US farm markets started the week with little changes, as traders are squarring ahead to the next round of supply and demand data from USDA, which the agency will release on Thursday morning.
Thus, corn prices ended the session narrowly mixed with front contract 0,09% lower.
Soy futures complex also traded mixed.
Soybean prices eased 0.45% lower as digested Friday’s jump (+ 1.84%).
Soybean meal, after past week gains of 2.6% started the week weaker down 1,67%.
Bean oil futures ended the session at or near their intra day highs, with 1,12% gains.
The wheat complex after starting the new trade week with losses through midday, bounced back and closed the session mostly in the black.
In fact, CBOT wheat futures lifted 0,31%.
KC HRW was down 0,21%.
MPLS spring wheat was up 0,69%.
On macro markets, oil prices continued edged up on this morning after a near 5% rebound the day before as concerns about the impact of the Omicron variant on global fuel demand eased while Iran nuclear talks hit roadblocks, delaying the return of Iranian crude supplies.
In another sign of confidence in oil demand, the world’s top exporter Saudi Arabia raised monthly crude prices on Sunday.
Crude imports at the world’s top importer China also rebounded in November.
Thus, Brent crude futures rose 60 cents, or 0.8%, to $73.68 a barrel at 05:20 GMT, after settling 4.6% higher on Monday.
U.S. West Texas Intermediate crude was at $70.23 a barrel, up 74 cents, or 1.1%, building on a 4.9% gain in the previous session.
On the freight markets, the Baltic Exchange’s dry bulk sea freight index rose to an over one-month high yesterday, buoyed by strengthened rates across all its vessel segments.
The overall index, which factors in rates for capesize, panamax and supramax vessels, added 64 points, or 2%, to 3,235, a peak since Nov. 1.
The capesize index advanced 105 points, or 2.3%, to its highest in nearly a month-and-a-half at 4,699.
Average daily earnings for capesizes, which transport 150,000-tonne cargoes such as iron ore and coal, increased by $874 to $38,970.
Dalian and Singapore iron ore futures rose, on hopes a monetary policy easing in China could curb the downside risks being faced by the world’s biggest steel producer and consumer, but gains were capped by steel output control fears.
The panamax index gained 84 points, or 2.7%, at 3,212, its eleventh straight session of gains.
Average daily earnings for panamaxes, which carry 60,000-70,000 tonne coal or grain cargoes, increased by $750 to $28,904.
The supramax index rose 21 points to 2,452, its highest level since Nov. 4.
On equities markets, US stock indexes yesterday posted moderate gains on an easing of omicron concerns.
Stocks also garnered support Monday after the People’s Bank of China (PBOC) boosted liquidity by cutting the reserve requirement ratio for most banks.
Indeed, the PBOC on Monday cut the reserve requirement ratio for most banks by -0.50 points to 11.50%, effective Dec 15, which will boost liquidity by 1.2 trillion yuan ($188 billion).
China’s exports rose by double digits in November but growth declined, while imports accelerated in a sign of stronger domestic demand.
Exports rose 21.4% over a year earlier to $325.5 billion, decelerating from October’s 27.1% growth, customs data showed Tuesday.
Imports surged 31.7% to $253.8 billion, up from the previous month’s 20.6% rate.
In this context, the S&P 500 Index closed up +1.17%, the Dow Jones Industrials Index closed up +1.87%, and the Nasdaq 100 Index closed up +0.85%.
Meantime, Asian shares markets followed Wall Street higher on this morning.
In fact, the Shanghai Composite Index added 0.1% to 3,593.73 and the Nikkei 225 in Tokyo gained 2.1% to 28,503.36.
Hong Kong’s Hang Seng advanced 1.5% to 23,690.01.
The Kospi in Seoul advanced 0.5% to 2,987.48 and Sydney’s S&P-ASX 200 gained 1% to 7,317.90.
India’s Sensex opened up 1.2% at 57,430.23.
New Zealand and Southeast Asian markets gained.
On the weather side, very light rain and snow is probable across most of the Midwest and Plains between today and Friday, but the likelihood of seeing any more than 0.1” later this week is quite low, per the latest 72-hour cumulative precipitation map from NOAA.
Drier-than-normal weather is likely for the central U.S. between December 13 and December 19, according to NOAA’s latest 8-to-14-day outlook.
Warmer-than-normal conditions are predicted for most of the country during this time.
Coming back on grain markets, the fundamentals for wheat are those of a very tight market , where supply is less than demand.
There are rumors of a possible downward revision of soybean exports for the 2021/22 season, which would increase carry-out stocks compared to forecasts.
The US Department of Agriculture (USDA) will provide more information on this subject Thursday in its monthly Wasde report, still eagerly awaited in the United States but also beyond.
Meantime, weekly corn export inspections were 758,169 MT (29.848 mbu) during the week that ended 12/02.
Last week’s inspections were 805k MT (31.7 mbu), and the same week last year saw 825k MT of corn inspected for export.
The weekly USDA data suggests 9.379 MMT of corn have been shipped MYTD, which trails 11.168 MMT through the same point last year.
As for soybean, weekly inspections data shows 2.247 MMT (82.5 mbu) of soybeans were exported during the week that ended 12/2.
That was just below last week’s 2.258 MMT, but remained 349k MT below the same week last season.
China was the top destination for the week, with 65% of the total.
Accumulated bean exports were at 23.57 MMT (866.3 mbu) as of 12/2, that is 21% lighter than last season’s volume at the same point.
As for wheat, USDA reported 245,963 MT of wheat was inspected for export during the week that ended 12/2.
That was down form 391k MT last week and from 537k during the same week last year.
HRW exports made up the bulk of the week’s activity with 42% of the total.
White wheat and HRS were each 55-56k MT, leaving less than 30k for SRW.
USDA added 148,557 MT to past reports, which brought the MYTD total to 11.148 MMT according to the weekly report.
Last year saw 13.477 MMT shipped through the same point.
At the same time, USDA yesterday reported a private export sale for 130,000 MT of soybeans to China under the daily reporting system.
In this context, corn snuck higher by 0.25usc/bu, soybeans eased by 5.75usc/bu, meal dropped USD$5.10/st while beanoil firmed by 0.69usc/lb.
CME wheat rose 2.5usc/bu, Minni firmed 7usc/bu while Kansas eased 1.75c/bu.
Corn basis bids were steady to mixed, moving as much as 8 cents higher at an Illinois processor and sliding as much as 3 cents lower at an Illinois river terminal.
Soybean basis bids were steady to mixed, eroding 10 cents lower at an Indiana elevator and an Iowa processor while firming as much as 5 cents higher at an Indiana processor.
The funds were net buyers in wheat yesterday for 2,000 lots but net sellers for 4,000 lots of corn and 5,500 lots of soybeans.
From South America, Brazilian soybean plantings for the 2021/22 season are 94% complete through last Thursday, per the country’s AgRural consultancy.
That’s favorable to the prior season’s pace of 90%.
Rainfall in key southern production states such as Rio Grande Do Sul was below average in November, per AgRural, but still expects a record-breaking production of 144.3 million tonnes.
Meantime, Brazil’s Trade Ministry reported 2.23 MMT of soybeans were shipped to China during November.
That was nearly double last year’s volume, though calendar YTD shipments to China trail 4% yr/yr at 58.4 MMT.
On the other hand, though the Brazilian government decision to set its biodiesel mandate level at B10 caught a couple of people off guard (a small crowd was expecting B13), the fact they set the mandate for the full calendar year 2022, rather than just for the first few months, was a surprise to all.
On European market, operators are digesting the estimates from Russia of an export quotas of 9 million tonnes from mid-February 2022.
Wheat rose slightly on Euronext, if we disregard the December deadline which closes this Friday and whose movements are therefore no longer to be interpreted.
The rise in tensions on the Ukrainian border is also being observed with great attention, and the negotiations between Joe Biden and Vladimir Poutin on this morning could have a big impact on prices depending on their outlets.
All this, call for caution.
European rapeseed has fallen back into the red under the pressure of the Australian harvests and an expected rebound in European production in 2022.
In fact, rapeseed output in the European Union could reach 18.0 million tonnes in 2022, up more than 6% from this year’s harvest, after farmers boosted their sowings due to high prices, consultancy Strategie Grains said in an initial projection.
The rise in rapeseed output for the 2022/23 season was mainly expected in western and northern EU countries, which host the bloc’s three largest rapeseed growers Germany, France and Poland, Strategie Grains said in its oilseed report.
In contrast sunseed production in the EU next year was seen falling slightly to 9.9 million tonnes in 2022 after reaching an all-time high of 10.4 million tonnes this year, boosted by sharply higher yields.
From the Black Sea basin, prices of wheat and corn gave way yesterday a little bit, following in particular the figures announced by Russia on the quotas which could be put in place in mid-February, figures higher than expected.
Meantime, Russian consultancy Sovecon estimates that the country’s wheat exports in November totaled around 3 MMT, a month-over-month decline of 6.3%, if realized.
Russia is the world’s No. 1 wheat exporter.
At the same time, inspections data from Russia’s Federal Center of Quality and Safety Assurance for Grain and Grain Products showed wheat export inspections are 18% behind last season’s pace with 18.8 MMT inspected through 12/2.
Russian officials are considering policy to limit Feb-June wheat exports to just 9 MMT.
Earlier this year, Russia limited 20/21 all grains shipments during the same window to 17.5 MMT with an export quota.
On the other hand, Russia has started issuing export licences for fertilisers, the TASS news agency quoted the industry and trade ministry as saying on Monday.
Fertiliser exports were suspended from Dec. 1 due to an absence of licences, Interfax reported on Thursday, citing unnamed sources.
Meantime, Ukraine has exported 26.08 million tonnes of grain so far in the 2021/22 July-June season, up 17% from the same stage a year earlier, agriculture ministry data showed on Monday.
That included 14.60 million tonnes of wheat, 4.96 million tonnes of barley and 6.21 million tonnes of corn, the data showed.
Ukraine plans to thresh a record 80.9 million tonnes of grain in 2021, up from 65 million tonnes in 2020.
Exports could jump to 62.4 million tonnes from 44.7 million tonnes in 2020/21.
The government has said that grain exports could include 24.5 million tonnes of wheat, 30.9 million tonnes of corn and 5.2 million tonnes of barley.
On the weather side, Moscow is currently experiencing snowfall and temperatures remain around zero degrees as in Kiev.
From the Middle Kingdom, China’s governmental statistics bureau reported that the country’s 2021 wheat crop saw an increase in both acreage an average yields, bringing in a total production of 136,9 MMT.
China’s state statistics bureau also reported ’21 corn production at 272.6 MMT, which would be 4.6% above last year’s output.
Chinese farmers increased area dedicated to corn production by 5%, while Huang-Huai-Hai River flooding limited yields.
China’s official Ag Ministry data was at 270.96 MMT of production (also a 4% increase yr/yr), where USDA’s November estimate was for 273 MMT +4.7% yr/yr.
Meantime, China imported 8.57 million tonnes of soybeans in November, up sharply from October with only 5.11 million tonnes.
The big winner is the USA at this time of year.
China buying has been the common catchphrase in most rallies over the last few years, be they corn or beans, but without China stepping in this time it has been hard for these markets to sustain higher values.
With the US govt announcing a diplomatic boycott of the winter Olympics it would be hard to see there would not be some ramification for global commodity markets.
Citing “crimes against humanity” the US will still allow athletes to attend but will keep Biden officials at home.
On the other hand, Chinese authorities introduced new restrictions on import of certain categories of goods from Russia, Russian Consul-General in Harbin Vladimir Oschepkov told TASS on Thursday.
“Since November 29, Suifenhe railway station temporarily does not accept box railcars from Russia with goods requiring manual unloading and non-containerized cargo like coal, iron ore, fertilizers, pulp, ore and agricultural produce. The actually introduced ban covered plenty of positions of Russian import in China, except wood,” the diplomat said.
“On December 1, similar restrictive measures were introduced at another railway crossing point of Zabaikalsk-Manzhouli; they apply to lumber resources from Russia also, with containerized cargo being an exception,” the Consul-General said.
Steps of the Chinese side were caused by worsened epidemiological situation in China’s border areas, he added.
The Chinese Foreign Ministry spokesman Zhao Lijian said Monday “If the US is insistent on going down the wrong path, China will take necessary and resolute countermeasures.”
From India, extremely favourable weather conditions and higher minimum support prices have seen Indian farmers increase the area planted to wheat, oilseeds and pulses.
Indeed, almost three months ago, India’s Cabinet Committee on Economic Affairs approved increases to the minimum support prices (MSP) paid to farmers for their produce.
The MSP for lentils was raised by 4000 Indian rupees (INR) per metric tonne, or A$75.25/t, to INR55,000 (A$1035)/t.
Rapeseed and mustard seed MSPs were lifted by INR4000 ($75.25)/t to INR50,500 ($950)/t.
For chickpeas, the MSP was raised by INR1,300 ($24.45)/t to INR52300 ($984)/t.
Wheat went up by INR400 ($7.50)/t, to INR20150 ($379)/t, and for barley, the increase was INR350 ($6.58)/t, to INR16350 ($313)/t.
Thus the Indian government may be paying higher absolute prices to its farmers.
However, its should to note that the projected net returns per hectare are more better for wheat than that of pulses and oilseeds, and the associated production risks are much lower.
Accordingly, the wheat area continues to increase as farmers pursue the lower risk option.
In this context, according to the Indian Agriculture Ministry, the area sown to wheat, totalled 20.07Mha across all states up to December 3.
The seeding program has been completed in most regions, but the final figure is expected to be higher as the data from the late sown areas is collected in December.
This is 3.8pc higher than last season’s final planted area of 19.34Mha.
Consequently, some analysts, expects wheat production could be as high as 112 million tonnes this season.
This compares to the USDA’s current production estimate of 109.52Mt.
Either way, it would be a record if realized.
On this wake, India have re-entered the export market in quite a meaningful way over the last two years.
In 2021-22, USDA say India could exporting 5Mt of wheat.
As of Friday last week, the area planted to pulses sat at 11.4Mha, compared to a final number in 2020 of 11.35Mha.
India’s rapeseed and mustard seed production is expected to jump significantly next harvest.
The country’s farmers, particularly in the northern states, responded to high domestic prices.
Indian rapeseed futures have risen by almost 40pc this year, hitting a record INR8850 (A$1676)/t in October, just as the planting campaign commenced.
As of December 3, the total area planted to oilseeds was up 29.4pc, from 6.47Mha to 8.37Mha.
The rapeseed area number on its own was even more impressive, soaring 30.2pc from 5.96Mha last year to 7.76Mha last week.
As a result, total oilseed production this season could be as high as 10Mt, a national record and up from the 8.6Mt harvested earlier this year.
India is the world’s biggest importer of edible oils, with imports of palm oil, predominantly from Indonesia and Malaysia, soybean oil, mainly from Argentina and Brazil and sunflower oil, primarily from Ukraine and Russia, costing the country a record US$15.7 billion over the last 12 months.
The significant rise in rapeseed production should decrease India’s import requirement in 2022.
From Australia, it is a cooler start to the day through SA and Vic this morning and harvest today will get going later.
Clear weather remains for WA, SA and most of Victoria, while NSW is set for another front to hit later today and continue to hang around for the balance of the week.
Meantime, markets kicked off the week a fraction firmer on the cash boards for wheat.
Barley was mixed across the grower boards with bids in WA up $5/t, SA down $5/t and east coast markets were a touch stronger with some prompt buying interest popping up.
Trade markets across wheat and barley where left wide bid offer spread for the day.
Canola markets gained more ground with east coast bids up $5-10/t over the day, which attracted grower selling activity as canola harvest powered along through Victoria.
Yields have been above growers’ expectations and growers are willing to sell at current prices.
On the international trade scene, Saudi Arabia finally switched to purchasing 689 kt of milling wheat with deliveries expected in July 2022.
The price traded at $ 365.14 / t, against $ 377.54 / t paid during the ‘tender from 1 st November.
Author: Sandro F. Puglisi
