FI Morning Grain Comments 12/28/22

PDF attached

 

 

Good
morning

 

USD
was lower by 19 points earlier, WTI crude oil $1.48 lower, US equities higher, and gold down about $12.
Higher
trade in most US CBOT agriculture markets with exception to a reversal in soybean product spreads and lack of direction in corn. News is light. Argentina’s rainfall event over the past few days was limited to isolated areas and the outlook for this week remains
in the drier side. Southern Brazil needs rain. Central and northern Brazil is in good shape. Warmer temperatures returned to the US Great Plains, melting some of the snow coverage. While beneficial for the northern and central growing areas, the lack of soil
moisture for the southern Great Plains, such as OK and TX, is still a concern for spring winter wheat establishment. Offshore values are suggesting a lower trade for soybean oil and higher lead for soybean meal. Look for the  reversal in oil share today to
remain in place by the time CBOT closes.

 

 

 

Weather

The
US warmup will continue through this weekend. US temperatures started to warm bias far southwestern growing areas Saturday, central and upper northwest of the Great Plains along with the central and southern Midwest Sunday, and upper Midwest into the northeast
Monday. The South American weather forecast (unchanged) has not changed that much, and the theme is generally the same: good rain for central and northern Brazil and lighter rain for southern Brazil and Argentina. Showers should favor Argentina’s Cordoba today
and Saturday. World Weather Inc. warned “Opportunities to plant crops will begin to run out in the middle part of January.”

 

 

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE COMING WEEK

• Excessive
  heat occurred again Tuesday in South Australia stressing livestock and inducing a strong demand for cooling fuels
• High
  temperatures were 95 to 111 degrees Fahrenheit in most of the state; including the coast
• Australia’s
  heatwave will shift farther to the east into New South Wales, Victoria and Queensland over the next few days stressing livestock and unirrigated summer crops
• Australia
  winter and summer crop areas are unlikely to get much precipitation during the coming week to ten days
• The
  environment will be good for fieldwork, including late season harvest progress in southern winter crop areas
• Rain
  is needed in interior east-central portions of the nation, although the situation is not a crisis
• Unirrigated
  sorghum, cotton and other crops will need rain soon especially with temperatures trending hotter
• Additional
  heavy rain fell in eastern Mindanao, Philippines Tuesday after significant rain fell in parts of the island  during the holiday weekend
• One
  location in east-central Mindanao reported 8.86 inches of rain
• Waves
  of heavy rain will continue to impact the eastern Philippines during the next full week to ten days resulting in some additional flooding from time to time
• Some
  areas may receive 6.00 to more than 14.00 inches of rain by the end of next week
• Argentina
  is still expecting rain late this weekend into Monday
• Rain
  totals of 0.30 to 0.90 inch and local totals of 1.00 to 2.00 inches are expected
• The
  moisture will be welcome, but there is still much debate over whether the amounts will be sufficient to sustain crops through the following week of dry and warmer weather
• The
  odds are high that the rain will induce a short term benefit, but much more moisture will be required to support crops for an extended period of time
• Not
  much rain will fall from January 2 through January 8 and temperatures will be warmer than usual resulting in rising potentials for crop stress especially in those areas that only get light rainfall late this weekend into Monday
• Argentina’s
  bottom line remains one of concern over poorly distributed rainfall. The rain expected this weekend into Monday will be extremely important and producers may advance with planting to take advantage of the moisture boost while noting the lateness of the planting
  season. Opportunities to plant crops will begin to run out in the middle part of January. Previously planted and established crops in the nation will benefit most from the coming rain.
  
• Most
  of Brazil will be impacted by rain at one time or another during the next two weeks
• The
  most abundant and significant rain will fall from southern Minas Gerais through Sao Paulo to northern and eastern Parana and Mato Grosso do Sul
• Net
  drying is expected in some western and southern Rio Grande do Sul locations where stress to rice, corn and a few soybean plants is expected
• Limited
  rain in Bahia, northern Minas Gerais and Espirito Santo will support ongoing crop development and planting especially since the ground is saturated with moisture going into this drier period
• Brazil’s
  bottom line remains very good for most of its crops. There will be some pockets of excessive moisture, but the impact is not likely to be great enough to threaten production. Net drying in western and southern Rio Grande do Sul and some Paraguay and Uruguay
  locations may continue to raise some concern over crop conditions and production, but the impact should be low on the nation’s bottom line. Drying in Bahia will be great for planting cotton and other late season crops. Subsoil moisture in Bahia and neighboring
  states in northeastern Brazil will be sufficient to support normal crop development, despite lighter than usual precipitation
• Western
  U.S. precipitation in the next ten days will be abundant and significant especially for California, western Washington and western Oregon where the precipitation will be frequent and often substantial   
  
• Mountain
  snowpack is already abundant, and it will remain that way for the next ten days to two weeks
• Runoff
  potential in the spring is looking better all the time and frequent storms expected in the next two weeks should add to that situation, but the wetter bias must continue into spring to ensure a reversal of the recent years of poor runoff
• Some
  flooding will be possible in the lower elevated areas of northern California and western Oregon during the coming week
  
• U.S.
  central and southwestern Plains are unlikely to receive significant precipitation in the next two weeks, despite periodic storm systems moving across a part of the region
• Drought
  remains a concern in the southwestern Plains and there is still worry over crop damage that may have resulted from the past week of bitter cold without significant snow cover to protect crops
• U.S.
  Northern Plains are expecting snow and some rain again during the late weekend and early part of next week
• The
  precipitation will bolster snow depths and induce some significant runoff in the warmer areas of Minnesota
  
• Abundant
  precipitation will be falling in the U.S. Delta, the Tennessee River Basin and heart of the Midwest for a while during the next ten days
• Sufficient
  moisture is expected to induce some flooding in low-lying areas
• U.S.
  temperatures will be warmer than usual over the central and eastern parts of the nation later this week into next week with some cooler biased conditions evolving in the western states
• Snow
  fell abundantly across the Canadian Prairies Tuesday, and it will continue today
• The
  moisture from snow may improve runoff in the spring, though there is still need for much more soil moisture in southern Alberta and southwestern
  
• Drier
  weather is expected for a while later this week and into the weekend
• Europe
  and western Asia temperatures will be warmer biased over the next ten days to two weeks
• Cooling
  is expected in northern and eastern Russia during the coming ten days, but mostly to the east of winter crop areas
  
• Europe
  weather will be wet biased in the west and north over the coming week to ten days maintaining wet field conditions and improving the spring runoff expectations
• Most
  of the precipitation will occur as rain, but some mountain snow is likely as well
• Western
  Russia, northern Ukraine, Belarus and the Baltic States will continue in a wet weather mode during the next ten days maintaining some concern over wet biased soil conditions in the spring in western Russia where some flooding may evolve
• China
  weather this week will continue relatively quiet biased with a little rain and mountain snow in the southwest including areas from Sichuan to Yunnan
• Most
  other areas will receive limited amount of moisture and temperatures will be near to above normal
• India
  weather will be rather quiet as well with limited amounts of moisture expected and seasonably to slightly warmer than usual temperatures
• India’s
  winter crops will have need for precipitation soon to support improved pre-reproductive precipitation
  
• An
  active weather pattern is expected in parts of the Middle East next week, although the resulting precipitation should be mostly light to locally moderate
• Iran,
  Iraq, Saudi Arabia and Afghanistan will be wettest
• South
  Africa weather will continue to be favorably mixed over the next two weeks supporting normal summer crop development
• There
  may be some increasing need for precipitation in the western summer crop areas eventually
• North
  Africa rainfall was limited during the weekend, and it will continue restricted over the next week
  
• Many
  areas from Morocco into Tunisia will require significant precipitation soon
• Some
  increase in precipitation is expected in northeastern Algeria and coastal Tunisia next week
• West-central
  Africa dryness will continue through the next ten days to two weeks
• Dry
  conditions are normal at this time of year
• No
  excessive heat is expected in this coming week, although warmer than usual conditions may begin to evolve a week from now and continue into January 10.
  
• Ethiopia
  rainfall will increase late this week and next week
• Until
  then, rain in east-central Africa will be concentrated on Tanzania, Uganda and parts of southwestern Kenya which is normal for this time of year.
  
• Coffee,
  cocoa, sugarcane, and a host of other crops should develop well in this environment
• Southeast
  Asia will continue to experience periodic rainfall and some periods of sunshine supporting most crops throughout the region
• Mainland
  areas of Southeast Asia will experience the driest conditions and that is normal for this time of year
• Heavy
  rain and local flooding will impact eastern parts of the Philippines and in some southern Indonesia locations
• Today’s
  Southern Oscillation Index was +18.16 today and it will likely level off early this week and then begin to fall during the remainder of this week and into the weekend

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Wednesday,
Dec. 28:

• Weekly
  USDA Broiler Report

Thursday,
Dec. 29:

• EIA
  weekly US ethanol inventories, production, 10:30am
• Vietnam’s
  general statistics department releases monthly coffee, rice and rubber export data

Friday,
Dec. 30:

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

• CFTC
  commitments of traders weekly report on positions for various US futures and options, 3:30pm
• ICE
  Futures Europe weekly commitment of traders report, 1:30pm (6:30pm London)

Saturday,
Dec. 31:

• Malaysia’s
  Dec. 1-31 palm oil export data by cargo surveyor AmSpec

Source:
Bloomberg and FI

 

 

 

USDA
inspections versus Reuters trade range                                                    

Wheat                 
280,554                 versus   175000-450000  range

Corn                     
856,606                 versus   500000-900000  range

Soybeans           
1,753,085             versus   1200000-1860000             range

 

Macros

 

Corn

·        
CBOT corn futures
are mixed to unchanged after contracts rallied on Tuesday. News is thin. Higher soybeans and wheat along with a lower USD are limiting losses. One would think some are unwinding corn/wheat spreads put on yesterday.

·        
Inspections for corn yesterday were ok, but on a crop year basis well below year ago. With Brazil on track to see a large crop, US exports need to be robust from now until June to reach USDA’s export projection. We are 25 million
bushels below USDA’s current export projection.  December 1 US corn stocks are expected to be large given lackluster demand for ethanol during Q1 (crop year) and very slow exports. Feed demand, a residual, could be variable.

·        
USDA US corn export inspections as of December 22, 2022, were 856,606 tons, within a range of trade expectations, above 826,955 tons previous week and compares to 954,488 tons year ago. Major countries included Mexico for 403,451
tons, China for 277,964 tons, and Japan for 70,392 tons.

 

Export
developments.

·        
None reported

 

 

Soybeans

·        
CBOT soybeans and meal are higher while soybean oil lower (reversal in product spreading) on Argentina weather concerns. Argentina’s rainfall event over the past few days was limited to isolated areas and the outlook for this
week remains in the drier side. Southern Brazil needs rain. Central and northern Brazil are in good shape.

·        
Warmer temperatures returned to the US Great Plains, melting some of the snow coverage. While beneficial for the northern and central growing areas, the lack of soil moisture for the southern Great Plains, such as OK and TX, is
still a concern for spring winter wheat establishment.

·        
Offshore values are suggesting a lower trade for soybean oil and higher lead for soybean meal. Look for a reversal in oil share today.

·        
Malaysia will keep its January export tax for crude palm oil at 8% while raising its reference price to 3,889.52 ringgit ($880.98) per ton for January (3,847.24 December).

·        
March palm oil futures in Malaysian were down 13 ringgit to 4,087 and cash down $12.50/ton at $960.00.

·        
China soybean futures were up 0.6%, meal 1.2% lower, soybean oil 1.3% higher and palm up 1.2%.

·        
Rotterdam vegetable oils were
unchanged to 25 euros lower from early yesterday morning. Rotterdam meal was mixed with not much change.

·        
Offshore values were leading SBO lower by about 195 points earlier this morning and meal $0.90 short ton higher.

·        
USDA US soybean export inspections as of December 22, 2022, were 1,753,085 tons, within a range of trade expectations, below 1,963,322 tons previous week and compares to 1,751,353 tons year ago. Major countries included China
for 1,073,756 tons, Japan for 129,503 tons, and Mexico for 83,348 tons.

 

Export
Developments

·        
Egypt’s GASC lowest offer for vegetable oils on Wednesday was $1,290 per ton c&f for 11,000 tons of sunflower oil and soyoil at $1,425 per ton c&f for 10,500 tons. Payment for both offers is at sight for arrival Feb. 5-25, 2023.
They
are also in for local vegetable oils, for at least 3,000 tons of soybean oil and 1,000 tons of sunflower oil for February 1-25 delivery.

·        
South Korea’s state-backed Agro-Fisheries & Food Trade Corp. seeks 25,000 tons of GMO free food-quality soybeans, optional origin, on January 4 for arrival between December 2023 and June 2024.

 

Wheat

·        
Chicago wheat is
mostly higher on technical buying after selling off yesterday despite strength in KC wheat after the US cold snap. KC and MN are seeing additional gains from steady global demand for high protein wheat. However, export developments lacked on Wednesday. Traders
are waiting for approval for Egypt’s 80,000 wheat import tender. Meanwhile there are a few rice import tenders this week.

·        
Paris March wheat was 1.00 euro lower earlier at 314 euros a ton.
That contract saw a nice bounce from a December 20 session low of 294.25 and prices appear to be stabilizing.

·        
USDA US all-wheat export inspections as of December 22, 2022, were 280,554 tons, within a range of trade expectations, below 304,108 tons previous week and compares to 314,502 tons year ago. Major countries included Mexico for
103,902 tons, Thailand for 54,109 tons, and Italy for 40,804 tons.

·        
SovEcon raised their Russia 2022-23 wheat crop production estimate to 101.2 million tons from 101.2 million previously, on improved crop conditions for the Centra region and Siberia.

 

Export
Developments.

·        
Egypt’s GASC seeks wheat as part of a World Bank-funded food security program but needs approval. Shipment is from Feb. 1-15, optional origin with any origin, and payment is for at sight.
Lowest offer was $339/ton for 40,000 tons of Russian wheat. Second lowest offer was $345 for 60,000 tons of Russian wheat. 

 

Rice/Other

·        
South Korea’s state-backed Agro-Fisheries & Food Trade Corp. seeks 113,460 tons of rice on December 29 from the United States for arrival in South Korea in 2023 between Feb. 1 and June 30.

·        
Vietnam 2022 rice exports were seen around 7 million tons by the government, up 12.2 percent.

·        
Bangladesh’s lowest offer for 50,000 tons of rice was $397.03/ton CIF liner out.
On
December 21 Bangladesh was in for 50,000 tons of rice and lowest offer was thought to be $393.19 CIF per ton.

·        
South Korea’s Agro-Fisheries & Food Trade Corp. seek 83,672 tons of rice from the United States for arrival in South Korea in 2023 between Feb. 1 and June 30.