FI Morning Grain Comments 01/03/22

PDF attached

 

Good
morning. 
We hope everyone had a safe and happy New Year.

 

New
month, new quarter, new year. Funds are pumping in money in many commodities. Easing concerns over the Omicron variant was noted. This morning the USD is 20 points higher, WTI crude oil lower, and US equities leading towards a higher open. Concerns over the
South American weather situation linger, which is supporting agriculture markets. China was on holiday, returning Tuesday. Jordan and Iraq are in for wheat early this week. OPEC+ meets on Tuesday and it is thought they will stick with its plan to increase
February production.

 

The
GFS model for South America is drier this morning while the European model suggests about unchanged from Friday’s outlook. Brazil saw rain over the weekend across the northern areas and spotty rain southern of southern MG and Sao Paulo. Argentina saw spotty
but beneficial rain over the weekend. Northern Cordoba western BA and La Pampa was mostly dry. Brazil will see rain over the next week, but the southern areas will see deficits while the north will be too wet for early harvesting in some areas. Argentina will
see variable rain, but the greatest concern are hot temperatures keeping the dry areas dry from evaporation during rain events. Looking forward, a ridge of high pressure is expected to build up across Argentina after day ten of the forecast (around January
12-13) and prevail through mid-month which may lead to drier and warmer weather for Argentina, southern Brazil, Uruguay and Paraguay. The US southern Great Plains will see limited precipitation and cold temperatures this week.

 

After
the close USDA NASS will be out with the US November crush and corn for ethanol use. The weekly Commitments of Traders report will be released today at 2:30 pm CT.

 

 

 

Weather

 

 

 

 

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR JANUARY 3, 2022

• Some
  wheat damage may have occurred in U.S. hard red winter wheat areas during the weekend due to limited snow cover and bitter cold conditions.
  
• Another
  bout of similar conditions may occur late this week after what snow is present today melts.
  
• There
  is some potential for more snow in northern areas before the coldest air arrives.
  
• Cold
  is also expected in the U.S. Midwest and eastern states of the U.S. late this week and into the weekend, but it will be short lived with the second week of the forecast trending warmer in much of the United States.
  
• Brazil
  will begin seeing showers and thunderstorms in the drier areas of the south this week and sufficient rain is expected to offer some relief from persistent dryness.
  
• Northern
  Brazil is expecting frequent rain that will be abundant to excessive at times raising concern over crop conditions and slowing crop maturation and harvesting.
  
• However,
  harvesting will advance around the precipitation from Mato Grosso to Parana and Sao Paulo where most of the early season soybeans are produced.
  
• Argentina
  was excessive hot during the weekend in the north with highest temperatures of 100 to 111 and a few readings a little higher
• Argentina
  during the weekend in central parts of the nation helped to temper some of the heat, but dryness is still common and a general soaking rain is still needed for most of the nation
• Rain
  is expected in Buenos Aires, northeastern La Pampa, far southern Cordoba and a few neighboring areas Sunday into next Monday, but until then the daily showers will be sporadic and mostly too light to counter evaporation
• A
  high pressure ridge will develop over Argentina and Paraguay after day ten in the forecast cutting off the rain in Argentina, Paraguay, Uruguay and far southern Brazil once again possibly through Jan. 18
• Snow
  will continue to protect wheat in Russia and Ukraine, although no extreme cold is expected. Spain and Morocco still need greater rain as do a few areas in the Middle East.
  
• India
  will get rain this week in the central, east and north favoring pre-reproductive winter crop development.
  
• Southeastern
  Australia will trend wetter this week
• South
  Africa experiences a mostly good mix of rain and sunshine. 
• Southeast
  Asia palm oil, coconut, rice, sugarcane, coffee, citrus, cocoa and other crop areas in Indonesia, Philippines and Malaysia will see routinely occurring rainfall with a few localized areas of flooding

 

 

 

 

Source:
World Weather, inc.

 

Bloomberg
Ag Calendar

Monday,
Jan. 3:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• CFTC
  and ICE commitments of traders reports (delayed from Dec. 31)
• Honduras
  and Costa Rica coffee exports
• Global
  cotton balance report from the International Cotton Advisory Committee
• USDA
  soybean crush, DDGS production, corn for ethanol, 3pm
• Ivory
  Coast cocoa arrivals
• HOLIDAY:
  U.K, New Zealand, Thailand, Russia, Japan, China, Canada, Australia

Tuesday,
Jan. 4:

• EU
  weekly grain, oilseed import and export data
• Australia
  Commodity Index
• Purdue
  Agriculture Sentiment
• HOLIDAY:
  New Zealand, Russia

Wednesday,
Jan. 5:

• EIA
  weekly U.S. ethanol inventories, production
• Malaysia’s
  Jan. 1-5 palm oil exports
• HOLIDAY:
  Russia

Thursday,
Jan. 6:

• FAO
  World Food Price Index
• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Port
  of Rouen data on French grain exports
• HOLIDAY:
  Russia

Friday,
Jan. 7:

• ICE
  Futures Europe weekly commitments of traders report (6:30pm London)
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm
• HOLIDAY:
  Russia

Source:
Bloomberg and FI

 

 

 

 

 

Macros

 

Corn

·        
CBOT corn is higher on South American weather concerns and higher energy markets. News was light with no notable global export developments announced over the weekend.  

·        
Cold US temperatures over the weekend expected to last beyond this week is supporting corn and soybean meal feed demand.

·        
Argentina extended its export suspension for some beef cuts until the end of 2023.

·        
Bulgaria culled 39,000 chickens after a bird flu outbreak was reported in the southern village of Krivo Pole.

·        
Reported on Friday – EIA’s monthly ethanol production for October came in at 32.165 million barrels, slightly below our expectations. We will leave our corn for ethanol use unchanged at 5.325 billion bushels, 75 million above
USDA and compares to 5.028 billion year earlier. 

 

Energy
prices rose more than other commodities in 2021

https://www.eia.gov/todayinenergy/detail.php?id=50718&src=email

 

 

 

Export
developments.

·        
None reported

 

Soybeans

·        
Higher trade in US soybean complex led by soybeans over South American weather concerns. NASS is due out after the close with November crush.

·        
The March crush spread is trading at $163 per bushel and close to its contract high.

·        
Deliveries in soybean beans were a little heavier than expected at 517 contracts with registrations up 329. Oil deliveries were only 35 contracts.

·        
Egypt said they have enough vegetable oil reserves for 6.4 months, largest amount in years.

·        
China’s Heilongjiang Province will increase its soybean planting area by 10 million mu (about 666,667 hectares) in 2022.

·        
China was on holiday, returning Tuesday.

·        
Malaysian palm futures rallied 160 ringgit to 4,857, highest since November 18, but the intraday high at one point hit 4,888, highest level since October 21. Cash CPO was up $35/ton to $1,217.50. Malaysian palm oil futures were
up nearly 31 percent in 2021. 

·        
Rotterdam soybean oil for the Feb-Apr position was 15 euros higher and Rotterdam rapeseed oil 35 higher. SA soybean meal when imported into Rotterdam was running mostly 1-3 euros higher in the nearby positions. 

·        
Offshore values are leading SBO 105 points higher and meal $1.30 higher. Global export developments were absent over the weekend. Jordan and Iraq are in for wheat early this week.

·        
Reported on Friday – EIA’s October biofuel feedstock report showed soybean oil use better than expected at 832 million pounds, above 756 million previous month and above 723 million for October 2020. We are standing at 11 billion
pounds for biofuel feedstock use, up from our working 8.639 billion for 2020/21 (USDA currently 8.850).  We look for USDA to make a revision to 2020-21 biofuel feedstock use.

 

Export
Developments

·        
The CCC seeks 12,000 tons of soybean oil on Jan 5 for Feb 5-15 delivery for the Dominican Republic.

 

 

Wheat

·        
US wheat is higher led by higher protein wheat. 

·        
The US southern Great Plains will see limited precipitation and cold temperatures this week. The January outlook calls for below normal precipitation for the southern Great Plains.

·        
Jordan and Iraq are in for wheat early this week.

·        
EU wheat basis the March position was 1.25 lower at 277.25 euros a ton. In 2021 it was up 30 percent.

·        
China plans to sell 50,000 tons of wheat from state reserves on January 5 to flour millers. The sold an estimated 891,938 tons of wheat from reserves in October.

 

Export
Developments.

·        
Jordan’s state grain buyer seeks 120,000 tons of milling wheat, optional origins, on Jan. 5, for shipment in 2022 between July 1-15, July 16-31, Aug. 1-15 and Aug. 16-31.

·        
Iraq seeks 50,000 tons of wheat on January 3 from the US, Canada and Australia.

 

Rice/Other

·        
Egypt said they have enough sugar reserves for 3 months.

·        
Results awaited: Bangladesh
seeks 50,000 tons of non-basmati parboiled rice for delivery 50 days from contract award and letter of credit opening.