FI Evening Grain Comments 04/12/22

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Inflation
concerns, higher outside energy markets and ongoing fund buying drove agriculture prices higher. New crop soybeans and corn gained on old crop. Wheat was higher from ongoing Black Sea concerns and Egypt in for wheat (they passed last two import tenders). US
CPI was up 1.2% from the previous month (highest month over month since 2005).  Year over year was up 8.5% (highest in 41 years). The US White House Administration granted E15 ethanol blending, at least for the summer driving months. We see no changes to the
US corn balance sheet over the next couple of months but long term, if this stands, we will increase our US corn for ethanol use. 

 

Weather

 

World
Weather Inc.

WEATHER
EVENTS AND FEATURES TO WATCH

• Excessive
  rain fell in southern Nata, South Africa Monday and early today with more than 11.00 inches reported in several areas.
  
• The
  additional rainfall occurred over already saturated ground and in an area where flooding has occurred a couple of other times during the summer growing season.
• Damage
  was greatest in urban areas, but some agricultural  areas nearly also suffered from the excessive rain event
• Argentina
  is moving into a full week of dry biased weather
• Temperatures
  will be seasonable
• Next
  week’s weather will trend a little wetter and cooler
• Rain
  is expected in the second half of the week and it may disfavor the northwest
• Late
  season crops will benefit most from the moisture
• Temperatures
  will be a little frosty again early next week, but early indications suggest damage potentials would not be any greater than that which occurred in last week’s frost event
• Additional
  significant rain fell overnight in western Parana, southern Mato Grosso do Sul and southern Paraguay after beginning in those areas earlier this week
• Rainfall
  varied 1.34 to more than 2.00 inches in the region and most of that occurred over saturated soil
• Brazil’s
  rain today will be greatest in Parana, southern Mato Grosso do Sul and eastern Paraguay where 0.40 to nearly 2.00 inches will result again.
  
• The
  precipitation will shift northward Wednesday and Thursday passing briefly through the drier areas of Mato Grosso do Sul, Mato Grosso and southern Goias offering temporary relief.
  
• Rainfall
  of 0.25 to 0.75 inch and a few amounts over 1.00 inch are expected
• The
  moisture will be welcome after recent drying, but more will be needed to protect subsoil moisture for use during the dry season which is beginning to evolve
• Late
  season crops reproduce in late April and May making the next few weeks very important to Safrinha corn and cotton
• Additional
  timely rain will be needed
• Brazil’s
  center west, center south and interior far south will be dry after Wednesday and Thursday’s rain event for at least a week and maybe 10 days.
• Some
  partial relief to dryness is expected in Mato Grosso do Sul, northern Mato Grosso, Bahia and northern Minas Gerais, but moisture deficits will remain
• North
  America’s blizzard is beginning to evolve today, but the worst conditions are expected tonight and Wednesday from North Dakota to Manitoba and western parts of Ontario
• Snow
  accumulations of 8 to 20 inches are expected with local totals of 20-25 inches possible
• Livestock
  stress will be quite high with some concern over animal health
• The
  storm will be serious enough to threaten the older animals, especially if they slip and fall in the snow
• Newborn
  calves will have to be protected from the snow and wind to prevent death
• Some
  road closures are likely
• Power
  Outages are also expected
• Flood
  potentials will rise once again following this event due to saturated field conditions, already high river and stream flows and additional precipitation periodically
• Western
  U.S. hard red winter wheat areas will remain dry or mostly dry through the next ten days
• Some
  computer forecast models have suggested a rising precipitation potential might occur after day ten, but World Weather, Inc. has its doubts
• West
  and South Texas will be dry for ten days
• A
  few showers of limited significance are expected in April 23-27, but confidence is low
• California’s
  Sierra Nevada will receive two brief bouts of precipitation this week; one today and the other Thursday into Saturday, but resulting moisture will not be great enough to seriously bolster snowpack or change spring runoff potentials
• Most
  of the southwestern United States will continue dry over the next two weeks
• U.S.
  Midwest, Delta and Tennessee River Basin are not expecting excessive rainfall to occur over the next ten days to two weeks, but mild to cool temperatures at times along with saturated soil conditions and brief periods of additional rainfall will maintain poor
  planting conditions. 
• U.S.
  southeastern states will be drying down over the next couple of weeks, although  some showers and thunderstorms will occur infrequently to temporarily slow the drying process
• Montana
  and the  western Dakotas will get some benefit from today and Wednesday’s snow event
  
• Topsoil
  moisture will be briefly increased
• Canada’s
  western Prairies are not expected to get much precipitation in the coming week, although there is some potential for light precipitation in the April 20-26 period.
  
• Ontario
  and Quebec will experience routinely occurring precipitation this week maintaining moisture abundance.
• Tropical
  Storm Megi continued to rain in the central Philippines Monday
• Some
  flooding has occurred in recent days, but the storm will  dissipate today
• Lingering
  rainfall will keep the  central parts of the nation wet with additional  rain for a little while
• The
  storm was still located over the central Visayas Islands where it should dissipate
• Typhoon
  Malakas, the season’s first typhoon in the  western Pacific Ocean poses no threat to land
• The
  storm will stay away from land throughout this week and will reach its peak intensity during mid-week
  
• Malakas
  may pass to the northwest of the island Iwo To late this week
• Europe
  will experience less precipitation over the next ten days and a seasonable range of temperatures
• Totally
  dry weather is not likely, but precipitation should be light and relatively infrequent
• The
  environment will be very good for fieldwork in time as soil temperatures rise
• Western
  Russia, Ukraine, Belarus and the Baltic States will experience brief periods of rain and snowfall during the next two weeks and temperatures should average relatively near normal with a slight cooler bias west of the Ural Mountains at times
• snow
  cover will continue to retreat from western and northern Russia
• runoff
  from melting snow will continue to keep some areas wet this week, despite more limited precipitation
  
• North
  Africa will experience a favorable mix of rain and sunshine during the next ten days while temperatures are seasonable
• India’s
  weather will continue mostly dry in the bulk of the nation, but some occasional rain will occur in Kerala, and a few areas in both southern Karnataka and Tamil Nadu with minimal impacts on the region away from the coast
• Rain
  will also continue frequently from eastern Bangladesh through the Eastern States
• West-central
  Africa precipitation is expected to be more frequent and more significant over the next ten days to two weeks improving soil moisture for coffee, cocoa, sugarcane, rice and cotton
  
• East-central
  Africa rainfall is expected to slowly increase in Ethiopia, Uganda and southwestern Kenya during the next ten days with next week wettest
• The
  change will be most welcome in Ethiopia where the dry season is coming to an end
• Turkey
  will experience a good mix of rain while areas to the southeast from Syria through Iraq are dry and only limited rain is expected in Iran
• These
  drier areas could experience some hot and dry weather in the next few weeks
• China
  weather is expected to see typical spring weather over the next two weeks
• Rainfall
  will be greatest near and south of the Yangtze River
• Precipitation
  will be sporadic and mostly light in the North China Plain, Yellow River Basin and interior portions of the northeast
• Xinjiang,
  China precipitation will be mostly confined to the mountains this week and next week
  
• Temperatures
  will be warmer than usual
• Australia
  precipitation is expected to be mostly limited to coastal areas over the next ten days
• The 
  exception will be in Western Australia where some rain will  fall  periodically improving topsoil moisture for autumn planting that begins late this month
• The
  dry-biased environment in eastern Australia will be good for maturing cotton and sorghum as well as their harvests
• South
  Africa rainfall over the next couple of weeks may be a little too frequent for some early season summer crop maturation and harvest progress
• Heavy
  rain in Natal should abate after today
• Late
  season crops will benefit, but there is need drying to accelerate maturation and support harvest progress
• Cotton
  quality could be compromised
• Rain
  will fall frequently and abundantly near and north of the Amazon River into Colombia, Venezuela and Ecuador during the next ten days
• Rain
  will also fall frequently in Peru
• Some
  flooding could impact a part of  the  Amazon River System and Colombia in time
• Mexico’s
  winter dryness and drought have been expanding due to poor precipitation resulting from persistent La Nina
• Northern
  parts of the nation will continue lacking precipitation for an extended period of time
• Eastern
  and southern Mexico will be seasonably dry this week and will receive sporadic rainfall of limited significance next week
• Central
  America precipitation will be greatest in both Panama and Costa Rica
• Guatemala
  and western Honduras will also get some showers periodically
• Rain
  elsewhere will be mostly along the Caribbean Sea coast
• 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 east-central Philippines and a part of the northern Malay Peninsula this week
• Today’s
  Southern Oscillation Index is +13.37 
• The
  index will continue strongly positive the remainder of this week and into the weekend.
  

Source:
World Weather Inc.

 

USDA
Scheduled Release Dates for Agency Reports and Summaries

https://www.usda.gov/media/agency-reports

 

2022
CME Globex Trading Schedule

https://www.cmegroup.com/tools-information/holiday-calendar.html

 

Bloomberg
Ag Calendar

Tuesday,
April 12:

• France
  Agriculture Ministry report; 2022 crop plantings
• EU
  weekly grain, oilseed import and export data
• U.S.
  winter wheat condition, 4pm

Wednesday,
April 13:

• EIA
  weekly U.S. ethanol inventories, production, 10:30am
• China’s
  first batch of March trade data, incl. soybean, edible oil, rubber and meat imports
• FranceAgriMer
  report; monthly French grains outlook
• New
  Zealand food prices
• Holiday:
  Thailand

Thursday,
April 14:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• May
  ICE white sugar contract expiry
• HOLIDAY:
  Argentina, India, Thailand

Friday,
April 15:

• ICE
  Futures Europe weekly commitments of traders report
• U.S.
  green coffee stockpiles data released by New York-based National Coffee Association
• FranceAgriMer
  weekly update on crop conditions
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• HOLIDAY:
  Major markets closed due to Good Friday holiday

Source:
Bloomberg and FI

 

Macros

US
CPI (M/M) Mar: 1.2% (est 1.2%; prev 0.8%)

US
CPI Ex Food And Energy (M/M) Mar: 0.3% (est 0.5%; prev 0.5%)

US
CPI (Y/Y) Mar: 8.5% (est 8.4%; prev 7.9%)

US
CPI Ex Food And Energy (Y/Y) Mar: 6.5% (est 6.6%; prev 6.4%)

US
Real Average Hourly Earning (Y/Y) Mar: -2.7% (prev -2.6%; prevR -2.5%)

US
Real Average Weekly Earnings (Y/Y) Mar: -3.6% (prev -2.3%; prevR -2.2%)

85
Counterparties Take $1.710 Tln At Fed Reverse Repo Op (prev $1.759 Tln, 85 Bids)

 

 

Corn

·        
Corn futures were sharply higher following a temporarily summer E15 blend announcement by the White House and higher outside related markets (wheat, soybeans and crude oil). May corn futures are near their all-time contract high
while December made a new high.

·        
WTI crude oil (May) was up $6.13 at 1:00 pm CT.  Russian oil production and gas output fell to 2020 levels.  The WTI market has been choppy so far this week.  RBOB was also up sharply.

·        
The E15 will be available during the June 1 to Sept. 15 period.  We heard RIN prices were unchanged to slightly lower this morning following the announcement, an indication traders expect no immediate impact from this announcement.
There is, however, some concern from US domestic end users that compete with ethanol plants over securing corn. Spot corn is currently hard t source across the far western Great Plains for some selected areas. 

·        
Nothing materially changes over the short term for our US corn for ethanol demand. Long term it could lead to higher corn use but by a minimal 100 million bushels, then 200 million longer term after pipelines adapt.

·        
The US already has an ethanol blend rate of over 10 percent, looking at EIA data.  E15 could be easily achieved, in our opinion, if blended at the rack.

·        
US export demand and outside related news should remain the driver for corn futures over the short term.

 

Export
developments.

·        
South Korea’s NOFI bought 207,000 tons of corn in three consignments for July and August arrival ($377.55-$379.40/ton).  Some speculate origin was Brazil.

 

 

 

May
corn is seen in a $7.25 and $8.10 range

December
corn is seen in a wide $5.50-$8.00 range

 

Soybeans

·        
The CBOT soybean complex was higher on follow through fund buying and inflation concerns. Nearby soybean oil rallied with a strong rebound in WTI crude oil. 

·        
There was chatter the US will allow for canola use for renewable biofuel. It’s already approved for traditional biodiesel.

·        
Cargo surveyor SGS reported month to date April 10 Malaysian palm exports at 255,789 tons, 66,965 tons below the same period a month ago or down 20.7%, and 88,250 tons below the same period a year ago or down 25.7%.

·        
Indonesia’s 2022 crude palm oil production is estimated at 48.24 million tons, up from 46.85 million tons in 2021, according to the AgMin. (Reuters)

·        
June Malaysian palm oil settled 172 ringgit higher to 6,177,
a 3 percent increase.

·        
European Union soybean imports so far for the 2021-22 season (July 1, 2021-April 11, 2022) totaled 10.85 million tons, down from 11.58 million tons by the same week in 2020-21.

 

 

Export
Developments

·        
China plans to auction off another 500,000 tons of soybeans later this week.

 

 

Updated
4/8/22

Soybeans
– May $16.00-$17.65

Soybeans
– November is seen in a wide $12.75-$15.50 range

Soybean
meal – May $440-$490

Soybean
oil – May 70.00-76.50

 

Wheat

·        
US wheat was higher on follow through fund buying, higher EU wheat futures, concerns over the US and China wheat conditions, and some chatter over improving export demand. Global supply concerns were noted by the news outlets.
It should be noted that South America is planting more wheat and India is exporting a large amount of wheat. We still see US wheat export prices above selected exporting nations.  Look for an eventual pause in the US wheat futures rally if US export developments
remain slow.

·        
Egypt is in for wheat, and they will accept offers from Russia and Ukraine.

·        
May Paris wheat futures were up 20.25 euros at 399.25 euros and December was up 13.75 to 364.50 euros.

·        
France’s AgMin pegged the soft wheat area at 4.79 million hectares (million hectares), down 3.9% on 2021 and 0.7% below the average of the past five years.

·        
European Union soft wheat exports so far for the 2021-22 season (July 1, 2021-April 11, 2022) totaled 20.63 million tons, down from 21.42 million tons by the same week in 2020-21. EU 2021-22 barley exports reached 6.14 million
tons, against 6.40 million a year ago. Corn imports were at 12.61 million tons, against 12.45 million year ago.

 

 

Export
Developments.

·        
Egypt seeks wheat on Wednesday.  Shipping
will be from 20-31 May for FOB, and C&F arrival offers will be from 1-15 June.  They will accept offers from Ukraine and Russia.  Thy pass on their two previous import tenders. 

·        
Japan seeks 114,645 tons of food wheat later this week.

·        
Jordan passed on 120,000 tons of barley. 

·        
Results awaited: Algeria floated another import tender for wheat. The wheat is sought for shipment in several periods from the main supply regions including Europe: May 1-10, May 11-20, May 21-31, June 1-10, June 11-20 and June
21-30.

·        
Jordan seeks 120,000 tons of milling wheat for LH May and/or through July shipment on April 13.

 

Rice/Other

·        
None reported

 

Updated
4/12/22

Chicago May
$9.75 to $12.00 range, December $8.50-$11.00

KC May
$10.50 to $12.00 range, December $8.75-$11.50

MN May
$10.75‐$12.00, December $9.00-$11.75