FI Evening Grain Comments 09/27/22

PDF Attached has our US soybean and corn balance sheets attached, reflecting updated crop production. Funds were not available at the time this was sent.

 

The
USD traded two-sided. WTI rallied as a large amount of oil production was shut down in the Gulf because of hurricane Ian. US harvest weather will be favorable this week. Hurricane IAN is expected to roll across central Florida, impacting soft commodities.
Heavy rain is expected for the SE and parts of the Delta. That should temporally disrupt harvesting. The upper Great Plains will see some rain during the second half of the week. Mostly dry weather is seen for southwestern Great Plains this week. Argentina
will see additional net drying. Brazil looks good with rain falling across center west and center south.

 

Weather

 

 

World
Weather, INC.

WEATHER
EVENTS AND FEATURES TO WATCH

• Hurricane
  Ian was located 305 miles south southwest of Sarasota, Florida and 200 miles south southwest of The Dry Tortugas near 23.0 north, 83.5 west moving northerly at 10 mph while producing maximum sustained wind speeds of 115 mph near the center of the storm
• Hurricane
  force wind (greater than 74mph) was occurring out 35 miles from the center of the storm while tropical storm force wind was occurring out 140 miles
• The
  storm has moved into the southeastern Gulf of Mexico after crossing over western Cuba overnight
• The
  storm’s track has been further adjusted to the east today with landfall now expected to the southeast of Tampa Florida probably near Sarasota, Florida with peak wind speeds getting close to 120 mph at the time of landfall.
  
• The
  adjusted path takes the storm to Orlando and then to Jacksonville, Florida with the storm reaching Orlando as a tropical storm.
  
• This
  adjusted track raises the damage potential for citrus and will also increase wind speeds in sugarcane areas, although sugarcane is still unlikely to be seriously impacted
• The
  new storm path keeps the storm center out of Georgia except along the coast and the system now moves northward along the Georgia/South Carolina border to northeastern South Carolina by Sunday morning
  
• Cotton
  fiber quality issues are expected in the Carolinas and a part of Georgia, but no serious production losses are expected with this new path.
  
• Quality
  declines will be common, though
• Europe
  continues to heal from summer drought with waves of rain to continue across most of the continent during the next couple of weeks
• Moisture
  improvements are needed most and will be continuing in France and the United Kingdom as well as in other areas
• Seasonal
  rainfall is unlikely to begin for a while in Spain and Portugal
• Western
  CIS weather continues wet biased with waves of rain expected to continue in most of western Russia
• Some
  of these crop areas have already received significant rain and the ground is saturated and vulnerable to some flooding
• Rainfall
  in the coming week to ten days will bring another 1.00 to 3.00 inches of moisture to this region
• Central
  and southern portions of Russia’s Southern Region will not get a large amount of rain and may eventually have need for more moisture
• Winter
  crops are establishing well in most of the western CIS
• Summer
  crop harvesting and winter crop planting will be delayed by expected precipitation, but progress has already advanced well
  
• China’s
  Yellow River Basin and North China Plain have dried out in recent weeks, but that has been a good for wheat planting and summer crop maturation as well as summer crop harvesting
• Rain
  is expected this weekend and it will continue next week with some moderate to heavy amounts expected
• The
  rain will delay fieldwork and could induce some flooding
• Rainfall
  may range from 2.00 to 6.00 inches with a few totals of 8.00 inches or more by the latter part of next week
• The
  moisture will be good for long term crop development, but any flooding might be a deterrent for planting and other field operations for a while
• Last
  year excessive rain fell in the same region causing serious delays to wheat planting resulting in poor planting and emergence conditions that may have hurt production. This year’s rain event is not likely to have the same impact, but it will need to be closely
  monitored
• China’s
  Yangtze River Basin is unlikely to get much rain for at least another week
• Northern
  parts of the region may get some rain late next week to lift topsoil moisture temporarily, but much more rain will be needed to end drought
• Drought
  has already cut into rice and other summer crop production
• Worry
  has been rising that if drought lasts much longer it could cut into rapeseed planting and production potential
• Northeastern
  China weather is improving with less frequent rain supporting better harvest conditions
• The
  region will not be completely dry, though, and some disruption to fieldwork is possible periodically for brief period of time
• Xinjiang,
  China weather remains mostly unchanged with good harvest weather for many areas outside of the northeast
• Northeastern
  Xinjiang has been and will continue be impacted by periodic rainfall causing field working delays
• India
  weather has been wetter than usual this month in central, western and northern parts of the nation
• Most
  of the rain expected over the next ten days will be centered on southern and eastern parts of the nation which is relatively normal
• Some
  central areas will continue a little wet and there may still be some concern over the condition of crops that should be maturing at this time of year
• Australia’s
  winter crops remain in good condition, especially in Western Australia
• Crops
  in New South Wales and Victoria have been and will continue to be a little too wet at times
• There
  is potential that crops in these areas will suffer a quality decline later in the year because of anticipated additional rainfall
• Argentina
  weather will continue drier than usual, although some showers will occur infrequently as has been noted for a while
• The
  driest areas in the west are unlikely to see significant improvements to soil moisture until a little later in October
• Brazil
  center west and center south will receive significant rain in the coming week with some periodic follow up shower activity expected next week
  
• A
  little too much rain will fall in Mato Grosso do Sul, Parana, Sao Paulo and far southern Minas Gerais where delays to farming activity will occur
• The
  moisture will be good for long term crop prospects
• Sugarcane,
  citrus and coffee will all benefit from the coming rain with flowering likely in citrus areas and new season growth in both sugarcane and coffee will become aggressive
• Coffee
  has already flowered in many areas from Parana into Sao Paulo and the coming rain will be good for pollination and cherry setting
• Rain
  a little farther north in Minas Gerais will support new coffee flowering
• Early
  season soybean planting should advance well following the expected rain
• Early
  season corn in interior southern Brazil will also benefit from the moisture withy better establishment and additional planting likely
• Cotton
  and rice planting will begin soon after this rainy period passes
• Wheat
  quality declines are likely in Parana and surrounding areas due to too much rain, wet field conditions and delays in harvesting
• Typhoon
  Noru was located 116 miles east of Da Nang, Vietnam at 1500 GMT today moving west northwesterly at 11 mph and producing maximum sustained wind speeds of 120 mph near the storm center
• Typhoon
  force wind was occurring out 20 miles from the center of the storm while tropical storm force wind was occurring out 105 miles.
  
• Damage
  in the port city of Da Nang is expected, although the radius of strongest wind speeds is not large which should contain the damage to a relatively small region
• The
  storm will proceed into southern Laos and then into Thailand producing some moderate wind and heavy rain
• Some
  flooding is expected with a little risk to rice quality
• Sugarcane
  should not be seriously impacted
• Only
  a minor impact is expected on the region’s coffee production
• Vietnam’s
  Central Highlands’ crop areas will not be seriously damaged by this storm
• Tropical
  Storm Kalup evolved well to the southeast of Japan Monday and early today
• The
  storm is expected to remain a safe distance from Japan and no other area in the western Pacific Ocean will be threatened by the storm
• 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 rain continues periodically late this month and into October.
  
• 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
• Typhoon
  Noru will bring flooding rain central Vietnam and central Laos later this week
• Some
  excessive rain already occurred in northern Luzon Island Philippines during the weekend from Noru
• 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 +19.45 and it will move a little higher over the next few days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Wednesday,
Sept. 28:

• EIA
  weekly US ethanol inventories, production, 10:30am
• G20
  Agriculture Ministers Meeting in Bali, day 2

Thursday,
Sept. 29:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• G20
  Agriculture Ministers Meeting in Bali, day 3
• Vietnam
  General Statistics Dept. releases Sept. coffee, rice and rubber exports data
• USDA
  hogs & pigs inventory, 3pm

Friday,
Sept. 30:

• USDA’s
  quarterly stockpiles data for wheat, barley, corn, oat, soybeans and sorghum
• US
  wheat production data, noon
• 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
• US
  agricultural prices paid, received, 3pm
• HOLIDAY:
  Canada

Source:
Bloomberg and FI

 

 

 

 

 

 

 

Macros

US
Crude Oil Futures Settle At $78.50/Bbl, Up $1.79 Or  2.33%

100
Counterparties Take $2.327 Tln At Fed Reverse Repo Op (prev $2.299 Tln, 103 Bids)

US
Durable Goods Orders Aug P: -0.2% (est -0.3%; prev -0.1%)

US
Durable Ex Transportation Aug P: 0.2% (est 0.2%; prev 0.2%)

US
Cap Goods Orders Nondef Ex Air Aug P: 1.3% (est 0.2%; prev 0.3%)

US
Durable Goods Ship Nondef Ex Air Aug P: 0.3% (est 0.3%; prev 0.5%)

US
New Home Sales Change Aug: 685K (est 500K; prev R 532K)  

–
New Home Sales (M/M): 28.8% (est -2.2%; prev R -8.6%)

–
Median Sale Price (Y/Y) (USD): 436.8K or +8.0% (prev 439.4K or +8.2%)

US
CB Consumer Confidence Aug: 108.0 (est 104.5; prev R 103.6)  

–
Present Situation: 149.6 (prev R 145.3)  

–
Expectations: 80.3 (prev R 75.8)

US
Freight Railroads Reach Tentative Agreement With International Association Of Machinists And Aerospace Workers – NCCC

–
Agreement Includes 24% Wage Increase During Five-Year Period From 2020 Through 2024 – National

–
All Unions In National Bargaining Round Ratified, Or Are In Process Of Ratifying New Collective Bargaining Agreements

 

 

 

Corn

·        
Corn rallied. Initially the market found strength from a lower USD. But as that reversed, corn pared gains. Slower than expected US corn harvest progress was seen supportive. US harvest weather will favorable this week.

·        
There was a large July 2023 option trade. 700-950 call spread traded 10,000 times @ 40 5/8 to 42 7/8. 

·        
China was due to release another round of pork from reserves today before going on holiday next week.

·        
China will see heavy rains across the northern growing areas over the next 7-10 days, delaying corn harvest progress.

·        
Ukraine will see delays for their corn harvest from wet weather this workweek.

·        
The Nord Stream disruption is expected to impact selected EU natural gas supplies and we think it could potentially impact fertilizer production. It’s not known how long it will take to restore gas transport infrastructure. Germany
fertilizer sales have already slowed because of demand destruction.

·        
US gasoline demand remains below pre pandemic levels and with the rail disruption a couple weeks ago, we look for ethanol production to end up near unchanged to down 15,000 barrels from the multi month low posted previous week
(901k for week ending Sep 16).

·        
ANEC sees Brazil September corn exports at 7.132 MMT versus 7.618 previously estimated.

·        
A Bloomberg poll looks for weekly US ethanol production to be up 11,000 thousand to 912k (881-935 range) from the previous week and stocks down 99,000 barrels to 22.402 million.

 

Export
developments.

·        
South Korea’s MFG bought 137,000 tons of corn from SA or South Africa at $333.38 (arrival around Dec 10) and $332.88/ton c&f (arrival around Jan 17).

·        
South Korea’s FLC bought 68,000 tons of corn at $330.95/ton c&f form South America for October 25-November 25 shipment.

 

 

 

Updated
9/20/22

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

 

Soybeans

·        
CBOT soybeans, meal and soybean oil started higher on outside macro influences but ended lower after the USD reversed to trade higher.  Soybean oil gained on meal. Over the next month we see meal prices slightly gaining on soybean
oil. Poor US exports and less than expected SBO for biofuel use is seen weighing on that market. However, SBO prices should continue to be influenced by energy markets.

·        
CBOT First Notice Day for October delivery is Friday, and we look for no deliveries for SBO. Meal is likely zero, but we have a 0-50 range.

·        
CME published the new delivery differentials yesterday. Soybean meal was unchanged, but oil went up by 20 pts in most territories, up 10 only in the Western territory.

·        
Cargo surveyor SGS reported month to date September 25 Malaysian palm exports at 1,152,612 tons, 183,271 tons above the same period a month ago or up 18.9%, and 257,106 tons below the same period a year ago or down 18.2%. Yesterday
AmSpec reported Sep 1-25 Malaysian palm oil exports at 1.075 million tons, up 18.6 percent and ITS at 1.169 MMT, up 20.9% from 966,655 tons Aug 1-25.

·        
ANEC sees Brazil September soybean exports at 3.818 MMT versus 4.152 previous. Soybean meal is seen at 2.013 million versus 2.225 million previous week.

·        
EU July 1 through September 25 soybean imports were 2.63 million tons, down from 3.18 million during the same period year ago. Soybean meal imports were 3.59 million tons versus 3.87 million tons prior season. Palm oil imports
were 817,769 tons versus 1.45 million tons in 2021-22. EU rapeseed imports reached 1.47 tons, compared with 1.10 tons a year earlier and sunflower imports were 383,585 tons versus 344,761 tons year ago.

 

Export
Developments

·        
None reported

 

Updated
9/27/22

Soybeans
– November is seen in a $13.85-$15.50 range

Soybean
meal – December $395-$480

Soybean
oil – December 60.00-70.00

 

Wheat

·        
Wheat ended higher, but well off session highs. It rallied earlier on technical buying and a lower USD. The dollar was higher by afternoon trading. EU wheat rallied but gains were limited from an increase in Black Sea shipments
and slowing EU wheat export demand.

·        
Harvesting progress for Manitoba, Canada, was 47 percent complete, well below the 5-year average of 79 percent, about 3.5 weeks behind normal.

·        
Ukraine ports shipped around 5.3 MMT of food under the grain deal, according to the infrastructure ministry. Another four vessels left Monday for Turkey, Netherlands and Spain.

·        
Ukraine winter wheat plantings were about 16 percent complete on 622,000 hectares. Trade estimates widely vary for total winter wheat plantings, down 10 to 40 percent from 6 million last year.

·        
President Putin looks for a 150 million ton Russian wheat crop, and all grains at 150 million tons. Russia is seeing excessive rainfall threatening some winter grain sowings.

·        
Meanwhile, with Russia including farmers for the war mobilization, some traders noted that could have jeopardize late grain harvest and winter sowings. We think it could be minimal. AgriCensus noted several Russian farm groups
were questioning the mobilization move to include producers.

·        
Egypt’s supply minister estimated the country bought 3.5 million tons of wheat since July 1.

·        
China plans to sell 40,000 tons of wheat from reserves on October 12, from the 2014-2017 crops.

·        
Paris December wheat was up 5.25 euros at 348.50 per ton.

·        
EU July 1 through September 25 soft wheat exports were 8.80 million tons, up from 8.75 million during the same period year ago. EU barley exports so far in 2022-23 totaled 2.04 million tons against 3.12 million a year ago.

 

Export
Developments.

·        
Algeria seeks 50,000 tons of soft milling wheat on September 29 for November shipment.

·        
Japan seeks 61,800 tons of food wheat later this week for Oct 21-Nov 20 loading.

·        
Jordan seeks 120,000 tons of wheat on October 4. They passed on wheat today
for
March and April shipment.

·        
The UN seeks 100,000 tons of wheat on September 28 on September 30 for late October and/or November delivery. Destinations included east Africa, Asia and the Middle East.

·        
Taiwan seeks 51,800 tons of US wheat on September 29 for mid to LH November shipment.  Various classes are sought.

·        
Jordan is back in for barley on September 28.

 

Rice/Other

·        
None reported

 

Updated
9/20/22

Chicago
– December $8.00-$10.50

KC
– December $8.75-$11.00

MN
– December $8.75-$11.00