FI Evening Grain Comments 03/30/22

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USDA
plantings and stocks reports are due out tomorrow. US agriculture futures ended higher pre-report day on renewed Black Sea concerns, rebound in WTI crude oil and lower USD. It’s too early to see if Russia will live up to their promise to de-escalate their
military “operation.” There
was a headline Russia actually intensified shelling in some areas outside the cities they were targeting. USDA’s hogs and pigs report was viewed bullish hogs and slightly negative for US corn futures. 

 

 

Weather

 

World
Weather Inc.

WEATHER
EVENTS AND FEATURES TO WATCH

• U.S.
  Delta, Tennessee River Basin and lower Parts of the  Midwest may experience planting delays this spring due to wet field conditions
• Poor
  drying rates are expected in this coming week between rain events and the ground is already saturated or nearly saturated
• No
  relief to dryness in West or South Texas is expected over the next ten days to two weeks
• Dryland
  crops in both regions will be vulnerable to production  cuts this year, although there is plenty of time for rain to evolve in West Texas before planting  begins in May
• South
  Texas crops, however, were planted previously and are not germinating, emerging or establishing well in unirrigated fields
• U.S.
  southeastern states will experience a mix of weather during the  next two weeks that will be supportive of some spring fieldwork
• U.S.
  northwestern Plains and southwestern Canada’s Prairies are unlikely to see “significant” precipitation for a while, although a few sporadic periods of rain and snow will impact portions of the region infrequently.
• California’s
  rainfall in the southern coastal Plain this week was welcome, but precipitation in the Sierra Nevada was dismally poor and the outlook for the state is dry over the next ten days to two weeks.
  
• The 
  state is likely facing some  serious water shortages later this year and MUST experience a more favorable winter precipitation pattern next year to avoid a more serious water shortage
  
• Frost
  and freezes may develop in the interior southeastern U.S. late next week, although it is too early to get specific about the outlook.
• Southwestern
  Argentina will  be dry biased for the next week to ten days
• Northeastern
  Argentina, southern Brazil and southern Paraguay may get too wet this weekend and next week raising concern over rice and other crop conditions
  
• Delays
  in harvesting is expected
• Northeastern
  Brazil will continue drier than usual over the next ten days to two weeks
• The
  region includes much of Bahia, away from the coast, and the northern and central parts of Minas Gerais
• Crop
  moisture stress is impacting corn, rice, sugarcane and coffee, although most of the production in these areas is limited
• Rainfall
  predicted in southern Mato Grosso and Mato  Grosso do Sul in today’s forecast models has been reduced for the coming ten days, but this is not the end of seasonal rainfall for the region
• The
  drier bias might improve some Safrinha crops after recent excesses of moisture
• Central 
  Europe to wet-central Russia will be wetter biased for a while during the coming week
• Some
  heavy snow is expected from southern Germany through northwestern Ukraine and southeastern Belarus to the Ural Mountains
• The
  snow might contribute to spring flooding since the moisture content will be high in the snow and the ground is suspected of being wet beneath the  snow
• Europe
  and northwestern Russia temperatures will be cooler than usual over the  coming week with some warming expected in western Europe during the second week of the  outlook
• Northwestern
  Africa and  southwestern parts of Europe will continue to receive periodic precipitation that will serve winter wheat, barley and some spring crops well
• Additional
  precipitation is predicted for the Russian New Lands and northern Kazakhstan during the weekend and especially next week
• The 
  moisture will be  ideal for spring planting
• India’s
  harvest weather will be very good over the next couple of weeks
• Precipitation
  will be limited to sporadic showers in the far south and more generalized rain in the Eastern States
  
• Southeastern
  China will get additional rain today and Thursday and then be dry biased for much of the following  week to ten days
• The
  break from rainy weather will be ideal for rapeseed development and early season corn and rice planting throughout the  south
• Improvements
  to many crops and field working conditions are likely
• Temperatures
  will trend warmer, as well
• Northern
  wheat areas of China will experience some warmer weather next week that may stimulate some greater crop development potential
• Mexico’s
  dryness and drought have been expanding this winter due to poor precipitation resulting from persistent La Nina
• The
  region will continue lacking precipitation for an expected period of time
• Eastern
  and southern Mexico will remain seasonably dry this week and will only receive light rainfall next week
• Southeast
  Asia rainfall will continue frequent and abundant
• No
  area in the  mainland areas, Philippines, Indonesia or Malaysia are expected to be too dry
• Too
  much rain may impact northeastern Philippines late this weekend into next week
• Vietnam 
  may be impacted by a tropical disturbance during the next several days resulting in frequent rainfall along the lower coast with some rain reaching into coffee areas as well
• The
  moisture may be good for rain-fed coffee which normally flowers in April
• East-central
  Africa rainfall will continue greatest in Tanzania, although parts of Uganda and Kenya will get rain periodically as well.
  
• Ethiopia
  rainfall should be most sporadic and light
• West-central
  Africa rainfall will continue periodically and sufficient to support coffee and cocoa development
• Rainfall
  so far this month has been a little sporadic, but no area has been seriously dry biased
• Pockets
  in Ivory Coast and western Ghana have received less than usual rain, but crop development has advanced well
  
• North
  Africa rainfall will be greatest today and Thursday with some follow up showers early to mid-week next week in Morocco and northern Algeria
• Crop
  conditions will improve as a result of the rain
• Western
  Australia will continue to receive periods of rain through the weekend, although much of it be light and sporadic
• The
  additional moisture will further boaster topsoil moisture for use in the autumn wheat, barley and canola planting season that begins in late April
• Eastern
  Australia precipitation is expected to be limited the remainder of this week bringing on a better environment for cotton in the open boll stage of development
• The
  drier weather will also be good for early season planting which begins soon
• Irrigated
  late season sorghum and other crops will continue to develop favorably
• Some
  of the dryland crop that is still immature still needs greater moisture
• Rain
  is expected briefly during the weekend and early part of next week, but it should not seriously harm fiber quality, although any rain is not welcome at this time of year
• South
  Africa rainfall over the next couple of weeks will periodic and sufficient enough to support late season crop development while the impact on mature crops should be low outside of some brief harvest delays
• Colombia,
  Ecuador, western Venezuela and parts of Peru will remain plenty wet during the next ten days
• Frequent
  rain is expected
• The
  moisture will be great for coffee and cocoa flowering and well as support of all crops
• Today’s
  Southern Oscillation Index is +12.13 
• The
  index will move lower over the next seven days
• Central
  America precipitation will be greatest along the Caribbean Coast during the next seven to ten days and in both Panama and Costa Rica
• Guatemala
  will also get some showers periodically

Source:
World Weather Inc.

 

Bloomberg
Ag Calendar

Wednesday,
March 30:

• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• USDA
  hogs and pigs inventory, 3pm

Thursday,
March 31:

• U.S.
  annual acreage prospective planting data for various farm commodities, including wheat, barley, corn, cotton, soybeans and sunflower, noon
• USDA
  quarterly stockpile data for wheat, barley, corn, oats, soybeans and sorghum, noon
• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• U.S.
  agricultural prices paid, 3pm
• Malaysia’s
  March palm oil export data

Friday,
April 1:

• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• Australia
  Commodity Index
• USDA
  soybean crush, DDGS output, corn for ethanol, 3pm
• FranceAgriMer
  weekly update on crop conditions

Source:
Bloomberg and FI

 

Reuters
trade estimates for USDA

 

 

 

 

 

 

Macros

US
GDP Annualized (Q/Q) Q4 T: 6.9% (est 7.0%; prev 7.0%)

US
GDP Price Index Q4 T: 7.1% (est 7.1%; prev 7.1%)

US
Core PCE (Q/Q) Q4 T: 5.0% (est 5.0%; prev 5.0%)

US
Personal Consumption Q4 T: 2.5% (est 3.1%; prev 3.1%)

US
ADP Employment Change Mar: 455K (est 450K; prev 475K)

 

US
DoE Crude Oil Inventories (W/W) 25-Mar: -3449K (est -2000K; prev -2508K)

–
Distillate Inventories: 1395K (est -1500K; prev -2071K)

–
Cushing OK Crude Inventories: -1009K (prev 1235k)

–
Gasoline Inventories: 785K (est -1600K; prev -2948K)

–
Refinery Utilization: 1.00% (est 0.40%; prev 0.70%)

 

86
Counterparties Take $1.786 Tln At Fed Reverse Repo Op (prev $1.719 Tln, 88 Bids)

 

Corn

·        
US corn futures ended higher led by bull spreading mainly on a rebound in US WTI crude oil and lower USD.  Post CBOT close, USDA’s Hogs and Pigs report appeared to be bullish for hog futures.

·        
The AgMin in Brazil’s state of Parana reported 85% of the first corn crop had been harvested as of Sunday, above 82% year earlier. Conab showed all Brazil first corn crop 47% collected versus 43% year earlier.

·        
We heard a large ethanol company predicted acres at 88.6 million for corn and 89.2 million for soybeans. Combined this seems a little low, in our opinion. We are at 92.5 million acres, 500,000 above the trade average. 

·        
Looking past soybeans, the low corn area outlook from the ethanol company is a reminder record fertilizer prices and short supply of the product may force some producers to consider some switching from corn to soybeans and/or
other commodities. We are seeing this for producers residing in the fringe states. For example, some producers across the far SE are switching from corn to cotton and peanuts, due to high input costs for corn. And for the far western Great Plains we are hearing
wheat is favored over corn to plant for the same reason. If we had to call a position for the US acreage report, I would hold a small, long position in new-crop corn. But keep in mind we also get a stocks number. Bear spreading could be a play for those looking
for large old crop stocks and less than expected 2022 corn acres.

·        
USDA’s Broiler Report showed eggs set in the US up 1 percent from a year ago and chicks placed up slightly.  Cumulative placements from the week ending January 8, 2022, through March 26, 2022 for the United States were 2.23 billion.
Cumulative placements were down slightly from the same period a year earlier.

·        
USDA Hogs and Pigs report showed a less than expected March 1 all hogs, hogs kept for breeding and kept for market. The pig crop shrank from the previous year while the trade was looking for an expansion. Actual farrowings contracted
from a year ago and intentions are down as well. The report is viewed slightly negative for US feed demand.

 

 

Weekly
US ethanol production was down 6,000 barrels to 1.036 million (Bloomberg survey looked for it to be down 5,000) from the previous week and stocks up 381,000 barrels to 26.529 million (survey looked for up 137,000 barrels). US gasoline stocks increase for the
first time in 7 weeks and demand remains about inline from a year ago but down about 3-4 percent from pre-pandemic levels.

 

 

 

US
DoE Crude Oil Inventories (W/W) 25-Mar: -3449K (est -2000K; prev -2508K)

–
Distillate Inventories: 1395K (est -1500K; prev -2071K)

–
Cushing OK Crude Inventories: -1009K (prev 1235k)

–
Gasoline Inventories: 785K (est -1600K; prev -2948K)

–
Refinery Utilization: 1.00% (est 0.40%; prev 0.70%)

 

 

 

Export
developments.

• AgriCensus
  noted South Korea’s MFG bought 137,000 tons of optional origin (South American and/or SAf) corn at $382.18 & $384.50/ton CFR for July delivery.
  

 

Updated
3/23/22

May
corn is seen in a $6.75 and $8.10 range

December
corn is seen in a wide $5.50-$7.50 range

 

Soybeans

·        
The CBOT soybean complex ended higher from strength in WTI crude oil, positioning ahead of the USDA reports, and a sharply lower USD.
Under
the 24-hour announcement system, private exporters sold 128,000 tons of soybeans to Mexico for 2022-23 delivery. 

·        
Our bias is to see a neutral to bearish soybean planting number for USDA’s report based on the possibility for US producers to scale back on corn plantings.  We are near the higher end for US corn plantings but recent reports
from producers do hint they are scaling back on corn intentions due to high input costs and uncertainty they will secure fertilizer. Trade estimate widely vary which tells up the trade has great uncertainty for acreage.

·        
The AgMin in Brazil’s state of Parana reported 83% of the soybean crop had been harvested as of Sunday, down from 88% year earlier. Conab showed all Brazil soybean crop 76% collected versus 70% year earlier.

·        
Brazil consultancy Datagro sees 2022 Brazil soybean exports at 99.1 million tons, down nearly 6 percent from a year ago. 

·        
Reuters – Indonesia’s palm oil export levy collection in 2022 is estimated at 68.18 trillion rupiah ($4.76 billion), down from last year’s 71.6 trillion rupiah, said Eddy Abdurrachman, head of the palm oil fund agency.

 

 

 

 

Export
Developments

·        
Under the 24-hour announcement system, private exporters sold 128,000 tons of soybeans to Mexico for 2022-23 delivery. 

·        
Turkey seeks 18,000 tons of sunflower oil on Thursday.

·        
China plans to sell about 500,000 tons of soybeans on April 1.

• USDA
  seeks 2,710 tons of packaged oil on April 7 for May shipment (May 23-June 13 for plants at posts).
  
• Qatar
  seeks to buy 960k cartons of corn oil in a tender closing April 4.

 

 

Updated
3/29/22

Soybeans
– May $15.50-$17.50 (down 50, down 50)

Soybeans
– November is seen in a wide $12.50-$16.00 range

Soybean
meal – May $430-$500 (unch, down $20)

Soybean
oil – May 68.50-74.00
(sharply
lower range)

 

Wheat

·        
US wheat futures traded tow-sided before the day session, traded higher throughout the day, and settled 12-20 cents higher led by KC type wheat.  Renewed Black Sea concerns, rebound in WTI crude oil and lower USD underpinned prices.
It’s too early to see if Russia will live up to their promise to de-escalate their military “operation.” But the trade believes nothing drastically will change over the short-term.

·        
Our bias for the USDA report is to see more than expected US spring wheat acres plantings.  Stocks should have little impact unless we see a 40 plus million bushel deviation, which is unlikely.  

·        
Russia is looking at expanding their list of commodities requiring importers to pay in rubles, including grain and metals.

·        
Taiwan bought 40,000 ton of US wheat while results are awaited on Tunisia and Algeria.

·        
Ukraine is in talks with Romania to ship wheat out of the Constanta Black Sea port.

·        
Russian wheat exports are expected to end up around 1 million tons for the month of March, a much larger number than what the trade thought at the beginning of the month. 

·        
May Paris wheat futures were up 9 euros (2.5%) to 366.50 euros.

 

Wheat
in 2023?

Schnitkey,
G., C. Zulauf, N. Paulson and K. Swanson. “Wheat in 2023?.” farmdoc
daily
(12):40,  Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, March 29, 2022.

https://farmdocdaily.illinois.edu/2022/03/wheat-in-2023.html

 

Export
Developments.

·        
Algeria started buying milling wheat with prices around 448/ton C&F for May and/or June shipment.

·        
Tunisia bought about 125,000 tons of soft wheat and 100,000 tons of feed barley. The wheat was bought between $418.68 and $455.75 per ton and barley $442.68 and $457.96 per ton.  The wheat was sought for shipment between April
20 and June 25, depending on origin supplied. The barley is sought for shipment between April 25 and June 25.

·        
Taiwan bought 40,000 tons of US wheat for shipment off the PNW during the May 14 and May 28 period. 14.5 percent dark northern spring wheat was bought at $439.82 a ton FOB PNW, 12.5 percent hard red winter wheat bought at $462.94
a ton FOB and 10.5% protein soft white wheat bought at $415.47 a ton FOB.

·        
Jordan bought about 60,000 tons of feed barley at an estimated $395.00 a ton c&f for shipment in the second half of July.

·        
Bangladesh seeks 50,000 tons of wheat on April 11 for shipment within 40 days after contract signing.

·        
Jordan issued an import tender for 120,000 tons of milling wheat for shipment during May, June, or July on March 31.

·        
Results awaited: Qatar seeks 105,000 tons of optional origin animal feed barley on March 27 shipment in April, May and June. 

·        
Bangladesh is in for 50,000 tons of wheat with a deadline of April 4.

 

Rice/Other

·        
(Bloomberg) — Qatar is seeking to buy 1.2m bags of rice in a tender that closes April 4, according to the Ministry of Commerce and Industry’s website.  Qatar also seeks to buy 960k cartons of corn oil in a tender closing April
4

 

Updated
3/29/22

Chicago
May $9.00 to $12.00 range

KC
May $9.00 to $12.00 range

MN
May $9.75‐$12.00