FI Morning Grain Comments 01/12/22

PDF attached

 

Good
morning. 

 

US
CPI data confirmed rising inflation.

USD
one min. chart

 

Positing
is ags is seen this morning. USDA is set to release their January reports at 11 am CT.  We will be watching South American soybean and corn production, December US grain stocks, and US carryout (s), followed by winter wheat seedings, in that order. Post reports,
look for the trade to shift their focus back to weather developments, SA production prospects, Q1 Chinese import demand, followed by global trade flows.

 

USD
was about 28 points lower and WTI crude oil up 86 cents. US equities are leaning towards a higher open. CBOT soybeans and meal are lower while soybean oil is higher. WTI crude and Heating Oil are supporting soybean oil. Corn was lower and wheat lower for Chicago
and KC. Before receiving much needed rain and temperature relief late this week, hot and dry conditions will prevail in southern Brazil and Argentina. Malaysian palm futures traded lower by 29 ringgit to 5,040, off a 10-week high, and snaps a 3-day rally.
Offshore values are leading CBOT soybean oil 75 points lower and meal $1.60 higher. In its monthly CASDE update, China lowered 2021-22 corn consumption by 3 million tons to 287.7 million tons, above 282.16 million tons for the 2020-21 season. Industrial was
down 2 million tons to 80MMT and feed was cut 1 million to 286 million. China noted weak hog margins curbing demand.  China left its 2021-22 soybean balance unchanged with imports standing at 102 million tons, up from 99.78 million in 2020-21. A Bloomberg
poll looks for weekly US ethanol production to be down 7,000 barrels to 1.041 million (1033-1060 range) from the previous week and stocks up 207,000 barrels to 21.566 million.

 

 

 

Weather

 

Argentina
rains – 6 days out…

 

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR JANUARY 12, 2022

• Temperatures
  in Argentina Tuesday afternoon were 100 to 110 (38-43C) with most readings of 100 to 106 Fahrenheit (41C). 
  
• No
  rain was noted and very little moisture was in the soil.
• Crop
  stress was serious in most of the nation.
• No
  change will occur in Argentina through Saturday morning….Daily high temperatures will continue 100 to 110 (38-43C), but extremes of 110 to 115 (43-46C) are expected, as well. Santiago del Estero will be among the hottest areas.
  
• Rain
  is expected to evolve late Saturday in Argentina and it will “eventually” impact much of the nation during the following seven days.
  
• Central
  and northeastern parts of the nation will likely get the greatest rainfall and sufficient amounts will occur in those areas to greatly improve soil moisture.
  
• Rain
  elsewhere will be lighter, but still beneficial with a need for follow up moisture.
  
• Brazil
  weather is looking very good for the next two weeks with improving crop weather in the north where it has been too wet and alternating periods of rain and sunshine will occur elsewhere.
  
• Paraguay
  and immediate neighboring areas from northern Rio Grande do Sul to Mato Grosso do Sul, Brazil  will probably experience below average precipitation over the next two weeks.
  
• U.S.
  hard red winter wheat areas and areas northwest to Montana and southwestern parts of Canada’s Prairies will remain drier biased as will California and the southwestern U.S. while a few weather systems impact the eastern half of the nation.
  
• Temperatures
  will trend cooler in the east next week, but damaging cold is not expected.
  
• No
  threatening cold is expected in Europe, Russia or China and a boost in snow cover will impact eastern Europe and Russia as some cooling occurs next week.
  
• Northwest
  Africa will remain too dry
• Queensland,
  Australia will have need for greater rain over the next two weeks.
• Crops
  in New South Wales, Australia will be favorable as they will be in South Africa, Indonesia and Malaysia. 
• India
  rainfall over the next few days in the southeast will be great for pulses, rice, sugarcane and other winter crops while drying occurs elsewhere

Source:
World Weather, inc.

 

Bloomberg
Ag Calendar

Wednesday,
Jan. 12:

• China
  farm ministry’s CASDE outlook report
• USDA’s
  monthly World Agricultural Supply and Demand Estimates (WASDE) report, noon
• USDA’s
  NASS 2021 summary of crop acreages and yields, noon
• USDA’s
  quarterly stockpiles data for commodities, including wheat, barley, corn, soybeans and sorghum, noon
• EIA
  weekly U.S. ethanol inventories, production
• USDA’s
  Farm Service Agency issues 2021 crop size data gathered from producers, 1pm
• New
  Zealand Commodity Price

Thursday,
Jan. 13:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Suedzucker
  quarterly earnings
• Agrana
  nine- month earnings
• International
  Grains Council monthly report
• Port
  of Rouen data on French grain exports

Friday,
Jan. 14:

• China’s
  December trade data
• ICE
  Futures Europe weekly commitments of traders report, ~1:30pm
• CFTC
  commitments of traders weekly report on positions for various U.S. futures and options, 3:30pm

Source:
Bloomberg and FI

 

 

 

 

 

 

 

 

Bloomberg
trade estimates for the January USDA crop/stocks reports.

 

 

 

 

 

Macros

US
CPI (M/M) Dec: 0.5% (est 0.4%; prev 0.8%)

–
CPI (Y/Y) Dec: 7.0% (est 7.0%; prev 6.8%)

–
US Core CPI (M/M) Dec: 0.6% (est 0.5%; prev 0.8%)

–
Core CPI (Y/Y) Dec: 5.5% (est 0.5%; prev 0.8%)

US
Avg. Real Weekly Earnings (Y/Y) Dec: -2.3% (prev -1.9%)

–
Real Avg. Hourly Earnings (Y/Y) Dec: -2.4% (prev -1.9%)

 

US
MBA Mortgage Applications Jan 7 1.4% (prev -5.6%)

– 
30-Year Mortgage Rate Jan 7 3.52% (prev 3.33%)

 

 

Corn

·        
CBOT corn is lower led by the front months in a pre-USDA report trade. US CPI confirmed rising inflation. “U.S. inflation hit 7%, highest in 40 years. Food at home index rose 6.5 percent over the last 12 months and this compares
to a 1.5-percent annual increase over the last 10 years. The index for food away from home rose 6.0 percent over the last year, the largest increase since January 1982,” noted one trader.

·        
USD was 28 points lower and WTI crude up 91 cents. US equities are leaning towards a higher open.

·        
In its monthly CASDE update, China lowered 2021-22 corn consumption by 3 million tons to 287.7 million tons, above 282.16 million tons for the 2020-21 season. Industrial was down 2 million tons to 80MMT and feed was cut 1 million
to 286 million. China noted weak hog margins curbing demand.  China left its 2021-22 soybean balance unchanged with imports standing at 102 million tons, up from 99.78 million in 2020-21.

·        
A Bloomberg poll looks for weekly US ethanol production to be down 7,000 barrels to 1.041 million (1033-1060 range) from the previous week and stocks up 207,000 barrels to 21.566 million.

 

EIA
forecasts crude oil prices will fall in 2022 and 2023

https://www.eia.gov/todayinenergy/detail.php?id=50858&src=email

 

Export
developments.

·        
None reported

 

 

Soybeans

·        
CBOT soybeans and meal are lower while soybean oil is higher. WTI crude and Heating Oil are supporting soybean oil. Don’t discount another two-sided trade in soybeans. Before receiving much needed rain and temperature relief late
this week, hot and dry conditions will prevail in southern Brazil and Argentina. Some locations in Argentina saw 100+ degrees yesterday.

·        
USDA December is at 49.5 million tons for Argentina soybean production. Several private estimates are between 42 and 45 million tons, bias 42. Argentina corn is around 51-54 million tons (USDA is at 54.50 million. 

·        
For the USDA reports, we will be watching SA production, December US grain stocks, and US carryout (s), followed by winter wheat seedings, in that order. US soybeans exports could be lowered more than 25 million bushels.

·        
Post reports, look for the trade to shift their focus back to weather developments, SA production prospects, Q1 Chinese import demand, followed by global trade flows.

·        
China left its 2021-22 soybean balance unchanged with imports standing at 102 million tons, up from 99.78 million in 2020-21.

·        
Abiove estimated the Brazil soybean production at 140 million tons, down 4.8 million form their previous estimate, and lowered export by 2.3 million tons to 91.1 million. They left crush unchanged at 48 million tons and sees the
carryout at 3.9 million tons.  USDA December is at 144MMT production, 47.7MMT crush and 94MMT exports, but on an October-September crop year basis.

·        
India palm oil imports during December 2021 were 565,943 tons, down 27% from a year earlier (770,392 tons December 2020). This comes as India imported 392,471 tons of soybean oil, up 22% from year ago.  Sunflower imports were
258,449 tons, up 10%.  India generally buys most of its palm oil from Indonesia and Malaysia, soybean oil from Argentina and Brazil, and sunflower oil from Russia and Ukraine.

·        
Winnipeg-based Mercantile Consulting Venture Inc. estimated Canada canola production in 2022 at 21 million tons, about 67 percent higher than 2021 of 12.6 million tons. 

·        
Argentina continues to have shipping problems along the Parana River with low water levels.  They cut cargoes by about 30 percent leaving the Rosario hub. 

·        
Malaysian palm futures traded lower by 29 ringgit to 5,040, off a 10-week high, and snaps a 3-day rally.

·        
Malaysian cash CPO was down $2.50/ton to $1,260.

·        
China soybean futures traded 0.6% lower, meal 0.4% lower, SBO up 0.1% and palm 0.8% higher. 

·        
China soybean cash crush values on our analysis were running at 186 cents/bushel (183 previous) versus 183 at the end of last week and 198 year ago. 

·        
Rotterdam soybean oil for the Feb-Apr position was about 13 euros higher and Rotterdam rapeseed oil 10 euros lower from this time previous session. SA soybean meal when imported into Rotterdam was running mostly 1-2 euros lower
(Brazil back months 2 euros higher).

·        
Offshore values are leading CBOT soybean oil 75 points lower and meal $1.60 higher.

 

Export
Developments

·        
The USDA seeks 7,540 tons of vegetable oil in 4-liter cans for Feb 16-Mar 15 shipment on January 19.

 

Wheat

·        
US wheat is lower in Chicago and KC, higher in MN front months. Chicago and KC are trading lower on positioning after closing higher yesterday.  News is light.

·        
EU wheat basis the March position was 2.50 lower at 274.25 eros a ton. 

·        
FranceAgriMer lowered its forecast of French soft wheat exports outside the European Union for the 2021-22 season to 9.0 million tons from 9.2 million estimated in December. French soft wheat exports within the 27-member bloc
was estimated at 7.7 million tons from 7.8 million. French soft wheat stocks at the end of the 2021-22 was seen at 3.6 million tons from 3.5 million previous.

·        
Ukraine plans to limit trade margins on a number of key food products in effort to slow inflation. December Ukraine inflation was up 13.3% from the same period year earlier. 

·        
The Russian government increased the export duty on wheat as of today, lasting until January 18, to $98.20 per ton from $94.90 per ton the previous period. The export duty on barley has risen to $86.20 per ton from $83.50 per
ton, and the export duty on corn has decreased to $67.70 per ton from $69 per ton.

 

Export Developments.

·        
Results awaited: China plans to sell 500,000 tons of wheat from state reserves on January 12 to flour millers. 

·        
Results awaited: Iran’s GTC seeks at least 60,000 tons of milling wheat for Feb-Mar shipment.

·        
Japan in a SBS imported tender seeks 80,000 tons of feed wheat and 100,000 tons of feed barley on January 13 for arrival in Japan by March 17.

·        
Algeria seeks milling wheat on January 13 for FH March shipment.

·        
Japan seeks 107,555 tons of milling wheat this week.

·        
Iraq extended their deadline for 50,000 tons of wheat, set to now close on January 13 instead of the 3^rd, from the US, Canada and Australia.

·        
Jordan seeks 120,000 tons of wheat on January 18.  Possible shipment combinations are in 2022 between July 1-15, July 16-31, Aug. 1-15 and Aug. 16-31. 

·        
Turkey seeks 335,000 tons of milling wheat on January 18. 

 

Rice/Other

·        
(Bloomberg) — U.S. 2021-22 cotton ending stocks seen as 3.46m bales, slightly above USDA’s previous est., according to the avg in a Bloomberg survey of seven analysts.  Estimates range from 3.0m to 3.85m bales.  Global ending
stocks seen 125,000 bales lower at 85.61m bales.

·        
Bangladesh seeks 50,000 tons of rice on January 16.