FI Morning Grain Comments 01/04/23

PDF attached

 

Good morning

 

WTI crude was down more than $1.80 earlier, USD lower and US equities higher. CBOT soybeans and soybean meal are rebounding this morning. The lower trade in WTI crude oil and weakness in palm oil futures are pressuring soybean oil. Offshore values were leading SBO higher by about 67 points earlier this morning and meal $3.50 short ton higher. CBOT corn futures are lower, but a lower USD is limiting losses. US wheat futures extended losses from ongoing Russia competition and strong December Western Australia wheat exports. Three import tenders were announced overnight. Selected US states reported winter wheat crop conditions. Kansas, Nebraska, Montana, and South Dakota declined from late November, while Oklahoma and Colorado improved. 

 

 

 

 

 

Weather

Argentina’s weather forecast turned slightly negative than that of Tuesday. Mostly dry weather is seen through Saturday. Brazil’s Santa Catarina and RGDS will see limited rain this week while the rest of the country is in good shape, with exception across parts of Mato Grosso where rain may delay harvesting progress. The Great Plains and WCB will trend drier through Friday. Eastern and central TX will see rain this weekend.

 

 

Past day

 

World Weather, INC.

WORLD WEATHER HIGHLIGHTS FOR JANUARY 4, 2023

• Argentina weather will be drier than usual for the next ten days and temperatures will slowly rise above normal
• Excessive heat is expected in Argentina, Uruguay and a part of Rio Grande do Sul late this week, through the weekend and into early next week with highs in the middle and upper 90s to 106 with possible extremes 110 degrees Fahrenheit in Santiago del Estero causing stress to crops and livestock
• Brazil weather will continue favorably mixed in most of the nation, although Rio Grande do Sul will be dry and very warm through early next week
• Frontal system expected to move through Argentina and far southern Brazil during mid-week next week will bring cooler temperatures and “some” limited rain
• Another short term bout of heat and dryness will occur in Argentina late next week before another cool front arrives shortly after mid-month
• Central U.S. snowstorm has ended with 6-18 inches of accumulation common and local totals to 27 inches
• Nebraska and southern South Dakota were hit hardest
• Snowstorm is now in the upper Midwest where another 2 to 8 inches of accumulation is expected sending totals over 14 inches in a part of Minnesota and northern Wisconsin
• Amazingly heavy, frequent, rain will impact northern California over the next ten days with impressive mountain snowfall expected as well
• The pattern will bring relief to years of drought and water supply may improve if the forecast verifies as it should
• Central and southwestern U.S. Plains will continue drought stricken for the next ten days with no relief expected
• Europe will stay warm for the next ten days
• Western CIS crop areas will be cold over the next several days with new snow falling in snow free areas to adequately protect wheat and rye from any potential damage
• India needs rain in its winter crop areas
• Interior eastern Australia needs rain – especially in interior southeastern and south-central Queensland
• South Africa weather will remain favorably mixed for a while

Source: World Weather INC

 

Bloomberg Ag Calendar

Wednesday, Jan. 4:

• No major event scheduled

Thursday, Jan. 5:

• Census Trade Balance
• EIA weekly US ethanol inventories, production
• Port of Rouen data on French grain exports
• Malaysia’s Jan. 1-5 palm oil exports

Friday, Jan. 6:

• FAO Food Price Index
• Net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• ICE Futures Europe weekly commitments of traders report
• CFTC commitments of traders weekly report on positions for various US futures and options

Source: Bloomberg and FI

 

 

 

 

USDA inspections versus Reuters trade range    

Wheat                  85,672                   versus   250000-450000  range

Corn                      667,010                 versus   650000-900000  range

Soybeans            1,462,882             versus   1500000-1865000             range

 

Macros

US MBA Mortgage Applications Dec 30: -10.3% (prev -0.9%)

US MBA 30YR Mortgage Rate Dec 30: 6.58% (prev 6.34%)

 

Corn

·         CBOT corn futures are lower, but a lower USD and higher soybeans are limiting losses. The upper Midwest will see precipitation (snow) through Thursday.

·         The Czech Republic reported a bird flu outbreak on a poultry farm west of Prague, resulting in the culling of 750,000 hens, largest outbreak recorded for that country.

·         USDA US corn export inspections as of December 29, 2022, were 667,010 tons, low end of a range of trade expectations, below 922,142 tons previous week and compares to 759,563 tons year ago. Major countries included China for 348,414 tons, Mexico for 145,444 tons, and Japan for 69,530 tons.

·         The USDA NASS November US corn for ethanol use was near trade expectations. 

 

 

Export developments.

·         None reported

 

 

Soybeans

·         CBOT soybeans and soybean meal are rebounding this morning over Argentina weather concerns. The lower trade in WTI crude oil and weakness in palm oil futures are pressuring soybean oil.

·         The NASS crush was viewed slightly constructive for US soybean products and neutral for soybeans.

·         March palm oil futures in Malaysian were down 84 ringgit to 4,169 and cash down $15.00/ton at $972.50.

·         China soybean futures were down 0.3%, meal 1.3% lower, soybean oil off 0.2% and palm up 0.1%.

·         Rotterdam vegetable oils were unchanged to 10 euros lower from early yesterday morning. Rotterdam meal was mixed.

·         Offshore values were leading SBO higher by about 67 points earlier this morning and meal $3.50 short ton higher.

·         USDA US soybean export inspections as of December 29, 2022, were 1,462,882 tons, below a range of trade expectations, below 1,774,899 tons previous week and compares to 1,616,018 tons year ago. Major countries included China for 908,152 tons, Mexico for 132,942 tons, and Korea Rep for 60,588 tons.

·         European Union soybean imports so far for the 2022-23 season that started in July reached 5.52 million tons by Jan. 1, against 6.55 million by the same week of the previous season. EU rapeseed imports reached 3.73 million tons, compared with 2.71 million tons a year earlier.

·         USDA reported the November soybean crush for the US at 189.5 million bushels, 0.5 million below an average trade guess and slightly below October on a daily adjusted basis. The November crush was third highest for the month in history. Despite an expansion of US soybean crush capacity, it appears downtime was larger than expected. End of November soybean oil stocks were 2.108 billion pounds, 93 million below an average trade guess and highest since end of July 2022. Soybean meal stocks fell to 348,000 short tons from 378,000 prior month. We see the NASS crush slightly constructive for products and neutral for soybeans.

 

 

Export Developments

·         South Korea’s state-backed Agro-Fisheries & Food Trade Corp. bought about 6,000 tons (25,000 sought) of GMO-free food-quality soybeans, optional origin for arrival between December 2023 and June 2024.

 

Wheat

·         US wheat futures extended losses from ongoing Russia competition and strong December Western Australia wheat exports. CBH Group shipped 2.18 million tons of grain during December, up from previous record of 1.89 million tons for that month. SovEcon predicted Russia will export 21.3 million tons during the first half of 2023, a record. They see January shipments for wheat at least at 3.6 million tons. US wheat inspections were poor last week.

·         Selected US states reported winter wheat crop conditions. Kansas, Nebraska, Montana, and South Dakota declined from late November, while Oklahoma and Colorado improved. 

·         The US Great Plains was mostly dry from late yesterday. Snowfall coverage for the central GP did improve over the last three days.

·         Bloomberg noted some ship insurers have altered their insurance policies for 2023 to exclude claims due to the war in Ukraine.

·         SovEcon reported Russian wheat with 12.5% protein content from Black Sea ports were unchanged last week at $307-$311 per ton.

·         Paris March wheat was 4.00 euros lower earlier at 299.00 euros a ton.

·         EU soft wheat exports so far for the 2022-23 season that started in July reached 16.71 million tons by Jan. 1, compared with 15.79 million tons by the same week in 2021-22.

·         USDA US all-wheat export inspections as of December 29, 2022, were 85,672 tons, well below a range of trade expectations, below 313,707 tons previous week and compares to 230,361 tons year ago. Major countries included Mexico for 66,773 tons, and Italy for 18,899 tons.

 

Export Developments.

·         Tunisia seeks 100,000 tons of soft milling wheat and 75,000 tons of barley on January 5, all optional origin. The wheat is sought for shipment between Jan. 10 and March 5, 2023, and barley between Jan. 10 and Feb. 28, 2023.

·         The Philippines seek 110,000 tons of feed wheat on January 5 for Feb-Mar shipment. They are also in for barley.

·         Thailand seeks up to 75,200 tons of feed wheat today for April 1-20 shipment.

 

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.

 

 

Bloomberg table on selected state winter wheat crop conditions.

Kansas: | V Poor | Poor | Fair | Good | Excel. | Excel.

Jan. 1 | 23| 26| 32| 17| 2| 19

Dec. 4 | 18 | 24| 36| 20| 2| 22

Difference | 5| 2| -4| -3| 0| -3

 

Oklahoma: | V Poor | Poor | Fair | Good | Excel. | Excel.

Jan. 1 | 4| 23| 35| 37| 1| 38

Nov. 27 | 12| 12| 45| 30| 1| 31

Difference | -8 | 11| -10| 7| 0| 7

 

Colorado: | V Poor | Poor | Fair | Good | Excel. | Good/Exc.

Jan. 1 | 5| 10| 35| 50| 0| 50

Nov. 27 | 17| 21| 32| 29| 1| 30

Difference | -12| -11| 3| 21| -1| 20

 

Montana: | V Poor | Poor | Fair | Good | Excel. | Good/Exc.

Jan. 1 | 1| 10| 67| 16| 6| 22

Nov. 27 | 0| 11| 45| 31| 13| 44

Difference | 1| -1| 22| -15| -7| -22

 

Nebraska: | V Poor | Poor | Fair | Good | Excel. | Good/Exc.

Jan. 1 | 10| 26| 46| 16| 2| 18

Nov. 27 | 16| 23| 41| 19| 1| 20

Difference | -6| 3| 5| -3| 1| -2

 

South Dakota: | V Poor | Poor | Fair | Good | Excel. | Good/Exc.

Jan. 1 | 5| 16| 63| 16| 0| 16

Nov. 27 | 5| 24| 44| 25| 2| 27

Difference | 0 | -8 | 19| -9| -2| -11

Source: Bloomberg