FI Morning Grain Comments 01/04/22

PDF attached

 

Good
morning. 

 

Higher
trade in soybeans, corn and wheat. US winter wheat conditions for selected key producing states declined from late November. The USD extended gains, crude WTI is slightly higher, and US equities are pointing toward a stronger open. Morning weather models are
slightly unfavorable for the US Great Plains and Argentina. Models improved for Brazil and the EU. The trade will remain focused on unfavorable Argentina and southern Brazil this week but should also watch the US southern and central Great Plains after USDA
reported declines in key crop ratings for selected winter wheat growing states. Brazil will see rain over the next week, but the southern areas will see deficits while the north will be too wet for early harvesting in some areas. Argentina will see variable
rain with hot temperatures. A ridge of high pressure is still advertised for Argentina around January 12‐13, lasting through mid‐month which may also impact southern Brazil, Uruguay and Paraguay. The US southern Great Plains will see limited precipitation
and cold temperatures this week.

 

 

 

 

 

Weather

 

World
Weather Inc.

Source:
World Weather, inc.

 

WORLD
WEATHER HIGHLIGHTS FOR JANUARY 4, 2022

• A
  state of emergency in parts of Parana and Mato Grosso, Brazil has been declared because of drought and flooding respectively.
  
• The
  agricultural losses in Parana have to be significant because of weeks without rain in the west half of the state.
  
• Some
  relief occurred in northern sugarcane and coffee areas of Parana last week, but other areas are still too dry, but about to start receiving rain.
  
• The
  moisture will come too late for early season corn, soybeans and a few other crops, but it will help improve the prospects for Safrinha corn.
  
• Mato
  Grosso flooding is mostly a northeastern problem and most of the state is experiencing very good summer weather.
  
• So,
  do not get misled by the talk of flooding in that state.
• Minas
  Gerais, Brazil is the state that has the most serious flood potential with northern Goias, southern Tocantins and some southwestern Bahia locations to also be a concern.
  
• Argentina
  is facing some very dry and warm to hot weather over the next couple of weeks, although southwestern areas are advertised to get some rain next week, which may help improve crops in that region.
  
• In
  the U.S. another round of bitter cold is coming up for hard red winter wheat areas and the northern Plains with snow cover in the central Plains possibly limited for the coldest mornings late this week.
  
• Heavy
  snow fell from the central Appalachian Mountains through Washington, D.C. Tuesday shutting down transportation and some commerce with 8 to nearly 15 inches of accumulation resulting
• Elsewhere
  in the world…
• Rain
  is expected in India over the next week to benefit its winter crops
• Rain
  will evolve in southeastern Australia, but leave Queensland in a dry weather mode
  
• Plenty
  of snow will remain on the ground despite some melting in Russia.
• There
  is no threatening cold slated for wheat areas in Europe, Russia, China or India.
  
• Southeast
  Asia weather will remain mostly good
• South
  Africa will see a mix of rain and sunshine to support its summer crops for the next couple of weeks. 

Source:
World Weather, inc.

 

Bloomberg
Ag Calendar

Tuesday,
Jan. 4:

• EU
  weekly grain, oilseed import and export data
• Australia
  Commodity Index
• Purdue
  Agriculture Sentiment
• HOLIDAY:
  New Zealand, Russia

Wednesday,
Jan. 5:

• EIA
  weekly U.S. ethanol inventories, production
• Malaysia’s
  Jan. 1-5 palm oil exports
• HOLIDAY:
  Russia

Thursday,
Jan. 6:

• FAO
  World Food Price Index
• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Port
  of Rouen data on French grain exports
• HOLIDAY:
  Russia

Friday,
Jan. 7:

• ICE
  Futures Europe weekly commitments of traders report (6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• HOLIDAY:
  Russia

Source:
Bloomberg and FI

 

 

 

 

USDA
inspections versus Reuters trade range    

Wheat                 
141,816                 versus   200000-450000  range

Corn                     
596,092                 versus   500000-1000000                range

Soybeans           
1,191,739             versus   1400000-1900000             range

 

CFTC
Commitment of Traders

 

 

 

Soybean
and Corn Advisory

2021/22
Brazil Soybean Estimate Lowered 2.0 mt to 138.0 Million (USDA 144)

2021/22
Argentina Soy Estimate Lowered 3.0 mt to 45.0 Million Tons (USDA 49.5)

2021/22
Brazil Corn Estimate Lowered 1.0 mt to 113.0 Million (USDA 118)

2021/22
Argentina Corn Estimate Unchanged at 52.0 Million Tons (USDA 54.5)

2021/22
Paraguay Soybean Estimate Unchanged at 8.0 Million Tons (USDA 10)

 

Macros

 

Corn

·        
CBOT corn is higher on ongoing concerns over unfavorable SA weather conditions. Analysts continue to downgrade Brazil and Argentina corn production estimates. Argentina soil moisture levels are expected to decline over the next
week with limited rainfall and hot temperatures in the forecast. Argentina corn is generally planted later than first crop Brazil corn.

·        
USDA US corn export inspections as of December 30, 2021 were 596,092 tons, within a range of trade expectations, below 954,488 tons previous week and compares to 1,089,440 tons year ago. Major countries included Mexico for 175,131
tons, Colombia for 146,717 tons, and Japan for 132,292 tons.

·        
USDA reported the November corn for ethanol use at 469 million bushels, 13 million above an average trade guess, one million above October and 37 million bushels above November 2020.

 

 

Export
developments.

·        
None reported

 

Crude
oil prices increased in 2021 as global crude oil demand outpaced supply

https://www.eia.gov/todayinenergy/detail.php?id=50738&src=email

 

 

Soybeans

·        
US soybeans are higher on concerns over South American weather, downgrades to Brazil production prospects, and expectations for USDA to raise the US 2021-22 soybean carryout next week in large part to slow shipments of soybeans.

·        
March soybean meal failed to hit buy stops around the $415 area overnight, third such time this has happened over the past week when trading around this level. $415.10 is the absolute contract high. 

·        
Malaysian palm futures are up three consecutive sessions. Flooding is slowing production across the Peninsular Malaysia and Sabah.

·        
Cargo surveyor SGS reported December Malaysian palm exports at 1,564,445 tons, 116,614 tons below month ago or down 6.9%, and 60,312 tons below the same period a year ago or down 3.7%.

·        
Malaysian palm futures rallied 57 ringgit to 4,914. Cash CPO was up $10/ton to $1,227.50.

·        
China is back from holiday.

·        
China soybean cash crush values on our analysis were running at 190 cents/bushels versus 193 at the end of last week and 145 year ago. 

·        
Rotterdam soybean oil for the Feb-Apr position was 15 euros higher and Rotterdam rapeseed oil 5 lower. SA soybean meal when imported into Rotterdam was running mostly 3-6 euros higher in the nearby positions. 

·        
Offshore values are leading SBO 10 points higher and meal $5.30 lower.

·        
USDA NASS reported the November crush 1.3 million bushels below expectations at 190.5 million and was below 196.9 million during October and compares to 191.0 million year earlier. 6.3 million bushels were crushed per day during
November, about 100,000 less than a month ago and 100,000 below year earlier. The lower than expected crush was surprising as NOPA indicated a month over month increase in the daily crush rate. Despite the lower rate, soybean oil stocks increased 29 million
pounds from October to 2.415 billion pounds, 13 million above trade expectations, even though the soybean oil yield dropped from 11.92 pounds per bushel during October to 11.80 pounds during November.  Soybean meal stocks fell from 411,000 short tons at the
end of October to 399,000 short tons at the end of November.

·        
USDA US soybean export inspections as of December 30, 2021 were 1,191,739 tons, below a range of trade expectations, below 1,732,291 tons previous week and compares to 1,764,078 tons year ago. Major countries included China for
748,871 tons, Italy for 141,102 tons, and Egypt for 56,906 tons.

 

Export
Developments

·        
The CCC seeks 12,000 tons of soybean oil on Jan 5 for Feb 5-15 delivery for the Dominican Republic.

 

 

Wheat

·        
US wheat is higher on declining US winter wheat ratings. 

·        
USDA in its early winter monthly selected state crop updates reported declines in winter wheat ratings for key production states. 33% of the Kansas winter wheat crop in good to excellent condition as of Jan. 2, down from 62% in
late November, and down from 51% by Dec. 12. In Oklahoma, 20% of the state’s wheat was rated good to excellent, down from 48% in late November. Wheat ratings declined in Nebraska (39 vs. 64 late Nov. and 37 year ago) and Colorado (25 vs. 38 late Nov. and 19
year ago).

·        
Turkey extended their custom tax exemption on some wheat, rye, barley, oats, maize, chickpea and lentil imports until the end of 2022. They also extended tax exemptions for sunflower oil until the end of June.

·        
EU wheat basis the March position was 3.25 higher at 277.25 euros a ton. 

·        
USDA US all-wheat export inspections as of December 30, 2021 were 141,816 tons, below a range of trade expectations, below 291,207 tons previous week and compares to 475,901 tons year ago. Major countries included Nigeria for
52,872 tons, Philippines for 40,820 tons, and Mexico for 30,537 tons.

·        
China plans to sell 50,000 tons of wheat from state reserves on January 5 to flour millers. The sold an estimated 891,938 tons of wheat from reserves in October.

 

Export
Developments.

·        
Tunisia seeks 125,000 tons of soft wheat, 75,000 tons of durum wheat and 75,000 tons of animal feed barley on Wednesday. For soft wheat was for five consignments of 25,000 tons each for shipment between Feb. 1 and March 25. The
durum tender was for three 25,000 tons each for shipment between Jan. 25 and Feb. 25 and barley for three 25,000 tons each for shipment between Feb. 1 and March 5. 

·        
Ethiopia Bought 400,000 tons of wheat in October and November and 12.5 million liters of cooking oil-Ministry of Finance. 

·        
Jordan’s state grain buyer seeks 120,000 tons of milling wheat, optional origins, on Jan. 5, for shipment in 2022 between July 1-15, July 16-31, Aug. 1-15 and Aug. 16-31.

·        
Results awaited: Iraq seeks 50,000 tons of wheat on January 3 from the US, Canada and Australia.

 

Rice/Other

·        
Results awaited: Bangladesh
seeks 50,000 tons of non-basmati parboiled rice for delivery 50 days from contract award and letter of credit opening.