FI Morning Grain Comments 04/03/23

PDF attached

Private
exporters reported the following sales activity:

150,000
metric
tons of corn for delivery to Mexico during the 2023/2024 marketing year

20,000
metric
tons of soybean oil
for delivery to unknown destinations during the 2022/2023 marketing year

OPEC+
cut crude oil production by 1.2 million barrels per day, and mineral oil and WTI crude prices surged. The USD was down 9 points, WTI up $4.39, and US equities mixed. CBOT soybeans are sharply higher led by bull spreading, following higher soybean oil after
WTI and Brent crude oil rallied. Malaysian palm oil settled 3 percent higher, largest daily rally in two months. CBOT soybean meal was on the defensive earlier from spreading and Argentina’s rollout of the “soybean dollar.” Offshore values were leading SBO
higher by about 214 points this morning and meal $4.40 short ton higher. Corn futures are higher following the OPEC+ announcement. US wheat futures are higher on renewed Black Sea grain shipment uncertainty after a WSJ reporter was detained over the weekend.
US winter wheat ratings resume this afternoon.

SX/CZ
ratio (2.33)

Fund
estimates as of March 31

Weather

USDA
will resume national winter wheat crop ratings at 3 pm today. Our initial estimate for the US combined winter wheat good and excellent categories below.

Map

Description automatically generated

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR APRIL 3, 2023

U.S.
Red River Basin of the North flood potential are rising and the weekend snow event has contributed potential runoff to the situation

New
snowfall of 4 to 12 inches and local totals to 18 inches occurred from central South Dakota to west-central Minnesota

A
new storm during mid-week this week will produce 6 to 20 inches of snow and a blizzard across the Dakotas to southern Manitoba Canada and northern Minnesota

Another
0.50 to 1.75 inches of moisture will be added to the snowpack waiting to be meted

Temperatures
in the north-central United States may rise above normal next week accelerating the snow melt that will begin late this week and during the weekend
U.S.
Delta and Tennessee River Basin will be too wet this week and may experience flooding as another 2.00 to 6.00 inches of rain falls from eastern Texas to the southern Tennessee River Basin
Another
severe weather outbreak is expected Tuesday into Wednesday in the U.S. Midwest and Delta resulting in damaging wind, tornadoes and hail

Similar
conditions occurred Friday into Saturday morning

U.S.
hard red winter wheat areas will continue dry biased this week with temperatures warming this weekend into next week to enhance crop stress in dryland areas
India’s
wet biased weather is ending and better winter crop conditions should result this week and next week
China’s
North China Plain and Yellow River Basin began receiving rain Sunday and it will spread east today resulting in 0.50 to 1.50 inches of moisture, although more than 2.00 inches already occurred in the upper Yellow River Basin and central Inner Mongolia.
North
Africa will get a few showers in northeastern Algeria and Tunisia today after getting rain Sunday and then the region will dry down again

Dryness
has been threatening North Africa durum wheat and barley production this year

Not
much change was suggested for South America this week relative to that of Friday

Brazil’s
center south crop areas will trend wetter later this week into next week
Southern
Argentina, Uruguay and southern Rio Grande do Sul will be dry biased this in this first week to 8 or 9 days of the outlook

Eastern
Australia weather will be drier biased this week while some welcome showers occur in the far southern part of the nation.

Source:
World Weather, INC.

Bloomberg
Ag calendar

Monday,
April 3:

USDA
export inspections – corn, soybeans, wheat, 11am
USDA
soybean crush, DDGS production, corn for ethanol, 3pm
US
planting data for corn, cotton, spring wheat and soybeans, 4pm
US
crop condition data for winter wheat, 4pm

Tuesday,
April 4:

EU
weekly grain, oilseed import and export data
New
Zealand global dairy trade auction
Purdue
Agriculture Sentiment, 9:30am
HOLIDAY:
India

Wednesday,
April 5:

EIA
weekly US ethanol inventories, production, 10:30am
Malaysia’s
April 1-5 palm oil export data
HOLIDAY:
China, Hong Kong

Thursday,
April 6:

USDA
weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
Port
of Rouen data on French grain exports
New
Zealand commodity prices
HOLIDAY:
Argentina, Thailand

Friday,
April 7:

FAO
World Food Price Index, grains report
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 condition report
Good
Friday holiday in several countries

Source:
Bloomberg and FI

CFTC
Commitment of Traders

Macros

April
2 (Reuters) – Saudi Arabia and other OPEC+ oil producers on Sunday announced further cuts in their production amounting to around 1.16 million barrels per day in a surprise move that analysts said would cause an immediate rise in prices. The development comes
a day before a virtual meeting of an OPEC+ ministerial panel, which includes Saudi Arabia and Russia, and which had been expected to stick to 2 million bpd of cuts already in place until the end of 2023.

Fed’s
Bullard: Fed Needs Rates Above 5%, His Forecast Is Above Median

Expect
Inflation To Be Stickier, Labor Market Strong

Not
Seeing Much Ebbing In The Labour Market

Corn

·
Corn futures are higher following OPEC+ announcement of mineral oil output cuts. Brent and WTI crude oil posted its biggest daily gain inn nearly a year.

Nearby
corn vs. WTI crude oil

·
Safras & Mercado: Brazil center-south corn production at 23.7 MMT, up from 21.9 MMT previous and 21.9 MMT last season.

·
Ukraine planted 500,000 hectares of spring grains as of late last week. The grain area could decline 12 percent from 2022.

Export
developments.

None
reported

Soybeans

·
CBOT soybeans are sharply higher led by old/new crop bull spreading, following higher soybean oil after WTI and Brent crude oil rallied, and ongoing buying after US soybean plantings reported by the USDA came in below expectations.
Malaysian palm oil settled 3 percent higher, largest daily rally in two months. CBOT soybean meal was on the defensive earlier from spreading and Argentina’s rollout of the “soybean dollar.” Details on it could come out sometime today, according to Reuters.
Earlier we heard details on it were set to be released Wednesday.

·
AgRural estimated Brazil soybean harvest progress at 76 percent as of last Thursday, up 6 points from the previous week and compares to 81 percent previous year.

·
Strategie Grains lowered its estimate for 2023 European Union rapeseed output to 19.5 million tons from 19.6 million tons previous and compares to 19.4 million tons last year.

·
Malaysia June palm futures were up 123 ringgit to 3,884 and June cash was higher by $30 at $940/ton.

China
May soybean futures were down 0.2%, meal up 1.6%, SBO up 1.4% and palm oil futures up 1.7%.

·
Nearby Rotterdam vegetable oils were higher by about 15-45 euros from this time Friday morning and meal 3.50-11.50 euros higher.

·
Offshore values were leading SBO higher by about 214 points this morning and meal $4.40 short ton higher.

U
of I: Record in Brazil, Drop in Argentina: Contrasting Soybean Harvests in South America

Colussi,
J., N. Paulson, G. Schnitkey and S. Cabrini. “Record in Brazil, Drop in Argentina: Contrasting Soybean Harvests in South America.”
farmdoc daily (13):59, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, March 31, 2023.

https://farmdocdaily.illinois.edu/2023/03/record-in-brazil-drop-in-argentina-contrasting-soybean-harvests-in-south-america.html

Export
Developments

·
China’s Sinograin late last week sold 15,003 tons of soybean oil at auction at an average price of CNY 233/ton. They sold 92,379 tons for the year. The 15k represented 38 percent of the total. (AgriCensus)

SBO/HO
relationship

Wheat

·
US wheat futures are higher on Black Sea grain shipping concerns/Russia tensions, after a WSJ reporter was detained over the weekend in Russia.

·
The northern US Midwest will see a wintery mix storm over the next few days. Kansas will be mostly dry this week.

·
Louis Dreyfus will stop exporting Russian grain from July 1.

·
Ukraine exported 3.8MMT of agriculture products during March, 500,000 tons above February, including 908,000 tons of wheat and 2.3 million tons of corn.

·
USDA will resume national winter wheat crop ratings this afternoon and we look for a 2 point increase from last fall but well below its 5-year average.