FI Evening Grain Comments 03/08/23

PDF Attached

USDA
report day.

US
equities are higher this morning after selling off hard Tuesday after the Fed indicated US rates could go higher. The USD is higher and WTI crude oil lower. There were several ag import tenders overnight, not surprising after prices collapsed on Tuesday. Before
the electronic session, futures for corn, soybean meal and soybean rebounded (meal the leader). Soybean oil is higher on technical buying. A large rise in soybean oil open interest yesterday suggests a lot of shorts were added. Wheat remains under pressure
from follow through selling related to optimism that the Black Sea grain deal will get done.

USDA
released their March S&D report

Reaction:
Initially
supportive for the soybean complex and neutral for grains. Nothing earth shattering was seen for the USDA S&D update. USDA did take a little more aggressive stance on adjusting US corn exports, and Argentina corn & soybean production.

USDA
NASS briefing

https://www.nass.usda.gov/Newsroom/Executive_Briefings/index.php

USDA
OCE Secretary’s Briefing

https://www.usda.gov/oce/commodity-markets/wasde/secretary-briefing

US
soybean stocks 210 vs. 225 last month (-15), -10 million vs. trade

US
corn stocks 1342 vs. 1267 last month (75), 34 million vs. trade

US
wheat stocks 568 vs. 568 last month (0), -5 million vs. trade

WLD
soy stocks 100.0 vs. 102.0 last month (-2.0), -0.3 million vs. trade

WLD
corn stocks 296.5 vs. 295.3 last month (1.2), 3.3 million vs. trade

WLD
wheat stocks 267.2 vs. 269.3 last month (-2.1), -2.2 million vs. trade

Brazil
Soy 153.0 vs. 153.0 last month (0), 0.1 million vs. trade

Arg.
Soy 33.0 vs. 41.0 last month (-8), -3.7 million vs. trade

Brazil
Corn 125.0 vs. 125.0 last month (0), 0.1 million vs. trade

Arg.
Corn 40.0 vs. 47.0 last month (-7), -3.4 million vs. trade

USDA’s
Argentina 33.0-million-ton soybean estimate and 40.0 million tons came in 3.7 and 3.4 million tons below trade expectations, respectively. Note many private estimates are using 25-28MMT for beans and 37-40 for corn. Look for USDA to lower Argentina production
estimate next month. For Brazil, the soybean and corn estimates were unchanged. USDA may massage the Brazil estimates next month with the soybean harvest advances and second corn crop takes shape.

World
soybean production was lowered 7.9 million tons to 375.2 million, still up 17 million tons from last crop year. World corn production was reduced 3.8 million tons to 1.148 billion, 68.5 million tons below 2021-22. USDA made upward revisions for Brazil, Australia,
and India wheat production. Global wheat output was increased 5.1 million tons from the previous month to 783.8 million tons, but stocks were lowered 2.1 MMT from an increased in feed/food use and lower imports.

USDA
increased US soybean exports by 25 million bushels to 2.015 billion, below 2.158 billion reported year ago. The US crush was lowered 10 million to 2.220 billion, only 16 million above last crop season. The lower crush was not that surprising. NOPA and NASS
crush figures have been coming in below trade expectations, despite good crush margins. US soybean meal production and domestic use was lowered 100,000 short tons. USDA lowered US soybean oil production by 50 million pounds, increased domestic use by 150 (raised
food by 150 million), and lowered SBO exports by a large 200 million pounds. USDA 2022-23 US soybean oil exports stand at only 500 million pounds. US soybean oil exports were estimated at 1.300 billion pounds back in November.

Table

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US
corn exports were taken down 75 million bushels and over a two-month period are down 100 million. This is a little bearish for corn futures. US ending stocks for corn stand at 1.342 billion bushels, 34 million above an average trade guess and above 1.267 billion
at the end of 2021-22. USDA did not make any other changes to the US corn demand categories. For the US balance sheet, there were no changes, including ending stocks by class.

Table

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Weather

Map

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Source:
World Weather, INC.

World
Weather, INC.

MOST
IMPORTANT WEATHER FOR THE DAY

South
America rainfall will be restricted over the next ten days from Santa Fe, southern Chaco and northeastern Buenos Aires, Argentina into Rio Grande do Sul, Brazil, Uruguay and southwestern Paraguay

These
areas will experience net drying conditions through March 18 and many locations are already quite dry resulting in greater crop moisture stress

There
are more showers suggested for this region today relative to that of Tuesday’s forecasts, but the resulting rainfall will still offer little to no relief

Western
and far southern Argentina showers and thunderstorms during the next ten days will support late season crop development

Southern
and western Buenos Aires, La Pampa, San Luis, western Santiago del Estero, western Cordoba and areas from Salta to western Formosa will receive most of the precipitation during this period of time and crop conditions will benefit, although it is getting late
in the year for some crops

Interior
eastern Bahia, Espirito Santo and northeastern Minas Gerais will receive “some” rain during the next ten days, but unirrigated crop areas away from the coast will not likely get enough to seriously change crop conditions

Greater
rain will be needed to reduce crop moisture stress for some of this region, although any rain is better than none

Center
west and center south Brazil are advertised to trend wetter again during the weekend and next week

The
moisture boost will be a concern for unharvested soybeans and unplanted Safrinha corn, but the moisture will be good for all previously planted Safrinha crops

Late
planted crops need to be well watered over the next few weeks so that the soil is completely saturated when monsoonal precipitation ends in April

That
way the late planted crops will have a fair chance of moving through reproduction while there is still beneficial moisture in the ground
Most
likely, some of the late planted corn will yield a little lighter than usual without an extended period of rain in late April and May

Europe
weather will turn more active over the next ten days with France, Germany and the U.K getting a notable boost in precipitation and soil moisture

The
change should improve water supply and long term soil moisture for use this spring

Eastern
Europe and the western CIS will also see a boost in precipitation this weekend through next week maintaining or inducing moisture abundance in those areas
Portions
of central India have received showers the past two days, but resulting rainfall was not enough to counter evaporation and much more moisture is needed

The
cloudiness and atmospheric moisture, though, should have helped temper the afternoon temperatures

India
has a good chance for additional showers in the central and interior north this week with rainfall of a trace to 0.60 inch of rain resulting

Madhya
Pradesh, Chhattisgarh and areas to the south will be wettest, although a few showers will occur in other areas as well

The
moisture will all be welcome for late reproducing and filling crops, though not enough to seriously raise soil moisture for induce a big change in winter crop production potential
The
moisture will help hold back temperatures keeping them warm, but not excessively hot

North
Africa weather is expected to continue restricted of moisture during the next ten days, although a few showers will produce up to 0.35 inch of moisture over the next ten days; mostly in coastal areas
Central
through southeastern Queensland, Australia rainfall is expected to evolve over the balance of this week and during the weekend with 2.00 to 4.00 inches of rain and locally more than five inches possible by early next week

Southwestern
Queensland and New South Wales will also receive a few showers, but resulting rainfall will not be enough to counter evaporation resulting in additional net drying.

China’s
Yangtze River Basin and areas southward into to a part of the coastal provinces will receive periodic rain

Moisture
totals will vary from 0.75 inch to more than 4.00 inches over the next ten days

Northern
and eastern most parts of the Yangtze River Basin will be driest with some areas getting less than 0.75 inch resulting in net drying

Other
areas in China will continue drier biased with temperatures well above normal this week and more seasonably warm this weekend into next week

China’s
bottom line will be mostly good for those rapeseed areas that get moisture, but net drying is likely in most other areas and the warmer weather this week will stimulate aggressive new crop development in rapeseed areas and greening in wheat areas to the north
Canada’s
central Prairies will get some welcome snow this weekend

Accumulations
of 2 to 8 inches will result in Saskatchewan and a part of Manitoba while lighter snowfall occurs elsewhere
Once
the snow melts this spring it should help to moisten the topsoil
Central
parts of the Prairies have been snow free for an extended period of time and soil moisture is low in many areas

Two
more waves of snow will move through the northern U.S. Plains and upper Midwest through the weekend

The
snow event for Thursday into Saturday was further reduced for the Red River Basin and uppermost Mississippi Valley

Snow
will fall Thursday and Friday from South Dakota and part of Nebraska to the Great Lakes region

Snowfall
of 2 to 6 inches and local totals to 8 inches will impact South Dakota, southern Minnesota and Nebraska while 3 to 10 inches and local totals to nearly 12 inches impact Iowa, far southeastern Minnesota, southern Wisconsin and northwestern Illinois

Another
wave of snow will fall in the northern Plains and upper Midwest this weekend with 2 to 6 inches expected from northern and eastern North Dakota into Minnesota

Some
of the weekend snow may extend southeast into a part of the Midwest, as well

Flood
potentials are still rising for the Red River Basin of the North and in a part of the upper Mississippi River Basin; however, most of the moisture will help improve water levels on the Mississippi River and will improve soil conditions for spring planting
once the ground firms up

Some
of the moisture will help end drought conditions
Flooding
is not a sure thing – much will depend on how it snow melts and whether significant rainfall occurs while it is melting

A
gradual melting will limit flood potentials

A
North America weather pattern trend change is expected next week with a northwesterly flow pattern expected in Canada and the north-central through the northeastern U.S.

This
change should squelch the frequent precipitation pattern in the northern Plains and upper Midwest – at least for a while

Three
areas of abundant U.S. precipitation are expected in the coming week to ten days

Central
and northern California through the Cascade Mountains of Washington and Oregon will see abundant to excessive precipitation again

Some
of the mountainous locations already have snow water equivalents in the snow of 1.5 to more than 2.0 times normal

Northern
Plains and upper Midwest will be wetter than usual as will a part of the Great Lakes region
The
northern and central Delta and Tennessee River Basin into Georgia will also be wetter than usual over the next week to ten days

West
and South Texas, the Texas Coastal Bend and northeastern Mexico will continue to receive restricted rainfall and remain in a drought

Greater
rain is needed and may evolve a little later this spring, but there is not much suggested through March 17

Philippines
rainfall will be light to locally moderate most days through the coming week

Weather
conditions in the next ten days should be mostly good for the nation

Indonesia
and Malaysia rainfall will occur abundantly during the next two weeks with all areas impacted and no area experiencing much net drying
Mainland
areas of Southeast Asia will receive very little rain of significance for a while which is normal for this time of year
South
Africa weather will be favorably mixed during the next two weeks with alternating periods of rain and sunshine likely

Similar
conditions occurred during the weekend, although more drying than rain was noted

West-central
Africa showers increased recently, but additional rain is needed and expected over the next ten days

Resulting
rainfall will be good for coffee and cocoa flowering and for sugarcane development and rice planting

Greater
rainfall may still be needed in some areas

Recent
temperatures have been heating up, but that is not unusual prior to the start of seasonal rainfall, but it has been stressful for some coffee and cocoa producing trees

Middle
East precipitation is expected to be erratic with some areas getting heavier rain than others

Iraq
and Iran will receive greater rain in this coming week and the change will be welcome for winter wheat development and eventual cotton planting

Eastern
Africa precipitation will be greatest in Tanzania during the next ten days which is not unusual at this time of year

Some
rain is expected to develop in Ethiopia, Uganda and Kenya over time, although amounts should be light

Eastern
Mexico and portions of Central America will receive rain during the next ten days

The
precipitation will be most organized in Central America with Costa Rica and Panama wettest, but some areas in western Honduras, northwestern Nicaragua and Guatemala this weekend into next week

Moisture
totals may be enough to stimulate premature coffee flowering and that potential event should be closely monitored

Most
likely the advertised rain is overdone and will be reduced in future forecast model runs.

Today’s
Southern Oscillation Index was +8.00 and it was expected to move erratically lower over the coming week

Source:
World Weather and FI

Bloomberg
Ag calendar

Wednesday,
March 8:

USDA’s
World Agricultural Supply and Demand Estimates (WASDE), 12pm
China’s
agriculture ministry (CASDE) releases monthly report on supply and demand for corn and soybeans
Bursa
Malaysia Palm Oil Conference and 2023 Outlook, Kuala Lumpur, day 3
EIA
weekly US ethanol inventories, production, 10:30am
ABARES
Outlook 2023 conference, Canberra, day 2

Thursday,
March 9:

USDA
weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
Port
of Rouen data on French grain exports
Brazil’s
Conab releases data on production, yield and area for corn and soybeans

Friday,
March 10:

ICE
Futures Europe weekly commitments of traders report
CFTC
commitments of traders weekly report on positions for various US futures and options, 3:30pm
Malaysian
Palm Oil Board’s data on stockpiles, production and exports
FranceAgriMer’s
weekly crop conditions reports
Brazil’s
Unica may release cane crush and sugar output data (tentative)
Coffee
festival in Dak Lak province, Vietnam

Source:
Bloomberg and FI

USDA
March report estimates

Due
out March 9

Macros

102
Counterparties Take $2.193 Tln At Fed Reverse Repo Op. (prev $2.1701 Tln, 101 Bids)

US
ADP National Employment Feb: 242K (exp 200K; prevR 119K)

US
Trade Balance Jan: -$68.3B (exp -$68.7B; prev -$67.4B)

Canadian
International Merchandise Trade (CAD) Jan: 1.92B (exp -0.12B; prev -0.16B)

US
Jan Oil Import Price $70.09/Bbl VS Dec $75.24/Bbl, +1.3% From Jan’22 $69.22/Bbl

–
Exports Fell To 3.51 Million Barrels Per Day In January (VS 3.84 Million Bpd In December)

Bank
Of Canada Leaves Its Key Rate Unchanged At 4.50%, As Expected

US
JOLTS Job Openings Jan: 10.824M (est 10.546M; prev R 11.234M)

US
Atlanta Fed GDPNow Q1: 2.6% (prev 2.0%)

US
DoE Crude Oil Inventories (W/W) 03-Mar: -1.694M (est +1.600M; prev +1.166M)

–
Distillate Inventories: +138K (est -1.300M; prev +179K)

–
Cushing OK Crude Inventories: -890K (prev +307K)

–
Gasoline Inventories: -1.134M (est -2.000M; prev -874K)

–
Refinery Utilization: +0.20% (est -0.50%; prev -0.10%)

Corn

·
Corn futures
traded two-sided, ending sharply lower on lack of bullish news. USDA increased their US carryout by 75 million bushels by lowering exports due to the slow sales pace. Soybean meal was lower by late afternoon trading which spilled over into corn.

·
The Philippines reported an outbreak of African swine fever in central Cebu province

·
Mexico plans to stick with their decision to partially ban US GMO corn imports. This will likely go to arbitration.

·
(Reuters) Canada has asked for formal consultations with Mexico over its restrictions on genetically modified agricultural imports under their free-trade agreement, Bloomberg News reported on Wednesday, citing people familiar
with the matter.

EIA
weekly ethanol update

The
US weekly EIA ethanol data was viewed slightly negative for US corn futures.
Weekly
US ethanol production increased 7,000 barrels per day to 1.010 million barrels. Traders were looking for a 9,000 increase. Stocks were up 545,000 barrels to 25.320 million barrels. Stocks estimate was for a 143,000 increase.
US
ethanol production of 1.010 million barrels per day is about 2% below from about the same time a year ago.
Over
the past 4 weeks, production changes averaged up 3,000 and stocks up 226,000 barrels.
Early
September 2022 to date (26 weeks) US ethanol production is running 4.0% below the same period a year ago. At this time last year ethanol production was advancing 8about 10% above the Sep 1, 2021-Mar 4, 2021, period.
Padd2
production was 964,000 barrels, up 6,000 from a week earlier. Padd1 was down 1,000 and Padd3 up 2,000.
There
were no ethanol imports reported this week.
Ethanol
stocks of 25.320 million barrels are up about 0.2% from a year ago and 0.2% above a previous 4-week average. The record for ethanol stocks was 27.689 million barrels set on 4/17/20, but today’s inventories are still considered high.
Days
of inventory of 24.5 compares to 24.4 a month ago and 24.3 during comparable period a year ago.
Weekly
ending stocks of total gasoline were down 1.134 million barrels to 238.1 million barrels. Implied gasoline demand was down 550,000 barrels to 8.562 million barrels.
The
net blender input of fuel ethanol was down 3,000 from the previous week at 870,000 bpd, above its previous 4-week average of 855,000 bpd.
Net
production of combined finished reformulated and conventional motor gasoline with ethanol was 8.610 million barrels, up 3,000 barrels from the previous week and represents 90.7 percent of total finished motor gasoline, below 92.7% blending rate previous week.
For
2022-23, we are using 5.225 billion bushels, unchanged from previous, and compares to 5.250 billion by USDA and 5.326 billion for 2021-22.

Export
developments.

Taiwan’s
MFIG group bought about 52,000 tons of corn from South Africa at an estimated premium of 219.40 cents a bushel c&f over the July contract for shipment between April 25 and May 25.
South
Korea’s Major Feedmill Group (MFG) bought 68,000 tons of corn from South America at an estimated outright price of $339.98 a ton c&f and 239.84 cents a bushel c&f over the September contract for arrival in South Korea around July 20.
South
Korea’s Nonghyup Feed Inc. (NOFI) bought an estimated 117,000 tons of optional origin corn. 45,000 tons was bought at an estimated $325.49 a ton c&f. 63,000 tons was bought at $326.00 a ton c&f. It’s for arrival in Korea around July 15.

U
of I: Safety Nets from Crop Insurance in 2023

Schnitkey,
G., C. Zulauf, N. Paulson and J. Baltz. “Safety Nets from Crop Insurance in 2023.”
farmdoc
daily
(13):41, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, March 7, 2023.

https://farmdocdaily.illinois.edu/2023/03/safety-nets-from-crop-insurance-in-2023.html

Updated
03/7/23

May
corn $6.00-$6.90

July
corn $5.75-$7.00

Soybeans

·
Soybean futures increased led by the nearby positions but gains were limited on lower soybean meal. Soybean oil ended higher on technical buying. USDA lowered their US carryout projection by 10 million bushels.

·
A main road that feeds Brazil’s Paranagua port closed late Wednesday after heavy rain caused a large crack in the road. Some speculate soybean arrivals could slow while other believe products could be railed. Soybean basis has
been under pressure there from harvest pressure.

·
Palm oil futures were down for the third consecutive day on weakness in outside related energy and vegetable oil markets. Losses were limited from several bullish comments out of the palm oil conference held in Kuala Lumpur. Some
Reuters headlines:

Dorab
Mistry – Malaysian palm oil is expected to trade between 4,000 and 5,000 ringgit ($1,106) per ton from now until August as Indonesia’s ambitious biodiesel mandate will keep stocks tight.
Thomas
Mielke – The market for vegetable oils is set to tighten for a year from mid-2023 as demand rises to produce biodiesel in Indonesia, while growth in palm oil output has slowed.
Indonesian
Palm Oil Association (GAPKI) – Indonesia’s palm oil exports are set to fall in 2023 as it increases the use of the tropical oil in biodiesel, reducing the surplus available for overseas sales.

·
China’s CASDE was unchanged for soybeans, corn and vegetable oils. They lowered sugar production.

Reuters
trade estimates for Malaysian palm oil S&D due out March 10.

Export
Developments

·
China’s Sinograin sold 34,839 tons of soybean oil from reserves, 100 percent of what was offered.

·
Tunisia seeks up to 9,000 tons of vegetable oils, either crude degummed soyoil or crude degummed rapeseed oil, on Thursday, March 9. Delivery is sought between March 30 and April 12.

Updated
03/07/23

Soybeans
– May $14.50-$16.00

Soybean
meal – May $430-$520

Soybean
oil – May 56-62

Wheat

·
All three US wheat markets were lower on USDA report day after no changes were posted for the US balance, an upward revision to India, Australia and Brazil crop production, and low US export demand. MN led Chicago and KC lower.
The US will see a large winter system this workweek across the northern Great Plains. Before the USDA report, May Chicago wheat futures were below $7.00/bu as traders continue to monitor Black Sea shipping negotiations, large global supply prospects, and the
large rally in the USD this week. A year ago, Chicago wheat was around $10.65.

·
Russia has been a good exporter of wheat in recent weeks. SovEcon reported Russia exported 6.7 million tons of wheat during January, up from 4.3 MMT year ago.

·
May Paris milling wheat officially closed down 3.75 euros, or 1.4%, at 266.75 euros a ton (about $281.20/ton).

Export
Developments.

·
Tunisia’s state grains agency bought 100,000 tons of durum wheat in four consignments of 25,000 tons, with lowest price at an estimated $455.89 ton c&f, for shipment between April 1 and May 15 depending on origin supplied.

·
Jordan bought 50,000 tons of animal feed barley, optional origin, at an estimated $279.50 a ton c&f for shipment in the second half of June.

·
Jordan seeks up to 120,000 tons of milling wheat, optional origin, on March 14, for shipment during Aug. 1-15, Aug. 16-31, Sept. 1-15 and Sept. 16-30.

·
Japan in a SBS import tender bought only 380 tons of feed barley. They were in for 70,000 tons of feed wheat and 40,000 tons of barley for arrival in Japan by August 31 on March 8.

·
India will send 20,000 tons of wheat to Afghanistan, for assistance in partnership with UN World Food Program.

·
Today China planned to auction off 140,000 tons of wheat from state reserves. They sold 141,700 tons last week, or about 100 percent offered at 2795 yuan per ton.

·
Algeria seeks 50,000 tons of durum wheat on March 9 for April 1-15 and April 16-30 shipment.

·
Japan seeks 80,570 tons of food wheat from the US and Canada on Thursday.

Rice/Other

·
(Bloomberg) — Sugar mills in India rally for a second day amid optimism the government will allow additional exports of the sweetener this season.

·
(Xinhua) — Vietnamese rice export prices increased to 528.5 U.S. dollars per ton, up 9.8 percent in the first two months this year from a year earlier, the Vietnam News reported on Wednesday.