FI Morning Grain Comments 12/02/22

PDF attached

 

Good
morning.

 

US
Change In Nonfarm Payrolls Nov: 263K (est 200K; prevR 284K)

US
Unemployment Rate Nov: 3.7% (est 3.7%; prev 3.7%)

 

US
equities are lower, USD down about 32 points and WTI crude oil 38 cents. Inflation concerns persist. Soybean oil extended their losses day after the EPA officially released their 2023-2025 US mandates. Two major agriculture processing companies already warned
the proposed law could bring slower biodiesel growth. Soybean complex was mixed after the day session open. The grains were lower on end of week positioning and slowing US exports. The US averted a railroad strike. President Biden will deliver remarks and
sign the Railroad Bill at 10:15 am ET. There were no major export develops overnight.

 

 

Weather

The
US Delta weather outlook calls for rains returning to the central and northeastern area through Tuesday. Forecast is unchanged for the Midwest and Great Plains. The US Great Plains will see light showers for southern OK & northern TX Sunday and eastern OK
on Monday.  Midwest will see net drying exception southeastern areas on and off through mid-next week. Argentina will be mostly dry though Tuesday. Temperatures will remain above normal. Brazil will see rain through early next week.

 

 

World
Weather, INC.

WORLD
WEATHER HIGHLIGHTS FOR DECEMBER 2, 2022

• U.S.
  Delta and neighboring areas of the Tennessee River Basin and a small part of the lower Ohio River Basin are advertised to receive waves of rain next week that will expand the region of saturated soil
  
• The
  European models is suggesting 3.00 to 9.00 inches will fall from Monday of next week to Monday, Dec. 12
• This
  is likely overdone
• The
  GFS model suggests 1.00 to 3.00 inches and local totals to more than 5.00 inches during the same period (Monday through Dec. 12) with more rain of significance in the Dec. 12-17
• Rain
  is expected and the ground will remain excessively wet in a part of the described region, but it is still debatable over the predicted rainfall next week
  
• Improvements
  in water levels on the lower Mississippi River would result if the heavier rain falls as suggested in the next two weeks, but World Weather, Inc. looks for “some” change in the outlook that may reduce the volume of rain and its timing
• Argentina’s
  forecast today is still dry biased through the first half of next week with a strong warming trend that will bring back 90- and 100-degree high temperatures later this weekend and into next week
• Argentina
  will see weak weather systems increase across the nation in the second week of the outlook increasing rain frequency, although initial amounts will be light
• Brazil
  will continue to receive routinely occurring rainfall that will support normal crop development in much of the nation during the next two weeks
• A
  boost in rainfall is still needed in portions of Mato Grosso and neighboring areas where soil moisture is low in pockets and there has not been much rain recently
• Some
  of the increase in rainfall will occur next week with a few showers this weekend; Mato Grosso do Sul will be wetter than southern Mato Grosso
• Below
  average precipitation will continue in far southern Brazil over the next ten days, although “some’ rain is expected
• Rio
  Grande do Sul and Paraguay will continue to receive the lightest rain relative to normal
• Europe
  is still slated to be colder than usual in the North and Baltic Sea regions over the next two weeks while southern Europe is milder
• Central
  and southern Europe will experience a notable increase in rain and snowfall next week and into mid-month
• Russia’s
  coldest weather will stay to the east of its key winter wheat production areas during the next ten days
• There
  is no threat of winterkill even though eastern Ukraine and Russia’s Southern Region are largely snow free
• Southern
  India will be impacted by a tropical disturbance late next week and into the following weekend producing more heavy rainfall
• China’s
  greatest precipitation will stay near and south of the Yangtze River during the next ten days
• Winter
  crops will remain in favorable condition
• Good
  harvest weather will continue in southern Australia
• Western
  cotton and sorghum areas of Queensland, Australia and some in northern New South Wales need rain

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Friday,
Dec. 2:

• FAO
  World Food Price Index
• Canada’s
  StatCan to release wheat, canola and barley production data, 8:30am
• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various US futures and options
• FranceAgriMer
  weekly update on crop conditions

Monday,
Dec. 5:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• US
  crop harvesting for corn and cotton; winter wheat planting and condition, 4pm
• New
  Zealand commodity prices
• Malaysia’s
  Dec. 1-5 palm oil exports
• HOLIDAY:
  Thailand

Tuesday,
Dec. 6:

• EU
  weekly grain, oilseed import and export data
• Australian
  crop report & Abares agricultural commodities
• Purdue
  Agriculture Sentiment, 9:30am
• New
  Zealand global dairy trade auction

Wednesday,
Dec. 7:

• China’s
  first batch of November trade data, including soybean, edible oil, rubber and meat imports
• EIA
  weekly US ethanol inventories, production, 10:30am

Thursday,
Dec. 8:

• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Port
  of Rouen data on French grain exports
• Vietnam’s
  customs releases Nov. coffee, rice and rubber export data
• EU
  Agricultural Outlook conference, Dec. 8-9, Brussels
• Brazil’s
  Conab data on area, yield and output of corn and soybeans
• HOLIDAY:
  Argentina, Chile

Friday,
Dec. 9:

• USDA’s
  World Agricultural Supply and Demand Estimates (WASDE), 12pm
• China’s
  agriculture ministry (CASDE) releases monthly report on supply and demand for corn and soybeans
• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various US futures and options
• FranceAgriMer
  weekly update on crop conditions
• Cane
  crush and sugar production data by Brazil’s Unica (tentative)
• HOLIDAY:
  Argentina

Source:
Bloomberg and FI

 

 

 

 

Selected
Brazil commodities exports:

Commodity           
          November 2022      November 2021

CRUDE
OIL (TNS)                8,526,204             3,623,593

IRON
ORE (TNS)                 29,976,676            28,786,375

SOYBEANS
(TNS)                 2,640,907             2,587,139

CORN
(TNS)                     6,058,945             2,392,522

GREEN
COFFEE(TNS)              216,443               175,104

SUGAR
(TNS)                    4,074,709             2,662,110

BEEF
(TNS)                     148,843               81,174

POULTRY
(TNS)                  346,708               305,887

PULP
(TNS)                     1,750,948             1,430,162

 

 

StatsCan
Canadian crop production estimates came in below expectations for most crops

Canola
production increased by 32.1% nationally to 18.2 million tons in 2022. Yields increased by 37.6% to 37.7 bushels per acre, while harvested area fell 3.9% to 21.2 million acres.

 

Total
wheat production rose by 51.7% to 33.8 million tons in 2022, the highest production since 2020 and the third highest production on record, largely attributable to higher production in the Prairies. Yields (+38.2% to 49.9 bushels per acre) and harvested area
(+9.7% to 24.9 million acres) were both up from a year earlier.

 

 

 

Macros

US
Change In Nonfarm Payrolls Nov: 263K (est 200K; prevR 284K)

US
Unemployment Rate Nov: 3.7% (est 3.7%; prev 3.7%)

US
Average Hourly Earnings (M/M) Nov: 0.6% (est 0.3%; prevR 0.5%)

US
Average Hourly Earnings (Y/Y) Nov: 5.1% (est 4.6%; prevR 5.6%)

US
Change In Private Payrolls Nov: 221K (est 185K; prevR 248K)

US
Labour Force Participation Rate Nov: 62.1% (est 62.3; prev 62.2%)

US
Underemployment Rate Nov: 6.7% (prev 6.8%)

US
Average Weekly Hours All Employees Nov: 34.4 (est 34.5; prev 34.5)

US
Change In Manufacturing Payrolls Nov: 14K (est 18K; prevR 36K)

 

ECB’s
Nagel: QT Should Happen From 2023 First Quarter Onwards 

 

Canadian
Net Change In Employment Nov: 10.1K (est 10.0K; prev 108.3K)

Canadian
Unemployment Rate Nov: 5.1% (est 5.3%; prev 5.2%)

Canadian
Full Time Employment Change Nov: 50.7K (prev 119.3K)

Canadian
Part Time Employment Change Nov: -40.6K (prev -11.0K)

Canadian
Participation Rate Nov: 64.8% (est 64.9%; prev 64.9%)

 

OPEC+
Seen Heading For Oil Policy Rollover, Cut Not Ruled Out – RTRS

 

 

Corn

·        
Corn futures were
lower on end of week positioning and slowing US exports.

·        
The US passed a bill to avert the rail strike. It will be signed by President Biden this morning.

·        
USDA estimated US farm income to increase to $160.5 billion in 2022 from $141.0 billion a year earlier, an increase of $19.5 billion, and inflationary adjusted, highest since 1973. Growth in the crop sectors of corn, soybeans
and wheat. Livestock cash sales receipts were expected to jump nearly 31% to $256.0 billion.

·        
USDA reported corn for ethanol use for the month of October at a slightly better than expected 449 million bushels, above 383 million during September and below 468 million year ago. We left our 2022-23 crop-year corn for ethanol
use estimate unchanged at 5.250 billion bushels, 25 million below USDA.

 

Export
developments.

·        
USDA reported private exporters reported sales of 114,300 tons of corn for delivery to Mexico during the 2022-23 marketing year.

·        
South Korea’s KFA bought 65,000 tons of South America or South American corn in a private deal for March arrival at $334.98/ton c&f.

·        
In another tender, South Korea’s KFA bought 69,000 tons of South America or South American corn in a private deal for Dec 20-Jan 20 shipment at $334.98/ton c&f.

 

 

Soybeans

·        
Soybean oil extended their losses day after the EPA officially released their 2023-2025 US mandates. Two major agriculture processing companies already warned the proposed law could bring slower biodiesel growth. Soybeans were
higher after selling off Thursday and meal was mixed after the day session open.

·        
Ongoing concerns over Argentina’s weather patter calling for above normal temperatures over the next week countering any precipitation should be monitored.

·        
If the US is truly crushing for soybean oil over soybean meal, we think the oil share correction is nearing a bottom. Look for support for Jan oil share around 42.2%, currently around 43.8%

·        
Not all global markets followed the steep drop in US soybean oil.

·        
CBOT limits for the soybean complex expanded for today.
https://www.cmegroup.com/trading/price-limits.html

·        
February Malaysia palm was down 126 ringgit to 3952 and cash down 1.8% or $17.50/ton at $970. For the week palm oil futures fell 4%.

·        
China soybean futures were down 0.2%, meal 0.1% lower, soybean oil 1.8% lower and palm off 2.3%.

·        
Rotterdam vegetable oils were lower
for the nearby soybean oil positions by 15 euros and rapeseed oil 27.50 for the Dec/Jan positions, from this time yesterday morning.  Rotterdam meal was 6-11 euros higher.

·        
Offshore values were leading SBO higher by about 446 points earlier this morning (388 for the week to date) and meal $2.70 short ton higher.

·        
USDA reported the October US soybean crush at 196.6 million bushels, 0.6 million above an average trade guess above 167.6 million in September and 300,000 bushels below October 2021. Recall NOPA reported the other crush below
trade expectations. Daily adjusted the crush was running at 6.34 million bushels per day, above 5.59 million during September and below 6.35 million below year ago. The daily rate suggest crusher were running near capacity.  December 2021 was the monthly record
for the daily crush at 6.39 million bushels per day. Soybean oil stocks at the end of October were 2.094 billion pounds, above 1.991 million the month earlier and down from 2.386 billion at the end of October 2021. Soybean meal stocks at the end of October
were 378,000 short tons, above 311,000 at the end of 2021-22 and below 411,000 year earlier. The October soybean meal yield was 46.82, above 46.63 year earlier. Our October-September crop year product crush is estimated at 2.246 billion bushels, one million
above USDA.

 

Export
Developments

·        
None reported

 

 

Wheat

·        
US wheat futures are lower on positioning ahead of the weekend, slow US export developments and higher USD.

·        
News was light. There were no global export developments reported overnight.

·        
UN’s FAO price index averaged 135.7 points last month, down from 135.9 for October (no revision), and is now only 0.3% above its level a year ago. China plans to auction off 500,000 tons of soybean on December 9.

·        
Paris March wheat was lower by 2.50 euros earlier at 310.00 euros a ton.

·        
French winter crops are in great condition. 98% of soft wheat was rated good or excellent condition as of November 28, unchanged from the previous week. Barley fell one point to 97%.

·        
Ukrainian harvested 41.9 million tons of grain from 85% of the expected area as of December 1, according to the AgMin, down from the total 86 million tons in 2021 (record). About 51 million tons was seen all said and done for
the 2022 grain crop, when completed.

·        
Ukraine exported 18.1 million tons of grain so far in the 2022-23 season, down 29.6% from the 25.8 million tons exported same period year ago, including 6.9 million tons of wheat, 9.7 million tons of corn and about 1.5 million
tons of barley.

 

Export
Developments.

·        
Taiwan seeks 42,750 tons of US wheat on December 7 for Jan 25-Feb 8 shipment.

·        
China plans to auction off 40,000 tons of wheat from reserves on December 7. 

 

Rice/Other

·        
None reported