US farm markets began this short holiday week with some different bullish actions.

Indeed, Chicago corn moved up 1,05%.

Soybeans increased 0,87%.

Soy meal was a rare negative close, down 0,48%.

Soybean oil added 2,15%.

CBOT wheat rallied 2,76%.

Kansas wheat jumped 3,23%.

Minneapolis wheat increased 1,31%.

On macro markets, yesterday Brent and WTI both rose 1% on reports that the OPEC+, could adjust their plan to raise oil production if large consuming countries release crude from their reserves or if the pandemic dampens demand.

However, oil prices fell on this morning, reversing gains in the previous session, on growing talk the United States, Japan and India will release crude reserves to tame prices despite the threat of demand faltering as COVID-19 cases flare up in Europe.

The United States, indeed, is expected to announce a loan of crude oil from its emergency stockpile on this morning as part of a plan it hashed out with major Asian energy consumers to lower energy prices.  

Thus, U.S. West Texas Intermediate (WTI) crude futures fell 58 cents, or 0.8%, to $76.17 a barrel at 04:23 GMT. 

Brent crude futures fell 42 cents, or 0.5%, to $79.28 a barrel.

With talk of a coordinated crude release having succeeded in driving prices back below $80 a barrel and an actual release only expected to have a temporary impact, analysts are now turning their attention to the potential hit to demand from a fourth wave of COVID-19 cases in Europe.

On equities markets, US stocks initially moved higher yesterday, with the S&P 500 and Nasdaq 100 climbing to new all-time highs.  

In fact, Monday’s U.S. economic news had been bullish for stocks.  

The Oct Chicago Fed national activity index rose +0.94 to 0.76, stronger than expectations of 0.10.  

Also, Oct existing home sales unexpectedly rose +0.8% m/m to a 9-month high of 6.34 million, stronger than expectations of a decline to 6.20 million.

However, a sell-off in technology stocks in the afternoon, as a consequence of higher T-note yields, took the entire market lower into the close.

Particularly, T-note yields rose after President Biden nominated Fed Chair Powell for a second term.  

Fed Chair Powell is seen as more hawkish on Fed policy than the other potential nominee for the Fed Chair, Fed Governor Lael Brainard. Also, the Powell Fed may feel less constrained about raising interest rates now that Mr. Powell has been renominated as Fed Chair.

Thus the S&P 500 Index closed down -0.32%, the Dow Jones Industrials Index closed up +0.05% and the Nasdaq 100 Index closed down -1.16%. 

Meantime, Asian shares were mixed on this morning after a late drop left major Wall Street indexes mostly lower.

Tokyo was closed Tuesday for a holiday. 

Hong Kong and Seoul declined while Shanghai edged higher.

Particularly, Hong Kong’s Hang Seng fell 1.1% to 24,669.59 and the Kospi in Seoul lost 0.5% to 2,997.33. 

In Sydney, the S&P/ASX 200 climbed 0.8% to 7,410.60 and the Shanghai Composite index added 0.2% to 3,588.77.

Shares rose in India but fell in Taiwan.

On the weather side, some wet is possible later this week in a band stretching from Oklahoma to Ohio, although very few areas are likely to see more than 0.25” between today and Friday, per the latest 72-hour cumulative precipitation map from NOAA. 

The agency’s 8-to-14-day outlook predicts a return to seasonally wet conditions for the Northern Plains between November 29 and December 5, meantime, with warmer-than-normal temperatures likely for most of the country.

Meantime, NASS’s weekly Crop Progress update showed corn harvest advanced to 95% complete, from 91% last week. 

The 5-yr average is to be 92% finished as of 11/21. Harvest had wrapped up in Texas, joining NC and TN with MN close behind at 99% complete. 

In Nebraska, corn harvest moved 5% to 95% finished, compared to 76% on average. 

Harvest in IA is 2 ppts behind average with 97% cut. 

As for milo, it was 94% harvested at the national scale, up 5% points on the week and 2% points behind the average. 

As for soybean update from NASS showed soybean harvest was 95% finished, compared to 92% last week and the average of 96%. 

Iowa, Nebraska, and South Dakota joined LA, MN, and ND at 100% harvested, with AR and WI likely to finish before next week. 

Soybean harvesting in Ohio is 5% points behind the average pace with 90% complete. 

As for wheat, NASS reported winter wheat planting at 96% complete, compared to 94% last week and the 5-yr average pace of 97%. 

The same 6 states were alone at 100% planted, while KS is at 98% finished. 

Illinois and Ohio remain behind schedule with 90% and 95% of fields planted, when each are finished by now on average. 

The Crop Progress report showed emergence at 86%, compared to 87% on average. 

Quality ratings took an unexpected drop.

Analysts were expecting to see ratings hold steady from a week ago, but USDA lowered them by two points, with 44% now in good-to-excellent condition.

Another 34% is rated fair (unchanged from a week ago), with the remaining 22% rated poor or very poor (up two points from last week).

On the demand side, weekly export inspections, saw 618,490 MT of corn shipped during the week that ended 11/18.

That was down 29% from 866,891 MT last week and down from 833k MT during the same week last season. 

Mexico and China were the week’s top destinations, each with over 200k MT shipped. 

Accumulated corn exports were tallied at 7.608 MMT (299.523 mbu) through the 18th. 

That compares to 9.3 MMT (366.1 mbu) through the same point last season. 

The report also showed 1.684 MMT of soybeans were exported during the week that ended 11/18. 

That was down 29% from 2.36 LW and down 2.291 MT LY. 

China was the top destination for the week’s export, with 1.23 MMT of the total. 

FAS also added 288,894 MT (284k to China alone) to past reports, which brought the MYTD total to 18.161 MMT (667.31 mbu). 

Last season’s Phase One accelerated pace was at 24.85 MMT by 11/19. 

As for wheat, USDA’s weekly Export Inspections report showed 177,799 MT of wheat shipped during the week of 11/18. 

That was down 54% from 212,909 MT of last week, and was 185,849 MT below the same week last season. 

Accumulated wheat exports through 11/18 were 1.917 MMT behind last year’s pace with 10.487 MMT shipped. 

In this context, corn basis bids showed some variability yesterday after tilting 5 to 7 cents higher at two Midwestern ethanol plants while falling as much as 8 cents lower at an Iowa processor.

Soybean basis bids slid 2 cents lower at an Illinois river terminal and dropped 5 cents at an Iowa processor while holding steady elsewhere across the central U.S..

Meantime the funds were net buyers yesterday for 10,500 lots of corn, 7,500 lots of soybeans and 15,500 lots of wheat.

From Canada, the once in a century storm that hit the southwest of Canada is not over it would seem. 

After washing out several roads and major rail lines Vancouver is due to get another 40-50mm.

Meantime, in shipping week 15, Canadian spring wheat exports were 309.4k mt for a season total of 3.732 million mt. 

This is just 61% (-2.384 million mt) of last year’s export number. 

Visible supplies rose to 2.713 million mt. 

Of this, 187.4k mt is sitting in Vancouver and 42.0k mt is sitting in Prince Rupert. 

The stocks in Western ports will provide some cushion to the rail delays.

As for durum wheat, week 15 exports were again small 66.9k mt for a season total of 995.4k mt. 

This is 67% (-491.3k mt) of last year’s amount. 

Total visible supplies are 719.5k mt, but just 40.9k mt of this is sitting in West Coast ports. 

The small stocks in Vancouver will make durum more immediately impacted by rail delays. 

However, there are 328k mt of durum sitting in eastern ports, and these are not affected by rail slowdowns. 

Year-to-date, Canada has relied on the Vancouver port to export 40% of all Canadian durum exports. 

On the other hand, StatsCan data showed fertilizer stocks for September were significantly lower yr/yr. 

NH3 supplies were 151 MT, compared to 209 last year and 263 in Sept 2019. 

Urea stocks were down 7.2% yr/yr to 167 MT, Urea ammonium nitrate stocks were 58% lower at 77 MT, and potash was 37% lower to 686 MT – and was below 1,000 MT for the first time since StatsCan began reporting in 2019.

From South America, Safras and Mercado reported their 1st Brazilian crop corn estimate at 25.7 MMT. 

If realized that would be up from 21.6 MMT last year on a 0.7% acreage increase. 

Brazil’s soybean planting progress is at around 85%, according to two recent estimates from consultancies Safras & Mercado and AgRural. 

That’s ahead of 2020’s pace of 74.1% and the historical average of 77.2%. 

Barring major weather catastrophes, most experts are anticipating a record-breaking soybean production this season.

On European market, Euronext started its week with a new historic surge with wheat contracts which went above 300 € / t on all the maturities of the 21/22 campaign. 

Other cereals are not to be outdone, with an increase in the prices of maize and barley in particular.

Rapeseed prices rebounded significantly yesterday, amid heightened volatility in this product and fears over supplies from Canada.

This unprecedented situation is the result of multiple factors, ranging from fundamentals to geopolitics, including rising inputs and energy costs. 

Meantime, the European Commission showed that sowing campaign for winter cereals has been completed on time in most of central and northern Europe, and is currently progressing in the south. 

In most parts of Europe, continued fair autumn weather provided good conditions for farmers to progress with the sowing of winter crops, as well as for emergence and early development of the seedlings. 

However, rain deficit in central and eastern Europe raises some concern.

In fact dry conditions in Czechia, Slovakia, southern Ukraine and northern Romania, resulted in delays in winter wheat sowing and crop emergence. 

In contrast, high rainfall in central and southern Italy and large parts of the Balkan region even if seems did not impact that much on the sowing of winter crops, with the exception of Croatia, where a moderate delay in emergence is observed, it is causing some delays especially in South Italy where sowing started earlier than usual, but continuos rainfall are delaying sowing works. 

In Spain and Portugal, in contrast, rainfall at the end of October and the first days of November created adequate soil moisture conditions for sowing and germination, but more rainfall is needed for sowing to progress and to sustain crop establishment. 

However, the mild temperatures in southern areas allow the sowing window to be extended until December, ensuring more appropriate soil moisture conditions for crop germination. 

Durum wheat sowing has started in southern Europe, but in Spain, farmers in the south, where durum wheat is mainly cultivated, are waiting for more substantial rain to start the sowing campaign, while in Italy farmers were stopped by rainfall.

From the Black Sea basin, wheat prices are rising again. 

This results in an increase in export taxes in Russia, taxes raised to 78.30 usd / t this week.

Meantime, according to the Ministry of Agriculture, as of 22/11/2021 125.4 MMT of grain has harvested, including 78.6 MMT of wheat, 18.9 MMT of barley and 15 MMT of corn.

On the other hand, the Ukrainian Minister of Agriculture surprised yesterday by posting estimates of maize production for Ukraine this year at 40 million tonnes, beyond the range of analysts’ estimates. 

While maize prices expressed in fob are on the rise, those on the national market are currently under the effect of harvest pressure.

Meantime, Ukraine’s 2021/22 corn exports have reached 4,6 MMT, and the country’s agriculture ministry expects to see a total of 30,8 MMT by the end of this marketing year. 

The country enjoyed a record-breaking grain harvest this fall and is one of the world’s top corn exporters.

Ukraine’s 2021/22 wheat exports have reached 14 MMT since the beginning of July, and the country’s agriculture ministry expects total wheat exports to top 24,5 MMT this marketing year. 

Total grain exports are expected to trend more than 20% higher year-over-year.

From the Middle Kingdom, Chinese Customs’ data showed China imported 775,331 MT of U.S. sourced soybeans during October. 

That was down from 3.4 MMT in October 2020, tumbling 77% lower year-over-year.

China also brought in 3.3 MMT of soybeans from Brazil, which compared to 4.23 MMT last season. 

Total bean imports were reported 41% below October 2020 at 5.11 MMT. 

From Australia, wheat production woes hit the wires. 

Given the global reliance on Australian wheat production due to adverse northern hemisphere seasons it makes sense that world values will ebb and flow with Australia’s’ harvest prospects. 

For many areas, harvest conditions have been wetter than the infamous 2010/11 season – one where wheat was so badly damaged some feed grain was unusable. 

This is a difference season – with a later than normal season some wheat that would ordinarily be harvested is still green – however, with over 150mm in the 15-day forecast for parts of NSW the market is asking the “what if” question.

The rumour mill would suggest the global feed grain buyer is stepping in to take advantage of both lower protein and potentially downgraded harvest. 

China is a constant theme with many indicated they have been shopping for AGP type wheat out of the west. 

Grade spreads in Australia tell the story. 

With lower grades trading at historically wide discounts to APW1. 

Additionally, APH2 hit its widest spread to APW1 in many areas. 

For many growers in Australia, these spreads don’t get fixed with the buyer until they deliver their grain.

Meantime, Aussie local markets kicked off the wheat in a explosive fashion. 

With upcoming forecast maps for this week’s rain event across the east coast it has a bulled-up quality wheat market.

Indeed, ASX January wheat traded in the range of $400-410 yesterday for smalls and finished the day out up $19/t from previous trading day at $405/t as the market gets in to secure milling wheat. 

Grower cash board bids were also up across the country with wheat up $5-10/t on APW and the AGP spreads continued to widen over the day.

Barley continued to gain a bid through South Australia and Victoria with track and delivered markets up $4-5/t. 

Canola markets were softer and came off $10/t through the track and delivered domestic crush bids.

On the international trade scenario, Bangladesh is officially buying 50,000 t of wheat.

South Korea issued an international tender to purchase 50.000 t of animal feed corn, likely sourced from Australia. 

The tender closes on Tuesday, and the grain is for arrival in late April.

South Korea also issued an international tender to purchase between 8,000 and 16,000 metric tons of soymeal, likely sourced from South America, that closes today. 

The grain is for shipment between mid-February and mid-March.

The Philippines purchased around 40.000 t of animal feed wheat in a tender that closed last Friday. 

The grain is likely sourced from Australia and is for shipment in February.

Author: Sandro F. Puglisi

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