A good export pace and a sustained domestic demand, led to solid gains in the US grain markets yesterday.
In fact, corn moved nearly 0.75% higher by the close.
Soybeans jumped more then 2% higher.
Wheat prices were also firm, with most contracts up around 1.6%.
Particularly, CBOT wheat contract, Dec 21, closed up 1,48%.
KCBT wheat contract, Dec 21, was up 1,61%.
MGEX wheat contract, Dec 21, closed 1,18% higher.
On macro markets, oil prices slid to near six-week lows on this morning as China said it was moving to release reserves following a Reuters report that the United States was asking big crude consumers to consider a coordinated release of stocks to lower prices.
The bid by the U.S. administration to shock markets, asking China to join coordinated action for the first time, comes as inflationary pressures, partly driven by surging energy prices, start to produce a political backlash, as the world fitfully recovers from the worst health crisis in a century.
Thus, Brent crude was down 41 cents, or 0.5%, to $79.87 a barrel by 07:12 GMT, after earlier dropping to $79.60, the lowest since Oct. 7.
U.S. crude was down 70 cents, or 0.9%, at $77.66 a barrel, having fallen earlier to $77.40, also the lowest since early last month.
Yesterday, Brent crude Jan. 2022. was down US$2.15 per barrel closing to $80.28, while WTI crude Dec. was down US$2.40 per barrel closing to $78.36.
On equities markets, US stocks on Wednesday closed lower, with the Dow Jones Industrials falling to a 2-week low.
Stocks were under pressure Wednesday as signs of faster global inflation may push the world’s central banks to curb stimulus and tighten monetary policy.
UK Oct core CPI rose +3.4% y/y, the fastest pace in more than ten years.
Also, Target closed down more than -4% Wednesday after it warned that cost pressures are creeping higher, stoking fears that inflation will curb company profits.
In addition, energy stocks retreated Wednesday after crude prices fell nearly -3% to a 1-1/4 month low.
Wednesday’s U.S housing data was mixed for stocks.
On the negative side, U.S. Oct housing starts unexpectedly fell -0.7% m/m to a 6-month low of 1.520 million, weaker than expectations of an increase to 1.579 million.
Conversely, Oct building permits, a proxy of future construction, rose +4.0% m/m to 1.650 million, stronger than expectations of 1.630 million.
A worsening of the pandemic in the U.S. is bearish for stocks after the 7-day average of new U.S. Covid infections rose to a 1-month high Tuesday of 87,897.
Thus, the S&P 500 Index closed down -0.26%, the Dow Jones Industrials Index closed down -0.58%, and the Nasdaq 100 Index closed down -0.01%.
On this wake Asian shares mostly declined on this morning.
In fact, Japan’s benchmark Nikkei 225 dipped 0.7% to 29,490.53 in early trading.
Australia’s S&P/ASX 200 edged up 0.2% to 7,381.40, while South Korea’s Kospi slipped 0.6% to 2,944.52.
Hong Kong’s Hang Seng dropped 1.7% to 25,227.83.
The Shanghai Composite shed 0.5% to 3,520.77.
On the weather side, lake effect snow will develop downwind from the Great Lakes tonight
into Friday evening.
Rain and higher elevation snow for the Pacific Northwest starting on Thursday.
Particularly a front extending from the Lower Great Lakes southwestward to the Southern Plains will move eastward off the East Coast and southward off the Gulf Coast by Friday morning.
Mainly rain will develop along the front from Great Lakes to the Lower Mississippi Valley/Western Gulf Coast tonight into Thursday morning.
Then, the rain will move eastward off the East Coast by Friday morning.
Behind the boundary, lake effect snow will develop over parts of the Upper Great Lakes overnight, with snow showers expanding
eastward across Michigan by Thursday evening.
Furthermore, lake effect snow will develop downwind from Lakes Erie and Ontario overnight Thursday.
Snow will also develop overnight Thursday, over parts of interior New England, while coastal areas will remain rain.
On Friday, the lake effect snow ends over the Upper Great Lakes, while lake effect snow continues downwind from Lakes Erie and Ontario through Friday evening.
Light snow will also continue over parts of Northern New England through Friday evening.
Meanwhile, another front will move onshore over the Pacific Northwest on Thursday afternoon and rushes inland to the Northern Plains/Great Basin by Friday evening.
However, ahead of the system, rain and higher elevation snow will develop over the Northwest Coast by Thursday morning and expand into Northern California by Thursday evening.
Snow will develop over parts of the Northern Intermountain Region and into parts of the Northern Rockies Thursday evening into Friday evening.
A third front, On Friday, moves south out of Western Canada into the Northern Plains, marking th leading edge of much colder air.
Elsewhere, easterly flow off the Atlantic will aid in producing showers
and thunderstorms over the southern tip of Florida through Thursday
evening.
Then, the aforementioned East Coast front moves southward over
Florida, continuing the showers and thunderstorms into Friday evening.
On the supply side, Barchart’s updated production forecasts were virtually unchanged for corn at 15.357 bbu.
As for soybean, Barchart revised their soy output forecasts reducing the crop size by 1 million to 4.456 billion bushels.
Meanwhile, IHS Markit estimated the 2022 corn area at 90.784m acres, which was a 1.6m slide from their prior figure and compares to 93.304m acres for the 21/22 campaign.
As for soybean, IHS Markit raised their 2022 soybean planting expectation by 600k acres from their October estimate to 87.935 million.
That compares to 21/22 plantings of 87.235 million.
As for wheat IHS Markit estimated 22/23 wheat planted area at 49.37 million acres.
That includes 34.39 million of winter wheat, and 13.03m for spring.
That is 190k acres and 303k acres above their prior forecasts respectively.
USDA has 21/22 area at 46.7m, including 33.65 for winter and 11.42m for spring wheat.
On the demand side, USDA yesterday reported two large export sales announcements with India booked 30k MT of soybean oil for 21/22 delivery, and private exporters that sold 132,000 MT of soybeans to China.
Meantime, the EIA reported ethanol producers averaged 1.06 million barrels of production per day through the week that ended 11/12.
That was back up from 1.039m bpd last week, but remains below the 1.1+ million bpd during late October.
Stocks were 205k barrels lighter at 20.081 million.
Led by a drop in the E. Coast region.
Ahead of the weekly Export Sales report out in the afternoon, traders surveyed are expecting to see between 0.8 and 1.4 MMT of corn bookings for the week that ended 11/11.
As for soybean, the trade expects to see between 1 and 1.8 MMT of beans sold during the week that ended 1111. For meal, survey respondents were expecting between 100k and 300k MT booked. BO bookings are estimated between 20k and 40k MT.
As for wheat, traders surveyed expect between 250,000 and 500,000 MT of wheat was sold for export during the week that ended 11/11.
In this context, the funds are stepping up their long positions in commodities in order to protect themselves against an inflationary risk.
So they were net buyers yesterday for 7,500 lots of corn, 17,500 lots of soybeans and 8,000 lots of wheat.
Meanwhile, corn basis bids trended 2 to 3 cents higher at two interior river terminals and faded 2 cents lower at an Iowa ethanol plant while holding steady elsewhere across the central U.S..
Soybean basis bids were steady to firm after rising 2 to 10 cents higher across a handful of Midwestern locations.
From Canada, Canadian National Railway and Canadian Pacific Railway which service Western Canada suspended some operations due to washouts along their main rail lines.
Meantime, Canada’s Ag Ministry suggested 2022 wheat area could increase 6% from 21/22, with a 10% boost to durum area, when speaking at the Global Grain Conference in Geneva.
From South America, in Argentina, beneficial rains make it possible to envisage good harvests to come, whether in wheat, soybeans or corn.
This origin could therefore quickly come into international trade.
On European market, yesterday there was a sharp rise in grain prices on Euronext in a context of sustained demand on the international scene.
For January / March deliveries, wheat prices thus progressed very significantly.
The corn market, for its part, relied on a further rebound in ethanol production in the United States last week.
Rapeseed, meantime, is losing ground in the wake of biodiesel and oil prices.
From the Black Sea basin, Ukrainian analyst APK-Inform is more bullish on its 2021/22 wheat export forecasts, with a new estimate of 22,5 million tonnes.
That’s a 7.1% increase above the group’s estimates from a month ago.
Low temperatures are currently observed in Ukraine without however causing concern for crops.
However, a drop in wheat areas is expected due to the sowing difficulties of recent weeks.
Ukraine is among the world’s top wheat exporters.
Meantime, prices rose sharply yesterday in a context in particular for Russia of satisfaction to see its origin selected for a significant volume in the Algerian tender.
The demand for these origins is not weakening despite the implementation of export taxes, which reinforces the rumors of quotas that would be implemented early next year.
From Australia, with warm conditions today through South Australia and high winds the state has declared a harvest ban day for large parts of the state.
That is very frustrating for growers with this next rain event to hit late Friday early Saturday for 20-40mm widespread event.
There is 1.7Mt of wheat on the lineups in LSC latest report, well below the 3Mt max months that it need to get to in Jan onward to meet export targets.
In fact, accumulation for nearby exports in NSW and South Australia appears likely to be relying on carry-out rather than new-crop, and spikes in the market created by short covering from consumers and exporters are expected the next rain is substantial and widespread.
Rain events impacting quality selection, harvest past and logistics will all slow things up at the export terminal.
Consequently, prices for wheat and barley have firmed in the past week to reflect harvest interruptions and thin grower selling of off-spec wheat.
Consumers are booking barley and SFW wheat as their preference as growers in New South Wales try to get a run on harvest before showers forecast for the entire eastern and South Australian grainbelt arrive.
Quality of grain being harvested in NSW is hugely variable, with sites taking in anything from APH2 to SFW1 and GP1, and testing for falling numbers now widespread.
Meantime, cash boards were down yesterday along the east coast on wheat and canola.
Barley remained relatively unchanged to a couple bucks stronger in South Australia
SA still continues to trade at a premium to all port zones with Port Lincoln hitting new highs yesterday on APW1 of a $411 port equivalent price while NSW Port Kembla zone was bid $361 port equivalent average for the day.
Harvest pace continued ahead of the next rain event with growers working around the clock to secure quality and get crop off.
The wheat harvest has kicked off also around Dubbo this week.
Internationally, Algeria would have bought a significant volume estimated between 700 and 800 thousand tons with optional origins, but which should be shared between the Black Sea basin, the Baltic or even Argentina.
Egypt purchased 60k MT of wheat from Romania in an international tender that closed yesterday.
The grain is for shipment during the first half of January.
Turkey issued an international tender to purchase up to 385,000 t of milling wheat in an attempt to quell high domestic prices after struggling with drought-damaged crops.
The deadline for offers is November 25; the grain is for shipment in January.
South Korea purchased 60.000 t of animal feed corn from optional origins in an international tender that closed yesterday.
The grain is for arrival by mid-February.
Author: Sandro F. Puglisi
