US farm markets, closed yesterday’s session higher, as traders finished squaring their positions ahead of this morning’s World Agricultural Supply and Demand Estimates (WASDE) report from USDA.
Corn and soybean gains were modest, as prices pickked up by 0.21% and 0.13% by the close respectvily.
Soymeal prices ended the day 0.77% in the red, while BO prices firmed 1.45% in the front months.
A flurry of export sales helped spur some demand optimism on the wheat complex, with some contracts moving more than 1.7% higher.
Particularly, CBOT SRW ended the day with 1,08% gains, taking March up 34 3/4 cents off Friday’s low.
KC HRW futures went home on Tuesday with double digit gains in the front months up 1.73%.
Spring wheat futures closed the day 1.53% stronger.
New crop HRS prices are still a 54 c/bu discount to March.
In energy market, oil prices climbed on this morning, extending big gains in the previous session after the U.S. Federal Reserve chief signalled the central bank may raise rates more slowly than expected, which should support oil demand in the near term.
Benchmarks Brent and WTI are trading at their highest levels since the super contagious Omicron variant of the coronavirus emerged in late November, as it has not hit fuel demand the way previous variants did.
Data from the American Petroleum Institute (API) industry gave a weaker picture on fuel demand, with a smaller decline in crude stockpiles than expected and bigger builds than expected in gasoline and distillate inventories.
Crude stocks, indeed, fell by 1.1 million barrels for the week ended Jan. 7, according to market sources citing API figures.
That was less than the 1.9 million barrel draw that 10 analysts polled by Reuters had expected.
Gasoline stockpiles rose by 10.9 million barrels, compared with analysts’ expectations for a 2.4 million barrel build.
Distillate inventories, which include diesel and heating oil, rose by 3 million barrels compared with forecasts for a 1.8 million barrel increase.
However buoying the market was the U.S. Energy Information Administration’s upgraded oil demand outlook released on Tuesday, seeing total U.S. demand rising by 840,000 barrels per day (bpd)in 2022 from last year, up from a previous forecast for an increase of 700,000 bpd.
At the same time, the EIA pared its production outlook for 2022, expecting U.S. oil output to rise by 640,000 bpd, down from an earlier forecast for an increase of 670,000 bpd.
In this context, U.S. West Texas Intermediate (WTI) crude futures rose 38 cents, or 0.5%, to $81.60 a barrel at 02:24 GMT, adding to a 3.8% jump in the previous session.
Brent crude futures gained 22 cents, or 0.3%, to $83.94 a barrel, after jumping 3.5% in the previous session.
On the freight market, the Baltic Exchange’s dry bulk sea freight index dropped to its lowest level since April 2021 on Tuesday, weighed down by weaker demand across all vessel segments.
The overall index, which factors in rates for capesize, panamax and supramax vessels, fell 126 points, or 5.5%, to 2,151, its lowest since April. 13.
The capesize index slipped 229 points, or about 9%, to 2,325.
Average daily earnings for capesizes, which transport 150,000-tonne cargoes such as iron ore and coal, dropped by $1,897 to $19,284.
The panamax index fell 134 points, or 4.7%, to 2,715.
Average daily earnings for panamaxes, which ferry 60,000-70,000 tonne coal or grain cargoes, fell by $1,210 to $24,435.
The supramax index fell 43 points to its lowest level since April at 1,958.
On equities markets, U.S. stocks yesterday recovered from early losses and rallied moderately after comments from Fed Chair Powell eased inflation concerns when he said, “we will use our tools to get inflation back.”
At the same time, lower T-note yields sparked a rally in technology stocks.
Indeed, Apple rose 1.7% and chipmaker Nvidia rose 1.5%.
Communication stocks and a mix of retailers and other companies that rely on direct consumer spending rose.
Facebook parent Meta Platforms gained 1.9% and Gap rose 3%.
Finally, the more than +3% jump in crude oil prices pushed energy stocks higher.
Meantime, the World Bank cut its forecast for 2022 global economic growth to 4.1% a prior estimate in June of 4.3% due in part to supply chain disruptions that fueled inflation.
The agency estimates the world economy grew by 5.5% in 2021.
In this context, on Wall Street the S&P 500 broke a five-day series of declines and rose 0.9% to 4,713.07.
The Dow Jones Industrial Average gained 0.5% to 36,252.02.
The Nasdaq composite advanced 1.4% to 15,153.45.
On this morning, the U.S. government is due to report consumer inflation.
That is followed Thursday by an index of wholesale prices.
Meantime, Asian stock markets followed Wall Street higher on this morning.
Thus, the Shanghai Composite Index gained 0.2% to 3,574.61 and the Nikkei 225 in Tokyo rose 1.9% to 28,748.21.
The Hang Seng in Hong Kong gained 1.9% to 24,193.22.
The Kospi in Seoul added 1.4% to 2,969.16 and Sydney’s S&P-ASX 200 was 0.6% higher at 7,438.20.
New Zealand retreated while Southeast Asian markets gained.
On the weather side, some additional rain or snow will be possible along the Northern Plains and upper Midwest between today and Saturday, with areas farther south likely to receive no measurable moisture during this time, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts cooler-than-normal conditions developing over much of the central U.S. between January 18 and January 24, with wetter-than-normal weather likely for much of the country.
Meantime, USDA is set to release initial winter wheat plantings data on this morning.
The trade is expecting to see a 700k acre increase from 21/22 at 34.3m acres on average.
On the demand side, WASDE estimates show the trade looking to see a U.S. wheat carryout bump to 609.3 mbu, and a world bump to 287.7 MMT.
On the other hand, USDA flashed a 100k MT old crop soybean sale to Mexico in a mandatory daily announcement yesterday.
Going into today’s WASDE reports analysts are looking for a 1.8 MMT trim in Brazilian corn production and a 900k MT reduction for Argentina on average.
World corn carryout is estimated at 303.6 MMT, which would be 2.1 MMT lower if realized.
Grain stocks are figured at 11.607 bbu.
As for soybean, traders are looking to see a USDA trim Brazil’s soy production by 2.4 MMT to 141.6 MMT on average.
Argentina soybeans are expected to be reported at 48.2 MMT, which would be a 1.3 MMT cut if realized.
Global soybean carryout is expected to be 2.3 MMT lighter at 99.7 MMT.
The average of pre report estimates for US Dec. 1 bean stocks is 3.127 bbu.
As for wheat, traders’ consensus is for USDA to maintain the world wheat carryout figure as analysts surveyed for an average 278.7 MMT figure.
The full range of pre-report estimates was for between a 3.2 MMT cut to a 2.8 MMT boost from the December report.
Pre-report estimates for domestic wheat stocks average at 609.3 mbu.
That would be up 11.3 mbu from December if realized.
The full range of estimates was between 580 and 648 mbu.
Regarding the quarterly stocks figure, traders are expecting to see 1.415 bbu of wheat counted as of December 1st.
The consensus was derived from private analysts guessing between 1.315 bbu and 1.680 bbu.
In this context, corn basis bids fell 6 cents at an Iowa processor while firming 2 to 6 cents higher at two other Midwestern locations and holding steady elsewhere across the central U.S..
Soybean basis bids were mostly steady, but did show some variability after tumbling 25 cents lower at an Iowa processor while firming as much as 13 cents at an Ohio elevator.
Meantime, the funds were net buyers yesterday for 1,000 lots of corn, 1,000 lots of soybeans and 5,000 lots of wheat.
From Canada, Canada exported 919.8k MT of wheat (excl. durum) during the month of December.
The largest customer during the month was Japan who bought a large, 162.9k MT of wheat making them the largest year-to-date customer at 471.4k MT.
This is still just 88% of last year’s amount.
China is the destination with the largest year-over-year decrease in Canadian wheat imports.
They have imported just 24% (-727.6k MT) of last year’s amount at 230.8k MT.
Canadian exports during weeks 21-22 were 263.8k MT for a season total of 5.0 million MT.
This is 59% (-1.3 million MT) of last year’s amount.
Visible supplies in the Canadian elevator system fell to 2.6 million MT.
Most (1.0 million MT) of this is sitting in Eastern terminals while just 142.2k MT is shared between Prince Rupert (44.7k MT) and Vancouver (97.5k MT).
They are 40% through the marketing year and have exported 36% of their total 14.0 million MT (according to AAFC) exportable surplus.
To reach AAFC’s number, average weekly exports will need to be 300.6k MT compared to the current pace of 226.4k MT per week.
From South America, Brazil’s CONAB reduced their first crop corn figure by 4.3 MMT to 24.79 MMT.
CONAB also trimmed their 2nd crop figure to 86.318 MMT.
That put their combined total at 112.9 MMT vs. USDA at 118 MMT in December.
Their average corn yield was cut 205 kg/HA to 5,391 (-3.27 bpa to 85.9 bpa).
Also, CONAB reported Brazil’s soy output forecast at 140.5 MMT.
That was down 252k MT from their prior estimate as Parana alone was cut 2.2 MMT.
States in the North and Center West regions were raised some to make up the difference with a 442k MT bump in Mato Grasso.
The AgRural reported Brazil’s bean harvest at 0.2% complete as of 1/6.
Meantime, Brazil’s Anec expects the country’s soybean exports to reach 157 million bushels this month.
Anec also estimates that Brazilian corn exports will reach 104.2 million bushels in January.
On the other hand, USDA’s Ag Attaché cited Argentina soy output as 46.5 MMT.
That compares to USDA’s official December figure of 49.5 MMT.
Attaché reports are considered unofficial.
Meantime, Argentina is facing a historic heat wave with temperatures soaring above 40 degrees Celsius (104°F), making the country for a while the hottest place on the planet, straining power grids and forcing residents to seeking sanctuary in the shade.
With temperatures up around 45°C (113°F) in parts of the South American nation, hundreds of thousands of people were left without electricity when power grids failed in and around populous capital city Buenos Aires.
On European market, grain prices entered in a positive territory on Tuesday evening, driven by sustained global demand and increased production risk in South America.
In contrast, rapeseed gave way yesterday, on the wake of Canola and again in a context of high volatility in this product.
According to the European Commission, soft wheat exports from the European Union so far this season had reached 15.11 million tonnes by Jan. 9.
Thus, weekly official data showed on Tuesday, a 1 million tonne jump from the previous update as missing French data was incorporated.
A week ago the European Commission had reported EU soft wheat exports for the 2021/22 season that began in July at 14.01 million, indicating that figures for France were only complete up to November.
A breakdown of volumes for the EU’s 27 member states indicated 4.15 million tonnes of soft wheat exports for France, against 3.17 million reported by the Commission last week.
The updated French tally in the EU report is much closer to the 4.5 million tonnes suggested by Refinitiv shipping data, which includes vessels loading but not yet departed.
The shortfall in data from France, lasted for months following a system fault at the French customs service.
The retrieval of the French data put the bloc’s soft wheat exports so far in 2021/22 well above last season, when 14.18 million tonnes had been exported by the same week, the data showed.
France was now slightly ahead of Romania, which had exported 4.04 million tonnes this season.
Germany was showing the third-largest volume with 1.88 million tonnes.
Algeria was the biggest destination so far in 2021/22 for EU soft wheat with 2.51 million tonnes, followed by Egypt with 1.39 million and China with 1.23 million, the data showed.
For barley, EU 2021/22 barley exports had reached 4.86 million tonnes, against 3.96 million a year ago.
French exports were shown at 2.22 million tonnes, compared with 1.93 million in the previous weekly EU update.
China was by far the largest destination for EU barley, with 2.02 million tonnes shipped, followed by Saudi Arabia with nearly 506,000 tonnes.
EU corn imports so far this season were at 7.72 million tonnes, against 9.20 million a year ago, according to the data.
That’s a year-over-year decline of 16% so far.
Rapeseed imports at European level stand to date at 2.57 million tonnes against 3.82 million last year to date.
European soybean imports was at 6.77 MMT, down from 7.86 MMT year ago so far.
From the Black Sea basin, cClear drop in temperatures this morning with – 13 degrees displayed in Moscow, – 14 degrees in Kiev and zero degrees in Krasnodar.
However, agro-meteorological conditions were mainly favorable for wintering of crops in the European part of Russia in the first ten-day period of January.
There were no dangerously low temperatures of air or soil, informed Roshydromet.
The weather was much warmer than usually during most days of the reporting period.
There was a slight grow of winter crops in some warm days in southern regions of Krasnodar Territory.
Thus, there is no fear for crops at the moment given the snow cover on the main production areas.
Winter crops for the harvest of 2022 occupied 19 million hectares.
However, over the past four months, a deficit of precipitation has been observed in a number of regions of the Volga region.
The problem affected Mordovia, Tatarstan, Bashkortostan, as well as the Ulyanovsk and Orenburg regions.
According to the scientific director of the Hydrometeorological Center Roman Vilfand, this can lead to aridity of the soil in the spring and summer and, as a result, to problems with the harvest.
According to Vilfand, from September to December in Mordovia fell 80% of the norm of precipitation, in the Ulyanovsk region – 83%, in Tatarstan – 80%, in the Orenburg region – 84%, in Bashkortostan – 85%. “These are far from positive factors,” TASS quoted him as saying.
Vilfand added that the consequences of the lack of precipitation will affect later, because the amount of productive moisture in the soil depends on the precipitation that falls in winter.
“When the snow melts, moisture will move into the upper layers of the soil.
This is an important characteristic that agrometeorologists take note of.
Of course, there is still January, February, March ahead, but there will be close attention to these regions,” he explained.
Meantime, grain prices gave some ground yesterday pending the USDA report.
Activity remained low.
On the other hand, Ukraine’s UkrAgroConsult bumped their corn output figure higher by 1.3 MMT to 40.5 MMT for their final production figure.
Exports were assumed at 33.8 MMT, up from the 32.7 MMT prior forecast.
From the Middle East, the Taliban administration said on Tuesday it was expanding its ‘food for work’ program, in which it uses donated wheat to pay thousands of public sector employees instead of cash as a financial crisis intensifies.
Wheat, largely donated by India to the previous U.S.-backed Kabul government, is being used to pay 40,000 workers 10kg of wheat per day for working five hours a day, agriculture officials told a news conference.
The scheme, which has largely paid labourers on public works programs in Kabul, will be expanded around the country, they said.
The Taliban administration has already received an additional 18 tonnes of wheat from Pakistan with a promise of 37 tonnes more and is in negotiation with India for 55 tonnes, according to Fazli.
International sanctions on Taliban members, frozen central bank assets and the sudden drop off in international assistance that once formed the backbone of the economy has left the Taliban government with limited government finances and a growing economic crisis.
U.N. agencies on Tuesday asked donors for $4.4 billion in humanitarian aid for Afghanistan in 2022, calling the funds an “essential stop gap” to ensure the country’s future.
From the Middle Kingdom, China’s anti-dumping and anti-subsidy protective legislation on US sourced DDGS expired yesterday.
China announced the measures, which were enacted in 2017, will remain in place as officials review the policy.
Indeed, China’s commerce ministry said on Tuesday it will continue to impose anti-dumping and anti-subsidy tariffs on imports of distillers grains (DDGS) from the United States during a review period.
China’s ministry of commerce will conduct expiry review investigations on the anti-dumping and anti-subsidy measures imposed on DDGS imports from the United States from Jan. 12.
From Australia, the eight-day BOM outlook is forecasting a widespread 10-25mm for eastern states.
Harvest is still going in western Victoria, where wheat quality has held up so far on wheat for growers able to resume harvesting.
There are still 8435 lots of ASX January 2022 wheat open, with the last trading day January 20.
Even though we are in the delivery window, there is only 60t registered, and ASX has quietly added A$18/t since the recent lows posted January 6.
Meantime, in cash markets, local wheat bids were relatively unchanged throughout eastern states depots yesterday, while the market was a touch firmer in Western Australia, with APW wheat trading around $368/t free in store Kwinana.
Barley firmed a fraction also over the course of the day, with some prompt bids popping up along the east coast and through South Australia, with Adelaide track bid at $305/t.
Canola was relatively unchanged across the boards.
Meantime, liquidity picked up yesterday and we saw more activity on wheat and barley in WA and along the east coast.
Meantime, Australia’s wheat and meslin exports increased in November from both a month and year earlier, and could continue to rise into 2022.
This helped take the country’s January-November shipments to 23.45mn, almost triple the same period in 2020, according to trade data from the Australian Bureau of Statistics (ABS) supplied through GTT.
Australia shipped 1.63mn t of wheat and meslin in November, compared with 1.44mn t in October and just 505,000t in November 2020.
The rise in November shipments compared with October was driven by higher exports to China, Indonesia and the Philippines, which more than offset declines in sales to Japan, South Korea and Vietnam.
January-November shipments to China nearly doubled from the same period in 2020.
On international trade scenario, the Korea Feed Association (KFA) Busan section purchased some 129,000 tonnes of animal feed corn in an international tender which closed yesterday.
It was purchased in two consignments at $338.35 and $335.30 a tonne c&f plus a surcharge for additional port unloading.
Sellers were believed to be trading houses Bunge and CJ International with corn arrival in South Korea in March and April.
Also, Leading South Korean animal feedmaker Nonghyup Feed Inc. is believed to have purchased around 130,000 tonnes of animal feed corn in an international tender which closed yesterday.
But NOFI rejected all offers and made no purchase of 65,000 tonnes of feed wheat also sought.
The corn was bought in two 65,000 tonne consignments all at an estimated $333.65 a tonne c&f plus a 1.50 surcharge for additional port unloading.
Trading house CHS was believed to have sold one consignment for arrival around April 1.
Shipment of the consignment was sought if sourced from the U.S. Pacific Northwest coast between Feb. 27-March 18, if from the U.S. Gulf or Black Sea region between Feb. 7-26, from South America between Feb. 2 and Feb. 21 or from South Africa for Feb. 12-March 3.
Trading house Posco was believed to have sold one consignment for arrival around April 10.
Shipment if sourced from the U.S. Pacific Northwest coast was sought for March 8-27, if from the U.S. Gulf or Black Sea region between Feb. 16-March 7, from South America for Feb. 11-March 2 or from South Africa for Feb. 21-March 12.
Offers for a third corn consignment for arrival around April 30 also sought in the tender were rejected with no purchase made.
Paraguay is excluded as a corn origin.
The feed wheat was sought for arrival around April 25.
Lowest feed wheat offer was said to be $341.50 a tonne c&f plus a surcharge for additional port unloading for optional-origin supplies from trading house Olam.
Japan issued a regular tender to purchase nearly 109.000t of food-quality wheat from the United States and Canada that closed yesterday.
Of the total, 52% is expected to be sourced from the U.S. The grain is for shipment between February 21 and March 20.
Turkey’s TMO tenders to buy 335.000 MT (+/- 5 % at buyer’s option) of red milling wheat.
Closing date is for 18 January 2022.
Algerian OAIC is tendering to buy a nominal 50 k milling wheat.
The shipment is sought for 1h March and 2h March or one month earlier if shipments are from USA and Australia.
The closing date is for Jan 13, 2022 with offers to stay valid untill Jan 14, 2022.
Author: Sandro F. Puglisi