FI Evening Grain Comments 09/21/22

PDF Attached

 

Attached
is an updated US corn S&D and selected world oilseed/soybean graphs

 

FOMC
Hikes By 75Bps; Target Range Stands At 3.00% – 3.25%     

FOMC:
Interest Rate On Reserves Balances Raised By 75Bps To 3.15% From 2.40%

Reuters:
FUTURES AFTER FOMC DECISION IMPLY TRADERS SEE 89 PCT CHANCE FED RAISING RATES ANOTHER 75 BASIS POINT AT NOVEMBER MEETING

 

Wheat
traded at a two-month high on geopolitical headlines. Corn and soybeans fell on US harvesting pressure and the USD hitting another fresh 20-year high. US weather forecast was unchanged this morning. Brazil improves with widespread rains moving into Mato Grosso
and surrounding states. Argentina will still see light rains but much more is needed. Corn turned lower on weakness in meal.

 

 

 

 

Weather

 

World
Weather, INC.

WEATHER
EVENTS AND FEATURES TO WATCH

• Tropical
  Storm Gaston formed Tuesday and will intensify today over open water in the north-central Atlantic Ocean
• The
  storm poses no land threat through the weekend
• Hurricane
  Fiona reached Category Four overnight and will move past Bermuda late this week
• The
  storm’s only direct land impact will be in northeastern Canada during the weekend and early next week
• Very
  strong wind, heavy rain and rough seas will impact eastern Nova Scotia and western Newfoundland, despite the storm losing its tropical characteristics at the time of land interaction
• The
  storm will be far enough west of Bermuda to minimize its impact on that island
• Disturbance
  200 miles east of the southern Windward Islands will be the most watched and talked about tropical disturbance over the next week to ten days
• This
  system will move past the northern coast of South America in the next couple of days reach into the Caribbean Sea Friday into the weekend and intensify likely becoming the next named tropical cyclone of the Atlantic Hurricane Season
• Model
  forecasts vary widely, but the southeastern U.S. and western Cuba are favored for land interaction next week and the system will be closely monitored
• There
  is still some potential for a more westerly track, although that is not favored at this time
• U.S.
  hard red winter wheat areas will get some welcome rain later today and Thursday ending Friday morning
• Rainfall
  of 0.50 to 1.50 inches will impact southern Nebraska, northern Kansas and northeastern Colorado with a boost in topsoil moisture likely to improve planting prospects
• Drier
  weather will develop Friday and prevail for a week to ten days thereafter making the event all the more important
• La
  Nina continues in control of world weather, but seasonal changes in the atmosphere are bringing opportunities for short term weather changes
  
• Brazil’s
  weather will include three waves of rain moving across center west and center south crop areas during the next ten days
• Sufficient
  rain will fall to bolster topsoil moisture for improved soybean planting, germination and emergence conditions
  
• Corn
  planting and establishment will also improve
• Wheat
  conditions may deteriorate in Parana and immediate neighboring areas because of too much moisture as the crop matures and is harvested
• Total
  rainfall in center west and center south by September 30 will vary from 0.75 to 2.5 inches with local totals of 2.50 to more than 4.00 inches from southern Mato Grosso do Sul into Parana and a part of Sao Paulo
  
• Eastern
  Paraguay will also receive some important rain
• Temperatures
  will be cooler than usual
• Additional
  rain is advertised for early October, although it may not be nearly as significant
  
• Brazil’s
  weather outlook is a boon to starting soybean planting and to supporting corn development and early rice and cotton planting. The moisture will be sufficient to support early planted corn, but it may raise some wheat quality concerns in areas where the crop
  is ready to be harvested.
• Brazil’s
  coffee, citrus and sugarcane areas from Mato Grosso do Sul to northern Parana, Sao Paulo and Minas Gerais should benefit from the coming two weeks of rain with flowering of coffee and citrus trees expected over time and new sugarcane development will evolve
  just as soon as significant rain has fallen.
• Argentina
  rainfall will be sporadic and light over the next ten days to two weeks Any showers that occur – and there will be some – will prove to be welcome and helpful in supporting wheat and sunseed, but greater rain will be needed
• Europe
  topsoil moisture has improved in many areas, but not in the far west where there is an ongoing need for rain
  
• Parts
  of Western Europe will continue until late in the coming ten days forecast period, but other areas will start getting some relief much sooner
• Rainfall
  in many areas over the next ten days will vary from 0.50 to 1.50 inches with portions of south-central Europe getting 2.00 to more than 5.00 inches
• Wettest
  in the Adriatic Sea region; including central and southern Italy
• Northwestern
  France and parts of the U.K. may continue to experience below average precipitation through the coming week
• Temperatures
  will be cooler than usual in the central and eastern parts of Europe this week with most of the continent seeing near normal temperatures next week
• Europe’s
  bottom line continues to be one of improvement for much of the continent with the exception of northern and western France which may continue too dry through much of the forecast period. Soil moisture is improving across most of the continent with rain noted
  in the past couple of weeks and it will continue this week. There will be an ongoing concern over France soil moisture and water supply until greater rain falls and a boost in precipitation will eventually reach there.
  
• Western
  CIS crop areas are still experiencing increasing soil moisture through periodic rainfall that will is going to lead to better winter crop establishment.
  
• Additional
  rainfall over the next ten days will vary from 0.25 to 1.00 inch in eastern Ukraine and 0.60 to 2.50 inches in most other areas west of the Ural Mountains; including Russia’s Southern Region.
  
• Drying
  is expected east of the Ural Mountains where spring wheat and sunseed harvesting should be advancing swiftly
• The
  bottom line for CIS crop areas is still good for improved wheat and rye planting, emergence and establishment conditions. Weather farther to the east will be equally good for sunseed and late spring wheat harvest progress except in a part of West Siberia where
  rain and snow are expected, but fieldwork should be winding down in that region.
  
• Dry
  weather is still advertised for the southern United States from Texas through the Delta and into the southeastern states during the coming week
  
• The
  drier weather will be great for summer crop maturation and harvest progress
• Additional
  cotton bolls will open making crops in the Delta and southeastern states more vulnerable to adverse weather which is why a close watch on the disturbance east of the Windward Islands is warranted since it may have potential to impact the southeastern U.S.
  
• Florida
  citrus and Georgia cotton may be most at risk of damage from a tropical cyclone if one develops in the Caribbean Sea as expected and threatens the region next week
• U.S.
  Northern Plains, eastern Canada’s Prairies and the northern U.S. Midwest will see a good mix of rain and sunshine over the next week favoring late season summer crop development and good crop maturation conditions
• Drought
  in Canada’s Prairies will continue without serious change from central through southwestern parts of the region during the next ten days
• Good
  crop maturation and harvest conditions are likely, but rain will be needed to improve the moisture profile before the winter cold settles into the region putting frost in the ground and limiting moisture for use in the spring
• Ontario
  and Quebec weather will be well mixed over the next couple of weeks, although there is need for drier weather to speed along summer crop maturation and harvest progress
• Gujarat,
  Rajasthan and Punjab, India northwest into Pakistan will be seasonably dry over the next ten days favoring good summer crop maturation and harvest progress
• India
  rainfall will be greatest over the next ten days from Maharashtra to Uttar Pradesh, Bihar, Bangladesh and the far Eastern States as well as areas southward into West Bengal and Odisha
• Rain
  totals will vary from 2.00 to more than 4.00 inches over the next ten days with a few amounts getting up over 8.00 inches, but mostly in northeastern India
• Far
  southern India will experience net drying conditions
• China
  will continue to experience poor rainfall in the Yangtze River Basin for the next ten days, despite a few showers
• Northeastern
  China will receive 0.50 to 1.50 inches of rain during the Wednesday through Friday period this week with a few amounts of 1.50 to 3.00 inches in northeastern Inner Mongolia
• Drier
  weather is expected thereafter into next week
• Temperatures
  will be warmer than usual over the next two weeks in southern China’s crop areas and more seasonable in the north
• Xinjiang,
  China weather is expected to be mild to warm with limited rainfall
• This
  pattern will be very good for cotton and corn maturation as well as early harvesting in most areas
  
• Australia
  is still expected to see periodic bouts of rain over the next two weeks
• Rainfall
  may be a little too great in portions of Victoria and New South Wales, but no imminent problems are expected
• Rain
  will be greatest into Thursday of this week and again early to mid-week next week
  
• Moisture
  totals may vary from 0.75 to 2.00 inches with a few areas from the Great Dividing Range to the coast getting 2.00 to more than 4.00 inches
• Most
  of this heavier rain will miss key crop areas.
• Showers
  in Western and south-central parts of the nation will be more reasonable with amounts to 0.20 to 0.75 inch over the same period of time
• Australia’s
  bottom line still looks very good for winter wheat, barley and canola development. As long as the crop region warms up a little more in coming weeks and rain frequency does not get excessive, this year’s production will be huge. There is some concern about
  a wet bias in October and November that could harm the quality of some crops.
  
• South
  Africa precipitation has been and will continue to be beneficial for winter wheat, barley and canola
  
• Most
  of the precipitation will be confined to the southern and eastern parts of the nation
  
• Some
  early corn and other crop areas may receive some needed rain, but more will be necessary to support planting in October and November.
  
• Winter
  crops are still poised to perform well this spring as long as continues late this month and into October.
  
• Central
  America, Colombia and parts of Venezuela are expected to trend wetter than usual in the next few weeks due to the persistent La Nina influence on 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
• Mexico’s
  drought in the northeast continues and will not likely end without the help from a tropical cyclone
• With
  that said some significant rain has fallen over the recent weeks in portions of the dry region
• This
  coming week’s rainfall will be trending lighter than usual once again
• Southern
  and western Mexico will get some rain periodically through the next couple of weeks with sufficient amounts to maintain moisture abundance
• 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
• West-Central
  Africa showers and thunderstorms will continue frequently benefiting coffee and cocoa production areas during the next two weeks.
  
• Some
  rice, cotton and sugarcane will also benefit from this pattern
• Weekend
  precipitation was minimal, but it will be increasing later this week and next week
• 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 +15.93 and it will move erratically over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Thursday,
Sept. 22:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• US
  cold storage data for beef, pork and poultry, 3pm
• Globoil,
  international edible oil conference, Agra, India, day 2
• International
  Grains Council monthly report
• USDA
  red meat production, 3pm
• Future
  Food Tech Conference, London, Sept. 22-23

Friday,
Sept. 23:

• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various US futures and options, 3:30pm
• Globoil,
  international edible oil conference, Agra, India, day 3
• FranceAgriMer
  weekly update on crop conditions
• Brazil’s
  Unica may release cane crush and sugar production data (tentative)
• US
  cattle on feed, poultry slaughter, 3pm
• HOLIDAY:
  Japan

Source:
Bloomberg and FI

 

 

Macros

FOMC
Hikes By 75Bps; Target Range Stands At 3.00% – 3.25%     

FOMC:
Interest Rate On Reserves Balances Raised By 75Bps To 3.15% From 2.40%

US
Existing Home Sales Change Aug: 4.80M (est 4.70M; prev R 4.82M)   

–
Existing Home Sales (M/M): -0.4% (est -2.3%; prev R -5.7%)   

–
Median Home Price (Y/Y) (USD): 389.5K or +7.7% (prev 403.8K or +10.8%)

102
Counterparties Take $2.316 Tln At Fed Reverse Repo Op (prev $2.239 Tln, 103 Bids)

 

Corn

·        
CBOT corn settled lower from a 120-point increase in the USD (post 1 pm FOMC announcement) and Black Sea shipping uncertainty. Weekly US ethanol production was down a large amount. WTI crude oil traded two-sided and was lower
by the time the ag markets closed.

·        
President Putin is looking to call up additional troops (300,000) for the Ukraine operation. He also raised his threat over the use of nuclear weapons. Yesterday Russia moved to annex a large portion of Ukraine.

·        
Funds sold an estimated net 4,000 corn contracts. 

·        
Attached is our updated US corn S&D.

·        
Our 2021-22 US corn September 1 stocks estimate is 1.553 billion bushels, above USDA’s current 1.525 billion. For 2022-23, we lowered production to 13.750 billion (USDA @  13.944), and trimmed exports by 50 million bushels to
2.250 billion (USDA @ 2.275).  Our working 2022-23 US corn ending stocks is 1.089 billion bushels, below 1.219 billion USDA September. China plans to release 14,400 tons of pork from state reserves on September 23. For the entire month, China was thought to
release a combined 200,000 tons of pork, according to AgriCensus.

·        
The weekly USDA Broiler Report showed eggs in the US up 4 percent and chicks placed up 6 percent from a year ago.  Cumulative placements from the week ending January 8, 2022, through September 17, 2022, for the United States were
6.98 billion. Cumulative placements were up 1 percent from the same period a year earlier.

·        
Bloomberg survey: US Cattle on Feed Placements Seen Down 2.1%. August placements onto feedlots seen falling y/y to 2.06m head. Reuters estimates below.

 

EIA
reported US ethanol production
fell barrels per day to 901,000 barrels, lowest level since February 26, 2021. Stocks fell 342,000 barrels to 22.501 million, lowest since late December 2021. Ethanol production over the last 14 days is running nearly unchanged from the same period year ago,
but compared with FH September 2019, pre-pandemic, output is off 8 percent. US gasoline stocks increased 1.57 million barrels to 214.6 million and implied gasoline demand decreased 172,000 barrels from the previous week to 8.322 million barrels. To put US
gasoline demand in perspective, the previous 4-week average is running 11 percent below the comparable period in pre-pandemic 2019. Refinery and blender net input of oxygenates fuel was 879,000 barrels, lowest since early April 2022, down 15,000 from the previous
week, and compares to previous 4-week average of 906,000 barrels. Ethanol blended into finished motor gasoline was 8.64 million barrels, or 88.2% rate (down from 91.4% previous week). We look for 2022-23 US corn for ethanol use to total 5.300 billion bushels,
25 million below USDA and compares to our working estimate of 5.317 billion for 2021-22 (USDA @ 5.330 billion).

 

 

 

US
DoE Crude Oil Inventories (W/W) 16-Sep: +1.141M (est +2.200M; prev +2.442M)  

–
Distillate: +1.230M (est -50K; prev +4.219M)  

–
Cushing: +343K (prev -135K)   

–
Gasoline: +1.570M (est -450K; prev -1.768M)  

–
Refinery: 2.10% (est 0.05%; prev +0.60%)

 

Export
developments.

·        
None reported

 

 

Updated
9/20/22

December
corn is seen in a $6.40-$7.30 range.

 

Soybeans

·        
Soybeans traded two-sided, ending lower on US harvest pressure, fresh 20-year highs in the USD (up 120 points post FOMC 75-point rate increase), and lower trade in soybeans oil. The November and January contracts closed near their
respected session lows. Soybean oil was higher earlier following strength in WTI but after that market gave up gains, SBO turned lower. Bull spreading narrowed the nearby spread by 15 points. Soybean meal traded two-sided, ending lower in the back months.
October meal ended higher (new contract high), gaining $4.50 / short ton over the December position, in part to tight domestic supplies.

·        
Funds sold an estimated net 6,000 soybeans, were even in meal, and sold an estimated net 2,000 soybean oil.

·        
US soybean basis remains high but that is expected to drop by the end of the month as US harvest advances.

 

 

·        
We are hearing 650,000 tons of Argentina soybeans exchanged hands in the local market yesterday, day after the government announced restrictions on foreign currency trades. China was also back in looking for Argentina soybeans
and at least one cargo traded earlier today. An estimated 55+ cargoes were thought to have been sold to China this season, most of it this month.

·        
Argentina new producer sales were 5.7 million tons as of September 19, according to a AgriCensus contact.

·        
We estimate US September 1 soybean stocks at 243 million bushels, 3 million above USDA.

·        
Cargo surveyor SGS reported month to date September 20 Malaysian palm exports at 952,888 tons, 234,597 tons above the same period a month ago or up 32.7%, and 117,208 tons below the same period a year ago or down 11.0%.

·        
Brazil’s weather forecast improves this week with scattered rainfall expected across most of the growing areas.
Argentina
rainfall will be light over the next ten days to two weeks.

 

Export
Developments

·        
None reported

 

Updated
9/20/22

Soybeans
– November is seen in a $14.00-$16.00 range

Soybean
meal – December $400-$490

Soybean
oil – December 64.00-73.00

 

Wheat

·        
Wheat futures were higher again on follow through buying and Black Sea tensions. Prices have been somewhat suppressed since early August after Ukraine increased wheat shipments by land and sea, but renewed concerns over an increase
in fighting and additional sanctions against Russia are getting traders nervous again. Russia wheat is cheap but traders fear grain merchants may shy away from booking future cargoes.

·        
Funds bought an estimated net 3,000 Chicago wheat contracts.

·        
Safras & Mercado raised their 2022 Brazil wheat production estimate to 10.935 million tons from 10.5 million previous.  The 10.9 million tons is a record.

·        
Ukraine grain shipments to date are down 43 percent to 6.88 million tons, according to the AgMin.

·        
Iraq plans to increase wheat plantings to 750,000 hectares from 625,000 last season. Plantings begin October.

·        
Paris December wheat was up 8.75 euros at 347.00 per ton, highest since July 11.

·        
Egypt estimated a 6.3-month buffer for their wheat reserves. Vegetable oils were 5.33 months. 

 

Export
Developments.

·        
The Philippines seek 45,000 tons of optional origin feed wheat on September 22 for Dec-Feb shipment.

·        
Jordan passed on 120,000 tons of barley. Jordan is back in for barley on September 28.

·        
Pakistan seeks 300,000 tons of wheat on September 26 for October shipment.

·        
Jordan opened a new import tender for 120,000 tons of wheat set to close Sep 27 for March and April shipment. 

 

Rice/Other

·        
India is looking at releasing some rice ships stuck at ports. Some ships have been stuck after an export ban was imposed September 8^th.

·        
India summer rice plantings are expected to fall 6 percent after monsoons did not live up to expectations. July 2022-June 2023 rice production was projected by the AgMin at 104.99 million tons, down from 111.76 million a year
earlier.

 

Updated
9/20/22

Chicago
– December $8.00-$10.50

KC
– December $8.75-$11.00

MN
– December $8.75-$11.00