FI Morning Grain Comments 03/22/23

PDF attached

 

Good
morning.

 

US
Fed rate decision today. Expectations are for an increase of +.25 to 4.75-5% Fed targe. USD was lower earlier, WTI crude near unchanged, and US equities mostly lower. Inflation remains a concern for major global economies. UK February inflation was up 10.4
percent from a year ago. Lower trade in the soybean complex and grains. CFTC COT data as of March 14 showed funds were not done getting out of long positions, especially soybean oil and corn. CFTC is caught up with these reports, but the recent data dump has
proved some of the trade (non-funds) was not well positioned after being in the dark for a few weeks. Traditional funds (futures only) had liquidated nearly 100,000 long corn contracts from late February through mid-March.

 

Lower
outside related vegetable oil and oilseed markets continue to pressure the US soybean complex, along with harvesting pressure in Brazil. Palm oil futures hit a five month low after trading 3 percent lower. Meanwhile the BOK/BON is firm this morning. May soybeans
are trading near its 200-day moving average. Both US cash and CBOT crush are much softer over the past week. Malaysia June palm futures were down 120 ringgit to 3,664 and June cash was down $30 at $885/ton. China May soybean futures were unchanged, meal down
0.4%, SBO down 2.0% and palm oil futures down 2.6%. Nearby Rotterdam vegetable oils were 5-15 euros lower from this time yesterday morning and meal 9.00-15.00 euros lower. Offshore values were leading SBO higher by about 105 points this morning and meal $5.40
short ton lower. Paris wheat was down sharply earlier. News for the grains and oilseeds is about the same from yesterday. US wheat country will see additional rain this week, but the southwestern growing areas may see the least amount. EU weather is favorable.
It’s mostly dry for Western Canada. Results are pending for Jordan seeking 120,000 tons of feed barley. Jordan seeks 120,000 tons of wheat on March 28 for Sep-Oct shipment. China plans to auction off 140,000 tons of wheat from state reserves on March 29. A
Bloomberg poll looks for weekly US ethanol production to be up 8,000 thousand barrels to 1022k (1012-1025 range) from the previous week and stocks down 400,000 barrels to 25.994 million.

 

 

 

Weather

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR MARCH 22, 2023

• Heavy
  rain fell in central Argentina as expected overnight and has further expanded the cropland in that country that has been relieved of drought, although more rain is needed
• Central
  Brazil crop areas will continue to dry down for a little while longer and that should translate into a better harvest environment for late season soybeans and for any unplanted Safrinha corn
• U.S.
  hard red winter wheat areas were advertised wetter in the central Plains today by the GFS model, but the moisture looks overdone
• More
  snow fell in the Red River Basin of the North Tuesday and overnight adding 7 inches of additional snow and another 0.65 inch of moisture to the deep snowpack that promises to induce flooding later this spring
• U.S.
  lower Midwest, Delta and Tennessee River Basin will be excessively wet for a while delaying some early season corn and rice planting
• California
  will continue quite wet for a while longer
• India
  has another wave of significant rain coming to the north Thursday into Saturday raising the potential for more wheat quality problems and some rapeseed and mustard might also be negatively impacted
• Portions
  of Pakistan are also expected to be too wet with a wheat quality issue expected
• Rain
  in northern India and Pakistan may prove good for early season cotton which is normally planted in April and May
• No
  changes in China, Australia or Europe overnight
• Western
  CIS crop areas are expecting a boost in rainfall that may enhance flood potentials in northwestern Russia where snow is melting
  
• North
  Africa will continue dry for the next ten days stressing reproducing crops
• South
  Africa will experience some increase in precipitation during the next two weeks, although much of the precipitation advertised may be a little overdone

Source:
World Weather, INC.

 

Bloomberg
Ag calendar

Wednesday,
March 22:

• EIA
  weekly US ethanol inventories, production, 10:30am
• EARNINGS:
  Syngenta
• HOLIDAY:
  Indonesia

Thursday,
March 23:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Port
  of Rouen data on French grain exports
• Rabobank
  Farm2Fork Summit, Sydney
• Russian
  Grain Union holds conference in Kazan
• Brazil’s
  Unica may release cane crush and sugar output data (tentative)
• USDA
  red meat production, 3pm
• US
  cold storage data for pork, poultry and beef, 3pm
• HOLIDAY:
  Indonesia

Friday,
March 24:

• Marine
  Insurance London conference
• 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
  poultry slaughter
• HOLIDAY:
  Argentina

Source:
Bloomberg and FI

 

 

 

CFTC
Commitment of Traders

The
net long position for corn and soybean oil really took a hit over the past 4 weeks (might be related to crude oil).

 

 

Macros

US
MBA Mortgage Applications Mar-17: 3.0% (prev 6.5%)

MBA
30-Year Mortgage Rate Mar-17: 6.48% (prev 6.71%)

 

Corn

·        
Corn futures are lower from negative sentiment in outside related commodity markets, lower China corn futures (down 1.3 percent) and sharply lower wheat. News has not changed much from that of yesterday.

·        
Ukraine’s AgMin looks for a 15.2% decrease in the 2023 corn production to 21.7 million tons from 25.6 million year earlier. Corn so far this season made up 58% of its overall grain exports. Ukraine expects “millions more hectares
of sunflower” could be sown (Reuters). Ukraine 2022-23 grain exports were 36.3 MMT as of March 22, well down from 44.8 MMT as of March 28, 2022 (one additional week). 

·        
CME lean hog futures hit contract lows on Tuesday. Wholesale pork values were under pressure again, after a decline last week weighed on futures, according to Reuters.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 8,000 thousand barrels to 1022k (1012-1025 range) from the previous week and stocks down 400,000 barrels to 25.994 million.

 

 

Export
developments.

• None
  reported

 

 

Soybeans

·        
Lower outside related vegetable oil and oilseed markets continue to pressure the US soybean complex, along with harvesting pressure in Brazil. Palm oil futures hit a five month low after trading 3 percent lower. Meanwhile the
BOK/BON is firm this morning. May soybeans are trading near its 200-day moving average. With weaker product prices, both US cash and CBOT crush are much softer over the past week.

·        
Malaysia June palm futures were down 120 ringgit to 3,664 and June cash was down $30 at $885/ton. 

• China
  May soybean futures were unchanged, meal down 0.4%, SBO down 2.0% and palm oil futures down 2.6%.

·        
Nearby Rotterdam vegetable oils were 5-15 euros lower from this time yesterday morning and meal 9.00-15.00 euros lower.

·        
Offshore values were leading SBO higher by about 105 points this morning and meal $5.40 short ton lower.

 

https://agriculture.canada.ca/en/sector/crops/reports-statistics

 

Export
Developments

·        
None reported

 

Wheat

·        
US wheat futures traded lower again on Wednesday from follow through selling on improving US and EU weather, and the extension of the Black Sea grain deal. Not all countries are in good shape. India’s major production wheat area
saw unfavorable heavy rains and hail earlier this week.

·        
Paris May wheat was lower by 6.50 euro earlier at 247.00 per ton, a fresh multi-month low.

·        
Interfax reported Russia winter crops are in good shape with 94%-95% good or satisfactory condition.

May Paris wheat

https://agriculture.canada.ca/en/sector/crops/reports-statistics

 

Export
Developments.

·        
Results are pending for Jordan seeking 120,000 tons of feed barley.

·        
Jordan seeks 120,000 tons of wheat on March 28 for Sep-Oct shipment.

·        
China plans to auction off 140,000 tons of wheat from state reserves on March 29.

 

Rice/Other

·        
Results awaited: South Korea seeks 121,800 tons of rice, most of it from China.

·        
(Reuters) – Thailand increased its rice export target for this year to 8 million tons, a senior government official said on Wednesday, up from a previous target of 7.5 million tons.

·        
(Bloomberg) — Sugar futures surged to the highest in more than six years in London, amid concern that Egypt’s export restrictions will further tighten global supply. Egypt’s decree, issued in the Official Gazette, said that exports
of any kind of sugar were restricted for three months, with the exception of that which is surplus to local market needs.