FI Morning Grain Comments 02/14/22

PDF attached

 

Good
morning. 

 

No
USDA 24-hour announcements.

 

CBOT
agriculture futures saw a wide two-sided trade overnight with most markets weaker led by soybeans. Some think it’s technical selling. The USD is up about 19 points (near two-week high) and WTI crude oil down 74 cents. US equities turned mostly higher. After
a strong start in the agriculture markets Sunday night, it appears the funds are taking longs off the table. Ukraine/Russian tensions were supporting wheat. Latest update we know of is that Ukraine is asking Russia for a meeting.  The fact that Russia has
opened talks over the weekend is leading some to think there could be a solution to this issue.

 

 

 

 

 

 

Weather

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR February 14, 2022

• Today’s
  market weather may be contributing to some bearishness by 1) increasing rainfall across Argentina during the second week of the outlook and by 2) reducing rain in northern Brazil during that week as well. 
  
• Now,
  the GFS model is too wet today, but World Weather, Inc. does expected the last days of February and early March to present a little more precipitation in Argentina to end the current bout of dryness that has put more pressure on Argentina production in central
  and eastern parts of the nation as well as the far north.
• Confidence
  is also rising that less rain will impact areas from Minas Gerais to Mato Grosso next week.
  
• In
  North America, this week’s storm system has been pushed southward and may be smaller in size than that advertised Friday; however, the system will provide abundant rain near and south of the Ohio River and into the Delta and mid-south region Wednesday and
  Thursday with a band of snow coming out of the southern Plains into the lower eastern Midwest.
  
• Another
  storm system next week will bring another shot of energy to the northern Plains and Midwest, but it, too, is a questionable event as to how strong or weak it will be and the exact path it will take.
  
• Confidence
  is high, though, that neither storm will produce a huge amount of moisture in the high Plains region of the west-central or southwestern Plains; including West Texas.
  
• In
  the rest of the world, little change has occurred since Friday.
• North
  Africa is still advertised to be dry in Morocco and northwestern Algeria with restricted rain in Spain as well.
  
• Eastern
  Europe and the western CIS will continue wet with frequent snow and rain.
• Southern
  China will remain wet
• India
  will be relatively dry biased along
• Eastern
  Australia will also be dry biased this week.
• Eastern
  Australia may experience some needed rain next week and that would be good for late season unirrigated crops in Queensland.
  
• South
  Africa will trend wetter this week
• More
  rain will impact Indonesia and Malaysia.
• West-central
  Africa will get some showers near the coast, but key coffee and cocoa areas will rarely get rain. 

Source:
World Weather Inc.

 

 

Source:
World Weather Inc.

 

 

Bloomberg
Ag Calendar

Monday,
Feb. 14:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• New
  Zealand Food Prices
• Ivory
  Coast cocoa arrivals

Tuesday,
Feb. 15:

• EU
  weekly grain, oilseed import and export data
• Malaysia’s
  Feb. 1-15 palm oil exports
• Malaysia
  crude palm oil export tax for March (tentative)
• New
  Zealand global dairy trade auction

Wednesday,
Feb. 16:

• EIA
  weekly U.S. ethanol inventories, production
• FranceAgriMer
  report; monthly grains outlook
• HOLIDAY:
  Thailand

Thursday,
Feb. 17:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• International
  Grains Council monthly report

Friday,
Feb. 18:

• 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
• FranceAgriMer
  weekly crop condition report

Source:
Bloomberg and FI

 

 

 

 

 

CFTC
Commitment of Traders report

Traditional
funds trimmed their net long position as of February 8 for corn, oil, and all three wheat markets while building onto their net long positions for soybeans and meal.  But the net long position for corn was 26,600 contracts less than expected. The funds position
for soybeans, meal and Chicago wheat were also less long than estimated.  We see little implication from this report on futures prices for corn and other products as prices were very volatile over the last three business days.  Index funds were good sellers
in corn of 35,700 contracts. There were no record positions for the notable positions we monitor.

 

 

 

 

 

 

Macros

US
Rate Futures Imply 66% Chance Of Fed Raising Rates By 50 Bps At March Meeting After Bullard – Fedwatch

 

 

Corn

·        
March corn is lower following weaker soybeans and lack of fresh news.

·        
WTI crude oil is lower on easing Ukraine//Russia tensions and USD higher. 

·        
On Friday CFTC reported the net long position as of last Tuesday less than what the trade expected.

·        
US poultry producers have tightened up safety measures after a bird flu case was detected last week at a turkey farm in Indiana.

·        
The DTN average price for domestic distillers dried grains (DDG) from 34 locations reporting for the week ended Feb. 10 was $234 per ton, up $6 per ton versus one week ago. (DTN)

 

Export
developments.

·        
None reported

 

 

Soybeans

·        
The US soybean complex is lower on technical selling. Both Brazil and Argentina saw rain over the weekend, providing relief for Argentina and southern Brazil but delaying soybean harvesting in the central & northern Brazil. 

·        
Soybean oil is gaining on meal.

·        
AgRural reported Brazil harvested 24% of the soybean crop through the end of last week, against 16% a week earlier and 9% in the same period last year. AgRural estimates soybean production at 128.5 million tons and corn production
at 110.9 million tons this season.

·        
Safras & Mercado estimated Brazil soybean harvest progress at 25.6%, up from the delayed 7.1% at this time last year and compares to 16.2% average. Mato Grosso was 60% complete.  Last week they pegged Brazil’s soybean crop at
127.17 million tons, down from 132.3 million tons previously.

·        
Paraguay’s AgMin estimated the soybean crop at around 5 million tons, lowest level in the last decade.

·        
Chinese Vice Premier Hu Chunhua called on soybean production provinces to expand soybean production at a meeting held in Shandong province, Xinhua on Sunday. China aims to produce 23 million tons of soybeans the end-2025.

·        
China’s Inner Mongolia region (second-largest soybean growing area) will expand soybean plantings by 287,000 hectares in 2022. Planting acreage of soybeans in Inner Mongolia in 2021 was about 1.15 million hectares, 13.7% of the
country’s total planting acreage of 8.4 million hectares.

·        
India lowered the tax on crude palm oil imports to 5% from 7.5% until Sept. 30. This widened the duty gap between CPO and refined palm oil (gap 11 points) and will likely increase CPO imports and slow imports of refined oil. 

·        
India January imports of palm oil fell 29% to 553,084 tons, compared with 780,741 tons a year earlier and 565,943 tons in December 2021.  SEA also reported soybean oil imports were up 341% from a year ago to 391,158 tons last
month, while sunflower oil imports jumped 50% to 307,684 tons.  In January crude palm oil (CPO) was being offered at around $1,510 a ton, including cost, insurance and freight (CIF), in India, compared with $1,506 for crude soybean oil and $1,475 for crude
sunflower oil.  A year ago, CPO was trading at a $74 per-ton discount to soyoil and $272 discount to sunflower oil. (Reuters)

·        
We think the 30,000 tons of soybean oil announced on Friday to unknown was likely India.

·        
Palm oil closed at a record high 5,6667 MYR, up 94 from the previous session.

·        
China futures were lower for soybeans and meal while palm and SBO were higher.

·        
Offshore values this morning was leading CBOT soybean oil about 17 points lower (63 higher for the week to date) and meal $1.70 short ton higher ($6.10 higher for the week). 

·        
Rotterdam meal values were about $5-$15/ton higher from this time yesterday morning.

·        
We see a record January NOPA crush when updated Tuesday and are at the high side of a range of expectations.  There were a couple plants that saw unexpected downtime in the WCB, but January was running full out for many crushing
plants taking advantage of good margins.  Soybean oil stocks are seen by FI declining from December. Recall SBO stocks at the end of December were unusually high, especially when you compare them to the NASS crush report that came out at the beginning of the
month.

·        
The Reuters trade guess for NOPA January crush came in at 186.7 million bushels, above 186.4 million for December and up from 184.7 year earlier. The range was 183.7-188.5 million. Many analysts expect a build in soybean oil stocks
to 2.062 billion pounds from 2.031 billion pounds at the end of December and compares to 1.799 billion year earlier.  If realized US soybean oil stocks would be up seven consecutive months.  End of January NOPA US soybean oil stocks ranged from 2.000 to 2.150
billion pounds.  We are at 2.007 billion pounds. 

 

 

 

Export
Developments

• Egypt’s
  GASC seeks vegetable oils on February 16 for April 5-25 arrival.  They seek a minimum 10,000 tons of sunflower oil and 30,000 tons of sunflower oil. They are also seeking local vegetable oils of at least 3,000 tons of soyoil and 1,000 tons of sunflower oil
  for arrival April 1-20.

 

Wheat

·        
US wheat futures turned lower after a higher trade for much of the overnight session on easing concerns over the Ukraine/Russia situation. Fund selling in soybeans may have spilled over into the grain markets. Egypt over the weekend
noted the Ukraine/Russian situation raised market uncertainty. 

·        
Earlier: (Bloomberg) — Wheat futures fell as much as 1.7% in Chicago, reversing earlier gains of 2%, on signals Russia may extend efforts to reach a diplomatic solution to surging tensions with the West.

·        
China sold 520,183 tons of wheat from auction on February 9, nearly all what was offered, at an average price of 2,590 yuan per ton ($407.22).

·        
EU wheat futures are trading up 1.50 euros at 270.25 euros per ton at the time this was written.

·        
This week a major US winter storm is expected during mid to late week that could produce snow and rain across the Midwest and eastern hard red winter wheat areas.

·        
Turkish government have reduced the VAT on basic food products from 8% to 1%.

 

Export
Developments.

·        
Taiwan seeks 54,920 tons of US wheat on February 18, for April 4-18 shipment if off the PNW.

·        
The Philippines seek 45,000 tons of feed wheat on Tuesday. Shipment is sought in June and July.

·        
Results awaited: The Philippines seeks feed wheat from Australia and soybean meal from Argentina on February 11. Amounts are unknown.

·        
Bangladesh saw offers for 50,000 tons of wheat and lowest was $390.92/ton CIF.

·        
Results awaited: Syria seeks 200,000 tons of wheat on February 14, open for 15 days.

·        
Japan seeks 80,000 tons of feed wheat and 100,000 tons of barley on Feb 16 for arrival by July 28.

·        
Jordan seeks 120,000 tons of feed barley on February 22 for late July through FH September shipment. 

 

Rice/Other

·        
None reported