FI Morning Grain Comments 12/27/22

PDF attached

 

Good
morning.
Hope everyone had a safe and peaceful holiday. CBOT main agriculture markets open at 8:30 am CT.

 

Opening
Calls:

Soybeans
10-15 cents higher

Soybean
meal $3-$4/short ton higher

Soybean
oil 50-80 points higher

Corn
4-7 cents higher

Wheat
6-10 cents higher

 

New
Year’s CBOT holiday schedule:

https://www.cmegroup.com/tools-information/holidaycalendar.html

 

USD
was lower by 11 points earlier, WTI crude oil higher by $0.55, US equities mixed, and gold higher. Paris wheat was up 2.00 euros and Paris February rapeseed higher by 12.25 euros. We look for a higher open based on the current weather outlook, changes in China
covid policies and price reaction from outside related markets. Egypt
is in for wheat and vegetable oils this week. USDA export inspections are due out this morning. Most other regular weekly reports will be delayed by one business day due to the holiday. World geopolitical problems increased over the weekend. Fighting between
Russia and Ukraine continued throughout the weekend. A Russian air base was hit by a drone strike. South Korea deployed jets after North Korea sent drones cross the border. China’s air force flew 71 planes and drones near Taiwan and Japan in a military exercise,
its biggest since the US House Speaker visited Taiwan earlier this year. March palm oil futures in Malaysian were up 270 ringgit to 4,100 and cash up $45.00/ton at $972.50. China estimates 250 million people contracted covid over a 20 day period as the country
continues to ease restrictions. We don’t think this will slow agriculture trade flow. China soybean futures were up 0.4%, meal 3.0% higher, soybean oil 4.5% higher and palm down 5.8%. Offshore values were leading SBO higher by about 159 points earlier this
morning and meal $4.63 short ton higher.

 

 

 

Weather

US
mainland snow coverage:

·        
44.1% Wednesday morning

·        
44.3% Thursday morning

·        
53.7% Friday morning

·        
55.4% Saturday morning (western Plains 43.9% covered)

·        
47.8% Monday morning

·        
45.2% Tuesday morning

 

The
US will warm up this week after the blast of cold temperatures. We expect winterkill and wind damage for wheat from this event. The USDA January Winter Wheat and Canola Seedings report should not reflect any area acreage loss, if any, from this storm event.
What was planted should have been counted. Survey collection was conducted during the first two weeks of December. The Great Plains was dry over the weekend, as expected. US temperatures started to warm bias far southwestern growing areas Saturday, central
and upper northwest of the Great Plains along with the central and southern Midwest Sunday, and upper Midwest into the northeast Monday. This morning (Tuesday) the models project most of the US Mainland at or above around the 20 degree mark for the areas surrounding
the Great Lakes while the rest of the GP and Midwest will be in the 30’s to mid-50’s (bias south and southwest).  The Great Plains will see precipitation across CO and NE Thursday and eastern TX Thursday through Friday before turning dry over the weekend.
Heavy rains are expected across the lower Mississippi River Wednesday and Thursday. The South American weather forecast has not changed that much, and the theme is generally the same: good rain for central and northern Brazil and lighter rain for southern
Brazil and Argentina. Showers should favor Argentina’s Cordoba today and Saturday.

 

December
27 US snow coverage

 

 

World
Weather, INC.

WORLD
WEATHER HIGHLIGHTS FOR DECEMBER 27, 2022

• Flooding
  in the central and southern part of the Philippines was significant during the Christmas Holiday weekend and more heavy rain is expected in eastern parts of the nation tonight through Thursday inducing some additional flooding
• Dryness
  remains a concern in North Africa wheat production areas where little to no moisture is expected for a while
• Argentina’s
  central crop areas were dry once again during the weekend while some significant rain fell in central through southeastern Buenos Aires and in the far northwest of the nation
• Argentina
  will not likely see much precipitation again until this weekend and early next week then another period of drying is expected
• Brazil
  will see some routinely occurring rainfall over the next ten days with sufficient precipitation expected to support most summer crops
• Rio
  Grande do Sul will receive the least frequent and least significant rain
• Eastern
  South Africa will stay plenty moist over the next couple of weeks
• Interior
  eastern Australia needs greater rain for its unirrigated summer crops
• Fine
  late season harvest weather will prevail in southern Australia into next week
• U.S.
  weather will be trending warmer this week and a more active weather pattern is expected to evolve late this week into next week
• California
  and portions of the Intermountain West should experience a boost in precipitation during the coming ten days raising soil moisture and mountain snowpack for use in the spring

Source:
World Weather INC

 

Bloomberg
Ag Calendar

Tuesday,
Dec. 27:

• Malaysia
  Dec. 1-25 palm oil exports
• HOLIDAY:
  UK, Australia, Hong Kong

Wednesday,
Dec. 28:

• Weekly
  USDA Broiler Report

Thursday,
Dec. 29:

• EIA
  weekly US ethanol inventories, production, 10:30am
• Vietnam’s
  general statistics department releases monthly coffee, rice and rubber export data

Friday,
Dec. 30:

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

• CFTC
  commitments of traders weekly report on positions for various US futures and options, 3:30pm
• ICE
  Futures Europe weekly commitment of traders report, 1:30pm (6:30pm London)

Saturday,
Dec. 31:

• Malaysia’s
  Dec. 1-31 palm oil export data by cargo surveyor AmSpec

Source:
Bloomberg and FI

 

 

 

 

 

 

CFTC
Commitment of Traders

Traditional
funds are still net short Chicago wheat and long corn, soybeans and soybean products. Funds for the week ending December 20 trimmed their long positions for corn and KC wheat, and extended longs for soybeans, meal and oil. For Chicago wheat they added a small
number of net longs.

 

 

 

 

 

 

Macros

 

 

https://finviz.com/

 

 

Corn

·        
CBOT corn futures
are expected to open higher following strength in wheat and ongoing weather concerns for Argentina and southern Brazil.

·        
Ukraine said there were 100 grain ships halted in the Bosporus Strait, which is located at Istanbul, Turkey.

·        
More grain vessels left Odessa over the weekend. Nine ships carrying 390,000 tons of Ukraine agriculture products left destined for Africa, Asia and Europe.

·        
As of December 22, Ukraine was 75 percent complete on their corn harvest, or 20.2 million tons on 3.1 million hectares. This was up from 18.4 million previous week.

·        
India aims to blend 17-18% ethanol into petrol by 2025 from current 9.6% for 2022.

 

Export
developments.

·        
None reported  

 

 

USDA
Hogs and Pigs

USDA
reported December 1 all hogs inventory at 73.119 million head, down 1.8 percent from December 1, 2021, and down 1 percent from September. The December inventory is lowest for that month since 2016. The inventory was slightly below trade expectations. Breeding
inventory was higher than year ago and an average trade guess while kept for market fell 2 percent from a year ag, down 1 percent from last quarter and slightly below trade expectations.

 

 

USDA
brief

https://www.nass.usda.gov/Newsroom/Executive_Briefings/2022/12-23-2022.pdf

 

USDA
Cattle on Feed

USDA
reported December cattle on feed at 11.673 million head, slightly above an average trade guess and lowest for the month of December since 2017. Marketings were near expectations and highest in more than the past decade for the month of November. Cattle placements
came in above expectations.

 

 

Soybeans

·        
CBOT soybeans, meal and oil are all expected to open higher on strength in outside related markets and weather concerns for Argentina. Prices are expected to be choppy this week as many traders will be on vacation. First Notice
Day deliveries are Friday, and we may see soybean oil delivered, maybe some meal and look for zero soybeans.

·        
After January soybean oil rose 4.1% last week, prices are set to climb higher following palm oil and China vegetable oil futures.

·        
China estimates 250 million people contracted covid over a 20 day period as the country continues to ease restrictions. We don’t think this will slow agriculture trade flow.

·        
March Malaysia palm oil traded up about 7 percent Tuesday morning (CT) after China scrapped quarantines, and open borders. This may speed up offloading of agriculture impots for inbound ships.

 

 

·        
March palm oil futures in Malaysian were up 270 ringgit to 4,100 and cash up $45.00/ton at $972.50.

·        
Cargo surveyor SGS reported month to date December 25 Malaysian palm exports at 1,224,122 tons, 31,241 tons above the same period a month ago or up 2.6%, and 114,133 tons below the same period a year ago or down 8.5%.

·        
Malaysian palm oil exports for the December 1-25 period were 1.262 million tons, down 0.8 percent from the same period during November (1.273MMT), according to ITS.

·        
AmSpec reported Malaysian 1-25 Dec. palm oil exports at 1.227 million tons, up 2.3% from Nov. 1-25.

·        
Indonesia plans to set the crude palm oil reference price for Jan. 1 to Jan. 15 at $858.96 per ton, and export tax at $52 per ton & levy at $90 per ton, unchanged from current. The reference price is $871.99 per ton.

·        
China soybean futures were up 0.4%, meal 3.0% higher, soybean oil 4.5% higher and palm down 5.8%.

·        
Rotterdam vegetable oils were
20-35 euros higher from early Friday morning. Rotterdam meal were mostly 3-5 euros higher.

·        
Offshore values were leading SBO higher by about 159 points earlier this morning and meal $4.63 short ton higher.

 

Export
Developments

·        
Egypt is in for wheat and vegetable oils this week. Egypt’s strategic reserves for wheat are large enough for 4.6 months, vegetables oils for 4.8 months, rice for 5.7 and sugar reserves for 2.7 months. Egypt’s GASC seeks vegetable
oils on December 28 for arrival between February 5 and February 25 with payment via 180-day letters of credit and/or at sight. They are also in for local vegetable oils, for at least 3,000 tons of soybean oil and 1,000 tons of sunflower oil for February 1-25
delivery.

·        
South Korea’s state-backed Agro-Fisheries & Food Trade Corp. seeks 25,000 tons of GMO free food-quality soybeans, optional origin, on January 4 for arrival between December 2023 and June 2024.

·        
Last Friday Turkey bought 24,000 tons of crude sunflower oil at $1,218.80/ton and $1,199.80/ton for delivery between January 2 and February 15, 2023.

 

Wheat

·        
Chicago wheat is
expected to open higher on US winter wheat crop condition concerns and mostly dry weather for the US Great Plains this week. Black Sea shipping concerns might be in play as fighting across Ukraine continued throughout the weekend.

·        
Egypt is in for wheat on Tuesday.

·        
Egypt’s strategic reserves for wheat are large enough for 4.6 months, vegetables oils for 4.8 months, rice for 5.7 and sugar reserves for 2.7 months.

·        
Three Japanese insurance companies are in talks with reinsurers to extend contracts for Black Sea port and shipping companies before they are set to expire at the end of this month. Most vessel companies get two types of insurance:
marine insurance covering damage from natural disasters and collisions, and marine war insurance covering damage from war or terrorism.

·        
Paris March wheat was 2.00 euros higher earlier at 313.75 euros a ton,
highest since early December.

·        
Russia secured more than 3 million tons of domestic grain for state reserves, most wheat, and will continue to buy.

·        
Russian wheat prices fell last week in part to a weaker roble. IKAR reported 12.5% protein wheat from Black Sea ports at $307 a ton FOB, down $5 from a week earlier. SovEcon reported $307-$311 per ton, down $1. Russian grain exports
were 1.1 million tons last week, up from 840,000 tons previous week.

·        
Note Russia’s export duty on wheat will increase 24.8% to 4,160.9 rubles per ton on December 28 from 3,333.8 rubles per ton the previous week.

 

Export
Developments.

·        
Egypt’s GASC seeks wheat on Tuesday as part of a World Bank-funded food security program, on a C&F basis, for shipment from Feb. 1-15, optional origin with any origin, and payment is for at sight.
Lowest offer was $339/ton for 40,000 tons of Russian wheat. Second lowest offer was $345 for 60,000 tons of Russian wheat. 

·        
Thailand on Friday bought 63,000 tons of feed wheat from Australia at $340/ton c&f for June 2023 shipment.

 

Rice/Other

·        
South Korea’s state-backed Agro-Fisheries & Food Trade Corp. seeks 113,460 tons of rice on December 29 from the United States for arrival in South Korea in 2023 between Feb. 1 and June 30.

·        
Vietnam 2022 rice exports were seen around 7 million tons by the government, up 12.2 percent.

·        
Bangladesh’s lowest offer for 50,000 tons of rice was $397.03/ton CIF liner out.
On
December 21 Bangladesh was in for 50,000 tons of rice and lowest offer was thought to be $393.19 CIF per ton.

·        
South Korea’s Agro-Fisheries & Food Trade Corp. seek 83,672 tons of rice from the United States for arrival in South Korea in 2023 between Feb. 1 and June 30.