FI Morning Grain Comments 10/12/22

PDF attached

 

Good
morning.
USDA
report day.

 

CBOT
ag market are lower. US PPI was higher than expected, sending WTI crude oil lower, USD higher, and selloff in US equities. This could be a negative influence for grains. Soybean oil lost ground to meal late in the electronic session. FOMC minutes are due out
early afternoon. USDA US crop progress was bearish for soybeans, neutral wheat and semi-bearish for corn. Traders are looking for USDA to lower the US corn yield and slightly increase soybeans. We think corn and soybean production will
be lowered. China in their month S&D updated raised 2021-22 corn imports by 2.00 million tons to 22.00 million. They left 2022-23 imports for corn unchanged at 18 million tons (7.2 MMT import quota for 2023, same as 2022).  China raised their 2022-23 corn
production by 2.75 million tons to 275.31 million, 2.76 or 1% above 2021-22. They left their old and new crop soybean balance unchanged and slightly adjusted various vegetable oil imports (lower) for 2021-22. US corn and soybean conditions improved 2 points
from the previous week while traders were looking for unchanged. Harvest progress for the corn crop advanced 11 points to 31 percent, 3 points below trade expectations. Soybeans collected were 44 percent, 3 points above trade expectations. Both corn and soybean
harvest progress are above their respected 5-year averages. US winter wheat plantings came in at 55 percent, at expectations, and  3 points below a 5-year average. No major changes to the US weather forecast. Brazil is unchanged and Argentina turned slightly
unfavorable. The Midwest will see light rain across the northeastern and central areas today & Thursday. Parts of the southern Great Plains will see rain, bias eastern Kansas, eastern Oklahoma today. Additional rain is expected to return to OK and include
TX late this weekend. Brazil will see widespread rains this week while Argentina will be dry over the next week. 

 

 

 

Weather

 

 

World
Weather, INC.

WORLD
WEATHER HIGHLIGHTS FOR OCTOBER 12, 2022

• Rain
  will fall in southern portions of the U.S. Plains (Texas and Oklahoma) Sunday into Monday offering some much-needed moisture to wheat and livestock grazing areas for improved soil moisture and crop establishment
• U.S.
  Midwest weather will be mixed with rain and sunshine, although western Corn Belt areas will be drier biased after today through the next ten days
• River
  and stream flows are not likely to seriously change
• Canada
  Prairies will remain drought stricken through the next ten days along with the U.S. Pacific Northwest and remaining far western states; some rain is possible after Oct. 20 in at least a portion of these areas
• Tropical
  Storm Karl remains over the southwestern Gulf of Mexico 155 miles north northeast of Veracruz, Mexico
• The
  storm will stall over the region today before turning back to the south southwest the remainder of this week reaching southern Veracruz, Mexico Friday night and Saturday
• Peak
  wind speeds will reach 50 mph prior to landfall
• Tropical
  Cyclones developing in the western Pacific and Bay of Bengal
• One
  storm will evolve in the South China Sea over the next couple of days before moving to southern Vietnam impacting the Central Highlands late Thursday and Friday with rainfall from there along much of the middle two-thirds of the coast ranging from 5.00 to
  15.00 inches
• Another
  storm forms east of the Philippines late this week and may move between Taiwan and Luzon Island during the weekend before possibly impacting Vietnam next week  – confidence is low
• A
  third tropical system may evolve in the Andaman Sea during mid-week next week before moving into the Bay of Bengal later next week and possibly threatening India Oct. 23-24 – confidence is low
• Eastern
  China to remain dry next two weeks (including Yangtze River Basin and southeastern provinces where drought is already under way
• Argentina
  remains mostly dry over the next ten days
• Brazil
  rain continues from the interior south to Bolivia and western and northern Mato Grosso
  
• Europe
  rainfall is minimal through Friday
• Eastern
  areas will continue drier biased along with western portions of the CIS during the weekend and next week while northwestern Europe gets waves of rain
• Northwest
  half of India will be dry while rain falls in southern and easternmost parts of the nation
• Australia’s
  greatest rain today and Thursday will be in Victoria and southern New South Wales
• A
  much larger part of eastern Australia will be wet next week with additional rain for many areas
• Western
  Australia continues to dry out and late season crops might benefit from a little rain

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Wednesday,
Oct. 12:

• USDA’s
  monthly World Agricultural Supply and Demand (WASDE) report, 12pm
• China’s
  agriculture ministry (CASDE) releases monthly report on supply and demand for corn and soybeans
• Bursa
  Malaysia Derivatives to host East Malaysia palm oil conference, day 1
• FranceAgriMer
  monthly grains outlook
• HOLIDAY:
  Brazil

Thursday,
Oct. 13:

• US
  CPI
• EIA
  weekly US ethanol inventories, production, 10:30am
• Malaysian
  Cocoa Board releases 3Q grind data
• Bursa
  Malaysia’s East Malaysia palm oil conference, day 2
• New
  Zealand Food Prices
• HOLIDAY:
  Thailand

Friday,
Oct. 14:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am

• China’s
  first batch of Sept. trade data, including soybean, edible oil, rubber and meat imports
• 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
• HOLIDAY:
  Thailand

Source:
Bloomberg and FI

 

 

 

 

 

 

 

 

World
ending stocks estimates

 

USDA
inspections versus Reuters trade range

Wheat                 
614,371                 versus   400000-750000  range

Corn                     
457,366                 versus   400000-725000  range

Soybeans           
969,212                 versus   400000-1250000                range

 

 

 

Macros

US
MBA Mortgage Applications Oct 7: -2.0% (prev -14.2%)

US
30 Year Mortgage Rate Oct 7: 6.81% (prev 6.75%)

 

Corn

·        
Corn futures are lower on US harvest pressure, break in the WTI crude oil market post US PPI number, and weakness in Chicago wheat. 

·        
China in their month S&D updated raised 2021-22 corn imports by 2.00 million tons to 22.00 million. They left 2022-23 imports for corn unchanged at 18 million tons (7.2 MMT import quota for 2023, same as 2022).  China raised their
2022-23 corn production by 2.75 million tons to 275.31 million, 2.76 or 1% above 2021-22.

·        
Romania reported an outbreak of African Swine Fever at a pig farm (not a wild bour) in the western part of the country.

·        
USDA US corn export inspections as of October 06, 2022, were 457,366 tons, within a range of trade expectations, below 672,835 tons previous week and compares to 850,831 tons year ago. Major countries included Mexico for 195,505
tons, Japan for 137,023 tons, and China for 78,627 tons.

 

 

Export
developments.

·        
Taiwan’s MFIG bought up to 65,000 tons of corn, optional origin, at $1.89/bu over the March contract for December and early January shipment. Brazil was thought to be the origin.

 

Soybeans

·        
The soybean complex is lower in part to US harvest pressure and outside market influence. Soybean oil lost ground to meal after WTI crude oil broke at 7:30 am CT. Look for positioning ahead of the USDA report.

·        
In its monthly S&D update, China their old and new crop soybean balance unchanged and slightly adjusted various vegetable oil imports (lower) for 2021-22.

·        
The USDA Attaché lowered Argentina soybean production to 49MMT and is now 2MMT below USDA’s official September estimate, up from 44MMT last year.

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Oilseeds%20and%20Products%20Update_Buenos%20Aires_Argentina_AR2022-0016

·        
Malaysian December palm oil futures increased 44 points to 3,736 and cash was up $5/ton to $880/ton.

·        
China November soybeans were down 1.1%, meal 1.5% higher, soybean oil 3.2% higher and palm oil 0.8% higher.

·        
Rotterdam vegetable oils were 3-6 euros higher from this time yesterday morning. SA meal was mixed.

·        
Offshore values were leading soybean oil 93 points higher earlier this morning and meal $5.50 short ton higher.

·        
USDA US soybean export inspections as of October 06, 2022, were 969,212 tons, within a range of trade expectations, above 585,271 tons previous week and compares to 1,744,264 tons year ago. Major countries included China for 690,073
tons, Mexico for 94,639 tons, and Egypt for 60,542 tons.

 

Export
Developments

·        
China plans to auction off 500,000 tons of soybeans from reserves on October 14, consisting of the 2019, 2020, and 2021 crop years.

 

 

Wheat

·        
US wheat futures are lower on positioning ahead of the USDA report and follow through technical selling after prices ripped higher on Monday.

·        
The Argentina Rosario exchange lowered Argentina wheat production to 16 million tons from 16.5 million previous. USDA September was at 19.0 million tons, which could decline in their update later today.

·        
Paris December wheat was off 2.00 euros at 354.00 per ton.

·        
FranceAgriMer increased its forecast for French soft wheat exports outside the EU for the 2022-23 season to 10.1 million tons from 10.0 million last month, a 15% increase from 2021-22. Within the EU they estimate exports at 7.07
million tons versus 7.13 million previously, 12% below 2021-22.

·        
USDA US all-wheat export inspections as of October 06, 2022, were 614,371 tons, within a range of trade expectations, below 667,577 tons previous week and compares to 446,896 tons year ago. Major countries included China for 87,396
tons, Korea Rep for 68,678 tons, and Philippines for 63,625 tons.

 

Export
Developments.

·        
Yesterday Algeria bought an estimated 510,000 tons of soft milling wheat for November shipment at an estimated $380-$385/ton c&f. Russia, Romania, Bulgaria and France (one cargo) was thought to be origin.

·        
Japan in a SBS import tender seeks 70,000 tons of feed wheat and 40,000 tons of barley on October 19 for arrival by February 24.

·        
Jordan saw two participants for 120,000 tons of barley for March and April shipment but passed.

·        
Jordan opened another import tender for 120,000 tons of feed barley, set to close October 19.

·        
Japan seeks 94,140 tons of food wheat from the US, Canada and Australia later this week for arrival by January 31.

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

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

 

Rice/Other

·        
Sugar prices hit a 12-month high. Heavy rain across parts of India are delaying sugarcane processing.

·        
South Korea plans to buy 450,000 tons of rice for reserves this year October 20 through December to stabilize domestic prices. This would be up from 350,000 tons last year.

·        
South Korea seeks 90,100 tons of rice from the US, Vietnam and other origins on October 19 for arrival between Jan 20 and Apr 30.

·        
Mauritius seeks 6,000 tons of rice on October 20, optional origin, for Jan-Mar shipment.