FI Morning Grain Comments 02/23/23

PDF attached includes USDA grain outlook S&D’s

 

Good
morning.

 

USDA’s
Agricultural Outlook Forum (AOF) started this morning.  https://www.usda.gov/oce/ag-outlook-forum/commodity-outlooks

 

 

USDA’s
outlook for 2023 issued today provides a glimpse into what supply and ending stocks could look like at by the end of the season. But like most years, final numbers could end up well off the initial projections. The 2023 soybean planted area was estimated at
87.5 million acres, 1.1 million below trade expectations, half million above the November budget, and near unchanged from 2022. This gave a little life to soybean futures post release. US soybean stocks are expected to rise to 290 million bushels from 225
million current, even though they see a massive increase in crush by 80 million bushels to record 2.310 million bushels. Many other commodity prices had little reaction to the USDA headlines. US corn acres of 91 million were near expectations and all-wheat
of 49.5 million were 800,00 acres above a trade guess. Corn for ethanol was estimated at 5.250 billion bushels, unchanged from current 2022-23 estimate. We see little trade reaction going forward with these numbers, but something to work with until the March
Intentions report is released.

 

February
to date SX/CZ stands at 2.32. A week ago it was at 2.30

Soybeans
are lower. Soybean meal is under light pressure from higher SBO futures. Palm oil rallied overnight from strength in mineral oil. The USD is higher by 1 points and WTI crude oil higher by 102 cents. The weather outlook is mostly unchanged. Argentina will see
light rain this week and Brazil rain will increase over the next 7 days. The upper US is still under a winter weather advisory bias eastern area. Over 2 feet of snow fell across some areas of the northern Plain states and upper Midwest.
Offshore values were leading SBO lower by about 2 points this morning and meal $0.40 short ton higher. Brazil beef exports to China will be halted after a case of mad cow disease was confirmed in the northern state of Para. Corn futures
are mixed on lack of direction. US wheat futures are mixed. China will auction off 140,000 tons of wheat from state reserves on March 1. USDA export sales is delayed until Friday. A Bloomberg poll looks for weekly US ethanol production to be up 6,000 thousand
barrels to 1020k (1015-1028 range) from the previous week and stocks up 60,000 barrels to 25.399 million.

 

Daily
estimate of funds

 

Weather

The
weather outlook is mostly unchanged. Argentina will see light rain this week and Brazil rain will increase over the next 7 days. The upper US is still under a winter weather advisory bias eastern area. Over 2 feet of snow fell across some areas of the northern
Plain states and upper Midwest. Rains favor southeast Oklahoma and northeast Texas Friday through Saturday.

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE DAY

• Southern
  Argentina’s earliest opportunity for precipitation will occur in the second week of the forecast which represents little change from Wednesday’s outlook
• Too
  much rain will continue to  fall in southern Brazil from eastern Paraguay through Mato Grosso do Sul to Sao Paulo and Parana during the next ten days
• Delays
  in farming activity will occur frequently until drier weather evolves
• Mato
  Grosso, Brazil rainfall will be infrequent and light enough at times in the next two weeks to support additional harvesting of soybeans and planting of Safrinha corn
• Northern
  Argentina rainfall will be sufficient for a notable increase in precipitation for cotton, northern grain and oilseed, dry bean, citrus and sugarcane production areas
  
• Mexico
  remains in a winter drought with little relief expected in the next two weeks
• California
  will start receiving rain and mountain snow once again during the balance of this week through much of next week
• The
  moisture will be good for runoff potentials later this spring
• U.S.
  hard red winter wheat areas turned much colder in the north Wednesday and early today and snow cover is not very great in some areas of northwestern Kansas, eastern Colorado and southwestern Nebraska.
  
• No
  serious crop damage was suspected today, despite the cold conditions and the sometimes limited snow cover
• Heavy
  snow and freezing rain impacted many areas from the northern U.S. Plains through the Great Lakes region to the northeastern states Wednesday and early today
• Travel
  delays have resulted along with some livestock stress and higher energy demand for parts of the northern Plains
• Stormy
  weather will continue in the northern Midwest and northeastern states today and early Friday
• Bitter
  cold will remain over the north-central United States into Saturday morning with a few extremes temperatures in the -20s and negative teens likely tonight in the Dakotas,, and Minnesota.
  
• Unusually
  warm to hot weather continued Wednesday from the southern Plains through the Delta to the southeastern states
• These
  areas will continue to experience warm weather for an extended period of time lasting into next week for some areas
• Winter
  wheat will break dormancy and begin developing more significantly
• Rising
  soil temperatures will improve planting conditions in South Texas and areas near the Gulf of Mexico coast.
  
• U.S.
  Gulf of Mexico coastal areas are unlikely to get much rain of significance in the next ten days
  
• Net
  drying will result because of limited rain and warmer than usual temperatures
• India
  rainfall continues unusually light leaving winter crops with a drier bias that may lead to lower yield this winter in unirrigated wheat, rapeseed, mustard, sorghum, groundnut, rice and pulse crops among others
• Greater
  rain is needed immediately, but unlikely to occur anytime soon
• Temperatures
  have not been excessively hot, but they have been and will continue to be a little warmer than usual which is likely to stress some of the reproducing and filling crops
• Southeastern
  and east-central China will be drying down over the next two weeks
• Rapeseed
  and wheat production areas in the nation are rated favorably with little change likely for a while, but rain will soon be needed
• Timely
  rain will be needed in March to maintain the best possible soil moisture
• Eastern
  Australia is still struggling with dryness in unirrigated cotton and sorghum areas of Queensland and New South Wales
• Some
  livestock stress has been occurring as well due to very warm to hot temperatures and limited soil moisture hurting grazing conditions
• Irrigated
  summer crops in eastern Australia are performing well with little change likely
• Tropical
  Cyclone Freddy moved through southern Madagascar Tuesday and was expected to reach Mozambique Friday
• The
  storm produced very heavy rain and induced damaging wind as well as some flooding over southern and east-central Madagascar impacting grain, oilseed, rice, coffee, sugarcane and other crops
• Damage
  assessments will be forthcoming later this week into next week
• Remnants
  of Tropical Storm Freddy may impact far northeastern Limpopo, South Africa as well as Mozambique Friday into the weekend, but crop damage should be limited to flooding in a few Mozambique locations
• Philippines
  heavy rain reported during the Friday through Monday period from eastern Mindanao to southeastern Luzon Island abated Tuesday and Wednesday allowing flood water to recede
• More
  rain is expected in eastern parts of the archipelago resulting in more flooding later this week and next week
• Some
  crop and property damage has likely occurred recently, but the extent of the damage is not known
• South
  Africa rainfall should be limited for a while in the next two weeks except where Tropical Cyclone Freddy brings heavy rain to Limpopo
• Crop
  and field conditions are rated quite well because of timely rain throughout the summer
• Western
  CIS crop areas will continue to be impacted by frequent snow and some rain in the next ten days
• Parts
  of western Russia, Ukraine, Belarus and Baltic States have saturated soil and need to dry down for a while especially when the spring snow melt season arrives
• The
  risk of flooding will be high in southwestern Russia if precipitation continues frequently while snow is melting
• Europe
  and Asia temperatures will remain warmer than usual during the coming week
• The
  developing negative phase of North Atlantic Oscillation promises to generate colder temperatures in northern Europe and northwestern Russia while bringing on greater storminess in southern parts of the continent
  
• This
  change may raise heating fuel demand in the north during March
• The
  change will also bring greater precipitation back to southern Europe which will be most welcome to winter and spring crop areas in eastern Spain and the lower Danube River Basin where low soil moisture is still present today
• Negative
  North Atlantic Oscillation in March may also bring greater rainfall to northern Africa which could improve wheat and barley development potential after a drier autumn and winter
• Rain
  is needed most in interior Tunisia, interior northeastern Algeria and southwestern Morocco
• Negative
  North Atlantic Oscillation might also cool down the eastern United States in the first week to ten days of March
  
• West-central
  Africa rainfall is expected to increase over the next two weeks resulting in greater soil moisture and a better environment for the flowering of coffee and cocoa next month
• Indonesia
  and Malaysia rainfall is expected to occur frequently for the balance of this week and the weekend and then parts of the region will start to trend a little drier in March
• Middle
  East precipitation is expected to be erratic over the next couple of weeks raising some need for greater precipitation prior to cotton and rice planting season.
  
• Wheat
  conditions are rated favorably, but would benefit from additional rain
• Turkey
  is wettest while Syria, Iraq and Lebanon need greater rainfall
• Eastern
  Africa precipitation will be greatest in Tanzania during the next ten days which is not unusual at this time of year
• Some
  rain is expected to develop in Ethiopia, Uganda and Kenya over time, although amounts should be light
• Today’s
  Southern Oscillation Index was +11.26 Wednesday and it was expected to fall significantly in the coming week

Source:
World Weather and FI

 

Bloomberg
Ag calendar

Thursday,
Feb. 23:

• Suspended
  until February 24 – CFTC commitments of traders

• USDA’s
  acreage outlook for corn, soy, wheat and cotton
• The
  USDA’s Agricultural Outlook Forum, Arlington, day 1
• EIA
  weekly US ethanol inventories, production, 10:30am
• Port
  of Rouen data on French grain exports
• Sugar
  production and cane crush data from Brazil’s Unica (tentative)
• USDA
  red meat production, 3pm
• HOLIDAY:
  Russia

Friday,
Feb. 24:

• USDA’s
  full outlook for corn, soy, wheat and cotton

• The
  USDA’s Agricultural Outlook Forum, Arlington, day 2
• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various US futures and options, 3:30pm
• FranceAgriMer’s
  weekly crop conditions reports
• US
  cattle on feed, 3pm
• US
  cold storage data for beef, pork and poultry, 3pm

Source:
Bloomberg and FI

 

 

 

Macros

US
GDP Annualized (Q/Q) Q4 S: 2.7% (est 2.9%; prev 2.9%)

US
GDP Price Index Q4 S: 3.9% (est 3.5%; prev 3.5%)

US
Core PCE (Q/Q) Q4 S: 4.3% (est 3.9%; prev 3.9%)

US
Personal Consumption Q4 S: 1.4% (est 2.0%; prev 2.1%)

US
Initial Jobless Claims Feb 18: 192K (est 200K; prev 194K)

US
Continuing Claims Feb: 1654K (est 1700K; prev 1696K)

US
Chicago Fed Nat Activity Index Jan:  0.23 (est -0.25; prevR -0.46)

Canadian
Payroll Employment Change- SEPH Dec: 91.4K (prev 7.1K)

 

Corn

·        
Corn futures are mixed on lack of direction.

·        
Brazil beef exports to China will be halted after a case of mad cow disease was confirmed in the northern state of Para.

·        
Cold temperatures this week for the northern US may slightly increase feed demand.

·        
USDA Cattle on Feed report is due out Friday and traders are looking for February 1 on feed to be reported slightly above January but down 3.5 percent from a year ago.

·        
The USDA Broiler Report reported eggs set in the US down slightly and chicks placed up 1 percent from a year ago. Cumulative placements were up 1 percent from the same period a year earlier.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 6,000 thousand barrels to 1020k (1015-1028 range) from the previous week and stocks up 60,000 barrels to 25.399 million.

 

 

Due
out Friday…

 

Export
developments.

• South
  Korea’s NOFI
  group passed on 138,000 tons of corn for in June. Lowest offer was $339.45 a ton c&f.
• Algeria’s
  ONAB bought 30,000 to 40,000 tons of corn from Argentina for shipment by April 10 at $342 to $346/ton c&f.
  

 

Soybeans

·        
Soybeans and meal are lower in part to USDA’s outlook calling for an increase in 2023-24 US ending stocks and follow through selling in soybean meal. Soybean oil is higher from strength in palm oil futures and rebound in WTI crude
oil.

·        
Malaysia May palm futures were up 89 ringgit to 4,235 and May cash was up $15 to $990/ton. 

·        
China soybeans increased 0.1%, meal down 0.6%, SBO off 0.3% and palm oil futures up 0.1%.

·        
Nearby Rotterdam vegetable oils were
higher by about 5-10 euros from this time yesterday morning
and meal lower by 5 euros for Argentina and 3.00-4.50 lower for Brazil.

·        
Offshore values were leading SBO lower by about 2 points this morning and meal $0.40 short ton
higher. 

 

Export
Developments

·        
Lowest offer for Egypt’s GASC seeking soybean oil was $1,314/ton c&f for payment at sight and $1,190/ton for sunflower oil also payment at sight. The international import tender was for arrival April 1-20. They are also in for
at least 3,000 tons of local soybean oil and 1,000 tons of local sunflower oil for delivery April 5-25.

·        
Turkey’s state grain board TMO seeks about 48,000 tons of crude sunflower oil Feb. 24 for delivery March 13-April 13 and April 14-May 14.

 

Wheat

·        
US wheat futures are mixed.

·        
China will auction off 140,000 tons of wheat from state reserves on March 1. USDA export sales is delayed until Friday.

·        
Paris May wheat was up 2.25 euros earlier at 282 per ton, just below Paris June corn of 284.75 euros

 

Export Developments.

·        
Egypt’s GASC bought 240,000 tons of Russian wheat funded by the World Bank for April 1-15 shipment at $317.50/ton for April 1-15 shipment.

·        
Taiwan seeks 48,975 tons of US milling wheat on March 1 for PNW shipment between April 19 and May 3. Wheat types sought include dark northern spring, hard red winter and white wheat.

·        
Jordan’s state grain buyer seeks 120,000 tons of optional origin milling wheat on February 28 for shipment between Aug. 1-15 and Aug. 16-31.

·        
Jordan’s state grain buyer seeks 120,000 tons of optional origin feed barley for shipment between June 1-15, June 16-30, and July 1-15.

·        
Iraq seeks 200,000 tons of milling wheat this week from the US, Canada and/or Australia.

·        
Jordan’s state grain buyer bought about 60,000 tons of optional origin feed barley at an estimated $295/ton for shipment between June 1-15, June 16-30, July 1-15 and July 16-31.

·        
Turkey seeks an estimated 790,000 tons of milling wheat on February 28 for March 8-April 7 and April 10-May 10 shipment.

·        
Turkey seeks 440,000 tons of feed barley on March 2.

 

 

Rice/Other

·        
May rice futures tanked today and yesterday after 1000+ sell orders/day.  The wipe out in rice prices is leading some to think little if any expansion un US plantings for 2023.  That would be three years in a row of low US rice
area, which could lead to an explosion to the upside in rice prices later this crop year is US stocks continue to decline.

·        
Egypt’s GASC bought 50,000 tons of imported white rice from their tender announced earlier this month. The rice might be sold through the Egyptian Mercantile Exchange.