FI Evening Grain Comments 09/30/22

PDF Attached

 

Most
US agriculture markets started higher but ended mixed, with grains settling higher and soybean complex sharply lower.

 

 

USDA
released their August S&D report*

 

Reaction:
Bearish soybeans and bullish corn and wheat. US soybean production for 2021 was raised 30 million bushels while corn was taken down 41 million. USDA reported September 1 corn stocks 135 million below a trade guess, soybeans 32 million above, and wheat at trade
expectations. 

 

US
wheat production for the 3 classes of winter wheat, spring wheat, and durum, all came in below expectations. The US all wheat planted area was lowered from 46.992 million acres to 45.738 million acres. The winter wheat area was lowered 735,000 acres, spring
wheat was taken down 275,000 and durum was lowered 244,000 acres. The all-wheat harvested area was cut from 37.527 million acres to 35.480 million acres. For the yield, all wheat was reported at 46.5, down from 47.5 previous.  If USDA were to leave its 2022-23
all-wheat US demand outlook unchanged in its October update, ending stocks would fall from 610 million bushels (31.4% STU) to 486 million bushels (25.0% STU).  That would justify a crop-year average of $8.75 to $9.00 Chicago wheat. The 2021 US soybean planted
area was unchanged. The corn planted area was lowered to 93.252 million from 93.357 million.

 

The
tendency for USDA to surprise the trade at the end of September lives on. We like owning grains over soybeans, at least for the short term. USDA will likely leave US soybean demand unchanged next month for 2022-23, if the yield changes little from September.
USDA may raise corn for feed by 50 to 75 million bushels. Don’t discount a cut in US corn exports if the 2022 October yield is lowered 1-2 bushels. For US wheat, look for USDA to lower exports by at least 50 million bushels. Back to stocks, USDA made
no revisions to June 1 stocks for soybeans and corn, but upward revised wheat by 9 million to 699 million.

 

*corrects
changes to corn and soybean production from earlier text. Corn for feed change outlook was revised

 

 

 

 

Weather
improves a touch for the Midwest with mostly dry weather, favoring harvest but bad for river transportation. Some rain will fall across the southeastern areas Saturday and northwestern areas Sunday through Tuesday. Water levels for the Mississippi River are
not expected to improve over the next week. The Delta and southeast will see dry weather after the remnants of the hurricane exit the region. Argentina has a chance for rain Tuesday for La Pampa and southwest Buenos Aires.

 

 

Weather

Source:
World Weather INC

 

Source:
World Weather INC

 

World
Weather, INC.

WEATHER
EVENTS AND FEATURES TO WATCH

• Europe
  will get some beneficial drying next week, although there will be some ongoing need for more moisture in France, Spain, Portugal and the lower Danube River Basin where dryness is still present down deep into the ground
• Recent
  rain has slowed fieldwork and farmers will find the break from rain next week to be welcome and quite beneficial
• Portions
  of western Russia have become too wet and there is need for drying, but that may not materialize for another week
• In
  the meantime, additional moisture in the region will keep the ground saturated and vulnerable to flooding
• Russia’s
  Southern region has received some welcome rain recently, but there is need for greater amounts
• Some
  of that additional moisture is forthcoming over this next week
• China’s
  Yellow River Basin and North China Plain rain this weekend and next week will be welcome initially, but some of it will be heavy and that will lead to saturated topsoil and some rising potential for local flooding
• Winter
  wheat planting, emergence and establishment should improve following the rain and after a few days of drying occurs
• Summer
  crop harvest delays should not create too many problems, although minor cotton areas in the region might experience a decline in fiber quality.
  
• Xinjiang,
  China harvest weather is mostly good, although some periodic showers in the northeast part of the province have caused some delay to the harvest and raised at least a little fiber quality concern
• Excellent
  drying conditions are prevailing in the bulk of other production areas in the province
• Rain
  is predicted for northern parts of China’s Yangtze River Basin late next week and into the following weekend
• The
  precipitation will ease long term drought, but there will be need for more rain
• Southern
  portions of the Yangtze River Basin will not see any relief to drought and dryness will prevail another two weeks
• Northeastern
  India will receive heavy rain in the coming week
• Uttarakhand
  will be wettest and may get 10.00 to more than 12.00 inches of rain resulting in some notable flooding
• Other
  areas in Uttar Pradesh, Bangladesh, Jharkhand, Bihar and West Bengal will be quite wet and vulnerable to flash flooding during the week and into the following weekend
• Northwestern
  India and Pakistan will experience favorably dry biased weather for the next two weeks supporting crop maturation and harvest progress.
• Argentina
  is still predicted to receive a restricted amount of rainfall during the next ten days
• Totally
  dry weather is unlikely, but greater rainfall will be needed to support the best production potential for winter wheat and to improve corn and sunseed planting conditions
• South
  America has been and will continue to be a little drier biased over the next couple of weeks.
  
• Brazil’s
  center south and center west crop areas are predicted to experience frequent rainfall over the next two weeks
• The
  moisture will support early soybean planting, continued corn planting and will be of special interest to coffee, citrus and sugarcane production areas
• Hurricane
  Ian will move into South Carolina this afternoon
• The
  storm has already been spreading significant rain into the Carolinas this morning
• Peak
  wind speeds near the center of the storm were reaching 85 mph and little change in intensity was expected prior to the mid-afternoon landfall between Myrtle Beach and Charleston, South Carolina
  
• Total
  rainfall of 2.00 to 6.00 inches is expected with a small pocket of 6.00 to 10.00 inches possible to the right of the storm center as it comes inland
• Damage
  to cotton fiber quality is expected and soybean could be vulnerable to a quality decline as well, but the storm will clear out of the region quickly and some important drying will follow.
  
• The
  storm will dissipate in northeastern North Carolina and southwestern Virginia late Saturday with remnants pushing east northeast out to sea Sunday into Monday
• Flooding
  continued into Thailand Thursday as remnants of Typhoon Noru moved through those areas
• Rainfall
  reached over 6.00 inches in a part of the region resulting in flooding
• Sugarcane
  should not have been seriously impacted, but a little damage was suspected in Thailand
• Rice
  might also be vulnerable to some of the excessive moisture
• 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
• Some
  of the heavy rain advertised in northern India Wednesday for next week has been removed in today’s forecasts and this change was needed
• Heavy
  rain still occurs in parts of Uttar Pradesh and Uttarakhand
• Australia’s
  winter crops remain in good condition, especially in Western Australia
• Crops
  in New South Wales and Victoria have been a little too wet at times and are expected to take a little break from the greatest rain until next week when it will increase again
  
• There
  is potential that crops in these areas will suffer a quality decline later in the year because of anticipated additional rainfall
• Typhoon
  Roke remained southeast of Japan today and is unlikely to impact any major landmass as it moves northeast over open water southeast of Japan during the coming week.
  
• South
  Africa precipitation has been and will continue to be beneficial for winter wheat, barley and canola
  
• Most
  of the precipitation has been confined to the southern 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.
  
• The
  coming week will be a little drier
• 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
• Autumn
  planting is still several weeks away
• 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
• Remnants
  of Typhoon Noru will bring additional flooding rain to parts of Thailand over the next few days
• 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
• 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 +18.89 and it will move erratically lower over the next several days

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Monday,
Oct. 3:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• US
  crop conditions for corn, soybeans and cotton; spring wheat, corn, cotton, soybean harvesting, 4pm
• USDA
  soybean crush, DDGS production, corn for ethanol, 3pm
• HOLIDAY:
  Germany, China, Korea, Australia

Tuesday,
Oct. 4:

• EU
  weekly grain, oilseed import and export data
• Global
  Grain Outlook conference in Baku, Azerbaijan, Oct. 4-7
• US
  Purdue Agriculture Sentiment
• New
  Zealand global dairy trade auction
• Australia
  commodity index
• HOLIDAY:
  China, Hong Kong

Wednesday,
Oct. 5:

• EIA
  weekly US ethanol inventories, production, 10:30am
• Malaysia’s
  Oct. 1-5 palm oil export data
• HOLIDAY:
  China, India, Bangladesh

Thursday,
Oct. 6:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• New
  Zealand commodity price
• Brazil’s
  Conab releases data on area, yield and output of corn and soybeans
• HOLIDAY:
  China

Friday,
Oct. 7:

• FAO
  World Food Price Index
• 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
• Vietnam
  customs data on September coffee, rice and rubber exports
• HOLIDAY:
  China, Argentina

Source:
Bloomberg and FI

 

Reported
Thursday evening/Friday morning

 

 

CFTC
Commitment of Traders

The
daily estimate of funds were not available as of late Friday afternoon.

 

 

 

 

 

Reuters
Table

SUPPLEMENTAL
     Non-Comm               Indexes                  Comm

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
159,556    -13,772    361,734     -9,613   -450,943     27,269

Soybeans           
31,887     -9,815    129,917     -3,221   -125,378     15,038

Soyoil             
20,109     -1,023    102,026     -2,618   -128,679      7,021

CBOT
wheat         -41,379      6,112    115,454       -451    -67,281     -3,930

KCBT
wheat           4,661      4,564     49,988     -1,401    -52,696     -2,418

 

FUTURES
+ OPTS     Managed                 Swaps              Producer

                       
Net        Chg        Net        Chg        Net        Chg

Corn              
237,854    -10,054    219,871     -6,050   -433,342     28,296

Soybeans           
94,831     -9,860     73,735         39   -116,394     13,053

Soymeal            
93,545     -8,623     85,627      1,582   -218,818     13,716

Soyoil             
58,417        107     88,180     -2,567   -147,047      8,744

CBOT
wheat         -14,397      1,306     61,493     -4,253    -56,548     -2,227

KCBT
wheat          23,905      4,847     24,268     -3,403    -43,921        222

MGEX
wheat           4,236      1,867        101     -1,195     -6,862       -563

                
———- ———- ———- ———- ———- ———-

Total
wheat         13,744      8,020     85,862     -8,851   -107,331     -2,568

Live
cattle         62,075    -11,148     55,338     -2,737   -129,358     12,933

Feeder
cattle       -6,456     -4,039      3,121        -13      5,304      2,061

Lean
hogs           41,129    -23,534     44,979     -1,113    -76,992     19,137

                     
Other             NonReport                  Open

                       Net       
Chg        Net        Chg   Interest        Chg

Corn               
45,963     -8,308    -70,346     -3,883  1,787,424    -30,104

Soybeans          
-15,744     -1,229    -36,427     -2,001    830,261     21,400

Soymeal            
14,205     -4,518     25,440     -2,157    422,486    -22,937

Soyoil             
-6,094     -2,903      6,544     -3,381    447,185     -7,391

CBOT
wheat          16,247      6,907     -6,794     -1,732    377,966     -9,854

KCBT
wheat          -2,299       -920     -1,954       -745    167,941     -4,315

MGEX
wheat           2,986        -22       -462        -88     57,413        -35

                
———- ———- ———- ———- ———- ———-

Total
wheat         16,934      5,965     -9,210     -2,565    603,320    -14,204

Live
cattle         19,221     -1,214     -7,277      2,165    359,048     -8,856

Feeder
cattle       -1,674       -484       -295      2,475     60,278      6,471

Lean
hogs           -1,856      1,864     -7,260      3,648    276,650      9,737

 

Macros

Vladimir
Putin Is Hosting A Signing Ceremony For The Annexation Of Four Areas Of Ukraine – Sky News

US
Personal Income Aug: 0.3% (est 0.3%; prev 0.2%)

US
Personal Spending Aug: 0.4% (est 0.2%; prev 0.1%)

US
Real Personal Spending Aug: 0.1% (est 0.1%; prev 0.2%)

US
PCE Deflator (M/M) Aug: 0.3% (est 0.1%; prev -0.1%)

US
PCE Deflator (Y/Y) Aug: 6.2% (est 6.0%; prev 6.3%)

US
PCE Core Deflator (M/M) Aug: 0.6% (est 0.5%; prev 0.1%)

US
PCE Core Deflator (Y/Y) Aug: 4.9% (est 4.7%; prev 4.6%)

EIA:
US Crude Oil Production Rose 12K Bpd In July To 11.8M Bpd (Vs Revised 11.788 Mln Bpd In June)

–
June Oil Production Revised Down By 28K Bpd To 11.788M Bpd

 

Corn

·        
Corn ended sharply higher from a bullish September 1 grain stocks report, slow Argentina corn planting progress (very dry), strength in wheat and ongoing Black Sea shipping concerns.

·        
The EU Commission lowered EU corn production to 55.5 million tons from 59.3 million estimated month ago. FI is at 53.3 million tons. Our EU S&D table is attached. 

·        
France collected 51 percent of the corn crop as of September 26, up from 26 percent week earlier and compares to only 2 percent year ago.

·        
Argentina corn plantings were 5.8 percent complete, according to the BA grains exchange, down 11 points from this time last year.

 

Export
developments.

·        
South Korea’s KFA bought 60,000 tons of corn at $334.88 a ton c&f from either South America or South Africa with November. Earlier they cancelled a corn import tender with a price of $334.99 a ton c&f. On Thursday they bought
65,000 tons of corn at $334.99/ton for November shipment.

·        
China plans to release 20,000 tons of frozen pork from reserves on September 30.

 

USDA
reported US quarterly hogs and pigs.

As
expected. All hogs were 99 percent, breeding 99, and marketing 99 percent. Estimates were 99.2 for All hogs, 99.6 for breeding, and 99.1 for market

https://release.nass.usda.gov/reports/hgpg0922.pdf

 

 

EIA
reported
July US ethanol production at 31.480 million bushels, slightly above our estimate. We raised our 2021-22 US corn for ethanol use to 5.331 billion bushels from 5.326 billion previous, 1 million above USDA. 2020-21 use was 5.033 billion and USDA looks for 2022-23
use to increase to 5.325 billion.

 

 

 

Updated
9/20/22

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

 

Soybeans

·        
CBOT soybean complex ended sharply lower on bearish September 1 grain stocks. USDA increased 2021 US soybean production, a surprise for the trade.

·        
USDA NASS will release August crush on Monday and traders are looking for 175.6 million bushels, above 168.2 million year ago and down from 181.3 million for July 2022.

·        
Malaysian palm oil posted a monthly loss (Bloomberg noted worst quarter in 14 years), down 17.5 percent, and fifth consecutive monthly loss.

·        
Today was the last day of the Argentina soy dollar.

·        
Mississippi River shipping problems from low water levels are disrupting grain flows to the Gulf. This is what got into the meal spreads on Thursday (bear spreading).

·        
CBOT First Notice Day deliveries were zero for soybean oil and 50 for meal. 

·        
AmSpec reported September Malaysian palm oil exports at 1.320 million tons, up from 1.191 million during August.

 

Export
Developments

• None
  reported

 

EIA
reported July soybean oil for biofuel
use at a better than expected 956 million pounds (FI was looking for 934 million), well above 810 million during June and 808 million year earlier. We are using 10.380 billion pounds for 2021-22 US soybean oil for biofuel use, above USDA’s current 10.200 billion
estimate.

 

 

 

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 on a much lower than expected US 2022 wheat production estimate and increasing tensions between western countries and Russia after the annexation in Ukraine. President Putin held a signing ceremony for  the
annexation of the four areas today.

·        
At one point, July Chicago traded at a July 11 high. It hit a top of $9.4575.  $9.60-$9.70 area next week is seen for that contract. 

·        
Dry conditions hit the summer wheat crops across the Great Plains late in the growing season. Meanwhile winter wheat was downward revised for all classes. Wheat stocks for the end of Q1 fell below expectations, but a low feeding
rate limited the figure from what could have been a much larger decline.

·        
India’s weather outfit sees above average rains for month of October. 115% of a long-term average was forecast.

·        
Paris December wheat was up 4.50 euros at 356.75 per ton.

·        
EU winter grain plantings improved after rains occurred over the past week, raising the potential for higher rapeseed seedings (up 5% from last year) and planned winter wheat area (unchanged from 2021-22).

·        
The EU is preparing another round of sanctions against Russia after the annex of nearly 15% of Ukraine.

·        
The US announced additional sanctions on Russia.

·        
China’s state planner raised the 2023 minimum purchase price for wheat by 40 yuan to 2,340 yuan ($329.69) per ton.

·        
Russia will lower its wheat export tax for the October 5-11 period to 2119 rubles per ton from 2476.6 previous week.

 

US
Wheat Associates

“This
is the final weekly report for HRS harvest and this year’s crop currently grades at U.S. No. 1 Northern Spring. Northern durum harvest is slowing as days get shorter with harvest of later planted fields expected to continue into October; the crop currently
grades at U.S. No. 1 Hard Amber Durum.”

 

Export
Developments.

·        
Pakistan passed on 300,000 tons of wheat.

·        
Algeria’s state grains agency OAIC is in the process of buying wheat for November shipment. Origin was thought to include mostly EU and some from Russia. Initial prices were seen at $369, $370 and $372 a ton c&f.

·        
The Philippines bought around 50,000 tons of feed barley from Australia and rejected offers for up to 50,000 tons of feed wheat, for January, February and March shipment. Prices were unavailable.

·        
Mauritius seeks 25,800 tons of wheat flour, optional origin, on October 28 for January through September 30, 2023, shipment.

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

• Jordan
  retendered for barley set to close October 5 for 120,000 tons.
• Iraq
  seeks 50,000 tons of milling wheat on October 10, optional origin.
• Iraq
  seeks 50,000 tons of wheat on October 10.

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

 

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