Good morning Farmer Family …
US farm markets prolonged their winning streak on Tuesday.
Corn prices added another 0.9% to the upside, but failed to get above the $7 mark.
Soybeans surged around 2% higher.
Soymeal, was the only “black sheep” of the complex, ending the day mostly lower, as was 0.77% weaker by the close.
Bean oil firmed up by 0.22% on the day.
Wheat gains were variable, as morning weakness attempting a turnaround.
However, afternoon strength pushed the board back into the black to extend the gains from Monday.
Thus, Chicago SRW ended the day the strongest, posting 2.3% gains.
Dec SRW has rallied 8.8% in only two day, and is back above the $9 mark for the close.
Kansas City HRW ended the session with 1.15% gains.
Minneapolis spring wheat prices settled 0.87% higher.
News from the Black Sea region continued to determine global grain prices.
Grain vessels continued to leave Ukraine on Monday and Tuesday, even after Moscow withdrew its support for the deal.
But the UN said Tuesday those movements were “temporary and extraordinary”.
Russian President Putin said on Monday “We are not saying that we are ceasing our participation to grain deal. We are saying that we are suspending it”.
“Ukraine must guarantee that there will be no threats to civilian vessels or to Russian supply vessels” he added.
Meantime, ship insurer Ascot paused offering insurance cover for new shipments which plan on using the Black Sea grains corridor until there is more clarity.
Russian President Vladimir Putin told his Turkish counterpart Tayyip Erdogan in a phone call on Tuesday that Moscow could consider resuming a deal allowing grain exports from Ukrainian seaports only after completion of an investigation of drone attacks on the Crimean naval port of Sevastopol.
On this morning, the United Nations UN stopped grain ships moving through Ukraine’s crop-export corridor.
Is expect the agency will issue another update on the status for the corridor later on day.
The agency is “exerting all efforts” to resume full participation in the grain deal, an UN statement said.
The Turkish Defence Minister emphasised the importance of the continuation of the grain corridor saying Turkey will continue to do its part for peace and humanitarian aid.
Coming back in the USA, dry conditions have hampered the newly seeded U.S. 2023 winter wheat crop.
The USDA on Monday rated 28% of the crop in good-to-excellent condition, the lowest for this time of year in records dating to 1987.
The soybean harvest is winding down with 88% of the crop cut, as of Oct. 30, the U.S. Department of Agriculture (USDA) said.
The corn harvest was 76% complete.
Meantime, some analysts are reducing their corn and soybean production.
Particularly as for corn analysts are forecasting corn production down by 3mbu to 14.681 bbu on a 1/10th yield hit.
The cmdtyView Corn Yield is now at 177.8 bpa.
As for soybean, analysts see 2 mbu fewer beans in the 22/23 crop, revising their US forecast to 4.764 bbu.
That came on a steady 89.99m acre harvest and a national average cmdtyView Bean Yield forecast of 52.94 bpa.
NASS reported in its September Grain Crushing report, a corn grind for ethanol at 383.09 mbu.
That was the lowest Sep pull since reporting began in 2015.
Traders were looking for 394 mbu going into the report. In August, 430.7 mbu was used for ethanol production.
The monthly Fats and Oils report had 167.99 mbu of soybeans processed during September.
That was in line with the pre-report estimates and up 4.7 mbu from Sep last year.
In August, soy crushers processed 175.87 mbu.
Soybean oil stocks were shown as 1.999b lbs, just above the 1.976b expected.
In this context, corn basis bids were steady to mixed across the central U.S., after rising as much as 15 cents higher at an Iowa processor and falling as much as 7 cents lower at an Illinois ethanol plant.
Soybean basis bids were mostly steady across the central U.S., but did jump 20 to 27 cents higher at two interior river terminals.
Commodity funds were net buyers of CBOT soybean, wheat, corn and soyoil futures contracts, and net sellers of soymeal.
On this morning, Chicago soybeans climbed to their highest levels in almost six weeks, with prices underpinned by concerns over shipments from Brazil.
Wheat fell for the first time in three sessions, although worries over Ukrainian exports limited losses, and corn ticked lower too.
Particularly, the Chicago Board of Trade most-active soybean contract was up 0.4% at $14.54 a bushel, as of 02:54 GMT, after climbing earlier in the session to its highest since Sept. 23 at $14.54-1/2 a bushel.
Wheat gave up 0.2% to $9.01 a bushel and corn fell 0.1% to $6.97 a bushel.
Meantime, during the drafting of this article, Russia said it would renew its participation in the agreement allowing Ukraine to export grain via the Black Sea.
“The Russian Federation considers that the guarantees received at the moment appear sufficient, and resumes the implementation of the agreement,” the defence ministry said in a statement.
The U-turn followed the phone call between Russian President Vladimir Putin and Turkish President Tayyip Erdogan on Tuesday, and repeated conversations between their defence ministers.
The ministry said that thanks to the involvement of the United Nations and Turkey, it had been possible to obtain written guarantees from Ukraine that it would not use the humanitarian corridor and Ukrainian ports to conduct military operations against Russia.
As a result, global grain markets are in sharp decline, especially in wheat.
In energy market, oil prices rose on Wednesday.
U.S. crude oil stocks fell by about 6.5 million barrels for the week ended Oct. 28, according to the American Petroleum Institute figures.
Analysts had on average expected crude inventories to rise by 400,000 barrels.
At the same time, gasoline inventories fell more than expected, with stockpiles down by 2.6 million barrels compared with analysts’ forecasts for a drawdown of 1.4 million barrels.
In this context, Brent crude rose 54 cents, or 0.6%, to $95.19 a barrel by 07:23 GMT, while U.S. West Texas Intermediate (WTI) crude rose 72 cents, or 0.8%, to $89.09 a barrel.
The benchmarks rose about 2% in the previous session on a weaker U.S. dollar and after an unverified note trending on social media said the Chinese government was going to consider ways to relax COVID-19 rules from March 2023, potentially boosting oil demand.
The potential disruption from the European Union embargo on Russian oil that is set to start on Dec. 5 may also be pushing prices more higher.
In ocean freight markets, the Baltic Dry index, fell for a tenth consecutive day to its lowest in seven weeks on Tuesday, down by another 5.9% to 1,377 points, amid weakening global economic outlook.
Particularly, the capesize index, which tracks iron ore and coal cargos of 150,000 tonnes, tumbled 11% to 1,388 points, logging its tenth consecutive daily fall on its worst day in nearly two months on sagging demand from China for iron ore.
Demand for bulk shipping from China has fallen by 5% year to date.
The panamax index, which tracks about 60,000 to 70,000 tonnes of coal and grains cargoes fell for a ninth straight session to an eight-week low of 1,696 points.
The supramax index was down for a seventh day to 1,389 points.
In equity markets, on this morning, the Fed will begin a two-day policy meeting.
The Labor Department reported that U.S. job openings rose unexpectedly in September, suggesting the labor market is not cooling.
Consequentily, long-term Treasury yields turned higher.
Particularly, the yield on the 10-year Treasury rose to 4.05% from 3.93% earlier in the morning.
The yield on the two-year Treasury, which tends to reflect market expectations of future moves by the Fed, rose to 4.54% from 4.40%.
In this context, the widespread expectation is for the Fed to push through another increase that’s triple the usual size, or three-quarters of a percentage point.
Thus, yesterday the S&P 500 fell 0.4% to 3,856.10.
The Dow Jones Industrial Average fell 0.2% to 32,653.20 and the Nasdaq composite dropped 0.9%, to 10,890.85.
The Russell 2000 rose 0.3% to 1,851.39.
Big technology stocks were the biggest weights on the market.
Apple fell 1.8%.
Communication services stocks, retailers and other companies that rely on consumer spending also helped drag down the overall S&P 500, keeping gains in banks, energy firms and other sectors of the market in check.
On this morning, Asian shares were mostly higher.
Hong Kong’s Hang Seng jumped 2.4% to 15,827.17, while the Shanghai Composite index added 1.2% to 3,003.37.
Japan’s benchmark Nikkei 225 was little changed, declining less than 0.1% to finish at 27,663.39.
Australia’s S&P/ASX 200 added 0.1% to 6,986.70.
South Korea’s Kospi added nearly 0.1% to 2,336.87, erasing gains that came earlier in the morning.
Chinese benchmarks extended gains after strong advances a day earlier driven by speculation the government might be preparing to gradually relax stringent COVID-19 restrictions.
However, since that was not followed by any official confirmation, the enthusiasm could quickly fade.
South Korea’s export growth fell in October as demand from China fell.
But the Bank of Korea’s minutes for a policy meeting last month showed a “hawkish theme of bringing inflation under control” according to the Bank of America.
In currency trading, the U.S. dollar edged down to 147.31 Japanese yen from 148.23 yen.
The euro cost 98.96 cents, up from 98.78 cents.
From South America, Brazilian truckers began blocking roads in protest of the Lula presidential election.
Demonstrators have disrupted fuel distribution and meat production, as well as the country’s ability to send grains and oilseeds to port, companies and authorities said on Tuesday.
Brazil’s AgRural had 56% of the 1st crop corn planted as of 10/27.
That was up 5% points through the week and trails 63% last year.
Also, Ag Rural reported 46% of the 22/23 soybean crop was planted as of 10/27.
That was up from 34% the week prior, but trails 52% during the same time last year.
Meantime, StoneX lifted their estimate for Brazil’s 2022/23 corn output to 129.9 MMT, from 126.3 MMT.
Soybean production prospects remain strong in Brazil with StoneX commodity brokerage raised its forecast of the country’s 2022/23 soybean crop to 154.35 million tonnes, from 153.8 million previously.
Brazilian governmental data showed that the country’s corn exports jumped to 7.2 MMT in October, which was a year-over-year increase of 300%.
Brazilian soybean exports in October rose moderately higher year-over-year, with a total of 4.06 MMT.
Argentina’s government is set to announce measures, potentially within days, to allow wheat exporters to delay agreed shipments after a major drought hammered the crop, raising concern about domestic supply.
A source at the country’s CEC grains exporting chamber, which represents companies buying the grain, said measures would be released “in the coming days” to allow firms to reschedule agreed wheat exports without facing the normal 15% fine from authorities.
The major Rosario grains exchange has slashed Argentina’s 2022/23 wheat harvest forecast to 13.7 million tonnes, which would be the lowest nationwide in seven years.
Buenos Aries Grains Exchange, in contrast, left their Argentine wheat forecast for 22/23 wheat at 15.2 MMT.
The country’s producers have already formally declared overseas sales of 2022/23 wheat of 8.9 million tonnes, official data shows.
Argentina’s domestic wheat consumption from the 2021/22 harvest totaled 7.6 million tonnes.
Some 2 million tonnes of wheat were left unsold from 2021/22.
There is an existing export cap of 10 million tonnes for the 2022/23 season’s wheat harvest.
In Europe, wheat prices consolidated a bit after their jump the day before.
Corn in contrast moved down.
Rapeseed prices rose slightly.
European markets were slower due the All Saints’ Day holiday, however.
From Ukraine, grain exports are down year on year in the 2022/23 season so far to almost 13.4 million tonnes from 19.7 million tonnes at the same date a season earlier, the agriculture ministry data showed on Wednesday.
Ministry data showed that exports so far in the July 2022 to June 2023 season included 5.1 million tonnes of wheat, 7.1 million tonnes of corn and 1.1 million tonnes of barley.
Meantime, as of October 31, Ukrainian farmers planted 4.1 mln ha with winter grains, or 85% of the forecast, the Ministry of Agriculture informed.
Particularly, agrarians planted:
wheat – 3.5 mln ha (87%);
barley – 507 thsd ha (75%);
rye – 78 thsd ha (92%).
In this context, last week, export prices of Ukrainian corn were mainly lower, head of local markets department at APK-Inform, Anna Tanskaya said.
Prices were pressured by the higher corn supply moving toward the land border checkpoints and the Danube ports, as most traders suspended purchases in the ports of Great Odesa due to weak demand form importers.
There was a low number of new ships coming to Ukraine, and accumulation of large stocks in port area.
However, an active corn export and a slow progress of the harvesting campaign limited the price decline.
Grain prices were also affected by the expensive logistics and slower down passage of cargoes through land border checkpoints due to frequent raid alerts.
In this context, the traders’ prices of corn totaled 185-205 (sometimes 210) USD/t or 7200-8500 UAH/t CPT-port in the ports of Great Odesa and the Danube.
The importers’ prices for delivery in November-December totaled 220-245, 225-250, 230-245 and 230-250 EUR/t at the borders with Poland, Hungary, Slovakia and Romania.
They reached 270-300 EUR/t DAP in the cities of Hungary and 255-270 EUR/t CIF in the port of Constanta.
It is likely that we will see further price decline and narrower price ranges this week.
From Kazakhstan, according to official statistics, the country exported 224 thsd tonnes of sunflower seed in 2021/22 MY, the lowest in 6 years.
Export quotas limited shipments of the oilseed in the last season.
China was the key destinations for Kazakh sunflower seed in 2021/22 MY.
It increased purchases by 22% y/y to 126.4 thsd tonnes.
Uzbekistan cut import by 31% to 83 thsd tonnes, Turkey – by 69% to 5.7 thsd tonnes.
According to the APK-Inform agency, the export of Kazakh sunflower seed will be 280 thsd tonnes in 2022/23 MY, despite the severe logistical problems (lack of rail fleet, slow transportation, etc.).
Possible implementation of the export duty on sunflower seed may limit the foreign supplies as well.
From the Middle Kingdom, China has allowed the import of wheat flour from Belarus from Nov. 1 if it meets inspection and quarantine requirements, China’s customs said on Tuesday.
From Australia, local markets slowed up yesterday with the Melbourne Cup public holiday in Vic, and the market lacked bids over the day.
Liquidity on new crop along the east coast remains slow while in WA it continues to trickle out as harvest ramps up.
Growers delivered 2470 tonnes to Viterra sites last week, most in the Western region of SA comprising more deliveries of barley, field peas and lentils as well as the first loads of canola for the season.
Unfortunately, there were some massive rainfall totals received over the last couple of days and although it looks like we are in for a brief reprieve, there is more on the forecast.
On the international trade scene, the Trading Corporation of Pakistan (TCP) and the Ministry of Finance’s Economic Coordination Committee (ECC) have purchased 685 000t wheat with the price paid said to be around $372/t CIFFO for November-December shipment dates.
September 2022 saw a G2G contract between Russian and Bangladeshi government agencies for the supply of 500,000 tons of wheat.
Of the amount, 217,000 tons have already been shipped, supplemented by 243,000 tons secured through private deals, totalling 460,000 tons.
An Iraq tender for a nominal 50,000t wheat for which the lowest offer received reportedly was from the EU (Romania) at $459/t C&FFO.
South Korea purchased 62k mt of animal feed wheat, likely sourced from the United States, in an international tender that closed yesterday.
The grain is for arrival in late December.
Jordan made no purchase in its yesterday tender to buy 120,000 tonnes of wheat, got following participants “CHS, Cargill, Ameropa and Buildcom”.
MIT cancelled its tender, to tender again for 120,000 tonnes wheat closing on Nov. 15.
South Korea rejected all offers in its international tender to purchase 58k mt of corn (along with 8,000 metric tons of soymeal) from South America that closed yesterday.
Several offers were submitted, but prices were regarded as too high.
The grain would have been for arrival in early February.
Meantime, another South Korean buyer purchased 66k mt of feed corn, likely sourced from South America and South Africa, in a private deal that closed late last week.
That grain is for arrival around February 5.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
