US farm markets has been all in an uptrend yesterday.
Corn prices registered double digit gains closing at the end of the session around 2,5% higher, as the U.S. Energy Information Administration released a very bullish round of ethanol production data.
Soybeans has been also in the green but were only able to scrape together modest gains, around by 0,1% up.
The spillover strength from corn rise, along with positive demand fundamentals, helped some wheat contracts move as much as 1.1% higher.
Indeed CBT SRW futures ended the day with 0,99% gain.
In KC wheat, there was a bounce 0,7%.
MPLS wheat gained only 0,04% in December contract, however it should to note that March contracts also closed the day above $10/bu.
On macro markets, oil prices slumped to their lowest in two weeks after official figures showed a surprise jump in U.S. inventories of crude, and rising cases of COVID-19 in Europe, Russia, and some outbreaks of infections in China dented hopes for an economic recovery.
In fact, crude stocks rose by 4.3 million barrels last week, the U.S. Energy Department said, more than double the 1.9 million-barrel gain forecast by analysts.
Still, gasoline stocks fell by 2 million barrels to the lowest in nearly four years, even as U.S. consumers struggle with rising prices to fill their tanks.
Gas dropped by some 2 million barrels, meantime.
In this context, on this morning Brent crude dropped $1.58, or 1.9%, to $83.00 a barrel by 05:02 GMT, having hit a two-week low of $82.32 earlier and fallen by 2.1% in the previous session.
U.S. oil fell $1.39, or 1.7%, to $81.27 a barrel, also a one-week low, after dropping 2.4% on Wednesday.
On the financial side, in New York on Wednesday, the S&P 500 slipped 0.5% to 4,551.68.
More than three fourths of the companies in the benchmark index fell, with financial, health care and industrial stocks accounting for most of the decline.
The Dow Jones Industrial Average lost 0.7% to 35,490.69.
Both it and the S&P 500 had logged record highs the day before.
The Nasdaq edged up less than 0.1% to 15,235.84, and the Russell 2000 index of small companies took the heaviest losses, falling 1.9% to 2,252.49.
Asian shares also fell on this morning after the retreat on Wall Street.
Thus Tokyo’s Nikkei 225 index lost 0.8% to 28,867.56.
In Hong Kong, the Hang Seng gave up 0.1% to 25,613.61, while the Shanghai Composite index dropped 1.1% to 3,524.93.
The S&P/ASX 200 in Sydney shed 0.3% to 7,426.40.
Most of the blue-chip index’s stocks were in the red, led by Visa, which slumped 6.9% a day after reporting strong quarterly results.
In Seoul, meantime, the Kospi edged 0.2% higher, to 3,030.56, after Samsung Electronics reported its highest quarterly profit in three years thanks to continued robust demand for its computer memory chips.
On this morning we will see a steady flow of corporate report cards continues, with industrial bellwether Caterpillar and technology giant Apple in first position.
Amazon and Starbucks will also report their results on Thursday.
Outside of earnings, investors will get an update on U.S. economic growth when the Commerce Department releases its report on third-quarter gross domestic product late in the morning.
Rising inflation remains a key concern.
Investors are also looking ahead to the Federal Reserve’s meeting next week to see how it moves forward with plans to trim bond purchases and its position on interest rates.
Additionally, an escalating war of words across the political divide between mainland China and Taiwan, China objecting to Taiwan joining the UN, has spooked some on in equities markets.
Caming back on grains market, weather maps shows between today and Sunday, large portions of Missouri, Iowa, Illinois, Indiana and Ohio will gather at least another 1” of rainfall, per the latest 72-hour cumulative precipitation map from NOAA.
But the agency’s 8-to-14-day outlook predicts a return to seasonally dry weather for the central U.S. between November 3 and November 9, with cooler-than-normal temperatures likely for the eastern Corn Belt.
As is typical on every Wednesday, fresh news has been rather sparse also yesterday.
However, corn prices jumped higher after the EIA reported one of the largest weekly ethanol production totals on record, ledding also the others grain prices up.
Strong corn prices, indeed, have done little to temper ethanol production margins at these ethanol prices.
Consequently, we have seen weekly ethanol production up again, at 1.11 million bpd this week.
Despite that being an extra 10k bpd above last week, and the 4th consecutive weekly increase to output, stocks declined 155k barrels during the week to 19.925 million.
No new export sales flashes were reported overnight, the talk of further Chinese bean buying retreated without that confirmation.
Operators will closely scrutinize the export sales that will be posted this evening.
As for corn, estimates show the trade is looking for 800,000 MT to 1.3 MMT of corn sold during the week ending 10/21.
As for soybean, traders are expecting USDA’s weekly Export Sales data to show between 1.25 and 2 MMT of soybeans booked for the week that ended 10/21.
As for wheat estimates call for between 200,000 and 550,000 MT of wheat sales during the week of 10/21.
In this context, corn basis bids were steady to mixed, moving as much as 15 cents higher at an Iowa river terminal while dropping as much as 8 cents lower at an Iowa processor.
Soybean basis bids jumped 10 to 15 cents higher at three interior river terminals and also firmed 12 cents at an Ohio elevator while dropping 5 cents lower at an Indiana elevator and holding steady elsewhere across the Midwest.
From South America, drier weather maps for southern Brazil mid-month are opening up chances for faster field work though, with plenty of overall optimism there as conditions remain supportive to the new crop.
Meantime, Brazilian corn exports for October were 2.143 MMT according to Anec.
That is down from 2.314 MMT last season.
Brazil’s soybean exports were 3.432 MMT for October according to Anec.
That compared to 3.397 MMT last season.
The USDA post in Buenos Aires released an attaché report Tuesday raising their 2021/22 corn production forecast to a record 54.5 million tonnes.
This is 1.5 million tonnes higher than official USDA October estimate and would be 4.1 million tonnes higher than 2020/21 production (the report raises 2020/21 production 400,000 tonnes higher than official USDA figure).
The higher production is mainly from higher acreage figures but includes a slightly lower yield versus the previous outlook.
Its likely that as a dry environment come from La Nina, many producers will plant corn late.
Indeed, about 26% of the crop is currently in the ground.
USDA also sees Argentine corn exports at a record 40 million tonnes, two million higher than what the USDA forecast in October, on a combination of higher production and lower domestic consumption.
On European market, operators are becoming a little more hesitant between tight balance sheets and a potential weakening demand given the new cases of covid observed around the world, especially in China.
Indeed, wheat on Euronext remained mainly unchanged yesterday despite a still tense international market.
Corn, for its part, spurred by the ethanol sector, has motivated only a rise in the Euronext contract in March 2022.
On the other hand, rapeseed has failed in negative territory, under the weight of technical considerations and the decline in crude prices.
The Malaysian palm also recorded some losses on the Kuala Lumpur Stock Exchange after the emergence of new cases of covid-19 in many Chinese provinces.
Sowing conditions in Europe for winter crops remain favorable, but with the soaring fertilizer prices, there are also logistical difficulties with a shortage of trucks hampering deliveries.
A change of weather is however expected for the weekend.
Corn harvest, meantime, continue with generally satisfactory yields even if there is a delay in maturity, and therefore with increasing drying costs given the price of energy.
From the Black Sea basin, weather maps have been choppy.
The storm system appears to be shifting further into central Russia and Ukraine with less mid-month rain forecast for the Volga River valley.
Dry conditions in Ukraine and Russia could result in lower planted acres of winter wheat for the 2021/22 season.
For Russia, that means a possible reduction of 3.8% from a year ago.
In Russia, indeed, 17.5 million hectares have been sown to date, against 18.2 million last year to date.
Large portions of the Black Sea region have received between 30% and 60% of normal precipitation in recent weeks, according to Sovecon’s Andrey Sizov.
Meantime Russia reported 44m HA of wheat had been harvested – or 93.5% of area as of 10/23.
Production was tallied at 118.5 MMT before drying.
USDA’s October forecast was to see Russia’s 21/22 wheat crop at 72.5 MMT.
On the other hand, according to the Ukrainian Ministry of Agriculture, Ukraine has exported since the start of the season 18.2 million tonnes of cereals including 11.7 million wheat, 4.2 million barley and 2.0 million corn.
Thanks to a record-breaking harvest this season, Ukraine’s total grain exports are up 18.2% from a year ago so far.
The ministry forecasts for this season total wheat exports to the tune of 24.5 million tonnes of wheat, 30.9 million corn and 4.2 million barley.
However, prices changed little yesterday on the Black Sea basin as reduced physical activity.
From the Middle Kingdom, China’s January 2022 corn futures hit one million volume.
The volume was the largest since February and the third highest of the year.
Prices are still pretty far off year’s highs seen in May, but they have rebounded strongly from the lows hit last month.
Investors have increasing concerns over logistics, weather, and domestic production.
USDA, indeed, sees China’s production at 273 MMT, which is up from last year’s harvest at 261 MMT.
China’s ag ministry, meantime, cut production 850,000 tonnes, expecting total production at about 271 million tonnes, about two million less than forecasted by the USDA.
Additionally, late-season rains have raised quality and harvest concerns.
Feed demand for China remains robust, meantime.
China sees itself importing at 20 million tonnes.
USDA sees the figure at 26 million, down 7% year-over-year.
From Australia, local cash markets remain under some pressure as northern harvest volumes increase and trade bids decrease.
Harvest pressure in southern Queensland and far northern New South Wales has seen barley values drop by $20 per tonne or more in the past week.
However, wheat has inched higher this week to reflect the later-than-normal harvest.
Weather maps remain wet for northern and central NSW mid-month, but latest runs are starting to take the totals down slightly, dropping under an inch for more western areas.
South Australia, NSW and Victorian growing areas north of the Western District had a mostly dry week, but Western Australia had widespread rain with most gauges in the growing regions catching 10-25mm.
Heaviest falls occurred in the Central Highlands, where harvest is all but over, and rain has bolstered subsoil moisture ahead of summer planting of sorghum.
Since yesterday, rain and hail has hit some crops in WA, and SA’s Eyre and Yorke peninsulas.
In add, wheat is also finding significant support from export accumulation at South Australian ports in particular as traders post some shiny bids in south-west NSW and north-west Victoria to compensate for a below-average crop in the drier regions.
Internationally, Egypt has returned to purchasing for loads in early December.
In all, Gasc contracted 360 kt of Black Sea wheat (180 kt Russian, 120 kt Ukrainian and 60 kt Romanian) at an average price of $ 359.95 / t C&F ($ 327.98 / t Fob), i.e. a inflation of nearly $ 8 / t compared to the previous deal concluded at the start of the month.
Jordan passed on all offers from its international tender to purchase 120.000 t of wheat that closed earlier yesterday.
The country has struggled to close similar deals, although it did buy 60.000 of wheat last week.
We wish you a good day.
