US farm markets were mostly lower to start the week.
Corn prices, indeed, dropped 0,85%.
Soybean market sold off due to improved crop weather in Brazil and soybean prices tumbled 1.87% lower.
Soybean meal fell 1,28%.
Soybean oil shedded 0,63%.
The wheat complex was mixed but mostly higher, in contrast, rebounding with small to moderate gains after hitting a six-week low last Friday.
Expanding drought in the Central Plains lent an additional support.
Indeed, March Chicago SRW futures picked up 0,45%.
March Kansas City HRW futures added 0,87%
March MGEX spring wheat futures dropped 0,34%, bucking the overall trend.
On macro markets, oil futures eased yesterday on worries that rising coronavirus cases around the world could reduce crude demand as new doubts emerged about the effectiveness of vaccines against the Omicron variant.
At the same time, OPEC on Monday raised its world oil demand forecast for the first quarter of 2022.
In a monthly report, indeed, OPEC said it expects world oil demand to average 99.13 million barrels per day (bpd) in the first quarter of 2022, up 1.11 million bpd from its forecast last month.
In this context, Brent futures fell 76 cents, or 1.0%, to settle at $74.39 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 38 cents, or 0.5%, to settle at $71.29.
Meantime, in Europe, natural gas prices surged 11% on Monday on colder forecasts and worries that Gazprom PAO’s Nord Stream 2 gas pipe from Russia to Germany will remain shut if Russia renews aggression against Ukraine.
On the freight market, yesterday the Baltic Dry Index decreased by 56 points, reaching 3216 points.
Meantime, the Capesize market peaked mid-week from its recent rally as the 5TC marked down -$1344 on the last day of the week to settle at $40,035.
A tonnage tightness in several positions, particularly in the north Atlantic, led to gains early on in the week.
However, sustained downward pressure from the Pacific and Ballaster routes took its toll as the week progressed.
The West Australia to China C5 closed out at $13.732.
And while the route suffered substantial losses to end the week, there is said to be tightness on loading position in the nearby dates.
The Transpacific C10 now rates $39,308, while the China Brazil China ballaster route C14 now rates at $27,268 to the Transatlantic C8 at a stronger $52,750.
The Brazil to China C3 heading into next week will largely be focusing on loading dates in the new year. This will likely coincide with a slowdown coming into the Christmas holiday period.
Meantime, the week began on a bright note for the Panamax segment with a positive and firmer looking market carried over from previous.
However, this proved to be very short lived with both basins easing. The support had ebbed away with Charterers now taking a firm hold on the market.
The Atlantic saw tonnage build up in most areas.
And, without any distinct enquiry, rates had to give and duly obliged.
Committed ships agreed to APS levels equivalent to sub index rates basis DOP delivery only applied further pressure.
A 82000-dwt delivery Rotterdam agreeing $36,000 for an EC Canada round trip midweek.
Asia followed a similar pattern.
The south of the region began brightly as Atlantic demand lent some support.
But again insufficient NoPac/Australia demand proved to be the catalyst for further corrections in the market.
An 87000-dwt delivery South Korea fixing $23,000 for an EC Australia round, typifying the softer market.
As for Ultramax/Supramax seems a positive week overall with most areas seeing stronger demand.
More enquiry appeared from key areas such as the US Gulf and Indonesian coal demand was up putting pressure on rates.
Period activity was seen, with Ultramax size open China fixing in the mid to upper $20,000s for one year.
In the Atlantic, a 63,000-dwt from the US Gulf fixed 10/12 months trading redelivery Atlantic at $30,000.
From the Atlantic, increased activity from The Continent saw 57,000-dwt fixing a scrap run to the East Mediterranean in the upper $30,000s.
From the US Gulf a 55,000-dwt was heard to have fixed a run to the Black Sea in the high $30,000s.
In Asia, pressure for prompt tonnage saw a 63,000-dwt fixing delivery Philippines via Indonesia redelivery China at $33,000.
On backhaul runs from Asia, a 55,000-dwt was fixed for a trip to the Black Sea at $20,500.
All eyes on the upcoming week to see if this momentum will continue.
Some small rises on the BHSI with positive sentiment in Asia and parts of the Atlantic.
A 28,000-dwt open in Vietnam was fixed for a quick South East Asia round trip at $20,000.
The US Gulf region has seen more cargo enquiry. A 39,000-dwt rumoured to have been fixed for a trip to New Zealand in the low $30,000s.
In East Coast South America the market remains firm with a 38,000-dwt fixing a trip from Brazil to North coast South America in the low $40,000’s.
A 34,000-dwt open in Northern Europe was fixed for a trip via the Baltic to the Western Mediterranean at $32,000. A 34,000-dwt open in Otranto fixed via the Black Sea to Tampa-Vera Cruz range with an intended cargo of steels at $29,000 and a 37,000-dwt open in Turkey was fixed for a trip to North Coast South America – East Coast South America range at $29,000.
On equities markets, US stock indexes on Monday settled lower on omicron concerns and this week’s FOMC meeting.
The FOMC at the conclusion of the Tue/Wed FOMC meeting is expected to double the pace of its QE tapering to $30 billion per month, thus ending its QE program by March 2022 and opening the door for interest rate hikes as soon as Q2-2022.
Also, weakness in technology stocks weighed down the overall market, and a slide in crude oil prices on Mondy undercut oil-related stocks.
Thus, the S&P 500 Index closed down -0.91%, the Dow Jones Industrials Index closed down -0.89%, and the Nasdaq 100 Index closed down -1.53%.
The Russell 2000 shed 1.4%.
Particularly, the S&P 500 fell 43.05 points to 4,668.97.
The Dow slid 320.04 points to 35,650.95.
The Nasdaq dropped 217.32 points to 15,413.28.
The Russell 2000 gave up 31.31 points to 2,180.50.
On the weather side, after numerous tornadoes and other nasty weather ripped through the Midwest this weekend, many are hoping for calmer skies ahead.
Some additional rain and/or snow is possible for much of the Midwest and Plains between today and Friday, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts more seasonally warm weather is in store for much of the Corn Belt between December 20 and December 26, with drier-than-normal conditions reestablishing across the central U.S. next week.
Coming back on grain markets, per latest batch of USDA grain export inspection data, out yesterday morning and covering the week through December 9, we have seen a mixed but somewhat bearish set of data.
Indeed, corn export inspections were up around 5% week-over-week, reaching 810.395 t.
That was on the lower end of trade guesses.
Cumulative totals for the 2021/22 marketing year are still running moderately behind last year’s pace.
China (10.8 million bu) and Mexico (10.1 million bu) were the top two destinations for U.S. corn export inspections last week. Japan, Colombia and El Salvador rounded out the top five.
Sorghum export inspections faced a moderate week-over-week decline, moving to 119.720 t.
That grain is largely bound to China, with Mexico accounting for the small remainder.
Cumulative totals for the 2021/22 marketing year remain moderately behind last year’s pace.
As for soybean volume we saw a moderate week-over-week decline and fell below the entire range of trade estimates that were released prior to the report.
Soybean export inspections, indeed, trended 26% below last year’s pace and falling to 1.723.970 t.
Cumulative totals for the 2021/22 marketing year continue to slide further below last year’s pace.
China accounted for nearly half of all U.S. soybean export inspections last week.
Egypt, Italy, Mexico and Bangladesh filled out the top five.
Wheat volume saw fractional declines.
Wheat export inspections, indeed, slipped slightly lower week-over-week, with 245.090 t.
That was close to the middle of trade estimates.
Cumulative totals for the 2021/22 marketing year are tracking 17% below last year’s pace so far.
Japan was the No. 1 destination for U.S. wheat export inspections last week.
Nigeria, Taiwan, Venezuela and Mexico rounded out the top five.
In this context, Monday’s corn trade went home 4 to 5 cents lower in the old crop contracts.
New crop futures were down a full 1% with 6 to 8 1/2 cent losses.
December ’21 futures expire at the close tomorrow, so far only 12 contracts were delivered on.
The national average cash corn price from cmdtyView was 13 cents under on Monday at $5.72, which compares to $5.57 1/2 at the start of the month.
Basis in the ECB was 19 1/2 cents under March, while WCB basis was minus 11 1/2 cents.
Monday’s soy trading session saw red through the day, with beans closing 20 3/4 to 23 3/4 cents lower.
For Jan, that was just off the low of the day.
Meal futures were also weaker, closing down by $4.70 to $5.40/ton.
Soybean oil futures closed 34 to 38 points weaker in the front months, which left Jan at a 6-month low.
Spring wheat futures on the MGE pulled back on Monday with fractional to 3 1/2 cent losses, compared to winter wheat strength.
CBT SRW futures were up 3 1/4 to 3 1/2 cents at the bell.
March SRW is a 3 1/4 cent premium to December, which is set to roll off the board at tomorrow’s close.
KC wheat closed with 5 to 7 cent gains.
March KC HRW was 4 cents above the Dec contract at the bell.
Meantime, corn basis bids tipped a penny higher at a Nebraska processor while sliding 3 to 5 cents lower at three other Midwestern locations and holding steady elsewhere across the central U.S. to start the week.
Soybean basis bids firmed 2 cents at an Ohio elevator and held steady at other Midwestern locations.
From Canada, in the aftermath of disastrous floods last month that cut off Canada’s main port, Ottawa will convene a summit of industry figures and shippers to discuss strengthening supply chains.
The event will take place in early 2022.
The summit will bring together shippers, ports, terminals and the railway and trucking sectors as well as organizations that run critical infrastructure to discuss how to ensure the supply chains can recover fully and make them more resilient.
Experts say building new tracks or roads would not be practical.
One option could be to reduce reliance on Vancouver and make more use of the smaller port at Prince Rupert, in northern British Columbia, which plans to increase its container capacity by one-third by 2023.
Meantime, Canadian common wheat exports fell 34.3% in the week ended Dec. 5, Canadian Grain Commission data released Dec. 12 showed.
Exports declined to 161,300 mt from 245,400 mt the week before, according to the data.
Overall common wheat exports for the marketing year 2021-22 (August-July) reached 4.3 million mt and were 38% lower year on year.
During the same period of MY 2020-21, Canada shipped out slightly over 7 million mt of the food grain.
Exports of the food grain fell in the week to Dec. 5 as export prices of the food grain rose sharply to near $422/mt amid a global increase in prices.
In the same week, however, exports of durum wheat rose to 51,400 mt from 22,200 mt the week before.
From Aug. 1 to Dec. 5, exports of durum wheat totaled at 1.1 million mt, compared with nearly 2 million mt during the same period last year.
In MY 2020-21, Canada exported a total 26.4 million mt of wheat.
Agriculture and Agri-Food Canada has estimated the country’s wheat exports at 16.1 million mt in MY 2021-22.
The US Department of Agriculture has pegged Canada’s wheat exports at 15 million mt for MY 2021-22.
In MY 2021-22, Canada is likely to harvest 21.7 million mt of wheat, down sharply from 35.2 million mt the year before.
CWRS wheat FOB 13.5% Vancouver for 30-45 days forward was assessed at $414.38/mt Dec. 10 and FOB prices of 13.5% CWRS Vancouver for 45-60 days forward at $416.22/mt, both down 18 cents/mt, S&P Global Platts data showed.
Some traders expect exports of the high-protein content wheat to increase in coming months as premium quality wheat supplies from Australia are seen tightened in the current season.
An expected increase in exports may also help boost the price of the commodity in the near term, traders said.
From South America, according to Agrural, Brazilian sowing of the 2021/2022 soybean crop reached 96% of the estimated planted area.
In southern Brazil, however, dry weather has delayed the pace of planting and is threatening the overall prospect of the grain crop.
In the case of summer corn, lack of rainfall has worried farmers in Paraná and Santa Catarina.
In Rio Grande do Sul, however, dryness has already caused irreversible losses in some corn fields, AgRural said.
The consultancy said it will release new production estimates for Brazil’s summer corn and soybeans in the 2021/2022 harvest for clients later this week.
In early November, it estimated summer corn production at 28.7 million tonnes and soybean output 145.4 million tonnes.
Meantime, according to DATAGRO, Brazilian farmers have pre sold 30.4% of their anticipated 2021/22 soybeans crop vs 56.3% LY and 36.1% average, which is only 2.2% during November.
Showers fell last weekend in northwestern Argentina and southern Brazil after several weeks of dry weather that ended up raising fears for production.
Further rains were expected this week, according to Argentine National Meteorological Service.
This is a critical time period for the crops in that region as we enter the time when corn is going through pollination and soybeans are flowering and setting pods.
Meantime, Argentina’s Bolsa de Cereales raised their projected corn crop to 57 MMT, compared to USDA’s 54.4 MMT.
On the other hand, Argentina harvested 53.4% of wheat.
As record crop is expected, exports can reach 14mmt .
However, so far only 9mmt declared in the Register of Affidavits of Foreign Sales, updated as of December 10 of this year by the Ministry of Agroindustry, have been observed.
On the other hand, Brazilian meatpacker JBS agreed a deal to acquire Italy-based delicatessen company Grupo King’s, which will be incorporated by its subsidiary Rigamonti, for 82 million euros ($92.38 million).
JBS said in a securities filing that Rigamonti will own all of Grupo King’s four factories in Italy as well as its operations in the United States, including a plant located in New Jersey.
Under the deal, Rigamonti has also acquired a 20% stake in hog producer Piggly and will hold the commercial operations of Italian delicatessen brands King’s and Principe, JBS added.
The transaction requires approval from antitrust regulators.
On European Market, Euronext started its week on a mixed note with a rebound in wheat prices but a return to red for corn and rapeseed.
As for wheat, the increas in price was based in particular on technical considerations and particularly dense activity on the international scene.
Meantime, according to Cocereal, soft wheat production in the European Union and the United Kingdom is expected to fall next year as yields in the Balkan region return to average levels after record crops this year.
In its first forecasts for next year’s harvest, Coceral projected soft wheat production in the 27-country EU plus the UK at 139.8 million tonnes in 2022, down from 143.2 million tonnes in 2021.
Particularly, Romanian soft wheat output was forecast to drop to 7.9 million tonnes from 11.1 million while Bulgaria’s crop was pegged at 5.7 million tonnes against 7.2 million.
For France, the 2022 crop production was projected to fall to 34.5 million tonnes from 35.3 million, while in Germany soft wheat production was forecast to rise to 22.1 million tonnes from 21.4 million.
As for barley, 2022 production in the EU and the UK was seen falling slightly 59.0 million tonnes from 59.4 million this year.
Corn production would also be little changed, at 66.4 million tonnes against 66.3 million in 2021, with a much higher expected crop in Hungary offseting slightly lower output forecast in Poland, Germany, France, and Romania.
As for rapeseed, it expected EU and UK production at 20.0 million tonnes, up from 18.5 million tonnes this year.
The sharp increase was mainly due to higher plantings in several countries, including Germany, France, Britain, Romania, and Bulgaria.
Particularly, rapeseed production in France next year was forecast to rise to 3.7 million tonnes from 3.3 million this year, in Germany to 3.6 million from 3.5 million and in Britain to 1.6 million from 1.1 million.
Meantime, France yesterday signed an agreement with main export customer China to ensure pork trade can continue even if an outbreak of African swine fever (ASF) occurs, potentially providing a blueprint for European countries threatened by the pig disease.
China is the largest pork export market for France and the European Union.
Monday’s agreement, which takes effect immediately, means China would allow pork exports from unaffected regions of France even if ASF occurred elsewhere in the country, the French economy and agriculture ministries said in a statement.
Germany, a larger pork supplier than France, is in ongoing talks with Beijing about a regional approach.
But at the moment, It has been excluded from the Chinese market due to ASF cases in eastern Germany since last year.
From the Black Sea basin, the Ministry official data in respect of the current harvesting campaign as of 10th of December 2021 show that 126,8 million metric tonnes of grain were harvested from 45,4 million hectares.
This includes, 79 million metric tonnes of wheat were harvested from 27,8 million hectares.
18,9 million metric tonnes of barley were harvested from 7,9 million hectares.
16 million metric tonnes of corn were harvested from 2,9 million hectares.
3 million metric tonnes of rapeseed were harvested from 1,6 million hectares.
At the same time, IKAR said yesterday that it expects Russia’s 2021 grain crop after drying and cleaning at 122.7 million tonnes of grain, including 76.7 million tonnes of wheat.
Meantime, Russian wheat exports are down by 37.5% since the start of the 2021/22 marketing season on July 1, due to a smaller crop and the export tax, which will rise to $91.0 per tonne this week.
In this context, Russian wheat export prices fell for the second consecutive week last week.
Indeed, according to IKAR, Russian wheat with 12.5% protein loading from Black Sea ports for supply in late December or early January was quoted at $334 a tonne free on board (FOB) at the end of last week, down $3 from the previous week.
Sovecon, meantime, pegged wheat export prices down $2 to $338 a tonne, while barley was steady at $304 a tonne.
Prices for wheat in the Russian domestic market also fell last week due to weak demand from exporters and domestic consumers, Sovecon said, adding demand could rise in coming weeks ahead of the country’s New Year holiday on Dec. 31-Jan. 9.
Meantime, China is ready to open its market for grain supplies from all regions of Russia, Rosselkhoznadzor deputy chief Anton Karmazin said at the Made in Russia forum.
At the end of 2020, China entered the top ten largest importers of Russian grain, having purchased 1.9 million tons. For 10 months of 2021, this figure was 1.8 million tons.
During the forum, on Friday, Karmazin also said the Rosselkhoznadzor is negotiating to ease phytosanitary requirements for Russian wheat for supplies to Indonesia and Vietnam.
India, he said, is awaiting delivery of a test batch of lentils from Russia.
On the other hand, according to the local Agriculture Ministry, Ukrainian farms have harvested 84.17 million tonnes of grain from 98.6% of the sowing area, with the yield averaging 5.36 tonnes per hectare.
The volume includes 32.4 million tonnes of wheat, 9.9 million tonnes of barley, 40 million tonnes of corn and small volumes of other grains, the ministry said.
Farmers were still due to harvest the remaining 2.2% of the corn area.
Meantime, according to the local Agriculture Ministry, Ukraine has exported 28.3 million tonnes of grain so far in the 2021/22 July-June season, up almost 21% from the same stage a year earlier.
That included 15 million tonnes of wheat, 5 million tonnes of barley and 7.9 million tonnes of corn.
From the Middle Kingdom, China’s customs authority published new food safety rules in April stipulating all food manufacturing, processing and storage facilities abroad need to be registered by year-end for their goods to access the Chinese market.
Detailed procedures explaining how to get the required registration codes were issued in October.
Last week, GACC agreed that implementation should only apply to goods produced on or after Jan. 1, effectively granting a delay for products already shipped.
It is not clear what will happen if goods arrive without the required registration codes stuck onto packaging.
China’s food imports have surged in recent years amid growing demand from a huge middle class.
They were worth $89 billion in 2019, according to a report by the United States Department of Agriculture, making China the world’s sixth largest food importer.
Meantime, China’s soybean demand in marketing year 2021-22 (October-September) is expected to remain robust as the domestic production forecast was lowered, the monthly China Agriculture Supply and Demand Estimates report released by the National Bureau of Statistics said Dec. 9.
The forecast for record soybean imports and cuts in domestic production in China is likely to support global prices.
The world’s largest soybeans purchaser is expected to import a record 102 million mt of beans in 2021-22, unchanged from the previous month’s estimates and up 2.2% year on year, the CASDE report said.
Simultaneously, the domestic projection for 2021-22 soybean output has been cut from 18.65 million mt in November estimates to 16.40 million mt, compared with 19.60 million mt last year, the data showed.
The cut in domestic output was largely due to lower yield, which is estimated at 1,950 kg/hectare, down 2.2% year on year, the report said.
China’s crushing sector has been beleaguered with negative margins since June, which had stoked concerns of a dampening oilseed demand in 2021-22.
From January through November, China has imported 87.65 million mt of beans, down 5.5% from the corresponding period a year ago, the customs report released Dec. 7 said.
However, Platts Analytics expects the Asian nation’s soybean demand to remain at all-time high levels in the upcoming marketing years on the back of robust pig herd growth.
Platts Analytics forecast China’s soybean imports in 2021-22 and 2022-23 at 102 million mt and 104 million mt, respectively.
From Australia, Aussie crop keeps getting bigger.
Estimates now about 65% to 70% is harvested.
Some analists thinks that total crop harvevst will be over 38 million tonnes.
Meantime, cash boards took a beating yesterday to kick off the week with wheat values off $10-14/t on all grades through Brisbane and NSW port zones.
Victoria port zones were softer also by $5-8/t and South Australian premiums have now come off with APW1 bid $400/t Port Adelaide on the cash boards vs Port Kembla bid $416/t.
Barley cash bids were also off $5-8/t, while trade track markets closed in on the bid and offer side putting east coast and South Australia fair values to start the week down by $5-6/t.
Scattered showers pushed through parts of South Australia yesterday causing some more harvest delays grower will get back on today with temps rising into the high 20s.
The rest of the country continues to crawl through this big Aussie harvest.
On international trade scene, Turkey’s TMO is tendering on December 21, 2021 to buy 320.000 MT (+/- 5 % at buyer’s option) of 12.5p or 13.5p milling wheat for February shipment CFR offers only.
Japan is tendering for 80k MT of feed wheat, and 100k MT of feed quality barely, to be sold at auction.
Algeria OAIC is tendering on today Dec 14, to buy milling wheat for Jan 15/Feb 28 shipments.
Author: Sandro F. Puglisi
