US farm markets were mixed to start the week.
Corn prices eased slightly shedding around 0,13%.
Soybeans, meantime, saw double-digit gains, closing 1,04% higher.
Meal prices were 2.65% to 2.94% higher with a +$10/ton gain.
Soybean oil on the other hand pulled back by 77 to 82 points in the front months.
Winter wheat prices were also firmed, with CBOT gained 1.13%, while Kansas up around 0,36%.
Nearby MGEX spring wheat contracts, in contrast, tumbled 2,24% lower.
On macro markets, oil prices were substantially unchanged yesterday, while on this morning rebounded as worries over tight inventories underpinned prices.
However, optimism was limited by fears over demand following a pickup in COVID-19 cases in Europe.
Thus, Brent futures added 96 cents, or 1.2%, to $83.01 a barrel, as of 0712 GMT, while U.S. West Texas Intermediate (WTI) crude climbed 80 cents, or 1%, to $81.68 a barrel.
On equities market, Wall Street closed little changed as rising Treasury yields dented appetite for technology stocks but boosted interest in financials.
In fact, benchmark U.S. Treasury yields rose nearly five basis points to a three-week high on Monday as companies rushed to sell debt before liquidity thins during holiday trade and ahead of a U.S. government sale of new 20-year bonds on Wednesday.
In add, investors are shifting focus from the latest corporate profits to economic issues that will determine growth into 2022.
That includes supply chain problems and rising inflation.
Thus, investors will be watching for any signs inflation is crimping business operations or consumer spending.
Businesses have raised prices to pass along higher costs of materials.
Consumers have taken that in stride, but analysts worry they might start to pull back on spending.
Additionally, investors also are waiting to see whether Biden decides to nominate Federal Reserve chairman Jerome Powell for a new term to lead the U.S. central bank.
Thus, the S&P 500 declined to 4,682.80.
The Dow Jones Industrial Average fell less than 0.1% to 36,087.45.
The Nasdaq lost less than 0.1% to 15,853.85.
Meantime, Asian stock markets rose on this morning after President Joe Biden and China’s Xi Jinping held a summit meeting by video link.
The closely watched conversation between the leaders of the world’s biggest economies was described by both sides as frank and direct as the two sides tried to lower the temperature and avoid conflict.
They discussed North Korea, Afghanistan, Iran, global energy markets, trade and competition, climate, military issues, the pandemic and other areas where they frequently disagree.
The talks appeared to yield no immediate outcomes, but gave the two leaders opportunity to nudge their relations away from icy confrontation.
Thus Shanghai, Tokyo and Hong Kong, which make up the bulk of the region’s market value, advanced.
Seoul and Sydney declined.
Particularly, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.27% to a 2-1/2 week high.
The Shanghai Composite Index rose 0.3% to 3,543.46 and Tokyo’s Nikkei 225 added less than 0.1% to 29,783.18.
The Hang Seng in Hong Kong was 1% higher at 25,658.04.
The Kospi in Seoul lost 0.2% to 2,994.40 while Sydney’s S&P-ASX 200 shed 0.8% to 7,413.20.
Coming back on grains market, a deep low pressure system is bringing potentially damaging winds across the northern Rockies/High Plains today.
Lake-effect snow/rain downstream of the lower Great Lakes tapers off by tonight before a warm front spreads rain into the area by late Wednesday.
Increasing chance of rain moving into the mid-Mississippi and Ohio Valley Wednesday night to Thursday morning associated with a cold front.
Particularly, the latest round of heavy rain and mountain snow across western Washington state is rapidly tapering off as the associated deep low pressure system moves swiftly through southwestern Canada.
Meanwhile, this intense storm is expected to trigger extreme downslope winds sustained at 50 to 70 mph with gusts of 80-100 mph possible today across mountainous terrain of western Montana.
While off to the east in the High Plains, sustained winds of 30 to 50 mph with gusts to 70 mph will expand eastward into western North Dakota today behind a strong cold front.
As the deep low pressure system continues to track across southern Canada the next couple of days, winds will remain at elevated levels across the northern Plains tonight and into Wednesday before slowly subsiding Wednesday night when the storm weakens and moves farther away.
Precipitation associated with this deep low will initially be modest across the northern Rockies, and virtually none across the northern Plains.
Rain chances will finally increase tonight when the cold front approaches the Midwest.
By Wednesday, a more solid stretch of rain is expected to develop across the Mid-Mississippi Valley through the Midwest into the Great Lakes.
By Thursday morning, rain chances is forecast to increase further across the Tennessee to Ohio Valley as the cold front continues to push eastward.
Meanwhile, widespread above normal temperatures across much of the Plains today will spread eastward toward the eastern U.S. for the next couple of days ahead of the cold front.
The cold air over the eastern U.S. will gradually moderate as a warm front approaches.
Lingering lake-effect snow/rain downstream of the lower Great Lakes should taper off by tonight before a warm front spreads rain into the area by late Wednesday.
In contrast, much colder air will expand quickly through the northwestern U.S. before plunging into the central and southern Plains by Thursday morning.
Meantime, the weekly Crop Progress report showed corn harvest was 91% complete compared to the 86% average.
That was up from 84% last week and matched trade expectations. Milo was 89% harvested as of 11/14.
NASS Crop Progress data also showed 92% of US soybeans were harvested as of 11/14.
That was up from 87% last week, and 1ppt behind the average pace.
As for wheat Crop Progress data as of 11/14 showed winter wheat planting had reached 94% completion.
That was up 3% points from last week and two points behind 2020’s pace of 96% but identical to the prior five-year average.
Emergence was seen at 81%, compared to 74% last week and 83% on average.
Analysts assumed USDA would leave quality ratings unchanged, but the agency pushed them a point higher, with 46% of the crop rated in good-to-excellent condition.
Another 33% is rated fair (up a point from last week), with the remaining 20% rated poor or very poor (down two points from last week).
On the demand side, USDA announced a large private corn sale to Mexico yesterday for 198,200 MT.
Of that, 148,200 is for 2021/22 and 50k MT for NMY.
As for soybean, USDA announced a private export sale for 264,000 MT of soybeans to unknown.
Meantime, the weekly Export Inspections report showed 855,698 MT of corn was shipped during the week that ended 11/11.
That was up from 649k the week prior, but just under 862,235 MT from the same week last year.
Accumulated corn exports from the weekly report were up to 6.978 MMT, while 8.456 MMT had been shipped at the same point last season.
As for soybean, USDA’s weekly Export Inspections report showed 2.073 MMT of beans were shipped during the week that ended 11/11.
That was down from 2.9 MMT reported for last week, and from 2.53 MMT during the same week last season.
USDA also added 263k MT to past reports, taking the MY’s total export to 16.19 MMT through 11/11.
Inspections data had 22.56 MMT shipped through the same point last season.
As for wheat, Export Inspections data showed 388,743 MT of wheat was shipped during the week that ended 11/11.
That was up from 251,452 MT last week and from 334k MT during the same week last year.
Most (54%) of the week shipped during the week was HRW.
African nations held the top spot for the week’s exports, with 130k MT to Nigeria and 61.8k MT to Ethiopia.
Accumulated wheat exports were up to 10.31 MMT as of 11/11, compred to 12 MMT at the same point last year.
The weekly CFTC update showed managed money reduced their net long by 4,951 in corn contracts through the week that ended 11/9 to 319,609 contracts.
Commercial traders were adding hedges, with 11.4k new longs and 20.2k new shorts opened, leaving the group at 568,564 contracts net short.
As for soybean, Commitment of Traders report showed managed money was just 12,137 contracts net long on 11/9.
That was down 30,544 contracts wk/wk, as new selling interest outweighed the long liquidation, and left the group the least net long since June 2020.
Spec traders flipped back to net long in soymeal during the week, as short covering left the group 9,299 contracts net long.
In BO, managed money funds reduced their net long by 16,143 contracts to 72,605.
As for wheat, weekly CFTC data showed managed money funds were 3,328 contracts net long in SRW.
That was a 2,257 contract dip from last week as new spec sellers outweighed new spec buyers.
Managed money was 57,382 contracts net long in HRW as of 11/9. For spring wheat, the CoT report had managed money at 16,496 contracts net long.
That is an 893 contract reduction wk/wk led by long liquidation.
On the other hand, NOPA members reported processing 183.993 mbu of soybeans in October.
The trade was looking for a 181.945 mbu crush.
Soybean oil stocks were 1.834 billion lbs, which was above the average 1.724 billion lbs expected.
In this context, corn basis bids showed plenty of variability across the central U.S., moving as much as 10 cents higher at an Indiana ethanol plant while dropping as much as 8 cents at an Illinois ethanol plant.
Soybean basis bids were steady to mixed to start the week, jumping as much as 19 cents higher at an Illinois river terminal while spilling as much as 10 cents lower at a Nebraska processor.
On European market, Euronext opened its week on a rather mixed note.
Wheat in particular has retreated into negative territory in the face of global demand which seems to be stalling.
In add, yesterday’s exit from December options with its share of profit taking, weighened on prices.
Corn continues to show its firmness despite balance sheets deemed to be comfortable, in a context of sustained demand, being more competitive with wheat in formulations.
Rapeseed gave way yesterday in the wake of soybean oils and canola.
Additionally, also the geopolitics are weighening on the markets with tensions on the Ukrainian border with Russia, causing a clear rise in the dollar rate.
Thus the latter displayed at 1.1366 on this morning against the euro and 72.60 against the ruble.
From the Black Sea basin, Russian wheat export prices continue to rise with fob prices for protein 12.5% at 332 USD / t.
Meantime, wheat shipments for the 2021-22 season reached 16.6Mt from Russia – down 16pc from the same time last year according to the Federal Center of Quality and Safety Assurance for Grain and Grain Products.
At the same time, Ukraine’s Ag Ministry reported corn harvest at 73%, with initial volumes of 28.1 MMT so far.
Ukraine also reported 3.5 MMT of corn exports MYTD – both matching last year’s pace.
The Ukraine reported 13.1 MMT of wheat had been shipped through November 11th.
That represents half of the expected volume for the full year, and is up 16.8% yr/yr.
From Middle East, Iraq can now be added to the list of consumers that have been forced to pay the relatively higher wheat market.
Tendering for half a million tonnes in Dec/Jan indeed created some interesting relative values.
On paper that tender should have attracted some Aussie wheat offers but, given the rainfall outlook, the trade would be a little nervous about exposing themselves to an already tight shipment window.
Pakistan flour millers have gone on strike.
The PFMA (Pakistan Flour Millers Association) announced that the millers of Rawalpindi division would down tools on 15 November in response to not being giving their government-promised wheat quota.
From the Middle Kingdom, China has announced plans to change the country’s seed regulations.
It would allow farmers to grow genetically modified (GMO) corn.
Meantime, China bought an estimates volume of Ukrainian corn, ranging between 300,000 to 700,000 tonnes late last week.
Indeed, from eight to 10 shipments were bought with a total minimum quintity of 500,000 tonnes.
Prices renged between $325 to $335 a tonne c&f.
Shipments are mostly for January/March 2022.
From Australia, markets kicked off the week firmer.
Cash bids for higher wheat grades firmed.
Lower grades like AGP continued to fall and now trade at $80/t discount to APW1 through NSW and Victoria port zones.
Barley was also bid firmer to growers and the trade-to-trade sellers are seeking higher bids.
On international trade scenario, South Korea is tendering for 115,000 MT of soybeans.
Taiwan issued an international tender to purchase 48.000 t of grade 1 milling wheat from the United States that closes on Thursday.
The grain is for shipment in January.
Ethiopia is tendering for 400k MT of milling wheat, with U.N. opting to purchase another 100k MT of wheat to supply to Ethiopia.
Turkey has likely made initial purchases on its international tender that recently closed.
European traders estimate that the country has bought nearly 325.000 t so far, but all purchases lack final confirmation at this time.
Algeria’s call for tenders in wheat it should to be followed closely, after Algeria’s OAIC changes terms in latest 50,000 mt wheat tender, relaxing the specifications favoring Russian origin.
Author: Sandro F. Puglisi
