of moisture expected and seasonably to slightly warmer than usual temperatures
• India’s
  winter crops will have need for precipitation soon to support improved pre-reproductive precipitation
  
• An
  active weather pattern is expected in parts of the Middle East next week, although the resulting precipitation should be mostly light to locally moderate
• Iran,
  Iraq, Saudi Arabia and Afghanistan will be wettest
• South
  Africa weather will continue to be favorably mixed over the next two weeks supporting normal summer crop development
• There
  may be some increasing need for precipitation in the western summer crop areas eventually
• North
  Africa rainfall was limited during the weekend, and it will continue restricted over the next week
  
• Many
  areas from Morocco into Tunisia will require significant precipitation soon
• Some
  increase in precipitation is expected in northeastern Algeria and coastal Tunisia next week
• West-central
  Africa dryness will continue through the next ten days to two weeks
• Dry
  conditions are normal at this time of year
• No
  excessive heat is expected in this coming week, although warmer than usual conditions may begin to evolve a week from now and continue into January 10.
  
• Ethiopia
  rainfall will increase late this week and next week
• Until
  then, rain in east-central Africa will be concentrated on Tanzania, Uganda and parts of southwestern Kenya which is normal for this time of year.
  
• Coffee,
  cocoa, sugarcane, and a host of other crops should develop well in this environment
• 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
• Heavy
  rain and local flooding will impact eastern parts of the Philippines and in some southern Indonesia locations
• Today’s
  Southern Oscillation Index was +18.16 today and it will likely level off early this week and then begin to fall during the remainder of this week and into the weekend

Source:
World Weather INC

 

Bloomberg
Ag Calendar

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

 

Position
day is
tomorrow for January futures.  We are looking for little, if any, First Notice Day meal deliveries, no soybeans, light soybean oil, no corn and little wheat, if any. Tuesday evening 55 soybean meal registrations were cancelled. FND estimates below.

 

Corn

·        
CBOT corn futures
increased for the third consecutive day on Argentina and southern Brazil crop concerns over dry weather. Higher soybeans and wheat along with a lower USD limited losses earlier.

·        
Funds bought an estimated net 5,000 corn contracts. 

·        
Some traders are worried about shipping insurance for Ukraine ports and ships that will sail in the Black Sea during 2023. Some insurance companies have planned to cancel policies due to reinsures exiting the region. Not all insurance
companies are pulling out. At least three Japanese companies are in talks to extend agreements.

·        
A Bloomberg poll looks for weekly US ethanol production to be down 17,000 thousand barrels to 1012k (997-1022 range) from the previous week and stocks down 31,000 barrels to 24.036 million.

·        
The USDA Broiler Report showed eggs set in the US up 1 percent from the previous year and chicks placed up 1 percent. Cumulative placements from the week ending January 8, 2022, through December 24, 2022 for the United States
were 9.60 billion. Cumulative placements were up 2 percent from the same period a year earlier.

·        
US export inspections for corn yesterday were ok, but on a crop year basis well below year ago. With Brazil on track to see a large crop, US corn exports need to be robust from now until June to reach USDA’s export projection.
But Brazil is still active selling old crop corn. Anec sees Brazil’s December corn exports at 6.2 million tons. We are 25 million bushels below USDA’s current export projection for 2022-23 (2.050 billion versus 2.075 USDA).  December 1 US corn stocks are expected
to be relatively large given lackluster demand for ethanol during Q1 (crop year) and very slow exports. Remember, feed demand, a residual, could be variable. With US corn supply as of the beginning of the crop year expected to be reported down 6.5% from September
1, 2021, December 1 stocks may tighten to its lowest level in ten years. Total US corn use during quarter one may decline 5 percent from 2021 to 4.438 billion bushels, lowest since 2017.

 

 

Export
developments.

·        
None reported

 

 

 

 

Updated
12/27/22

March
corn $6.25-$7.25 range. May
$6.00-$7.25

 

Soybeans

·        
CBOT soybeans and soybean meal rallied on South America weather concerns, good US export demand for soybean meal and hopes China will increase soybean imports, while soybean oil traded lower (reversal in product spreading) in
part to lower outside vegetable oil prices. Argentina’s rainfall event over the past few days was limited to isolated areas and the outlook for this week remains in the drier side. Southern Brazil needs rain. Central and northern Brazil are in good shape.

Source:
World Weather Inc.

 

·        
Soybeans were up for the third consecutive session to near a six month high. The March contract failed to test its session high made yesterday but did settle near the upper end of its trading range. We would not rule out $15.40
by the end of the week if Argentina weather fails to improve. Sharply higher soybean meal was logged today with a $13.50 per short ton rise in the March position.

·        
Funds bought an estimated net 10,000 soybeans, bought 9,000 soybean meal and sold 5,000 soybean meal.

·        
We don’t expect deliveries for soybeans on First Notice Day this Friday.  For soybean meal, it looks like good exports demand may limit deliveries, if any. 50 registrations were cancelled in Gilman (IL) and Owensboro (KY) Tuesday
evening, leaving just 235 registrations. Soybean oil registrations are 774 and we think there could be 50 to 300 deliveries.

 

·        
Malaysia will keep its January export tax for crude palm oil at 8% while raising its reference price to 3,889.52 ringgit ($880.98) per ton for January (3,847.24 December).

 

Export
Developments

·        
Egypt’s GASC bought a combined 42,000 tons of vegetable for arrival Feb. 5-25, 2023. It included 30,000 tons of soybean oil at $1,415 per tons and 12,000 tons of sunflower oil at $1,330 per ton.
They
were also in for local vegetable oils but details of that lacked.

·        
South Korea’s state-backed Agro-Fisheries & Food Trade Corp. seeks 25,000 tons of GMO free food-quality soybeans, optional origin, on January 4 for arrival between December 2023 and June 2024.

 

 

 

Updated
12/27/22

Soybeans
– January $14.60-$15.00, March $14.15-$15.25

Soybean
meal – January $440-$465, March $4.00-$500

Soybean
oil – January 65.00-69.00 range,
March 55.00-70.00

 

Wheat

·        
Chicago, KC and most of the Minneapolis contracts
traded
higher on technical buying after selling off yesterday. Steady global demand for high protein wheat is supportive. Egypt bought 200,000 tons of Russian wheat.

·        
The funds bought an estimated net 5,000 Chicago wheat contracts.

·        
Warmer temperatures returned to the US Great Plains, melting some of the snow coverage. While beneficial for the northern and central growing areas, the lack of soil moisture for the southern Great Plains, such as OK and TX, is
still a concern for spring winter wheat establishment.

·        
Some of the far western US growing areas saw rain over the past day after several weather systems slammed the west coast.

·        
March Paris milling wheat officially closed down 0.25 euro, or 0.1%, at 314.50 euros a ton ($334.03/ton). That contract saw a nice bounce from a December 20 session low of 294.25 and prices appear to be stabilizing.

·        
SovEcon raised their Russia 2022-23 wheat crop production estimate to 101.2 million tons from 101.2 million previously, on improved crop conditions for the Centra region and Siberia.

 

Export
Developments.

·        
Egypt’s GASC bought 200,000 tons of Russian wheat at $339 per ton C&F as part of a World Bank-funded food security program for shipment is from Feb. 1-15, optional origin, and payment is for at sight.

 

 

Rice/Other

·        
South Korea’s state-backed Agro-Fisheries & Food Trade Corp. seeks 113,460 tons of rice on December 29 from the United States for arrival in South Korea in 2023 between Feb. 1 and June 30.

·        
Vietnam 2022 rice exports were seen around 7 million tons by the government, up 12.2 percent.

·        
Bangladesh’s lowest offer for 50,000 tons of rice was $397.03/ton CIF liner out.
On
December 21 Bangladesh was in for 50,000 tons of rice and lowest offer was thought to be $393.19 CIF per ton.

·        
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. 

 

Updated
12/27/22

Chicago
– March $7.25 to $8.35

KC
– March 8.25-$9.50

MN
– March $8.75 to $9.75