US farm markets were mixed yesterday as traders continue to square positions ahead of the February World Agricultural Supply and Demand Estimates (WASDE) report, which USDA will release today in the afternoon.
For corn, afternoon strength limited the turnaround Tuesday losses for old crop to 0.47%.
New crop prices ended fractionally higher after trading red through midday.
Soybean prices also firmed into the close, but old crop was still double digits lower at the bell as eased by 0.81%.
Soymeal bounced into the close after a failed turnaround, but gains were limited to 0.29%.
Soybean oil prices also firmed some from the 2+ cent losses at midday, going at home with 3.05% losses netherless.
Wheat prices found solid forward momentum, in contrast, with most contracts rising between 1.2% and 2%, ending the day with some double digit gains led by the spring wheat market, after StatCan report showed as of December 31, lower then expected Canadian all-wheat stocks.
Thus, SRW bounced by 1.3%.
HRW prices closed 1.2% higher.
HRS prices rallied by 2.09%.
In energy market, oil prices climbed on this morning after two sessions of losses as industry data showed an unexpected drop in U.S. crude and fuel stocks, offsetting concerns of a possible rise in supplies from Iran.
Indeed, U.S. crude, gasoline and distillate stocks fell last week, according to market sources citing American Petroleum Institute figures on Tuesday.
Particularly, crude inventories fell 2 million barrels, according to API, versus analysts’ expectations of a 400,000-barrel increase.
Thus, Brent crude futures rose 41 cents, or 0.5%, to $91.19 a barrel by 04:22 GMT, while U.S. West Texas Intermediate crude was at $89.74 a barrel, up 38 cents, or 0.4%.
Still, yesterday concerns about a possible Iran nuclear deal that could unleash more oil into global markets weighed on prices.
Consequentially, Brent and WTI slid about 2% on Tuesday.
Also, oil prices at near $100 a barrel could also draw more production from the United States, thus, the Energy Information Administration expects U.S. crude output to rise 770,000 barrels per day to 11.97 million bpd in 2022.
In the freight market, the Baltic Exchange’s dry bulk sea freight index rose to a near three-week high on Tuesday, helped by strong demand across all its vessel segments.
Indeed, the overall index, which factors in rates for capesize, panamax and supramax vessels, rose 81 points, or 5.7%, to 1,503, its highest level since Jan. 19.
Particularly, the capesize index climbed 54 points, or 4.7%, to 1,202.
Average daily earnings for capesizes, which transport 150,000-tonne cargoes such as iron ore and coal, increased by $448 to $9,969.
The panamax index gained 116 points, or 6.3%, at 1,971.
Average daily earnings for panamaxes, which ferry 60,000-70,000 tonne coal or grain cargoes, rose by $1,046 to $17,740.
The supramax index rose 96 points to 1,734.
In equities markets, U.S. stock indexes on Tuesday settled moderately higher.
Mostly positive quarterly earnings were underpinning stock prices.
Of the 299 companies in the S&P 500 that have reported results, 76% have beaten earnings estimates, with profits coming in more than +6% above projected levels.
Technology companies accounted for a big slice of the S&P 500′s rally.
Apple rose 1.8%.
Chipmaker Nvidia rose 1.5% after announcing it terminated its plan to buy chip designer Arm from SoftBank.
Retailers and other companies that rely on direct consumer spending helped lift the market.
Amazon rose 2.2% and Home Depot gained 1.1%.
Also Tuesday’s U.S. economic data was slightly bullish for stocks after the U.S. Dec trade deficit widened to -$80.7 billion, narrower than expectations of -$83.0 billion.
Finally, an easing of global geopolitical risks was bullish for stocks after French President Macron said he received assurances from Russian President Putin that there would be no “escalation” of Russian aggression in Ukraine.
On the other hand, economists expect Thursday’s data to show U.S. inflation accelerated to a four-decade high of 7.3% in January.
On this wake, a negative factor for stocks Tuesday was higher T-note yields after the 10-year T-note yield rose to a 2-1/4 year high of 1.969% from Monday’s 1.91%; its highest level since the start of the pandemic.
In this context, on Wall Street, the S&P 500 rose to 4,521.54.
The index is now about 5.7% below its Jan. 3 high.
The Dow Jones Industrial Average gained 1.1% to 35,462.78. The Nasdaq composite advanced 1.3% to 14,194.45.
Smaller company stocks outpaced the broader market in a potential sign that investors are optimistic about economic growth.
Thus, the Russell 2000 index of smaller stocks rose 1.6% to 2,045.37.
Meantime, Asian stocks rose on this morning after Wall Street rebounded.
Particularly, the Shanghai Composite Index advanced 0.8% to 3,479.95 and the Nikkei 225 in Tokyo gained 1.1% to 27,579.87.
The Hang Seng in Hong Kong was 2.1% to 24,829.99.
The Kospi in Seoul rose 0.8% to 2,768.85 and Sydney’s S&P-ASX 200 added 1.1% to 7,268.30.
India’s Sensex gained 0.8% to 58,316.17.
New Zealand and Southeast Asia markets rose.
On the weather side, more rain and snow will be possible over large portions of the Midwest and Plains between today and Saturday, per the latest 72-hour cumulative precipitation map from NOAA.
Few areas south of I-70 will see any measurable moisture during this time, however.
NOAA’s 8-to-14-day outlook predicts seasonally wet weather for the eastern Corn Belt and warmer-than-normal conditions in the Plains between February 15 and February 21.
On the demand side, exports of US grain in 2021 hit an all-time high, according to the USDA.
Exports of farm and food products totalled $177 billion.
It represented an increase of 15 per cent above the 2014 record and 18% from 2020 export sales receipts, on soaring commodity prices and robust international food and feed demand.
China took $33 billion in purchases, up 25pc from 2020.
Grain and feed export sales soared 41% higher in 2021 to $43.5 billion as corn export receipts more than doubled on the heels of a four-fold increase in Chinese purchases and competing demand from Mexico and Japan.
It was the first time on record that the value of grain and feed exports exceeded that of oilseeds.
But on an individual product basis, soybeans continue to reign supreme.
Indeed, soybeans were at the top of the international shopping list in 2021, with 1.9 billion U.S. soy bushels worth $27.4 billion sold last year.
Corn export volumes rose by over a third from 2020 to a record-breaking 2.7 billion bushels.
The haul was worth $18.7 billion, more than doubling the value of 2020 corn exports over the course of the year.
It was the largest value of corn exports since the prior record of $13.7 billion was set in 2011.
Going inside the numbers, about corn, the official Census numbers had the MY total at 15.986 MMT (628.9 mbu) through December, with 196.4 mbu shipped in Dec ’21.
That was the most for a December export since 2007/08.
December Milo shipments were recorded at 748,074 MT from the monthly Census report.
Census also reported 933,882 MT of DDGS were shipped in December, which was a 2-month low but a 4-yr high for the month.
Ethanol shipments were reported at 117.93m gallons.
That left 2021’s yearly total ethanol export at 1.24 billion gallons, 68.07m below 2020’s program.
As for soybean,, official Census data showed 8.108 MMT (279.9 mbu) of soybeans were shipped during December.
That was down from the 10.6 MMT shipped in November 2021 and from 10.44 MMT in Dec 2020.
The MY’s total soybean export program reached 31.418 MMT (1.154 bbu) through December, compared with weekly Inspections data for 37.643 MMT as of 2/3.
Census data listed the month’s soymeal export as 1.266 MMT. That was a MY high but down 4% yr/yr.
The full season’s export, at 3.458 MMT, trails 2020/21’s pace by 0.5%. Soybean oil shipments were reported at a 3-yr low 82,852 MT for December.
As for wheat, monthly Census data reported 1.341 MMT of wheat was shipped during December.
That was down 6% from November ‘21’s shipments and was 30% weaker yr/yr.
Through December, official exports reached 12.97 MMT.
That compares to last season’s pace of 15.491 MMT.
Weekly FAS data has MY exports at 14.025 MMT through 2/3.
Meantime, USDA reported yesterday two large export sales.
China booked 132k MT of new crop beans.
Private exporters also sold 332k MT of new crop beans to unknown destinations.
In this context, corn basis bids were steady to mixed on Tuesday after falling 3 cents lower at two Midwestern processors and firming 5 cents higher at two interior river terminals.
Soybean basis bids were mostly steady to firm after trending 4 to 6 cents higher at two interior river terminals and improving 5 cents at two other Midwestern locations.
The funds were net sellers yesterday for 8,500 lots of corn and 7,500 lots of soybeans.
They were net buyers for 6,000 lots of wheat.
From Canada, StatCan released December 31st stocks estimates yesterday.
All wheat is expected to total 15.564 MMT, which was under the expected 17.3 million and last year at 25.09 MMT.
Durum ending stocks are at 2,093.7 mmt.
Particularly, durum farm ending stocks are at 1,082 mmt, while ending stocks in commercial positions are now at 1,011.7 mmt.
That was moderatly above trade expectations (2mmt) but down 56.43% from 4.806mmt last year.
If they will continue to export ~40k mt of durum per week, they have sold out all old crop durum in the next 3-4 months.
Thus, in our opinion, likely they are looking at selling in advance a part of the new crop of #3 CWAD, at $13 per bushel (Cd$/t 481.48) or better.
Indeed, as of February 08, 2022, Canadian Regional prices average, was at Cd$/t 581,23, while average deferred basis was at Cd$/t 97.55.
That means a FOB price at Cd$/t 678.78 (USD/t 534 or €/t 467.85) teorically.
Barley stocks dropped to 3.146 MMT (trade estimate 3.3), compared with 5.58 million last year.
Canola was down to 7.56 MMT, (trade estimate 7.5), down by 43.1% from 13.259 mlnT a year ago and at the lowest level since 2007.
On farm stocks fell 50.8% to 5.6 mlnT, Commercial stocks up by 4.3% to 1.9 mlnT.
Soybeans are at 3.285 MMT compared to 3.511 at the end of 2020.
Oats year-end stocks were down almost 40%, coming in at 1.657 MMT.
From South America, continues uncertainties about the production potential, with the return of dry and hot weather in Argentina, announced for the next 15 days by meteorologists.
Reports from the northern region of the Brazilian belt indicate yields are down 10pc from pre-report estimates.
Brazilian bean harvest is estimated to have reached 16% complete, which compares with just 4% last year and an average of 10%.
Rains last week were primarily concentrated in the central and northern territories and Mr. Cordonnier kept his estimate unchanged at 130 MMT this week.
The USDA’s last print was 139Mt, but generally private forecasters are at 128-133Mt, so tonight’s report is extremely important for market sentiment.
As for corn, first season corn in Brazil is now estimated to be 18% harvested and 24% of the safrinha crop is planted compared with just 3% last year.
Crops in southern Brazil and Northern Argentina have received some moisture but the currently outlook is dry once again.
Consequentially, Mr. Cordonnier left his estimates for Argentine production unchanged, looking for 42 MMT of beans and 51 MMT of corn.
Meantime, Brazil’s Anec estimates that the country will export 275.6 million bushels of soybeans in February, which was well below week-ago estimates of 364.6 million bushels.
Anec also expects Brazilian corn exports to reach 20.5 million bushels this month.
In Europe, grain prices gave up a little ground yesterday, but it was above all rapeseed prices that showed the sharpest decline, especially on the last deadline for the 2021 harvest.
Rapeseed prices indeed fell by more than €24/t for the May 2022 deadline, while the decline in the 2022 harvest was only €5/t, in a context of liquidations of long positions in R21, reducing thus clearly the offset between the two seasons.
As for wheat, a lower than expected official estimate of Canadian wheat stocks, helped Euronext wheat futures trim earlier losses.
Volumes, however were light as traders looked ahead to today’s world supply and demand forecasts from the US Department of Agriculture (USDA).
Worries about lagging French and European Union exports curbed Euronext prices, with competition continuing from Black Sea countries.
However, per latest data showed by the European Commission, European Union soft wheat exports during the 2021/22 marketing year reached 16,92 MMT through February 6, trending slightly higher year-over-yeara when reached 16.22 million.
France (with 4.97 million tonnes), Romania (with 4.64 million tonnes) and Germany (with 1.98 million tonnes) were the top three exporting nations.
Algeria was still the leading destination for EU soft wheat with 2.58 million tonnes, while China had drawn level with Egypt at 1.64 million tonnes.
EU barley exports are also slightly above last year’s pace (4.75 MMT), with 5,14 MMT.
France was also the leading exporting country in barley, with 2.35 million tonnes, followed by Romania’s 1.56 million tonnes.
China was by far the biggest destination with 2.09 million tonnes, followed by Saudi Arabia with nearly 506,000 tonnes.
On the other hand, European Union corn imports during the 2021/22 marketing year reached 9,79 MMT through February 6, according to the latest data from the European Commission.
That’s slightly below last year’s pace so far when reached 10.28 MMT.
Spain remained the largest EU corn importer, with 4.15 million tonnes, while Ukraine was the leading supplier of corn to the EU with 4.91 million tonnes.
EU 2021/22 corn exports, meanwhile, had reached 3.48 million tonnes, up from only 1.43 million tonnes a year earlier.
Romania has accounted for most EU maize exports, with 2.61 million tonnes shipped so far, while Iran has been the biggest outlet on almost 905,000 tonnes, the data showed.
European Union soybean imports during the 2021/22 marketing year reached 7,98 MMT through February 6, trending 11% below last year’s pace so far.
EU soymeal imports are also down year-over-year, at 9.85 million metric tons.
EU rapeseed imports were at 3.08 million tonnes, against 4.28 last year.
“This week there is a low level of wheat purchase tenders so far from the main importers in the Middle East and North Africa, with feed grains mainly in demand”.
“Likely the big importers still have a milling wheat requirement but are waiting for further drops.”
In this context, standard 12% protein wheat for February onwards delivery in Hamburg was offered for sale at about 13 euros over Euronext March with purchase ideas at around 11 euros over.
On the weather side, significant rainfall in recent days in Germany and forecasts of widespread showers in France next week were tempering concerns about a dry spell for grain crops in western Europe in the past month.
From the Black Sea basin, winter wheat conditions are looking good with ample snow cover adding to the moisture profile.
While early days, the prospects for spring wheat also look favourable.
Black Sea wheat was down $0.50/t in overnight trading.
In Ukraine, local wheat prices fell slightly yesterday amid weak demand.
The strengthening of the hrivna against the US dollar also did not contribute to the price increase.
On the contrary, corn CPT prices were supported by stable demand.
At the same time, Ukrainian operators indicate large volumes of corn stored in the ports, which nevertheless limits the rise in prices.
In 2021, Russia exported 32.918 mln tonnes of wheat and meslin at the general sum of 8.88 bln USD.
The export in volume terms decreased by 14.4% compared to the same period of 2020 and it was up by 8.5% in monetary terms, reported the Federal Customs Service.
In 2021, Russia exported 3.11 mln tonnes of sunflower oil at the general sum of 3.99 bln USD (down by 15.1% in volume terms and up by 41.8% in monetary terms).
Export of mineral fertilizers totaled 37.56 mln tonnes at the sum of 12.48 bln USD.
Meantime, spring planting campaign will start earlier than multiyear average in Russia in 2022, declared the Minister of Agriculture Dmitry Patrushev.
In 2022, the planted area under the main agricultural crops, particularly, grains, sugar beet, vegetables will be extended.
More than 95% of farmers have the required seeds of crops, the same as the last year.
As of the start of February, farmers have bought more than 500 thsd tonnes of fertilizers, virtually the same as in 2021.
From Australia, wWheat values remained largely unchanged yesterday, as the focus remains on grain in good execution sites or delivered parcels as freight still remains very tight.
The track-to-delivered spread on SFW wheat through Melbourne and Geelong remains as wide as A$40/t.
Barley markets were also unchanged and liquidity continues to trickle through to the market.
Some prompt buying interested popped up through the domestic homes along the east coast late in the day.
Canola bids were up $3-5/t through the depots, and $5-10/t stronger on the delivered to east coast ports.
Meantime, South Australian bulk handler Viterra released its first post-harvest receival monthly report yesterday, and the network reported taking in 94,989t since January 10, with wheat being the major receival.
On the international trade scene, Turkish grain board TMO has started buying corn in an international tender on Tuesday, with about 275,000 tonnes believed to have been initially purchased.
The tender seeks about 325,000 tonnes of corn so more purchases are expected.
The results are provisional and subject to final confirmation in coming days.
Initial purchases can be reduced or cancelled completely.
Shipment was sought between Feb. 25 and March 15 for unloading in a series of Turkish ports.
Both imports and supplies already in warehouses in Turkey could be offered in the tender.
Traders said they believed the following provisional purchases were made, with port of unloading, seller, tonnes sold, price in dollars a tonne c&f and whether the supplies are from Turkish warehouses:
Bandirma 25,000 Bek Tarim $307.70 warehouse;
Bandirma 25,000 Aston $315.15 warehouse;
Tekirdag 25,000 Erser $314.30 warehouse;
Samsun 25,000 Promaks $304.70 warehouse;
Karasu 25,000 Bek Tarim $304.70;
Derince 25,000 Yayla $311.50;
Derince 25,000 Rolweg $311.50;
Mersin 25,000 Erser $311.65;
Mersin 25,000 Yayla $311.65;
Izmir 25,000 ADM $309.59 warehouse;
Izmir 25,000 Yayla $309.60.
Jordan’s state grain buyer has purchased about 60,000 tonnes of animal feed barley to be sourced from optional origins in an international tender which closed on Tuesday.
It was bought at an estimated $301.25 a tonne c&f for shipment in the first half of July.
Seller was believed to be trading house Cargill.
Two other trading houses participated in the tender, Viterra which offered $319.00 a tonne c&f and CHS which offered $323.69 a tonne c&f.
South Korea’s Major Feedmill Group (MFG) has issued an international tender to purchase up to 140,000 tonnes of animal feed corn.
The deadline for submission of price offers in the tender is Wednesday, Feb. 9.
The corn is sought in two consignments of between 55,000 tonnes and 70,000 tonnes with the seller free to decide the volume offered in this range.
The first consignment is sought for arrival in South Korea around May 18.
Shipment was sought between April 14 and May 3 if sourced from the U.S. Pacific Northwest coast, between March 25-April 13 if sourced from the U.S. Gulf or Black Sea region/east Europe, between March 20-April 8 from South America or between March 30-April 18 if from South Africa.
The second consignment is sought for arrival in South Korea around June 7.
Shipment was sought during May 4-23 if sourced from the U.S. Pacific Northwest coast, between April 14 and May 3 if sourced from the U.S. Gulf or Black Sea region/east Europe, between April 9 and 28 from South America or during April 19-May 8 if from South Africa.
South Korean import group KFA is also putting a tender for corn on Wednesday.
Taiwan’s MFIG purchasing group has issued an international tender to buy up to 65,000 tonnes of animal feed corn which can be sourced from the United States, Brazil, Argentina or South Africa.
The deadline for submission of price offers is Thursday, Feb. 10.
Some 40,000 to 65,000 tonnes of yellow corn is sought in a single consignment.
Shipment is sought between April 1 and 20 if the corn is sourced from the U.S. Gulf, Brazil or Argentina.
If sourced from the U.S. Pacific Northwest coast or South Africa, shipment is sought between April 16 and May 5.
Price offers are sought at a premium over the Chicago July 2022 corn contract CN2.
USDA monthly report will be released today in the afternoon at 6:00 p.m., Rome time.
Grain markets are positioning ahead of WASDE report as some Asian importers fear rising prices if the USDA cuts its forecasts of South American soybean and corn harvests after poor weather in the region.
Thus, we will follow closely the USDA’s latest assessment of South American crops and other related information.
Here are trade estimates.
In USA, corn carryout is expected to come in at 1.512 billion bushels, which would be down 28 million bushels from last month.
Bean carry out is expected to be reduced 40 million bushels to 310 million, and wheat is expected to climb 1 million to 629 million.
The average estimate for Brazilian beans sits at 133.65 MMT, down from 139 last month, and corn at 113.6, compared with 115.
Argentine bean production is expected to be cut by 2 million to 44.5 MMT and corn reduced to 52.16 MMT versus 54.
Global ending stock for corn is expected to be lowered nearly 3 MMT to 300.3 MMT, beans taken down 3.7 million to 91.5 MMT, and wheat left virtually unchanged at 279.9 MMT.
That’s all.
Author: Sandro F. Puglisi
