FI Morning Grain Comments 01/11/23

PDF attached

 

Good
morning

 

The
CBOT soybean complex and corn are trading higher, and wheat mixed. US wheat futures bounced around overnight, indicating position squaring ahead of the USDA reports. Brazil soybean premiums firmed. US energy, metal, dollar, and equities are higher. USDA reports
are out tomorrow and look for positioning today ahead of the 11 am CT Thursday release. Our focus will be on SA crop (Argentina corn and soybean) production, followed by US ending stocks, US winter wheat seedings, and USDA expected cut in world ending stocks.
December 1 US stocks will give the trade a glimpse of early 2022-23 US corn and first half crop-year wheat feed use. We don’t see major revisions to the 2022 US corn and soybean production surveys, but a surprise to the downside could amplify tighter US 2022-23
carryout stocks.

 

 

 

Weather

Argentina’s
weather outlook turned negative this morning. Light rains favor Cordoba and Buenos Aires today and Thursday before dry weather sets in Friday through Sunday, and through next week. Brazil is in good shape and the far southern areas have an opportunity for
rain later this week. The US Midwest will see precipitation across the southern and eastern winter growing areas today and Thursday. Most of the US winter wheat areas of the Great Plains will remain dry with exception of a wintry mix for southwest NE, northern
CO, and KS today.

 

 

World
Weather, INC.

WORLD
WEATHER HIGHLIGHTS FOR JANUARY 11, 2023

• Today’s
  forecast  model runs are suggesting better rain potentials in U.S. hard red winter wheat areas and in a part of West Texas, but these events may be overdone
• Some
  moisture is expected, but the volumes in the west-central high Plains are likely overdone
• The
  00z GFS model run also increased central Argentina rainfall for mid-week next week, but the increase was removed by the 06z model run and the European model was never onboard with the change
• The
  moisture advertised is not likely to verify and central through southern Argentina will likely continue drier biased
• Northern
  Argentina is still expecting rain Thursday into Friday and that will be welcome and good for cotton and minor grain and oilseed crops, though follow up moisture will be very important and not much is expected for a while
• Far
  southern Brazil has become quite dry, but there is need for significant rain and that should occur in brief waves in this coming week
• Much
  more rain will be needed, though to ensure dryness does not return again later this month
• Center
  south Brazil’s excessive moisture situation remains a concern, but lighter rain and that is less frequent will occur next week to bring most of the excessive moisture situation to a lesser degree of concern
• Rain
  fell in the lower Danube River Basin in southeastern Europe Tuesday helping to ease long term dryness, although much more moisture is still needed
• Another
  cold morning occurred in Russia’s New Lands today with subzero Fahrenheit temperatures in a part of Russia’s Southern Region, but the area was sufficiently covered in snow to protect crops
• North
  Africa may get a few showers over the next couple of weeks, but a general soaking is still not very likely
• Eastern
  China will receive some late week rain and snowfall this week and the moisture will be good for future wheat and rapeseed development
• Australia’s
  rainfall will be greatest in central and northern Queensland leaving most other summer crop areas looking for a little precipitation in unirrigated areas

Source:
Bloomberg and FI

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Macros

US
MBA Mortgage Applications Jan-6: 1.2% (prev -10.3%)

–         
MBA 30-Year Mortgage Rate Jan-6: 6.42% (prev 6.58%)

Mexican
Industrial Production NSA (Y/Y) Nov: 3.2% (exp 2.8%; prev 3.1%)

–         
Industrial Production SA (M/M) Nov: 0.0% (exp -0.3%; prev 0.4%)

–         
Manufacturing Production NSA (Y/Y) Nov: 4.6% (exp 4.8%; prev 5.3%)

Brazilian
Retail Sales (Y/Y) Nov: 1.5% (exp 1.9%; prev 2.7%)

–         
Retail Sales (M/M) Nov: -0.6% (exp -0.3%; prev 0.4%)

 

 

Corn

·        
CBOT corn futures
are
higher on technical buying and an increase in world import interest. March CBOT corn failed to close below $6.50 over the past week.

·        
Look for positioning ahead of the USDA reports.
The trade is looking for US exports to be revised lower by 25 to 50 million bushels, and its possible USDA may lower corn for ethanol by 25 million bushels. We are unsure if USDA will decrease their export projection. However, Anec is looking for Brazil January
corn exports to reach 5.024 million tons vs. 4.326 million tons projected week ago. This figure, if realized, could cut into January US corn exports.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 115,000 thousand barrels to 959k (944-995 range) from the previous week and stocks down 130,000 barrels to 24.313 million.

·        
China extended anti-dumping and anti-subsidy tariffs on US DDGS from the United States for another five years. The anti-dumping tariffs are between 42.2% and 53.7% while anti-subsidy tariffs range from 11.2% to 12% (up to 66%
total). China looks to boost ethanol production through 2026.

 

 

Export
developments.

·        
Taiwan’s MFIG bought about 65,000 tons of corn from the US at an estimated premium of 219.66 cents a bushel c&f over the Chicago July contract for shipment between March 20 and April 8, later if from the PNW. Argentina corn was
offered at 227.50 cents over the July.

·        
Yesterday SK’s MFG bought SA corn at $339.79/ton.

 

 

Soybeans

·        
CBOT soybeans
are higher from Argentina end users looking around for soybeans to fulfill crush obligations, driving up SA cash premiums. $15.00 March soybeans could be tested today. Soybean meal is seeing a bid from this, and soybean oil is higher. Strength in outside related
US energy markets are lending support to SBO. The CBOT oil share is ticking higher, but don’t discount a two-sided trade as seen in overnight trade.

·        
Brazil soybean premiums are firm.

·        
Argentina may have bought at least a couple cargoes of soybeans from Brazil recently. This is a nonevent as Argentina tends to import soybeans every year around the end of their crop cycle. With other surrounding countries also
experiencing poor new-crop crop conditions and delays to new-crop harvesting progress (Paraguay) it come as no surprise the largest soybean meal producer would turn to another neighboring country.

·        
Malaysian palm oil traded near a three week low.

·        
SGS reported 1-10 January Malaysian palm oil export at 262,201 tons, a 45 percent decrease from the same period a month earlier, similar to the declines posted by ITS and AmSpec on Tuesday.

·        
Indonesia set its crude palm oil reference price at $920.57 per ton for Jan. 16-31, up from $858.96 per ton FH Jan. Indonesia’s palm oil export tax will be $74 per ton and levy at $95 per ton.

·        
March palm Futures declined 73 ringgit to 3,911 and cash down $20.00 at $945.00.

·        
China soybean futures were up 0.4%, meal 0.3% higher, soybean oil off 0.3, and palm down 1.2%.

·        
Nearby Rotterdam vegetable oils were
5-40 euros lower from early yesterday morning (some of the back month rapeseed oil cash prices were down 90 euros). Rotterdam meal was mostly unchanged to 11 euros higher.  Offers for meal out of Argentina are thin for nearby delivery. 

·        
Offshore values were leading SBO higher by about 3 points earlier this morning and meal $4.10 short ton
higher.

 

Export
Developments

·        
South Korea’s Agro-Fisheries & Food Trade Corp. seeks 19,000 tons of food-non-GMO soybeans, optional origin, on January 19 for arrival in February to April 2024.

·        
Turkey seeks about 24,000 tons of sunflower oil on January 13 for February 15 to March 20 delivery.

 

Wheat

·        
US wheat futures are mixed as traders square up positions ahead of the USDA reports.  We are not bullish headed into the January updates as new-crop US seedings are expected to expand for 2023.

·        
News for wheat was light. Traders are looking for Egypt to book at least another cargo of wheat in their latest import tender for up to 120,000 tons. So far 60,000 tons have been confirmed.

·        
Today China was to auction off 140,000 tons of wheat from reserves.

·        
Paris March wheat was down 1.00 euro earlier at 289.50 per ton.

 

Export
Developments.

·        
Egypt bought 60,000 tons of wheat via World Food Bank for February 10-25 shipment. 120,000 tons is expected to be finalized. Lowest offer was $337/ton C&F Russian origin.

·        
South Korea’s FLC bought up to 65,000 tons of feed wheat from the US or Australia and $346 per ton C&F for shipment between May 10 and June 10.

·        
A group of South Korean flour mills seeks 50,000 tons of milling wheat from the United States on Thursday for shipment between March 16 and April 15.

·        
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.

·        
Japan seeks 89,735 tons of food wheat later this week.

 

Rice/Other

·        
(Bloomberg) — US 2022-23 production seen slightly lower than USDA’s previous estimate, according to the avg in a Bloomberg survey of eight analysts.

-Production
seen down 96,000 bales, while exports seen down 131,000 bales

-Ending
stocks seen mostly unchanged at 3.5m bales

-World
production seen down by 151,000 bales