On Monday, US farm markets closed sharply higher both for corn and soybean on South American weather worries, while ended lower for wheat.
Indeed, corn prices rose 1,49%.
Soybeans stole the show, jumping by 2,29%.
However, some of soy’s rally was fueled by news of tightening rapeseed stocks in the European Union.
In fact, soybean oil prices soared 2.1%-2.4% higher on the news, while soymeal continued to surge past the $400/ton benchmark on the combined pressure of tightening rapeseed stocks and South American weather concerns, gaining 2,14%.
Meantime, wheat prices tumbled across the board mainly due to some profit-takings and some technical trading.
Also, the slim holiday trading volumes, a stronger dollar, and ongoing omicron concerns also likely threw off price dynamics in the wheat market.
Consequentially, in spite optimistic weekly export inspection data for hard red winter wheat, Kansas prices took the biggest hit, falling 1,68%.
Chicago wheat took a beating shedding 1,32% .
Minneapolis wheat prices drifted by 0.77% lower.
In energy markets, oil prices extended gains on this morning with prices trading near the previous day’s one-month high on hopes that the Omicron coronavirus variant will have a limited impact on fuel demand.
Indeed, Brent crude rose 7 cents, or 0.1%, to $78.67 a barrel, by 07:28 GMT, after gained yesterday 2,28%.
U.S. West Texas Intermediate (WTI) crude rose 17 cents, or 0.2%, to $75.74 a barrel, gaining for a fifth straight session and adding that to yesterday’s 2,41%.
Oil prices have risen around 50% this year, supported by recovering demand and supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+.
Investors are awaiting an OPEC+ meeting on Jan. 4, at which the alliance will decide whether to go ahead with a planned 400,000 barrels-per-day production increase in February.
Meantime, money managers raised their net long U.S. crude futures and options positions in the week to Dec. 21, the U.S. Commodity Futures Trading Commission said on Monday.
The speculator group raised its combined futures and options position in New York and London by 4,634 contracts to 259,093 during the period.
On equities markets, in spite Monday’s U.S. economic data was bearish after the Dec Dallas Fed manufacturing activity index unexpectedly fell -3.7 to 8.1, U.S. stocks closed moderately higher, with the S&P 500 posting a new all-time high, the Dow Jones Industrials posting a 1-1/4 month high, and the Nasdaq 100 posting a 1-month high.
Strength in technology stocks, indeed, lifted the overall market, as well as gains in energy stocks after crude prices rose more than +2% to a 1-month high.
Stocks also climbed in hopes that the U.S. economy will remain strong.
On this wake, Vice President Harris on Sunday said the Biden administration is seeking a path forward for its “Build Back Better” economic stimulus and social spending plan.
Finally, U.S. stocks saw some carry-over support from strength in European stocks with the Euro Stoxx 50 index rose +0.77% and posted a 3-week high.
Indeed, European markets garnered support Monday after the Press Association reported that UK Prime Minister Johnson is not expected to announce further restrictions to control the recent jump in Covid infections in England.
In this context, the S&P 500 rose 1.4% to 4,791.19, its fourth straight gain.
The benchmark index, which capped a holiday-shortened week Thursday with a record high, is on pace to close out the year with a 27.6% gain.
It has notched 69 all-time highs so far this year.
The Dow Jones Industrial Average rose 1% to 36,302.38 and the technology-heavy Nasdaq rose 1.4% to 15,871.26.
Meantime, global shares advanced on this morning following a rally on Wall Street.
Indeed, Japan’s benchmark Nikkei 225 jumped 1.4% to finish at 29,069.16.
South Korea’s Kospi gained 0.7% to 3,020.24.
Hong Kong’s Hang Seng recouped early losses to edge up 0.2% to 23,280.56, while the Shanghai Composite gained 0.4% to 3,630.11.
Trading was closed in Australia for Boxing Day.
France’s CAC 40 edged up 0.2% in early trading to 7,155.68, while Germany’s DAX added 0.3% to 15,878.65.
Britain’s FTSE 100 was little changed at 7,372.10.
On the weather side, spring like temperatures persist in the South and East; elevated fire
weather risk for parts of the Southern Plains.
Bitterly cold wind chills in the northern Rocking and High Plains today.
Wintry weather to cause treacherous travel conditions from the Midwest to the interior Northeast today.
Slight Risks for severe storms and Excessive Rainfall posted in parts of the Deep South Wednesday.
Heavy snow for parts of the Sierra Nevada and Central/Southern
Rockies.
On the demand side, the weekly Export Inspections report showed 719,031 MT of corn was shipped during the week that ended 12/23.
That was down from 1.01 MMT last week and from 1.266 MMT during the same week last year.
Mexico was the top destination for the week with 293k MT of the total.
China held the second-place title for weekly corn shipments at 138k MT.
The majority of last week’s corn shipments were sourced out of the Gulf of Mexico – around 50% of the week’s total corn export volumes.
The MY’s total was up to 12.03 MMT as of 12/23, compared to 14.13 MMT at the same time last season.
Corn export season typically does not reach its fever pitch until late February.
Yesterday’s numbers were stable enough to prevent price gains from being reversed but not enough to add to the South American weather-induced rally.
Meantime, USDA announced a large private export sale yesterday as unknown destinations booked 269,240 MT of corn.
As for soybean, USDA’s weekly Export Inspections report showed 1.577 MMT were shipped during the week of 12/23.
That have marked a 17% decline in weekly volumes.
Particularly, it was under last week’s 1.89 MMT, and below 2.27 MMT during the same week last year.
China was the top destination with 750,312 MT.
Germany and Turkey rounded out the top three destinations.
To note that this time last year, Turkey had not purchased any U.S. soybeans, while Germany has already purchased nearly 5% more soybeans than this time last year.
So while China may be pulling back its export paces in line with seasonal trends, the soybean volumes shipped to Turkey and Germany this week suggest that the boost in international demand for U.S. soybeans could provide a leg of support for soybean prices in the coming months.
Meantime, USDA added 211k MT of beans to past reports bringing the MY total 28.94 MMT.
That compares to last season 37.5 MMT.
As for wheat, shipment volumes inspected and certified for export at U.S. terminals last week rose nearly 20% from the previous week to 271,349 MT.
Of that, HRW was the top variety with 70% of the total.
White wheat shipments made up 15% the total.
Shipments to Japan were the largest of the week.
Colombia and Mexico rounded out the top three destinations.
As of 12/23, USDA’s weekly data showed 11.92 MMT of wheat was shipped for the season.
As of the same time last season 14.54 MMT were shipped.
On the other hand, the delayed CFTC report showed managed money was 360,416 contracts net long as of 12/21.
That was 14,436 contracts more from the prior week on net new buying.
The commercials extended their net short during the same time by 14,574 contracts to 662,912.
As for soybean, the report showed managed money was 31,949 contracts more net long from wk/wk on 12/21.
The net new buying paired with some spec short covering left the group 72,924 contracts net long.
Their most since 8/24. Soybean commercial traders added shorts and covered longs for a 40,840 contract stronger net short of 206,657.
That was their strongest net short since 6/15.
Also, CFTC data showed managed money was 50,551 contracts net long in soymeal.
That was 10,017 stronger from last week on a 1,251 bump to spec OI.
In soy oil, spec traders were 39,078 contracts net long as of 12/21. That was 5,705 contracts weaker than the week prior.
As for wheat, the report showed managed money was closing SRW wheat longs through the week of 12/21.
That left the group 3,704 contracts more net short at 11,007.
In HRW, spec traders were 1,643 contracts more net long through short covering.
That left the group 58,807 contracts net long.
CFTC reported Minneapolis wheat specs were 13,178 contracts net long on 12/21 as the new fund buying matched the new spec selling.
In this context, corn basis prices on the river were largely unchanged, though some spotty weakness popped up sporadically at ethanol plants, processors, and elevators across the country.
Farmer corn sales were slow, as many growers turned their focus to capitalizing on the eye-popping rally in the soybean market.
As for soybean, cash bids at processing locations around the Midwest began to roll over to March contracts as the January futures contract approaches the start of its delivery period.
Bids on the Mississippi and Illinois Rivers were mixed, though all offerings were largely $0.11-$0.28/bushel below current futures prices.
Likely, yesterday’s $0.30/bushel rally in the futures market enticed many growers to book new spot sales, according to an Iowa-based grain originator.
Meantime, the funds were net buyers yesterday for 9,000 lots of corn and 125,000 lots of soybeans while they were net sellers for 3,500 lots of wheat.
From South America weather remained at the center of attention at the start of the week.
The water deficit, indeed, remains in force in the south of Brazil and is even accentuated in the whole of Argentina.
The expectation for hot and dry weather continue to dominate the forecasts for Southern Brazil and Argentina for the next 10 days.
The onset of rains anticipated over the next few days would also be too late for many plots.
“There is worry that a La Nina weather pattern could bring extended dryness which could stress crops.”
In contrast, the north of Brazil is in the grip of flooding.
Indeed, Northeast Brazil, namely Mato Grosso, received between four and six inches of rain over the weekend.
Mato Grosso has seen as much as 10 inches of accumulation in some areas with between 10-15% of soybeans and first-crop corn plants at risk of excess moisture.
Crop development in these areas continues to be largely favorable despite the pockets of excessive rain. But markets are not yet convinced that the bumper crops in these regions will be enough to offset losses in Argentina and Southern Brazil due to dryness.
Brazil is the world’s largest producer and exporter of soybeans.
Argentina is only the world’s third largest soybean exporter, but it is also the largest international seller of soybean products.
Meantime, BAGE raised wheat output for Argentina by 500k MT to 21.5 MMT as harvest their reached 78.3% complete.
On European market rapeseed prices resumed with fanfare, breaking new records every day in a context of unprecedented volatility.
Strong global demand for edible oils has been a key driver of the uptick in rapeseed futures in the E.U., which are now double in price from a year ago.
Canada’s summer drought and poor harvest performance of E.U. crops left 2021 global rapeseed production estimates lower than previously expected.
The global green energy push for biodiesel has added an additional layer of demand pressure to the global edible oils complex.
As countries, including France, have battled dwindling energy supplies in the post-pandemic era, restrictions have been placed on palm and soybean oil used for biodiesel production.
But that in turn has added increased consumption of rapeseed/canola oil in the biodiesel refining process.
Indeed, E.U.’s vegetable oil and meal industry association (FEDIOL) recently released monthly rapeseed crush data that found November 2021 rates to be the highest on record at 1,67 MMT.
“If vegetable oil prices recover, rapeseed will have room to show the extreme tension of its fundamentals and to continue … to ration demand via an more increase in prices,” French analyst Agritel said yesterday.
In this context, the February rapeseed contract set a record high for Euronext at 783.50 euros a tonne, even if settled at €779.75/ton by the close.
Meanwhile, March milling wheat, the most active contract on the Paris-based Euronext exchange, was sligth lower at 290 euros a tonne by the close.
In Germany, premiums were often nominal in thin trade, with many participants also still absent from cash markets.
Standard 12% protein wheat for January onwards delivery in Hamburg was offered for sale at around 8 euros over Euronext March.
Purchase interest was assessed at around 6 euros over.
($1 = 0.8829 euros).
From the Black Sea basin, on this morning – 9 degrees in Moscow, – 7 degrees in Kiev and + 4 degrees in Krasnodar.
However at the moment, no specific concerns about the state of winter crops.
Indeed, winter wheat crops in Ukraine’s central regions, which make up a third of all sowings in the country, have been affected by poor weather but are mostly in satisfactory condition, APK-Inform agriculture consultancy said on this morning.
Farmers were unable to sow all of the planned areas with winter wheat for the 2022 harvest due to severe drought in the main producing regions, planting a total of 6.2 million hectares or 94% of the expected area.
However, the current satisfactory state of crops, according to APK-Inform, is associated with arid weather conditions in the regions from the beginning of sowing to the development of plants.
Thus, “some farmers reported about possible reseeding of winter crops due to a lack of sprouted plants”, the consultancy said.
Meantime, the export of Ukrainian goods to China in 10 months of 2021 increased by 20% and amounted to 12% of all Ukrainian exports.
This was announced by the head of the State Service for Food Safety and Consumer Protection of Ukraine Vladyslava Magaletska during a meeting of the Council for Foreign Economic Activity at the Ukrainian Chamber of Commerce and Industry.
According to her, the most considerable growth occurred in meat and edible offal – 164%, in grain the increase was 46%, in vegetables – 25%.
Export to China is interesting for Ukrainian producers.
Today, an increase in supplies to the export direction of the PRC is one of the priorities for the State.
Meanwhile Russia hopes to gain market share towards China in wheat.
Indeed, Swiss-based Solaris, a major trader of Russian wheat, is confident China will soon become a big buyer and also aims to boost exports to Egypt, Pakistan, Sudan, Tanzania and Turkey, following breakthroughs in the Algerian market.
Indeed, Russian wheat trade has been hit by a smaller crop and state grain export curbs in 2021.
Russia’s preliminary wheat harvest was marked at 75.9 MMT, compared to 85.9 MMT last season.
The final totals will be published in March.
MYTD wheat shipments form Russia were totaled at 21.1 MTM as of 12/23, which is still 17% under last season’s pace.
In China, the government is trying to encourage producers to sow more soybeans in order to limit its production deficit.
Indeed, according to the Communist Party’s People’s Daily that quoted the agriculture minister, China will stabilise corn production and expand soybean output in the new year to ensure grain security.
The ministry said it would expand soybean oilseed production and restore soybean planting areas in northeast China.
Tang, indeed, called for abandoned land to be cultivated while maximising the potential of intercropping to ensure stable grains acreage in 2022, People’s Daily reported.
Tang’s comments come against the backdrop of lingering concern over food security in the world’s most populous country as the COVID-19 pandemic continues to disrupt food supply chains and logistics across the globe.
China’s soybean output this year dropped sharply from last year while corn production increased as farmers sought to take advantage of better profitability.
Meantime, China plans to approve the safety of more genetically modified (GMO) corn varieties produced by domestic companies.
The three new corn products are produced by China National Tree Seed Corp and China Agricultural University, Hangzhou Ruifeng Biotech Co Ltd and Beijing Dabeinong Technology Group Co Ltd.
Both Hangzhou Ruifeng, in which Yuan Longping High-Tech Agriculture Co Ltd owns 41.8%, and Beijing Dabeinong already own GMO corn traits approved as safe by the government.
The plan to approve the new corn varieties, along with seven new GMO cotton products, will be open for public comment until Jan. 17, according to the notice posted on the website of the Ministry of Agriculture and Rural Affairs.
The move comes after Beijing last month proposed an overhaul of regulatory seed rules to pave the way for approval of GMO crops and as top policy makers urged progress in biotech breeding, seen as key to ensuring food security.
Beijing has so far not permitted the planting of GMO soybean or corn varieties, but it allows their import for use in animal feed.
Safety approval is seen as a major step towards commercialization of GMO crops, but it is still unclear when the new products will be ready for a market launch.
On the other hand, constant rains in October had delayed wheat planting in China’s main wheat regions, potentially affecting growth while excess moisture could cause more crop diseases.
China faced heavy rains this fall that disrupted corn and wheat harvests, as well as crop quality.
China has become the world’s largest importer of grains in recent years, but as international commodity prices soar, China continues to look for cost effective ways to continue feeding its people.
On international trade scene, Jordan’s state grains buyer has issued a new international tender to purchase 120,000 tonnes of animal feed barley.
The deadline for submission of price offers in the tender is Dec. 30.
A new tender had been expected after Jordan bought 60,000 tonnes in its last international tender for 120,000 tonnes of barley which closed on Dec. 23.
Shipment in the new tender is sought in a series of possible combinations in 60,000 tonne consignments.
Possible shipment combinations for delivery in 2022 are between July 1-15, July 16-31, Aug. 1-15 and Aug. 16-31.
Author: Sandro F. Puglisi
