US farm markets, had started 2022 trading activity’s, on a positive note, but the bullish overnight action observed, faded fast, during the morning session.
In fact, only soybeans and soymeal remained in the green by the close, both grabbing double-digit gains.
Particularly, corn prices stumbled to losses more than 0.65%.
Soybean prices, in contrast, in spite were off their highs, at the end were still 1,21% higher for the session.
Soymeal ended the day with around 3.1% gains.
Soyoil was down 0,19% meantime.
The wheat complex after Christmas holiday, continued to be down and the new year seems to start with more or less the same trend.
In fact, CBOT SRW futures closed 1,65% weaker.
KC HRW ended the day 1,25% lower.
MPLS spring wheat closed with 1,45% losses.
In energy market, oil prices rose on this morning as investors embraced expectations that oil producers will add supply as a sign that fuel demand remains robust.
The OPEC+ are due to meet on this morning.
The Joint Ministerial Monitoring Committee is due to meet at 12:00 GMT, followed by a ministerial meeting at 13:00 GMT, both by videoconference.
Three OPEC+ sources told Reuters the group is likely to stick to its plan to increase output by 400,000 barrels per day in February, as it has done each month since August.
RBC Capital Markets analysts said OPEC+ was unlikely to change course given the current price outlook, pressure from the administration of U.S. President Joe Biden to boost supply, and no major new COVID-19 mobility curbs.
Consequentially, Brent crude futures gained 43 cent to $79.41 a barrel at 05:02 GMT, while U.S. West Texas Intermediate (WTI) crude recouped its earlier loses and rose 33 cents to $76.41 a barrel.
The benchmark contracts both climbed more than 1% yesterday.
On equities markets, U.S. stocks on Monday posted moderate gains, thanks a +13% jump in Tesla, after it reported better-than-expected vehicle deliveries in Q4.
Also, semiconductor stocks rallied Monday after monthly sales data from the Semiconductor Industry Association came in stronger than expected.
On the negative side for equities was Monday’s jump in the 10-year T-note yield to a 5-week high of 1.639%.
The jump in T-note yields also prompted some rotation out of growth stocks in the technology sector.
Monday’s U.S. economic data was mostly bearish for stocks.
U.S. Nov construction spending rose +0.4% m/m, weaker than expectations of +0.6% m/m.
Also, the U.S. Dec Markit manufacturing PMI was revised downward by -0.1 to 57.7, right on expectations.
In this context, Wall Street got 2022 off to a solid start with more record highs for the S&P 500 and the Dow Jones Industrial Average. In fact, the S&P 500 rose 0.6% to 4,796.56 and the Dow finished 0.7% higher, at 36,585.06.
Both indexes eclipsed the record highs they set last Wednesday.
The Nasdaq composite rose 1.2% to 15,832.80.
Smaller company stocks also rose.
The Russell 2000 gained 1.2% to 2,272.56.
Meantime, Asian shares were mixed on this morning, as worries in the region about the coronavirus omicron variant tempered market optimism on Wall Street.
Particularly, Japan’s benchmark Nikkei 225 jumped 1.7% in morning trading to 29,278.31 as markets reopened after the New Year holidays.
Among the gainers were Toyota Motor Corp., Sony Corp. and SoftBank Group Corp.
Australia’s S&P/ASX 200 jumped 1.7% to 7,570.00.
Meanwhile, South Korea’s Kospi slipped 0.3% to 2,979.23.
Hong Kong’s Hang Seng dropped 0.3% to 23,206.26.
The Shanghai Composite edged down 0.4% to 3,627.10.
On the weather side, most of the Midwest and Plains will see at least some measurable moisture between today and Friday, per the latest 72-hour cumulative precipitation map from NOAA.
But drier-than-normal conditions are likely coming next week, according to NOAA’s 8-to-14-day outlook, which predicts below-normal precipitation for most of the country between January 10 and January 16.
Seasonally warm weather is also probable west of the Mississippi River during this time.
MCondition ratings for winter wheat fell sharply during December in Kansas and Oklahoma, the top two U.S. winter wheat producers, the U.S. Department of Agriculture (USDA) said on Monday.
The USDA rated 33% of the Kansas winter wheat crop in good to excellent condition as of Jan. 2, down from 62% in late November, and down from 51% by Dec. 12.
In Oklahoma, 20% of the state’s wheat was rated good to excellent, down from 48% in late November.
Wheat ratings also declined in Nebraska and Colorado.
Roughly half of Kansas and 90% of Oklahoma are in moderate drought, according to the latest weekly U.S. Drought Monitor report, and a severe windstorm swept the Plains in mid-December.
In Montana, the No. 6 winter wheat producer in 2021, 12% of the crop was rated good to excellent, up from 7% in late-November.
But 71% was in poor to very poor condition, an expansion from 56% in late November.
Updated crop ratings were not available online for Texas, another key wheat state.
Ratings fell modestly in Illinois.
The USDA rated 75% of the Illinois crop as good to excellent by Jan. 3, down from 79% in late November.
On the demand side, the weekly Export Inspections report showed 596,092 MT of corn shipped through the week that ended 12/30.
That was down from 954k MT the week prior and below the 1.089 MMT during the same holiday week last season.
USDA also added 268,788 MT of corn shipments to past reports, which brough the season’s total to 12.898 MMT.
That is still 15% behind last season’s pace.
As for soybeans, report showed 1.192 MMT of beans were shipped during the week that ended 12/30.
That was down from 1.732 MMT last week and well below the 1.76 MMT during the same week last season.
USDA added 171,178 MT of bean exports to past reports which brough the MY total to 30.3 MMT.
That is still 23% behind last season’s pace.
As for wheat, FAS data showed 141,816 MT of wheat was shipped during the week that ended 12/30.
That was half of the prior week’s export, but 70% lower yr/yr.
USDA added 26.5k MT of shipments to past reports, which left the MYTD total at 12.087 MMT.
2020/21 shipments were 15.015 MMT as of the same week.
On the other hand, the monthly Grain Crush report showed 468.66 mbu of corn was used for ethanol production during November.
That was up from 467.9 mbu in October and was a 4-yr high for the month.
The trade was on average looking for 453.1 mbu to be reported.
MYTD corn use is 1.344 bbu through November, which is the most through the first three months since 2018/19.
Meantime, the monthly Fats and Oils report showed 190.48 mbu of soybeans were processed during November.
That was down from 196.9 mbu in October on 1 less crush day.
The trade was looking for 197.1 mbu on average.
The November crush produced 4.175m tons of meal and 2.25b lbs of oil for yields of 43.84 lbs/bu and 11.8 lbs/bu respectively.
NASS also had BO stocks at 2.415 billion lbs, compared to the 2.39b expected.
Meantime, the delayed CFTC report, had seen managed money at 373,345 contracts net long in corn as of 12/28.
That was a 12,929 contract larger net long than the week prior spurred by net new spec buying.
The PMPUs were 674,323 contracts net short, which was their biggest net short since May 2021.
As for soybean, the report showed managed money were 98,080 contracts net long in soybeans as of 12/28’s settle.
That was a 25,156 contract stronger net position on a 9.3k contract increase to managed money OI.
The commercials were 21,576 contracts more net short wk/wk to 228,233 as of 12/28.
That was their strongest net short since June. Farmer selling has picked up.
As for wheat, the weekly CFTC data showed managed money were 11,773 contracts net short in SRW as of 12/28.
That was 766 contracts more net short than the week prior on net new spec selling.
In KC wheat, spec traders were 599 contracts more net long wk/wk to 59,406 contracts as of 12/28.
The CoT report showed managed money was 12,030 contracts net long in MPLS wheat as of 12/28.
In this context, corn basis bids were steady to mixed to start the week, jumping as much as 14 cents higher at an Illinois ethanol plant and sliding as much as 4 cents lower at an Illinois processor.
Soybean basis bids were steady across most Midwestern locations but did spill 5 cents lower at an Ohio river terminal.
The funds were net sellers yesterday for 4,500 lots of corn and 6,000 lots of wheat.
They were net buyers for 6,500 lots of soybeans.
South America, is raising more and more concerns after a weekend which finally turned out to be less rainy than anticipated.
The medium-term forecasts are also hardly reassuring.
Meantime, StoneX reduced their Brazilian corn output outlook by 2.5 MMT to 117.5 MMT.
Also, StoneX reduced their Brazilian soy output outlook by 11 MMT to 134 MMT.
They citing recent crop stress.
Meantime, in the Brazilian state of Paraná, the country’s Department of Rural Economy (Deral) has lowered soybean production estimates by 38% below trend yield, which would imply a loss of 7-8 MMT.
Meantime, Brazilian corn exports in December reached 3,43 MMT.
That was 29% below year-ago volume, according to the latest available governmental data.
Meanwhile, Brazilian soybean exports in December totaled 2,71 MMT, which was significantly higher year-over-year, according to the country’s latest governmental data.
On the other hand, Argentina’s ag exports reached a record-breaking $32.8 billion in 2021, anchored by sales of several key commodities such as soymeal, soybeans, corn and wheat, per a recent report from exporter and grain processor group CIARA.
Meantime, Argentinian wheat explores new destinations.
Indeed, during last weeks Bunge loaded – 2*30k and Cargil 30k for Morocco.
Cargill sent 40k to turkey, and someone of 30k to Algeria.
On European market, beginning of the year under the sign of volatility.
For its first session of the year, Euronext had another eventful day.
In particular, wheat found itself sucked into negative territory by a rapid withdrawal of Chicago.
Corn prices showed little change in the delayed contracts while had a sharply decline for Jan deadline, as the contract aproache to expire.
Rapeseed on its part, rose again, thus confirming its violent movements of last year.
Rapeseed benefits from the firmness of soybeans but also palm, which is plagued by floods in Malaysia.
Over the calendar year 2021, malt barley prices increased by 76%, durum wheat by 74%.
Milling wheat on Euronext gained + 31% and feed barley a + 28%.
Corn prices on Euronext rose only 8% meantime.
From the Black Sea basin, Russia’s wheat export tax will hit a record US$98.20/t as of 12 January 2022, up from $94.90/t.
The Russian government approved a grain export quota of 11 million tonnes (Mt) between 15 February and 30 June 2022, including 8Mt wheat.
Markets were closed yesterday in Ukraine.
From Levant, Turkey has extended a customs tax exemption on some wheat, rye, barley, oats, maize, chick pea and lentil imports until the end of 2022, according to the country’s Official Gazette.
It also extended the customs tax exemption on sunflower seed oil until the end of June, the Gazette showed on Friday.
The exemptions were previously due to expire at the end of 2021.
From the Middle Kingdom, China’s Heilongjiang province plans to expand soybean area by 10m MU (~ 1.65m acres), or about 8%, for the coming 22/23 growing season.
This is implementation of plans announced by the government in December.
Heilongjiang is China’s largest soybean province.
From Australia, local markets had kick off on this morning after the New Year long weekend.
Meantime, Western Australian bulk handler CBH Group has received more than 20 million tonnes (Mt) of grain for the first time ever this harvest after passing the milestone on December 29.
With 2.1Mt delivered in the fortnight to January 2, the CBH intake now stands at 20.4Mt.
Meantime, Eastern states grain handler GrainCorp received more than 2 million tonnes (Mt) into its storages in the approximately two weeks of the Christmas holiday period ending January 4.
The previous reporting period, the week to December 20, saw an intake of 2.02Mt and 10.36Mt total.
Total tonnes received during the 2021-22 harvest period now amount to 12.4Mt, 14pc of which were delivered in Queensland sites, with just under 28pc and 60pc respectively into sites in Victoria and New South Wales.
Meantime, dry and warm weather conditions saw strong harvest activity throughout southern NSW, particularly the Parkes, Temora, Junee and Cunningar regions, and the Wimmera, central Victoria and north-east regions in Victoria.
The drier and warmer conditions also helped growers in northern NSW harvest their remaining crops.
Receival activity in northern NSW has now started to wrap up, with growers looking ahead to summer-cropping opportunities.
In contrast, weather creating some more havoc for the western Victorian harvest where wheat is in full swing now with rain forecast upwards of 25-50mm for the region over the next 4-8 days.
Meantime, updated shipping lineups have 0.7Mt canola still on the stem for January after shipping 0.34Mt in December.
WA is looking to ship 0.5Mt again in January, challenging the previous record month set back in November.
Canola is starting to flow onto the stem for Vic and NSW now too.
Jan is not set up as a big one yet, 0.788Mt on stem so far.
For wheat shipments we need to start seeing some 1Mt months in WA if they are going to reach their export numbers.
The production is there but the bottleneck is now elevation capacity in WA.
On international trade scene, Jordan issued an international tender to purchase 120.000 t of milling wheat from optional origins that expires January 5.
The grain is for shipment starting in July.
Iraq issued a tender to purchase a nominal 50.000 t of milling wheat from the United States and Canada that expired yesterday.
The country plans to import around 2 MMT of wheat this year, according to the director general of its state grain board.
Author: Sandro F. Puglisi
