FI Morning Grain Comments 08/24/22

PDF attached

 

Good
morning.

 

Chinese
demand for US soybeans total at least 627k this week. USDA: Private exporters reported sales of 517,000 metric tons of soybeans for delivery to China during the 2022/2023 marketing year.

 

CBOT
agriculture futures are higher after the second day of the Pro Farmer crop tour showed potential corn and soybean yields below average for Nebraska and a lesser extent, Indiana. Based on the two days of tour results for corn, implied production for the combined
four states is 471 million bushels below USDA August. Global import demand is slowly picking up. US weather forecast is mostly unchanged. Minor spring wheat harvesting delays are seen while the Delta saw too much rain causing concern over crop conditions.
China’s Yangtze Valley, bias northwest/east will gradually see an increase in rain. WTI crude oil is higher for the third consecutive day. USD was up 20 points and US equities are suggesting a higher open. Overseas agriculture product values were higher.
Offshore
values were leading SBO 10 points higher earlier this morning and meal $4.40 short ton lower. A Bloomberg poll looks for weekly US ethanol production to be up 7,000 thousand (965-985 range) from the previous week and stocks down 177,000 barrels to 23.269 million.

 

“Indiana
corn yields were projected at 177.85 bushels per acre (bpa), the Pro Farmer Midwest Crop Tour said on Tuesday evening, below the 2021 crop tour average of 193.48 bpa and the three-year crop tour average of 178.26 bpa.  The four-day crop tour, which does not
project soybean yields, estimated the amount of soybean pods in a 3-by-3-foot square in Indiana at an average of 1,165.97 pods, down from last year’s average of 1,239.72 pods but above the three-year average of 1,148.26 pods.” (Reuters)

 

“Nebraska’s
corn yield was projected at 158.53 bushels per acre (bpa), the Pro Farmer Midwest Crop Tour said on Tuesday evening, well below the 2021 crop tour average of 182.35 bpa and the tour’s three-year average of 176.68 bpa.  The four-day crop tour, which does not
project soybean yields, estimated the amount of soybean pods in a 3-by-3-foot square in Nebraska at an average of 1,063.72 pods, down from last year’s average of 1,226.43 pods and the three-year average of 1,245.06 pods.” (Reuters)

 

 

 

Weather

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR AUGUST 24, 2022

• Too
  much U.S. rain has fallen this week from western Georgia through central and southern Mississippi, Louisiana and southern Arkansas to portions of Texas and southern Oklahoma where 3.00 to more than 7.00 inches was common
• Local
  rain totals over 15.00 inches occurred in the Dallas, Texas area with some unofficial amounts to 11.00 inches in a part of the lower Delta
• The
  rain has induced flooding and farming delays along with raising the potential for crop quality declines
• Soybeans
  and rice may have been most impacted
• Tropical
  disturbances are being closely monitored over the Atlantic Ocean for possible development; no imminent threat to major land masses is seen through the weekend
• Tropical
  Storm Ma-On continues to trek toward western Guangdong, China with landfall expected there Thursday
• Typhoon
  Tokage remains well east of Japan and unlikely to threaten land
• Not
  much change in the U.S. outlook today
• Scattered
  showers and thunderstorms will impact most crop areas in the Great Plains, Midwest, Delta and southeastern states through the first half of next week and then drier in the following week
• The
  mix will be good for crops and fieldwork, although additional moisture from Texas to Georgia will not be welcome
• Canada’s
  Prairies precipitation will continue restricted for the next ten days
• Western
  Argentina will remain drier than desired while rain falls in the east and in southern Brazil and Uruguay
• India’s
  weather is improving with less frequent and less significant rain
• Russia’s
  weather will continue in a net drying mode along with parts of Ukraine and Kazakhstan, despite a few showers; temperatures will be warmer than usual
• Declining
  soil moisture will maintain some worry over winter crop establishment
• Europe
  weather has not changed with rainfall expected to be most significant from Italy to eastern Germany and western Poland as well as in some of the Balkan Countries while leaving western Europe a bit drier biased
• Excessive
  rain will continue in parts of Pakistan and eastern Afghanistan through Friday resulting in some floods
• Northeastern
  China will experience some net drying while the southern Yellow River Basin becomes wet
• Drought
  in the Yangtze River Basin will continue for ten more days in central parts of the region while other areas see some gradual improvement
  

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Wednesday,
Aug. 24:

• EIA
  weekly US ethanol inventories, production, 10:30am
• Brazil’s
  Unica may release cane crush, sugar production data (tentative)
• US
  poultry slaughter

Thursday,
Aug. 25:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Malaysia’s
  Aug. 1-25 palm oil export data
• USDA
  red meat production

Friday,
Aug. 26:

• 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
  weekly update on crop conditions

Source:
Bloomberg and FI

 

 

 

 

Macros

Mortgage
applications to purchase a home fell 1% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was 21% lower than the same week one year ago. (CNBC)

Durable
Goods came 0% month over month, est. +0.6%.

 

Corn

·        
Corn is higher for the sixth consecutive day on US yield concerns and follow through technical buying. Yesterday’s volume was very large for both futures and options. China, EU, and US corn crop prospects have steadily deteriorated
over the past month and with the investment funds shedding their long position mid-summer over global economic fears, they are back in buying across the ag space, led by corn.

·        
The USD is higher this morning and crude oil higher.

·        
Heavy rain across the US Delta is seen delaying corn harvest progress and fieldwork activity for the balance of the week.

·        
The annual Pro Farmer crop tour for day 2 showed most yield potentials for corn and pod counts for soybeans below normal levels for NE and IN.

·        
Based on the two days of tour results for corn, implied production for the combined four states is 471 million bushels below USDA August.

·        
Texas ranchers are apparently increasing slaughter rates for their cows as more than 93 percent of the state is experiencing some type of drought.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 7,000 thousand (965-985 range) from the previous week and stocks down 177,000 barrels to 23.269 million.

 

 

Export
developments.

·        
South Korea’s KOCOPIA group bought two non-GMO corn cargoes from the Black Sea at $378 and $379.40/ton c&f for FH November arrival.

 

 

Soybeans

·        
Soybeans
are higher led by bull spreading and Chinese demand. September is now at a premium over November of about $1.15, widest to date. Outside product markets were higher overnight but soybean oil sold off before the electronic close in part to WTI crude oil, higher
USD and meal/oil spreading.

·        
Private exporters reported sales of 517,000 metric tons of soybeans for delivery to China during the 2022/2023 marketing year.

·        
Germany on Wednesday prioritized the transportations of energy products on most of its railways, a blow for grain traders that are unable to fully utilize the Rhine River.

·        
Indonesia extended its palm oil export waiver until October 31, that has been in place since mid-July.

·        
Malaysia November palm oil was 74MYR higher at 4308 per ton, and cash was up $12 at $1048.50/ton.

·        
China soybean futures were down 1.5 percent, meal 1.2% higher, soybean oil up 1.3%, and palm 1.3% higher.

·        
Rotterdam vegetable oils were
10-20 euros higher, and meal up 7-13 euros for the positions we follow, from this time yesterday morning.

·        
Offshore values were leading SBO 10 points higher earlier this morning and meal $4.40 short ton
lower.

 

Export
Developments

·        
Private exporters reported sales of 517,000 metric tons of soybeans for delivery to China during the 2022/2023 marketing year.

·        
This comes after they bought 110,000 tons earlier this week.

·        
USDA this week seeks 1,500 tons of vegetable oil for the AMS/CCC to use in export programs. Shipment was set for Oct 1-31, later if from plants at the port.

 

Wheat

·        
US wheat
futures are higher following strength in corn and technical buying. China’s drought situation is adding to the bullish undertone but at this time we don’t know the extent of the damage.

·        
Paris December wheat was down 0.75 euro at 325.50 per ton as of 7:50 am CT.

·        
Romania’s wheat crop was estimated at 9 million tons, a decline from 11.3 million tons for 2021.  Despite the lower crop, they expect to remain a net exporter.

·        
APK-Inform: Ukraine 2022 grain crop seen at 52.5 to 55.4 million tons, down from a record 86 million last year.

 

Export
Developments.

·        
South Korea ended up buying 50,000 tons of US wheat on Friday for November shipment at $331-$333 per ton (soft white).

·        
Jordan saw four participants for their barley import tender.

·        
Jordan also announced they seek 120,000 tons of wheat on August 30.

·        
Iraq passed on US wheat that was to close earlier this month (no prices were provided).

·        
Yesterday Egypt’s GASC bought 240,000 tons of Russian wheat on Aug. 22, according to Reuters. Shipment is for Sep 20 through November 10. Additional purchases could still be made, they added. Average price was thought at $368
per ton.

·        
Japan seeks 118,881 tons of food wheat from the United States, Canada and Australia, on Thursday.

·        
Taiwan Flour Millers’ Association seek 34,025 tons of grade 1 milling wheat from the United States on August 25 for shipment out of the PNW between October 12 and October 26.

·        
Bangladesh seeks 50,000 tons of milling wheat on September 1, optional origin, for shipment within 40 days of contract signing.

 

Rice/Other

·        
Bangladesh seeks 50,000 tons of rice on September 6.

·        
We read that China’s drought situation has had the largest impact on rice production.