All US farm markets moved lower yesterday.
Corn and the oilseed complex were down in under profit taking and in the wake of oil prices.
In add, soybean long holders are becoming increasingly concerned about the impact of the global fertiliser rally.
Consequently, one logical outcome is for the US farmer to switch from the fertiliser-hungry corn into soybeans and/or spring wheat.
Wheat prices trended lower again due to the spillover from corn and soybeans weakness, plus a strengthening U.S. Dollar, that applied additional headwinds.
Traders, meantime, have begun squaring their positions ahead of the next World Agricultural Supply and Demand Estimates (WASDE) report, out next Tuesday.
Meantime, the consensus seems to be that the agency will show bigger corn and soybean yield and production potential versus its October estimates.
Thus, corn prices fell 0.8%.
Soybeans slid 1.75% lower.
Some wheat contracts lost nearly 2.5%.
On macro markets, oil prices rose on this morning, staging a partial recovery after OPEC+ producers rebuffed a U.S. call to raise supply and instead maintained plans for a gradual return of output.
The ministerial meeting overnight of the so-called OPEC++ decided modest oil production increases for December overnight, despite heavy lobbying by the US to crank up the pumps. The 400,000bbl per day increase fell short of the White House’s wishes with the Biden Administration quick to speculate that the lack of oil could stumble the post COVID recovery.
Thus, Brent crude rose 53 cents or 0.7% to $81.07 a barrel by around 0805 GMT, after falling nearly 2% on yesterday session.
U.S. oil gained 96 cents or 1.2% to $79.77 a barrel, having declined 2.5% in the previous session.
OPEC’s decision will have meaningful bearing on the US tapering decisions given the pressure higher energy costs have on households which, when coupled with natural gas have been difficult to manage.
Meantime, on equity market, US stocks settled mixed yesterday, with the S&P 500 and Nasdaq 100 all posting new all-time highs.
Strength in technology stocks was a supportive factor for equities today, along with reduced interest rate concerns.
Global bonds yields tumbled after the BOE refrained from tightening policy at its meeting on Thursday.
Equities also found support on strength in the U.S. labor market after weekly initial unemployment claims fell to a new pandemic low.
Weekly initial unemployment claims, indeed, fell -14,000 to a 19-1/2 month low 269,000 showing a stronger labor market than expectations of 275,000.
Conversely, Q3 nonfarm productivity fell -5.0% (q/q annualized), weaker than expectations of -3.1% q/q and the biggest decline in 40 years.
Also, the U.S. Sep trade deficit was a record -$80.9 billion (data from 1992), wider than expectations of -$80.2 billion and a negative factor for GDP growth.
Thus the S&P 500 Index closed up +0.42%, the Dow Jones Industrials Index closed down -0.09%, and the Nasdaq 100 Index closed up +1.25%.
Meantime, shares were mostly lower in Asia on this morning, with Chinese markets weighed down by concerns over property developers.
Benchmarks fell in Shanghai, Hong Kong, Tokyo and Seoul but rose in Sydney and Taipei.
Jitters over troubles in the property sector flared after Kaisa Group, a Chinese developer, announced that Hong Kong-traded shares in its companies were suspended after it failed make payments on wealth products it had guaranteed.
Tightened controls on borrowing by highly leveraged real estate companies have been rattling markets.
The government has also been ramping up controls on wealth management.
In this context, Hong Kong’s Hang Seng index dropped 1.4% to 24,878.42.
The Shanghai Composite index lost 0.9% to 3,493.88.
Tokyo’s Nikkei 225 index shed 0.6% to 29, 611.57, while South Korea’s Kospi declined 0.5% to 2,960.27.
In Sydney, the S&P/ASX 500 gained 0.4% to 7,456.90.
Coming back on grains market, between today and Sunday, only trace amounts of rain or snow are expected to fall anywhere in the Midwest or Plains, per the latest 72-hour cumulative precipitation map from NOAA.
Some seasonally wet weather could return to parts of the eastern Corn Belt and upper Midwest between November 11 and November 17, with near-normal temperatures likely during this time, per NOAA’s latest 8-to-14-day outlook.
Meantime, USDA’s weekly Export Sales report showed 1.224 MMT of corn was booked during the week of 10/28.
Thus, corn exports improved 37% from a week ago and moved 10% above the prior four-week average,
Mexico was the top buyer, with about half of the total.
Accumulated commitments were up to 1.22 billion bu as of 10/28.
That is 6.6% behind last season’s pace while the USDA was expecting a 9.2% reduction yr/yr in the October WASDE.
Corn export shipments, meantime, titled 9% higher from a week ago even if stayed 17% below the prior four-week average.
As for milo, weekly FAS data showed 265,560 MT of milo was sold for export during the week ending 10/28.
That was a MY high and moved accumulated commitments to 3.017 MMT – compared to 3.819 MMT at this point last year.
As for soybean Weekly Export Sales data showed 1.864 MMT of soybeans were sold during the week ending 10/28.
Thus, soybean exports improved 19% versus the prior four-week average.
China was the largest buyer for the week, having booked 775k MT through the week – 510k MT previously reported as unknown were also switched to China.
Soybean export shipments jumped 46% above the prior four-week average, however, total soybean commitments sat only at 1.19 bbu as of 10/28.
That is down 33% from last season’s pace, while USDA had a 7.7% yr/yr decrease penciled in for the October WASDE.
USDA data also showed meal bookings at 226,588 MT for the week that ended 10/28.
That was 40% higher for the week, 14% above the same week last year, and at the top end of the expected range.
BO sales were in the middle of pre-report estimates at 11.2k MT.
That was up 88% from the same week last year, though MYTD commitments trail last season’s pace by 40%.
As for wheat, export sales data showed 400,102 MT of wheat was booked during the week that ended 10/28.
That was 48% higher on the week and at the top end of the expected range, though still 33% below the same week last year.
Mexico was the top buyer, with 1/4 of the total, while Chinese business was a net cancelation of 100 MT.
Total wheat commitments as of 10/28 were 477.9 mbu, which is 54.6% of USDA’s October forecast and 23% behind last season’s pace – when the October WASDE called for a 12% drop off.
Wheat export shipments slumped 60% below the prior four-week average.
As we can see, really US export sales lagged with China taking their foot off the pedal, both in new purchases and cancellations of existing sales.
This folds into wider concerns about China’s commodity appetite.
US soybeans continue to wait for the phone to ring as buying by China becomes a very distant memory.
Export sales, indeed, have lagged with the main global buyer dragging their heels on last year’s pace.
According to the USDA, China could import 101 million tonnes of soybeans this year, exceeding the previous season’s record of 99.8 million tonnes.
With soybean export commitments running 33pc behind last year and things looking pretty good in South America from a weather perspective the bean complex looks heavy.
As for wheat, still according to the USDA, India could export 5 million tonnes of wheat this year.
Meantime, Census data shows 100.4 mbu of corn was shipped during September.
That was down from 154 mbu during the same month in 2020.
For September milo exports, Census confirmed 242,802 MT were shipped, which was also down from 399,888 MT last year.
As for soybean official September export data from Census showed 79.6 mbu of beans were shipped to start the 21/22 marketing year. That was a 7-yr low for the starting month and compared to last year’s record 264 mbu.
For meal, 724k MT shipped in September ended the MY with 12.49 MMT shipped.
BO shipments during the 20/21 MY were 781,766 MT as September data came in at 15,362 MT.
As for wheat, monthly Census data showed 84.86 mbu of wheat was shipped during September.
That was down from August’s 96 mbu and vs. 98.6 mbu in September 2020.
MYTD wheat exports were 330.2 mbu through the first four months, or averaging 82.5 mbu/month compared to the 72.9 mbu average monthly pace required to hit USDA’s October 875 mbu target.
USDA will update their S&D tables next Tuesday.
In this context, corn basis bids were steady to mixed across the central U.S. yesterday, firming 8 cents at an Illinois river terminal while dropping 2 to 11 cents at four other Midwestern locations.
Soybean basis bids were mostly steady, but did drop 8 cents at an Illinois processor while firming 6 to 10 cents at two other Midwestern locations.
From South America, the beneficial rains allow the Buenos Aires Stock Exchange to display its optimism about the next wheat harvest estimated at 19.8 million tonnes, that of corn at 55 million and that of soybeans at 44 million.
Meantime, Argentine soybean planting was pegged at 7.1pc complete, up from 4.6pc last week.
Corn was 28.4pc in the ground vs 27.6pc last week according to the Buenos Aires Grain Exchange.
On European market, wheat resisted on the strength of strong global demand, however traded without a clear trend, before picking up some fractionally gains at the end of the session.
In dollars, netherless, the market retains an upward potential on the basis of historical prices.
Corn prices continue to find support due to the delay in harvesting operations, in particular with logistical and grain drying difficulties.
In the wake of canola also, rapeseed gave way yesterday at the fence.
The rebound in covid cases around the world worries operators with a rebound in economic activity which could therefore be undermined if the pandemic were to resume.
Meantime, FAO posts food prices to the highest for 10 years, since July 2011.
It estimates the world production of cereals at 2.793 billion tonnes against 2.8 billion estimated last month.
The market is out of balance this year with demand exceeding supply, leaving no room for any weather incident for next year.
From the Black Sea basin, Ukrainian farmers harvested 61% of corn planted areas.
Current average yield is now at 6.82 mt/ha vs 6.44mt/ha LW.
That means 22.81mmt corn crop.
Sunseeds is now 95% harvested
Current average yields are now 2.38 mt/ha vs. 2.31mt/ha LW.
That means 14.72mmt sunseed harvested.
Russia harvested 96.7% of wheat areas with 77.96mmt.
Sunseed is now 94.2% harvested with 14.56mmt.
It is still the water deficit that raises concerns in the realization of the autumn sowings both in Ukraine and in Russia.
Despite this, the prices of cereals gave up a little ground yesterday in the wake of the other places.
Note a clear resurgence of cases of covid in this region, with in particular a most worrying situation in Russia.
From the Middle Kingdom, Chinese authorities are trying to reassure the population about a shortage of certain food products after inviting the population to build up stocks.
Indeed, China’s vegetable production is “basically normal” and the country has enough wheat stocks to meet 1.5 years of demand, said agriculture officials on Thursday.
Chinese people rushed to stock up on vegetables and grain this week after the commerce ministry urged residents to make sure they had enough daily necessities at home in case of emergencies.
From Australia, weather maps are predicting falls of 80-100mm for large part of the east coast over the next 15 days.
Showers expected in parts of SA over the weekend will slow things down again.
As rain has started to fall along the east coast quality is now a concern and was reflected in the wheat market yesterday.
A large portion of harvest through northern NSW has all but pulled up now and, with more moisture on the way, could be at a standstill for a good week.
Consequently markets got a run on!
Wheat took off yesterday afternoon with both the trader and the Jan ASX Eastern wheat futures market all being bid up.
The trade market finished firmer by $5-10/t while the grower cash boards were a fraction quieter.
APW and better grades of wheat were $2-3/t stronger.
Barley was relatively unchanged over the course of the day and canola was back down $10-20/t in WA and Vic/NSW.
Meantime, Australia exported 32,729 tonnes of malting barley, 514,815t of feed barley and 252,729t of sorghum in September, according to the latest export data from the Australian Bureau of Statistics (ABS).
The malting figure is down 52pc from the August total, with Ecuador and Peru both destination for 13,000t cargoes accounting for most of the volume.
The feed tonnage was down 12pc on the month, with Saudi Arabia on 131,557t, Kuwait on 90,676t and Qatar with 55,125t the biggest customers.
September’s sorghum exports surged 91pc from the August total to reflect more volume sales — 179,803t, or 71pc of the total — to China, plus a cargo each to Japan and Kenya.
Internationally, the USA sold 100,000 t of soybeans to Egypt.
Japan purchased just under 82.000 t of food-quality wheat from the United States and Canada in a regular tender that closed earlier today.
Of the total, 36% was sourced from the U.S. The grain is for arrival by the end of January.
Pakistan received multiple offers in its tender to purchase 90.000t of wheat that recently closed, but additional details about the sale were not immediately available.
USDA has also confirmed the sale of 100 kt of soybeans to China.
MIT Jordan got 2 participants in its yesterday’s barley tender:
Viterra & ETG.
Tender was cancelled.
Author: Sandro F. Puglisi
