FI Morning Grain Comments 10/24/22

PDF attached

I will be out of the office 11 am CT onward

 

Good
morning.

 

CBOT
soybean complex is lower on widespread selling and higher USD. Corn and wheat are lower, in part to some traders thinking the Black Sea safe passage agreement will be extended. Xi Jinping was elected, for the third term, as China’s leader for another 5 years.
We see no change in China ag flows.
Most of the US growing areas saw above normal temperatures, record in some places, over the weekend, and much of the area was dry, with exception to the PNW. The dry areas of the southwestern US Plains will see rain today before drying down midweek. Malaysia
is on holiday. Offshore values are leading soybean oil 63 lower and meal 40 cents lower.

 

 

 

 

Weather

 

Last
7 days

 

World
Weather, INC.

WORLD
WEATHER HIGHLIGHTS FOR OCTOBER 24, 2022

• Rain
  will be developing early this week in Oklahoma, northeastern Texas, western Arkansas, Missouri and Illinois as remnant moisture from Tropical Storm Roslyn streams into those areas ahead of a cooler airmass
• Rainfall
  of 1.00 to 3.00 inches is expected in the heart of Oklahoma today and early Tuesday
• Rainfall
  of 0.20 to 0.75 inch in the Texas Panhandle with a few amounts over 1.00 inch
• Eastern
  Colorado, central and western Kansas and Nebraska will stay dry
• Follow
  up rain in parts of Texas and Oklahoma Thursday into Friday – favors eastern parts of the region
• Extremely
  windy, hot and dry conditions occurred in the Great Plains during the weekend with highest temperatures in the 80s and 90s, relative humidity of 7-25% and wind speeds of 20-44 mph and gusts to 66
• These
  conditions induced rapid drying not only in the central and southern Plains, but in the western Midwest, as well
• Rain
  in Missouri and Illinois later today and Tuesday will induce some runoff, although the area impacted will be relatively small
• Rain
  totals of 1.00 to 2.50 inches will lead to a small increase in river flow for the Mississippi River later this week and into the weekend
• Follow
  up storm from the southern Plains late this week will bring rain into the Delta and Tennessee River Basin improving runoff in those areas as well
  
• The
  bottom line will be a welcome rise in river levels on the Mississippi River this weekend into next week that might be enough to ease some of the barge restrictions for a little while – follow up rain will be needed to sustain the improvement
• A
  third weather system “may” reach the Midwest and Delta briefly Nov. 3-5 for possible additional moisture
• Argentina
  received some rain in the south during the weekend and more is expected early this week that will be followed by ten days of drying
• Improved
  crop and field working conditions will result
• Today’s
  models produce more rain in east-central and northeastern Argentina this weekend
  
• The
  increase in rainfall in east-central Argentina was new today relative to Sunday’s forecasts
• Brazil
  will see a good mix of rain and sunshine during the next ten days to two weeks
• Weekend
  rainfall in North America was greatest from southern Alberta southward into central Montana
• That
  precipitation is expected to continue northeast through southern and eastern Saskatchewan and northeastern Montana to west-central and northwestern Manitoba today and early Tuesday which will benefit winter crop establishment and will put needed moisture into
  the ground for use next spring
• Europe
  weather in the coming ten days will be confined to the North and Baltic Sea regions leaving most other areas dry or mostly dry
• Western
  CIS weather this week will include some brief periods of rain with snow likely in the eastern New Lands where much colder temperatures are expected
• China’s
  weather will continue dry biased in the east except for a few showers in the northeast infrequently and rain in Sichuan and immediate neighboring areas early this week
• Rain
  is needed in rapeseed production areas, and some will occur, but it will be very light
  
• Good
  wheat planting weather is prevailing, and summer crop harvesting is also advancing well
• Eastern
  Australia will continue too wet over the next ten days, although rain frequency and amounts will be less than that of the past couple of weeks and some net drying will occur at times
• Western
  Australia will experience the best mix of weather for a high yielding winter crop
• India’s
  weather will be good for summer crop maturation and harvesting as well as for winter crop planting
• Tropical
  Cyclone Sitrang will move into Bangladesh today producing some very heavy rain and flooding in eastern Bangladesh
  
• South
  Africa weather will remain favorable for summer crop planting and emergence

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Monday,
Oct. 24:

• MARS
  monthly EU crop conditions report
• USDA
  export inspections – corn, soybeans, wheat, 11am
• US
  crop conditions and harvesting for corn, soy, cotton; winter wheat plantation and condition, 4pm
• US
  cold storage data for pork, beef, poultry, 3pm
• Cane
  crush, sugar output data by Brazil’s Unica (tentative)
• HOLIDAY:
  India, Singapore, Malaysia, New Zealand, Thailand

Tuesday,
Oct. 25:

• Malaysia’s
  Oct. 1-25 palm oil export data
• EU
  weekly grain, oilseed import and export data
• EARNINGS:
  ADM

Wednesday,
Oct. 26:

• Asia-Pacific
  Agri-Food Innovation Summit, Singapore, day 1
• EIA
  weekly US ethanol inventories, production, 10:30am
• EARNINGS:
  Bunge, Pilgrim’s Pride
• HOLIDAY:
  India

Thursday,
Oct. 27:

• Asia-Pacific
  Agri-Food Innovation Summit, Singapore, day 2
• Virtual
  New Food Invest Conference, EMEA
• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am

Friday,
Oct. 28:

• Asia-Pacific
  Agri-Food Innovation Summit, Singapore, day 3
• FranceAgriMer
  weekly update on crop conditions
• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for
• various
  US futures and options, 3:30pm

Source:
Bloomberg and FI

 

 

 

 

CFTC
Commitment of Traders

 

 

 

 

Macros

US
Chicago Fed Nat Activity Index Sep: 0.10 (est -0.10; prevR 0.10)

China’s
economy increased 3.9% in the third quarter from the previous year and up from 0.4% for Q2.

US
midterm elections are nearly two weeks away.

 

 

Corn

·        
Corn futures
are lower on widespread commodity selling and higher USD.

·        
Safras estimated Brazil’s summer crop at 25.2 million tons, above 21.9 million for 2021-22. The area is projected to rise to 4.2 million hectares or 4.3% from the previous season. All 2022-23 corn production is seen at 126.3 million
tons, above 119.5 million in 2021-22. USDA is at 126 million tons for the Brazil 2023-22 corn crop.

·        
China September corn imports were 1.53 million tons, more than half of what was imported year earlier.

·        
Barge freight costs were up on Friday

 

·        
The Netherlands culled 44,000 turkeys on a farm in the southern areas due to bird flu.

·        
USDA Cattle on Feed was at expectations. Inventories are up for the third consecutive month and for the month of September are at a three year low.

 

 

Export
developments.

·        
None reported

 

Soybeans

·        
CBOT soybeans were sharply lower led by weakness in soybean meal, lower outside commodity markets and higher USD. Soybean oil is lower but nearby oil share is higher with limited losses in December relative to the back months.
The US biofuel discussion and slower than expected crush is supporting spreads.

·        
China’s soybean imports in September were up 12% from a year earlier to 7.72 million tons, which will provide some relief to near record high soybean meal prices. Jan-Sep soybean imports are running 6.6% below year earlier at
69.04 MMT.

·        
A few light rains in Argentina over the weekend will increase plantings but more rains are needed.

·        
Argentina’s September soybean crush was 2.87 million tons, down 9 percent from 3.15 million during August and well below September 2021 (off 22 percent).

·        
Malaysia is closed for holiday, returning Tuesday.

·        
China November soybeans were down 0.6%, meal 0.3% lower, soybean oil 0.1% higher and palm oil 1.0% lower.

·        
Rotterdam vegetable oils were mixed (SBO higher and RSO lower) from this time Friday morning. SA meal was mostly higher.

·        
Offshore values this morning were leading soybean oil 63 points lower earlier this morning and meal $0.40 short ton lower.

 

Agriculture
and Agri-Food Canada

https://agriculture.canada.ca/en

 

Export
Developments

• Egypt
  seeks vegetable oils (no specific amounts noted) on October 26 for Dec 10-30 arrival, and some local vegetable oils. They are looking for 180-day letters of credit.
  

 

Wheat

·        
Wheat is lower from a higher USD and positive sentiment that Russia will agree to extend the safe passage deal for Ukraine grain exports due to expire November 19^th. Ukraine’s energy and military infrastructures were
targeted over the weekend. A UN spokesman said they need to unclog a backload of 150 ships under the safe passage deal. No specifics were provided. Russia is looking to negotiate opening selected trade flows, such as fertilizer.

·        
The dry areas of the southwestern US Plains will see rain today before drying down midweek.

·        
The USDA Attaché estimated Australia’s wheat crop at 34 million tons, 1 million above USDA official, despite heavy rainfall hurting the crop across parts of the eastern growing area.

·        
APK-Inform lowered Ukraine 2022 grain production to 53.2-53.6 million tons from 54.1-55.7 million previous, including 19 MMT wheat and 27.9 MMT corn.

·        
Ukraine grain exports since the start of the marketing year are down 33.4%.

·        
Egypt said they have enough wheat stocks for 5.5 months.

·        
Paris December wheat ended down 3.50 euros at 338.50 euros a ton.

·        
China auctioned off 40,026 tons of wheat from state reserves at an average price of 2,829 yuan per ton ($390.75). They sold 41,359 tons on October 12.

 

USDA
Attaché on Australia – 34 MMT wheat versus 33 USDA official

“Australia
is on the path to a third consecutive bumper grain crop in marketing year (MY) 2022/23 after a record-setting winter crop and strong summer crop production in MY 2021/22. After another strong start to the planting season followed up by great rainfalls, there
is ample moisture to carry the wheat and barley crops through the grain fill stage. The key risk is rainfall at harvest causing grain quality downgrades.
Wheat production is forecast at 34 million metric tons (MMT), down from the record-breaking MY 2021/22 crop of 36.3 MMT but still the second largest in history. Similarly, barley production is forecast at 12.2 MMT, down from the previous year’s 13.9
MMT record. Sorghum production is forecast to achieve the fourth largest on record in MY 2022/23 at 2.6 MMT and exports at a near-record 2.1 MMT. With plentiful irrigation water available, rice production in MY 2022/23 is forecast to continue to grow for the
third successive year to 575,000 MT.”

 

https://agriculture.canada.ca/en

 

US
Wheat Associates

“This
week (ending 10/21), basis was mixed in the Gulf and Pacific Northwest (PNW). Secondary rail rates rose 6% compared to last week and an astonishing 1500% compared to the same week last year. Barge traffic resumed last week along the Mississippi River, a key
artery for grain exports through the Gulf, but lagged behind their pace from a year ago, according to USDA’s weekly Grain Transportation Report (GTR). Export elevations are also firm, as wheat competes with corn and especially soybeans for available elevator
space. Overall, the story remains the same: sluggish railroad performance, the consistently high value of the U.S. Dollar, persistent dry weather in wheat growing areas, and uncertainty over the Black Sea grain deal are all combining to keep wheat prices high.
“

 

Agriculture
and Agri-Food Canada

 

Export
Developments.

·        
Saudi Arabia’s SAGO bought 566,000 tons of wheat at an average price of $384.75/ton CIF for March and April shipment. It includes 12.5% protein hard milling wheat. European Union, Black Sea region, North America, South America
and Australia were noted origins.

·        
Iraq seeks 50,000 tons of wheat on October 30, nearly one week later than their original close date.

·        
Algeria seeks wheat on October 25, valid until the next day, for November 16-December 31 shipment.

·        
Thailand seeks up to 180,000 tons of optional origin feed wheat for Feb-Apr shipment.

·        
Jordan seeks 120,000 tons of wheat on October 25 after buying 60,000 tons this week at $374/ton c&f for FH March shipment.  

·        
Pakistan seeks 500,000 tons of wheat on October 26.

·        
Jordan reopened another import tender for barley set to close October 26.

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

 

Rice/Other

·        
Egypt seeks 50,000 tons of sugar, optional origin, on October 25 for arrival between Dec 1-31.