US farm markets were mixed yesterday, but mostly higher.
Traders, indeed, are on the lookout for new fundamental news that may will arrive only tomorrow morning after USDA’s December World Agricultural Supply and Demand Estimates (WASDE) report.
As for wheat, farmer sentiment continues on its recent downward slide, according to the latest readings from the Ag Economy Barometer from Purdue University / CME Group.
November’s reading of 116 fell 5 points from October and is down around 30% from a year ago.
Rising input costs were largely to blame.
Farmers remain very optimistic about farmland values, meantime.
Meantime, corn prices declined moderately in morning trading but ended the session up 0.43%.
Soybeans did not follow suit, closing with losses between 0.65% and 0.89% approximately.
Soybean meal eased down 0,82%.
Bean oil ended the session with losses by 1,31%.
The wheat complex moved up moderately, with CBOT wheat futures lifted 0,28%.
KC HRW was up 0,61%.
MPLS spring wheat was up 0,85%.
On macro markets, oil prices eased on this morning, taking a breather after two days of gains.
Investors, indeed are waiting for an assessment of full impact of the Omicron coronavirus variant on global economy and fuel demand as well as the effectiveness of existing vaccines.
British drugmaker GSK, said on Tuesday its antibody-based COVID-19 therapy with U.S. partner Vir Biotechnology is effective against all mutations of the Omicron variant.
The market is also focusing on Iran nuclear talks, tensions between Russia and Ukraine and weather in northern-hemisphere winter.
Indirect talks between Washington and Tehran on reinstating their nuclear pact resumed a week ago but broke off on Friday, with a resumption scheduled for later this week.
Germany wants Iran to present realistic proposals in talks over its nuclear programme.
President Joe Biden warned Russian President Vladimir Putin yesterday that the West would impose “strong economic and other measures” on Russia if it invades Ukraine, while Putin demanded guarantees that NATO would not expand farther eastward.
The most significant impact could be global pressure in Germany to shut the Nord Stream 2 natgas pipeline – this would be explosive to the European gas market and ultimately to urea values.
In this context, the recovery run took a break as investors tried to understand how this situations will evolve, before buying further.
On this wake oil markets reacted little also to the U.S. weekly inventory data.
U.S. crude stocks, indeed, fell last week while gasoline and distillate inventories rose, according to market sources citing American Petroleum Institute figures on Tuesday.
In fact, Brent crude futures dropped 19 cents, or 0.3%, to $75.25 a barrel at 05:19 GMT, after settling 3.2% higher on Tuesday.
U.S. West Texas Intermediate crude was at $71.82 a barrel, down 23 cents, or 0.3%, having gained 3.7% in the previous session.
On equities markets, US stock indexes on Tuesday settled sharply higher, with the S&P 500 and Dow Jones Industrials posting 1-1/2 week highs.
A sharp rally in technology stocks boosted the overall market, along with strength in energy stocks.
Stock indexes also pushed higher on reduced omicron concerns.
Stocks also received a boost Tuesday afternoon when Senate Republican leader McConnell said a deal had been reached with Senate Majority leader Schumer on raising the debt limit.
On this wake, stocks ignored Tuesday’s bearish U.S. economic data.
The U.S. Oct trade balance, indeed, was in deficit by -$67.1 billion, wider than expectations of -$66.8 billion.
Also, Q3 nonfarm productivity was unexpectedly revised lower to -5.2% (q/q annualized) from -5.0%, weaker than expectations of -4.9% and the biggest decline in more than 60 years.
In addition, Oct consumer credit rose +$16.897 billion, weaker than expectations of +$25.000 billion.
Thus, the S&P 500 Index closed up +2.07%, the Dow Jones Industrials Index closed up +1.40%, and the Nasdaq 100 Index closed up +3.03%.
The benchmark U.S. 10-year Treasury yield edged a little lower on this morning, but after registered, two days of gains.
It was last at 1.4614%, well up from Friday’s recent low of 1.335% when Omicron worries first hit, but also well short of its pre-Omicron recent high in late November of 1.693%.
The two-year yield , which rises with expectations of higher interest rates, was at 0.6892% just shy of its recent top.
The dollar index on Tuesday posted modest gains as higher T-note yields supported the dollar.
Thus, the dollar index on Tuesday rose +0.044 (+0.05%).
Meantime, Asian shares advanced on this morning after the second broad rally on Wall Street.
In fact, Tokyo’s Nikkei 225 index gained 1.4% to 28,860.62 and the Shanghai Composite index climbed 1.2% to 3,637.57.
Hong Kong’s Hang Seng was slipped 0.1% to 23,954.04.
In Australia, the S&P/ASX 200 jumped 1.3% to 7,405.40, while the Kospi in South Korea picked up 0.3% to 3,001.80.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3%, after closed 2.1% higher on Tuesday, its biggest percentage gain since November 2020.
On freight market, the Baltic Exchange’s dry bulk sea freight index extended gains for a ninth straight session on Tuesday, tracking firm rates across all its vessel segments.
The overall index, which factors in rates for capesize, panamax and supramax vessels, advanced 117 points, or 3.6%, to 3,352, touching its highest level since Nov. 1.
The capesize index rose 284 points, or 6%, to 4,983, its highest since Oct. 26.
Average daily earnings for capesizes, which transport 150,000-tonne cargoes such as iron ore and coal, increased by $2354 to $41,324.
Recent gains in capesizes can be attributed to increased demand witnessed in key trade routes of Brazil-China and Australia-China, Allied Shipbroking said in a weekly note.
Benchmark Dalian and Singapore iron ore futures surged, leading a broad rally in ferrous materials, as investors cheered a liquidity-boosting measure to support economic growth in top steel producer and consumer China.
The panamax index added 41 points, or 1.3%, to hit a more than one-month high of 3,253.
Average daily earnings for panamaxes, which carry 60,000-70,000 tonne coal or grain cargoes, increased by $371 to $29,275.
Augmented interest for both mineral and grains shipments in the Atlantic basin has led to “significant gains” in the panamax segment, the shipbroker noted.
The supramax index gained 36 points to 2,488, its highest since Nov. 4.
On the weather side, some more rain and snow will move across the central U.S. between today and Saturday, with northern Nebraska, northern Iowa and southern Minnesota likely to see the most accumulations during that time, per the latest 72-hour cumulative precipitation map from NOAA.
Snowfall is covering roughly 16.5% of the country today – most notably across most of North Dakota, Minnesota, Wisconsin and Michigan.
NOAA’s 8-to-14-day outlook predicts a return to much warmer-than-normal conditions for most of the U.S. between December 14 and December 20, with seasonally wet weather likely for a large portion of the Corn Belt.
Coming back on grain markets, USDA will release its Dec WASDE on tomorrow morning, December 9.
Analysts’ consensus predicts little change in US stocks for this month of December.
However, the weaker export performance than expected could lead to a slight upturn in US wheat and soybean stocks.
While the good demand for corn, especially for ethanol, would allow a very slight drop in US stocks.
Meantime, Census data showed October’s official corn exports were 3.816 MMT.
That was up from 2.55 MMT in Sep and 3.7% above October 2020.
The monthly data release showed DDGS exports were 1.059 MMT in October.
That was a 3-month high and 28% above Oct 1010.
Ethanol exports were tallied at 104.74m gallons, which was a 6-month high but down 18% yr/yr.
Census reported 291,108 MT of milo was exported during October, with 73% to China.
As for soybean, monthly Census data showed soybean exports during October totaled 10.506 MMT, or 386.06 mbu.
That was under October 2020’s record 11.64 MMT and Oct 2016’s 11.17 MMT but was still the 3rd most on record for the month.
MYTD soybean shipments were tallied at 466 mbu through October.
China was the destination for 71% of the total for the month, and 66% of the MYTD total.
Soymeal exports were reported at 989,150 MT for the month of October.
That was up from September’s 724.7k MT but below October 2020’s 1.005 MMT.
For soybean oil, Census data showed 25,929 MT were exported during October.
That was a 21 year low for the month, but was up 69% from September.
As for wheat, Census data reflecting official wheat exports showed 1.218 MMT (44.75) of wheat was shipped in October.
That was down from 2.31 MMT (84.86 mbu) in September and was a 50-yr low for the month. MYTD wheat exports were 374.97 mbu through October.
Meantime, the national average corn basis from cmdtyView is minus 13 cents, as it continues to strengthen from harvest’s -22 cents and last year’s -20 cents.
In the ECB, cmdtyView data has the average basis at 18 3/4 cents under, where in the WCB offers are averaging 12 cents under.
The national average soybean basis according to cmdtyView is 33 1/4 cents under Jan.
That is firmer than 47 cents under Nov during mid October and compares to -46 cents at the same point last year.
The ECB basis is 25 1/4 cents under Jan, while cmdtyView has the WCB bean basis at -38 cents.
Meantime, yesterday USDA reported a private export sale of 123,000 MT of soybeans to unknown destinations.
On the other hand, the US government has committed to throw some cash at the biofuel companies to offset COVID impact along with the retrospective changes.
At the same time, the EPA has officially extended their deadline via an announcement that did not specify a time frame.
Both 2021 and 2022 blending requirements are yet to be established.
It indicated retroactive reduction of 2020 targets to 17.13 billion gallons due to a reduction in fuel demand during the Covid-19 pandemic in the United States, and 2021/2022 targets which would put the biofuel quota in 2022 at its highest ever level.
The current year target would be 18.52 b gallons, with 13.32b gal from ethanol.
The 2022 target would be 20.77 b gal, with 15 b gal from ethanol.
It should also be noted that the EPA would reject the multiple requests for exemptions.
In this context, corn March contract put on 2.5c/bu, soybeans January contract fell 11.25c/bu, meal fell USD$1.5/st and oil came 0.75usc/lb.
Chicago wheat increased 2.25c/bu, minni added 8.75c/bu while Kansas March contract put on 5c/bu.
Corn basis bids firmed 2 cents higher at an Iowa processor and tilted 2 to 4 cents lower at two other Midwestern locations while holding steady elsewhere across the central U.S..
Soybean basis bids faded 3 cents lower at an Ohio elevator and firmed 2 to 5 cents higher at two other Midwestern locations while holding steady elsewhere across the central U.S..
The funds yesterday in Chicago bought 2,000 lots of corn and 2,000 lots of wheat while they sold 5,500 lots of soybeans.
From Canada, the rail recovery in Canada continues to be slow.
Canadian National Railway Co. reported the Kamloops-to-Vancouver rail line has resumed operation after severe flooding caused the shutdown.
Rain is still hampering repair efforts.
CN Rail will continue to monitor the infrastructure and terrain.
Consequently, deliveries to Vancouver terminals were small and will continue to be restricted also in the next days.
In this context, Canadian Gov’t has asked Vancouver terminals to prioritize feed grain deliveries to British Columbia over wheat exports.
Indeed, Canadian wheat exports (exluses durum) during week 17 were 245.4k mt for a season total of 4.17 million mt, down 38% from last year.
Visible supplies in the Canadian elevator system grew to 1.61 million mt but supplies in Vancouver and Prince Rupert shrank to 52.0k mt and 124.6k mt respectively.
Meantime, last week Stats Canada put Canadian all wheat production at 21.65 million mt.
This was 450k mt higher than what trade was expecting.
Particularly, spring wheat production was put at 16 million mt (62% of last year’s volume), which was significantly higher than the 14.70 million mt that the trade was expecting.
However, the largest surprise in the StatsCan numbers was in durum wheat.
Stats Canada, indeed, put Canadian durum production 891k mt lower than AAFC’s number to just 2.65 mln mt.
This was well below the 3.60 mln mt that the trade was expecting.
AAFC already had ending stocks and domestic use at low levels.
So, if the 2.65 mln mt production number were correct, most of the 891k mt decrease would have to come out of exports.
This would take exports down to 2.21 million mt.
Stats Canada’s production number would lower total supply to ~3.43 mln mt.
Meantime, as of shipping week 17, producers have delivered 1.28 mln mt of durum into the Canadian elevator system.
This means that just over 30% of the total supply has been delivered which is in-line with last year.
Canada exported 22.2k mt of durum during shipping week 17 for a year-to-date total of 1.07 mln mt.
Consequently, this represents roughly 48% of Canadian exportable supplies.
Last year just 33% of the exportable supplies had been exported.
In this context, Canadian bids were slightly lower last week.
Particularly, as for durum wheat bids were mixed.
Indeed, in St. Lawrence prices fell by Cnd 4.09/mt to ~C$871.09/mt, while durum street prices in Rosetown, continued to quote at $716.88, unchanged from past week, even if export basis rose again at CAD $151.28, from $145.07/mt of previus week.
That was $6.21 higher.
From South America, Brazil’s AgRural cited 94% of Center-South 1st crop corn was planted as of 12/2.
That compared to 96% at the same point last year.
Brazil’s soybean planting was 90% finished as of 12/2, according to AgRural.
Meantime, Brazil’s Anec expects the country’s corn exports to reach 3,47 MMT in December, which would be a year-over-year decline of 9.2%, if realized.
Brazil’s Anec estimates that the country’s soybean exports will reach 2,58 MMT in December – a substantial year-over-year increase, if realized (last December, Brazil only exported 0,16 MMT of soybeans).
On European market, with the exception of rapeseed, which once again stood out yesterday, wheat and corn prices were substantially unchanged, pending the USDA report.
Rapeseed, indeed, yesterday shoewd, during the session, on the February 2021 Euronext deadline, a sharp increase of up to + € 21 / t .
With a rebound of +57.75 € / t over the last 5 sessions, rapeseed is thus back at the gates of 700 € / t which had not been seen since November 17.
Meantime, according to the European Commission, soft wheat exports from the EU in the 2021/22 season that started in July continued to run last week.
Indeed, as of Dec. 05, EU soft wheat exports had reached 12.84 million tonnes, up from 11.62 million tonnes of last week and above last season, when 11.54 million tonnes had been exported by the same week.
That is a year-over-year increase of 11% so far.
As for durum wheat, EU export were at 255.087t.
That was up from 252.105 of prior week, noticeably up from 106.972 t by the same week in 2020/21, but down from 343.490 t by the same week in 2019/20.
As for barley, EU data showed 2021/22 exports at 4.31 million tonnes, against 3.49 million a year ago and 4.12 million tonnes reported a week ago.
Meantime, EU corn imports reached 5.63 million tonnes, against a revised 7.43 million a year ago.
EU 2021/22 soybeans import, had reached 5.29 million tonnes, down from 6,29 million tonnes in 2020/21 at same week.
EU 2021/22 rapeseed imports, were at 2,02 million tonnes, down from 3.1 million tonnes a year ago.
Frustrations remain over the fact that French data is not current, however (and France is Europe’s top wheat exporter).
Meantime, Agreste yesterday released its first estimates of areas for the next 2022 harvest.
The soft winter wheat area for 2022 is thus expected to decrease by -0.6% to 4.924 million hectares against 4.956 million hectares in 2021.
Durum wheat should fall by -1.8% to 279,000 ha against 284,000 ha in 2021
Winter barley increased by + 2.4% to 1.226 Mha against 1.197 Mha in 2021
Finally, rapeseed shows an increase of + 12.3% to 1.102 Mha against 981,000 ha in 2021.
It should be noted that the 2022 rapeseed sole would nevertheless remain lower by -11.3% than the five-year average.
As for the 2021 production, the soft wheat harvest is confirmed at 35.41 Mt while the production of grain corn (seeds included) is sharply revised upwards to 15.39 Mt.
From North Africa, Egypt’s strategic wheat reserves are sufficient to cover 5.3 months of consumption, state news agency MENA cited supply minister Ali Moselhy as saying on Tuesday.
Moselhy added that sugar stocks were enough for 2.3 months and vegetable oil reserves covered 5.4 months.
From the Black Sea basin, according to the Russian Ag Ministry as of 07/12/2021 Russia harvested 126.7 MMT of grain, including 79 MMT of wheat, 18.9 MMT of barley, 15.9 MMT of corn.
Meantime, Russia exported wheat for 18,8mmt (-18% YoY), barley for 2,3mmt (-24% YoY), corn for 1mmt (+12% YoY).
As of Dec 6, since July 1 2021, Ukraine exported, wheat for 14.602mmt(+20.7% YoY); barley for 4.965mmt(+34% YoY); corn for 6.207mmt (old+new crop!!!, same pace YoY meanwhile crop is ~30% bigger).
From the Middle Kingdom, S&P Global Ratings said on Tuesday that a default by China property giant Evergrande was inevitable.
This would be China’s largest debt restructure and it would seem the chance of a government bailout is close to zero.
On ag market side, the latest customs data shows that Chinese soybean imports in November 8,57 MMT.
The country’s total soybean imports from January to November are down 5.5% from a year ago, at 87,66 MMT.
From Australia, widespread rains and flooding throughout the cotton-growing regions of eastern Australia over the past few weeks have had a mixed impact on this season’s emerging crops.
Where the falls have been moderate the extra moisture has been a bonus, but in low-lying areas subject to flooding and waterlogging crops have been set back and, in some cases, destroyed altogether.
Cotton Australia chief executive officer, Adam Kay, said while the industry was still forecasting a national crop this season of around 4.7 million bales, it had been a very challenging start for growers due to the flooding and cool temperatures.
Meantime, wheat markets were firmer on the cashboards yesterday by $3-4/t while ASW1 bids gained a little more ground, east coast prices posting up $6/t.
Wheat harvesting in southern NSW to date so far has been making SFW1 spec with test weight holding up, and good protein. As expected falling number is the issue, with the lowest of the range reported to be 60-80 seconds.
Yields continue well above average according to feedback from growers.
Barley markets yet again took another hit and pushed lower with cash bids off $5-8/t and deferred January plus delivered markets were also a touch softer on the bid side but bid offer spreads remained wide.
Pulse prices gained significantly.
Lentils in South Australia were actively bids around $1050/t port attracting large grower selling.
We have also seen the faba bean market rally in recent weeks with bids into packers and export pathway gaining more momentum, which at $550-600 delivered packer, now sees fabas being priced out of the domestic ration.
Scattered showers pushed across parts of SA and Victoria yesterday creating some headaches for growers and slow start getting onto paddocks.
Cooler conditions again today calls for a later start on cereals.
Strong harvest receival data was reported yesterday through South Australia Viterra network with a total of 2.624Mt of grain taken into their system this harvest.
On international trade scene, wheat demand just keeps coming.
Japan’s MOA is tendering for 260,312 MT of wheat, with 160,802 MT to be U.S. specific.
Philippines 300,000t feed wheat and 125,000t barley.
A private Philippines buyer has entered the market looking to buy optional origin feed wheat across a range of delivery options for arrival through February 25-July 14 period.
Jordan issued an international tender to purchase 120.000t of milling wheat from optional origins that closes on Thursday.
The grain would be for shipment starting in mid-May.
Taiwan purchased 130.000 t of animal feed corn, likely sourced from Argentina, in an international tender that closed yesterday.
The grain is for shipment starting in early February.
Author: Sandro F. Puglisi
