FI Morning Grain Comments 02/07/23

PDF attached

 

Good
morning.

 

Stats
Canada was seen supportive for high protein wheat and canola.

 

Wednesday
is USDA report day. Heavy rains across Brazil are starting to concern the trade as harvesting progress lags from this time year ago. This is supporting soybeans. Soybean oil is higher following strength in WTI crude oil, spreading against meal and higher Malaysian
palm oil. Indonesia plans to suspend some palm oil export permits to cool internal prices and secure domestic supplies ahead of the Islamic festivals.  CBOT corn is lower following weakness in wheat and soybean/corn spreading. South Korea’s MFG bought 138,000
tons of corn from South America at $339.50/ton (70k) and $339.83/ton (68k), both for May arrival. Chicago wheat is mostly lower from improving US weather and slow US exports. Algeria is in for wheat today. Jordan passed on 120,000 tons of optional origin milling
wheat for May-June shipment. U.S. Federal Reserve Chair Jerome Powell will speak later today.
Goldman roll starts today.

 

 

 

Weather

The
US Great Plains forecast is unchanged, and rain should favor southeastern KS, eastern OK, and eastern TX today into Wednesday. The rest of the GP will see net drying exception far western growing areas. The US Midwest will see rains build across the southern,
central and eastern areas today into Thursday. Argentina will see limited rain through the rest of this workweek, but models vary. Southeastern BA could see rain through Wednesday. Another rain event is expected to occur Sunday through February 14. Northeastern
Argentina will remain driest. Too much rain across Brazil’s MG, Goias, southern MG, MGDS and Sao Paulo should delay soybean harvesting efforts and second crop corn plantings.

 

 

 

World
Weather, INC.

WORLD
WEATHER HIGHLIGHTS FOR FEBRUARY 7, 2023

• Argentina
  is still expecting some relief to dryness late in this coming weekend and mostly next week with rain for most areas
• Follow
  up rain will be of critical importance
• Argentina
  is experiencing warm and dry weather now that will last into the weekend with only a few scattered showers likely
• Brazil
  will continue drier biased in the south into this coming weekend and then rain should bring relief in the following week
• Brazil’s
  center west and center south production areas are expected to receive frequent rain over the next two weeks keeping the harvest pace a little slower than desired for early season soybeans and the same is true for the planting of Safrinha corn
• Western
  portions of U.S. hard red winter wheat areas will continue to receive less than usual precipitation over the next ten days
• Excessive
  rain may impact a part of the Delta and central and southeastern Midwest during the next ten days to two weeks
• Upper
  U.S. Midwest will receive some needed moisture next week, but the northwestern Plains and Canada’s Prairies will continue receiving a limited amount of precipitation
• No
  changes in the Europe, North Africa, China or India forecast today relative to that of Monday
• Eastern
  Australia rainfall is still looking limited during the next ten days raising need for rainfall and a higher demand for irrigation
• South
  Africa rainfall should be increasing over the next ten days

Source:
World Weather and FI

 

Bloomberg
Ag calendar

Tuesday,
Feb. 7:

• New
  Zealand commodity prices
• EU
  weekly grain, oilseed import and export data
• Canada’s
  StatCan to release wheat, soybean, canola and barley reserves data, 8:30am

• Suspended
  – CFTC commitments of traders weekly report on positions for various US futures and options

• New
  Zealand global dairy trade auction

Wednesday,
Feb. 8:

• USDA’s
  World Agricultural Supply & Demand Estimates (WASDE), 12pm
• China’s
  agriculture ministry (CASDE) releases monthly supply and demand report
• EIA
  weekly US ethanol inventories, production, 10:30am
• Brazil’s
  Conab issues production, area and yield data for corn and soybeans
• RESULTS:
  Yara

Thursday,
Feb. 9:

• 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. 10:

• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various US futures and options, 3:30pm
• Malaysian
  Palm Oil Board’s January data on stockpiles, production and exports
• Brazil’s
  Unica to release sugar output, cane crush data (tentative)
• Malaysia’s
  Feb. 1-10 palm oil export data

Source:
Bloomberg and FI

 

 

 

 

Brazil’s
Conab will be out Wednesday with updated soybean and corn production

 

Soybean
and Corn Advisory

2022/23
Brazil Soybean Estimate Unchanged at 151.0 Million Tons

2022/23
Brazil Corn Estimate Unchanged at 125.0 Million Tons

2022/23
Argentina Soybean Estimate Lowered 1.0 mt to 38.0 Million

2022/23
Argentina Corn Estimate Unchanged at 44.0 Million Tons

 

 

 

Macros

US
Trade Balance Dec: -$67.4B (est -$68.5B; prevR -$61.0B)

 

Corn

·        
CBOT corn is lower following weakness in wheat and soybean/corn spreading.

·        
Traders are also looking for US corn acres to expand in 2023, which is no surprise given the December corn contract is trading just below $6.00 per bushel. November soybeans are near $13.70, which favors corn plantings. 

 

Export
developments.

• South
  Korea’s MFG bought 138,000 tons of corn from South America at $339.50/ton (70k) and $339.83/ton (68k), both for May arrival.
  

 

 

Soybeans

·        
Heavy rains across Brazil are starting to concern the trade as harvesting progress lags. Soybean rust cases in Brazil are starting to creep higher. Nine percent or 14 million tons of AgRural’ s production estimate had been collected,
below 16 percent year ago. Meanwhile, Argentina is not expected to see any meaningful rain through the end of this workweek. Not all areas will be totally dry for Argentina. Some weather models are diverging, meaning there is a possibility Argentina could
see rain time to time. 

·        
Goldman roll starts today.

·        
Look for positioning today ahead of the February USDA S&D.  The trade should focus on Argentina soybean and corn  production, global ending stocks, followed by changes to the US S&D’s, in that order. We think the average trade
guesses for Argentina soybean and corn production are very conservative. We don’t see USDA making any significant changes to China demand.

·        
Soybean oil is higher following strength in WTI crude oil, spreading against meal and higher Malaysian palm oil. Some are eyeing the fund position for soybean oil which has nearly halved since mid-January.  Soybean meal was down
$1.30-1.90/short ton.

·        
Indonesia plans to suspend some palm oil export permits to cool internal prices and secure domestic supplies ahead of the Islamic festivals.  Two thirds of existing quotas are suspended until May 1. The government noted traders
accumulated large shipment quotas last year and have no intention to divert the palm supplies back to the domestic market. Exporters were holding about 5.9 million tons worth of export permits at the end of January.  Companies had been ordered to supply 450,000
tons per month to the domestic market, up from 300,000 tons previously.

·        
Malaysian markets are back from holiday.

·        
Malaysia April palm futures were up 88 ringgit to 3939 and cash was up $7.50/ton to $965.00/ton.  

·        
China soybeans increased 0.3%, meal down 1.0%, SBO up 0.6% and palm oil futures up 1.3%.

·        
Nearby Rotterdam vegetable oils were
15-17 euros from this time yesterday morning and meal was 3.00-6.00 euros lower.

·        
Offshore values were leading SBO higher by about 28 points this morning and meal $0.90 short ton
higher.

 

Export
Developments

·        
None reported

 

Wheat

·        
Chicago wheat is mostly
lower from improving US weather and slow US exports. KC and MN are higher after StatsCan reported a supportive durum stocks estimate.

·        
Winter weather advisories are advertised for many parts of the US, including far western Great Plains.

·        
Paris March wheat was up 2.00 euros earlier at 290.50 per ton. 

·        
Ukraine exported 27.7 million tons of grain so far for the 2022-23 marketing year, down from 39.2 million tons last season.

·        
Traders don’t see a disruption in grain trading in Syria and Turkey post devastating earthquake.

 

 

Export
Developments.

·        
Today Algeria may start buying wheat. They are in for 50,000 tons of wheat for March and April shipment, Feb 7-8, and may double down on the import tender as it is sought for two consignments.

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

·        
Taiwan seeks 48,100 tons of milling wheat from the US on February 9 for March 29 and April 12 shipment.

 

Rice/Other

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

·        
Egypt seeks at least 25,000 ton of rice from optional origin April-May shipment.