FI Morning Grain Comments 09/28/22

PDF attached

 

Good
morning.

 

USD
is higher, WTI higher and US equities mixed. CBOT soybeans are lower following weakness in soybean oil while meal is mixed on rising demand for feed in China (sow numbers during August improved from July) and strength in China meal futures. Malaysian palm
oil futures hit a 1-1/2 year low, down five consecutive days, on global demand destruction concerns. It was down 8.4% at settlement for the overnight session. Corn was  higher with strength in wheat. A strong USD, good US harvesting weather, global economic
uncertainty and volatile energy markets were weighing on prices earlier. China’s sow heard during August reached 43.2 million tons, up 0.6% from July. The AgMin said the 43.2 million tons is 5.5% higher than normal levels. Wheat prices are higher on uncertainty
whether or not Russia will extend the safe passage grain agreement for the Black Sea. President Volodymyr Zelenskiy warned this in his nightly update. US winter wheat planting progress across the southwestern Great Plains may stall this week with dry conditions.

 

US
harvest weather will be favorable. Hurricane IAN is expected to make landfall today in Florida. Heavy rain over a several day period is expected for the SE and parts of the Delta. That should temporally disrupt harvesting. MT, western NE and northern CO will
see rain through Sunday. The Midwest will be mostly dry with exception of the southeastern areas Sat and Sun. Mostly dry weather is seen for southwestern Great Plains. Argentina will see additional net drying. Brazil looks good with rain falling across center
west and center south.

 

 

 

Weather

 

 

World
Weather, INC.

WORLD
WEATHER HIGHLIGHTS FOR SEPTEMBER 28, 2022

• Frost
  and freezes occurred this morning in the upper Midwest from eastern North Dakota to Wisconsin and southward to northern Iowa
• The
  growing season ended for many areas, but crop damage was restricted to the most immature areas and where temperatures fell near and below 28 Fahrenheit
• Hurricane
  Ian brought horrific wind and flooding rain to western Cuba Monday night and early Wednesday with the early assessments of damage being significant
  
• Hurricane
  Ian will make landfall in west-central Florida to the south southwest of North Point and west southwest of Punta Gorda
  
• Peak
  winds off the coast will reach 155 mph
• Coastal
  wind speeds will reach 120 mph with a significant storm surge getting to the range of 8-12 feet above normal tides in some areas
• Wind
  speeds over 100 mph will extend inland by at least 50 miles with speeds over 80 mph occurring in the southwest half of citrus country
• Serious
  damage to citrus production is likely from Sarasota to southwestern Polk Counties in Florida with lighter damage to the northeast and south
• Excessive
  rainfall of 5.00 to 15.00 inches and local totals pushing close to 20 inches will occur between Tampa and Port Charlotte to the Orlando and Jacksonville areas of Florida
• Flooding
  will be extensive
• Personal
  property damage will be greatest from Charlotte and Sarasota Counties into Hardee and Desoto Counties as well as a part of southeastern Manatee County
  
• Sugarcane
  in Florida should not be seriously impacted, although the cane will lay down
  
• Hurricane
  Ian will be downgraded to tropical storm status near Orlando, Florida and then will move off the Atlantic coast briefly before coming inland again as a tropical storm along the Georgia/South Carolina border
• This
  path will spare Georgia cotton from any damage
• Heavy
  rain will fall in cotton, soybean and corn areas of the Carolinas reducing cotton quality and inducing some local flooding
• Typhoon
  Noru has reached the Da Nang area of Vietnam overnight and produced wind speeds over 100 mph in that region causing serious damage to property in the region
• Damage
  to some sugarcane, rice and a minor amount of coffee is expected as the storm continues off to the west northwest today
• Robusta
  coffee crop in the Central Highlands will not be seriously impacted
• Dry
  weather will dominate the U.S. Plains, much of the Midwest, Delta and Canada’s Prairies during much of the coming week to ten days
• Some
  rain is expected in the northwestern U.S. Plains this weekend, but resulting rain will be light
• Rain
  is still expected in Brazil’s center west and center south crop areas over the next week to ten days improving soil moisture for early season soybean and corn planting and setting the stage for cotton and rice planting
• A
  little too much rain may fall from Mato Grosso do Sul to Parana and Sao Paulo where flooding is possible and damage to unharvested wheat is possible
• A
  decline in rainfall has been advertised for a part of Mato Grosso do Sul
• Argentina’s
  rain potential remains poor, although a few showers are expected periodically
• Europe,
  western Russia and Ukraine rain will fall frequently in the next ten days bolstering soil moisture for winter crop establishment, but delaying some fieldwork and a few areas might become a little too wet
• China’s
  Yangtze River Basin will remain in a drought for another 7-8 days with no opportunity for rain
• Northern
  areas may get some rain around day 9 and 10
• China’s
  Yellow River Basin will get some needed rain this weekend and next week with some of it possibly becoming heavy
• The
  long term benefits of rain will be good for wheat planting and establishment
• No
  serious changes were noted to India or Australia weather overnight

Source:
World Weather INC

 

Frost
/ freeze occurred across the upper Great Plains and parts of the upper Midwest

Source:
World Weather INC

 

Bloomberg
Ag Calendar

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

 

 

 

 

Macros

US
Wholesale Inventories (M/M) Aug P: 1.3% (est 0.4%; prev 0.6%)

Retail
Inventories (M/M) Aug: 1.4% (est 1.0%; prev 1.1%)

Advanced
Goods Trade Balance Aug: $-87.3B (est -$89.0B; prev -$90.2B)

 

 

Corn

·        
Corn was higher with strength in wheat. A strong USD, good US harvesting weather, global economic uncertainty and volatile energy markets are weighing on prices earlier.

·        
Argentina producers sold 66.7 percent of the 2021-22 corn crop so far this season (59 MMT production), compared to 61.7 percent previous season.

·        
South Africa’s 2022 corn production was estimated by CEC at 15.260 million tons, down 6.5 percent from 16.315 million last season. Last month they projected 2022 output at 15.004 MMT. The latest outlook includes 7.790 million
for white and 7.470 million for yellow.

·        
China’s sow heard during August reached 43.2 million tons, up 0.6% from July. The AgMin said the 43.2 million tons is 5.5% higher than normal levels.

·        
China plans to release 20,000 tons of frozen pork from reserves on September 30.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 11,000 thousand to 912k (881-935 range) from the previous week and stocks down 99,000 barrels to 22.402 million.

·        
ANEC sees Brazil September corn exports at 7.132 MMT versus 7.618 previously estimated.

·        
Yesterday’s large “$20 million wager” corn option trade resulted in a large shift in open interest for some strikes. Open Interest change from yesterday’s corn call spread:

·        
CN 700 calls +9,981

·        
CN 950 calls +10,828

-Meanwhile,
CZ 700 calls traded 21,443x between outright and strategy. Open Interest -11,866

 

U
of I – Fertilizer Prices, Rates, and Costs for 2023

Schnitkey,
G., N. Paulson, C. Zulauf, K. Swanson and J. Baltz. “Fertilizer Prices, Rates, and Costs for 2023.”
farmdoc daily (12):148, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, September 27, 2022.

https://farmdocdaily.illinois.edu/2022/09/fertilizer-prices-rates-and-costs-for-2023.html

 

 

Export
developments.

·        
None reported

 

 

Soybeans

·        
CBOT soybeans are lower following weakness in soybean oil while meal is finding a bid on rising demand for feed in China (sow numbers during August improved from July) and strength in China meal futures. Malaysian palm oil futures
hit a 1-1/2 year low, down five consecutive days, on global demand destruction concerns. It was down 8.4% at settlement for the overnight session.

·        
Argentina producers sold 65.2 percent of the 2021-22 soybean crop so far this season (44MMT production), 6 percent below previous season. 1.6 million tons were sold during the Sep 15-21 period, down from 2.3 million during the
September 8-14 period. For 2022-23, 1.36 million tons were sold, 28 percent below year earlier.

·        
CBOT First Notice Day for October delivery is Friday, and we look for no deliveries.

·        
Indonesia set its October 1-15 crude palm oil reference price at $792.19 per ton for the Oct. 1-15 period, down from the $846.32 per ton for Sept. 16-30. The export tax will be $33 per ton.

·        
Malaysian December palm oil futures decreased 297 points to 3,226 and cash was down $57.50/ton to $807.50/ton.

·        
China futures for soybeans were down 0.1%, meal 0.7% higher, SBO 0.6% higher and palm off 0.8%.

·        
Rotterdam vegetable oils were 10 euros lower from this time yesterday morning. SA meal was 3-8 euros lower.

·        
Offshore values were leading soybean oil 95 points lower earlier this morning and meal $0.20 short ton higher.

·        
ANEC sees Brazil September soybean exports at 3.818 MMT versus 4.152 previous. Soybean meal is seen at 2.013 million versus 2.225 million previous week.

·        
EU July 1 through September 25 soybean imports were 2.63 million tons, down from 3.18 million during the same period year ago. Soybean meal imports were 3.59 million tons versus 3.87 million tons prior season. Palm oil imports
were 817,769 tons versus 1.45 million tons in 2021-22. EU rapeseed imports reached 1.47 tons, compared with 1.10 tons a year earlier and sunflower imports were 383,585 tons versus 344,761 tons year ago.

 

Export
Developments

·        
None reported

 

Wheat

·        
Wheat prices are higher on uncertainty whether or not Russia will extend the safe passage grain agreement for the Black Sea. President Volodymyr Zelenskiy warned this in his nightly update.

·        
US winter wheat planting progress across the southwestern Great Plains may stall this week with dry conditions.

·        
Paris December wheat was up 2.75 euros earlier at 351.25 per ton.

·        
Harvesting progress for Manitoba, Canada, was 47 percent complete, well below the 5-year average of 79 percent, about 3.5 weeks behind normal.

·        
Russia grain exports are seen between 50 and 60 million tons for 2022-23, according to the AgMin.

·        
Russia collected 95 percent of its wheat area, according to IFX. Yield was seen at 3.33 tons per hectare from 2.62 year ago.

·        
EU July 1 through September 25 soft wheat exports were 8.80 million tons, up from 8.75 million during the same period year ago. EU barley exports so far in 2022-23 totaled 2.04 million tons against 3.12 million a year ago.

·        
China plans to sell 40,000 tons of wheat from reserves on October 12, from the 2014-2017 crops.

 

Export
Developments.

• The
  Philippines seek up to 50,000 tons of feed wheat and up to 50,000 tons of feed barley on Thursday for Jan-Mar shipment.
  
• Jordan
  passed on barley. Jordan retendered for barley set to close October 5 for 120,000 tons.
  

·        
Pakistan seeks 2 million tons of wheat to meet consumption shortages.

·        
Algeria seeks 50,000 tons of soft milling wheat on September 29 for November shipment.

·        
Results awaited: The UN seeks 100,000 tons of wheat on September 30 for late October and/or November delivery. Destinations included east Africa, Asia and the Middle East.

·        
Japan seeks 61,800 tons of food wheat later this week for Oct 21-Nov 20 loading.

·        
Jordan seeks 120,000 tons of wheat on October 4. They passed on wheat today
for
March and April shipment.

·        
Taiwan seeks 51,800 tons of US wheat on September 29 for mid to LH November shipment.  Various classes are sought.

 

Rice/Other

·        
Vietnam saw flooding and blackouts after the typhoon landfalls. Coffee production could be impacted.