Good morning Farmer Family …
US farm markets were uneven on Wednesday.
Corn prices ended the midweek session giving back a 0.18%.
Soybean were fractionally lower at the close, as shedded just a 0.02%.
Soybean meal price dropped by 1.66%, while soybean oil strengthened by 1.58%.
The wheat complex also was mixed, as Kansas City and Chicago wheat prices were firmer up on the day, ending with SRW up by 0.69% and HRW wheat prices up by 0.67%.
Minneapolis spring wheat, in contrast, closed fractionally weaker on the day, as was down just 0.03%.
Chicago and Kansas wheats rose amid uncertainty about exports from Ukraine.
Wheat prices felt an extra boost from concerns about drought lowering Argentina’s output.
Weakness in the U.S. dollar also helped support early gains in the markets.
Current and projected water levels on the Mississippi River remain well below levels needed for normal barge flow. USDA reports that barges are being filled with 24-30pc fewer soybeans to maintain draft on the river, and that only 25 barges can be connected together on the river for movement downstream, down from the 30-40 that are normally connected.
This reduces the flow of soybeans and other commodities, while increasing the per unit cost.
All said, corn and soybean prices ran out of bullish news to keep prices higher and gains evaporated.
EIA reported ethanol production averaged 1.033 million barrels per day through the week that ended 10/21.
That was 17k bpd above last week, and marked the second consecutive week that production stayed above the 1-million-barrel-per-day benchmark and is the highest weekly tally since late July.
However, ethanol stocks increased 447k barrels to 22.291 million.
Going into the weekly Export Sales report out this afternoon, analysts expect corn bookings were between 350k MT and 1 MMT for the week that ended 10/20.
As for soybean, analysts expect between 0.8 and 1.6 MMT of soybeans were booked for export through the week that ended 10/20.
Forward sales for 23/24 delivery are expected to be below 250k MT.
Soymeal weekly export sales are estimated from 150k to 600k MT, with less than 20k MT of BO booked.
As for wheat, traders are looking for between 100,000 MT and 450,000 MT of wheat bookings.
Forward sales for 23/24 delivery are expected to be below 50k MT.
In this context, corn basis bids were steady to mixed on Wednesday after moving as much as 8 cents lower at an Ohio elevator and as much as 5 cents higher at a Nebraska processor.
Soybean basis bids were steady to mixed, after climbing as much as 15 cents higher at an Indiana processor while tumbling as much as 25 cents lower at an Illinois river terminal.
Commodity funds were net sellers of CBOT corn and soymeal futures contracts, and net buyers of wheat and soyoil futures.
Funds were seen as net even in soybeans.
On this morning, Chicago wheat prices gained more ground, with slowing exports from the Black Sea region amid the Russian-Ukraine war raising concerns about world supplies.
Soybeans rose on forecasts of dry weather in parts of Argentina.
Particularly, the most-active wheat contract on the Chicago Board of Trade rose 0.4% to $8.43-3/4 a bushel, as of 03:06 GMT.
Soybeans added 0.5% to $13.99-3/4 a bushel and corn quarter of a cent to $6.85-1/4 a bushel.
In energy markets, oil steadied on Thursday following a rally of nearly 3% in the previous session, as concern over slack demand in China balanced optimism from record U.S. crude exports and sign that recession concerns are abating.
Thus, Brent crude rose 23 cents, or 0.2%, to $95.92 a barrel by 0810 GMT.
U.S. West Texas Intermediate (WTI) crude fell 17 cents, or 0.2%, to $87.74.
Oil’s gain on Tuesday was prompted by figures showing record U.S. crude exports, a hopeful sign for demand, even as crude stocks rose, as well as weakness in the U.S. dollar stemming from hopes that interest-rate hikes may become less aggressive.
Meantime, the World Bank on Wednesday said it expects energy prices to decline by 11% in 2023 after this year’s 60% surge, although slower global growth and COVID restrictions in China could lead to a deeper fall.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index, fell to its lowest in about six weeks weighed down by a dip in rates across vessel segments.
The overall index, indeed, fell 49 points or about 2.8%, to 1,706, the lowest since Sept. 16.
Particularly, the capesize index lost 70 points, or about 3.6%, to 1,885, also a near six-week low.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore used in construction, fell $572 to $15,637.
The panamax index shed 66 points to 2,007, recording its worst day in over a month.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, dropped $588 to $18,065.
The supramax index fell 26 points to over a month low of 1,632.
In equity markets, on Wall Street, the S&P 500 index fell 0.7% to 3,830.60, breaking three days of gains after Microsoft and the parent companies of Google and Facebook reported weaker-than-expected profit or revenue.
The tech-heavy Nasdaq composite dropped 2% to 10,970.99.
The Dow Jones Industrial Average ended little changed, gaining 2.37 points to 31,839.11.
Google parent Alphabet, indeed, slumped 9.6%.
Spotify fell 13%.
Microsoft slid 7.7%.
Chipmaker Texas Instruments fell 2.6%.
Facebook’s parent company, Meta, fell 10.8% in after-hours trading following the release of its third-quarter earnings.
The stock fell 5.6% in regular trading.
On the other hand, Visa rose 4.6%.
Norfolk Southern gained 2.9%.
Shrinking bond yields suggested investors believe the Federal Reserve might ease up on its rate hike plans as early as this year.
Thus, the yield on the 10-year Treasury, fell to 4.01% from 4.10% late Tuesday.
The two-year yield fell to 4.42% from 4.48%.
Meantime, Asian stock markets were mixed on this morning.
Investor are waiting for an update on the U.S. economy and a European Central Bank meeting that is expected to raise its key interest rate to a 13-year high.
Forecasters expect U.S. government data to show the economy grew in the three months ending in September after two quarters of contraction.
Other indicators including housing sales, in contrast, suggest activity is cooling following rate hikes to rein in stubbornly high inflation.
In this context, the Shanghai Composite Index lost 0.2% to 2,993.70 and the Nikkei 225 in Tokyo shed 0.3% to 27,345.24.
The Hang Seng in Hong Kong jumped 1.3% to 15,515.92.
The Kospi in Seoul advanced 1.7% to 2,288.72 after the government reported economic growth slowed to a one-year low of 0.3% over the previous quarter in the three months ending in September from the previous quarter’s 0.7% increase.
Sydney’s S&P-ASX 200 gained 0.5% to 6,845.10.
India’s Sensex opened up 0.3% at 59,716.48.
New Zealand and Southeast Asian markets rose.
In currency trading, the dollar declined to 145.77 yen from Wednesday’s 146.26 yen.
The euro edged down to $1.0056 from $1.0080.
From Canada, Statistics Canada reported that September 2022 canola processing is estimated at 793,876t (+2pc on same month of previous year).
Canola oil production seen at 331,683t (+27pc) and canola meal output placed at 470,097t (+3pc).
From South America, Argentina’s 2022/23 wheat harvest will come in at 13.7 million tonnes, the Rosario grain exchange said on Wednesday, a sharp cut from its previous forecast of 15 million tonnes amid a protracted drought that has hammered farmers in the country.
Meantime, Argentina announced new ethanol pricing formulas based on petrol at the pump.
The Energy Secretariat said that alternative pricing may be considered if the new formula leads to major misalignments with ethanol’s production costs.
Currently sugarcane based ethanol is 88.24 pesos/L with corn based ethanol at 107.41 pesos/L.
In Europe, Euronext wheat fell for a third day to touch a one-month low, weakened by a jump in the euro and competition from cheaper Russian supplies.
However, the current climatic conditions remain a subject of concern, with abnormally high temperatures in Europe.
Romania has reaped over 2 million tonnes of sunseed this year, Agriculture Minister Petre Daea said on Wednesday, down from 2021 due to a prolonged drought.
Preliminary ministry data showed damage to 954,123 hectares out of roughly 7 million hectares of grain and oil-producing crops.
The country has reaped 9 million tonnes of wheat this year.
Meantime, non-commercial market participants lowered their net long position in Euronext milling wheat futures and options in the week to Oct. 21, Euronext data showed on Wednesday.
Non-commercial participants, which include investment funds and financial institutions, cut their net long position to 84,816 contracts from 119,991 a week earlier, the data showed.
Commercial participants similarly reduced their net short position to 102,660 contracts from 138,168 a week earlier.
In Euronext’s rapeseed futures and options, non-commercial market participants trimmed their net short position to 16,546 contracts from 16,947 a week earlier.
Commercial participants also reduced their net long position in rapeseed to 16,363 contracts from 16,919 a week earlier.
On the other hand, Norwegian fertiliser maker Yara is back to producing ammonia at around 65% of its capacity in Europe.
The firm have curtailed almost two-thirds of the capacity two months ago when gas prices hit an all-time high.
The significant drop in gas prices in recent days allowed a fall in nitrogen fertilizer prices and an at least partial resumption of ammonia production by many manufacturers.
From South Africa, farmers are expected to harvest 6% less maize in the 2021/2022 season compared with the previous season, the government’s Crop Estimates Committee (CEC) said on Wednesday.
The CEC’s latest summer crop forecast estimates the 2022 harvest at 15.329 million tonnes, down from the 16.315 million tonnes harvested last season.
The harvest is expected to consist of 7.790 million tonnes of white maize, used for human consumption, and 7.539 million tonnes of yellow maize, used mainly in animal feed.
From Ukraine, the Black Sea Grain Initiative Joint Coordination Centre has authorised a preliminary inspection of a possible mine-like object in the export corridor.
The object was reported on Tuesday by a vessel transiting the corridor.
Ship traffic was ‘on hold’ on Wednesday with two boats dispatched to check the area.
Concerns over Ukrainian grain exports mounted as data from the country’s farm ministry showed that shipments have slowed over the past 10 days, with volumes so far this month 9% behind the same period last year.
Ukraine on Sunday said Russia was blocking the full implementation of a Black Sea grain export deal, forcing Ukrainian ports to work at 25% to 30% of their capacity.
However, United Nations aid chief Martin Griffiths said on Wednesday that he was “relatively optimistic” that the U.N.-brokered deal would be extended beyond mid-November.
From Russia, according to Russia’s Ag Ministry, as at 24 Oct, 2022-23 wheat harvesting yielded 104.3Mt from 29.1Mha (equivalent to 99pc of planted area), with productivity at 3.6t/ha (+28pc on same period last year), barley at 24.3Mt from 7.8Mha (99pc of area), with yields at 3.1t/ha (+29pc y/y).
From Australia, harvest is off to a fitful start in some regions south of Central Queensland (CQ) this week, and even this small amount of new-crop grain has softened the prompt northern market for SFW wheat.
While the sun is out over parts of the northern region today, the forecast for up to 50 millimetres of rain in the coming week over eastern and South Australia means shorts are in the market to cover on barley in the north and SFW in the south.
Sporadic rain continues through the eastern states off the back of the last low pressure system.
The short-term demand squeeze before new crop grain becomes available is building and will likely keep the market on its toes for the short term and the 2-4 weeks of delayed harvest will see carryover stocks eaten into.
The Bureau of Meteorology climate driver update reports that the IOD negative phase could break down rapidly before the end of the year and that La Ninã conditions may fade back to neutral by early 2023.
Meantime, trade sources report grain is moving, albeit by the longer-than-normal route in some cases, amid flood-related road and rail closures in New South Wales and Victoria.
The extent and duration of flooding in some districts means some area losses and widespread downgrading is inevitable.
However, consumers are waiting for harvest to start in earnest in the hope that it will depress rates for feed-grade wheat before they go big on new-crop coverage.
In this context, local markets continued to track sideways yesterday.
Wheat in SA was up a couple of bucks by the end of the day and was slightly firmer in the eastern states, but still not a lot of activity on new crop.
SA and eastern states canola values pulled back a fraction, following offshore weakness.
Limited trade was reported, however.
On the international trade scene, a second trading house is believed to have matched the lowest price of $373.00 a tonne c&f offered during negotiations on a tender from Pakistan to purchase 500,000 tonnes of wheat that closed on Wednesday.
The lowest offer on Wednesday was believed to have been submitted by trading house Aston for 120,000 tonnes.
Trading house Solaris is also believed to have matched the lowest price, also offering $373.00 a tonne c&f for 260,000 tonnes.
Other trading houses are being asked by the state Trading Corporation of Pakistan (TCP) to match the lowest price for the remaining 120,000 tonne volume in the tender.
It’s believed Russian wheat would be chosen to supply Pakistan, but technically offers are optional origin with the source country being declared later on shipment.
Offers submitted in the tender have to remain valid until Saturday. Eight trading houses were initially assessed to be participating and no purchase has yet been reported.
Shipment in the tender is sought in 2022 in consignments of at least 100,000 tonnes between Nov. 13-Nov. 18, Nov. 21-Nov. 26, Nov. 29-Dec. 4, Dec. 7-Dec. 12 and Dec. 15-Dec. 20.
Shipments must be organised so that all wheat arrives in Pakistan by Jan. 10, 2023.
Egypt bought 14,000 metric tons of soyoil in an international tender that closed yesterday.
The lowest offer presented at the tender was $1,425 per tonne c&f.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
