Good morning Farmer Family …
Global grain prices started the week on a strong note.
Russia’s withdrawal from the Black Sea export agreement, indeed, raised concerns over global supplies.
Ships carrying grain anyway sailed from Ukrainian ports, suggesting Moscow likely had stopped short of reimposing a blockade.
But shipments could be interrupted, merely if insurers stop underwriting insures.
On this wake, Lloyd’s of London insurer Ascot suspended writing cover for new shipments that use the Ukrainian grains corridor in the Black Sea, until it has more clarity about the situation there.
Consequentily, US farm markets, saw some wheat contracts gaining more than 6%; corn and soybeans followed suit, with both commodities up around 1.5%.
Particularly, Chicago SRW wheat contract, although it held under the $9/bu mark, rose 6.39% on the day.
Kansas City HRW settled with a 5.81% gain.
Minneapolis spring wheat rallied 3,84%.
Corn prices found technical support from surging wheat prices, and December contract added 1.58% at Friday closure.
Soybeans closed with double digit gains as rose by 1.39% on the session, which put November contract to get above its $14/bu mark.
Soymeal prices despite faded back to the red by midday, rebounded and closed with a 0.63% gain.
Bean oil was the leader of the complex, settling the day 1.98% higher.
Meantime, USDA’s weekly Export Inspections report had 422,288 MT of corn exports shipped during the week that ended 10/27, making modest week-over-week improvements.
China and Mexico were the top destinations.
That sets the MYTD corn shipments as 4.192 MMT, running moderately behind last year’s pace.
As for soybean, USDA reported 2.574 MMT of soybeans were exported during the week of 10/27, a tally also exceeded the entire range of trade guesses.
That sets the yearly total to 10.205 MMT through 10/27.
Last year’s pace was for 11.3 MMT.
As for wheat, USDA data had 137,082 MT of wheat shipments in the Inspections data.
That was up from 133k MT last week and above the 131k MT from the same week last year.
HRS was the top variety with 61.8k MT of the total, followed by 48k MT of HRW.
The weekly data had the MYTD total at 9.646 MMT as of 10/27, compared to 9.668 MMT during the same period last year.
After the sessions close, the weekly Crop Progress data from NASS showed corn harvest advanced from 61% to 76% complete as of 10/30.
That is now a 12% point lead over the 5-yr average pace.
As for soybean, 88% was already harvested as of 10/30 according to NASS.
That was up 8% points through the week and is now 10% points ahead of average.
Also, Weekly Crop Progress report had 87% of the 23/24 winter wheat crop was planted.
That was up 8% points through the week and is 2% points ahead of the average pace.
In KS, 87% of the winter wheat was in the ground compared to 88% on average.
Emergence reached 62% as of 10/30, compared to 66% on average.
That was enough for the first preliminary ratings, and NASS scored the crop 17% very poor, 18% poor, 37% average, 23% good, 5% excellent.
Going into the NASS Grain Crush report on Tuesday, traders expect 394.4 mbu of corn was used for ethanol production in September.
That would be 3.1% below Sep ’21 if realized.
Expectactions from the Fats and Oils report to show a September soy crush of 167.9 mbu.
That would be up 2.3% yr/yr if realized.
Bean oil stocks are estimated at 1.976b lbs.
In this context, yesterday corn basis bids were mostly steady across the central U.S., but did shift 5 cents lower at an Illinois processor.
Soybean basis bids were steady to firm across the central U.S., after climbing as much as 52 cents higher at an Ohio elevator and improving 2 to 15 cents across four other Midwestern locations.
Commodity funds were net buyers of CBOT wheat, soybean, corn, soyoil and soymeal futures contracts.
On this morning, Chicago wheat futures slid, as grain shipments continued from Ukraine, though deliveries of Ukrainian crops to ports are grinding to a halt, amid more uncertain.
Corn also ticked lower.
Meanwhile, soybeans gained more ground, climbing to their highest in more than a month.
Particularly, the most-active wheat contract on the Chicago Board of Trade was down 0.6% at $8.77 a bushel, as of 03:38 GMT, and corn fell 0.1% to $6.90-3/4 a bushel.
Soybeans added 0.5% to $14.26-3/4 a bushel, after having climbed to their highest since Sept. 27 at $14.29-1/2 a bushel.
Losses in the wheat market were curbed by dryness hitting the U.S. winter crop.
In energy markets, oil prices rose on Tuesday, paring losses from the previous session.
Strict pandemic restrictions had caused China’s factory activity to fall in October and cut into its imports from Japan and South Korea.
Likely U.S. crude oil stocks in the week to Oct. 28 could rise of about 300,000 barrels, but distillate and gasoline inventories were expected to fall.
OPEC raised its forecasts for world oil demand in the medium-and longer-term on Monday, saying that $12.1 trillion of investment is needed to meet this demand despite the transition to renewable energy sources.
Meantime, a weaker U.S. dollar offset widening COVID-19 curbs in China, as a weaker dollar makes oil cheaper for holders of other currencies and usually reflects greater investor appetite for risk.
Thus, Brent crude for January delivery rose 73 cents, or 0.8%, to $93.54 a barrel at 04:06 GMT.
The December contract expired on Monday at $94.83 a barrel, down 1%.
U.S. West Texas Intermediate (WTI) crude rose 58 cents, or 0.7%, to $87.11 a barrel, after falling 1.6% in the previous session.
The Brent and WTI benchmarks both ended October higher, their first monthly gains since May.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index extended losses for the ninth straight session on Monday, weighed down by lower rates across vessel segments.
The overall index, indeed, fell 71 points, or about 4.6%, to its lowest since mid-September at 1,463.
Particularly, the capesize index shed 111 points, or about 6.7%, at a six-week low of 1,559, extending its losing streak to nine sessions and finishing the month lower by one-fifth.
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 $919 to $12,933.
The panamax index dropped 72 points, or about 4%, to 1,745, its lowest in nearly two months.
It logged its eighth consecutive daily decline and was down 16.2% on the month.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, dropped $647 to $15,703.
The supramax index fell 46 points to 1,437, its lowest since February 2021.
In equity markets, on Wall Street, the benchmark S&P 500 index closed down 0.7% at 3,871.98.
That gave it an 8% gain for October, but the index still is down 18.8% from its Jan. 3 peak.
The Dow Jones Industrial Average lost 0.4% to 32,732.95.
It ended the month up 14%.
The Nasdaq composite rose 3.9% in October, also marking its first monthly gain in three months.
On Monday it shed 1% to 10,988.15.
The Russell 2000 index of smaller company stocks was little changed at 1,846.86.
Stocks gained ground throughout October as investors shifted focus to the latest round of corporate earnings.
Companies have so far given investors a mixed bag of results and forecasts, but inflation is stubbornly hot.
The European Union’s statistics agency, Eurostat, reported Monday that inflation hit 10.7% in October, another record in the 19 countries that use the euro currency, fueled by high prices for natural gas and electricity due to Russia’s war on Ukraine.
Thus, investors this week will be watching this week’s Fed meeting for another extra-large interest rate increase.
The widespread expectation is for it to push through another increase that’s triple the usual size at 0.75 percentage points.
Also, investors will watch the U.S. government’s monthly employment report Friday for clues on whether the hot jobs market is cooling as inflation squeezes businesses.
Meantime, on this morning, Hong Kong jumped more than 5% and other Asian markets also rose after a survey showed Chinese manufacturing improved.
The monthly manufacturing gauge from Caixin, a Chinese business news magazine, indeed, helped to counter renewed concerns about coronavirus outbreaks.
It showed activity declined in October but a slower rate than the previous month.
Thus, the Hang Seng index in Hong Kong surged 5.1% to 15,441.77 and the Shanghai Composite Index gained 2% to 2,940.75.
The Nikkei 225 in Tokyo added 0.3% to 27,678.92.
The Kospi in Seoul jumped 1.8% to 2,335.22 and Sydney’s S&P-ASX 200 gained 1.6% to 6,976.90.
India’s Sensex opened up 0.6% at 61.124.72.
New Zealand declined while Southeast Asian markets advanced.
In currency trading, the dollar fell to 147.65 yen from Monday’s 148.73 yen. The euro rose to 99.34 cents from 98.82.
From South America, Argentina’s Rosario Grains Exchange reports that drought conditions are forecast to result in 2022-23 wheat production in the core growing areas falling to 1.3Mt (compared to 7.8Mt previous year).
In Brazil, truckers who supported Brazil’s outgoing President Jair Bolsonaro escalated their protests on Monday, blocking roads in 20 states in an action that could affect agricultural exports and cause wider economic chaos.
Bolsonaro lost Sunday’s election to leftist former President Luiz Inacio Lula da Silva, but has yet to concede defeat.
However, Paranagua’s port authority said one of the main roads giving access to its port was being blocked by protesters, but that there was no immediate disruption to cargo movement.
Rumo, a leading rail company that operates Latin America’s biggest grain terminal in Rondonopolis, said earlier Monday that none of its operations in Brazil had been affected so far.
In Europe, Euronext recorded strong growth yesterday.
Grain prices and rapeseed rose sharply, in reaction to Russia’s withdrawal from the Black Sea agreement.
Meantime, the European Commission, for its part, increased the total imports of corn since the start of the campaign by almost 530 kt, to 9.57 Mt, against 4.4 Mt last year at the same period.
European Union soybean imports, in contrast, are trending moderately below last year’s pace so far after reaching 3.66 MMT through October 30.
EU soymeal imports have seen modest year-over-year declines, with 5.34 million metric tons over the same period.
European Union soft wheat exports, meantime, are running slightly ahead of last year’s pace so far after reaching 11.54 MMT through October 30.
EU barley exports are trending significantly below last year’s pace, in contrast, with 2.38 MMT during the same period.
From the Middle East, Lebanon has been officially informed of Russian President approval of a donation of 25,000 tonnes of wheat to the crisis-hit country, Lebanese Public Works Minister, Ali Hamie, told on Monday.
From the Black Sea basin, the United Nations said yesterday there were no ships transiting the Black Sea maritime humanitarian corridor on the night of 29 Oct when Russia says its vessels in Crimea were attacked.
Despite Russia’s suspension, 12 Ukrainian vessels left port, yesterday, carrying 354,000 metric tons of grain – the biggest single-day tally since the war began in late February, and more ships currently are inbound.
“Civilian cargo ships can never be a military target or held hostage,” UN program coordinator Amir Abdullah said. “The food must flow.”
Turkey remains committed to the deal, with Turkish President Recep Tayyip Erdogan saying “Even if Russia behaves hesitantly because it didn’t receive the same benefits, we will continue decisively our efforts to serve humanity.”
Russia emphasised it was not withdrawing from the deal, but only suspending it.
Russia said on Monday that it was “unacceptable” for shipping to pass through the Black Sea security corridor.
“Under the current conditions, there can be no question of guaranteeing the security of any object in the indicated direction until the Ukrainian side accepts additional obligations not to use this route for military purposes.”
Russian missiles targeted the capital, Kyiv, including essential civilian infrastructure, on Monday, leaving parts of the city without water and electricity.
Explosions were also reported in Kharkiv, Zaporizhzhia, Kremenchuk and Vinnytsia regions.
Meantime, Russia’s Agriculture Ministry said that as of 27 October 16.7 million hectares were sown with winter crops compared with 17.6 million on the same date last year.
Overall weather conditions remain fine for development of the winter crops, but the southern regions are a bit dry
In some central regions, indeed, planting is 20-25% below average due to the adverse weather.
Moscow-based Institute for Agricultural Market Studies, IKAR projects 2023-24 wheat production at 87Mt (101Mt this year) and exportable surplus in 2022/23 (Jul/Jun) at 50Mt.
Russia’s grain exports fell to 910,000 tonnes last week from 1.06 million tonnes a week earlier, the Sovecon consultancy said, citing port data.
Sovecon expects Russia’s grain exports to rise in October compared with the previous month.
However, “it is hard to expect that Russia could continue increasing exports substantially. The lack of railcars remains a substantial bottleneck” Sovecon said.
In this context, Russian wheat prices were stable last week amid high exports and risks to grain exports from Ukraine’s ports.
According to the IKAR, prices for Russian wheat with 12.5% protein content and for supply from Black Sea ports, were at $312 a tonne free on board (FOB) on Friday evening, unchanged from a week earlier.
Price for domestic 3rd class wheat, European part of Russia, excluded delivery was at 12,600 rbls/t ($203.9) -75 rbls (Sovecon).
Price for sunflower seeds was at 21,450 rbls/t unchanged (Sovecon).
Price for domestic sunflower oil was at 73,675 rbls/t +1,000 rbls (Sovecon).
Price for domestic soybeans was at 30,150 rbls/t +250 rbls (Sovecon).
Export price for sunflower oil was at $1,320/t +$30 oil (Sovecon).
Export price for sunflower oil was at $1,190/t +$20 oil (IKAR).
Price for white sugar, Russia’s south was at $790.4/t -$6.3 (IKAR).
($1 = 61.8000 roubles).
From South East Asia, Indonesia said on Monday it has extended until the end of this year its policy of waiving a palm oil export levy, unless the palm oil reference price breaks $800 per tonnes, the economic ministry said on Monday.
Indonesia set its Nov 1-15 CPO reference price at $770.88 per tonne, a regulation document showed on Monday.
The reference price, set every two weeks, has stayed below $800 per tonne since early October.
From Australia, feed grain prices fell dramatically yesterday through the northern areas of the eastern Australian grain belt as headers started rolling.
SFW it was around $400-405/t.
Brisbane was still holding up at $470/t.
Meantime, other markets around the country kicked and were all firmer across the board.
Old crop liquidity on Clear Grain Exchange picked up with approx. 21,000t trading yesterday.
The hits keep on coming with more rain falling overnight and continuing today for parts of Qld, NSW, Vic and SA with cold wind and hail storms on the cards.
Heavy rain and hail have also hit crops in WA interrupting harvest and causing some damage.
On the international trade scene, Pakistan’s government on Monday approved a plan to buy 300,000 metric tonnes of wheat from Russia, the finance ministry said in a statement.
The country’s Economic Coordination Committee, which is headed by Finance Minister Ishaq Dar, approved the plan proposed by the ministry of commerce to procure wheat from the Russian government.
The wheat was priced at $372 per tonne and will be shipped between Nov. 1 and Jan. 15, the ministry said, adding that it will be a government to government deal.
Egypt, one of the world’s top wheat importers, reported over the weekend that it has strategic wheat reserves that are sufficient for more than five months. Egypt’s vegetable oil reserves are also sufficient for more than five months, according to the country’s supply minister.
Leading South Korean feedmaker Nonghyup Feed Inc. (NOFI) has issued an international tender to purchase up to 65,000 tonnes of animal feed wheat.
The deadline for submission of price offers in the tender is also Tuesday, Nov. 1.
The wheat is sought for arrival in South Korea in one consignment in December 2022.
That’s all, thank you.
We wish you a happy All Saints’ Day.
Author: Sandro F. Puglisi
