FI Morning Grain Comments 02/02/23

PDF attached

 

Good
morning.

 

Ongoing
Argentina weather concerns combined with a steep decline in the USD on Wednesday by 94 points are propping up the soybean complex and grain markets. Fundamentals have not changed for ags. This morning the USD was up 84 points, WTI crude oil down 25 cents and
US equities higher. Earning season continues with three major tech companies reporting after the close. China was thought to be inquiring about soybeans and corn earlier this week. Yesterday we heard of pricing for Brazil and US origin for soybeans. After
a one-day holiday, Malaysia April palm oil futures fell 64 ringgit, or 1.7%, to 3,751, equivalent to $884.04 per ton. Offshore values were leading SBO higher by about 86 points this morning and meal $0.40 short ton lower. News was thin for grains. USDA export
sales were poor for the soybean complex & wheat and good for corn.

 

 

 

 

 

Weather

The
weather forecast turned slightly unfavorable for the Delta, unchanged for the US Midwest & Great Plains, improved for Brazil and unchanged for Argentina. The southeastern Great Plains will see lingering precipitation today before trending drier this weekend. 
The Midwest will be mostly dry through the end of the week.  Argentina will see rain today across Cordoba, Buenos Aires, and southern Santa Fe, before turning drier this weekend.  Argentina will trend drier next week.  Brazil will see rain bias central and
southern areas but also slow soybean harvest and second crop corn planting progress.

 

 

World
Weather, INC.

WORLD
WEATHER HIGHLIGHTS FOR FEBRUARY 02, 2023

• Rain
  in Argentina overnight was greatest in Cordoba and in central through south-central Buenos Aires with areas in between the two areas staying mostly dry
• Argentina
  is still facing 10 days of net drying once rain ends today
• Northeastern
  Argentina will continue to have the most threatening weather with top and subsoil moisture already exhausted and no rain for at least ten days
• Rain
  chances do improve near mid-month for Argentina, but it is still debatable how significant that moisture may be
• Western
  Rio Grande do Sul, Brazil will also be caught up in the Argentina dry weather with not much moisture likely over the next ten days to two weeks resulting in rising crop stress
• Recent
  drier weather in Mato Grosso and areas southeast into Minas Gerais and Sao Paulo has been improving topsoil conditions and that may soon translate into better soybean maturation and harvest conditions with accelerated Safrinha crop planting as well
• Returning
  rain is expected from Sao Paulo to Mato Grosso do Sul this weekend into next week and some of that will be abundant slowing or stalling fieldwork for a while
• Northeastern
  Brazil will see the least precipitation for a while
• South
  Africa will be trending wetter in the next ten days supporting high yields for most summer crops
• Eastern
  Australia still expecting a return of showers and thunderstorms, but mostly next week after net drying through the weekend
• There
  is still no threatening cold in Europe or Asia, although Europe temperatures will be cooler than usual for a while next week
• North
  Africa will be dry through the coming week with some rain returning to northern Algeria and coastal areas of Tunisia after Feb. 8
• Eastern
  Europe will be wet biased for a while in this coming week to ten days while western Europe is dry biased
• GFS
  model is still trying to bring significant rain and snow into the central and southwestern U.S. Plains next week, but the European model keeps precipitation rather limited
  
• India
  will be dry over the next ten days while southeastern China gets sufficient rain to bolster soil moisture in rapeseed and early rice production areas

Source:
World Weather and FI

 

Bloomberg
Ag calendar

Thursday,
Feb. 2:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Port
  of Rouen data on French grain exports

Friday,
Feb. 3:

• FAO
  World Food Price Index
• FAO
  Cereal Supply and Demand Brief
• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various US futures and options

Source:
Bloomberg and FI

 

 

 

Selected
Brazil commodities exports:

Commodity                     
January 2023       January 2022

CRUDE
OIL (TNS)                6,578,636             4,192,439

IRON
ORE (TNS)                 24,686,106            24,894,012

SOYBEANS
(TNS)                 851,878               2,452,064

CORN
(TNS)                     6,348,030             2,732,473

GREEN
COFFEE(TNS)              169,553               178,051

SUGAR
(TNS)                    2,119,507             1,349,529

BEEF
(TNS)                     160,191               138,061

POULTRY
(TNS)                  388,597               317,378

PULP
(TNS)                     1,699,467             1,622,085

Reuters
table via Brazil AgMin

 

USDA
Export Sales

Soybean
sales were near the low end of trade expectations while corn came in above a trade range. The corn sales included 432,100 tons for unknown and 319,500 tons for China (136,000 switched from unknown).  The Soybean sales included China for 782,400 tons but 613,000
tons were switched from unknown.  Soybean meal sales were poor and soybean oil again well below its respected average. All-wheat sales significantly slowed. One cargo was booked by Egypt. Sorghum sales were good at 110,500 tons (57,500 unknown and 53,000 China). 
Pork sales of 30,900 tons were good again and included 15,100 tons for Mexico and 3,700 for Japan.

 

 

 

Macros

BoE
policymakers vote 7-2 to raise bank rate by 50 bps to 4.0% (Reuters poll: 4.0%)

US
Challenger Job Cuts (Y/Y) Jan: +440.0% (prev 129.1%)

US
Initial Jobless Claims (W/W) 28-Jan: 183k (est 195K; prev 186K)

–
Continuing Claims (W/W) 21-Jan: 1655k (est 1684K; prev 1675K)

US
Nonfarm Productivity (Q/Q) Q4 P: 3.0% (est 2.4%; prev R 1.4%)

–
Unit Labor Costs (Q/Q): 1.1% (est 1.5%; prev R 2.0%)

Canadian
Building Permits (M/M) Dec: -7.3% (est -3.9%; prev R 14.1%)

 

 

Corn

·        
CBOT corn is higher on strength in wheat & soybeans. Lack of fresh news could limit gains.

·        
Yesterday StoneX raised its forecast of the Brazil corn crop to 129.9 million tons from 128.71 million last month.

·        
NASS corn for ethanol use for the month of December came in well below our estimate and trade expectations.

·        
We lowered our corn for ethanol use to 5.225 million, down from 5.250 billion from previous, and compares to USDA’s 5.275-billion-bushel projection.

·        
US weekly ethanol stocks declined a large 635,000 barrels from the previous week to 24.442 million and production rose 16,000 barrels, despite talk of declining processor margins. For reference, a Bloomberg poll looked for weekly
US ethanol production to be down 1,000 thousand barrels and stocks up 304,000 barrels.

 

Export
developments.

·        
Algeria bought about 30,000 tons of corn from Argentina last week and around $339/ton c&f for March 1-15 shipment.

 

 

Soybeans

·        
Soybean complex is higher from ongoing Argentina crop concerns and talk of China returning to market. China was thought to be inquiring about soybeans and corn earlier this week. Yesterday we heard of pricing for Brazil and US
origin for soybeans.

·        
NASS crush came in slightly below expectations and soybean oil stocks were above an average trade guess. We think USDA will lower its crop year soybean crush by 10 million bushels next week.

·        
Abiove sees the 2023 Brazil soybean crop at 152.6 million tons, crush at 52.5 million, and exports at 92 million tons, all unchanged from their January 12 estimate. The 2022 soybean crop production was raised to 128.6 million
tons from 128.5 million previous.

·        
Yesterday StoneX raised its forecast of the Brazil soybean crop to a record-high 154.2 million tons from 153.79 million last month.

·        
India January palm oil imports declined 31% from December to 770,000 tons, lowest since July 2022, according to a Reuters estimate.

·        
After a one day holiday, Malaysia April palm oil futures fell 64 ringgit, or 1.7%, to 3,751, equivalent to $884.04 per ton. Cash palm oil was down $5.00/ton at $940.00/ton.

·        
China soybeans increased 1.0%, meal down 0.1%, SBO down 2.8% and palm oil futures off 1.5%.

·        
Nearby Rotterdam vegetable oils were
mixed from early yesterday morning (SBO down 30-40 euros and RSO 5-11 euros higher).
Rotterdam meal was unchanged to 2 euros higher.

·        
Offshore values were leading SBO higher by about 86 points this morning and meal $0.40 short ton
lower.

 

EIA:
Domestic renewable diesel capacity could more than double through 2025

https://www.eia.gov/todayinenergy/detail.php?id=55399&src=email

 

Export
Developments

·        
Today the CCC seeks a total of 100,320 tons of bulk hi-pro soybean meal for shipment to Ghana, Ivory Coast and Senegal. One half will be shipped Mar 21-31, with the balance for Apr 1-10 shipment. All offers are due by Feb 2 at
2 PM CT.

 

 

Wheat

·        
Chicago wheat hit a one-month high from the weakness in the USD on Wednesday and poor pace of US exports.  KC and MN were higher at the electronic break. Cold temperatures were noted for the northern Great Plains Wednesday into
Thursday, but we think no damage occurred.

·        
Drought conditions for parts of the Great Plains and lack of moisture for some of the Black Sea region is adding to the bullish undertone.  The US needs to see good rains this spring across the heart of the country to allow winter
wheat crop conditions to rebound after a very poor start.

·        
EU officials are visiting Ukraine ahead of the one-year anniversary of the Russia/Ukraine conflict. They may announce another round of support, including arms and financial assistance.

·        
Paris March wheat was 0.25 euro higher earlier at 285.50 per ton. 

·        
Iraq said they should see a good amount of locally grown wheat if rainfall continues. No production estimate was provided. They imported around 800,000 tons of wheat since October. Iraq consumes about 4.6 million tons of wheat.

·        
(Bloomberg) — State-run Food Corp. of India sold 888,000 tons of wheat through an auction on the first day of a planned open market sale of the grain to cool local prices, according to a statement by the food ministry.  The company
offered to sell 2.2 million tons of wheat on Wednesday. More than 1,100 bidders from 22 states participated in the auction.

 

Export
Developments.

·        
Lowest price for Egypt’s import tender for wheat was $322.80/ton c&f, Russia origin, for late February through March 20 shipment. The tender is under the Food Security and Resilience Support Program funded by the World Bank with
at sight financing.

·        
South Korea’s Major Feedmill Group (MFG) bought about 60,000 tons of optional origin feed wheat at an estimated $339.60 a ton c&f for May through June 30 shipment, depending on origin.

·        
Jordan seeks 120,000 tons of optional origin milling wheat on February 7 for May-June shipment.

 

Rice/Other

·        
Indonesia’s Bulog looks for the country to produce 2.4 million tons of rice in 2023.

·        
South Korea seeks 79,439 tons of rice on February 8 for May 1-Dec 31 arrival.

 

 

U.S. EXPORT SALES FOR WEEK ENDING  1/26/2023 

	CURRENT MARKETING YEAR						NEXT MARKETING YEAR
COMMODITY	NET SALES	OUTSTANDING SALES		WEEKLY EXPORTS	ACCUMULATED EXPORTS		NET SALES	OUTSTANDING SALES
		CURRENT YEAR	YEAR AGO		CURRENT YEAR	YEAR AGO
	THOUSAND METRIC TONS
WHEAT
HRW	14.9	905.2	2,036.6	137.9	3,487.6	4,815.0	0.0	91.3
SRW	24.2	717.2	710.6	28.7	1,816.2	1,848.1	23.0	124.6
HRS	38.5	1,247.8	1,266.7	204.8	3,580.6	3,366.3	0.0	49.8
WHITE	60.9	1,262.2	751.0	95.2	2,842.6	2,300.2	9.1	23.4
DURUM	-2.0	113.2	54.6	29.5	198.0	113.1	0.4	1.9
TOTAL	136.4	4,245.6	4,819.5	496.2	11,925.0	12,442.8	32.5	291.0
BARLEY	0.0	4.4	17.1	0.0	7.2	13.4	0.0	0.0
CORN	1,593.2	13,021.3	25,557.6	598.3	12,610.6	19,565.7	163.2	1,427.1
SORGHUM	110.5	437.8	4,130.0	0.9	293.4	2,086.0	0.0	0.0
SOYBEANS	736.0	11,683.1	8,868.1	1,959.6	35,588.3	36,295.4	192.0	718.0
SOY MEAL	165.4	3,149.6	3,263.6	288.3	3,885.4	4,216.9	4.2	52.5
SOY OIL	0.9	18.5	178.5	1.5	22.9	306.3	0.0	0.6
RICE
L G RGH	6.6	89.0	215.4	1.5	245.7	671.5	0.0	0.0
M S RGH	0.0	11.1	9.9	1.1	15.8	3.8	0.0	0.0
L G BRN	0.1	4.8	20.0	0.5	11.4	28.4	0.0	0.0
M&S BR	0.1	35.8	68.3	0.1	8.4	17.0	0.0	0.0
L G MLD	16.0	144.8	76.9	23.4	340.2	435.4	0.0	0.0
M S MLD	1.7	133.6	155.1	1.5	123.3	213.6	0.0	0.0
TOTAL	24.4	419.0	545.6	28.2	744.8	1,369.8	0.0	0.0
COTTON		THOUSAND RUNNING BALES
UPLAND	171.2	4,864.1	8,087.6	212.2	4,589.1	3,903.1	20.2	1,256.4
PIMA	-0.8	53.1	214.8	7.8	77.2	179.8	2.4	3.5

 

 

Export Sales Highlights   

This
summary is based on reports from exporters for the period January 20-26, 2023.

Wheat: 
Net sales of 136,400 metric tons (MT) for 2022/2023 were down 73 percent from the previous week and 51 percent from the prior 4-week average. Increases primarily for Egypt (60,000 MT switched from unknown destinations), Jamaica (22,000 MT), Singapore (22,000
MT switched from Thailand), Trinidad and Tobago (17,400 MT, including 9,500 MT switched from the Dominican Republic), and Peru (12,500 MT), were offset by reductions primarily for Thailand (19,600 MT), the Dominican Republic (9,200 MT), Japan (6,900 MT), Mexico
(2,700 MT), and Panama (1,500). Net sales of 32,500 for 2023/2024 were primarily for Mexico (23,000 MT) and Japan (9,100 MT). Exports of 496,200 MT were up 88 percent from the previous week and up noticeably from the prior 4-week average. The destinations
were primarily to Japan (98,500 MT), Mexico (85,900 MT), Thailand (58,100 MT), Iraq (52,500 MT), and Chile (47,400 MT).

Corn: 
Net sales of 1,593,200 MT for 2022/2023 were up 75 percent from the previous week and up noticeably from the prior 4-week average. Increases primarily for unknown destinations (423,100 MT), Mexico (323,600 MT, including decreases of 78,000 MT), China (319,500
MT, including 136,000 MT switched from unknown destinations and 140,000 MT – late), Colombia (196,500 MT), and El Salvador (55,300 MT, including 34,800 MT switched from Guatemala and decreases of 2,800 MT), were offset by reductions for Guatemala (22,500 MT)
and Canada (500 MT). Net sales of 163,200 MT for 2023/2024 were reported for Mexico (152,200 MT) and Japan (11,000 MT). Exports of 598,300 MT were down 34 percent from the previous week and 14 percent from the prior 4-week average. The destinations were primarily
to Mexico (227,900 MT), China (138,700 MT), Japan (102,000 MT), El Salvador (58,600 MT), and Panama (18,000 MT).

Late Reporting: 
For 2022/2023, net sales totaling 140,000 MT of corn were reported late for China.

Barley: 
No net sales or exports were reported for the week.

Sorghum: 
Net sales of 110,500 MT for 2022/2023 were up 56 percent from the previous week and 70 percent from the prior 4-week average. Increases were reported for unknown destinations (57,500 MT) and China (53,000 MT). Exports of 900 MT were down 99 percent from the
previous week and 95 percent from the prior 4-week average. The destination was to Mexico.

Rice: 
Net sales of 24,400 MT for 2022/2023 were down 43 percent from the previous week and 21 percent from the prior 4-week average. Increases were primarily for Haiti (15,100 MT, including decreases of 200 MT), Honduras (5,600 MT), Canada (1,100 MT, including decreases
of 100 MT), Guatemala (1,000 MT), and Mexico (500 MT). Exports of 28,200 MT were down 58 percent from the previous week and 33 percent from the prior 4-week average. The destinations were primarily to Haiti (22,200 MT), Mexico (2,900 MT), Canada (2,200 MT),
Belgium (200 MT), and the Netherlands (100 MT). 

Soybeans: 
Net sales of 736,000 MT for 2022/2023 were down 36 percent from the previous week and 18 percent from the prior 4-week average. Increases primarily for China (782,400 MT, including 613,000 MT switched from unknown destinations and decreases of 10,200 MT),
Japan (96,300 MT, including 73,700 MT switched from unknown destinations and decreases of 2,100 MT), Indonesia (86,000 MT, including 68,000 MT switched from unknown destinations and decreases of 300 MT), Taiwan (71,300 MT, including 66,000 MT switched from
unknown destinations and decreases of 1,200 MT), and the Netherlands (68,000 MT, including 66,000 MT switched from unknown destinations), were offset by reductions primarily for unknown destinations (523,200 MT). Net sales of 192,000 MT for 2023/2024 were
reported for unknown destinations (132,000 MT) and China (60,000 MT). Exports of 1,959,600 MT were up 3 percent from the previous week and 11 percent from the prior 4-week average. The destinations were primarily to China (1,415,300 MT), Japan (123,600 MT),
Taiwan (94,100 MT), Indonesia (90,700 MT), and Vietnam (70,900 MT). 

Optional Origin Sales: 
For 2022/2023, the current outstanding balance of 300 MT, all South Korea.

Export for Own Account:
 For 2022/2023, the current exports for own account outstanding balance is 1,500 MT, all Canada.

Soybean Cake and Meal: 
Net sales of 165,400 MT for 2022/2023 were down 46 percent from the previous week and 12 percent from the prior 4-week average. Increases primarily for the United Kingdom (30,000 MT switched from Ireland), Panama (29,500 MT, including decreases of 100 MT),
Morocco (27,000 MT), Colombia (26,700 MT, including decreases of 2,300 MT), and Canada (20,400 MT, including decreases of 5,400 MT), were offset by reductions primarily for Ireland (30,000 MT) and Spain (14,000 MT). Total net sales of 4,200 MT for 2023/2024
were for Canada. Exports of 288,300 MT were up 1 percent from the previous week and 3 percent from the prior 4-week average. The destinations were primarily to Venezuela (64,400 MT), the Philippines (50,200 MT), Colombia (45,800 MT), Mexico (31,800 MT), and
Honduras (26,300 MT).

Soybean Oil: 
Net sales of 900 MT for 2022/2023 were down 62 percent from the previous week and 12 percent from the prior 4-week average. Increases were primarily for Mexico (700 MT). Exports of 1,500 MT were up 10 percent from the previous week and 99 percent from the
prior 4-week average. The destinations were to Mexico (1,000 MT) and Canada (500 MT).

Cotton: 
Net sales of 171,200 RB for 2022/2023 were down 20 percent from the previous week, but up 28 percent from the prior 4-week average. Increases primarily for China (119,800 RB, including decreases of 3,300 RB), Turkey (44,000 RB, including decreases of 11,800
RB), Indonesia (8,800 RB, including 1,600 RB switched from Japan and decreases of 300 RB), Taiwan (2,000 RB), and Japan (900 RB), were offset by reductions primarily for Mexico (2,800 RB) and Thailand (1,200 RB). Net sales of 20,200 RB for 2023/2024 were reported
for Turkey (18,000 RB) and Thailand (2,200 RB). Exports of 212,200 RB were up 21 percent from the previous week and 41 percent from the prior 4-week average. The destinations were primarily to China (59,200 RB), Pakistan (45,300 RB), Turkey (24,400 RB), Vietnam
(20,400 RB), and Mexico (18,000 RB). Net sales reductions of Pima totaling 800 RB for 2022/2023 were down noticeably from the previous week and from the prior 4-week average. Increases reported for Turkey (1,100 RB, including 100 RB switched from India), Egypt
(900 RB), Pakistan (400 RB), and Japan (200 RB), were more than offset by reductions for Italy (1,300 RB), Taiwan (900 RB), Peru (900 RB), India (200 RB), and China (100 RB). Total net sales of Pima totaling 2,400 RB for 2023/2024 were for Italy. Exports of
7,800 RB were up noticeably from the previous week and up 72 percent from the prior 4-week average. The destinations were primarily to India (5,400 RB), Indonesia (1,000 RB), Turkey (500 RB), Thailand (400 RB), and Japan (200 RB).

Optional Origin
Sales:  For 2022/2023, the current outstanding balance of 9,300
RB, all Malaysia.

Export for
Own Account:  For 2022/2023, new exports for own account totaling
24,800 RB were to China (19,400 RB), South Korea (2,400 RB), Turkey (1,600 RB), and Vietnam (1,400 RB). Exports for own account totaling 14,000 RB primarily to Vietnam (7,200 RB) and China (6,300 RB) were applied to new or outstanding sales. The current exports
for own account outstanding balance of 114,700 RB are for China (88,100 RB), Vietnam (16,100 RB), Pakistan (5,000 RB), South Korea (2,400 RB), Turkey (1,600 RB), and India (1,500 RB).

Hides and Skins: 
Net sales of 356,200 pieces for 2023 primarily for China (213,700 whole cattle hides, including decreases of 19,600 pieces), South Korea (52,700 whole cattle hides, including decreases of 3,600 pieces), Mexico (48,900 whole cattle hides, including decreases
of 1,000 pieces), Turkey (22,400 whole cattle hides, including decreases of 100 pieces), and Indonesia (7,400 whole cattle hides), were offset by reductions primarily for Thailand (1,200 pieces). Total net sales reductions of 4,500 calf skins were for Italy.
In addition, net sales of 2,100 kip skins were reported for China (1,200 kip skins) and Italy (1,100 kip skins), were offset by reductions for Canada (200 kip skins). Exports of 505,800 whole cattle hides exports were primarily to China (315,200 pieces), South
Korea (84,100 pieces), Mexico (55,700 pieces), Turkey (12,900 pieces), and Thailand (9,800 pieces). Exports of 5,800 calf skins were to Italy. In addition, exports of 1,300 kip skins were to Canada.  

 

Net sales of
62,200 wet blues for 2023 primarily for Italy (25,300 unsplit, including decreases of 900 unsplit), Vietnam (24,000 unsplit), China (5,200 unsplit), Thailand (4,500 unsplit), and South Korea (3,200 grain splits), were offset by reductions for Brazil (200 grain
splits). Exports of 107,300 wet blues were primarily to Italy (56,700 unsplit), Vietnam (14,400 unsplit), China (10,800 unsplit), Mexico (7,200 unsplit), and Thailand (6,200 unsplit). Net sales reductions of 15,700 splits for 2023 were reported for Hong Kong
(8,800 pounds), Vietnam (6,500 pounds), and China (400 pounds). No exports of splits were reported this week.

 

Beef: 
Net sales of 25,200 MT for 2023 were primarily for South Korea (7,100 MT, including decreases of 400 MT), Japan (6,800 MT, including decreases of 700 MT), China (4,300 MT, including decreases of 100 MT), Mexico (3,300 MT, including decreases of 100 MT), and
Canada (2,100 MT, including decreases of 200 MT). Exports of 18,900 MT were primarily to South Korea (5,300 MT), Japan (4,900 MT), China (3,500 MT), Mexico (1,800 MT), and Taiwan (1,000 MT). 

Pork: 
Net sales of 30,900 MT for 2023 primarily for Mexico (15,100 MT, including decreases of 400 MT), Japan (3,700 MT, including decreases of 700 MT), Canada (3,100 MT, including decreases of 500 MT), Colombia (2,200 MT, including decreases of 200 MT), and Australia
(2,200 MT), were offset by reductions for Vietnam (100 MT). Exports of 35,500 MT were primarily to Mexico (16,400 MT), China (5,700 MT), Japan (3,800 MT), South Korea (2,800 MT), and Canada (2,400 MT).