FI Morning Grain Comments 01/09/23

PDF attached

 

Good
morning

 

Busy
week ahead with USDA reports Thursday. Also, on that day the US CPI will be released, giving the trade a glimpse of how much the Fed may increase interest rates in February. Export inspections are due out later this morning and we look for a slower than average
volume for grains due to the New Year holiday. Soybeans are expected to come in above a 5-year average. President Biden is visiting Mexico. Japan’s PM will visit the US later this week. The Farm Bureau’s annual convention wraps up mid-week. US stock futures
are higher on follow through buying from Friday. WTI oil was up about $2.50, natural gas higher, and USD 53 points lower. Fund rebalance starts today.
Soybean meal is lower from technical selling and product spreading after the March contract on Friday closed at its highest level since March. CFTC Commitment of Traders showed a record net long position by money managers for soybean
meal. CBOT soybeans and soybean oil are higher. Some of the fundamentals behind soybeans remain unchanged. Overnight newswires noted dry weather across Argentina & southern Brazil, and China demand prospects increasing after travel opened. Corn is lower while
wheat is mixed. March Chicago wheat saw its largest weekly loss since August. Egypt, Turkey, and Taiwan are in for wheat. Taiwan also seeks corn.

 

 

 

Weather

Argentina
will see light rain across La Pampa, Cordoba, BA and northern Santa Fe Tuesday through Thursday, before drying down Friday. The far southern areas will see restricted rain while the central areas should improve. Rain will fall across Mato Grosso, Goias, MGDS,
Sao Paulo and lesser extent Parana, Santa Catarina, and Rio Grande do Sul. The far western Great Plains will see a wintery mix mid this week while other areas of the GP will remain dry. Rains were as expected over the weekend for southeastern TX, northeastern
KS and west central IL. Light precipitation will fall across south central and east central of the Midwest Wednesday through Thursday, and southeastern areas later this week. This should be beneficial for winter crops. US Midwest temperatures will be mild
through Thursday. Rain should favor many central and eastern European countries this week.

 

 

 

World
Weather, INC.

 

 

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Monday,
Jan. 9:

• USDA
  Export Inspections
• HOLIDAY:
  Japan

Tuesday,
Jan. 10:

• Malaysian
  Palm Oil Board’s Dec. data on stockpiles, production and exports
• Malaysia’s
  Jan. 1-10 palm oil exports
• EU
  weekly grain, oilseed import and export data

Wednesday,
Jan. 11:

• EIA
  weekly US ethanol inventories, production
• New
  Zealand Commodity Price

Thursday,
Jan. 12:

• USDA’s
  World Agricultural Supply & Demand Estimates (WASDE), 12pm
• China’s
  agriculture ministry (CASDE) releases monthly supply and demand report
• International
  Grains Council report
• Brazil’s
  Conab releases data on area, yield and output of corn and soybeans
• Net-export
  sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Port
  of Rouen data on French grain exports

Friday,
Jan. 13:

• 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CFTC
Commitment of Traders

Corn
was a surprise with a much longer than estimated net long position for the week ending January 3. This explains some of the heavy selling on Wednesday and Thursday when grains sold off. Soybeans and soybean oil were a little more long than estimated while
wheat and meal were near expectations.

 

Money
managers recorded a record net long position for soybean meal. 

 

 

 

 

 

 

Macros

President
Biden visited the southern border

Kevin
McCarthy was elected House Speaker

US
CPI will be out Thursday.

Mexican
CPI (M/M) Dec: 0.38% (exp 0.39%; prev 0.58%)

–         
CPI Core (M/M) Dec: 0.65% (exp 0.65%; prev 0.45%)

–         
CPI (Y/Y) Dec: 7.82% (exp 7.84%; prev 7.80%)

–         
CPI Core (Y/Y) Dec: 8.35% (exp 8.35%; prev 8.51%)

China
To Cut Value-Added Tax Among Small Businesses Until December

 

 

Corn

·        
CBOT corn futures
are
mixed early this morning. Lower soybean meal is weighing on prices despite higher soybeans and wheat.  US energy market are higher. WTI crude oil was up around $2.50 per barrel earlier and February natural gas up 2.4 percent. Some traders noted the corn spread
between Brazil and US is narrowing, giving some optimism US exports could soon increase.

·        
Fund rebalance starts today.

·        
A Brazilian corn cargo (68,000 tons) arrived in southern China over the weekend, first bulk shipment. Many more cargoes will soon arrive after Brazil’s AgMin reported late last week that 1.2 million tons of corn was shipped from
Brazil to China.

·        
Look for positioning to pick up ahead of the USDA reports due out January 12.

·        
Many traders are looking for USDA to lower corn exports on Thursday. We agree but look for a small decline as we are thinking Argentina corn production could be lowered up to 5.5 million tons. A Reuters trade guess calls for a
3-million-ton reduction.

·        
A 65,000-ton corn cargo ran aground in the Sez Cannel earlier today. The Ukraine corn was bound for China.

·        
Ukraine Black Sea corn exports fell 35% last for the week ending January 8 to 610,996 tons, including 250,000 tons of corn to China. 939,948 tons were export previous week.

 

U
of I: Cattle Finishing Net Returns Prospects for 2023

Langemeier,
M. “Cattle Finishing Net Returns Prospects for 2023.” farmdoc
daily
(13):3, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, January 6, 2023.

https://farmdocdaily.illinois.edu/2023/01/cattle-finishing-net-returns-prospects-for-2023.html

 

Export
developments.

·        
Taiwan’s MFIG seeks 65,000 tons of corn from the US, Brazil, Argentina, or South Africa, on Wednesday, January 11, for March 20 and April 8 shipment. If sourced from the US PNW or South Africa, shipment is sought between April
4 and April 23.

 

Soybeans

·        
CBOT soybeans and soybean oil are higher while soybean meal is lower on technical selling and product spreading. The March soybean meal contract on Friday closed at its highest level since March. CFTC Commitment of Traders showed
a record net long position by money managers for soybean meal. US interior and Gulf soybean meal basis was sharply higher last week. Soybean oil futures are seeing a boost from strong US energy markets.

·        
Some of the fundamentals behind soybeans remain unchanged. Overnight newswires noted dry weather across Argentina & southern Brazil, and China demand prospects increasing after travel opened. A slowdown in US crush during the
third week of December may limit any rally for soybean futures, but crush margins remain very high and promote product production.

·        
Three million hectares (7.4 million acres) of Argentina’s growing areas were last rated in poor condition. Traders expect a 2.8 million ton decrease in Argentina soybean production and 3.0-million-ton lower corn output by USDA
on January 12, or down 5.6% and 5.5%, respectively. Despite worsening crop conditions in southern Brazil, traders are looking for a modest increase in soybean and corn production for that country.

·        
Brazil’s soybean harvest progress is off to a slow start, according to AgRural. Only 0.4 percent of the soybean crop had been collected as of late last week, compared to 0.2 percent previous year. 2.3 percent of the center-south
crop had been collected, below 3.1% this time year ago.

·        
Brazil 2022-23 producer sales reached 28.5 percent of the expected 153.3-million-ton estimate, Safras reported, or 43.6 million tons.  This is down from 36.5 percent for the same period year ago.

·        
EU rapeseed prices were lowered earlier by 3.75 euros to 574.00 for the nearby position.

·        
Indonesia and Malaysia agreed to work together to promote palm oil consumption, including use for biofuel. Palm oil production has been targeted by several countries over several issues, including deforestation. Indonesia is set
to increase use of palm oil to B35 starting February 1.

·        
March palm oil futures in Malaysian were up 66 ringgit to 4,118 and cash up $25.00 at $985.00. Futures prices last week hit a 11-day low. MPOB S&D data will be out later tonight.

·        
China soybean futures were up 0.8%, meal 0.3% higher, soybean oil off 0.5% and palm down 0.6%.

·        
Rotterdam vegetable oils were
mixed from early Friday morning. Rotterdam meal was mostly 5-15 euros higher.

·        
Offshore values were leading SBO lower by about 2 points earlier this morning and meal $3.25 short ton
lower.

 

Export
Developments

·        
None reported

 

 

Malaysian
palm oil inventories
at the end of December are seen at their lowest level since August.

 

 

 

Wheat

·        
Chicago and KC wheat futures are mixed. Chicago March was moderately higher on technical buying. March Chicago wheat saw its largest weekly loss since August. Egypt, Turkey and Taiwan are in for wheat. MN was unchanged in the
nearby position.

·        
Paris March wheat was 1.50 euros lower earlier at 298.50 euros a ton.

·        
Pakistan reported a surge in inflation. Over a one-week period, it was up 1.09 percent, led by a rise in meat (chicken), rice and flour prices. We may see Pakistan floating an import tender for wheat soon. Food inflation over
a month period was up 32-38 percent across cities and the countryside. 

·        
China will auction off 140,000 tons of wheat from reserves on January 11. The sale includes 100,000 tons bought in 2015, 2016 and 2017 under its minimum purchase price policy, and another 40,000 tons of 2014 and 2015 wheat from
its temporary reserve. (Reuters)

 

Export
Developments.

·        
Egypt seeks wheat via World Food Bank, on January 10, for February 10-25 shipment. Late December GASC bought Russian wheat (200k).

·        
Turkey seeks 565,000 tons of milling, including red, wheat on January 12 for February through March shipment.

·        
Taiwan is in for 45,200 tons of US wheat on January 13 for March shipment. Wheat types sought include dark northern spring, hard red winter and white wheat.

 

Rice/Other

·        
Vietnam’s rice exports in December fell 26.1% from the previous month to 434,611 tons. Rice shipments from Vietnam in 2022 rose 13.8% year on year.

·        
Vietnam’s coffee exports in December were up 53.5% from the month before at 197,077 tons. For 2022, Vietnam exported 1.78 million tons of coffee, up 13.8% from a year earlier.