US farm markets were mixed but mostly lower yesterday.
Corn prices were mostly weaker on morning session, but old crop prices recovered for a 0,25% higher close.
Soybeans spilled into the red, falling 0.54% by the close.
Soymeal prices closed the session 0,58% down.
Soy oil prices were 0,91% lower on the day.
Wheat complex saw the biggest losses.
CBOT SRW futures were off their lows going home, but were still 1,94% in the red.
March SRW has given back 78 cents since the 12/27 high and is down $1.28 3/4 from the 11/24 high.
At the close KC HRW futures were down by 2,35%.
Spring wheat futures ended the session with losses of as much as 2,58%, setting the March contract back to October levels.
The big production potential from places such as Argentina and Australia are quelling global supply worries.
In energy market, oil prices continued edged up also on this morning, heading for their biggest weekly gains since mid-December.
The rally is fuelled by supply worries amid escalating unrest in Kazakhstan and outages in Libya.
Supply additions from the OPEC+, are not keeping up with demand growth.
OPEC’s output in December rose by 70,000 barrels per day from the previous month, versus the 253,000 bpd increase allowed under the OPEC+ supply deal, which restored output that was slashed in 2020.
Production in Libya has dropped to 729,000 barrels per day, down from a high of 1.3 million bpd last year, partly due to pipeline maintenance work.
According to some analysts, low oil inventory in Europe and America was also supporting market sentiment, “but overall, the price rally stokes inflation concerns, which could weigh on any further oil price gains.”
Thus, Brent crude futures climbed 52 cents, or 0.63%, to $82.51 a barrel at 0721 GMT, after a 1.5% jump in the previous session.
U.S. West Texas Intermediate (WTI) crude futures rose 57 cents, or 0.72%, to $80.03 a barrel, extending a 2.1% gain in the previous session.
Brent and WTI were on track for a more than 6% gain in the first week of the year, with prices at their highest since late November.
In the freight market, the Baltic Exchange’s dry bulk sea freight index was little changed on Wednesday, as higher rates for panamax vessels countered a dip in the capesize and supramax segments.
The overall index, which factors in rates for capesize, panamax and supramax vessels, rose by 4 points to 2,289.
The capesize index fell 49 points, or 2.1%, to 2,301, its lowest level since late-March, 2021.
Average daily earnings for capesizes, which transport 150,000-tonne cargoes such as iron ore and coal, decreased by $406 to $19,084.
The panamax index gained 129 points, or 4.5%, at 3,003.
Average daily earnings for panamaxes, which ferry 60,000-70,000 tonne coal or grain cargoes, rose by $1,158 to $27,865.
The supramax index slipped 44 points to its lowest level in more than a month at 2,165.
On equities markets, U.S. stocks on Thursday extended Wednesday’s sharp losses, with the S&P 500 falling to a 2-week low, the Dow Jones Industrials falling to 1-1/2 week low, and the Nasdaq 100 dropping to a 2-1/2 week low.
A jump in the 10-year T-note yield Thursday to a 9-month high of 1.751% weighed on technology stocks and led the overall market lower.
Weakness in big tech companies like Apple was the main culprit.
The iPhone maker fell 1.7%.
Health care stocks also helped drag down the benchmark S&P 500 index, outweighing gains by banks, energy companies and other sectors.
Meanwhile, Thursday’s U.S. economic data also was bearish for stocks.
U.S. weekly initial unemployment claims unexpectedly rose +7,000 to 207,000, showing a weaker labor market than expectations of a decline to 195,000. Also, the Dec ISM services index fell -7.1 to 62.0, weaker than expectations of 67.0.
Comments on Thursday from St. Louis Fed President Bullard were bearish for stocks when he said, “the FOMC could begin increasing the policy rate as early as the March FOMC meeting in order to be in a better position to control inflation.”
In this context, on Thursday, the S&P 500 slipped 0.1% to 4,696.05.
The Dow slipped 0.5% to 36,236.47.
The Nasdaq composite lost 0.1% to 15,080.86, while smaller company stocks bucked the broader market, with the Russell 2000 index gaining 0.6% to 2,206.37.
Meantime, Asian markets were mixed on this morning after yesterday big declines in technology stocks.
Indeed, Tokyo’s Nikkei 225 index edged less than 0.1% lower to 28,478.56 and the Hang Seng in Hong Kong jumped 1.5% to 23,422.04.
South Korea’s Kospi gained 1.2% to 2,954.89, while the Shanghai Composite index shed early gains to fall 0.2%, closing at 3,579.54.
In Australia, the S&P/ASX 200 rose 1.3% to 7,453.30.
Shares in Taiwan dropped 1.1% and India’s Sensex was down 0.2%.
Meantime, according to Jeff Currie, global head of commodities research at Goldman Sachs, the world is at the beginning of a commodities supercycle that could go on for a decade, he says in a Bloomberg TV interview.
He is “extremely bullish” on commodities; it’s “best place to be right now”, notes record dislocations in energy, agriculture, metals, and a lot of money in the system, oil market has potential to get extremely tight over next 6 months.
On the weather side, large portions of the Central Plains won’t see any additional rain or snow between today and Monday, while parts of the Mid-South and eastern Corn Belt could see significant amounts, per the latest 72-hour cumulative precipitation map from NOAA.
This snow on the way for the US Plains, however, looks like it will miss Kansas.
The agency’s 8-to-14-day outlook predicts a pocket of seasonally dry weather developing over the Great Lakes Region between January 13 and January 19, with warmer-than-normal conditions likely for much of the central U.S..
On the demand side, the weekly FAS Export Sales data showed a 17-week low 256,084 MT of corn was sold during the week that ended 12/30.
That was below the 500k to 1.2 MMT expected and compared to 749k MT sold during the same week last season.
Corn export shipments were more robust, inching 7% higher week-over-week to 38.8 million bushels.
Japan was the No. 1 destination,
Total corn commitments sit at 41 MMT or 1.614 bbu as of 12/30.
That is 7% less than last season’s pace.
As for soybean, the report showed 382,669 MT of soybeans were booked during the holiday week that ended 12/30.
That was a MY low and the lowest weekly sale for 21/22 beans since July.
The weekly report included 1.74 MMT of export shipments.
Thus, soybean export shipments trended 1% higher from a week ago but 11% below the prior four-week average.
China was by far the No. 1 destination.
That brought the MY total to 30.6 MMT (1.125 bbu).
For products, FAS reported 31,459 MT of soymeal bookings and 2,907 MT of soy oil sales from the week that ended 12/30, below trade expectations.
MYTD soymeal commitments were 6.12 MMT with 440,689 MT for soy oil.
As for wheat, export sales data from the week that ended 12/30 showed 48,569 MT of wheat was booked.
That was the lowest weekly sale for the 21/22 crop since the week that ended March 4th.
Going into the report, the trade was looking for at least 150k MT.
Italy was noted as the top buyer with just 15.4k MT booked.
Wheat export shipments also slid 17% below the prior four-week average.
MYTD wheat commitments were 15.88 MMT (583.6 mbu) as of 12/30 with 11.05 MMT (406 mbu) already shipped.
Meantime, Census data showed November corn shipments were 181.9 mbu.
That was up 21% from October and 22% from November 2020.
MYTD corn shipments through the first quarter totaled 432.5 mbu. Ethanol exports were 149.4m gallons during November, up 43% on the month and 40% above November 2020.
For DDGS, the U.S. shipped 1.019 MMT in November.
That was down 7% on the month but was just 46k MT under Nov 2013 for the 2nd largest November export on record.
As for soybean, Census data showed November soybean exports were 390.8 mbu.
That was up slightly from October but 2% below 2020’s record.
Total bean shipments through the Q1 reached 856.5 mbu.
Census data confirmed November meal exports were 1.2 MMT, for a 2.13 MMT total through the first 2 months.
For soy oil, Census confirmed 115,041 MT were shipped in November.
As for wheat, November wheat exports totaled 1.425 MMT according to Census.
That was 17% above October but still 25% lighter yr/yr.
Meantime, yesterday USDA announced a private export sale for 102k MT of old crop beans to Mexico.
In this context, corn basis bids were steady to mixed across the central U.S., moving as much as 4 cents lower at an Ohio elevator and as much as 10 cents higher at an Iowa processor.
Soybean basis bids were steady to firm across the central U.S., moving 2 to 10 cents higher at three Midwestern locations.
The funds were net sellers yesterday for 3,000 lots of soybeans and 8,500 lots of wheat.
They were net buyers for 1,500 lots of corn.
From South America, the Buenos Aires Grains Exchange is now anticipating the country’s 2021/22 wheat production may top 21,8 MMT, which is a 1.4% increase from its prior estimate.
It would also be a record-breaking harvest, if realized.
While there is some rain on the Argentine forecast, it won’t be enough to deal with the 43 degrees that will hit.
Meanwhile in the north of Brazil there is widespread flooding.
Brazil-based consultancy AgRural slashed its Brazilian soybean crop estimate by 11.3 million tonnes (Mt) or by 7.8% to 133.4Mt against 137.3 Mt last year, and that due to heat and drought in southern Brazil.
Thus, it now forecasts Brazil’s soybean yield will be the lowest since 2015-16.
AgRural says Paraná has been hit hardest, with drought spreading from western areas of the state in December.
The firm also cut its production forecasts for the Rio Grande do Sul, Santa Catarina and to a lesser extent Mato Grosso do Sul.
AgRural says “In the rest of the country, the crop is developing well and high yields are expected in Mato Grosso, where the first areas are already being harvested.”
Looking forward to the next WASDE report, analysts expect the USDA to cut its soybean crop estimate in Brazil to 141.6 million tons from the previous 144 million.
But some forecasts go as high as 131 million tons, which would be a major blow to the major soybean exporter.
Meantime, Brazil’s first soybean shipments are imminent as the harvest has just begun.
In Europe, grain prices remained anchored in negative territory Thursday evening, in the wake of American wheat under pressure.
Rapeseed fell back yesterday while remaining at price levels close to records.
Meantime, the FAO is sounding the alarm by posting food prices at their highest for 10 years, and prices which have increased by + 28% over 2021.
The monthly index eased slightly in December but had climbed for the previous four months in a row, reflecting harvest setbacks and strong demand over the past year.
Higher food prices have contributed to a broader surge in inflation, and the FAO has warned that the higher costs are putting poorer populations at risk in countries reliant on imports.
In its latest update, the food agency was cautious about whether price pressures might abate this year.
Also, it is not certain that the rise in commodity prices will lead to an increase of world production given the surge in inputs, mainly fertilizers.
On the other hand, the risk of delivery to the latter remains, further fueled by logistical problems.
From the Black Sea basin, according to the Ukrainian Ministry of Agriculture 33.2 million tonnes of grain have been exported from Ukraine since the start of the campaign, up 25.7% from last year.
This includes 16.1 million tonnes of wheat, 5.2 million tonnes of barley and 11.5 million tonnes of corn.
The ministry posts total estimates for the season at 24.5 million tonnes of wheat, 5.2 million tonnes of barley and 30.9 million tonnes of corn.
Per latest update on the Winter Crop Condition 2021/2022, in most regions of Russia, winter crops are in good and satisfactory condition.
This allows you to expect a good harvest in 2022.
Winter crops in most regions of Russia are in good and satisfactory condition, the share of non-emerging and sparse crops is about 3%, which makes it possible to count on a good harvest in 2022, scientific director of the Hydro meteorological Center Roman Vilfand said during a press conference.
In the South and North Caucasian Federal Districts, the share of winter crops in poor condition is estimated at 2-2.5%.
“There is only one region where the area of bad crops is about 10% – the Ural Federal District, but there is nothing wrong with that either.
In spring, summer and autumn, there was a terrible shortage of precipitation, so they had to sow in dry land, – said the specialist.
“But the area under crops is not that large, and in general, there was no negative impact on the future harvest.”
Earlier, the Ministry of Agriculture of Russia reported that winter crops for the harvest of 2022 were seeded on an area of about 19 million hectares.
Meantime, Russian wheat prices are stable so far this year amid holiday-thinned trade, the IKAR consultancy said on Thursday, adding that the market was watching developments in neighbouring Kazakhstan, a major flour exporter.
Kazakhstan, which is also a major buyer of Russian wheat in Siberia, is experiencing its worst unrest since independence in 1991, spurred initially by protests against gas price hikes.
On Thursday, Russia sent paratroopers there as part of an international peacekeeping force.
The internet is down in most parts of Kazakhstan and banks have temporarily suspended work, but this situation is unlikely to last for long, Dmitry Rylko, the head of IKAR, said.
Meantime, futures Black Sea wheat dropped US$4.5/t to close at $314.75.
The May contract had posted a high on the 23-Nov-21 of $366/t.
In this context, Russian wheat with 12.5% protein content loading from Black Sea ports for supply in January stood at $330 a tonne free on board (FOB) on Thursday, unchanged from late 2021, IKAR said.
Meantime, Russian wheat exports fell by 38% in July-December, owing to a smaller crop and an export tax that will rise to $98.2 per tonne on Jan. 12.
However, Russian consultancy Sovecon estimates that the country exported 3,6 MMT of wheat in December, a month-over-month increase of 20% and the highest monthly total since September.
Russia’s New Year holiday started on Dec. 31 and will end on Jan. 10.
From Australia, in the BOM latest Climate outlook overview some of the key takeaways were:
• February to April rainfall is likely to be above median for parts of northern and eastern Australia;
• The La Niña in the Pacific Ocean, the near-positive state of the Southern Annular Mode (SAM) and the Madden–Julian Oscillation (MJO) over the eastern Pacific are likely influencing the rainfall outlook.
Meantime, heavy falls have been recorded through NSW with Dubbo recording 59mm, Temora 23mm and Griffith 55mm.
With harvest pretty much completed through NSW growers will now be switching their attention to the summer weed program.
With ongoing rising cost of glyphosate and tight supplies does this put more pressure with good summer rain activity on the market and also impact growers further rising cost of production.
In this context, Aussie markets remained subdued yet again locally, wheat values were relatively unchanged with ASX eastern wheat settling at $343/t for January contract.
Barley markets were thin on the bid and the offer.
Canola found a bid early for small volume with values around $840/t Port Kembla.
On international trade scene, Jordan’s state grain buyer has issued an international tender to buy 120,000 tonnes of milling wheat which can be sourced from optional origins.
The deadline for submission of price offers in the tender is Jan. 18.
A new tender had been expected after Jordan purchased 60,000 tonnes in its previous tender for 120,000 tonnes of wheat which closed on Jan. 5.
Shipment in the new tender is sought in a series of possible combinations in 60,000 tonne consignments.
Possible shipment combinations are in 2022 between July 1-15, July 16-31, Aug. 1-15 and Aug. 16-31.
Tunisia’s state grains agency bought about 125,000 tonnes of soft wheat, 75,000 tonnes of durum wheat and 75,000 tonnes of animal feed barley in international tenders on Wednesday.
Author: Sandro F. Puglisi
