FI Evening Grain Comments 09/01/22

PDF Attached

 

Private
exporters reported sales of 396,000 metric tons of soybeans received in the reporting period for delivery to unknown destinations during the 2022/2023 marketing year.

 

USDA
export sales will be delayed for a couple of weeks. The delay in the data should not be concerning as US corn and soybeans started a new marketing year.

 

Macros
were driving the agriculture markets. With exception of soybean meal, ags traded sharply lower. On Friday US unemployment figures will be released. US wheat is lower on lack of fresh news and higher USD. Consensus is 300k. US weather was unchanged for the
Great Plains and Midwest but turned slightly unfavorable for the Delta. Rain returns to the southern Delta Friday and southern/eastern areas Sat-Sun. The Midwest will see rain across the far north central/southeast areas Friday, southeast Sat-Sun, and south
central/eastern area Monday. EU will see rain bias the western areas through Monday. China will see rain across parts of the Yangtze Valley through Monday.

 

 

Weather

 

 

WEATHER
EVENTS AND FEATURES TO WATCH

• Interior
  eastern China will be dry for the next ten days
• Areas
  from the Yangtze River Basin to the North China Plain will receive little to no rain and temperatures will be seasonable
• Drought
  conditions will not change much in the Yangtze River Basin leaving rice and a few other crops; including some grain and oilseed crops in central and southern parts of the basin too dry hurting production potentials
• Far
  northeastern China may receive some heavy rain early next week due to the passing of Typhoon Hinnamnor, but resulting rainfall is not likely to be damaging
• Model
  divergence continues with the GFS bringing the storm move over northeastern China while the European model keeps the center of the storm southeast of the region minimizing the impact
• The
  European model solution is preferred
• Xinjiang,
  China weather is expected to trend warmer in the next ten days to two weeks and precipitation is expected to diminish
• This
  pattern will be very good for cotton and corn maturation as well as early harvesting
• Super
  Typhoon Hinnamnor was located 309 miles south southwest of Okinawa, Japan at 0900 GMT today moving south southwesterly at 10 mph and producing a sustained wind speed of 155 mph and gusts to 190 mph.
• Typhoon
  force wind was occurring out 40 miles from the center of the storm while tropical storm force wind was occurring out 90 miles
  
• The
  storm will slow its forward movement and should be near the southwestern Ryukyu Islands of Japan and southeast of Taiwan through Friday before turning to the north this weekend and threatening the Korean Peninsula with torrential rain and damaging wind speeds
• The
  storm will stay far enough to the east of central and southern China to minimize any impact there, although some rain is expected in coastal areas
• Western
  Japan’s main islands will feel the influence of Hinnamnor as well along with , but no direct adversity is currently expected
  
• Typhoon
  Hinnamnor may eventually reach the high latitudes in the northwestern Pacific  Ocean where it may merge with a deepening mid-latitude trough of low pressure inducing a very intense storm west of the Aleutian Islands
• A
  very strong ridge of high pressure may briefly evolve late next week and into the following weekend over the Gulf of Alaska pushing much colder air southward through Canada to the north-central United States Sep. 10-14
• This
  may bring the season’s first frost and light freeze event to a part of Canada’s Prairies
• The
  impact of frost and freezes should be relatively low, but some negative impact is possible on late season canola and some corn, flax and soybean crops in the eastern Prairies
• Confidence
  over the cold surge is still very low, but the logic is in place and close monitoring of Typhoon Hinnamnor and Canada’s Prairies is warranted
• Drying
  in western Canada, the U.S. Pacific Northwest, the northern half of the U.S. Plains and western Corn Belt over the coming week will be ideal for maturing spring and summer crops and supporting their harvest
• Some
  rain is expected in Canada’s Prairies and a small part of the upper Midwest in the second week of the forecast ahead of cooler air
  
• Eastern
  U.S. Midwest weather is expected to trend drier through Saturday, but rain is predicted to evolve Sunday and advance daily through the eastern Midwest through the first half of next week.
  
• Rain
  will fall frequently in the southern U.S. Plains, Delta and southeastern states during the coming ten days to two weeks
• Two
  tropical cyclones predicted to evolve near the Mexico coast over the next week will bring moisture into western and northern Mexico and some of this precipitation may stream to New Mexico and Texas further perpetuating waves of rain across those areas for
  the next week and possibly ten days
• Western
  and northern Mexico will trend wetter because of the two developing tropical cyclones along its coast today
  
• Tropical
  Depression Five formed over the central North Atlantic Ocean overnight and is expected to intensify to hurricane status in the next few days without moving much
• The
  storm poses no threat to land
• Two
  tropical disturbances are still being monitored in the Atlantic Ocean by the U.S. National Hurricane Center today
  
• Neither
  of the disturbances are expected to threaten North America and most of them will remain over open water in the Atlantic Ocean through early next week
  
• The
  system near the Cabo Verde Islands is not likely to survive more than a couple of days and will eventually dissipate
• The
  disturbance east of the Leeward Islands is expected to pass northeast of the northern Leeward Islands Friday and Saturday and it may become a tropical cyclone thereafter, but the system is more likely to turn away from North America rather than be a threat
  
• Western
  Europe rainfall will continue restricted in central and northern France, Germany, Belgium, the Netherlands and U.K. until late this weekend and especially next week when rainfall is expected to increase
• Rain
  would fall too late for most summer crops, but late season improvements to sugarbeets is possible
• The
  moisture would be best for bolstering soil moisture for better rapeseed and eventual winter wheat planting
• Interior
  eastern Europe rainfall in recent weeks has been great in improving topsoil moisture for better late season crop development and for improved winter wheat and rye planting prospects
• Russia’s
  winter wheat and rye region is quite dry, but some showers are expected to evolve during the next two weeks that should improve the prospects for some crops
• Greater
  rain will be needed
• Northern
  Russia will receive more significant rain with a part of the far northwest reporting 0.50 to more than 2.00 inches Tuesday and early today
  
• Cooling
  in western Russia late this weekend and next week may bring the season’s first frost and freeze potential for next week, but the impact on unharvested spring and summer crops should be minimal and the same is true for the planting of winter crops
• Today’s
  forecast continues to predict more cloudiness for early next week which may limit the occurrence of frost and freezes to a very small part of the region
• North
  Africa showers at this time of year are always welcome, but have a minimal impact and that will be the case over the next ten days
• Northwestern
  India and Pakistan are drying down and that will be good for early planted cotton and other early season crops
• Pakistan
  is cleaning up from its recent flooding and crop damage assessments will continue for a few weeks
• Central,
  southern and eastern India will continue to experience periods of rain during the next two weeks
• Precipitation
  should slowly increase over the next two weeks
• Argentina
  rainfall will occur today into Friday, but it will continue to disfavor the west leaving crop areas in that region quite dry
• Eastern
  crop areas will remain in very good condition
• Southern
  Brazil rainfall will be limited for another day and then southern parts of the nation (Parana southward) will receive rain Friday into the weekend and the moisture will maintain a good outlook for winter crops
• Ontario
  and Quebec weather remains mostly good for corn and soybeans with little change likely
• Rain
  will linger during mid-week this week; otherwise , the next full week will be dry
• the
  environment will be good for late season crop development and for maturation and early season harvesting
• Mexico’s
  drought in the northeast continues and will not likely end without the help from a tropical cyclone
• Increased
  rainfall from monsoonal precipitation is expected, though, and that will help ease some of the driest conditions
• Western
  and southern Mexico will be wetter biased over the next couple of weeks especially with the help of two tropical cyclones near the west coast.
  
• Central
  America rainfall has occurred routinely and will continue to do so favoring many crops
• Rain
  in Australia is expected to be favorably mixed over the next two weeks
• The
  bottom line still looks very good for most of the nation’s crops
• Queensland
  should experience increased rainfall and rising soil moisture over the period with two waves of rain expected
• Temperatures
  will be seasonable
• Southeast
  Asia rainfall is expected to be frequent and significant during the next ten days to two weeks
  
• All
  areas are expected to be impacted and sufficient rain is expected to bolster soil moisture for long term crop development need
  
• Local
  flooding is expected
• South
  Africa will receive erratic showers of limited significance in the south, west and east leaving north-central areas dry
• Most
  of the resulting rain is not likely to be great enough for a serious impact on soil moisture, but some southern areas will get enough to maintain favorable early spring crop development potential
• The
  outlook is not unusual for this time of year and crops are poised to perform well in the spring if timely rain evolves
• Central
  Africa showers and thunderstorms have recently increased in some key coffee and cocoa production areas during the next two weeks.
  
• Recent
  rain Ivory Coast and Ghana has brought relief to seasonal drying will likely support mid-crop flowering if follow up rain occurs as needed
• Nigeria,
  Cameroon, Benin and other coffee and cocoa production areas should see relatively good crop weather over the next couple of weeks
• East-central
  Africa rainfall will continue to occur most frequent and significantly in Ethiopia, Uganda and southwestern Kenya over the next two weeks
• Good
  coffee, cocoa and other crop development conditions will prevail
• Today’s
  Southern Oscillation Index was +8.24 and it will move higher over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Thursday,
Sept. 1:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Cocoa
  Association of Asia hosts International Cocoa Conference, day 1
• Australia
  Commodity Index
• USDA
  soybean crush, DDGS production, corn for ethanol
• HOLIDAY:
  Vietnam

Friday,
Sept. 2:

• FAO
  world food price index, grains supply and demand outlook
• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various US futures and options, 3:30pm
• FranceAgriMer
  weekly update on crop conditions
• Cocoa
  Association of Asia hosts International Cocoa Conference, day 2

Source:
Bloomberg and FI

 

 

 

US
area/ supply estimates.

StoneX:

US
soybean yield 51.3 vs. 51.8 previous

US
soybean production 4.515 billion vs. 4.490 previous

US
corn yield 173.2 vs. 176.0 previous

US
corn production 14.168 vs. 14.417 previous

 

Karen
Braun (Reuters) “A poll of Twitter users on Tuesday suggested the 1,720 voters predominantly like a yield around 171 bushels per acre or just below, down notably from the U.S. Department of Agriculture’s August peg of 175.4. Only 7% called for yield above
174 bpa.  About 1,100 voters on Aug. 18 had suggested something closer to 174 with 28% calling for something higher than 174. The quick change in mindset is undoubtedly influenced by last week’s Pro Farmer crop tour and the firm’s corn yield forecast of 168.1
bpa, which would be the worst relative result since 2012.”

 

Allendale
Inc

• US
  2022 corn yield at 172.39 bushels per acre, the company said on Wednesday.
• US
  2022 U.S. soybean yield at 50.86 bushels per acre.
• 2022
  corn production at 14.108 billion bushels and soybean production at 4.435 billion bushels.
• The
  yield survey, conducted from Aug. 15-28, was based on producer-calculated yields in 26 states covering 86% of corn production and 83% of soybean production.
• The
  firm’s production figures were based on the U.S. Department of Agriculture’s estimates of harvested acres.

 

(Reuters)
– A Farm Futures magazine survey of U.S. planting intentions for 2023 indicated that producers expect to expand their plantings of corn and wheat acres in the coming crop year while paring soybean acreage.

• Corn
  plantings for 2023 were forecast at 94.282 million acres, up 5% from the U.S. Department of Agriculture’s 2022 estimate of 89.8 million and the most since 2013
• Soybean
  plantings seen at 87.331 million acres, down 0.8%
• All-wheat
  seedings seen at 48.842 million acres, up 3.9%
• Winter
  wheat seedings seen at 36.553 million acres, up 7.5%
• Spring
  wheat plantings (including durum) seen at 12.289 million acres, down 5.4%
• Farm
  Futures surveyed 692 producers from July 13 to Aug. 1 via an email questionnaire

 

Selected
Brazil commodity exports:

Commodity          
           August 2022        August 2021

CRUDE
OIL (TNS)                6,096,676             6,782,173

IRON
ORE (TNS)                 33,462,954            34,683,354

SOYBEANS
(TNS)                 6,161,341             6,484,176

CORN
(TNS)                     7,553,854             4,335,763

GREEN
COFFEE(TNS)              139,822               172,424

SUGAR
(TNS)                    3,037,734             2,547,315

BEEF
(TNS)                     203,230               181,623

POULTRY
(TNS)                  398,599               350,839

PULP
(TNS)                     1,573,160             1,331,563

Source:
Brazil AgMin, Reuters, and FI

 

 

Macros

US
Initial Jobless Claims Aug 27: 232K (est 248K; prev 243K)

US
Continuing Claims Aug 20: 1438K (est 1438K; prev 1415K)

US
Nonfarm Productivity Q2 F: -4.1% (est -4.3%; prev -4.6%)

US
Unit Labor Costs Q2 F: 10.2% (est 10.5%; prev 10.8%)

Canadian
Building Permits (M/M) Jul: -6.6% (est -0.4%; prev -1.5%)

 

US
ISM Manufacturing Aug: 52.8 (est 51.9; prev 52.8)

–
Prices Paid: 52.5 (est 55.3; prev 60.0)

–
New Orders: 51.3 (est 48.0; prev 48.0)

–
Employment: 54.2 (est 49.5; prev 49.9)

US
Construction Spending (M/M) Jul: -0.4% (est -0.2%; prev R -0.5%)

 

105
Counterparties Take $2.173 Tln At Fed Reverse Repo Op (prev $2.251 Tln, 108 Bids)

 

Corn

·        
CBOT corn ended sharply lower for the third consecutive session on global macro-economic concerns / US recession fears. China locked down Chengdu due to covid. They city has a population of 21 million, and this is the largest
city to be locked down since Shanghai, according to Bloomberg.

·        
StoneX estimated Brazil’s first corn crop at 29.85 million tons. USDA is at 126 million tons for all corn crop. Conab is at 125.5 million tons, up from 114.7 million for 2021-22.

·        
Ukraine’s AgMin reported 4.5 million tons of grain and oilseed was exported during the month of August. They warned there might be a storage shortage of about 12 million tons by the end of November, but ease as exports increase.

·        
The UN reported 139 voyages (77 inbound and 63 outbound) were cleared for sail at three Ukrainian ports during August.

·        
June EIA US ethanol production was 31.276 million barrels, below our expectations and suggests USDA’s 5.350 billion corn for ethanol use is on the high side.

·        
NASS reported July corn for ethanol use at 446 million bushels, at our expectations and 2 million above a Bloomberg trade guess. This compares to 444 million during June and 450 million July 2021. We will not make any changes
to our corn for ethanol use.

 

 

Export
developments.

·        
Indonesia bought 65,000 tons of corn on Wednesday from the US or SA at 179 and 183 cents over the March contract .

·        
Taiwan’s MFIG group seek 65,000 tons of corn on September 7 for November and/or early shipment from the US.

 

 

EIA:
Record numbers of solar panels were shipped in the United States during 2021

https://www.eia.gov/todayinenergy/detail.php?id=53679&src=email

 

 

Updated
8/29/22

December
corn is seen in a $6.00-$7.00 range. Next level of resistance is seen at $7.25.

 

Soybeans

·        
Soybeans ended sharply lower on weakness in grains and outside related commodity markets. Meal was higher for the non-expiring months and soybean oil more than 380 points lower. Oil share made a large move to the downside, a reversal
from yesterday. Meal found strength from slowing Argentina crush as traders await a new FX plan and South Korea buying 120,000 tons of meal overnight. Soybean oil likely followed the energy markets lower. Traders are eying the 50-day MA average for December
SBO at 62.82. For soybeans, November saw sell stops at $13.9850 down to $13.9150, on 2000 contracts. With November settling at $13.9475, below $14, there is a possibility the contract could test the $13.75-$13.80.

·        
We heard China was back in today looking around for US soybeans.

·        
StoneX raised their Brazil soybean projection to 153.6 million tons from 152.7 million. USDA is at 149 million tons. Conab is at 150.4 million tons.

·        
Argentina is expected soon to announce a new FX plan.

·        
Cargo surveyor SGS reported August Malaysian palm exports at 1,309,801 tons, 3,408 tons above the same period a month ago or up 0.3%, and 118,748 tons above the same period a year ago or up 10.0%. Cargo surveyor AmSpec reported
Malaysian August palm exports at 1,190,848 tons, compared to 1,227,118 tons month earlier. Cargo surveyor ITS reported Malaysian palm exports at 1,299,116 tons, 1.6 percent above 1,278,579 tons from month earlier.

·        
Malaysia was back from holiday and futures traded 3.6% lower (down 150 ringgits) and cash was down $25/ton to $991/ton.

·        
June EIA US soybean oil for biofuel use came in well below our expectations at 810 million pounds (886 estimated by FI), down from 856 million pounds used during May but up from 663 million pounds for June 2021.  Implied food
use was better than expected for the US during June. We lowered out US soybean oil for biofuel use by 150 million pounds and raised food use by 50. 

·        
NASS reported the July US crush higher than expected at 181.3 million bushels. End of July stocks for soybean oil were 2.228 billion, 9 million above average and compares to 2.316 billion at the end of June and 2.070 billion at
the end of July 2021. A Bloomberg survey called for 180 million bushels and ending stocks for SBO of 2,219 million pounds. Note Reuters trade guess for crush was 180.5. End of July soybean meal stocks were 524,000 short tons, above 357,000 short tons previous
month. 

·        
We raised 2021-22 Oct-Sep crush by 1 million bushels to 2.214 billion and left Sep-Aug unchanged at 2.206 billion.

 

 

Export
Developments

·        
Private exporters reported sales of 396,000 tons of soybeans received in the reporting period for delivery to unknown destinations during the 2022/2023 marketing year.

·        
South Korean groups bought 120,000 tons of soybean meal from SA and/or the US & China. 60,000 tons of South American meal was bought jointly by FLC and Feed Buyers Group at an estimated $525.35 a ton c&f for shipment between Sept.
27 and Oct. 26. Another 60,000 tons was purchased by the MFG at an estimated $526.90 a ton c&f and was expected to be sourced from either the United States or China for shipment between Oct. 1 and Oct. 31.

·        
China seeks to sell 500,000 tons of soybeans from auction on Friday.

·        
South Korea’s Agro-Fisheries & Food Trade Corp. seeks 30,000 tons of GMO-free soybeans on September 6 for arrival in SK between November 12 and Dec 12, and another arrival period of October 30 and November 30.

·        
USDA’s AMS CCC seeks to sell 3,150 tons of vegetable oil on September 7 for shipment for Oct 1-31 (Oct 16 to Nov 15 for plants at ports).

 

 

 

 

 

Updated
8/23/22

Soybeans
– November is seen in a $13.75-$16.00 range

Soybean
meal – December $390-$445

Soybean
oil – December 63.00-71.00

 

Wheat

·        
US wheat settled sharply lower led by high protein contracts on lack of fresh news and strong USD. The USD index hit a fresh 20 year high earlier today. Global export business is picking up. Egypt bought 120,000 tons of Russian
wheat.

·        
Paris December wheat was down 3.00 euros at 321.50per ton. The contract has been in a sideways trading range since late July.

·        
Oman’s Salalah Mills Company received 61,780 tons of Australian wheat. They increased strategic reserves to cover 6 months of domestic consumption.

·        
Russia ports are loading wheat destined for Iran, Egypt, Syria, Turkey, and Algeria. They are also going to soon ship barley to Lebanon, Israel, Saudi Arabia, and Libya.

·        
Kazakhstan lifted restrictions on wheat and flour exports from September 10 after realizing a good 2022 crop. Limits on wheat exports were imposed back in May. They may introduce quotas on livestock exports.

·        
The Ukrainian Agrarian Council estimated Ukraine’s 2023 wheat plantings could fall 30% to 40% due to lack of funds and warned production may not exceed 15 million tons. Ukraine collected 19 million tons in 2022 and 32.2 million
tons in 2021.

 

Export
Developments.

·        
Egypt in a direct purchase bought 120,000 tons of Russian wheat at $340/ton for November  10-30 shipment.

·        
Algeria bought about 105,000 tons of Russian wheat at around $364/ton for late Sep through October shipment.

·        
South Korea’s MFG group bought 63,000 tons of feed wheat from Australia at an estimated $357.50/ton c&f for Jan 5-Feb 5 shipment.  They bought 135,000 tons of corn yesterday from SA or SAf.

·        
Japan bought 95,497 tons of food wheat form the US and Canada this week for arrival by December 31.

·        
Jordan seeks 120,000 tons of wheat on September 6.

·        
Jordan seeks 120,000 tons of barley on September 7 for Feb-Mar shipment. 

·        
Bangladesh seeks 50,000 tons of milling wheat on September 18.  It’s for optional origin with shipment within 40 days of contract signing.

 

Rice/Other

·        
South Korea’s AgMin announced they will purchase, on the domestic market, 450,000 tons of rice for reserves, including 350,000 tons of packaged rice and 100,000 tons of pre-dried rice, all by the end of November. This is up sharply
from 350,000 bought last year.

·        
Bangladesh seeks 50,000 tons of rice on September 6.

 

Updated
8/29/22

Chicago
– December $7.25-$10.00

KC
– December $8.00-$11.00

MN – December
$8.00-$11.50