FI Morning Grain Comments 03/07/22

PDF attached

 

Good
morning.

 

Private
exporters reported sales of 132,000 metric tons of soybeans for delivery to China. Of the total, 66,000 metric tons is for delivery during the 2021/2022 marketing year and 66,000 metric tons is for delivery during the 2022/2023 marketing year.

 

Day
12. WTI crude oil is near session lows, although higher. Equities are lower & gold higher. CBOT agriculture markets are higher, USD up about 21 points and euro lower-following last week’s FX trend.  China’s AgMin warned their winter wheat conditions could
end up “worst in history,” in a note published by Reuters.  A survey was conducted, and some China winter wheat plots are yielding 20 percent below average.  China aims to expand food security policies to ensure they have a bumper 2022 summer grain crop, so
one can’t jump to conclusion that they will immediately be seeking feedgrains for animal feed use.  CBOT corn futures are higher following wheat futures.  News is light for corn. CBOT soybeans & soybean meal are now mixed, and soybean oil higher. 14-year highs
were established in wheat. Tunisia seeks 125,000 tons of soft wheat and 100,000 tons of barley, optional origin, on Tuesday. Shipment is for March through May.  Taiwan seeks 50,000 tons of US PNW milling wheat on March 11 for April 23-May 7 shipment.  Algeria
seeks 50,000 tons of soft milling wheat, optional origin, on March 8, opening until the 9th, for May shipment. 
85
cent Chicago and KC wheat limit for Monday https://www.cmegroup.com/trading/price-limits.html

 

Weather

 

World
Weather Inc.

WORLD
WEATHER HIGHLIGHTS FOR MARCH 7, 2022

• North
  Africa and Spain have reported some bouts of rain since late last week improving topsoil moisture in many winter and spring crop areas.
• More
  moisture is needed and more is expected with the next greatest rain coming late this weekend into early next week. 
  
• Central
  and northeastern Europe will dry down for a while, but cool temperatures will prevent any area from becoming too dry.
  
• Cooling
  in Russia will bring in some bitter cold temperatures during mid- to late-week this week, but snow cover should protect most winter crops.
  
• China
  is warming up and a little rapeseed and southern wheat development is possible.
  
• Soil
  moisture is favorable for crop development as well .
• India’s
  weather will be relatively tranquil for a while
• South
  Africa will see frequent bouts of rain over the next week to ten days.
• Eastern
  Australia rainfall will be greatest along the coast while only light precipitation occurs inland leaving cotton fiber quality unaffected.
• Ivory
  Coast, Ghana and other west-central Africa coffee and cocoa areas will continue to receive periodic rainfall over the next ten days
  
• Indonesia
  and Malaysia get frequent rain of significance that may lead to some local flooding.
  
• The
  same is true for the Philippines.
• South
  America weather will remain very good for late full season and Safrinha crops in Argentina and Brazil.
  
• In
  the U.S., hard red winter wheat areas will get some rain and snow, but not enough moisture to change drought status.
  
• The
  southeastern U.S. will get some needed moisture later this week
• The
  Delta will remain moist
• Parts
  of the lower eastern Midwest and Tennessee River Basin may continue too wet for a while
• Minimal
  precipitation is expected in West and South Texas and California – for at least a week. 

Source:
World Weather Inc.

 

Bloomberg
Ag Calendar

Monday,
March 7:

• China’s
  1st batch of Jan.-Feb. trade data, incl. soybean, edible oil, rubber and meat & offal imports
• USDA
  export inspections – corn, soybeans, wheat, 11am
• Bursa
  Malaysia Palm Oil Conference, day 1
• Vietnam’s
  customs to publish Feb. coffee, rice and rubber export data
• Ivory
  Coast cocoa arrivals
• HOLIDAY:
  Russia

Tuesday,
March 8:

• EU
  weekly grain, oilseed import and export data
• U.S.
  National Coffee Association Virtual Convention, day 1
• Bursa
  Malaysia Palm Oil Conference, day 2
• HOLIDAY:
  Russia, Ukraine

Wednesday,
March 9:

• USDA’s
  monthly World Agricultural Supply and Demand (WASDE) report, 12pm
• China’s
  agriculture ministry (CASDE) releases monthly report on supply and demand for corn and soybeans
• U.S.
  National Coffee Association Virtual Convention, day 2
• FranceAgriMer
  monthly French grains outlook
• EIA
  weekly U.S. ethanol inventories, production, 11am
• Bursa
  Malaysia Palm Oil Conference, day 3
• HOLIDAY:
  South Korea

Thursday,
March 10:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Malaysian
  Palm Oil Board’s monthly data for output, exports and stockpiles
• U.S.
  National Coffee Association Virtual Convention, day 3
• Malaysia’s
  March 1-10 palm oil export data
• Brazil’s
  Unica may release cane crush and sugar output data (tentative)

Friday,
March 11:

• 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 update on crop conditions
• New
  Zealand Food Prices

Source:
Bloomberg and FI

 

 

 

 

 

 

 

 

 

 

CFTC
Commitment of Traders

No
major records stand out this week. Note the positions below are from last Tuesday and don’t reflect the ongoing fireworks we saw over the past three trading days. However, as of March 1, the net fund positions were much less long than expected for all five
commodities we monitor on a daily basis, especially for Chicago wheat and soybean oil. 

 

 

 

 

Estimates
Friday afternoon

 

 

Macros

Livesquawk
– Shell Is Limiting Supplies Of Heating Oil In Germany

Some
analysts are looking for a sharp increase in energy prices. 

 

 

Corn

·        
CBOT corn futures
are higher following wheat futures.  Spreads are interesting as funds are focused on the May futures contract.  News is light.

·        
China aims to expand summer grain plantings to ensure food security. If successful, we look for grain imports to decline from 2021.  Soybean imports for the Jan-Feb period exceeded expectations. 

·        
China looks to buy 38,000 tons of frozen pork for state reserves on March 10.  They bought pork last week, making the March 10 tender second for the crop year. 

 

Export
developments.

• None
  reported

 

U
of I: International Benchmarks for Corn Production

Langemeier,
M. and L. Zhou. “International Benchmarks for Corn Production.” farmdoc daily (12):29, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, March 4, 2022.

https://farmdocdaily.illinois.edu/2022/03/international-benchmarks-for-corn-production-6.html

 

Soybeans

·        
CBOT
soybeans, meal and soybean oil are higher following strength in wheat, energy prices, and concerns grain supply availability is shrinking.  This morning we did not see offers for Argentina soybean meal, but Brazil offers were sharply higher, when imported
into northern Europe. Rapeseed oil and soybean oil cash prices for Rotterdam were up from Friday. Palm oil rallied after a sharply lower trade Friday. 

·        
South American rains improved and that should limit additional downside risk for estimated 2022 Argentina and southern Brazil soybean crop estimates going forward.  Latest estimates for Brazil and Argentina soybean production
suggest USDA is 6+ million tons too high, combined, and we could see a 50 million bushel cut to US ending stocks when updated this week (higher US exports).  This could prompt a reversal in the SX2/CX2 ratio, currently favoring corn over soybean plantings
for the Northern Hemisphere. 

·        
AgRural – 122.8 MMT Brazil soybeans, down from 128.5 previous.

·        
China: January – February soybean imports reached 13.94 million tons, above expectations and 4.1% above year earlier.  Trade flows suggested 12.2 million tons, suggesting non-commercials were active in buying for domestic use. 
March and April imports are expected to decline from the previous year. 

·        
May Malaysian palm oil settled 350 ringgit higher to 6,626 ringgit (recall Friday it was down sharply). Cash palm was up $45/ton to $1,685/ton, after crashing more than $100 per ton Friday.

·        
From this time Friday morning Rotterdam meal was unchanged (no Argentina offers) to 31 euros higher and vegetable oils 25-80 euros higher.

·        
China May soybeans were down 0.4%, meal up 2.7%, soybean oil down 0.5% and palm 1.1% lower. 

·        
Offshore values are leading SBO 341 points higher and meal $6.30 short ton higher.

 

 

Export
Developments

• South
  Korea’s NOFI passed on 60,000 tons of soybean meal for June 30 arrival due to high prices. Lowest offer was a high $640/ton c&f, up from $548.50/ton paid by NOFI late January. 
  
• Private
  exporters reported sales of 132,000 metric tons of soybeans for delivery to China. Of the total, 66,000 metric tons is for delivery during the 2021/2022 marketing year and 66,000 metric tons is for delivery during the 2022/2023 marketing year.

 

Wheat

·        
We caution a hard fall in US wheat futures prices when the market settles.  14-year highs in wheat. CME expanded the limit for May Chicago & KC to 85 cents. Tuesday it expands to 1.30/bu if limit(s) hold.  Attached is the CME
announcement. 

·        
China warned that domestic winter wheat conditions could be “worst in history” but no figures were provided.  Some plots could see a 20 percent loss. A bumper summer grain crop could offset such losses that would be used for feed
use. 

·        
There was rumor Mexico bought French wheat.  Some question US completeness over French wheat but a reminder import interest has picked up.  Taiwan seeks US PNW wheat. 

·        
Several countries announced they have enough grain reserves for domestic consumption.

·        
India was in a good place to export wheat after the surge in global wheat prices and three consecutive years of a bumper crop.  They may export more than 7 million tons, a large amount to help alleviate the Black Sea supply shortage. 
They have already supplied over 6.6 million tons for export. 

·        
May Paris wheat futures were up 29 euros at 400.75 euros, a record high, at the time this was written.  High was 424 euros!

·        
Paris nearby second month (monthly) rolling contract below…

 

 

·        
Algeria said they have enough wheat reserves to last until end of this year. 

·        
Romania said they have enough grain reserves to “weather” the Ukraine invasion. They will be exporting wheat in the meantime. 

·        
China last week, on March 2, sold 526,254 tons of wheat from state reserves at an average price of 3,054 yuan per ton ($483.32/ton), well above 2,753 average price recoded February 23. 

·        
Sudan received 20,000 tons of wheat (aid) on Sunday from Russia.

 

Export
Developments.

·        
Tunisia seeks 125,000 tons of soft wheat and 100,000 tons of barley, optional origin, on Tuesday. Shipment is for March through May. 

·        
Taiwan seeks 50,000 tons of US PNW milling wheat on March 11 for April 23-May 7 shipment. 

·        
Algeria seeks 50,000 tons of soft milling wheat, optional origin, on March 8, opening until the 9^th, for May shipment. 

·        
Iraq seeks two million tons of wheat to provide a strategic reserve.  Iraq looked for offers from international companies over the weekend.

·        
Jordan’s state grains buyer seeks 120,000 tons of milling wheat on March 9.  Shipment is between LH May and LH July.

·        
Jordan’s state grains buyer seeks 120,000 tons of feed barley on March 15.  Shipment is between July 16-31, Aug. 1-15, Aug. 16-31 and Sept. 1-15.

·        
Bangladesh seeks 50,000 tons of milling wheat on March 16 for shipment within 40 days of contract signing. 

 

Rice/Other

·        
(Bloomberg) — U.S. 2021-22 cotton ending stocks seen at 3.37m bales, 127,000 bales below USDA’s previous est., according to the avg in a Bloomberg survey of seven analysts.

               
-Estimates range from 3.1m to 3.65m bales

               
-Global ending stocks seen unchanged at 84.31m bales