FI Morning Grain Comments 10/03/22

PDF attached

 

Good
morning.

 

USDA
24-Hour: Private exporters reported sales of 110,000 metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year.

 

Follow
through buying in grains and mixed for the soybean complex. Sharply higher WTI crude oil is lifting soybean oil over meal. Outside markets are mixed. The USD was up 10 points and WTI crude oil up about $4.24 per barrel higher (5.3%). Ongoing global macro concerns
may keep commodity and equity markets on edge this week. Credit Suisse’s stock is off sharply on debt level concerns. Water levels for the Mississippi River continue to recede, creating problems for shippers forced to reduce loadings. Memphis-Cairo barge freight
offers were up 200 percentage points to 2200 on Friday. Egypt’s GASC seeks vegetable oils on October 4 for arrival Nov. 25-Dec. 10 for payment through 180-day letters of credit. China is on holiday all week. USDA NASS will release August crush after the close
(3 pm CT) and traders are looking for 175.6 million bushels, above 168.2 million year ago and down from 181.3 million for July 2022.
Funds held longer than expected net long positions as of last Tuesday, especially for soybeans, wheat and soybean oil. Today we have USDA export inspections, crop progress, and monthly crush reports.

 

Weekend
harvest weather was ideal for the US, with temperatures warming from that of the workweek and little rain occurring for the major growing regions of the Midwest. Note the remnants from the hurricane did dump good rains across parts of the far eastern areas
of the ECB. Overall Midwest weather conditions were and will remain drier than normal, exception upper WCB east of the Dakotas and ECB’s MI & OH states. Look for water levels for the Mississippi to continue to decline well into the workweek. Winter wheat plantings
across the southwestern growing areas will remain a challenge with net drying this week while parts of the central and northern Great Plains will see some rain. Argentina will see rain this week across the northern, central and southwestern areas, welcome
after a slow start to the corn planting season. Southern and central Brazil will see rain. 

 

 

 

 

Weather

 

 

 

World
Weather, INC.

WORLD
WEATHER HIGHLIGHTS FOR OCTOBER 3, 2022

• New
  South Wales, Australia is facing some excessive rainfall later this week into next week
  
• Flooding
  is possible after 2.00 to more than 5.00 inches of rain falls with locally up to 7.00 inches by the end of the ten day period
• South
  Australia will get some rain Monday and then it will shift east and stall over New South Wales
• Western
  Australia weather will be notably drier, but crops will remain in good condition
• Southwestern
  Russia and eastern Belarus have received 1.00 to 3.19 inches of rain during the weekend
  
• Rain
  will continue for a while this week with another 1.00 to 2.00 inches resulting in local flooding
  
• A
  short term break from rain is expected later this week into the weekend before more rain falls next week
• Europe
  will experience some much needed drier weather in the coming week supporting fieldwork expansion
• China’s
  Yellow River Basin received too much rain during the weekend with areas from central Shanxi through Shandong (including southern Hebei) receiving 4.00 to nearly 11.00 inches of rain
• Lighter
  rain fell farther to the west with 1.30 to 4.00 inches occurring in Shaanxi
  
• More
  rain is expected this week with another 2.00 to 6.00 inches and locally more from northeastern Sichuan and southern Shaanxi to Anhui and some with lighter rain in Jiangsu
• This
  week’s rain will expand flooding causing more delays to wheat and other winter crop planting and raising the potential need for some replanting
  
• Some
  rain will reach the northern drought area of the Yangtze River Basin later this week, but more rain will be needed
• Southern
  areas of the Yangtze River Basin will stay too dry through the next ten days
• Argentina
  will get some beneficial rain showers Tuesday and Wednesday and then experience drying again for the following ten days
• Brazil
  rain will be widespread in center west, center south and far southern parts of the nation at one time or another in the next ten days
• U.S.
  weather will be favorably mixed in many areas, although the Delta, and southeastern states will be driest for the longest period of time
• Far
  western states will stay dry
• Hard
  red winter wheat areas in the central and southwestern Plains are advertised to get “some” rain over the next ten days, but this should not be the start of a trend change
• Some
  moisture will occur, though, to help wheat planting, emergence and establishment
• Lower
  U.S. Midwest, Delta and southeastern states will be dry biased for the next week to nearly 10 days
• Canada’s
  Prairies will see limited rainfall during the coming week to nearly ten days
• Significant
  rain fell in Montana wheat areas during the weekend
• Flooding
  occurred in a part of northern Thailand and central Sumatra, Indonesia during the weekend
• Excessive
  heat occurred during the weekend in Namibia and Botswana and some of this will continue for a while this week
  
• Hurricane
  Orlene is moving into west-central Mexico later today and Tuesday producing heavy rain and flooding along with strong wind in southern Sinaloa
• Central
  America may trend much wetter later this week into next week as a tropical disturbance moves into the region

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Monday,
Oct. 3:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• US
  crop conditions for corn, soybeans and cotton; spring wheat, corn, cotton, soybean harvesting, 4pm
• USDA
  soybean crush, DDGS production, corn for ethanol, 3pm
• HOLIDAY:
  Germany, China, Korea, Australia

Tuesday,
Oct. 4:

• EU
  weekly grain, oilseed import and export data
• Global
  Grain Outlook conference in Baku, Azerbaijan, Oct. 4-7
• US
  Purdue Agriculture Sentiment
• New
  Zealand global dairy trade auction
• Australia
  commodity index
• HOLIDAY:
  China, Hong Kong

Wednesday,
Oct. 5:

• EIA
  weekly US ethanol inventories, production, 10:30am
• Malaysia’s
  Oct. 1-5 palm oil export data
• HOLIDAY:
  China, India, Bangladesh

Thursday,
Oct. 6:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• New
  Zealand commodity price
• Brazil’s
  Conab releases data on area, yield and output of corn and soybeans
• HOLIDAY:
  China

Friday,
Oct. 7:

• FAO
  World Food Price Index
• 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
• Vietnam
  customs data on September coffee, rice and rubber exports
• HOLIDAY:
  China, Argentina

Source:
Bloomberg and FI

 

 

 

 

CFTC
Commitment of Traders

 

 

 

 

 

 

Macros

OPEC
Crude Output Rose 230,000 Barrels Per Day in Sept. (Bloomberg)

OPEC+
Discusses Potential Oil Output Cut In Excess Of 1 Mln Bpd, Excluding Any Voluntary Cut, Says OPEC Source – RTRS  (largest production cut since start of the pandemic).

IMF
Managing Director Georgieva Says 48 Countries Are Exposed To Food Crisis, Half Of Them Vulnerable

 

 

Corn

·        
Corn is higher on Black Sea shipping concerns and follow through buying from the bullish USDA reports.

·        
China restricted exports of corn starch; a warning local corn supplies might be tighter than expected and/or control local corn prices.

·        
Late last week, Argentina corn plantings were 5.8 percent complete, according to the BA grains exchange, down 11 points from this time last year.

·        
EU’s Food Safety Agency (EFSA) warned Europe experienced its worst bird flu outbreak this year and nearly 50 million poultry culled and increased the risk for next season (peaks autumn and winter months for the Northern Hemisphere
in large part from migration).

·        
MEXICO BASIC CORN FLOUR PRICES TO DROP 3%: RAMIREZ (Bloomberg)

·        
NASS is due out with corn for ethanol usage for the month of July after the close.

·        
EIA reported July US ethanol production at 31.480 million bushels, slightly above our estimate. We raised our 2021-22 US corn for ethanol use to 5.331 billion bushels from 5.326 billion previous, 1 million above USDA. 2020-21
use was 5.033 billion and USDA looks for 2022-23 use to increase to 5.325 billion.

 

 

Export
developments.

·        
None reported

 

 

 

Soybeans

·        
November CBOT soybeans hit its lowest level since August 4^th, but prices are hanging in there from a rally in corn and wheat.

·        
CBOT deliveries were zero for soybean oil and 75 for meal.

·        
Strategie Grains raised its forecast for 2022 rapeseed production for the EU to 19.46 million tons from 19.15 million previously, 14.5% above 2021. EU sunflower seed crop was estimated at 9.25 million tons from 9.17 million last
month but still 10% below last year. EU soybean production was pegged at 2.47 million tons versus 2.49 million tons last month and 8.2% below 2021.

·        
USDA NASS will release August crush after the close (3 pm CT) and traders are looking for 175.6 million bushels, above 168.2 million year ago and down from 181.3 million for July 2022.

·        
EIA reported July soybean oil for biofuel use at a better than expected 956 million pounds (FI was looking for 934 million), well above 810 million during June and 808 million year earlier. We are using 10.380 billion pounds for
2021-22 US soybean oil for biofuel use, above USDA’s current 10.200 billion estimate.

 

 

·        
Malaysia’s Commodities Minister Zuraida Kamaruddin expects the weakness in Malaysian crude palm oil prices as temporary. Other analysts expect a price decline for cash and futures by the end of the year from growing supplies.

·        
Malaysian December palm oil futures increased 10 points to 3,426 and cash was down $5.00/ton to $822.50/ton.

·        
China is on holiday – Golden Week 黄金周

·        
Rotterdam vegetable oils were 50-60 euros higher from
this time Friday morning. SA meal was mostly 1-2 euros lower.

·        
Offshore values were leading soybean oil 392 points higher earlier this morning and meal $3.60 short ton higher.

 

 

Export
Developments

·        
USDA 24-Hour: Private exporters reported sales of 110,000 metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year.

·        
Egypt’s GASC seeks vegetable oils on October 4 for arrival Nov. 25-Dec. 10 for payment through 180-day letters of credit. GASC also seeks local vegetable oils, for at least 3,000 tons of soyoil and 1,000 tons of sunflower oil
for delivery Dec 1-15.

 

 

 

Wheat

·        
Chicago wheat is trading at its highest level since June on follow through buying from the bullish USDA reports release Friday and ongoing Black Sea tensions.

·        
December KC wheat is back above $10 per bushel, highest since mid-July.

·        
Iraq plans to plant one million hectares with wheat for 2022-23 during the winter crop season, according to the ministry of water resources, as it faces the driest year since 1930. Iraq harvested 625,000 hectares during 2021-22.

·        
The UN chartered a fifth vessel that arrived at Ukraine’s Black Sea port of Chornomorsk and will deliver Ukrainian wheat to Somalia.

·        
Ukraine’s September grain exports fell by 23.6% year on year to 4.278 million tons, but highest level since the Russian invasion.

·        
Farmers in Russia have sown winter grains on 9.4 million hectares compared with 10.7 million hectares around the same date a year ago – SovEcon.

·        
Russia’s September exports of wheat, barley and maize (corn) are estimated at 4.45 million tons, up from 4.20 million tons in August. – SovEcon

·        
Russia is looking at providing financial assistance (credit and investment insurance) for major importers to boost grain exports.

·        
Kazakhstan collected 20.4 million tons of grain as of October 1, 98 percent of the 15.6 million hectares planted. This compares to 15.3 million tons year ago. 15.7 million tons of wheat was collected compared to 13.4 million for
all of 2021.

·        
Paris December wheat was up 3.00 euros earlier at 355.25 per ton. Over 22,000 options were traded previous session. 5.8 million tons of agricultural products had so far left Ukrainian ports under the U.N.-brokered deal.

 

US
Wheat Associates

“This
week, basis was down in the Gulf except for SRW. Basis in the Pacific Northwest (PNW) was mixed. The market is mainly focused on geopolitics again this week, with Russia’s president a key player in the trajectory of wheat futures. The continued momentum in
futures prices has kept farmer selling sluggish as they anticipate prices to continue rising Minimal export demand means grain merchandisers are in no rush to purchase grain from farmers, and grain traders are focused on soybeans this time of year. The SRW
Gulf basis rose significantly due mainly to barge transportation problems associated with low river levels. Mississippi River barge rates are 58% higher than a year ago, according to USDA’s weekly Grain Transportation Report (GTR).”

 

Export
Developments.

·        
Results are awaited on Algeria’s state grains agency OAIC buying wheat for November shipment. Origin was thought to include mostly EU and some from Russia. Initial prices were seen at $369, $370 and $372 a ton c&f.

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

• Jordan
  retendered for barley set to close October 5 for 120,000 tons.
• Iraq
  seeks 50,000 tons of milling wheat on October 10, optional origin.
• Iraq
  seeks 50,000 tons of wheat on October 10.

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

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

·        
Mauritius seeks 25,800 tons of wheat flour, optional origin, on October 28 for January through September 30, 2023, shipment.

 

Rice/Other

·        
Egypt Buys 25,000 Tons of Local Rice From Farmers (Bloomberg).