FI Morning Grain Comments 01/25/23

PDF attached

Private
exporters reported the following activity:

-100,000
metric tons of corn for delivery to unknown destinations during the 2022/2023 marketing year

-130,000
metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year

A
few Asian countries are back after the Lunar New year holiday. The US and Argentina morning forecast again suggests an improvement for upcoming weather. Argentina should see precipitation fall across Cordoba, Santa Fe, Entre Rios, northern BA and northern
La Pampa through this weekend. The US will see several wintery mix systems today through next week, boosting soil moisture levels and improving river levels. The current system that is dumping precipitation across the Midwest ECB was beneficial yesterday for
the southern Great Plains. Global tender announcements are starting to pop up this week. Iraq and Japan are in for wheat. South Korea seeks up to 40,000 tons of rapeseed meal from India.
US
soybeans are lower on weakness in some of the outside markets, ongoing bearish sentiment from the recent Argentina rains, and lower palm oil future pressuring US soybean oil and a higher USD. January Malaysian palm oil shipments are off to a slow start but
so is production. Offshore values were leading SBO higher by about 433 points this morning and meal $2.50 short ton lower. US corn futures are higher again from strength in wheat and technical buying, despite a higher USD and renewed US recession concerns
as corporate earning season is off to a shaky start. A
Bloomberg poll looks for weekly US ethanol production to be up 6,000 thousand barrels to 1014k (1000-1022 range) from the previous week and stocks up 235,000 barrels to 23.637 million.

Weather

Map

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World
Weather, INC.

WORLD
WEATHER HIGHLIGHTS FOR JANUARY 25, 2023

Northwestern
U.S. Plains and southwestern Canada will get snow to accumulate over winter wheat later this week to protect crops from the impending cold surge
U.S.
wheat areas should all be adequately protected against the bitter cold coming this weekend into next week, although some snow melt is expected in the central and southern Plains late this week

The
snow free areas will not likely be cold enough to be threatened with potential winterkill, despite some market worry to the contrary

Recent
precipitation in the U.S. hard red winter wheat areas will reach into the topsoil as it melts over the next few days improving soil moisture for future crop establishment
Bitter
cold in North America will mostly be anchored over the northern half of the U.S. Plains, upper Midwest, Pacific Northwest and Canada’s Prairies this weekend into early next week; no further expansion to the southeast is likely and the airmass will moderate
later next week before being reinforced again later in February

Eventually
the cold in North America will shift more into eastern parts of the continent, but not until mid-February at the earliest and more likely it will be in the second half of the month

Argentina
rainfall over the coming week will be greatest in west-central and northwestern parts of the nation, but enough rain will occur in other areas to limit the potential for further declining crop conditions

World
Weather, Inc. anticipates more drying in Argentina during February – at least for a while

Brazil’s
southern Crop areas will dry down for a while in this coming week; The pattern should give way to improved precipitation and soil conditions in the second week of the forecast
Center
west and center south Brazil will continue to experience frequent bouts of rain that might slow fieldwork at times and slow the maturation of early season soybeans, but progress will be made
No
threatening cold weather is expected in Europe or Asia during the next two weeks
Europe
and the western CIS precipitation will be restricted for a while, although it will not be completely dry
India
is still expecting light rainfall in the north-central and northeastern parts of the nation in the coming five days and then drier weather will resume once again
China
is not expecting much precipitation in this first week of the forecast, but some rain will return to the Yangtze River Basin in the second week of the outlook
Eastern
Australia will experience limited shower activity in this first week of the outlook and then greater daily showers and thunderstorms in the second week outlook
South
Africa precipitation is still expected to increase in week two of the forecast with rain mostly confined to the south in this first five days of the outlook

Source:
World Weather and FI

Bloomberg
Ag calendar

Wednesday,
Jan. 25:

EIA
weekly US ethanol inventories, production, 10:30am
Malaysia’s
Jan. 1-25 palm oil exports
US
cold storage data for pork, beef and poultry, 3pm
National
Coffee Association’s webinar on 2023 US coffee outlook
USDA
total milk production, 3pm
US
poultry slaughter, 3pm
HOLIDAY:
China, Hong Kong, Vietnam

Thursday,
Jan. 26:

Paris
Grain Conference, day 1
USDA
weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
USDA
to release its outlook for world orange and orange-juice production.
Port
of Rouen data on French grain exports
HOLIDAY:
China, India, Australia, Vietnam

Friday,
Jan. 27:

Paris
Grain Conference, day 2
ICE
Futures Europe weekly commitments of traders report
CFTC
commitments of traders weekly report on positions for various US futures and options
US
cattle inventory, 3pm
HOLIDAY:
China

Source:
Bloomberg and FI

Macros

US
MBA Mortgage Applications Jan 20: 7.0% (prev 27.9%)

US
30-Yr MBA Mortgage Rate Jan 20: 6.20% (prev 6.23%)

Corn

·
CBOT corn
futures
are unchanged to higher again from strength in wheat and technical buying, despite a higher USD and renewed US recession concerns as corporate earning season is off to a shaky start. US equities are on the defensive.

·
There are rumors China is in for US corn. US Gulf basis was up yesterday (about 5 cents) while Brazil was unchanged to 8 cents lower.

·
Bulgaria reported a bird flu outbreak at an industrial farm near the capital Sofia resulting in the culling of 25,000 quails and discard quail eggs.

·
A Bloomberg poll looks for weekly US ethanol production to be up 6,000 thousand barrels to 1014k (1000-1022 range) from the previous week and stocks up 235,000 barrels to 23.637 million.

Export
developments.

·
None reported

Soybeans

·
US soybeans are lower on weakness in some of the outside markets, ongoing bearish sentiment from the recent Argentina rains, and lower palm oil future pressuring US soybean oil and a higher USD. January Malaysian palm oil shipments
are off to a slow start but so is production. Rotterdam cash soybean oil prices are down $25.00 per ton from late Tuesday. Soybean meal was lower at the time this was written.

·
The Rosario grains exchange said Argentina received more than expected rains but were “unevenly spread throughout the country.” In a Reuters note citing the exchange…”only 15% of the Pampas region received rainfall above the
key level of 45 mm. The Buenos Aires area received 15%, La Pampa 10%, Santa Fe 5% and Cordoba 3%. Some areas got none at all.”

·
Northern Brazil should see additional soybean harvesting delays with more rain on the way over the next week.

·
Brazil soybean export basis firmed yesterday.

Table

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·
Cargo surveyor ITS reported Malaysian palm oil January 1-25 exports fell 34.7% to 824,373 tons from 1.262 million tons during the December 1-25 period. AmSpec reported a 32.9% decline to 823,376 tons from 1.227MMT.

·
Malaysia is back from holiday.

MPOA
Jan 2023 CPO 1-20 day production (from Anil Bagani):

Peninsular
Msia (-) 9.50%

Sabah
(-) 11.74%

Sarawak
(-) 18.61%

East
Msia (-) 13.50%

Malaysia
(-) 11.22%

·
GAPKI reported 2022 Indonesia palm oil shipments declined 8.5 percent from the previous year to 30.8 million tons from 33.7 million during 2021. There was a short ban last April on palm oil which contributed to the decline. Indonesia
plans to raise their biofuel blend to B35 from B30 this February. 2022 crude oil palm production was 46.7 MMT, down 0.4% from 2021. Stocks were ample at just over 3.6 million tons at the end of December. Production via Reuters…

Table

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·
Indonesia set its February 1-15 palm oil reference price at $879.31/ton, down from $920.57/ton for the LF January period. CPO export tax resets at $52 per ton and levy at $90 per ton.

·
Indonesia is planning to change the way exporters do business, or reverting back to a similar 2019 plan, by requiring them to hold their foreign exchange earnings offshore for at least three months, in a special account, held
domestically. This should not change trade flows.

·
There were 11 CBOT soybean registrations were cancelled (Chicago) Tuesday evening.

·
Russia plans to keep its sunflower oil export duty at zero percent during February. Sunflower meal will increase from 1,826.9 rubles ($26.47) per ton in January 2022 to 2,200.7 rubles ($31.9) per metric ton in this February.

·
China is on holiday all week.

·
Nearby Rotterdam vegetable oils were
10-25 euros lower from early yesterday morning. Rotterdam meal was mostly 2-5 euros lower.

·
Offshore values were leading SBO higher by about 433 points this morning and meal $2.50 short ton
lower.

April
Malaysian palm oil futures

Source:
Reuter Eikon and FI

Export
Developments

·
South Korea seeks up to 40,000 tons of rapeseed meal from India on Thursday for May 21-June 10 shipment.

·
The CCC seeks 3,770 tons of vegetable oils on February 1 for last half March shipment.

Wheat

·
Higher follow through trade in US wheat futures from technical buying is seen this morning after prices hit multi month lows last week (16-month low). US crop conditions are expected to improve but for now they are still concerning.

·
USDA reported TX winter wheat crop ratings declined 10 points good & excellent to 11% from late November. Latest poor & very poor conditions were 43 percent. 95 percent of the winter wheat crop was emerged.
https://www.nass.usda.gov/Statistics_by_State/Texas/Publications/Crop_Progress_&_Condition/tx-cw-01-22-2023.pdf

·
The southern Great Plains saw much needed precipitation over the past couple of days and may limit the short-term rally in US wheat futures.

·
India’s government plans to release 3 MMT of wheat reserves to bulk consumers to cool prices. Domestic wheat prices hit a record earlier this week. 2-3 MMT was expected for release.