FI Morning Grain Comments 03/08/23

PDF attached

 

Good
morning. USDA report day.

 

US
equities are higher this morning after selling off hard Tuesday after the Fed indicated US rates could go higher. The USD is higher and WTI crude oil lower. There were several ag import tenders overnight, not surprising after prices collapsed on Tuesday. Before
the electronic session, futures for corn, soybean meal and soybean rebounded (meal the leader). Soybean oil is higher on technical buying. A large rise in soybean oil open interest yesterday suggests a lot of shorts were added. Wheat remains under pressure
from follow through selling related to optimism that the Black Sea grain deal will get done.

 

 

 

Weather

 

Source:
World Weather, INC.

 

World
Weather, INC.

WORLD
WEATHER HIGHLIGHTS FOR MARCH 8, 2023

• Not
  many changes overnight
• Central
  and eastern Argentina into far southern Brazil, Uruguay and southwestern Paraguay will be dry or experience net drying conditions for the next ten days
• Western
  and far southern Argentina will get periodic rainfall of benefit for late season crops that have survived the drought
• Center
  south and center west Brazil are expected to be wetter biased during the coming ten days that may slow late season soybean harvesting and Safrinha corn planting
• India’s
  rainfall will continue light and erratic, but the moisture and cloud cover will help to prevent temperatures from getting excessively hot
• Eastern
  China will dry down for a while except for the western and southern parts of the Yangtze River Basin where some occasional rain is expected
• Temperatures
  will be warmer than usual and winter wheat greening will continue while rapeseed development accelerates
• Central
  Queensland through northeastern New South Wales will get rain during the balance of this week and into the weekend offering relief for dryland crops suffering from limited precipitation and poor soil moisture
• Germany,
  France and the U.K. will receive significant precipitation over the coming week improving runoff and water supply
  
• Eastern
  Spain and the lower Danube River Basin will continue drier biased
• Excessive
  snowfall and valley rain will impact California and western Washington and western Oregon Thursday through a part of next week
  
• Waves
  of snow will continue form the northern Plains into the northern Midwest during the coming week
• Needed
  snow will accumulate in Canada’s Prairies this weekend improving spring planting moisture in some areas
• West
  and South Texas will continue to get very little precipitation for a while

Source:
World Weather and FI

 

Bloomberg
Ag calendar

Wednesday,
March 8:

• USDA’s
  World Agricultural Supply and Demand Estimates (WASDE), 12pm
• China’s
  agriculture ministry (CASDE) releases monthly report on supply and demand for corn and soybeans
• Bursa
  Malaysia Palm Oil Conference and 2023 Outlook, Kuala Lumpur, day 3
• EIA
  weekly US ethanol inventories, production, 10:30am
• ABARES
  Outlook 2023 conference, Canberra, day 2

Thursday,
March 9:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Port
  of Rouen data on French grain exports
• Brazil’s
  Conab releases data on production, yield and area for corn and soybeans

Friday,
March 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 data on stockpiles, production and exports
• FranceAgriMer’s
  weekly crop conditions reports
• Brazil’s
  Unica may release cane crush and sugar output data (tentative)
• Coffee
  festival in Dak Lak province, Vietnam

Source:
Bloomberg and FI

 

 

 

USDA
March report estimates

 

 

 

 

 

 

 

Due
out March 9

 

Macros

US
ADP National Employment Feb: 242K (exp 200K; prevR 119K)

US
Trade Balance Jan: -$68.3B (exp -$68.7B; prev -$67.4B)

Canadian
International Merchandise Trade (CAD) Jan: 1.92B (exp -0.12B; prev -0.16B)

 

Corn

·        
Corn futures
turned higher in the nearby contracts before the electronic close. Soybean meal is making  new session highs.

·        
The Philippines reported an outbreak of African swine fever in central Cebu province

·        
The trade is expecting USDA to lower US corn exports by 25 to 50 million bushels (reflected in the trade average).

·        
CME feeder cattle futures hit a contract high on Tuesday in large part to reduced herd sizes and lower corn.

·        
Mexico plans to stick with their decision to partially ban US GMO corn imports. This will likely go to arbitration.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 9,000 thousand barrels to 1012k (996-1025 range) from the previous week and stocks up 143,000 barrels to 24.918 million.

 

Export
developments.

• Taiwan’s
  MFIG group bought about 52,000 tons of corn from South Africa at an estimated premium of 219.40 cents a bushel c&f over the July contract for shipment between April 25 and May 25.
  
• South
  Korea’s Major Feedmill Group (MFG) bought 68,000 tons of corn from South America at an estimated outright price of $339.98 a ton c&f and 239.84 cents a bushel c&f over the September contract for arrival in South Korea around July 20.
• South
  Korea’s Nonghyup Feed Inc. (NOFI) bought an estimated 117,000 tons of optional origin corn. 45,000 tons was bought at an estimated $325.49 a ton c&f. 63,000 tons was bought at $326.00 a ton c&f. It’s for arrival in Korea around July 15.

 

 

 

Soybeans

·        
Soybean futures rebounded from a $6.00 swing in soybean meal since early this morning. Soybean oil is higher on technical buying.

·        
New shorts were put on CBOT soybean oil yesterday with open interest increasing 15,170 contracts.

·        
Palm oil futures were down for the third consecutive day on weakness in outside related energy and vegetable oil markets. Losses were limited from several bullish comments out of the palm oil conference held in Kuala Lumpur. Some
Reuters headlines:

• Dorab
  Mistry – Malaysian palm oil is expected to trade between 4,000 and 5,000 ringgit ($1,106) per ton from now until August as Indonesia’s ambitious biodiesel mandate will keep stocks tight.
  
• Thomas
  Mielke – The market for vegetable oils is set to tighten for a year from mid-2023 as demand rises to produce biodiesel in Indonesia, while growth in palm oil output has slowed.
  
• Indonesian
  Palm Oil Association (GAPKI) – Indonesia’s palm oil exports are set to fall in 2023 as it increases the use of the tropical oil in biodiesel, reducing the surplus available for overseas sales.
  

·        
China’s CASDE was unchanged for soybeans, corn and vegetable oils. They lowered sugar production.

·        
Traders are not looking for USDA to change their US export forecast, and leave ending stocks about unchanged. Stocks will change March 31 when USDA updates their quarterly stocks estimate. Our working estimate for March 1 soybean
stocks is 1.760 billion bushels, down 9 percent from year earlier but well above 1.564 billion two years ago.

·        
Malaysia May palm futures were down 25 ringgit to 4,180 and May cash was down $10.00 at $985/ton. 

·        
China soybeans were down 0.8%, meal down 0.2%, SBO down 0.9% and palm oil futures down 1.8%.

·        
Nearby Rotterdam vegetable oils were
mixed from this time yesterday morning and meal mostly 5.00-11.50 euros higher.

·        
Offshore values were leading SBO higher by about 113 points this morning and meal $0.40 short ton
lower.

 

Reuters
trade estimates for Malaysian palm oil S&D due out March 10.

 

Export
Developments

·        
China’s Sinograin sold 34,839 tons of soybean oil from reserves, 100 percent of what was offered.

·        
Tunisia seeks up to 9,000 tons of vegetable oils, either crude degummed soyoil or crude degummed rapeseed oil, on Thursday, March 9. Delivery is sought between March 30 and April 12.

 

 

Wheat

·        
Wheat futures basis May Chicago trended below $7.00/bu as traders continue to monitor Black Sea shipping negotiations, large global supply prospects, and the large rally in the USD this week. A year ago, Chicago wheat was around
$10.65.

·        
Russia has been a good exporter of wheat in recent weeks. SovEcon reported Russia exported 6.7 million tons of wheat during January, up from 4.3 MMT year ago. 

·        
Paris May wheat was lower by 3.50 euros earlier at 266.50 per ton, near a 1-year low.

 

Export
Developments.

·        
Tunisia’s state grains agency bought 100,000 tons of durum wheat in four consignments of 25,000 tons, with lowest price at an estimated $455.89 ton c&f, for shipment between April 1 and May 15 depending on origin supplied.

·        
Jordan bought 50,000 tons of animal feed barley, optional origin, at an estimated $279.50 a ton c&f for shipment in the second half of June.

·        
Jordan seeks up to 120,000 tons of milling wheat, optional origin, on March 14, for shipment during Aug. 1-15, Aug. 16-31, Sept. 1-15 and Sept. 16-30.

·        
Japan in a SBS import tender bought only 380 tons of feed barley. They were in for 70,000 tons of feed wheat and 40,000 tons of barley for arrival in Japan by August 31 on March 8.

·        
India will send 20,000 tons of wheat to Afghanistan, for assistance in partnership with UN World Food Program.

·        
Today China planned to auction off 140,000 tons of wheat from state reserves. They sold 141,700 tons last week, or about 100 percent offered at 2795 yuan per ton.

·        
Algeria seeks 50,000 tons of durum wheat on March 9 for April 1-15 and April 16-30 shipment.

·        
Japan seeks 80,570 tons of food wheat from the US and Canada on Thursday.

 

Rice/Other

·        
(Bloomberg) — Sugar mills in India rally for a second day amid optimism the government will allow additional exports of the sweetener this season.

·        
(Xinhua) — Vietnamese rice export prices increased to 528.5 U.S. dollars per ton, up 9.8 percent in the first two months this year from a year earlier, the Vietnam News reported on Wednesday.