FI Morning Grain Comments 02/02/22

PDF attached

 

Good
morning. 

 

The
USD was down about 54 points as of 7:25 am CT and this is supporting CBOT agriculture futures. Soybeans and meal extended their contracts highs from ongoing South American weather concerns. Corn is higher following soybeans and overnight reversal to the upside
in wheat futures. The morning weather models indicated a stronger ridge of high pressure for Argentina than that of earlier this week. Crop stress is seen in Argentina “a week from now, returning stress to Paraguay and southern Brazil in the second week of
the outlook after a short term bout of improvement late this weekend into Monday.” (World Weather, Inc.)  Queensland, Australia will get rain into Thursday. A large snow and rain/ice event is underway across the US.

 

 

 

 

 

Weather

Source:
World Weather Inc.

 

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR February 2, 2022

• A
  stronger, better defined, ridge of high pressure is noted in the forecast models today for Argentina relative to that of earlier this week.
  
• The
  ridge fits extremely well with our trend model forecast suggesting this would occur in mid-February a few weeks ago.
  
• Rainfall
  in Argentina through the weekend will be too light to seriously improve soil moisture except in the far northeast where some cotton areas will get needed rain briefly late this weekend just before the new ridge of high pressure evolves.
  
• Paraguay,
  Rio Grande do Sul and neighboring areas in southwestern Brazil will also get some rain briefly late this weekend and early next week before drying resumes in response to the high pressure ridge in Argentina.
  
• The
  bottom line will lead to more crop stress in Argentina crops a week from now, returning stress to Paraguay and southern Brazil in the second week of the outlook after a short term bout of improvement late this weekend into Monday.
  
• Frequent
  rain in Minas Gerais, Goias and northern Sao Paulo, Brazil will maintain concern about flooding for the next ten days.
  
• In
  the U.S., snow will fall in hard red winter wheat areas today and early Thursday reaching into West Texas, but this will not be a drought busting event and below average precipitation will resume following this event.
  
• California
  and the far western U.S. will receive less than usual precipitation for the next two weeks.
  
• Snow
  and ice accumulations from Texas to the northeastern U.S. today into Friday will shut down commerce, stress livestock and induce harvest delays and some power outages. 
  
• Extreme
  cold in the northern Plains and upper Midwest today and Thursday will lead to extreme low temperatures Thursday below -30 Fahrenheit, but this cold airmass will not drop as far into the U.S. as last weekend’s event did.
  
• The
  rest of the world….
• Weather
  has not changed much with southwestern Europe and northwestern Africa drier biased for the next couple of weeks,
  
• Frequent
  snow and rain in eastern Europe and western parts of the CIS
• Rain
  in northern and eastern India Thursday into Saturday
• Rain
  and snow will fall from China’s Yangtze River Valley to the south coast during the next ten days
  
• Queensland,
  Australia will get some additional needed rain today into Thursday.
• South
  Africa will see a good mix of weather
• Most
  coffee and cocoa production areas around the world are unlikely to see adverse weather for a while. 

Source:
World Weather Inc.

 

Bloomberg
Ag Calendar

Wednesday,
Feb. 2:

• EIA
  weekly U.S. ethanol inventories, production
• HOLIDAY:
  China, Hong Kong, Malaysia, South Korea, Singapore, Vietnam

Thursday,
Feb. 3:

• FAO
  World Food Price Index and grains supply/demand outlook
• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• New
  Zealand Commodity Price
• Port
  of Rouen data on French grain exports
• HOLIDAY:
  China, Hong Kong, Vietnam

Friday,
Feb. 4:

• 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
• HOLIDAY:
  China, Vietnam

Source:
Bloomberg and FI

 

 

 

 

Macros

 

Corn

·        
Corn is higher following another surge in soybean prices, lower USD, and reversal to the upside in wheat futures. Later we will see additional US (weekly) ethanol figures. A large portion of the Midwest, bias ECB, is seeing a
large snow event, with exception of the southern areas that are under ice/rainfall advisories.  Some areas across the “I” states of IL and IN (not IA) will see 15 plus inches of snow (the poor person’s fertilizer). 

·        
Yesterday April CME hog and cattle futures hit contract highs.

·        
NASS reported December corn for ethanol use at 486 million bushels, above a Bloomberg trade estimate of 478 million and well above 432 million for December 2020.

·        
We estimate US corn for ethanol use at 5.425 billion bushels, 100 million above USDA.  Our estimate is unchanged from late December. 

·        
A Bloomberg poll looks for weekly US ethanol production to be down 9,000 barrels to 1.026 million (1005-1050 range) from the previous week and stocks up 232,000 barrels to 24.708 million.

 

Crop
Insurance Decisions and Risk in 2022 – University of IL

Schnitkey,
G., N. Paulson, K. Swanson, C. Zulauf and J. Baltz. “Crop Insurance Decisions and Risk in 2022.”
farmdoc
daily
(12):13, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, February 1, 2022.

https://farmdocdaily.illinois.edu/2022/02/crop-insurance-decisions-and-risk-in-2022.html

 

Export
developments.

·        
None reported

 

 

 

Soybeans

·        
The USD was down about 54 points as of 7:25 am CT and this is supporting CBOT agriculture futures.

·        
CBOT soybeans and meal extended their contracts highs from ongoing South American weather concerns. The morning weather models indicated a stronger ridge of high pressure for Argentina than that of earlier this week. USDA’s December
crush was reported well above trade expectations and at a record. Soybean oil also extended gains despite US end of December SBO stocks reported above trade expectations.

·        
Brazil soybean export premiums are on fire again, up 5-15 cents in the nearby positions.

·        
March soybeans rallied above $15.50/bu, hitting a session high of $15.64.

·        
Results are awaited in Iran seeking soybean meal and corn. 

·        
Malaysia will return from holiday on Thursday while China will be closed for the remainder of the week.

·        
Rotterdam soybean oil for the Feb-Apr position was 10 euros higher from this time previous session and Rotterdam rapeseed oil 2-3 euros higher. SA soybean meal when imported into Rotterdam were mostly 10-18 euros higher.

·        
Offshore values this morning were leading CBOT soybean oil about 23 points lower and meal $3.20 lower. 

·        
Bloomberg: Thailand Cuts Biodiesel Blending Ratio to 5% as Palm Oil Soars from 7% from February 5 to March 31. 

·        
Monthly US December crush was reported by NASS at a record 198.2 million bushels, 6.4 million above a Bloomberg trade guess and above 193.1 reported for December 2020. On a daily adjusted basis crush was a record 6.39 million
bu/day, up from 6.35 million previous month.  Soybean oil production was a large 2.324 billion pounds, up from 2.235 during November. Soybean oil stocks of 2.466 billion came in 64 million pounds above an average trade guess, above 2.406 billion at the end
of November and above 2.111 billion at the end of December 2020/ The oil yield was unchanged at 11.73 pounds per bushel. Soybean meal stocks expanded to 411,000 short tons versus 376,000 at the end of November and are above 359,000 at the end of Dec 2020. 
The report is seen supportive for soybeans, neutral for meal and slightly negative for soybean oil.  It appears implied soybean oil demand was better than expected with stocks up 60 million pounds from November while production increased 89 million pounds. 

·        
We made no changes to our crush estimate, already about 15 million bushels above USDA. 

 

Export
Developments

• Results
  awaited: Iran’s SLAL seeks 60,000 tons of soybean meal (combo with barley) on Wednesday for February and March shipment.  They bought meal and barley last week. 
  

 

 

Wheat

·        
US wheat futures are higher on a sharply lower USD and sharply higher soybeans, but gains are limited on slowing global wheat export developments and lower trade in EU wheat futures. EU March wheat was down 1.00 euro at 268.25
euros.

·        
Ukraine exported 38.6 million tons of grain so far this season (July-June), up 31.6% from year earlier. This included 17 million tons of wheat, 5.5 million tons of barley and 15.6 million tons of corn. The crop-year target for
exports included 24.5 million tons of wheat, 30.9 million of corn and 5.2 million of barley. Two Ukraine Black Sea ports restricted grain loading because of poor weather. 

·        
Low water levels on the Rhine River in Germany continue to hamper shipping, even after seeing levels tick up after rain fell this week.

·        
India is looking to buy 1 million tons of potash from Belarus in rupees. This comes after the EU and US sanctioned selected companies in Belarus, preventing euro/USD trades. India heavily relies on potash imports and about one-fifth
of it normally comes from Belarus.

·        
The U.S. hard red winter wheat production areas today will get additional welcome snow and a little rain during the middle to latter part of this week. Precipitation amounts could be very large bias the eastern winter wheat areas. 

 

Export
Developments.

·        
Tunisia’s state grains agency bought 100,000 tons of soft wheat, 75,000 tons of durum and 75,000 tons of barley, all optional origin. The soft wheat was sought in four 25,000 ton consignments for shipment between March 20 and
April 25, depending on origin supplied. One wheat consignment was bought at $350.64, another at $348.69, one at $350.69 and $350.77.  Durum was for shipment between Feb. 25 and March 30, bought at $643, $646 and $649 all per ton c&f. The barley was sought
in three 25,000 ton consignments for shipment between March 5 and April 15, at $342, $332.69 and $339.70 all per ton c&f. (Reuters)

·        
Bangladesh seeks 50,000 tons of wheat set to close February 14.

·        
Jordan saw three offers for 120,000 tons of barley.

• Results
  awaited: Iran’s SLAL seeks 60,000 tons of barley (combo with soybean meal) on Wednesday for February and March shipment.  They bought meal and barley last week. 
  

·        
Japan seeks 53,957 tons of wheat from Canada and Australia later this week.

 

Rice/Other

·        
Thailand estimated 2022 rice shipments at 7 million tons, a 15 percent increase from 2021 as paddy production is forecast to expand 18 percent to 19.5 million.