US farm markets, posted solid gains yesterday after USDA’s World Agricultural Supply and Demand Estimates (WASDE) report offered some supportive data.
Thus corn prices, the only one to made moderate inroads, gained around 0.75%, while soybeans, winter wheat and spring wheat contracts, all closed with gains of around 2%.
On macro markets, oil prices rose on this morning, extending yesterday’s strong gains, after industry data showed U.S. crude stocks unexpectedly fell last week just as near-term travel demand picked up with COVID-19 pandemic curbs easing.
Indeed, according to market sources, API data showed U.S. crude stocks declined by 2.5 million barrels for the week to Nov. 5, defying analysts’ estimates for a 2.1 million build in crude stocks.
Thus, Brent crude futures were at $85.22 a barrel by 0732 GMT, up 44 cents, or 0.5%, to after rising 1.6% on Tuesday.
U.S. West Texas Intermediate (WTI) crude futures rose 16 cents, or 0.2%, to $84.31 a barrel, adding to Tuesday’s 2.7% gain.
Both benchmarks touched their highest in two weeks earlier on this morning.
On equities markets, US stocks yesterday closed moderately lower.
An -11% plunge in Tesla led losses in technology stocks that weighed on the overall market.
Also, a -10% drop in PayPal weighed on the S&P 500.
Homebuilders rallied Tuesday after DR Horton reported stronger-than-expected Q4 revenue.
Tuesday’s U.S. Oct producer price data came in near expectations and was neutral to slightly supportive for stocks.
U.S. Oct PPI final demand rose +0.6% m/m and +8.6% y/y, right on expectations.
Also, Oct PPI ex-food & energy rose +0.4% m/m and +6.8% y/y, slightly weaker than expectations of +0.5% m/m and +6.8% y/y.
Thus, the S&P 500 Index closed down -0.35%, the Dow Jones Industrials Index closed down -0.31%, and the Nasdaq 100 Index closed down -0.71%.
Meantime, Asian shares fell on this morning, tracking Wall Street’s retreat, with Chinese benchmarks leading the decline after the government reported a surge in inflation in October.
In fact, China’s consumer price index, a main measure of inflation, rose 1.5% in October, up from 0.7% the month before, the National Bureau of Statistics reported.
The surge to a 13-month high was driven mainly by a jump in prices for food and fuel.
Producer prices, or wholesale prices, climbed 13.5%, adding to worries that price pressures might limit the central bank’s ability to adjust its policies to bolster growth.
Thus, Hong Kong’s Hang Seng dropped 1% to 24,575.71, while the Shanghai Composite index lost 0.8% to 3,479.31.
Elsewhere in Asia, Tokyo’s Nikkei 225 lost 0.6% to 29,106.78 and the Kospi in South Korea declined 1.1% to 2,929.81.
Australia’s S&P/ASX 200 edged 0.1% lower, to 7,423.90.
Coming back on grains market, some wet weather is returning to the Midwest between today and Saturday.
Some areas could see another 0.75” or more later this week, per the latest 72-hour cumulative precipitation map from NOAA.
Wetter-than-normal may prevail between November 16 and November 22 for most of the central U.S., per NOAA’s latest 8-to-14-day outlook.
Seasonally average weather is likely during this time.
Meantime, Japan’s weather bureau said on this morning that the La Nina phenomenon appears to now be in effect and that there is a 60% chance the phenomenon will continue through until winter.
The La Nina occurs every few year and causes unusually cool ocean temperatures in the equatorial Pacific Ocean region and is linked with floods and drought.
Meantime, yesterday was the WASDE report day’s.
The main features of the overnight USDA reports are as follows:
USDA raised the national average corn yield by half a bushel to what would be a record 177.0/acre.
The net effect was for 43 mbu boost to output now at 15.062 bbu, where the trade was looking for 15.05.
Domestic carryout was tightened by 7 mbu as 50 mbu rise in projected ethanol use offset the bigger crop.
Consequently, US corn ending stocks in 2021/22 are now at 1.493bbu.
Trade expectation was 1.480bbu.
Internationally, USDA raised corn production to 1.204b MT, mostly reflecting Argentina and the EU.
Brazil corn production unchunged at 86Mt in 2020/21 season.
China corn imports were unchanged at 26Mt in 2021/22.
Global ending stocks were 2.68 MMT higher at 304.42, where the trade was looking for a 600k MT trim.
The U.S. market share shrank to 31.2% of global exports, which were raised to 203.4 MMT.
In this context, USDA left the cash average price for corn at $5.45/bu.
As for soybean, USDA’s monthly update reduced the soybean yield by 0.3 bpa to 51.2 bpa.
Overall production was 23 mbu lighter to 425 bbu, when the trade was ready for a 34.6 mbu increase.
US 2021/22 soybean ending stocks are now up +20mbu to 340mbu.
That is down than trade expectations, that were at 362mbu, as the 40 mbu export trim offset the larger output.
Internationally, USDA’s soybean balance sheet showed a lighter crop size, down 1.13 MMT to 384, lighter trade, down 990k MT to 172.1, and a tighter carryout, down 790k MT to 103.8 MMT.
The trade was looking for a slightly higher global carryout, so this was also bull friendly.
USDA trimmed the Argentinian output to 49.5 MMT, but left Brazil at 144.
The USDA bumped China’s beginning stocks, but trimmed imports by 1 to 100 MMT and left carryout unchanged from October.
However, USDA’s new cash price estimate for soybeans was $12.10, down by 25 cents from October.
While, both soymeal and soybean oil cash prices were unchanged from October WASDE at $325/ton and 65 cents/lb respectively.
As for wheat, USDA trimmed the wheat supply for the 2021/22 season by a 10 mbu import cut.
US carryout was 3 mbu higher at 583 mbu as reduced exports offset the supply difference.
The trade was looking for no change going in.
Internationally, global wheat ending stocks 2021/22 down -1.38Mt at 275.8Mt.
That was a larger reduction than the trade was expecting going in, as traders expected 276.5Mt.
That mostly reflecting tighter exporter stocks.
Indeed, Argentina (-200k), Australia (-500k), the EU (-980k) and the Ukraine (-300k) offset the bumps to the U.S. and Russia (+500k).
Particularly, US 21/22 total wheat ending stocks are now up +3mbu at 583mbu (581mbu expected).
Particularly, HRW 299mbu (-22), HRS 127mbu (+14), SRW 93mbu (-1), SWW 46mbu (+5), Durum 17mbu (-3).
Global wheat production in 2021/22 its seen down -0.6Mt at 775.28Mt.
In majors countries producer, was mostly unchanged.
Particularly, Argentina is seen at 20.0Mt, Australia at 31.5Mt;
Canada at 21.00Mt, EU at 138.4Mt (-1.0Mt), Russia at 74.5Mt (+2Mt), USA at 44.79Mt and Ukraine at 33Mt.
Global wheat trade was increased to 203.16 MMT, mostly as EU was 1 MMT higher to 36.5 and India was 1 MMT higher to 5.
Russian wheat exports in 21/22 is seen up +1Mt at 36Mt.
The U.S. market share tightened to 11.52%.
USDA upped the average cash price by 20 cents to $6.90/bu.
In this context, corn basis bids were stead to mixed, firming as much as 8 cents higher at an Iowa processor while tumbling as much as 23 cents lower at an Illinois river terminal.
Soybean basis bids were steady to mixed, dropping as much as 10 cents and firming as much as 5 cents across various Midwestern locations.
From Canada, Statistics Canada released the September ’21 export numbers.
A total of 1 million mt of wheat (excl. durum) were exported during the month of September.
This compares to 1.56 million mt during Sept. 2020.
The top destinations this year in September were the US (191k mt) and Indonesia (177k mt).
Exports to the US during Aug-Sep are 23% larger than last year.
As of September, Canadian wheat #exports are running 27% (-962k mt) behind last year.
The countries with the largest decrease are China, which has imported just 53% (-198k mt) of last year’s amount, and Bangladesh which has imported just 54% (-139k mt) of last year’s amount.
As for durum wheat, according to StatCan, Canada exported 225k mt of durum during the month of September.
This was just over half of the Aug. volume but is 58k mt higher than what Canada shipped in Sept. ‘2020.
Italy was the largest buyer, importing 73.2k mt of durum.
Aug-Sept exports to most major destinations are higher than last years; the US has imported 84k mt more durum than last year, while exports to Belgium are 48k mt ahead of last year.
Meantime, in shipping week 13, Canadian spring wheat exports amounted to 333k mt, for a season total of 3.39 million mt.
This is just 63% (-1.9 Million mt) of last year’s export number.
Visible supplies rose to 2.78 million mt as producer deliveries continue to outstrip exports.
As for durum wheat, in week 13, exports amounted to 121.0k mt for a season total of 860.2k mt.
This is 78% (-236.8kmt) less than last year.
Meantime, Canadian durum wheat export price continued to rise last week.
Indeed, as of November 8, Canadian durum export price was at CAD $840.37/t, up $6.02 per tonne from prior week.
However, it should to note that basis bids continued to be eroded by an increase in elevator costs due an intense export activity and an increase in energy prices.
Particularly, elevators’ cost this week rose at CAD $123.5, up $13.01 from $110.49/mt of previus week.
That partly eroded basis bids by $6.58, quoting now at $716.88 ($26.55/bu) down from $723.46 prior week.
Certantly, after grain companies execute their post-harvest commitments, durum exports will decline as Canadian supplies are limited and demand rationing will have to take place.
Meantime, its should to note that new crop durum targets in SE SK being hit at $13.00-$13.50 per bushel for a #1CWAD for fall 2022 delivery.
Some Canadian farmers believe that these are excellent prices, as show an unusually high~$4.00 per bushel premium to spring wheat.
Maybe, someone could consider to sell a part of next production at these levels (likely~15-20%).
From South America, according to the Buenos Aires Stock Exchange, the 2021 soybean production could reach 49 million tonnes against 43.1 million last year.
Maize production is expected at 55 million tonnes against 50.5 last year.
Brazil’s Anec estimates that the country’s soybean exports will reach 95.6 million bushels in November.
The group also estimates that the country’s corn exports will reach 104.2 million bushels this month.
On European market, gloomy for nearly a week, Euronext finally relied yestrday on the latest USDA report to revive strongly in the green, even if there were more supportive elements.
In fact yesterday were displayed EU export & Import data after two weeks.
Per latest data showed by European Commission, EU soft wheat exports in the 2021/22 season that started in July had reached 9.79 million tonnes by Nov. 7.
That was up from 8.47 million tonnes by the same week in 2020/21, the data showed.
That is 16% higher year on year.
As for durum wheat, EU export were at 240.983 t, noticeably up from 76.215 t by the same week in 2020/21 and up from 210.099 t by the same week in 20219/20.
EU 2021/22 durum wheat imports, were at 545.220 t, against 1,04 million tonnes a year ago and 587.680 2019/20 season.
EU 2021/22 barley exports had reached 2.94 million tonnes, against 3.02 million a year ago, while EU maize imports were at 4.39 million tonnes, against 6.07 million.
EU 2021/22 soybeans import, had reached 4.26 million tonnes, down from 5,16 million tonnes in 2020/21 at same week.
EU 2021/22 rapeseed imports, were at 1,54 million tonnes, down from 2,57 million tonnes a year ago.
The Commission said complete data for France, the EU’s biggest grain exporter, was still only available until July.
However, the vessel data suggests the French stocks situation could be tighter than expectations.
Meantime, the Franch Ministry of Agriculture revised upward its estimate of soft wheat production for France increased by 300 kt to 35,456 million tonnes, including an area of 4,974 million hectares and an average yield of 7.13 t / ha.
This is a year-over-year increase of 21.5%, if realized and it should compare to 33.4 Mt on average for five years.
As for barley, production is displayed at 11,448 million tonnes resulting from 1,729 million hectares with an average yield of 6.62 t / ha.
As for corn, the 2021 harvest is expected at 14.5 million tonnes against 13.9 estimated last month, a year-over-year increase of 9.4%, if realized.
That is a jump of 1.3 Mt compared to last year and the best French harvest since the 2014 campaign. !
As for rapeseed the Ministry shows a 2021 production of 3.297 million tonnes, with an area of 983,000 ha and a yield of 3.35 t / ha.
Finally, as we have just seen, USDA tightened EU wheat ending stocks by just under 1Mt.
In this context, wheat on Euronext rose from + 2 to + 3 € / t.
Corn was from unchanged at +1 € / t.
But was rapeseed which again showed spectacular growth, earning + € 14 / t for delivery in February 2022.
From the Black Sea basin, the USDA has revised up by 2 million tonnes its estimate of the soft wheat harvest for Russia to 74.5 million tonnes unsurprisingly.
Wheat export has seen at 36 million tonnes, up 1 mmt.
Soft wheat harvest for Ukraine was estimated at 33 million tonnes, exports was posted at 24 million tonnes, up 0,5 mmt.
Corn production in Russia was unchanged at 15 million tonnes, in Ukraine is posted at 38.0 million tonnes against 38.2 estimated by some analysts.
Corn exports were at 4,5 and 31,5 million tonnes for Russia and Ukraine respectvily.
In this context, wheat prices in the Black Sea basin changed little yesterday while corn prices in Ukraine gave up a little ground.
From the Middle Kingdom, with the Chinese corn crop all but in the bin local prices continue to ratchet higher.
Dalian corn, indeed, had yet another positive close, up CNY$13/t.
Growers are still dealing with what was a wet harvest so drying down grain has created some tightness in the supply chain, despite the crop being regarded as above average.
However, China’s Ag Supply and Demand Estimates (CASDE) reported good quality corn, maintaining their 270.96 MMT, and maintained their 20 MMT import forecast.
USDA left Chinese production at 273 MMT and imports at a more optimistic 26 MMT.
China’s CASDE maintained 18.65 MMT for their soybean output forecast, with 102 MMT (UNCH from Oct) for imports.
From Australia, more wet weather arrived in the past 24 hours. Geraldton and northern Kwinana region received a widespread 5-20mm according to the BOM latest rainfall while scattered showers pushed across the South Australian cropping regions of the Yorke Peninsula and the Mid North where harvest has been underway in a very stop-start way.
Consequently, there will continue to see very little harvest action along the east coast again for another day.
Meantime, markets around the globe are eager to know how the quality of the Aussie wheat crop is holding up thoughout this wet period.
On the other hand, export activity continued to be strong.
Viterra loaded its first train this week of new season barley that loaded 2400t out of Port Pirie headed to Outer Harbour for upcoming barley export program with Bowmans and Snowtown sites loading trains as well.
LSC latest vessel lineups report has approx 213,228t of wheat on the shipping stem for SA and 215,954t of barley to be shipped for the November period.
In this context, Aussie local markets were yet again a fraction firmer on wheat and barley yesterday across the boards.
Wheat trade bids showed gains of A$2-3/t.
Grower cash bids were unchanged as limited harvest action was seen along the east coast.
Barley saw small gains in the Victorian and SA markets by $2-3/t.
Canola fell $20/t in WA on the grower boards while Victoria market caught a bid and was up by the day’s end being bid $900-910/t track range site dependent.
On international trade scenario, Japan issued a regular tender to purchase 158.000 t of food-quality wheat from the United States, Canada and Australia that closes on Thursday.
Of the total, 39% is expected to be sourced from the U.S.
The grain is for arrival starting in February.
The United Nations issued an international tender to purchase 110,000 tonnes of milling wheat from optional origins on behalf of Ethiopia, which continues to struggle through substantial drought conditions.
The tender closed yesterday, and the grain is for delivery between late December and late January.
Tunisia issued an international tender to purchase 100.000 t of soft milling wheat and another 75.000 t of animal feed barley from optional origins, which closes today.
The grain is for shipment between December 1 and January 20.
The Philippines purchased 50,000 tonnes of animal feed wheat from Australia in a private deal late last week.
The grain is for shipment in December and January.
South Korea is in the process of purchasing 115,000 t of non-GMO soybeans.
South Korea’s Major Feedmill Group (MFG) has issued an international tender to purchase up to 140,000 tonnes optional feed corn, for arrival in South Korea in February 2022.
Deadline for submission of price offers in the tender is also Wednesday, Nov. 10.
Author: Sandro F. Puglisi
