FI Morning Grain Comments 09/26/22

PDF attached

 

Good
morning.

 

US
harvest pressure is weighing on CBOT ag futures. USD
was up sharply earlier before pairing gains, but again rallied during the electronic break.US WTI crude oil is lower and US equities are pointing towards a lower open. Wheat is lower on higher Ukraine grain production prospects and fund selling. Corn is lower
on favorable US harvesting weather. Soybeans and soybean oil are weaker on widespread commodity selling. October soybean meal was near unchanged after China meal futures hit record highs overnight (5352 yuan or $747.94/ton). China will be on holiday next week.
Offshore values were leading soybean oil 26 points higher earlier this morning and meal $0.90 short ton lower.

 

US
weather forecast improved for the Midwest and Delta than that of Friday. The upper Great Plains will see rain during the second half of the week. The Midwest will see rains for the northeastern areas today and Tuesday, and far northwestern areas Thursday.
Mostly dry weather is seen for the Delta and southwestern Great Plains all this week.

 

USDA
on Friday releases Grain Stocks and Small Grains Summary. Some analysts are looking for price volatility.  We are looking for small changes for stocks.

 

 

 

 

Weather

 

 

World
Weather, INC.

WORLD
WEATHER HIGHLIGHTS FOR SEPTEMBER 25, 2022

• Heavy
  rain fell in Punjab and Haryana, India during the weekend resulting in some possible damage to cotton fiber quality.
  
• Cotton
  in the United States may also be at risk of a quality decline because of Tropical Storm Ian which may reach northern Florida and southern Georgia late this week and into the weekend
• Florida
  citrus areas will get heavy rain from the approaching tropical storm that will likely become a hurricane after moving across western Cuba Tuesday
• Damaging
  wind is not very likely in Florida citrus from this storm as long as it moves inland southeast of Tallahassee and not over Tampa Bay which is where the European model has suggested landfall would take place
• U.S.
  hard red winter wheat areas will get some additional rain this weekend into early next week from eastern Colorado to Nebraska and in a part of the northern Plains
  
• Most
  of the rain will be light having a limited benefit
• Drought
  will continue in Canada’s Central and southwestern Prairies for the next couple of weeks despite some showers late this week and into the weekend
• Europe
  will experience an improving trend in soil moisture this week with France and the U.K. included after being drier biased last week
• Soil
  moisture continues to improve throughout the continent
• Moderate
  to heavy rain fell across western Russia during the weekend
• Additional
  waves of rain will fall over the western CIS over the next couple of weeks resulting in some delay in farming activity, but ensuring a good moisture profile for winter crop establishment
• China’s
  Yangtze River Basin will continue dry for another ten days and possibly for two weeks
• Rain
  is needed to support rapeseed planting which will begin in October.
• Summer
  crop production – mostly rice – has been hurt by this year’s drought
• Australia’s
  rainfall in the next couple of weeks will be greatest in the east, but the precipitation will be erratic and light for a while over the next several days
• Western
  Australia will be driest and crop conditions are likely to be nearly ideal in that state
• Argentina
  will not get much rain this week, although a few showers are expected
• Greater
  rain is expected next week that will benefit wheat development the planting of sunseed and early corn
  
• Brazil’s
  center west and center south crop areas are expecting some significant rain this week and that may lead to better improved early soybean, corn, cotton and rice planting especially in October

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Monday,
Sept. 26:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• US
  crop conditions for corn, soybeans and cotton; spring wheat, corn, cotton, soybean harvesting, 4pm
• Malaysia’s
  Sept. 1-25 palm oil export data
• HOLIDAY:
  New Zealand

Tuesday,
Sept. 27:

• EU
  weekly grain, oilseed import and export data
• G20
  Agriculture Ministers Meeting in Bali, day 1

Wednesday,
Sept. 28:

• EIA
  weekly US ethanol inventories, production, 10:30am
• G20
  Agriculture Ministers Meeting in Bali, day 2

Thursday,
Sept. 29:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• G20
  Agriculture Ministers Meeting in Bali, day 3
• Vietnam
  General Statistics Dept. releases Sept. coffee, rice and rubber exports data
• USDA
  hogs & pigs inventory, 3pm

Friday,
Sept. 30:

• USDA’s
  quarterly stockpiles data for wheat, barley, corn, oat, soybeans and sorghum
• US
  wheat production data, noon
• 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
• US
  agricultural prices paid, received, 3pm
• HOLIDAY:
  Canada

Source:
Bloomberg and FI

 

 

 

 

 

Commitment
of Traders

No
major surprises other than to see Chicago wheat futures near flat as of last Tuesday.

 

 

Macros

 

Corn

·        
Corn is lower on favorable US harvesting weather.

·        
China will be on holiday next week.

·        
Mostly dry weather is seen for the Delta and southwestern Great Plains all this week.

·        
The US House will vote this week on the Global Food Security Act
https://www.congress.gov/bill/117th-congress/house-bill/8446

·        
Argentina corn plantings are delayed due to persistent drought.

 

Export
developments.

·        
South Korea’s NOFI bought 12,000 tons of optional origin barley for Jan arrival at $329.55/ton c&f.

·        
South Korea’s NOFI bought 135,000 tons of optional origin corn for Jan arrival at $1.7275/bu over the Dec and $181.40 over the Dec contract, c&f.

 

USDA
Cattle on Feed

 

Cattle
and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.3 million head on September 1, 2022. The inventory was slightly above September 1, 2021. This is the second highest September 1 inventory
since the series began in 1996.

 

Placements
in feedlots during August totaled 2.11 million head, slightly above 2021. Net placements were

2.06
million head. During August, placements of cattle and calves weighing less than 600 pounds were 430,000 head, 600-699 pounds were 320,000 head, 700-799 pounds were 465,000 head, 800-899 pounds were 532,000 head, 900-999 pounds were 270,000 head, and 1,000
pounds and greater were 95,000 head.

Marketings
of fed cattle during August totaled 2.00 million head, 6 percent above 2021.

 

Other
disappearance totaled 53,000 head during August, 10 percent below 2021.

 

 

Soybeans

·        
CBOT soybeans are lower following weakness in vegetable oils and follow through selling in widespread commodities. A late morning decline in the USD limited losses before the biscuit break. Palm oil futures hit multi month lows
and China ag futures were weaker. China meal hit a record overnight before closing lower. Look for China to step up soybean imports.

·        
AmSpec reported Sep 1-25 Malaysian palm oil exports at 1.075 million tons, up 18.6 percent from 906,470 tons during the same period month ago.

·        
Malaysian December palm oil futures decreased 195 points to 3541 and cash was down $47.50/ton to $867.50/ton.

·        
China futures for soybeans were down 0.5%, meal off 1.4%, SBO 2.6% lower and palm off 4.3%.

·        
Rotterdam vegetable oils were 15 to 65 euros lower from this time Friday morning. SA meal was  unchanged to 7 euros lower.

·        
Offshore values were leading soybean oil 26 points higher earlier this morning and meal $0.90 short ton lower.

 

Export
Developments

·        
None reported

 

Wheat

·        
Wheat is lower from a higher USD and slowing global demand. Higher Ukraine grain production prospects are also weighing on the market. Losses for Chicago wheat could be limited as the net long position for the investment funds
reported by the CFTC were less than expected as of last Tuesday.

·        
APK-Inform raised their Ukraine 2022 grain harvest to between 54.1 to 55.7 million tons compared with 52.5-55.4 previous, including 19 million tons of wheat, 30 million tons of corn and 5.5 million tons of barley. This is down
from a record 86 million tons last year.

·        
Paris December wheat was down 3.00 euros earlier at 343.25 per ton.

·        
Canada Outlook for Principal Field Crops

https://agriculture.canada.ca/en/canadas-agriculture-sectors/crops/reports-and-statistics-data-canadian-principal-field-crops

 

Export
Developments.

·        
Taiwan seeks 51,800 tons of US wheat.

·        
Pakistan saw only two offers for 300,000 tons of wheat, with lowest at $398.92/ton c&f for October shipment.

·        
The UN seeks 100,000 tons of wheat on September 28 on September 30 for late October and/or November delivery.

·        
Jordan opened a new import tender for 120,000 tons of wheat set to close Sep 27 for March and April shipment. 

·        
Jordan is back in for barley on September 28.

 

Rice/Other

·        
Vietnam’s coffee belt is expected to see heavy rains from a typhoon.

 

 

 

Seasonal vols

Joe Davis and Greg Potter

All vols% are above the 5yr avgs for this time of year.  Wheat vols look extremely rich.  The next 2 weeks we approach the seasonal bottom for corn vols%.  I would look to buy soymeal vol% on a break and be short all others through harvest. 

 

 

 

 

 

 

Joe Davis and Greg Potter