FI Morning Grain Comments 01/26/22

PDF attached

 

Good
morning. 

 

US
wheat futures are sharply lower on technical selling after rallying earlier this week. Corn is lower but a reversal in soybeans trimmed losses in corn.  USD is up 16 points, WTI crude oil $1.39 higher, and US equities higher.
USD Traders are now penciling in a 25 basis point US rate hike (some speculate 50 points) in March. Canada may announce a rate hike today. Other things talked about this morning include US ethanol margins/production, Ukraine/Russia tensions,
cold temperatures sweeping across US winter wheat country, and South Korea buying feedgrains.

 

Argentina
saw additional precipitation with heavy local amounts across BA. Northeastern Argentina, Paraguay and southwestern Brazil are expecting a few waves of rain during the next ten days. A dense snow event occurred Tuesday in eastern Colorado and western Kansas
(small event compared to total US winter wheat area) where some areas saw 10-27 inches. Cold weather in the eastern US will be abating after today. 

 

 

 

Weather

Source:
World Weather Inc.

 

 

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR JANUARY 26, 2022

• Additional
  rain fell in parts of Argentina overnight with locally heavy amounts in northwestern Buenos Aires.
• Rain
  will continue for another day or two and then a period of drying will evolve and that will be welcome for the heart of the nation.
• Northeastern
  Argentina, Paraguay and southwestern Brazil are expecting a few waves of rain during the next ten days, but it will be very difficult to get the drought to completely break down.
  
• Some
  dryness is expected to prevail.
• Interior
  southern Brazil and some southern parts of center south Brazil will get too much rain in the coming week with northern Parana, parts of Sao Paulo and northern and eastern Mato Grosso do Sul possibly getting enough rain to induce some flooding eventually and
  that may raise some issues for harvesting of soybeans.
• In
  the United States, an impressive snow event occurred Tuesday in eastern Colorado and western Kansas where a narrow band of 10-27 inches of snow fell with moisture totals to 1.00 inch (25mm), but the area impacted was quite small relative to the whole of hard
  red winter wheat country leaving drought still a very big issue.
• Cold
  weather in the eastern U.S. today will be abating later this week and during the weekend
  
• Florida
  citrus areas are vulnerable to a frost and freeze event Sunday that may induce at least a little damage to citrus, sugarcane and other fruits and vegetables.
  
• Most
  likely the impact on citrus and sugarcane will be minimal.
• Warming
  is expected in the eastern U.S. next week and the central U.S. will be warmer than usual, but a new buildup of cold air in Canada will have potential to move into the central and eastern U.S. a little later in early February.
  
• Western
  Europe and northwestern Africa are still advertised to be drier than usual over the next ten days
• Eastern
  Europe and the western CIS will experience more waves of snow and a little rain with no threatening cold to winter crops.
  
• India
  will be dry for a while
• China’s
  Yangtze River Basin and southeastern provinces will be seeing an abundance of rain and a little snow in the next ten days.
  
• Eastern
  Australia will get some rain with Queensland seeing most of its rain in the second week of the forecast.
  
• South
  Africa weather will be well balanced for crops. 

 

Bloomberg
Ag Calendar

Wednesday,
Jan. 26:

• EIA
  weekly U.S. ethanol inventories, production
• HOLIDAY:
  Australia, India

Thursday,
Jan. 27:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Paris
  Grain Day conference, Jan. 27-28
• Port
  of Rouen data on French grain exports

Friday,
Jan. 28:

• ICE
  Futures Europe weekly commitments of traders report, ~1:30pm
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• U.S.
  cattle on feed, 3pm

Source:
Bloomberg and FI

 

 

 

 

 

Macros

US
Wholesale Inventories (M/M) Dec P: 2.1% (est 1.2%; prev 1.4%)

–
US Retail Inventories (M/M) Dec P: 4.4% (est 1.5%; prev 2.0%)

OPEC+
Likely To Stick To Existing Policy At Feb 2 Meeting And Raise March Output Target By 400,000 Bpd – RTRS Sources

Canada
Dec Wholesale Prices Most Likely Unchanged – StatsCan Flash Estimate

US
Advance Goods Trade Balance Dec: -$101.0B (est -$96.0B; prev $97.8B; prevR -$98.0B)

DoE
Awards 13.4 Mln Barrels From Strategic Petroleum Reserve Exchange To Bolster Fuel Supply Chain

 

 

Corn

·        
CBOT corn is lower after additional rain fell across parts of southern Brazil and Argentina, higher USD, and sharply lower wheat. A reversal in soybeans trimmed some of the losses in corn. 

·        
President Joe Biden said he would consider sanctioning Vladimir Putin if there is an invasion.

·        
Ukraine is on track to become the third largest exporter of corn and fourth-largest exporter of wheat.

·        
US corn margins are negative, and traders will be watching if US ethanol production starts to slow.

·        
A Bloomberg poll looks for weekly US ethanol production to be down 10,000 barrels to 1.043 million (1005-1072 range) from the previous week and stocks up 363,000 barrels to 23.955 million.

·        
China will allow producers, on one million hectares of land, to grow soybeans and corn in rows alongside each other. This is to help promote expansion of soybean production while not reducing corn production.

·        
Yesterday CME lean hogs futures rallied to a new contract high over concerns of tightening US supplies. US cold storage data released on Monday was supportive for futures.

 

NE
Iowa ethanol margins

Source:
Reuters and FI

 

Export
developments.

·        
South Korea’s Major Feedmill Group (MFG) bought 69,000 tons of optional origin corn at an estimated $332.70 a ton c&f for arrival in South Korea around May 30.

• South
  Korea’s NOFI group bought about 193,000 tons of corn in three consignments.
• 62,000
  tons for arrival around April 20 at $338.95 a ton c&f and at a premium of 245 U.S. cents over the May contract.
  
• 65,000
  tons for arrival around April 30 at $336.77 a ton c&f and at a premium of 241.44 U.S. cents over May contract.
• 66,000
  tons for arrival around May 10 at $336.80 a ton c&f and at a premium of 238 U.S. cents over the May contract.

 

 

Soybeans

·        
CBOT soybeans reversed late in the electronic trade on lack of direction despite no signs of fresh export demand. Higher soybean oil is helping soybeans. Meal is on the defensive for a lower trade in feedgrains.

·        
April Malaysian palm futures traded higher by 47 ringgit to 5,329.

·        
Malaysian cash CPO was up $10/ton to $1,325.

·        
China soybean futures traded 1.6% higher, meal 0.6% lower, SBO down 0.1% and palm 0.8% higher. 

·        
Rotterdam soybean oil for the Feb-Apr position was about unchanged and Rotterdam rapeseed oil 20 euros lower from this time previous session. SA soybean meal when imported into Rotterdam was mixed.

·        
Offshore values this morning were leading CBOT soybean oil about 75 points lower and meal $0.10 lower.

 

Export
Developments

·        
Turkey’s state grain board TMO seeks about 6,000 tons of crude sunflower oil on Jan. 28 for shipment between Feb. 8 and Feb. 25.

 

Wheat

·        
US wheat futures are sharply lower after nearby Chicago hit a two-month high yesterday. Some needed snow fell across eastern Colorado and western Kansas Tuesday, the event is small relative to the size of HRW wheat country. Cold
weather in the eastern US will be abating after today.  It will take weeks to determine if winterkill impacted crop areas. 

·        
We have a few wheat tender developments and awaiting results on Iran in for wheat, corn and meal.

·        
EU wheat basis the March position was 6.25 euros lower at 284.50 eros a ton.

·        
Some suggest the Ukraine/Russian tension eased a touch today.

 

Export
Developments.

• South Korea’s NOFI
  group bought 55,000 tons of optional origin feed wheat at $339.49 a ton c&f for arrival in South Korea around April 25.
  
• Three groups from
  the Philippines are seeking feed wheat for April-May, April=October and/or May-July shipment.
  
• The Philippines bought
  35,000 tons of Australian wheat this week and it was confirmed at a price of $356/ton for April shipment.
  
• Jordan postponed
  their import tender for 120,000 tons of feed barley. They likely passed.
  

·        
Results awaited: Iran’s SLAL seeks 60,000 tons of barley, 60,000 tons of corn and 60,000 tons of soybean meal for Feb/Mar shipment.

·        
Japan seeks 47,841 tons of food wheat later this week from Australia. 

·        
Results awaited: The Philippines seeks 36,000 tons of Australian wheat for April 1-30 shipment.

·        
Jordan retendered on wheat seeking 120,000 tons on February 1 for July – August shipment.

 

Rice/Other

·        
South Korea seeks 46,344 tons of rice from (mainly) China on Jan 27.

 

Rice/Other

·        
South Korea seeks 46,344 tons of rice from (mainly) China on Jan 27.