US farm markets, were mixed yesterday as traders finished to square their positions ahead of today’s WASDE report from USDA.
Thus corn eased slightly, shedding 0,27%.
Soybeans declined 1,41% regestering double digits losses.
Wheat tracked modestly higher in some contracts, as CBOT December contract was up 0,20%, Kansas up 0,26%, while Minneapolis was down 0,07%.
On macro markets, oil prices were steady on this morning after two straight sessions of gains as the passage of a U.S. infrastructure bill, strong Chinese exports and the global post-pandemic recovery lifted the outlook for fuel demand.
In fact, U.S. President Joe Biden’s long-delayed $1 trillion infrastructure bill – which passed through Congress at the weekend – and better-than-expected Chinese exports helped paint a picture of a more expansive global economy
Also Monday, the deputy chairman of the Federal Reserve, Richard Clarida, said conditions to raise interest rates might not be met until late next year.
The Labor Department is due to report wholesale inflation on this morning and consumer inflation Wednesday.
Meantime, the Fed Reserve has flagged the perils of investing in risky assets indicating that, while this asset class may continue to rally, there is increased risk of a sizeable correction.
Traders worried a spike in inflation might prompt central banks to withdraw stimulus that helped to boost stock prices.
In this context, Brent crude was down 2 cents at $83.41 a barrel by 07:35 GMT, after gaining 0.8% on Monday.
U.S. oil was up 3 cents at $81.96 a barrel, also after a 0.8% gain the previous day.
On equities markets, yesterday Wall Street has seen the S&P 500 rose to 4,701.70, setting a record for an eighth day.
The Dow Jones Industrial Average rose 0.3% to 36,432.22. The Nasdaq composite gained 0.1% to 15,982.36.
Both also were records.
Meantime, Asian stock markets fell on this morning.
In fact the Nikkei 225 in Tokyo lost 0.6% to 29,325.30 while the Shanghai Composite Index advanced 0.2% to 3,498.80.
The Hang Seng in Hong Kong declined less than 0.1% to 24,750.33.
The Kospi in Seoul lost 0.1% to 2,956.10 while Sydney’s S&P-ASX 200 shed 0.2% to 7,444.70.
India’s Sensex opened down 0.2% at 60,425.05. New Zealand, Bangkok and Jakarta advanced while Singapore declined.
Coming back on grains market, some wet weather could return to the Midwest and Plains this week.
Most of the central U.S. will see at least some measurable moisture, with some areas set to gather as much as 0.75” or more between today and Friday, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts mostly some seasonally wet weather for the Northern Plains between November 15 and November 21, with cooler-than-normal temperatures settling into the Corn Belt during that time.
Meantime, the weekly Crop Progress update from NASS showed corn harvest had advanced 10% points to 84% complete.
That compares with 90% last year and the 78% average pace.
Harvest in Colorado, Indiana, Iowa, and Wisconsin advanced by more 10% points through the week that ended 11/7.
Those states are 85%, 75%, 84%, and 76% harvested respectively.
IA corn harvest is 7% points ahead of average and WI is 21% points ahead of their average.
Sorghum harvest pace in the weekly update was 86% complete, but finished in TX.
The national average is to be 80%, with TX’s average pace at 91%.
In NE, milo harvesting was 5 ppts ahead of average at 85% complete.
As for soybean, harvest made it to 87% completion through November 7, up from 79% a week ago and two points below the average trade guess of 89%.
It’s also four points below 2020’s pace of 91% and a point behind the prior five-year average of 88%.
Among the top 18 production states, Minnesota (99%) is closest to the finish line and North Carolina (57%) has made the least progress so far.
As for wheat, Crop Progress data as of 11/07 showed 91% of the 22/23 winter wheat crop had been planted.
That was up 4% points from the week prior as planting finished up in ID, NE, and WA.
The 5-yr average is to be 91% planted by now.
Planting progress in KS reached 85% of expected area, which is 5% points behind the average pace.
Emergence was 80% in KS and 74% nationally.
That is 1 ppt ahead of and 3 ppts behind the averages respectively.
Winter wheat quality ratings shifted slightly.
Forty-five percent of the crop is still rated in good-to-excellent condition, unchanged from a week ago, while 33% is rated fair (down a point from last week) and the remaining 22% is rated poor or very poor (up a point from last week).
On the other hand, USDA’s early R22 spring planting estimates show corn areas at 92 million acres from 93.3 this year, 87.5 million acres in soybeans from 87.2 and 49 million acres in wheat from 46.7 this year.
However, we will have to wait for the official figures for planting intentions in March to have better visibility.
Ahead of USDA’s monthly Supply and Demand estimates, the trade is looking for a 100k MT bump to Argentina corn production and for no change to Brazil.
If realized that would leave the countries at 53.1 and 118 MMT of 21/22 production.
Global corn ending stocks are expected to be reduced 600k MT to 301.1 MMT.
As for soybean, the trade expects USDA to bump 200k MT for Brazil soy output – taking it to 144.2 MMT.
The full range of estimates going in is for no change to a 1 MMT bump.
Argentina soybean output is expected to drop 300k MT on average, down to 50.7 MMT, according to pre report survey responses.
As for wheat, analysts surveyed anticipate a 200k MT tighter world wheat carryout – at 276.9 MMT, and a 1.9 mbu larger US domestic carryout – at 581.9 mbu.
On the demand side, corn export inspections dropped 16% from a week ago.
Indeed, per latest data showed in USDA’s weekly Export Inspections, 563,163 MT of corn was shipped during the week that ended 11/04.
That was down from 671k last week and from 692k the same week last year.
USDA’s FAS also found late reported exports to bring the MY total to 6.037 MMT.
That is 21% behind last season’s pace.
In add, USDA announced a large private export sale for 150k MT of corn to Colombia yesterday morning.
Soybean export inspections saw modest week-over-week gains.
In fact, USDA’s FAS reported 2.647 MMT of soybeans were exported during the week that ended 11/04.
That was 39k MT above last week’s export but still 205k MT below the same week last year.
Export Inspections data confirmed China was the top destination, with 1.807 MMT of the total.
Late reports combined for an additional 350k MT, which set the MY accumulated export at 13.851 MMT.
Soybean shipments were 20.025 MMT at the same point last season.
Wheat export inspections showed some signs of improvement, moving to 231,854 MT – a week-over-week gain of 77%, but this was 24% light of the same week last season.
The winter wheats were the top variety for the week’s shipping program, with 31% each SRW and HRW.
Mexico was the top destination with 92,520 MT of the total.
The weekly data suggests 9.899 MMT of wheat has been shipped MYTD.
That compares with 11.71 MMT from last season.
In this context, corn basis bids were steady to mixed, firming 7 to 8 cents higher at two Midwestern processors while falling as much as 5 cents at an Indiana ethanol plant.
Soybean basis bids showed some variability, moving as much as 15 cents higher at an Indiana processor and falling as much as 10 cents lower at an Iowa processor.
From South America, according to the AgRural Brazil’s 2021/22 corn plantings have reached 75% through November 4.
That’s up from 63% a week ago and ahead of 2020’s pace of 68%.
The crop is seeing “adequate conditions” for now, according to AgRural.
As for soybean, Brazilian farmers have planted 67% of their intended 2021/22 soybean acres through November 4.
That’s up from 52% a week ago and ahead of 2020’s pace of 56%.
Early-season weather has been generally favorable overall, despite some drier-than-normal conditions in Rio Grande do Sul.
In this context, Safras and Mercado estimated 21/22 Brazilian soy output at 144.7 MMT.
That was up from their 142.2 MMT previous estimate.
Safras and Mercado figures a 5.4% yr/yr increase on a 4% area boost.
On European market, sowing in France is taking place in good conditions.
Meantime, Euronext remained into the red yesterday, weighed down by technical considerations.
Indeed, this downward movement is accompanied by a decline in freight prices and to a lesser extent by energy prices which seem, at least temporarily, to stabilize.
In add, there was a slowdown in loadings and demand for European wheat by buyers at the beginning of November.
In France, talk that Ukrainian wheat was taking a large share of initial purchases by Moroccan buyers in the country’s import season that opened on Nov. 1 was also tempering export sentiment, traders said.
In Germany, traders said that export shipments were slowing in November after very large loadings earlier in the autumn.
Ships that loaded or are scheduled to load wheat in Germany in November include 30,000 tonnes for Algeria, 50,000 tonnes for Nigeria, 30,000 tonnes for Guinea, 7,500 tonnes for Angola and 4,500 tonnes for Mauritius.
Standard 12% protein wheat for November delivery in Hamburg was offered for sale at about 2.50 euros below Paris December.
A firm euro also curbed Euronext prices.
Rapeseed, meantime, fell again in the wake of other vegetable oils, especially palm where tomorrow’s MPOB report could see stocks in Malaysia grow.
From the Black Sea basin, in Ukraine, corn prices are losing ground in response to harvest pressure.
Agritel analysts put a harvest estimate of 38.2 million tonnes.
Meantime, Ukraine’s 2021/22 grain exports are up more than 18% from a year ago so far.
That includes wheat sales totaling 12.8 MMT, that was up 17% from last season’s pace.
Plus another 2.9 MMT of corn exports.
Ukraine is among the world’s top exporters of both crops and is coming off a record-breaking harvest.
On the other hand, Russian wheat exports in October came in around 3,2 MMT, according to the latest estimates from the country’s Sovecon consultancy.
Russia is the world’s No. 1 wheat exporter.
From the Middle Kingdom, China’s Import Expo led to an 8.4 MMT soy purchase agreement from the state grain buyer Sinograin.
Cofco reportedly committed to $10 billion of farm product purchases as well (details not disclosed).
From South Korea, wheat production estimates for the 2021-22 South Korea crop have been revised down by 11%, while imports have been raised by 12%, according to a Global Agricultural Information Network report from the Foreign Agricultural Service of the US Department of Agriculture (USDA).
Yields were down 19% from the previous marketing year due to weather damage, the USDA said.
With the smaller crop (22,406 tonnes) and a 12% increase in consumption to 3.9 million tonnes due to expanding demand for both milling and feed grade wheat, South Korea has been forced to depend on higher imports this marketing year.
In this context, imports are projected to reach 4.3 million tonnes in 2021-22, including 2.8 million for milling wheat and 1.5 feed grade wheat, the USDA said.
However, the report noted that South Korea flour imports declined 12% in 2020-21 to 16,272 tonnes (wheat equivalent) following declining demand from small-sized restaurants and noodle manufacturers “who are traditionally the most loyal users of cheaply priced flour.”
From Australia, weather, and the flow-on quality effects, still remains the hot topic in this market, and continued limited trade activity is on the cards until we get some more clarity when headers start to roll again.
Meantime, latest receival data from the bulk handlers reveals strong harvest pace in WA with CBH exceeding 2Mt, GrainCorp network before the rain 2.28Mt.
Harvest started in the southern NSW region as the Wyalong and Griffith cluster took their first loads.
First deliveries of barley also were received in Victoria with 820t delivered in the Piangil region.
However, in spite a large carryout wheat stock in NSW comprising mostly protein wheat, the question remains whether, in the event we do see moist conditions downgrade quality, there is enough to stock to satisfy the local domestic milling market plus export markets.
Consequently, this has led ASX eastern wheat futures contract to rally A$30/t since the end of October. Open interest in that contract presently exceeds 500,000t.
Meantime, East coast grower cash bids were relatively unchanged yesterday amid little harvest action.
Deferred track and delivered bids were all a touch stronger, wheat and barley by $2/t.
Canola bids were down another $5/t on average in WA,SA, Vic and NSW.
In add, its start to see some bids into the Victorian delivered markets for prompt delivery.
Internationally, Turkey issued an international tender to purchase 325,000 t of animal feed corn from optional origins that expires November 15.
The grain is for shipment between December 20 and January 20.
On the other hand, global fertiliser prices continue firming and finding buyers.
Middle East futures rallied through Us$900/t fob this week, compared with under $300/t a year ago.
Author: Sandro F. Puglisi
