FI Morning Grain Comments 02/27/23

PDF attached

 

Good morning.

 

WTI crude oil earlier was 9 cents lower and USD 33 points lower. US equities are higher. CBOT soybeans are higher in part to a rebound in meal. Soybean oil share reversed overnight from higher outside vegetable oil prices. Corn is trading higher and Chicago wheat lower. US Great Plains winter wheat areas saw an improvement in weather after last week’s coast to coast storm system and forecast for additional precipitation this week. Black Sea competition is also weighing on wheat. Traders are expecting the Black Sea grain corridor deal to be extended. SA crop concerns are underpinning soybeans and corn. Argentina is not expected to see much rain over the next week. Malaysia May palm futures were up 23 ringgit to 4,225 and May cash was unchanged at $982.50/ton. Offshore values were leading SBO higher by about 88 points this morning and meal $4.30 short ton lower. 

 

 

Weather

 

 

World Weather, INC.

WORLD WEATHER HIGHLIGHTS FOR FEBRUARY 27, 2023

• Not much change occurred in the world during the weekend
• Heavy rain and impressive mountain snow fell in California resulting in some flooding and another round of impressive snow accumulation to impact runoff potentials in the spring
• Thunderstorms occurred Sunday night and early today in central and eastern parts of U.S. hard red winter wheat country with moisture totals of 0.10 to 0.74 inch resulting.
• South-central Kansas was wettest along with north-central Oklahoma
• The high Plains region did not receive much moisture, but a few areas in central and northwestern Oklahoma reported more than 1.00 inch
• West and South Texas and the Texas Coastal Bend area will continue quite dry over the next ten days, although some showers will impact West Texas briefly later this week
• Temperatures will be cold in western parts of North America this week and very warm to the east
• Argentina will see restricted rainfall during the next ten days in the central and south while rain falls later this week in the north
• Brazil will see rain periodically in all crop areas during the next couple of weeks excepting Bahia, northeastern Minas Gerais and Espirito Santo where net drying is expected
• Eastern Australia’s unirrigated summer crops will continue dry biased and looking for significant rain
• India will be dry for another week and then a few showers may pop up in parts of central India during the second week of March
• Southern Europe and northern Africa will be wetter biased during the coming ten days which may improve soil moisture in the drier areas
• Western CIS crop weather will continue wet biased for the coming week to ten days
• Eastern China will not see much precipitation for a while
• South Africa will be drier biased early this week and then rain will increase once again.

Source: World Weather and FI

 

 

Bloomberg Ag calendar

Monday, Feb. 27:

• USDA export inspections – corn, soybeans, wheat, 11am
• Dubai Sugar Conference, day 1
• EARNINGS: Olam, FGV

Tuesday, Feb. 28:

• Dubai Sugar Conference, day 2
• EU weekly grain, oilseed import and export data
• US agricultural prices paid, received, 3pm
• Malaysia’s Feb. palm oil export data
• Vietnam coffee, rice and rubber export data
• EARNINGS: Golden Agri

Wednesday, March 1:

• Dubai Sugar Conference, day 3
• EIA weekly US ethanol inventories, production, 10:30am
• USDA soybean crush, DDGS production, corn for ethanol, 3pm
• Global Grain and Animal Feed Asia 2023, Singapore, day 1

Thursday, March 2:

• Dubai Sugar Conference, day 4
• USDA weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Port of Rouen data on French grain exports
• Global Grain and Animal Feed Asia 2023, day 2

Friday, March 3:

• FAO World Food Price Index, grains report
• ICE Futures Europe weekly commitments of traders report
• CFTC commitments of traders weekly report on positions for various US futures and options, 3:30pm
• FranceAgriMer’s weekly crop conditions reports
• Global Grain and Animal Feed Asia 2023, day 3

Source: Bloomberg and FI

 

 

 

Options: Quite a bit of OTM Exercises at the Corn 6.50 strike from Friday’s Expiry.  Calls 4157 and Outs 2414 were exercised.  This is somewhat expected since we settled @ 6.50 on Friday.  The surprise id for the short who may or may not have hedged this.  About 1.5k net of shorts who thought they were flat on Friday. -Joe Davis  PDF attached

 

Commitment of traders as of January 31

 

 

 

 

 

 

Macros

US Durable Goods Orders Jan P: -4.5% (exp -4.0%; prevR 5.1%)*

*BIGGEST MONTHLY DROP SINCE APRIL 2020 “COVID”.

Durable Ex Transportation Jan P: 0.7% (exp 0.1%; prevR -0.4%)

Cap Goods Orders Nondef Ex Air Jan P: 0.8% (exp 0.0%; prevR -0.3%)

 

Corn

·         Corn futures are trading higher on technical buying. SA crop concerns are underpinning soybeans and corn.

·         The recent winter storm across the central and upper Midwest dropped a good amount of precipitation, beneficial for soil moisture ahead of the US growing season.

·         USDA Cattle on Feed reported showed inventories as of February 1 less than expected. At 95.8 percent from year ago to 12.199 million head, that was down from the 3.5 percent contraction the trade was looking for. Placements were 1.784 million, 89.2% of a year ago, 7.9 percentage points below expectations.

 

 

Export developments.

• None reported

 

 

 

 

 

 

Soybeans

·         CBOT soybeans are mostly higher led by old crop amid a reversal in soybean meal. Soybean oil share reversed overnight from higher outside vegetable oil prices. SA crop concerns are underpinning soybeans and corn. Argentina is not expected to see much rain over the next week. Look for a choppy trade on lack of fresh news. Malaysian palm oil futures were higher on improving palm oil exports.

·         AgRural reported 33 percent of Brazil’s soybean crop had been collected as of Thursday, up 8 points from the previous week and compares to 43 percent year earlier. They are using a 150.9 MMT soybean crop.

·         Brazil’s government will decide whether or not to raise their biodiesel mandate next month. It’s currently at 10 percent, lowered from 13 percent a while back.

·         Argentina producers will launch a protest this week over taxes, exchange rates and financial support.

·         AmSpec reported February 1-25 palm oil exports up 15.3 percent to 949,082 tons from 823,376 tons during January 1-25. ITS reported a 25.4 percent rise to 1.034 million tons from 824,373 tons during January 1-25.

·         Malaysia May palm futures were up 23 ringgit to 4,225 and May cash was unchanged at $982.50/ton. 

·         China soybeans decreased 0.3%, meal down 0.5%, SBO up 0.1% and palm oil futures down 0.1%.

·         Nearby Rotterdam vegetable oils were mixed from this time yesterday morning and meal mostly lower by 1.50-4.00 euros.

·         Offshore values were leading SBO higher by about 88 points this morning and meal $4.30 short ton lower. 

·         Argentina crushed 1.9 million tons of soybeans during the month of January, down 24 percent from a year ago and well below 2.6 million tons crushed during December 2022.

 

Export Developments

·         China plans to auction off 32,472 tons of soybean oil from state reserves on February 28.

 

 

 

 

 

Wheat

·         US wheat futures are lower for Chicago and KC and unchanged to higher for MN. US Great Plains winter wheat areas saw an improvement in weather after last week’s coast to coast storm system and forecast for additional precipitation this week.

·         Black Sea competition is also weighing on wheat.

·         Traders are expecting the Black Sea grain export deal to be extended. China expressed interest for grain exports to be unaffected by the conflict.

·         Ukraine grain exports crop year to date were 31.8 million tons, down 27 percent from a year ago.

·         Egypt’s wheat reserves are 4.6 months and vegoils at 5.1 months.

·         Paris May wheat was up 0.25 euro earlier at 280.25 per ton. 

·         China sold 141,751 tons of wheat from state reserves at an average price of 2,848 yuan per ton.

·         India so far sold 1.81 million tons of wheat in the open market.

 

Export Developments.

·         South Korean flour mills seek 85,000 tons of US and Canadian milling wheat on Feb. 28. 50,000 tons is sought from the United States and 35,000 tons from Canada, both for shipment between May 1 and May 31.

·         Turkey seeks an estimated 790,000 tons of milling wheat on February 28 for March 8-April 7 and April 10-May 10 shipment.

·         Jordan’s state grain buyer seeks 120,000 tons of optional origin milling wheat on February 28 for shipment between Aug. 1-15 and Aug. 16-31.

·         Jordan’s state grain buyer seeks 120,000 tons of optional origin feed barley for shipment between June 1-15, June 16-30, and July 1-15.

·         Taiwan seeks 48,975 tons of US milling wheat on March 1 for PNW shipment between April 19 and May 3. Wheat types sought include dark northern spring, hard red winter and white wheat.

·         Turkey seeks 440,000 tons of feed barley on March 2.

 

Rice/Other

·         Reuters) – Thailand’s rice exports for January were at 805,519 tons, up 75.2% from a year earlier, helped by higher demand from the Middle East and a weak baht currency THB=TH, the Commerce Ministry said on Monday. The value of rice exports rose 78.76% to 14.28 billion baht ($406.72 million) in January year-on-year, Ronnarong Phoolpipat, head of the ministry’s foreign trade department, told a news conference.