Good morning Farmer Family …
US farm markets moved higher on Thursday.
Corn after a four-session losing streak, found some buyers, which pushed the market back up by 0.85%.
Soybeans following the announcement of two large flash sales, closed with double-digit gains, or around 1.4% higher from previus session.
Meal rallied the strongest of the complex with gains of 2.9% at the close.
Bean oil prices closed slightly down with a 0.31% losse.
The wheat complex also made moderate inroads, with Chicago SRW wheat contract which closed 0.95% higher; Kansas City HRW went home 0.85% stronger on the day; Minneapolis spring wheats closed 0.94% higher.
The water deficit in the USA causes many logistical problems past week, including complicated navigation on the Mississippi.
The Mississippi River was reopened on traffic, but only to one-way near Hickman, Kentucky.
The US Army Corps of Engineers dredging the channel deeper following the grounding of barges, according to the US Coast Guard.
Meantime, Weekly Export Sales report had 408k MT of corn booked for export during the week that ended 10/13.
That was mid-range of estimates as a 3wk high.
Accumulated commitments sit at 13.8 MMT, compared to 28.89 MMT at this time last year.
As for soybean USDA data had 2.335 MMT of soybean sales for the week that ended 10/13.
That was at the top end of estimates as a MY (September 1 to present) high, and was up 218% from the same week last year.
Accumulated soybean commitments were 30.5 MMT, up 1.3% yr/yr.
For the products FAS data showed542,340 MT of meal sales and 9,317 MT of soy oil sales.
For bean oil that left 29,354 MT of commitments on the books, and for meal there were 3.631 MMT committed as of 10/13.
As for wheat the report showed sales of 163,128 MT for the week of 10/13.
That was down from 3 consecutive +200k MT sales, below estimates, and was down 63% from the same week last year.
Accumulated wheat commitments now trail last years pace by 8.5% with 11.3 MMT on the books.
Separately, private exporters reported to the USDA having sold 201,000 metric tons of soybeans for delivery to China during the 2022/2023 marketing year, and 132,000 metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year.
Dry weather, however, also raised some fears of weak development of winter wheat before the onset of cold weather.
In this context, corn basis bids were largely steady across the central U.S. on Thursday but did trend 5 cents higher at an Illinois river terminal and 7 cents lower at an Iowa processor.
Soybean basis bids were mostly steady across the central U.S., but did lift 10 cents higher at an Ohio river terminal and 13 cents at an Ohio elevator.
Commodity funds were net buyers of CBOT soybean, corn, wheat and soymeal futures contracts, and net sellers of soyoil.
On this morning, Chicago soybean prices slid, shedding some of previous session’s gains, although the market is poised to end the week on a positive note.
Export demand for soybean has turned very strong in the past week with China the more active buyer.
Wheat, meantime, lost ground with the market on track for a third weekly loss.
Thus, the most-active soybean contract on the Chicago Board of Trade was down 0.4% at $13.86-1/4 a bushel, as of 01:52 GMT, and wheat gave up 0.3% to $8.46-1/2 a bushel.
Corn lost 0.2% to $6.82-3/4 a bushel.
For the week, soybeans have gained 0.2%, wheat dropped 1.6% and corn lost 1.1%.
In energy markets, oil prices were little changed on Friday as optimism about a possible rise in demand in China faded and the market again weighed the impact of sharp interest rate rises on energy consumption.
Thus, Brent crude futures slipped 12 cents to trade at $92.26 a barrel by 06:25 GMT.
U.S. West Texas Intermediate futures were down by 11 cents to $84.40 a barrel.
Consequentially, Brent was on track for a weekly gain of 0.6%, while WTI was expected to fall 1.5%.
Oil prices have been supported recently by a looming European Union ban on Russian crude and oil products, as well as the output cut from the OPEC+.
However, the U.S. Federal Reserve is trying to slow the economy and will keep raising its short-term rate target.
Also, soaring energy costs will hurt Q4 packaging profits.
Russia poised to largely skirt new G7 oil price cap.
“Everyone is pining for a China-reopening-driven commodity boost, but we are not there yet” some analysts said.
Beijing is considering cutting the quarantine period for visitors to seven days from 10 days.
However, many analysts believe the zero tolerance policy will be largely maintained well into next year.
A slowing global economy and sustained soft demand from China are key headwinds.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index fell for the second straight session on Thursday, weighed down by weaker demand for capesize vessels.
The overall index, indeed, was down 34 points, or about 1.8%, at 1,837.
Particularly, the capesize index lost 98 points, or about 4.4%, to 2,111.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore used in construction, were down $817 at $17,505.
The panamax index lost 3 points, or about 0.1%, to 2,161, breaking a three-day winning streak.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, dropped $27 to $19,448.
The supramax index lost 2 points to 1,676.
In equity markets, US stocks on Thursday gave up an early advance and closed moderately lower.
Stocks Thursday morning initially pushed higher on better-than-expected Q3 corporate earnings results.
U.S. stock indexes also garnered carry-over support from strength in European stocks after UK Prime Minster Truss announced her resignation.
Meantime, Thursday’s U.S. economic news were mixed.
On the bearish side, the Oct Philadelphia Fed business outlook survey rose +1.2 to -8.7, weaker than expectations of -5.0.
Also, Sep leading indicators fell -0.4% m/m, weaker than expectations of -0.3% m/m.
Conversely, weekly initial unemployment claims unexpectedly fell -12,000 to 214,000, showing a stronger labor market than expectations of an increase to 233,000.
Also, Sep existing home sales fell -1.5% to a 2-1/4 year low of 4.71 million, slightly stronger than expectations of 4.70 million.
However, the U.S. employment market remains strong.
The healthy jobs market is a sticking point since it suggests the Fed will have to persist in raising interest rates.
On this wake, Philadelphia Fed President Harker said the Fed is likely to raise interest rates to “well above” 4% this year.
As a result, the yield on the 10-year Treasury climbed to 4.23% from 4.14% late Wednesday and is at its highest level in 14 years.
The yield on the two-year Treasury, which tends to track expectations for future Federal Reserve action, rose to 4.61% from 4.56%.
The increases in key interest rates are putting pressure on other areas of the economy, including the housing market, where mortgage rates are now at 15-year highs.
Mortgage buyer Freddie Mac reported Thursday that the average on the key 30-year rate ticked up this week to 6.94% from 6.92% last week.
In this context, on Wall Street the S&P 500 fell 0.8% and the Dow Jones Industrial Average slipped 0.3%.
The Nasdaq composite fell 0.6%, while the Russell 2000 index lost 1.2%.
IBM rose 4.7%, AT&T jumped 7.7%, meantime, Tesla fell 6.6%, Union Pacific dropped 6.8%, Rival CSX fell 3%, American Airlines fell 3.8%.
Allstate slumped 12.9%.
On this morning, Asian shares were mostly lower.
Benchmarks fell in most regional markets but rose in Mumbai.
Particularly, Japan’s benchmark Nikkei 225 declined 0.4% in afternoon trading to 26,892.67.
Australia’s S&P/ASX 200 shed 0.8% to 6,676.80.
South Korea’s Kospi edged down 0.3% to 2,212.61.
Hong Kong’s Hang Seng fell 0.8% to 16,157.32, while the Shanghai Composite gained 0.2% to 3,041.21.
Shares rose 0.4% in Mumbai.
China’s ruling party congress is expected to wrap up Saturday with an endorsement of leader Xi Jinping remaining in office indefinitely.
On the other hand, Japan’s core consumer prices rose 3.0% in September from a year earlier, according to government data released Friday.
That was the highest increase in eight years.
It would also have been the highest in more than 30 years if the impact of introducing and raising the consumption tax was excluded.
In currency trading, the U.S. dollar rose to 150.38 Japanese yen from 150.09 yen, adding to pressure on the BOJ to tweak its monetary policy since a weaker yen amplified rising prices due to the higher costs for imports.
The euro was little changed at 97.76 cents, inching down from 97.87 cents.
From South America, Argentina’s wheat crop is seen sliding again due to prolonged drought plus a recent cold snap.
The current 2022/2023 wheat crop, indeed, is estimated at 15.2 million tonnes, down from last week’s forecast of 16.5 million tonnes, the Buenos Aires Grains Exchange said in its weekly report on Thursday.
That is a slashing in its production forecast by nearly 8%.
BdeC also cut its projection for fields planted with corn to 7.3 million hectares from 7.5 million hectares estimated last week, down about 3% and blamed on the months-long drought.
Freezes from Oct. 8-9 in key areas planted with wheat caused significant damage to expected yields, according to the exchange, which also reported that 53% of wheat-planted areas are experiencing between regular and bad conditions.
The new estimates for the 2022/2023 wheat harvesting season, in which most of the grain is gathered from November to January, are all far below last season’s crop of 22.4 million tonnes.
Meanwhile, Argentina’s corn farmers have to date planted 17% of their corn-designated fields for the 2022/2023 season, or down more than 9 percentage points compared to the same time during the previous cycle.
The slow pace of corn planting is due to the lack of optimal soil humidity, the BdeC report noted, which is also seen hitting yields since early planted corn tends to be more productive.
In Europe, grain and oilseed prices had a good performance yesterday.
Sowing conditions in France remain very favorable for winter crops, with, however, temperatures still abnormally high for the season, leading to fears of sensitivity to come next spring in the event of frost.
According to the farm office FranceAgriMer, French farmers had sown 46% of the expected soft wheat area for next year’s harvest by Oct. 17, compared with 21% a week earlier and ahead of year-ago progress of 36%.
Farmers also advanced swiftly in winter barley sowing last week, with 67% of the expected area drilled by Monday against 37% a week earlier, FranceAgriMer’s cereal crop progress report showed.
Winter barley sowing was also ahead of the pace last year, when 54% of the area had been drilled by the same week.
In this context, Stratégie Grains raised the 2022-23 EU wheat crop forecast by 1.4Mt to 125.5Mt.
However it still down 3pc on previous year.
Meantime, the French consultancy said EU corn production will fall to 50Mt this year, a “calamitously low” level, 2.5Mt lower than its previous estimate and 28pc lower than last year.
Grain maize harvesting in France was nearly finished, with 92% of the area cut by Monday, FranceAgriMer said.
That compared with 83% the prior week and just 30% a year ago.
Still European users have already imported massive amounts from Ukraine and Brazil to offset the anticipated shortfall, so allowing the market “some breathing space”.
On the same wake, the International Grains Council reduced estimated global corn output by 2 MMT to 1.166 billion in their latest update, versus year-ago totals of 1.217 billion metric tons.
That came via cuts to the EU and U.S., only offset in part by an increase for China.
Particularly, EU corn output is now seen down at 53.5 million tonnes versus 56.2 million previously, and the United States, is now seen producing 353 million tonnes versus 354.2 million.
Meantime, consumption was reduced by 3 for a net carryout forecast of 258 MMT.
The IGC, indeed, expects the U.S., will ship just 54.6 million tonnes of corn in 2022/23, versus a previous forecast for 57.8 million tonnes of shipments.
This will leave the country with closing corn stocks of 29.8 million, down from 31 million expected previously.
IGC also reduced their global soybean production outlook by 1 MMT to 386 MMT.
However, that is still up sharply from last year’s 355 MMT and from 2020/21’s 370 MMT.
They had 54 MMT leftover for global ending stocks.
As for wheat, the October IGC estimates show a mostly unchanged balance sheet from Sept.
Production was left at 792 MMT.
Argentina was reduced by 500k MT but offset by increases to U.S., Russia, and Australia.
On net, stocks were lifted by 200k to 285.8 MMT.
In other news, multinational chemical company and fertilizer manufacturer, Yara, cut its European ammonia output to just 57pc of capacity in the third quarter as it struggled with swings in natural gas prices.
From North Africa, Egypt will release an “appropriate quantity” of feed components from ports every week, according to an agriculture ministry letter to the central bank, following outrage from poultry farmers forced to cull chicks amid a dollar shortage.
Around 1.5 million tonnes of corn and 500,000 tonnes of soybeans are stuck at ports.
Although wheat and other strategic goods were exempted from import controls by the country’s central bank, around 700,000 tonnes of wheat is also estimated to be stuck at ports.
The agriculture ministry said a committee will meet every week to ensure the availability of feed, stating that around 500,000 tonnes of corn and 250,000 tonnes of soybeans are needed each month.
Around 62,000 tonnes of soybeans have already been released this week, worth $44 million.
A loss of confidence in the weakening Egyptian pound and an exodus of local and overseas investors from short-term government debt markets have contributed to dollars running short.
From the Black Sea basin, the Russian foreign ministry said on Thursday that Moscow was ready to boost exports of food and fertilizers to help avert a global food crisis, but was being blocked from doing so by the United States.
“There are active and intensive discussions going on, on many fronts,” Stephane Dujarric, spokesman for the UN’s secretary-general, said in a media briefing on Wednesday when asked where talks over export corridor stand.
Ukraine’s central bank chief says he believes the grain export deal will be extended and that is built into its forecasts.
However, foreign Ministry spokeswoman Maria Zakharova said Washington was “blackmailing” and “persecuting” those that try to trade with Russia and was therefore compromising global food security.
Russian Representative to the UN Dmitry Polyanskiy told reporters there must be practical results for Russia for it to back the extension of the deal.
“We will look at the practical results, not some kind of wishful thinking,” he said, adding, “practical results are very modest.”
He also said Russia was not yet convinced the deal needed to be extended, labeling the export of Russian fertilizer and food products “the most important thing.”
Polyanskiy also said his country would reassess its cooperation with UN Secretary General Antonio Guterres and his staff if they were to send experts to Ukraine to inspect downed drones the West said were made in Iran.
From Australia, eastern Australian prices continued to rally yesterday.
Cash wheat grower bids gained another $5/t.
Canola was also $5/t stronger and barley also showed a touch of firmness.
New crop markets remain gun shy on the offer side, while the old crop execution program creates further headaches.
Old crop markets rallied a further at least $10/t for grain with ready access allowing it to be moved promptly on a truck to a destination.
There have been some significant rainfall totals overnight with Moree copping 100mm and Narrabri 75mm with more rain on the forecast for the next couple of days.
The relentless wet weather will continue to chip away at production prospects while the logistics nightmare rolls on with further road closures and access issues.
On the international trade, the Gasc would have opened private negotiations to buy wheat.
The lowest price in the first round of offers in the tender on Friday from Turkey’s state grain board TMO to purchase 495,000 tonnes of milling wheat was believed to be $337.00 a tonne c&f.
The offer was said to have been made by trading house Grain Star for 100,000 tonnes for the Nov. 1 to Nov. 22 shipment position.
No purchase has yet been made and initial results of the tender are expected later on Friday.
The TMO traditionally goes through several rounds of negotiations in its tenders seeking lower prices.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
