FI Morning Grain Comments 01/18/23

PDF attached.

 

Good
morning.

 

WTI
crude oil was up about $1.47, USD 50 points lower and US equities higher. Talk of potential record world oil demand for 2023 was supporting WTI crude oil. Corn and soybeans turned lower after soybean meal prices broke. Wheat futures are extending gains on
Black Sea export concerns. Global wheat export demand is good. CBOT soybean oil is higher on strength in WTI crude oil. Palm oil closed higher on strength in mineral oil although chatter of India possibly raising their CPO import tariff may have limited grains.
Offshore values were leading SBO higher by about 34 points lower this morning and meal $3.20 short ton higher.

 

 

 

Weather

US
and Argentina’s weather outlook this morning improved. Rain was near expectations for Argentina yesterday for Cordoba, western BA and northeastern La Pampa. Argentina will see rain this week with greatest amounts Friday into Saturday, then again early next
week. Southern Brazil has an opportunity to see rain this week. Three weather systems will hit the US Great Plains by mid next week. It starts with precipitation falling across Nebraska into Iowa (yesterday) through Wednesday night, before moving east.

 

 

 

World
Weather, INC.

WORLD
WEATHER HIGHLIGHTS FOR JANUARY 18, 2023

• Today’s
  ECMWF model is wetter for Argentina next week with nearly all of the nation getting rain at one time or another
• The
  GFS model run is not quite as wet for next week as the ECMWF model especially in northern Argentina
  
• The
  interpretation for Argentina should be bearish with improved rainfall being suggested by both models this morning
• Brazil
  weather remains well mixed in most of the nation, although Rio Grande do Sul’s precipitation may be a bit more erratic and light for a while
• U.S.
  hard red winter wheat areas will get some precipitation in the coming ten days, but drought busting moisture is not likely
• A
  first storm is impacting Nebraska, northern and eastern Kansas and northeastern Colorado today with snow and some rain
• A
  second storm is expected this weekend across the central Plains, but it will be a weaker event with limited increases in soil moisture expected
  
• A
  third event is still possible during mid-week next week, though the 06z GFS model run this morning removed that event
• California
  and the Pacific Northwest will be seeing less precipitation for a while and the break will be welcome, though additional moisture will be needed later this season to ensure improved water supply going into the growing season
• Northern
  U.S. Plains and Canada precipitation is expected to be limited for a while
• U.S.
  Midwest, Delta and southeastern states should see a net rise in soil moisture over the next two weeks
• The
  upper Midwest may not be as wet as other areas
• India’s
  eastern winter crop areas will get some welcome moisture next week
• Eastern
  Australia is still expecting some periodic showers thunderstorms, though greater rain may be needed in dryland areas
• Northeastern
  parts of South Africa will see limited rainfall for the next ten days while rain eventually develops in all other summer crop areas
• Europe
  weather will be wettest in the Mediterranean Sea region
• North
  Africa rainfall will be greatest in the next ten days in northern Algeria and coastal Tunisia; both Morocco and interior parts of Tunisia will need greater precipitation
  

Source:
World Weather and FI

 

Bloomberg
Ag calendar

Wednesday,
Jan. 18:

• Global
  Forum for Food and Agriculture, Berlin, Jan. 18-21
• Asia
  4Q 2022 cocoa grinding data

Thursday,
Jan. 19:

• European
  cocoa grindings
• North
  America cocoa grindings
• EIA
  weekly US ethanol inventories, production
• Port
  of Rouen data on French grain exports
• New
  Zealand Food Prices
• USDA
  red meat production, 3pm

Friday,
Jan. 20:

• Malaysia’s
  Jan. 1-20 palm oil exports
• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various US futures and options
• US
  net- export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• US
  cotton ginnings
• US
  cattle on feed

Source:
Bloomberg and FI

 

CME
is introducing new crop weekly options

https://www.cmegroup.com/articles/2023/new-crop-vs-old-crop-risk-of-the-past-year.html

 

 

No
changes in CBOT registrations

 

 

 

USDA
inspections versus Reuters trade range

Wheat                 
320,473                 versus   150000-400000  range

Corn                     
774,461                 versus   400000-700000  range

Soybeans           
2,075,197             versus   900000-1925000                range

 

 

Macros

US
MBA Mortgage Applications Jan 13: 27.9% (prev 1.2%)

US
30-Yr MBA Mortgage Rate Jan 13: 6.23% (prev 6.42%)

US
Retail Sales Advance (M/M) Dec: -1.1% (est -0.9%; prevR -1.0%)

US
Retail Sales Ex Auto Dec: -1.1% (est -0.5%; prevR -0.6%)

US
Retail Sales Ex Auto And Gas Dec: -0.7% (est 0.0%; prevR -0.5%)

US
Retail Sales Control Group (M/M) Dec: -0.7% (est -0.3%; prev -0.2%)

US
PPI Final Demand (M/M) Dec: -0.5% (est -0.1%; prev 0.3%)

US
PPI Ex Food And Energy (M/M) Dec: 0.1% (est 0.1%; prev 0.4%)

US
PPI Final Demand (Y/Y) Dec: 6.2% (est 6.8%; prev 7.4%)

US
PPI Ex Food And Energy (Y/Y) Dec: 5.5% (est 5.6%; prev 6.2%)

 

 

Corn

·        
CBOT corn
turned
lower early morning after soybean meal prices broke.

·        
China December corn imports increased 35 percent from a year earlier to 870,000 tons and brings total 2022 corn imports to 20.6 million tons, down from 28.4 million during 2021. This is higher than we expected from this time a
year earlier and expect imports to further slow during 2023 due to a large 2022 harvest.

·        
China’s state planner said they are confident of their grain supply. China’s AgMin announced they are making headway on trial projects for GMO corn and soybeans, and looking to organize pork purchases for state reserves. They
reported that the China’s sow herd at the end of 2022 was slightly higher than a reasonable level. China is asking producers to reduce sow herds. 2022 pork production rose to its highest level in eight years.

·        
There is some concern the Brazil summer grain crop could be over capacity, by a slightly amount. Brazil was thought to have 187.9 million tons of capacity.

·        
USDA US corn export inspections as of January 12, 2023, were 774,461 tons, above a range of trade expectations, above 401,108 tons previous week and compares to 1,237,811 tons year ago. Major countries included Mexico for 275,778
tons, China for 275,469 tons, and Japan for 107,078 tons.

 

EIA
forecasts lower wholesale U.S. natural gas prices in 2023 and 2024

https://www.eia.gov/todayinenergy/detail.php?id=55219&src=email

 

Export
developments.

·        
Egypt seeks corn on January 19 for Feb 10-25 shipment. Egypt tends to buy South American corn followed by Ukraine origin.

 

 

Soybeans

·        
CBOT soybeans
are lower after meal prices broke. They climbed to a 7-month high overnight on ongoing Argentina crop concerns and lower USD. Soybean oil remains higher on strength in WTI crude oil. Palm oil closed higher on strength in mineral oil although chatter of India
possibly raising their CPO import tariff may have limited grains.

·        
Brazil’s AgMin said the country can increase grain planting by 5 percent each crop year for several years without deforestation. They are working on plans to work on degraded pastures. They estimate about 150 million hectares
(370.66 million acres) of pastures with low productivity and want to convert around 40 million hectares, “in regions suitable for agriculture.”

·        
April palm futures were up 72 ringgit to 3867 cash up $15.00 at $940.

·        
China soybean futures were up 1.2%, meal 1.2% higher, soybean oil up 1.3%, and palm up 0.6%.

·        
Nearby Rotterdam vegetable oils were
up 25-30 euros from early yesterday morning. Rotterdam meal was 3-9 euros higher.

·        
Offshore values were leading SBO higher by about 34 points lower this morning and meal $3.20 short ton
higher.

·        
USDA US soybean export inspections as of January 12, 2023 were 2,075,197 tons, above a range of trade expectations, above 1,456,526 tons previous week and compares to 1,868,635 tons year ago. Major countries included China for
1,283,074 tons, Mexico for 209,129 tons, and Italy for 192,482 tons.

 

April
palm oil futures

Source:
Reuters and FI

 

NOPA
crush

The
cold snap during the third week of December across the US likely impacted soybean crushing rates last month. Iowa followed by the southeast, was hit the hardest. At 177.5 million bushels, the crush came in below most trade guesses. Soybean oil stocks of 1.791
billion pounds were 66 million above an average trade guess. The soybean yield improved to 11.74 pounds per bushel from 11.63 pounds for November. USDA may leave its yield estimate unchanged next month at 11.72 pounds per bushel. We had a working estimate
of 11.65 pounds and may increase that at the end of this month when NASS US crush data is released.  Soybean meal production was good but on a cumulative crop year basis running below year ago.

 

 

Export
Developments

·        
The Philippines seeks up to 45,000 tons of soybean meal on January 19. The soybean meal was sought for April 18 and May 25 shipment.

·        
The USDA seeks 50,160 tons of soybean meal on January 19 for March 1-10 shipment, for the Food for Progress program.

 

Wheat

·        
US wheat futures are mostly higher from follow through buying after Russia hinted, they could soon curb grain exports.

·        
Paris March wheat was up 2.00 euros earlier at 288.75 per ton, in part to technical buying and good demand for EU soft wheat exports. 

·        
FranceAgriMer increased its forecast of French soft wheat exports outside the European Union to 10.6 million tons from10.3 million tons in December, led by demand from Algeria and Morocco. This is about 21% above last crop-year.
Stocks as of this June 30 were reduced to 2.33 million tons from 2.55 million estimated in December.

·        
The Buenos Aires Grain Exchange estimated Argentina wheat exports at 5.9 million tons, down 62% from year earlier, lowest in 8 seasons.

·        
China auctioned off 142,709 tons of wheat from state reserves that includes 2014-2017 crop years.

·        
China plans to auction off 140,000 tons of wheat on February 1, that includes stocks from the 2014-2017 crop years.

·        
China December wheat imports increased 15 percent from a year ago and up 7 percent from November, bringing total 2022 wheat imports to 9.96 million tons, slightly above 2021 and a fresh record.

·        
Saudi Arabia’s state grains buyer SAGO will become the General Food Security Authority (GFSA). The new agency will expand their responsibilities, including strategic storage, developing an warning system, and partner with countries
and international organizations.

·        
USDA US all-wheat export inspections as of January 12, 2023 were 320,473 tons, within a range of trade expectations, above 209,544 tons previous week and compares to 386,786 tons year ago. Major countries included Philippines
for 81,714 tons, China for 68,049 tons, and Mexico for 40,604 tons.

 

Chicago
wheat is getting very cheap versus corn

Source:
Reuters and FI

 

Export
Developments.

·        
Tunisia seeks 125,000 tons of durum wheat on January 19, optional origin, for shipment between February 15 and April 5.

·        
Thailand bought 117,000 tons of feed wheat at $325-$327 and $340/ton, for July and March shipment, respectively. Black Sea, Brazil and/or Australia was thought to be origin.

·        
Algeria wheat purchase is now estimated between 570,000 and 600,000 tons. The 11.5% protein milling wheat is for March shipment. $334.50 c&f was thought to have been paid.

·        
Japan seeks 70,000 tons of feed wheat and 40,000 tons of barley on January 25 for arrival in Japan by March 16.

·        
The Philippines seek up to 165,000 tons of feed wheat and up to 45,000 tons of soybean meal on January 19. The wheat was sought for April 16 and June 25 shipment.

·        
Japan seeks 77,763 tons of food wheat later this week for Feb 21-Mar 20 shipment.

 

 

Rice/Other

·        
Thailand lowered its rice export target for this year to 7.5 million tons from a previous target of 8 million tons.