Once again weather conditions juke a fundamental role in farm markets all around the world.
In fact, the rainfalls during the weekend in South America and the forecasted bumper crops in Australia, are ginning up some bearish sentiment, pushing grain prices lower.
Thus, yesterday on US farm markets corn and soybeans even if suffered moderate losses, were down more then 0,9%.
The soy crushing margins tumbled 7% lower.
Soymeal was down around 2,4% and soy oil was down 1,29%.
Chicago wheat fell 2,18%.
Kansas wheat was down 1,27%.
Meanwhile Minneapolis wheat, even if only marginally was up 0,26%.
On macro markets, Brent crude futures gained 1% yesterday, while U.S. West Texas Intermediate (WTI) crude futures jumped by 2.6%, rebounding from last week’s plunge on growing expectations that major producers would pause plans to add crude supply in January and amid uncertainty over the severity of the Omicron coronavirus variant.
However, oil prices tumbled more than 3% on this morning after Moderna’s CEO cast doubt on the efficacy of COVID-19 vaccines against the Omicron coronavirus variant.
That spooked financial markets.
Thus Brent crude futures fell $2.32, or 3.2%, to $71.12 a barrel at 07:29 GMT after slipping to an intraday low of $70.52, the lowest since Sept. 1.
U.S. West Texas Intermediate (WTI) crude futures fell $2.15, or 3.1%, to $67.80 a barrel, off a session low of $67.06, the weakest since Aug. 26.
On equities markets, U.S. stock indexes yesterday settled moderately higher as they rebounded after last Friday’s rout.
Technology stocks supported the overall market, and energy stocks also rose after crude prices climbed more than +2%.
Yesterday’s U.S. economic news was bullish for stocks after U.S. Oct pending home sales jumped +7.5% m/m, stronger than expectations of +1.0% m/m.
The pandemic situation in the U.S. has improved after the 7-day average of new U.S. Covid infections fell to a 1-month low Sunday of 68,455.
Thus, the S&P 500 Index closed up +1.32%, the Dow Jones Industrials Index closed up +0.68%, and the Nasdaq 100 Index closed up +2.33%.
Meantime, Asian shares mostly slipped on this morning, as investors cautiously weighed how much damage the new omicron coronavirus variant may unleash on the global economy.
Thus, South Korea’s Kospi led regional losses with a 2.4% drop, to 2,839.01.
Japan’s benchmark Nikkei 225 lost earlier gains and dropped 1.6% to 27,821.76, as pessimism over the omicron variant set in.
Australia’s S&P/ASX 200 gained 0.2% to 7,256.00.
Hong Kong’s Hang Seng dipped 1.7% to 23, 439.91, while the Shanghai Composite was nearly flat at 3,563.89.
On the weather side, some light rains and snows could fall on parts of the eastern Corn Belt and Great Lakes region between today and Friday.
However, very few areas will gather much more than 0.25” during this time, per NOAA’s latest 72-hour cumulative precipitation map.
The agency’s new 8-to-14-day outlook predicts warmer-than-normal conditions for almost the entire country between December 6 and December 12, with seasonally dry weather likely for the Plains next week.
Meantime, in yesterday’s USDA weekly Crop Progress report, sorghum was 97pc harvested compared with 94pc last week and 96pc average.
The condition of the winter wheat crop was rated 44pc good-to-excellent, unchanged from last week and down compared to 46pc a year ago.
USDA weekly Crop Progress report has finished for the 2021 season.
Yesterday pubblication was the last.
The first USDA weekly report for 2022 will be released on Monday, April 4, 2022.
On the demand side, yesterday’s weekly Export Inspections report showed 766,063 MT of corn was shipped during the week that ended 11/25.
That was down from 825k MT last week and the 1.045 MMT shipped during the same week last year.
Mexico was the top destination, with 327,440 of the total.
USDA revised past reports, adding 207,160 MT for an accumulated 8.581 MMT of corn exported through 11/25.
Last year’s pace was 10.344 MMT.
Export Inspections data for sorghum showed 190,649 MT were shipped, which brought the season’s total to 944,338.
Last year’s pace was 1.455 MMT of sorghum shipments through 11/25.
As for soybean, the weekly Export Inspections report from USDA showed 2.142 MMT of soybeans were exported during the week that ended 11/25.
That was down from 2.432 MMT last week and from 2.242 MMT during the same week last season.
China, with 1.385 MMT (or 64% of the total), was the week’s top destination.
USDA also added bean shipments to past reports, combining for 818,887 MT – with over half to China alone since the 10/1 report.
Accumulated soybean exports are 21.123 MMT (776 mbu) for the marketing year through 11/25, which still trails last season’s 27.27 MMT (1.002 bbu) pace.
As for wheat, USDA reported 250,651 MT of wheat was inspected for export during the week that ended 11/18.
That was up 30% on the week, but still down 53% yr/yr.
HRW wheat made up nearly half of the total, with 29.5% as HRS.
MYTD wheat exports were reported at 10.753 MMT as of 11/25, compared to 12.939 MMT at the same point last season.
On the other hand, yesterday the delayed CoT report, showed managed money was 366,691 contracts net long in corn as of 11/23.
That was up 25,556 contracts wk/wk on net new spec buying.
The CFTC data showed new commercial shorts were also added through the week, leaving the PMPU traders 614,963 contracts net short.
As for soybean, CFTC’s weekly Commitment of Traders update showed soybean spec traders were liquidating shorts through the week that ended 11/23.
That extended the group’s net ong by 19,868 to 49,356 contracts.
Commercial soybean traders added shorts, for a net 23,495 contract stronger net short.
In soymeal, the CoT update showed managed money short covering extended the group’s net long by 16,071 contracts to 53,559.
Soybean oil spec traders also closed shorts, but paired with net new buying the group was 6,142 contracts more net long at 82,354.
As for wheat, CFTC Commitment of Traders update showed CBT wheat spec traders were 2,705 contracts more net long to 17,963 as of 11/23.
In KC wheat, managed money firms added 3.6k new longs to contribute to a 5,049 contract stronger net long of 65,609 contracts.
MPLS wheat specs were 15,135 contracts net long as of 11/23, compared to 14.9k last week.
In this context, corn basis bids were mostly steady to start the week but did tilt 4 to 10 cents lower at two Midwestern processors while firming 3 cents at an Illinois ethanol plant.
Soybean basis bids remained steady across the central U.S..
The funds were net sellers yesterday for 15,000 lots of corn, 8,000 lots of soybeans and 12,000 lots of wheat.
From Canada, ahead of a Statistics Canada report out Friday morning, analysts expect to see 2021 Canadian all-wheat production estimates at just under 21,2 MMT.
That would be a year-over-year decrease of 40%, if realized. Widespread drought dropped total production to the lowest levels in more than a decade.
Meantime, railcars are moving again through the Rocky Mountains following the historic storm mid-November.
However, there are worries if the new rains over the weekend and the big precipitation expected today will cause additional damage.
In this context, in shipping week 16, Canadian spring wheat exports were 190.9k mt for a season total of 3.922 million mt.
This is just 61% (-681.6 million mt) of last year’s export number. Visible supplies rose slightly to 2.76 million mt.
Visible stocks continue to be large versus other years.
For comparison, visible supplies in week 16 of last year (when total supply was 30% larger) was 2.22 million mt.
Stocks in Vancouver fell to 75.2k mt over the week, while stocks in Prince Rupert rose to 124.6k mt.
As for durum wheat, week 16 Canadian exports were 50.7k mt for a season total of 1 million mt.
This is 61% (-682k mt) of last year’s volume.
Total visible supplies rose to 733.8k mt.
Stocks on the west coast fell to just 37.7k mt, but there are 322.7k mt sitting in eastern ports ready for export to Europe/ N Africa.
To date, 64% of all 2021/22 Canadian durum shipments have been exported from eastern ports.
From South America, Agroconsult estimated Brazil’s 21/22 corn output at 124 MMT, which would be a record and compares to the dryness afflicted 87 MMT last season.
Agroconsult is expecting an early Brazilian soy harvest.
They forecast 51 MMT of beans will be harvested by Feb 15, which would beat the 18/19 record of 47.4 MMT by the same date.
They expects production to total 144.6 MMT, which is above USDA’s 144 and Conab’s 142 MMT forecasts.
Southern Brazil remains dry, allowing for expedient planting pace.
Safras and Mercado reported national planting at 91% finished.
Conab reported Mato Grosso do Sul at 99% planted, Minas Gerais at 95%, Goias at 85%, and Sao Paulo at 80%.
La Nina in Argentina is a concern for the upcoming summer crop.
The crucial Jan/Feb period is generally dry in a textbook La Nina, as Buenos Aires Exchange flagged yesterday.
On European market, the risks linked to the new variant of covid-19 and the record Australian harvests sent Euronext clearly in the red.
Indeed, markets continued their decline yesterday across all products, in the wake of last Friday’s session.
It is difficult at this stage to know the real consequences on the world economy.
The situation is all the more worrying given that a large part of Europe is already introducing new restrictive measures in an attempt to contain a new wave of contamination.
Corn is losing ground in the wake of wheat and under harvest pressure in Ukraine.
Rapeseed prices fell sharply yesterday in the wake of vegetable oils, and in a context of fears of falling demand for biofuels given the health context.
From the Black Sea basin, Russia’s Sovecon consultancy estimates that the country’s wheat exports in November will come in around 3,2 MMT, which would be mostly level with October’s tally, if realized.
Particularly Russia exported 840,000 t of wheat over the period from 18 to 25 November against 630,000 t the previous week.
Russia is the world’s No. 1 wheat exporter.
Meantime, despite the drop in prices in all places, prices in Russia remain firm, maybe as a result of the increase in export taxes on wheat.
On the other hand, corn prices are losing ground in Ukraine as a result of harvest pressure.
The latter could be between 38 and 40 million tonnes.
To date, according to the Minister of Agriculture, 5.5 million tonnes have been exported, a volume roughly equivalent to that of last year to date.
From Australia, ABARES November crop estimates released overnight predicted 34.3Mt wheat, 13.2Mt barley and 5.7Mt canola.
Particularly, ABARES increased their wheat production from their prior 32.633 MMT forecast and is now above last season’s 33.337 record.
The largest change came via NSW, which was raised 1.11 MMT – citing beneficial rains.
In fact, ABARES acknowledged the late season rain in the NSW and Queensland states would result more in quality concerns as opposed to production loss.
Meantime, cash board markets kicked off the week firmer along the east coast with wheat up $5-6/t again on most grades.
There were some stronger moves on ASW1 with, for example, Kembla cash bids up $10/t.
South Australian wheat values have continued to firm and now reports of quality issues on falling numbers across the state. Barley grower bids were up $4-5/t while trade bids pulled back $5 and offers remained unchanged. Pulses have struck a bid in the past week, with a softer Australian currency turning on some more export demand. Containers remain tight but seeing more bulk activity on lentils and faba beans.
Field pea demand remained strong from China in the past month. Lentils have been a focus for growers through South Australia and Victoria.
On the international scene, Egypt surprised the market by buying no less than 600,000 t of wheat, divided between 240,000 t from Romania, 240,000 t from Russia and 120,000 t from Ukraine.
The French origins were non-competitive.
The average price was around $ 378.30 / t C&F, against $ 372 / t processed during the previous call for tenders.
Jordan is also trying to take advantage of the break in prices, tendering for 120,000t wheat.
Author: Sandro F. Puglisi
