US farm markets finally showed some recovery yesterday, even if still there are many concerns over how the omicron variant could affect global economy.
Thus, corn prices firmed 0.7%.
Soybeans trended 0,9% higher.
Soymeal jumped around 2,14%.
Soy oil eased 0,05%.
Chicago wheat gained 0,41%.
Kansas wheat shedded 0,58%.
Minneapolis wheat was up 1,67%.
On macro markets, oil prices rose on this morning, recouping the previous day’s losses, as investors adjusted positions ahead of an OPEC+ decision over supply policy, but gains were capped amid fears that Omicron will hurt fuel demand.
Thus, Brent crude futures rose 85 cents, or 1.2%, to $69.72 by 04:02 GMT, having eased 0.5% in the previous session.
U.S. West Texas Intermediate (WTI) crude futures gained 85 cents, or 1.3%, to $66.42 a barrel, after a 0.9% drop on Wednesday.
Global oil prices have lost more than $10 a barrel since last Thursday, when news of Omicron shook investors.
On equities markets, U.S. stock indexes opened higher yesterday, on better-than-expected U.S. economic data.
U.S. Nov ADP employment rose +534,000, showing a stronger labor market than expectations of +525,000.
Also, the Nov ISM manufacturing index rose +0.3 to 61.1, just below expectations of 61.2.
However at the mid-morning, after the Fed’s Beige Book said that the U.S. economy grew at a modest to moderate pace in the month through Nov 19, with prices “rising at a moderate to robust pace and with price hikes widespread across sectors of the economy” and news that the first case of the omicron Covid variant was discovered in the U.S., US stocks trended lower for the remainder of the day and settled lower with the S&P 500 fell to a 6-week low, the Dow Jones Industrials dropped to a 1-3/4 month low, and the Nasdaq 100 posted a 1-month low.
Thus the S&P 500 Index closed down -1.18%, the Dow Jones Industrials Index closed down -1.34%, and the Nasdaq 100 Index closed down -1.60%.
Meantime, Asian stocks and major currencies paused for breath on this morning as markets struggled to find direction.
Thus, MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.35%, supported by a 1.1% rise in Korea’s KOSPI that, on the back of a mini tech rally closed at 2,930.47.
The Shanghai Composite Index held steady at 3,577.03 while the Nikkei 225 in Tokyo lost 0.4% to 27,825.15.
The Hang Seng in Hong Kong gained 0.2% to 23,714.00.
Sydney’s S&P-ASX 200 lost less than 0.1% to 7,231.20.
India’s Sensex opened up 0.6% at 58,037.76.
New Zealand and Singapore fell while Jakarta advanced.
On the weather side, widespread record breaking warmth likely throughout the central United States today.
Gusty winds and fire weather concerns located over the northern High Plains and central Appalachians.
Scattered showers and lake effect snow forecast across the Great Lakes and Northeast through Friday morning.
Particularly, a relatively tranquil weather pattern is expected to remain over the Lower 48 through the end of the week, with dominant high pressure located across the southern half of the U.S. and a powerful jet stream remaining over the Northern Tier.
As a result, above average temperatures are forecast for nearly the entire country over the next few days.
The warmest weather will occur today as highs soar into the 60s and 70s from the Great Plains to the Mid-Atlantic.
This equates to around 20-30F above normal for early December.
Dozens of daily high temperature records could be tied or broken throughout these regions as well.
Highs are forecast to remain above normal on Friday, but should begin to cool slightly as a cold front enters the midsection of the Nation.
The combination of these warm and dry conditions, along with gusty winds, could lead to dangerous fire weather across parts of the northern High Plains and central Appalachians today.
Additionally, both of the regions have High Wind Warnings in effect to highlight the potential for damaging winds.
Very little precipitation is forecast across the U.S. through the beginning of the weekend.
A majority of the activity is likely to occur across the Northeast and Great Lakes as a potent low pressure system swings through southeast Canada.
This system and associated cold front will aid in producing showers across the Northeast today.
Meanwhile, with arctic air surging behind the cold front lake effect snow is likely to begin overnight into Friday morning across the typical snowbelts of Upstate New York.
Light snow is also possible for upslope regions in far northern New England.
In this context, as is the case almost every year at this time, dryness in the Texas Panhandle and south eastern Colorado is getting some attention of course.
Approximately 82% of the High Plains were experiencing some level of drought through November 23.
That’s high, but not quite as bad as year-over-year levels of 96%.
The U.S. Drought Monitor releases its next set of data today in the morning.
Meantime, EIA data showed ethanol producers averaged 1.035m barrels of output per day through the week that ended 11/26.
That was 44k bpd below the week prior, and was 36k bpd below the 4-week average.
Ethanol stocks were 137,000 barrels higher to 20.3 million.
That was the largest stockpile since the MY began.
Also, NASS yesterday reported 469.312 mbu of corn were converted to ethanol during October.
That was the largest corn grind for October since 2017, and the most for any month since Jan 2020.
With that, ethanol plants produced 1.948m tons of DDGS, which was a 4 month high, and 183,804 tons of corn oil – an all time record going back to November 2014.
Strong ethanol demand is the one shining light for US corn now.
At the same time, NASS Fats & Oils report showed 196.92 mbu of soybeans were processed during October.
That was above the 195.6 mbu average estimate and an all time record.
Those beans produced 4.284m tons of soymeal and 2.348b tons of soybean oil.
That was also a record bean oil output since the report began in May of 2015, on a record 11.92 lb/bu yield.
Bean oil stocks were 2.386 billion lbs, which was above the 2.34b estimate and not surprising given the record oil yield.
On the other hand, Export Sales estimates ahead of today’s weekly USDA update range from 600k to 1.25 MMT for corn.
New crop corn bookings are expected to stay below 75k MT.
As for soybeans, the trade is looking for USDA to show between 0.8 and 1.8 MMT of soybeans were booked during the week that ended 11/25.
New crop bean bookings are expected to stay below 100k MT. Soymeal sales are estimated between 100k and 200k MT, with between 30k and 60k MT of soy oil sales.
As for wheat, estimates for the weekly Export Sales update run between 250k and 600k MT.
NMY forward sales are expected to be less than 60k MT in the update.
Meantime, private exporters announced to USDA the sale of 150.000 t of corn for delivery to Colombia during the 2021/22 marketing year, which began September 1.
In this context, US grains detached from outside markets last night, with corn that increased 4usc/bu, soybeans January contract increased 11usc/bu, soybean meal increased $6.6/st while beanoil fell 0.21usc/lb.
The wheat markets, on the other hand, pulled back after attempting a midweek bounce back, as Chicago wheat up only 3.25usc/bu, Kansas fell 3usc/bu while Minni increased 9.75usc/bu.
Corn basis bids were mostly steady to firm, after rising 3 to 5 cents higher at four Midwestern locations.
An Illinois river terminal bucked the overall trend, slipping 2 cents lower.
Soybean basis bids tilted 4 cents higher at an Ohio elevator and 6 cents higher at an Illinois river terminal while holding steady elsewhere across the central U.S..
The funds were net buyers yesterday for 3,500 lots of corn, 5,000 lots of soybeans and 2,000 lots of wheat.
From Canada, ahead of the StatsCan Crop Production report, which is due Friday, analysts surveyed on average expect corn output to come in at 14.1 MMT.
That would be up 500k MT from last year’s production if realized.
The full range of estimates is from 13.2 and 14.5 MMT.
As for soybean, analysts are looking for Canadian soybean output at 5.8 MMT.
That would be down from 6.36 MMT if realized.
For canola the trade is looking for between 11.5 and 14 MMT to be reported, with 12.8 as the average trade guess.
As for wheat, StatsCan will report Canadian crop production data on Friday.
Going into the data release, traders expect wheat output to be reported between 19.3 MMT and 22.5.
The average of estimates is to see 21.2 MMT.
That compares to 2020/21 StatsCan’s 35.18 MMT and USDA’s 21 MMT projection.
Traders are expecting spring wheat at 14.7 MMT and durum specific to total 3.6 MMT on average.
From South America, StoneX has pegged Brazil’s 2021-22 total corn crop estimate higher, from 119.8Mt to 120.1Mt, a decent uplift from last season’s 86Mt.
Meantime, Brazil exported 2.403.244 t of corn in November, but that was only roughly half of the total sold the same time a year ago, per newly available governmental data.
Brazil’s soybean exports in November totaled 2.587.139 t, versus year-over-year results of 1.435.661 t.
However, most Brazilian commodity exports were down year-over-year, including corn, beef, poultry, sugar and crude oil.
Argentine exports of grain, oilseeds and their derivatives totaled just over $2 billion in November, the country’s CIARA-CEC chamber of oilseed crushers and export companies said in a report on Wednesday, slightly down versus a month earlier.
CIARA-CEC said the amount of exports represented a decrease of 15.4% compared with October, though was up 17.7% versus the year-earlier period.
Also, CIARA-CEC said $30.1 billion in accumulated agro-export foreign currency revenue was earned in the first 11 months of the year.
On European market, Euronext has embarked on a technical rebound despite a still fearful market.
Rapeseed rebounded strongly, erasing the losses of the day before.
Wheat on Euronext finally managed to return to the rise in a market, however, still very nervous.
Despite this technical recovery, the Omicron variant and its impact, which is still difficult to measure, does indeed give rise to fears and uncertainties.
Also, the massive arrival of feed wheat, barley and Australian canola on the markets is also likely to weigh on prices after a particularly tense first part of the season.
It seems that China is taking advantage of the downturn in recent days to be a buyer on several products, particularly in Europe, of French feed barley.
From the Black Sea basin, temperatures remain negative in Moscow this morning around -6 degrees and close to zero in Kiev.
Meantime, Ukrainian wheat exports are outpacing last year by 22% through 11/29.
Ukraine exported a total of 2,17 MMT of wheat in November, bringing the country’s total wheat sales for the 2021/22 marketing year to 14,52 MMT.
Recall, Ukraine is limiting exports at 25.3 MMT through June.
Also, Ukraine’s agriculture ministry reports that the country’s corn exports totaled 5,49 MMT in November.
Ukraine is coming off a record-breaking grain harvest this year and is one of the world’s top exporters of both corn and wheat.
According to the Russian agriculture ministry, Russia has harvested 126.3 million tonnes of grain before drying and cleaning as of Dec. 1.
Particularly, wheat 79.0 MMT from 27.8 mln hectares; barley 18.9 MMT from 7.9 mln hectares; corn 15.6 MMT from 2.8 mln hectares; sunflower 15.7 MMT, from 9.6 mln hectares; sugar 40.6 MMT, from 1.0 mln hectares; rapeseed 3.0 MMT, from 1.6 mln hectares; soybeans 4.9 MMT from 3.0 mln hectares.
At the same time, farmers have already sown winter grains for next year’s crop on 18.4 million hectares compared to 19.3 million hectares on Dec. 1, 2020, the data showed.
From Australia, prices for feedgrain for delivery in coming weeks have risen by $5-$40 per tonne to reflect the lateness of harvest and the shorts created as wet weather persists across much of New South Wales.
The rally has come despite a softening in offshore markets this week, with ABARES’ upward revision to estimates for the national wheat and barley crops a contributor.
In fact, many consumers with animals to feed are now weighing up the possibility of swapping some or all of the feed barley in their rations to downgraded wheat that could easily account for at least half the NSW wheat crop, forecast by ABARES at 12.2 million tonnes (Mt).
There’s a stronger demand into Queensland for SFW because there’s less downgraded wheat available there.
Plenty of new-crop grain harvested before the rain is sitting on farm, but most cannot be accessed because of rain-related road closures.
Old-crop carryout and the capability of selected bulk-handling sites to load trains in the rain have been the saviour of exporters with vessels to load, and flour millers.
Growers in some districts are being bid more than $400/t for wheat on farm from domestic stockfeed millers, but rain interruptions have them loath to commit to nearby sales.
That, has blown out the spread between APW and SFW to around $120/t, and SFW is now available for around the same price as feed barley.
Wheat is being downgraded on its falling number, which it a proxy for the amount of sprouting, and test weight.
SFW1 has a minimum test weight of 70 kilograms per hectolitre, 8kg/hl above the FED1 cut-off, and neither have a minimum falling number.
The quality outlook for barley harvested post rain is also of concern, as most growers prioritised the harvest of bread wheat and canola ahead of the wet weather because of their higher value relative to barley.
On international trade scene, demand remains strong.
Tunisia’s ODC state grains agency, has issued two international tenders to purchase soft wheat and durumwheat.
The deadline for bids is for this morning.
Particularly, as for soft wheat, Tunisia is seeking cargoes of around 25,000 tonnes for a potential volume of up to 175,000 tonnes.
The shipment is requested in different periods between Jan. 1 and March 25.
As for durum wheat, cargoes are sought of 25,000 and or 17,000 tonnes.
The volume could up to about 92,000 tonnes.
The shipment is for Jan. 1-25.
Saudi Arabia’s SAGO seeks 535.000 tonnes of wheat in tender closing tomorrow, for arrival May-July 2022.
Jordan got 6 participant in yesterday barley tender, and MIT purchased 60k from Ameropa at 307 $/MT for shipment in June 2022.
Other offers were: CHS 329.18 $, Cargill 323.65 $, Vittera 345 $ , 342 $, Bunge 347 $, ETG 338 $.
South Korea has contracted corn probably of South American origin.
Japan issued two regular tenders to purchase 50.000 t of food-quality wheat from the United States, which close today and Friday.
The grain is for shipment in March.
Author: Sandro F. Puglisi
