On Tuesday, US farm markets closed mixed.
Corn prices tried to extend the rally into Tuesday, but by midday prices turned red.
Thus new crop December closed down 1,04% at $5.73.
Soybean prices initially started Tuesday’s trading with gains before slipping into midday.
However, in the afternoon session, action then rallied prices back by 0,62% higher, to close at 1255.75/bu.
Meal prices rallied back around 2,46%, leaving December contracts at the highest quote since the Grain Stocks report day drop.
Soybean oil prices were substantially firm, with modest gains around 0,03%, after having spent most of Tuesday weaker.
Winter wheat futures stayed red, while the spring wheat market rallied back once again.
Indeed, yesterday trading in SRW saw gains to new contract highs initially before fading into midday and ending the day 0,72% weaker.
KC traded similarly, lefting December below by 1,02% for the close.
Minneapolis prices, meantime, were unchanged.
On macro markets, oil prices fell on this morning.
API yesterday reported for the sixth straight week that crude oil and distillate fuel inventory’s rose last week while gasoline declined.
Particularly, crude stocks rose by 3.6 million barrels for the week ended Oct. 29.
Distillate stocks rose by 573,000 barrels.
While gasoline inventories fell by 552,000 barrels.
Data from the U.S. Energy Information Administration, the statistical arm of the U.S. Department of Energy, will be released later on this morning.
Meantime pressure also mounted on OPEC to increase supply, after that US President Joe Biden, speaking at a climate summit in Glasgow, blamed the surge in oil and gas prices to a refusal by OPEC nations to pump more crude and threatened to tap their Strategic Petroleum Reserve.
Thus, Brent crude futures fell $1.03, or 1.2%, to $83.69 a barrel by 07:24 GMT, after dropping to a session-low of $83.27 earlier.
U.S. West Texas Intermediate (WTI) crude futures tumbled $1.30, or 1.6%, to $82.61 a barrel, after dropping to a low of $82.26 earlier.
Meantime, the Baltic Dry Shipping index fell another 91 points yesterday to close at 3428 points.
The index is now 39.3pc off the highs printed back in early October.
On the other hand, Mosaic Co, the world’s largest phosphate producer, expects the fertiliser price surge to continue.
In a company statement it indicated 90pc of fourth quarter sales are committed and priced but did acknowledge the impact of changing cropping rotations are still being ascertained.
On the financial side, after the Dow increased by 0,39% setting at 36,052 points – a new record high – markets were mixed yesterday, buoyed by favorable third quarter corporate earnings but stalled by economic growth concerns in China, tight global energy supplies, and the looming prospect of the Federal Reserve tapering back its asset purchase program.
Thus, the S&P closed at 4,623.50, gaining only +17.75 points or +0.39%.
The Nasdaq composite index, closed at 15,961.25, gainig +67.00 points or +0.42%.
Coming back on grains market, as of yesterday, cooler temperatures blanketed the Heartland.
According to NOAA’s short-range forecasts, a mix of snow, ice, and rain will batter Colorado and Western Nebraska before shifting into Kansas, while showers will likely hover over Oklahoma and the Texas Panhandle for the next 24 hours.
Michigan is also likely to see a rain-snow mix in the next 24 hours.
Both regions are likely to see a half inch of precipitation during that time period, with some regions experiencing as much as an inch of accumulation.
Meantime, corn futures tumbled, despite were reported by USDA slower than expected corn harvesting rates this week.
The weakness in the wheat market and lower energy markets pushed prices lower.
The harvest pressure pulled cash bids around the Midwest lower at elevator and processor facilities, meantime.
In add an US ethanol trade group Growth Energy plans to sue the US EPA over an alleged “failure to fulfil the agency’s statutory obligation” as it has delayed the proposed biofuel blending rules for 2022.
Ethanol accounts for just over 40pc of total domestic corn use in the US.
Soybeans also saw somewhat of a slowdown in harvest pace, but in this case prices continued to keep some gains mainly led by soymeal futures prices that clawed out over a 2% gain yesterday as poultry demand in the South begins to rise ahead of peak chicken demand season ahead of New Year’s.
As for wheat, profit-takers cashed in on the recent rally in the wheat market in the absence of new market news.
A stronger dollar and concerns about Australian’s bumper wheat harvest also limited gains in the wheat complex.
Traders are now likely to be cautious while waiting for the next USDA report on Tuesday, November 9.
From Canada, while there has been widespread precipitation in parts of Western Canada, a large portion of Alberta and Saskatchewan still have soil moisture levels well below average.
Meantime, in shipping week 12, Canadian spring wheat exports recovered slightly from the week before at 185.5k mt.
This is still well below the 249.4k mt worth of weekly sales needed to reach AAFC’s export estimate.
Meantime, stocks in Eastern ports continue to grow and there are now 1.1 million mt of wheat ready to export from Eastern terminals with an additional 238k mt sitting in Vancouver.
Total visible supplies (stocks in primary elevators, process elevators and export terminals) are at a 3-year record of 2.85 million mt as grain companies are trying to secure stocks.
Total grain deliveries of 4 million mt, indeed, indicate that 22% of the total Canadian wheat crop has been delivered into the grain handling system.
Thus, as we can see, deliveries lag compared last year by 20% when the crop was ~36% smaller.
As for durum wheat, Canadian farmers continue to see no reason for the durum market to fall and at this moment, they are not available to sale down below $21/bu.
Indeed, as a consequence of the rise in elevators’ cost this week, Canadian durum exports have slowed a lot, to reach only 4.1k mt.
Particularly, elevators’ cost this week was at CAD $110.49, up $3.24 from $107.25/mt of previus week.
That partly eroded basis bids by $11.02, quoting now at $723.46 ($19.53/bu) down from $734.48 prior week.
For the season, total Canadian durum wheat exports are now at 739k mt.
This is 19% (-174k mt) less than last year.
Canadian farmers have delivered to elevators roughly 26% of their total production for the year.
That is 5% ahead of last year.
Canola futures, while elevated, continued to gain ground.
With nitrogen prices ramping higher and glyphosate near impossible to source the speculators have decided canola will struggle in the acreage war.
From South America, weather delays are certainly not an issue for Brazil this year as bean planting continues to charge forward at the second-quickest pace on record.
According to AgRural, 52% of the acreage is now planted, which is 10% ahead of last year and nearly 12% ahead of the 5-year average.
First crop corn planting also moved forward by 10%, reaching 63% complete, which is 9% ahead of last year.
While weather conditions in Argentina have improved some, the pace of planting has not increased significantly.
It is estimated that 4.6% of the beans and 27.6% of corn are now in the ground.
This is close to an average pace for corn but is 8% behind in corn.
According to the Argentina Soybean Association, farmers in that country will plant the fewest beans in 15 years.
On European market, Euronext continued its fine bullish ascent, notably with wheat prices which will now seek new historical records.
In fact, we have to go back to 2007 and 2008 to see such price levels, in a context of rising all raw materials, agricultural or not.
The tension is perceptible on all commodities, coupled not only to a lack of supply, but also to an extreme tension in the means of transport, whatever they are.
Rapeseed, for its part, took advantage of the revival of soybeans and Malaysian palm to go close to 700 € / t!
Weekly export data from the European Union was not published yesterday.
That provided no indication of export rates out of the E.U. over the past week.
The next edition will come out on November 09, 2021.
It should to note that this season is presenting as a larger than usual wheat export season for E.U. exporters.
From the Black Sea basin, Ukraine’s Ag Ministry reported winter grains planting at 90% of expected area.
That includes 6.1m HA of winter wheat.
That is 91%, as of November 1, out of an expected total of 6.66 million, up 9% from sowings for the 2021 growing season.
All signs point to a record grain crop for Ukraine by next summer.
Wheat prices, meantime, posted new season highs yesterday for both Russia and Ukraine.
Only corn prices in Ukraine gave up a little ground in a context of harvest pressure.
Logistical problems are also observed locally.
From the Middle Kingdom, the Chinese government cautioned its citizens to begin stockpiling food for the winter as COVID outbreaks, excessive rains, supply chain issues, and energy shortages ahead of cooler temperatures increase uncertainty in the world’s second largest economy.
The Chinese government is also cracking down on grain losses during harvest, in addition to food waste in kitchens, as part of a campaign launched by President Xi Jinping to combat growing food insecurity in the world’s second largest economy.
The government will offer subsidies for grain drying equipment so farmers can reduce grain spoilage in storage, which will be especially crucial this year as unseasonably heavy rains this fall docked quality points for freshly harvested Chinese grain crops.
Meantime, Chinese State reserves sold 100% of soybeans from offered 52395 mt. ~CIF China port 789 usd equivalent.
Despite slim profit margins, new players in China’s hog market are determined to continue production.
China’s hog herd expanded over the past year in a government-sponsored effort to rebuild after the 2018 African swine fever (ASF) epidemic killed over half of China’s hog herd.
The rising volume of pigs sent profit margins into the red for much of the 2021 calendar year.
Government officials told farmers to cull less efficient breeding stock in a memo released last month to curb rising hog supplies.
But switching to cheaper feed rations and a hog price rally last month has encouraged some of the smaller growers to stick it out until more headwinds rear up in the industry.
From Australia, the Aussie dollar came under pressure after the RBA Governor Philip Lowe said it was still “likely to take some time” for inflation to return to target.
Meantime, yesterday the Victorian trade was out of action for the day due to the Melbourne Cup.
Cash wheat bids were a touch firmer in northern and central NSW as protein bids rose $4-5/t.
Barley and canola bids were also higher.
Harvest pace continues to ramp up along the east coast. GrainCorp reported strong receivals at 1.5 million tonnes all commodities while in South Australia the Viterra system has received 43,500t and WA CBH 760,000t.
Rain pushing through South Australia and Victoria today is expected to slow harvest progress, particularly in the north east of SA.
Meantime, the rail line connecting Moree and Bellata reopened as scheduled on Monday and is already carrying loads of new-crop wheat from north-west New South Wales to the Port of Newcastle.
The line closed on April 10 to allow upgrades to take place as part of the Inland Rail project, and next winter, the remainder of the Narrabri North-Moree section will close to complete the upgrade.
In the meantime, the rail line will play a vital role in shifting what will be another bumper winter crop in eastern Australia for GrainCorp, its biggest bulk handler, and other operators including Arrow, CHS Broadbent and LDC.
Pacific National (PN) hauls for GrainCorp, and expects to be moving up to 800,000t a month by running up to 30 grain services every 48 hours throughout NSW and Victoria.
On the international scene, Japan is buying a little over 143,000 t of milling wheat with 56,508 MT from the U.S. specifically, while the rest is from Canada or Australia.
Pakistan has sit on India request to let trucks take its wheat to Afghanistan.
The task of moving 50,000 metric tonnes of wheat to Afghanistan would require sending 5,000 trucks via Pakistan.
Conab holds auctions for the purchase of 56.2 k of corn.
Author: Sandro F. Puglisi
