FI Evening Grain Comments 12/29/22

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Today
was position day for January futures. First
Notice Day deliveries are expected to be light. Soybeans traded two-sided and ended higher. Soybean meal was lower and soybean oil higher (product reversal). Profit taking was seen for corn and wheat.
News
was extremely light. Weekly US ethanol production fell hard from the previous week and stocks increased by a larger than expected amount. Global export developments were light.

 

Weather

Showers
should favor Argentina’s Cordoba today and Saturday. Southern Brazil will see net drying. U.S. Northern Plains will receive significant snow Monday into Tuesday of next week. Upper Midwest will see rain. The US Delta and SE will see significant rain over the
next week. The Great Plains will see rain across western NE, northwest KS, and CO today, then TX through Friday.

 

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE COMING WEEK

• Argentina
  will be at a very important crossroad in weather over the next couple of weeks
• Significant
  rain must fall to get the remaining planting completed and to improve crop emergence and establishment
• Rain
  potentials are only good for Saturday into Monday at which time 0.15 to 0.85 inch of rain is expected with a “few” 1.00-to-2.00-inch totals
  
• Most
  of the rain is not likely to have a lasting impact on crops or soil moisture even though most crop areas will get at least some moisture.
  
• Net
  drying will resume next week and last through Jan. 12 even though a few more showers might pop up in parts of the production region
• If
  rain stays limited through the first half of January acreage reductions will become permanent and emerged and established crops will begin dealing with waves of stress due to dry and warm weather until significant rain falls
• If
  a generalized soaking rain comes along in these next two weeks the situation could end up much different with much of the planted acreage getting planted and crops having a renewed outlook, but such a rain event is not on the forecast charts today
• Rainfall
  in Argentina should improve with the commencement of aggressive La Nina weakening in January, but that change may not occur fast enough to get all crops planted and well established.
  
• Argentina
  weather Wednesday was dry and warm except in the far northwest where a few showers and thunderstorms brought some rain to northwestern Santiago del Estero and some neighboring areas
• Brazil
  weather has not changed in recent days. Both the past and forecast weather seems to be similar as each day comes and goes and the bottom line remains favorable for most of the nation’s crops
• All
  crop areas will get rain with many getting it multiple times
• Central
  and southern Rio Grande do Sul will experience the poorest distribution of rain and net drying will result leading to rising levels of crop stress
• The
  region impacted with dryness, though, is mostly a rice and corn production region with some soybeans
• Waves
  of heavier rainfall will impact center south Brazil often during the next two weeks and that will maintain wet field conditions
• The
  wetter bias may have to back off a bit later in January and February to support soybean harvesting and Safrinha crop planting
• All
  indicators suggest ongoing routinely occurring rainfall through the heart of summer with some potential for improved Rio Grande do Sul rainfall after La Nina has weakened
• Brazil
  rainfall Wednesday and early today was greatest from Sao Paulo and southernmost Minas Gerais into Mato Grosso and Goias where rainfall varied from 0.25 to 1.50 inches and local totals of more than 2.00 inches
• Northeastern
  parts of the nation and the far south were left dry.
• High
  temperatures were in the 80s and lower 90s Fahrenheit with a few 70s in east-central and southeastern production areas
• 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 is 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
• The
  precipitation comes in three primary waves with the Delta impacted first Friday and Saturday
• The
  greatest rainfall is expected Monday into Wednesday when some flooding might evolve in the interior southeastern part of the nation
• 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
• West
  Texas will be dry biased for an extended period of time
• North
  Africa rainfall was limited during the weekend and it will continue restricted over the next ten days
• 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
• 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 far western and northeastern summer crop areas eventually
• 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
• 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
• Waves
  of heavy rain will return to the eastern Philippines this weekend and especially next week resulting in some additional flooding from time to time
• Flooding
  already occurred in the past week from northern and eastern Mindanao into Samar
• Canada’s
  Prairies will be drying down over the coming week after widespread snow fell earlier this week
  
• Europe
  and western Asia temperatures will be warmer biased over the next ten days to two weeks
• Cooling
  is expected in north-central through northeastern Russia during the coming ten days, but mostly to the east of winter crop areas
  
• Europe
  weather will be wet biased in the far 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 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
• 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 +18.20 today and it will likely stay strongly positive over the next few days due to the presence of another tropical low pressure system in northern Australia near Darwin that will thwart the index anomalously high

Source:
World Weather INC

 

Bloomberg
Ag Calendar

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

 

 

 

Corn

·        
CBOT corn futures
were lower for the front three contracts (back months higher) in part to weakness in wheat, profit taking, poor ethanol data, and lack of fresh news.

·        
The World Food Program (UN) is interested in buying 75,000 tons of Ukraine agriculture products, likely destined for poor countries.

·        
Argentina producer corn sales were running at 74 percent, down from 77 percent at this time a year ago.

 

EIA
weekly ethanol update

• The
  US weekly EIA ethanol data was viewed negative for US corn futures.
• Weekly
  US ethanol production plunged 66,000 barrels per day to 963,000 barrels. Traders were looking for a 17,000 decrease. Stocks were up 569,000 barrels to 24.636 million barrels (estimate was for a 31,000 decline).
  
• US
  ethanol production of 0.963 million barrels per day is about 9% below from about the same time a year ago.
• Over
  the past 4 weeks, production changes averaged down 14,000 and stocks up 426,000.
• Early
  September 2022 to date (16 weeks) US ethanol production is running 4.3% below the same period a year ago. At this time last year ethanol production was advancing 8.9% above the Sep 1, 2021-Dec 24, 2021, period.
• Padd2
  production was 906,000 barrels, down 66,000 from a week earlier. Padd1 was unchanged and Padd3 up 2,000.
• There
  were no ethanol imports reported this week.
• Ethanol
  stocks of 24.636 million barrels are up about 19.2% from a year ago and 5.9% 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 25.0 compares to 22.4 a month ago and 19.6 during comparable period a year ago.
  
• Weekly
  ending stocks of total gasoline were down 3.105 million barrels to 223.0 million barrels. Implied gasoline demand was up 613,000 barrels to 9.327 million barrels (top 5 for demand for 2022)
• The
  net blender input of fuel ethanol was up 40,000 from the previous week at 916,000 bpd, above its previous 4-week average of 874,000 bpd.
• Net
  production of finished reformulated and conventional motor gasoline with ethanol, increased 414,000 to 9.026 million barrels, or 90.2 percent of the net production of all finished motor gasoline, down from 90.5 percent for the previous week.
  
• For
  2022-23, we are using 5.250 billion bushels, unchanged from previous, and compares to 5.275 billion by USDA and 5.326 billion for 2021-22.

 

 

 

Export
developments.

·        
None reported

 

 

 

Updated
12/27/22

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

 

Soybeans

·        
CBOT soybeans were higher on light technical buying after soybean oil gained over meal. Gains were limited from profit taking, and futures did trade two-sided during the trade. A lower USD and mostly unchanged weather forecast
for Argentina was supportive. Some traders noted the surge in Covid cases across China may hurt demand, but we think it would be temporary, if any slowdown in soybean purchases. Lack of fresh news was noted. Soybean meal traded lower in part to lower corn
and a reversal in product spreading (long traders yesterday in meal were lifting positions today).

·        
Earlier March soybean futures hit their highest level since June 21.

·        
The drought in Argentina is one of the worst in 100 years, according to local sources. We expect USDA to lower production by at least 5.5 million tons in the January 12 update from current 49.5 million tons. This should reduce
soybean oil and soybean meal exports for Argentina, and prompt USDA to think about increasing US soybean meal exports, partially offset by a reduction in domestic usage. 

·        
China imports of soybeans during 2023 is a big unknown, and a wildcard way we look at it. It’s unlikely they will be boosting soybean imports from what they imported during 2022. Remember the statistics bureau in China estimated
a much larger soybean crop than wheat USDA and China’s AgMin had penciled in, making the country less dependent on imports. The National Statistics Bureau on December 12 reported the 2022 China soybean crop at 20.3 million tons and corn output at 277.2 million.
USDA December was at 18.4 million tons for soybeans and 274.0 million for corn.

·        
Argentina producer sales were running at 79 percent for 2021-22, slightly below this time a year ago. Bloomberg: Argentina Soy Exporters Sold $2.86 Billion From Nov. 28.

·        
Indonesia will enforce their mandatory 35% palm oil biodiesel blending program on Feb. 1, a month later than initially planned, from current 30%. The allocation is unchanged at 13.15 million kiloliters.

·        
The Russia export duty for sunflower oil in January will remain at zero percent, same as it was during Q4. Sunflower meal will increase to 1,826.90 rubles per ton, up from just 79.8 rubles in December.

·        
We look for December 1 US soybean stocks, when updated by USDA next month, to initially come in around 3.065 billion bushels, down 3.149 billion from year earlier and lowest in two years. This assumes a Q1 crush of 554.9 million
bushels, second largest for the fall quarter and exports of 804 million bushels, down from 861 million year earlier.  This could change as USDA is set to release their November crush number on Tuesday. Also, next week Census will release the US trade balance
which will provide imports and exports for the soybean complex.

 

Source:
FI and USDA. Assumes no revisions to past stocks posted by USDA

 

Export
Developments

·        
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 wheat traded
lower on lack of news and slowdown in global export developments, despite a sharply lower USD. Profit taking in Paris wheat futures spilled over into the US markets. March Chicago wheat hit its highest level yesterday since December 1. Some traders were closing
books ahead of the end of the quarter/year.

·        
Additional precipitation made its way into the western Great Plains after storms slammed the US west coast earlier this workweek. The precipitation is welcome as most of the US drought conditions reside across the central US.

·        
March Paris milling wheat officially closed down 6.00 euros, or 1.9%, at 308.00 euros a ton ($328.79/ton).

·        
Bloomberg estimates Egypt’s wheat purchases, after yesterday, total about 4.18 million tons so far this crop year.

 

 

Export
Developments.

·        
No reported export developments.

 

Rice/Other

·        
Results awaited: 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.

 

Updated
12/27/22

Chicago
– March $7.25 to $8.35

KC
– March 8.25-$9.50

MN
– March $8.75 to $9.75