Good morning Farmer Family …
US farm markets were mixed but mostly lower yesterday.
Russia said it would honor its participation in the prior agreement allowed Ukraine to export grain via the Black Sea.
As a result, global grain markets dropped back to last week’s levels!
Particularly, Chicago SRW wheat gave back 6.26% on the day.
Kansas City HRW wheat prices ended the day down by 5.03%.
Minneapolis spring wheat prices closed the session with 4.09% losses.
Corn prices also faced double-digit losses, shedding 1.47%.
Soybeans didn’t follow suit, meantime, picking up modest gains around 0.4%.
Soy oil has been the leader of the complex, having rallied 3.05% on the wake of crude oil strength.
Soymeal prices ended the session off the lows, but still down by 0.07%.
Russia announced it will resume participation in the Black Sea Grain Initiative after receiving written guarantees from Kyiv not to use the corridor for military operations against Russia.
“The Russian Federation considers that the guarantees received at the moment appear sufficient, and resumes the implementation of the agreement,” the Russian ministry statement said.
President Putin said on Wednesday Russia reserved the right to withdraw from the grain accord if Ukraine violated its guarantees.
But in a nod to Turkey’s influence, as well as what he called its “neutrality”, he said if Moscow did pull out, it would not impede grain supplies from Ukraine to Turkey.
Thus, markets essentially are back to where they were last week, with uncertainty about the continuation of the export corridor after November.
It is believed that President Putin is likely to use the need for an extension as a way to gain leverage at the November G20 summit in Indonesia.
Coming back in the USA, StoneX is revising up its US corn yield estimate to 174.5 bushels/acre from 173.9 previously estimated.
The consultancy, in contrast, cut the US bean crop to be 4.413 bbu.
That comes via a 50.9 bpa yield forecast, compared to 51.3 bpa in their prior estimate.
Grain traveling the country’s railways saw another 25,653 carloads last week.
That brings cumulative totals for 2022 up to 950,475 carloads, trending 4.2% below last year’s pace so far.
Ethanol production rose for the fifth consecutive week, reaching a daily average of 1.040 million barrels for the week ending October 28, per the latest data from the U.S. Energy Information Administration, released yesterday.
It was also the largest weekly turnout since early July.
Ahead of the next USDA export report, out this afternoon and covering the week through October 27, analysts expect to see corn sales ranging between 250k MT and 600k MT.
Last week’s corn sales were 264k MT.
New crop sales are estimated to be less than 75k MT ahead of the weekly report.
As for soybean, bookings are expected to be between 700k MT to 1.6 MMT for the week that ended 10/27.
New crop soybean sales are estimated to be less than 75k MT.
Analysts project 150k MT to 400k MT of soymeal was sold.
Bean oil bookings are estimated between 0 and 20k MT.
As for wheat, bookings are estimated between 200k MT and 600k MT for the week that ended 10/27.
New crop export sales are estimated to be below 50k MT.
In this context, corn basis bids were steady to mixed across the central U.S. on Wednesday after spilling 5 to 10 cents lower at four Midwestern locations while firming 7 to 15 cents at two other locations.
Soybean basis bids were mostly steady across the central U.S. but did rise 5 cents at an Indiana processor and 15 cents at an Iowa river terminal.
Commodity funds were net sellers of CBOT wheat, corn and soymeal futures contracts on Wednesday and net buyers of soyoil and soybean futures.
Meantime, the latest results from the Purdue University / CME Group’s Ag Economy Barometer showed farmer sentiment dropped another 10 points in October for a new reading of 102 (anything above 100 is still considered net positive).
Current readings are now down to similar levels observed in late 2015 and early 2016.
More than 40% of respondents indicated that high input costs are their current top concern.
On this morning, Chicago wheat lost more ground.
Soybeans slid from a six-week high scaled in the previous session and corn also fell.
Particularly, the most-active wheat contract on the Chicago Board of Trade was down 0.8% at $8.39 a bushel, as of 03:30, after dropping more than 6% in the previous session.
Soybeans gave up 0.5% to $14.46-3/4 a bushel, having climbed to their highest since Sept. 22 on Wednesday at $14.58 a bushel and corn lost 0.4% to $6.84-1/2 a bushel.
Russia resuming participation in the Black Sea grain corridor prompted the fall.
In energy markets, oil prices rose on Wednesday, gaining ground.
Brent crude settled up $1.51, or 1.6%, to $96.16 while U.S. West Texas Intermediate (WTI) crude settled up $1.63, or 1.8%, to $90 per barrel.
The market was supported by another decline in U.S. oil inventories.
U.S. crude oil stocks, indeed, fell about 3.1 million barrels on the week, according to federal data.
Gasoline inventories while distillate stocks rose only marginally ahead of the key heating season, when demand is expected to pick up.
That is worrying analysts who believe that the impending end of releases from U.S. strategic reserves will remove a source of supply that will further tighten markets.
Meantime, output from the OPEC fell in October for the first time since June, in addition to pumping 1.36 million barrels per day below its targets.
The oil market held its rally even as stocks fell and the dollar rallied after Federal Reserve Chair Jerome Powell said it was premature to think about pausing rate increases.
On this morning, oil slipped as the U.S. interest rate hike, pushing up the dollar and fuelled fears of a global recession, although losses were capped.
Brent crude, indeed, shed 37 cents, or 0.4%, to $95.79 a barrel at 04:26 GMT, while U.S. West Texas Intermediate (WTI) crude futures dipped 60 cents, or 0.7%, to $89.40.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index extended its fall to an 11th session on Wednesday, as demand waned across all segments.
The overall index, indeed, fell 56 points, or about 4.1%, to 1,321.
Particularly, the capesize index shed 102 points, or about 7.4%, to 1,286.
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 $845 to $10,664.
The panamax index dropped 13 points, or about 0.8%, to 1,683, marking its 10th consecutive fall.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, dropped $117 to $15,149.
The supramax index fell 57 points to a more than 20-month low of 1,332.
In equity markets, on Wall Street, the S&P 500 fell 2.5% to 3,759.69.
The Dow Jones Industrial Average lost 1.5% to 32,147.76.
The Nasdaq composite slid 3.4% to 10,524.80.
Tech stocks, retailers and health care companies were among the biggest declines.
Amazon.com, Inc. dropped 4.8%.
Apple, Inc. fell 3.7% and Johnson & Johnson, Inc. slipped 1.5%.
U.S. consumer prices rose 6.2% over year earlier in September, the same as the previous month.
Core inflation, which excludes volatile food and energy prices to make the trend clearer, accelerated to 5.1% from August’s 4.9%.
The latest data on hiring, are relatively strong.
Data from payroll processor ADP showed companies added jobs at a faster pace in October than expected.
The government is due to release unemployment data Thursday and a report on the broader jobs market on Friday.
Thus, the Fed on Wednesday raised its key rate by another 0.75 percentage points to a 15-year high and said it could shift to a more deliberate pace of rate hikes and would consider the overall economic impact.
As a consequence, the yield on the two-year Treasury, an indicator of market expectations of Fed action, rose to 4.58% from 4.55% before the Fed statement.
The yield on the 10-year Treasury, used to set mortgage rates, climbed to 4.10% from 3.98%.
On this morning, Asian stock markets tumbled.
Hong Kong’s benchmark lost 2.9%.
Shanghai and Sydney also followed Wall Street lower.
Particularly, the Hang Seng in Hong Kong fell to 15,369.72 and Sydney’s S&P-ASX 200 sank 1.8% to 6,857.90.
The Shanghai Composite Index lost 0.3% to 2,993.37 and the Kospi in Seoul rose 0.1% to 2,337.45.
Japanese markets were closed for a holiday.
India’s Sensex fell less than 0.1% at 60,850.09.
New Zealand and most Southeast Asian markets also fell.
Investors are worried that the global economy might tip into recession.
In currency trading, the dollar gained to 147.52 yen from Wednesday’s 146.94 yen.
The euro declined to 98.19 cents from 98.83 cents.
From South America, Brazilian authorities said on Wednesday they are making headway in their efforts to clear blockades set up across the country by truckers to protest President Jair Bolsonaro’s narrow loss to leftist Luiz Inacio Lula da Silva in an Oct. 30 runoff election.
The protests has disrupted fuel distribution, industrial activity, food deliveries to supermarkets and shipments of grains to ports.
Argentina will reportedly soon allow wheat exporters to reschedule shipments without the normal 15 per cent penalty, due to the impact the drought is having on production.
Producers have already formally declared export sales of 8.89Mt for the 2022-23 wheat crop, with an existing export cap set at 10Mt.
The ministry also said Argentina had sold 5.5 million tonnes of its 2022/23 wheat crop as of last week.
Meantime, farmers in Argentina, also sold 71% of this cycle’s 44-million-tonne soybean harvest as of last week, the country’s agriculture ministry said on Wednesday.
Particularly, Argentina sold 323,100 tonnes of soybeans between Oct. 20 and 26, nearly doubling the 164,000 tonnes that traded the previous week.
Producers had sold 483,600 tonnes during the same period in the 2020/21 crop.
Also, the ministry said the country had also sold 70.4% of its 2021/22 corn harvest.
That was down from the 72.1% it had sold at the same time during the previous cycle.
In Europe, also Euronext fell sharply yesterday.
Wheat and corn were both down.
Rapeseed also lost ground in the wake of all the other ag commodities, but limited its losses in the face of very firm oils and a new jump in crude prices after the surprise drop in US crude inventories last week.
Market volatility has become unprecedented and fueled mainly by geopolitics, and therefore subject to great uncertainty.
The autumn works are continuing in France at a steady pace and should be completed quickly.
Meantime, as at 22 October, French wheat export to the third countries was at 1.586 mt.
That means that total French wheat export July -Oct 22 was at 5.270 mt.
As a result, 54 % of wheat export potentail is already gone.
November wheat export, also started strong, with 3 vessels GASC, 1 China, 1 Algeria.
That means 267 kt in the line up in 2 days.
Meantime, per latest data published by Euronext on Wednesday, non-commercial market participants cut their net long position in Euronext’s milling wheat futures and options in the week to Oct. 28.
Particularly, non-commercial participants, which include investment funds and financial institutions, reduced their net long position to 71,632 contracts from 84,816 a week earlier, the data showed.
Commercial participants similarly cut their net short position to 90,733 contracts from 102,660 a week earlier.
In Euronext’s rapeseed futures and options, non-commercial market participants lowered their net short position to 14,577 contracts from 16,546 a week earlier.
Commercial participants also decreased their net long position in rapeseed to 14,326 contracts from 16,363 a week earlier.
From Russia, the country’s Ag Ministry reported that as at 31 Oct, the 2022-23 wheat harvest had yielded 104.7Mt from 29.1Mha (equivalent to 99% of planted area), with productivity at 3.6t/ha, barley 24.3Mt from 7.8Mha (99% of area), with yields at 3.1t/ha and rapeseed 4.6Mt, from 2.2Mha (94% of area), with productivity at 2.1t/ha.
Russia’s Union of Grain Exporters reports that as at early Nov, ytd 2022-23 (Jul/Jun) grain exports totalled 18Mt (-2% on same period previous year), including wheat at 15Mt (-4%).
From Ukraine, Lloyd’s of London insurer Ascot is once again quoting on its cargo insurance facility for the Black Sea grain corridor, the facility’s lead underwriter said on Wednesday after Russia announced it would resume its participation in the accord.
Other insurers also are providing cover through the Ascot facility, which also includes broker Marsh.
Meantime, seven ships carrying agricultural products left Ukrainian Black Sea ports on Thursday, the infrastructure ministry said.
The vessels were loaded with 290,000 tonnes of food products and were headed towards European and Asian countries, the ministry said in a statement without elaborating.
From the Middle Kingdom, China’s imports from Ukraine have dwindled to less than 2,000 tonnes in September this year, leaving it reliant on the U.S. for the bulk of its overseas supplies..
Meantime, Chinese customs updated its list of approved Brazilian corn exporters on Wednesday.
The approvals could reshape global trade flows and result in fewer sales for farmers in the United States.
The new list on the website of China’s General Administration of Customs included 136 corn export facilities, including facilities owned by Archer-Daniels-Midland Co, , Bunge Ltd, Cargill, Louis Dreyfus Company and Cofco International.
China customs also published a list of 14 Brazilian facilities approved to export soymeal to the country, including those owned by Bunge Ltd and Olam, according to a document posted on customs website.
China is expected to import 18 million tonnes of corn in the 2022/23 crop year that began in October, according to the agriculture ministry.
Small Chinese imports from Brazil may begin soon, but larger shipments are not expected until the next harvest begins in early 2023.
Demand for soymeal, in contrast, is expected to be limited, given China’s large domestic production capacity.
On the other hand, China plans to auction off another 40.000t of its state wheat reserves on November 9, according to a statement from the country’s National Grain Trade Center.
China sold 100% of the wheat it offered for sale at its last auction held on October 26.
From Australia, progress in the Queensland harvest has softened values in the northern market, while moves in southern prices were mixed and moderate to reflect some short covering and the inevitability of big volumes of feed grades in ongoing wet conditions.
New South Wales roads closed by the worsening flood situation in parts of the grainbelt are the biggest logistics hurdle for the trade this week.
However, trade sources report some dry and even sunny weather has allowed trucks to load.
The lateness of the eastern and South Australian harvests could well see some exporters provide additional competition for old-crop grain as shipping moves to the new-crop window with nothing fresh off the header to be found south of the Queensland-NSW border.
Meantime, local markets firmed yesterday across the board.
It is hard to gauge grower reaction to higher bids because they remain at a standstill with so much uncertainty.
There is more certainty in WA and in the northern part of the east coast where headers are rolling but the feedback on quality has been mixed with classifying anywhere in the range from H2 to SFW1.
There are reports of wheat issues with falling numbers and presence of fusarium.
Although the rain has stopped for now, moderate to major flood warnings are still in place for many catchments across New South Wales, Victoria and Southern Queensland.
According to the Bureau of Meteorology records were broken in SA, Vic, NSW and Qld.
Nationally 180 stations with at least 30 years of observations set records for the highest total rainfall for October, and around 30 of those were highest for any month of the year.
On the international trade scene, Jordan’s state grains buyer has issued a new international tender to purchase 120,000 tonnes of animal feed barley.
The deadline for submission of price offers in the tender is Nov. 16.
A new announcement had been issued after Jordan made no purchase in its previous barley tender on Wednesday.
Shipment in the new tender is sought in a series of possible combinations in 60,000 tonne consignments.
Possible shipment periods are in 2023 between March 1 and April 30.
Jordan issued an international tender to purchase 120k mt of milling wheat from optional origins that closes on November 15.
The country failed to make any purchases in its previous tender that closed yesterday.
The new tender is divided into two consignments that will be for delivery in March and April.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
