FI Morning Grain Comments 02/24/22

PDF attached

 

Good
morning. 

 

Based
on spread activity, May Chicago wheat synthetic is about 10 cents higher. May corn near limit higher to up 1 cent. Limit up moves in many ag markets overnight after Russia invaded Ukraine. Commodities are flying higher, equities lower and USD up 100 points. 
Ukraine is key global supplier of metals, fertilizers, grains, sunflower oil, and many other products.  CBOT limits:
https://www.cmegroup.com/trading/price-limits.html

 

Ukraine
shut down ports. Egypt cancelled their wheat import tender. One offer was presented.  We heard in the radio China may allow wheat from Russia. Reminder, Friday is position day for March contracts. 

 

Offshore
values are leading SBO 384 points lower and meal $10.63 short ton higher. Palm oil futures hit a record high overnight with May up 471 ringgit or 7.9%, to 6,453 ringgit a ton. Cash palm increased $115/ton to $1,620/ton. China soybean meal futures hit a record
overnight. 

 

 

The
USDA Agriculture Forum kicked off. Corn and wheat are bearish and soybeans slightly bullish based on S&D’s 

https://www.usda.gov/oce/ag-outlook-forum

Link
to commodity reports https://www.usda.gov/oce/ag-outlook-forum/2022-commodity-outlooks

 

 

 

 

 

Weather

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR February 24, 2022

• Northwest
  Africa looks a little wetter today along with a few areas in southern Spain relative to Wednesday’s forecasts.
  
• No
  big soaking is expected in either area, but enough rain will fall in parts of Morocco and Spain to bolster topsoil moisture by the end of next week.
  
• In
  South America, the 06z GFS model run tried to keep rain out of interior southern Brazil through the end of next week, but the European model continues to support rain after Tuesday in Mato Grosso do Sul and Parana along with Paraguay
  
• World
  Weather, Inc. believes that the European model presents the better solution.
  
• Argentina
  is still advertised to eventually get rain throughout the nation and especially in the driest areas, but this process will take multiple days to accomplish.
  
• Cooling
  in Argentina after the rain will help conserve soil moisture through lower evaporation rates.
  
• A
  general improvement in late season crop conditions should occur in Argentina and far southern Brazil during the next ten days.
  
• Rio
  Grande do Sul and Santa Catarina will get some of Argentina’s rain in time but will only get light amounts of moisture periodically until then.
  
• In
  the U.S., less frequent and less significant rain may occur for about one week after Friday in the lower eastern Midwest, Delta and Tennessee River Basin areas before rainy weather resumes again.
  
• The
  spring outlook is still wet for the lower and eastern Midwest, northern Delta and parts of the Tennessee River Basin.
  
• Bitter
  cold in the central U.S. is still not expected to have much impact on the eastern states as its duration in those areas will be relatively brief while temperatures moderate.
  
• Weather
  elsewhere in the world has not changed much overnight. 

Source:
World Weather Inc.

 

Bloomberg
Ag Calendar

Thursday,
Feb. 24:

• USDA
  corn, cotton, soybean and wheat acreage outlook, 8:30am
• EIA
  weekly U.S. ethanol inventories, production, 11am
• U.S.
  red meat production, 3pm

Friday,
Feb. 25:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am

• 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
• USDA
  corn, cotton, soybean and wheat end-stockpile outlook, 8:30am
• FranceAgriMer
  weekly update on crop conditions
• Malaysia’s
  Feb. 1-25 palm oil exports
• U.S.
  cattle on feed, 3pm

Source:
Bloomberg and FI

 

 

 

 

 

Macros

Tensions
are now rising in other areas outside Ukraine.

TAIWAN
DEFENCE MINISTRY SAYS 9 CHINESE AIR FORCE PLANES ENTERED ITS AIR DEFENCE ZONE ON THURSDAY

 

 

Corn

·        
CBOT corn is up limit 35 cents.  May synthetic is near limit to penny higher based on spreads.

·        
Ukraine closed their ports.

·        
The USDA weekly Broiler Report showed eggs set in the United States up 4 percent and chicks placed up 1 percent.  Cumulative placements from the week ending January 8, 2022, through February 19, 2022 for the United States were
1.30 billion. Cumulative placements were down 1 percent from the same period a year earlier.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 1,000 barrels to 1.010 million (1000-1022 range) from the previous week and stocks up 135,000 barrels to 25.618 million.

·        
The USDA reported a bird flu outbreak in a commercial poultry flock in Delaware.  This comes after of the highly pathogenic avian flu was reported in several states this year. Variants of bird flu have been detected in New York,
Maine, North Carolina, South Carolina, Virginia, Indiana (at least three farms) and Kentucky. China and Mexico has already placed trade restrictions. 

 

Export
developments.

• Taiwan’s
  MFIG seeks up to 65,000 tons of corn which from the United States, Brazil, Argentina or South Africa, on Friday, Feb. 25, for shipment between May 1 and early June shipment, depending on origin. 
  

 

 

 

Soybeans

·        
CBOT May soybeans were up 38.50 cents at the electronic close, May meal up $8.20 and May soybean oil up 302 points.  Palm futures hit a record overnight. Note palm oil opened up for their third session this morning and futures
were off 64 MYR from the close noted below.  SBO reached limit higher 400 points overnight, now sitting 98 points off that level.  

·        
Ukraine sunflower oil accounts for around 75 percent of global export market share.

·        
Rotterdam meal was up more than 100 euros and vegetable oils 15-45 euros higher from this time yesterday.

·        
Palm oil futures hit a record high overnight with May up 471 ringgit or 7.9%, to 6,453 ringgit a ton.  Cash palm increased $115/ton to $1,620/ton. 

·        
China soybeans were up 0.3%, meal up 3.2%, soybean oil up 3.5% and palm up 3.1%. 

·        
Offshore values are leading SBO 384 points lower and meal $10.63 short ton higher.

 

Export
Developments

• Iran’s
  SLAL seeks up to 60,000 tons of soybean meal and 60,000 tons of feed barley on Feb. 23 for an unknow shipment period. 
  

 

Wheat

·        
US wheat is up limit after Russia invaded Ukraine. We think there is additional upside in wheat futures if futures settled up limit.  Based on spread activity, May Chicago wheat synthetic is about 10 cents higher.

·        
Ukraine port closures are in place. Countries like Egypt, Turkey, and other major importers may have to scramble for wheat and corn supplies from other major exporters.

·        
China already announced they will allow wheat imports from Russia.  

·        
May EU wheat futures gapped higher, up 31.50 euros at 325.50 euros per ton at the time this was written.

 

Export
Developments.

·        
Turkey seeks 435,000 tons of milling wheat on March 2 for March-April shipment. 

·        
Jordan seeks 120,000 tons of feed barley on March 1. 

 

Rice/Other

·        
South Korea seeks 72,200 tons rice from U.S. and Vietnam on Feb. 25.