US farm markets were mostly lower yesterday.
Corn prices fell around 1%.
Soybean prices had more modest losses around 0,5%.
Wheat prices saw downward pressure from a strengthening U.S. Dollar.
Thus Chicago wheat December contract was down 1,94%.
Kansas wheat December contract was down 1,82%.
Minneapolis wheat December fell 1,12%.
On macro markets, oil fell on this morning after an industry report showed U.S. gasoline stocks dropped more than expected last week, that could soar fuel prices more.
Indeed, gasoline prices, hit a record high at California pumps this week, potentially heightening pressure on the Biden administration to release oil from emergency reserves to cap soaring fuel prices.
Lawmakers, however, have mixed views.
Thus, U.S. West Texas Intermediate (WTI) crude futures fell 57 cents, or 0.7%, to $80.19 a barrel at 07:50 GMT, extending a 12 cent loss from Tuesday.
Brent crude futures dropped 50 cents, or 0.6%, to $81.93, erasing Tuesday’s 38 cent gain.
On equities markets, US stocks on Tuesday closed moderately higher, on signs of strength in the U.S. economy with the better-than-expected U.S. economic data.
Also, signs of improved U.S.-China relations were supportive for equities after President Biden and Chinese President Xi Jinping reached an agreement regarding issuing new visas for journalists.
Hawkish comments on Tuesday from St. Louis Fed President Bullard were a bearish factor for stocks, meantime.
Thus, the S&P 500 Index closed up +0.39% posting a 1-week high, the Dow Jones Industrials Index closed up +0.15%, and the Nasdaq 100 Index closed up +0.75%.
The dollar, meantime, strengthened more through key resistance levels on Wednesday, propelled by better-than-expected U.S. retail data.
Asian shares, in contrast, were mostly lower on this morning, dragged by worries about COVID-19 and higher costs.
Thus, MSCI’s broadest index of Asia-Pacific shares outside Japan skidded 0.5%.
Japan’s benchmark Nikkei 225 fell 0.4% to 29,688.33.
South Korea’s Kospi fell 1.2% to 2,962.42.
Australia’s S&P/ASX 200 lost 0.7% to 7,369.90.
Hong Kong’s Hang Seng fell 0.4% to 25,621.91, while the Shanghai Composite edged up 0.5% to 3,537.32.
On the weather side, strong and gusty winds across the northern Plains will gradually moderate as deep storm in southern Canada weakens and moves away.
A cold front will bring a around of rain through the eastern U.S. for the next couple of days followed by colder temperatures and lake-effect snow/rain over the Great Lakes.
Tropical moisture will bring some enhanced rainfall across southern Florida on Thursday.
A deep low pressure system moving across southern Canada will gradually weaken as it heads towards eastern Canada during the next couple of days.
Strong and gusty winds across the northern Plains will gradually moderate today and should have largely subsided by Thursday as a high pressure ridge takes over.
Meanwhile, mild air across the Deep South through the Ohio Valley will be pushed into the eastern U.S. and up through New England following the passage of a warm front.
High temperatures for today and Thursday will be locally as much as 20 degrees above normal in portions of the eastern U.S.
A cold front will then push steadily across the mid-section of the country today, through the eastern U.S. on Thursday, and then off into the Atlantic by Friday morning.
Increasing southerly flow ahead of this front will allow moisture to return north from the Gulf of Mexico and this will allow for an axis of showers and some thunderstorms to develop.
Cold air behind the front will set up some lake-effect rain and snow showers over the Great Lakes region Thursday night into Friday morning with gusty winds.
Interior New England may see the rain ending as wet snow following the cold frontal passage Thursday evening along with gusty winds and colder temperatures.
Meanwhile, a new storm system will be approaching the Pacific Northwest by late Thursday, and this will bring a new threat of rain and higher elevation snowfall here as moisture streams inland.
Some heavy rain will once again be in the forecast for the Pacific Northwest coast Thursday night.
Some high-elevation snows should also move into the northern
Rockies by Friday morning.
Elsewhere, tropical moisture from the western Caribbean Sea will be lifted northward ahead of a weak upper-level trough moving into the Gulf of Mexico.
Some enhanced rainfall can be expected to move across southern Florida mainly on Thursday.
By Friday morning, much of the rain should be on its way eastward into the Atlantic as a cold front dips into northern Florida.
Coming back on grains market, the “get long commodities and brace for inflation impact” trade took a step back last night as US retail sales outperformed trade estimates.
Indeed, US retail sales rose 1.7 per cent in October versus market expectations of 1.4pc, a solid result compared to the previous months revised 0.8pc increase.
Even when motor vehicle sales were removed, wider retail sales outperformed, and the commodity markets took this as an indication inflation has not yet bitten.
Consequentially, the US dollar rallied, and commodities were sold.
Certanty, this had little to do with the fundamentals, which haven’t changed, but there was a sell-off yesterday.
In fact, funds were net sellers yesterday for 7,000 lots of corn, 3,000 lots of soybeans and 9,000 lots of wheat.
Nevertheless in pre-opening the markets seem to have to correct, in particular in the hope of seeing the discussions with China relax the tense atmosphere of recent weeks between the two countries.
In add, likely funds colud to take an interest in commodities ag again to protect themselves against inflation.
USDA yesterday announced a private export sale of 270k MT of corn to Mexico, meantime.
USDA also reported a large 161,000 MT soybean sale to unknown destinations.
In this context, corn basis bids moved as much as 14 cents higher at two interior river terminals and firmed 2 cents at two other Midwestern locations while holding steady elsewhere across the central U.S..
Soybean basis bids were steady to mixed, rising as much as 14 cents higher at an Iowa river terminal while stumbling as much as 5 cents lower at an Indiana processor.
From Canada, Canadian canola prices were at a new high on Monday, up to 1,019 CAD/MT (Jan).
Meantime, weekly Canadian exports, in shipping week 14, have seen small moviments as spring wheat exports were at 130k mt, for a season total of 3.42 million mt.
This is just 60% (-2.25 million mt) of last year’s export number.
Visible supplies were essentially unchanged from last week at 2.77 million mt.
As for durum wheat, in shipping week 14 durum exports were 68.3k mt for a season total of 928.5k mt.
This is 27% (-338.7k mt) less than last year.
Meantime, Canadian wheat export price continued to rise last week.
As of November 15, N1 class CWRS with 13.5% prot. was valued at $527.74 – FOB West Coast – , up $13.54 per tonne.
The N2 class CWRS with 13.0% quoted at $517.26 – FOB West Coast -, up $57.96/t w.o.w.;
The N3 class CWRS was pegged at $465.71 – FOB West Coast -, up $30.66;
The N1 class CWAD (Durum Wheat), was quoted at $845.37 – FOB Great Lakes -, up $5 per tonne.
(1USD=Cnd$1.2511).
Durum street prices, not been eroded this week, quoting at $716.88, unchanged from past week.
While export basis rose at CAD $128.5, up $5 from $123.50/mt of previus week.
That rapresents the total increase in durum wheat price.
From South America, Agrural said on Monday that Brazilian soybean planting continued at a quick pace, reaching 78% done for the week ending November 11.
It was a gain of 11 points on the week and is eight points higher than average.
Work is now largely done in Mato Grosso, and Rio Grande do Sul hit 29% planted.
Meanwhile, first corn planting is now 85% planted, jumping ten points for the week and three points higher than at the same point last year.
Agrural emphasized the quick planting progress for corn and beans, but it also stressed some moisture problems may lie ahead.
In Rio Grande do Sul, dry weather is causing concern, while there’s been some excess moisture in more northeastern regions.
Most of the concern for farmers is the effect of drought on the corn crop.
However, the situation is not as alarming in Rio Grande do Sul on its later plantings.
Argentina planted 18.8% of soybeans as of late last week vs to 19.7% LY and 21.8% average.
Corn was planted 29.0% of areas vs 31.2% LY and 37.5% average.
On European market, the Algerian wheat purchase a large part of which is believed to be of Black Sea (probably Russian) origin and the rapid withdrawal of Chicago, caused European prices to bend.
As a reminder, the OAIC has decided to relax its specifications to open up to new origins, thus closing many opportunities for French exporters.
Thus we have seen a sharp drop in European wheat prices.
Rapeseed retreated yesterday in the wake of biodiesel and vegetable oils.
Meantime, according to the European Commission, soft wheat exports from the European Union in the 2021/22 season that started in July had reached 10.01 million tonnes by Nov. 14.
That was up from 9.29 million tonnes by the same week in 2020/21, the data showed.
As for durum wheat, EU export were at 241.236 t.
That was up from 240.983 of prior week, noticeably up from 83.031 t by the same week in 2020/21 and up from 223.737 t by the same week in 20219/20.
EU 2021/22 barley exports had reached 3.02 million tonnes, against 3.16 million a year ago, while EU corn imports were at 4.52 million tonnes, against 6.55 million.
EU 2021/22 soybeans import, had reached 4.5 million tonnes, down from 5,41 million tonnes in 2020/21 at same week.
EU 2021/22 rapeseed imports, were at 1,61 million tonnes, down from 2,65 million tonnes a year ago.
The Commission said complete data for France, the EU’s biggest grain exporter, was still only available until July.
Meantime, according to Refinitiv, France exported 973,000 t of wheat outside the Euro zone, mainly to China for an estimated volume of 431,500 t and to Algeria for 193,400 t.
French export activity therefore remains strong and estimated by FranceAgriMer at 9.4 million tonnes for the current campaign outside the euro zone, ie 2 million tonnes beyond last year.
On the other hand, in Germany, the rapeseed areas for the 2022 harvest are estimated by the UFOP at 1.08 million hectares against 991,000 last year.
Current prices encourage European farmers to increase their areas although nitrogen prices are a drag for this crop.
From the Black Sea basin, Russia has indicated it may look at regulating domestic fertiliser, and by creating an indicator that tracks domestic availability, its Agriculture Ministry would potentially freeze supply should it fall below target levels.
Meantime, in Ukraine negative temperatures settle, which is after all usual during this period.
Thus, we note – 5 degrees this morning in Kiev.
Wheat prices are giving way in Ukraine, while corn prices remain positive.
Ukraine’s 2021-22 wheat exports rise 17% on year, reaching 13.1 mil mt.
Wheat prices hit record high as export prices reach record high $330/mt.
2022-23 Ukraine winter wheat sowing is at 94%.
Meantime, in Russia analysts are carefully scrutinizing the volume that could have been contracted with Algeria.
In add, with a new call for tenders from Egypt out yesterday, Russian origins could be selected again, despite the risk to exporters if quotas were put in place.
From the Middle Kingdom, Dalian corn futures were down again on 11/15, back to 2,653 yuan/MT (~ $10.54/bu) for Jan.
That has been a 3% slide in 3 days after touching levels not traded since May-June.
Dalian No2 Soybean Prices were stronger on Tuesday, back to 4,116 yuan/MT (~ $17.52/bu), which came after a brief 3-day dip below 4,000.
The more actively traded No.1 Dalian Soybean Prices were also firm on Monday.
Priced at 6,367 yuan/MT (~ $27.10/bu), No.1 beans were just below the all time high (6,486) printed on November 5th.
From South East Asia, Vietnam has lowered its tariffs on wheat, corn and frozen pork, and the wheat tariff will drop to 2pc from 5pc.
Particularly, Vietnamese officials issued a decree eliminating tariffs on U.S. sourced wheat beginning December 1st.
The tariffs were put in place following the U.S.’s withdrawal from the TPP trade agreement.
Last season Vietnam sourced 500k MT of their 4 MMT total wheat imports from the U.S..
From Australia patchy showers and storms across the Australian grainbelt in recent weeks have delayed the wheat, chickpea, faba bean and lentil harvest.
This has buoyed prices for bulk parcels in some port zones as exporters look to fill cargoes wriggling in to the shipping schedule ahead of the main run on wheat vessels.
Thus, grower cash boards were slightly firmer again yesterday, wheat by AU$1-$2/t.
Barley made the gains and was up $3-4/t across the east coast, and values in WA pushed up to $300/t free in store for barley late in the day.
On the other hand, canola lost ground and was down $10/t, with offshore markets peeling back and local canola harvest getting going again.
The upside of rain is that it is setting up ideal conditions for the planting of mungbeans in most parts of northern New South Wales and southern and Central Queensland (CQ).
However, New South Wales is a mixed bag, with reports that there is a mixture of quality coming off after the latest rainfall event.
Growers harvesting wheat are having loads that are meeting H2 specifications, and the next load is going AGP.
Particularly, the first quality echoes indicate a decline in PS.
Protein is said to be been holding up, but testweights have suffered, and are largely responsible for downgrades.
Growers are working around the clock where they can to harvest as much grain as they can before the next rain event forecast for coming days.
On interantional trade scenario, Algeria ’s state grains agency OAIC has started purchasing optional-origin milling wheat in an international tender closed today.
Volume bought was unclear, however its believe that several hundred thousand tonnes may have been purchased.
Russian -origin wheat has been involved in negotiations.
We don’t know how mutch.
Meantime, rumors on purchase price renged between $382.50 to $384 a tonne c&f.
Shipment is request in both the second half of December 2021 and in January 2022.
GASC bought 12KMT of sunflower oil from Viterra at $1,425 per tonne, with payment at sight at the vegoils international tender. Arrival: Jan 10-30.
GASC also bought 8KMT of soyoil from Alex at around $1377.7 per tonne for Jan. 1-20 at the local tender.
Egypt’s GASC issued an international wheat tender, closing today.
Importers in the Philippines issued a tender to purchase 220.000 t of animal feed wheat that closes today.
The grain is to be divided into four consignments that will ship between January and April.
TMO Turkey is tendering on Nov 23 to buy 320000 tonnes of feed barley for Jan shipment.
TMO Turkey is also tendering to buy 6000 tonnes of sunflower seeds.
Author: Sandro F. Puglisi
