The month of November begins with the fireworks for the wheat contracts, prices for which jumped substantially higher at the start of the week.
A strong international demand and continuous worries on global supply, indeed, pushed higher most contracts with gainis between 2% and 3% yesterday.
Particularly, Kansas City HRW contracts surpassed the $8 per bushel benchmark for the first time since 2014.
Minneapolis contracts has been steadily towards $11 per bushel.
Corn prices also found double-digit gains, muving up around 1,9%, partly spurred by a harvest slowdown from rainy weather this past week and by the spillover from rally in wheat prices.
Soybeans finished the session narrowly mixed, meantime.
On macro markets, oil prices were steady on this morning as key producer group OPEC undershot its expected pace of output increases last month, while the world’s top oil consumer China ramped up operating rates to meet a spike in diesel demand.
OPEC, indeed, pumped 27.50 million barrels per day (bpd) in October, the survey found, a rise of 190,000 bpd from the previous month but below the 254,000 increase permitted under the supply deal.
Meanwhile, national oil firms in China have ramped up refinery run rates, increasing its appetite for crude oil, to avert a diesel shortage in the world’s second-largest oil user.
Thus Brent crude futures edged higher by 3 cents to $84.74 a barrel by 05:07 GMT, while U.S. West Texas Intermediate (WTI) crude futures slipped by 7 cents, or 0.1%, to $83.98 a barrel.
On the financial side, overnight, Wall Street advanced to record highs helped by gains for energy shares and Tesla.
Thus the Dow Jones Industrial Average .DJI rose 0.26%, after eclipsing 36,000 points for the first time during intraday trading.
The S&P 500 gained 0.18% while the Nasdaq Composite added 0.63%.
Currency moves were slight in morning trade with the dollar hovering below recent highs after posting its biggest daily rise in more than four months last Friday.
Meantime, Asian shares were mixed on this morning and currencies held tight ranges.
Nervous investors are awaiting several key central banks meetings that could set the tone for risk appetite heading into next year.
The immediate focus is on the Reserve Bank of Australia’s (RBA) meeting programmed for this morning.
While the Federal Reserve and Bank of England due to hold their policy decisions later in the week.
A drop of the RBA’s key policy measure targeting ultra low short-term rates would signal a change to the bank’s dovish stance and could be a preamble to the Fed’s meeting that markets expect will mark the start of its bond buying tapering.
Thus, MSCI’s gauge of Asia-Pacific shares outside Japan recovered early losses to be 0.8% higher at 01:28 GMT, while Japan’s Nikkei edging 0.2% lower and Australia’s S&P/ASX 200 down 0.6%.
Australian government bonds fell, with the 10-year benchmark yield five basis points higher at 1.973%, ahead of the RBA’s post-meeting announcement scheduled for 3:30 GMT.
Chinese shares opened slightly lower, with local blue chips trading down 0.09%, though the Hong Kong benchmark HSI was up 1.8%.
South Korea’s KOSPI index opened 1.50% higher.
Coming back on grains market, weather conditions should stay relatively dry across the central U.S. later this week, with very few places expected to gather more than 0.1” between today and Friday, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook expects drier-than-normal conditions to hold across the Midwest and Plains between November 8 and November 14, with seasonally warm weather likely for the central during that time.
Meantime, yesterday’s NASS Crop Progress data showed corn harvest was 74% complete as pf Oct. 31.
That was up 8% points through the rainy week, but remains about a week (8% points) ahead of the 5-yr average.
Milo harvest was reported at 80% complete, which was up 9% points and 10% ahead of the average.
NASS data also showed soybean harvest had progressed to 79% complete.
That was below the trade’s anticipation and only up 6% points wk/wk reflecting the rainy weather last week.
The 5-yr average is to be 81% finished.
Winter wheat planting, meantime, reached 87% as of 10/31 according to NASS.
That was up 7% points from last week, and is now just 1% point ahead of average.
Planting in Illinois only advanced 3% points on the week and Ohyo was only 5% more planted at 70% and 80% respectively.
Emergence was up 12% points to 67% – 68% is the average.
Winter wheat conditions seen as the Good/Ex dropped 1 to 45% meantime vs. 46pc last week & 43pc last year.
Meantime, fertiliser price continues to grind higher.
The North American Fert Index, indeed, hit all-time highs.
On the demand side, corn exports during the week that ended 10/28 reached 5.422 MMT for the season.
That was up 619k on the week, but still trails last year’s pace by 1.5 MMT (21%).
Mexico was the top destination for the week’s exports with half of the total.
USDA also added 89k MT of late reported corn exports late to recent weeks.
As for soybean, USDA’s weekly Export Inspections report showed 2.272 MMT of soybeans were shipped during the week that ended 10/28.
Of that, 1.432 MMT were to China.
The USDA also added 356,138 MT of soybean shipments to China reported late, along with an additional 96k MT of late reported beans for recent weeks.
Accumulated soybean exports were up to 10.864 MMT as of 10/28 – compared to 17.17 MMT at the same point last season.
In add, USDA reported a large 132,000 MT soybean sale to China yesterday via mandatory announcement.
As for wheat, USDA’s weekly Export Inspections report showed 115,341 MT of wheat was shipped during the week that ended 10/28.
That was down from 197k MT last week and from 313k MT the same week last year.
Accumulated exports were up to 9.651 MMT as of 10/28, which compares to 11.4 MMT at the same point last season.
And still, continuing to analyze the demand side, USDA reported 457 mbu of corn was consumed during September, with 407 mbu for ethanol.
That was ethanol’s largest September pull since 2018, but was still 1.6% below August.
Also in the monthly update, NASS showed 1.761m tons of DDGS were produced which was a 7 month low.
As for soybean, September’s soy crush was 164.14 mbu.
That was lightly above the average trade guess for 163.3, but was still below August’s 168 and Sep 2020’s 171 mbu.
Soy oil stocks were reported at 2.177 billion lbs, when 2.19 billion were expected.
In this context, corn basis bids were mixed, dropping 2 to 10 cents lower at two ethanol plants while firming 2 to 10 cents higher across five other Midwestern locations.
Soybean basis bids showed some variability, moving as much as 10 cents higher at an Indiana processor while falling as much as 10 cents lower at an Illinois river terminal.
From South America, some Brazilian truckers are engaged in demonstrations to protest high fuel prices, but these actions have not led to any road or port disruptions yet.
The country is struggling with double-digit inflation, due in part to rising diesel prices.
Meantime, according to AgRural, 52% of soybean areas in Brazil would be sown on October 28, compared to 42% last year.
That was up by 14% points on the week, and remains at the second fastest pace on record.
Thus the sowing takes place in good conditions.
The sowing of first harvest maize is 63% compared to 54% last year to date, meantime.
In Argentina, the Buenos Aires Grains Exchange reported Argentina soybean planting at 4.6% complete as of 10/28.
BAGE also estimated the 2022 Argentina wheat crop at 19.8 MMT.
That was up 600k MT from their prior figure, but remains 200k MT below the USDA estimate.
Also on European market, wheat prices soared at the start of the week.
December milling wheat on Paris-based Euronext settled up 8 euros, or 2.8%, at 291.25 euros a tonne after peaking at 293.25 euros, the highest level for the front month since March 2008.
The demand on the international scene is the main driver of this increase.
As for oilseeds, Strategie Grains lowered its forecast for this year’s European Union rapeseed harvest to 16.97 million tonnes from 17.03 million estimated last month.
In add, canola posts a new all-time high amid a catastrophic harvest this year in Canada and farmer retention for sale.
In this context, rapeseed also has posted new highs on the February Euronext deadline at nearly € 690 / t.
The only exception on Euronext yesterday, was the November corn contracts, as they were close to deadline, settling lower.
Meantime, the European Commission reported 2021 corn harvest at 67.8 MMT, compared to the prior 68.8 MMT guess.
The European Commission also reported 2021 wheat harvest at 130.3 MMT, which was down from their 131 MMT September forecast, reducing output mainly in France, Romania, and Hungary.
From the Black Sea basin, grain prices progressed all yesterday in the wake of other international places.
However, Russia remains competitive despite the surge in prices and export taxes which will rise next week to 69.90 usd / t.
The Russian origins were in fact the ones chosen yesterday by Egypt in its latest wheat tender.
Russia, however, exported 15.3 million mt of wheat, down 14% over the year, according to data released by the Russian Federal Service for Veterinary and Phytosanitary Surveillance on Nov. 1.
Russia’s cumulative wheat exports for the year were at 14.7 million mt till Oct. 21.
Turkey remained the largest buyer of wheat from Russia, having purchased 3.1 million mt as of Oct. 28 in MY 2021-22, followed by Egypt at 1.9 million mt.
Kazakhstan overtook Saudi Arabia to become the third largest buyer of wheat from Russia, having increased its purchases to 800,000 mt.
S&P Global Platts Analytics has projected Russian wheat exports at 36.5 million mt in MY 2021-22.
Russian consultancy Sovecon estimates that the country’s wheat exports in October reached 34 million mt, up from September’s tally of 33 million mt.
In MY 2020-21, Russia had sold 38.5 million mt of wheat, according to data from the US Department of Agriculture.
Certanty the pace of Russian wheat exports has been declining since August likely because the taxes on exports have been consistently rising.
All Russian grain exports figure was seen 17.9Mt which puts barley down 33pc from last year pace.
On the weather side, rains are expected in Ukraine over the weekend, which could delay the corn harvest.
Meantime, Ukraine has exported 19.4 million metric tons of grain since the 2021/22 marketing year began in July, per the latest data from its agriculture ministry.
That includes 455.6 million bushels of wheat and 90.5 million bushels of corn.
Ukraine’s total grain exports this year could rise more than 37% after it finishes securing a record-breaking harvest in 2021.
From the Middle Kingdom, China’s CNGOIC is now matching the WASDE estimate for Chinese 2020/21 corn production at 273 MMT, up more than 4% from year ago.
From Australia, the increased likelihood of consecutive La Niña weather patterns has raised concerns for global winter crop production over the next twelve months, increasing the prospects of continued market volatility as consumers scramble to cover open positions in a falling supply environment.
According to the Australian Bureau of Meteorology’s latest climate update, indeed, the El Niño–Southern Oscillation (ENSO) outlook remains at La Niña “alert”, meaning the chance of a La Niña event forming in the next few months is around 70pc.
Recent cooling in the tropical Pacific Ocean has temperatures approaching La Niña thresholds, and most models suggest further cooling is highly likely.
La Niña-like conditions usually increase the chances of below-average precipitation in East Africa, Central Asia, southern South America, southern United States, northern Mexico, and the eastern regions of East Asia.
Conversely, the weather phenomenon typically increases the chance of above-average precipitation in parts of Southeast Asia, Australia, Southern Africa, and northern South America.
In fact, the rains are just coming there!!
And as the weather models now all start to align along the east coast, there is a race to get as much harvest done before a wet week starting Thursday.
SNSW should to be able to handle this rain, so no particular concerns just yet with crops being later and having such a remarkable mild finishing period.
Meantime, Aussie markets kicked off the week with a mixed bag on the cash grower bid boards.
Protein wheat again was a buck or 2 stronger in the north and east coast barley off $4-5/t.
Canola bled lower again with east coast markets off $10/t while WA remained unchanged at $995 FIS Kwinana.
The spread between WA and east coast canola now has extended to around $100/t.
The theme of harvest pace through the north continues to be slow going in the large crops.
Barley crops are exhibiting a lower protein profile lending themselves to a higher malt selection rate.
Yields have been pleasing with notionally ~10% extra from initial conservative estimates.
Early canola through the Central West has seen excellent yields & fantastic oil average.
On international trade scenario, Saudi Arabia bought 1,268 million tonnes of wheat this weekend, more than double the expected volume, at an average price of $377.54 cost and freight (C&F) a tonne.
The arrival period is January/April 2022.
Egypt, for its part, bought 180,000 t of Russian wheat in its last call for tenders.
The prices on the Egyptian tender range between 363.83 and 364.48 usd / t cif.
The grain is for shipment between December 11 and December 20.
Author: Sandro F. Puglisi
