Good morning Farmer Family …
US farm markets eased on Tuesday, as traders finalized their positions ahead of today’s WASDE report.
Corn prices faded more then 1.2%.
Soybean prices gave back 0.26%.
Soymeal prices have been the only complex’s starlight, though gains there were limited just to 0.07% on the day.
Bean oil prices fell triple digits with 1.7% losse.
Tuesday’s wheat trade ended with double digit losses for mostly contracts.
Particularly, Chicago SRW closed 2.13% in the red.
Kansas City HRW closed down by 1.2%.
Minneapolis spring wheat has been the firmest of the complex, but still settled 1.02% weaker.
Analysts expect the agency to keep its U.S. corn and soy yield estimates unchanged, but raise its estimates for U.S. wheat, corn and soybean ending stocks.
Also, traders will examine USDA’s world wheat projections given adverse weather ahead of harvests in Argentina and Australia, along with mixed signs about Black Sea exports.
Uncertainty about the economy and COVID-19 restrictions in China, weighed on soyben prices, although losses were limited thanks to USDA reporting three large daily flash export sales.
The USDA, indeed, through its daily reporting system said private exporters had sold 138,700 tonnes of U.S. soybeans to China; 144,000 tonnes of U.S. soybeans to Mexico; and 132,000 tonnes of U.S. soybeans to unknown destinations.
Mexico also bought 338,600 tonnes of U.S. corn.
As for wheat, market analysts had been hoping for improving US winter wheat crop conditions and USDA didn’t disappoint they, with its Monday’s Crop Progress report.
Rains did help improve growing conditions for the young crop.
Emergence rates rose 11% on the week to 73% complete.
Surely, drought still remains a very prominent concern for this winter wheat crop in the Southern Plains, but last week’s showers brought some long-awaited relief to dire conditions.
The wheat market, furthermore, was also grappled with Black Sea supply prospects as Ukraine wants the Black Sea grain export deal expanded to include more ports and goods, and hopes a decision to extend the agreement for at least a year will be made next week.
In this context, corn cash prices again closed mixed at elevator locations in the Eastern Corn Belt.
Basis remained positive at Western Corn Belt elevators and ethanol plants but negative in their eastern counterparts.
Basis grew at ethanol plants across the Corn Belt.
Cash corn bids at processors was also mixed though the bids were largely quoted at a premium to Dec22 futures.
Cash corn prices at export terminals were weaker to flat, as cash quotes continued to trade at a steep discount to futures.
Cash soybean prices rose at an Eastern Corn Belt ethanol plant and elevator.
Cash prices for soybeans at elevator and river terminals destined for the U.S. Gulf continued to be quoted at steep discounts to January 2023 futures prices.
Processors were largely offering cash bids at or above futures prices, offering growers with surplus harvested supplies a profitable option for cash sales.
As for wheat, both cash markets for hard red winter wheat in the Southern Plains and soft red winter wheat in the Eastern Corn Belt were flat during yesterday’s trading session.
With futures prices dipping below recent highs, farmers had little incentive to book new cash sales during the market session.
Meantime, commodity funds were net sellers of CBOT wheat, corn, soybean and soyoil futures contracts, and net buyers of soymeal futures.
On this morning, Chicago wheat and corn prices slid for a third consecutive session.
Soybeans were largely listless after closing lower on Tuesday.
Thus, the most-active wheat contract on the Chicago Board of Trade was down 0.3% at $8.25-1/4 a bushel, as of 03:09 GMT, and corn lost 0.4% to $6.65 a bushel.
Soybeans eased quarter of a cent to $14.46-1/4 a bushel.
In energy markets, oil prices slid on Wednesday.
Brent crude futures, indeed, fell 9 cents, or 0.1%, to $95.27 a barrel by 07:27 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 20 cents, or 0.2%, to $88.71 a barrel.
Both benchmarks fell around 3% on Tuesday.
U.S. crude oil inventories rose by about 5.6 million barrels for the week ended Nov. 4, according to market sources citing American Petroleum Institute figures, while analysts had estimated on average that crude inventories would rise by about 1.4 million barrels.
Also, API data showed gasoline inventories rose by about 2.6 million barrels, against analysts’ forecasts for a 1.1 million drawdown.
Last week, market oil had latched on to hopes that China might be moving toward relaxing COVID restrictions, but over the weekend health officials said they would stick to their “dynamic-clearing” approach to new infections.
Also, COVID cases in Guangzhou and other Chinese cities have surged, with the global manufacturing hub becoming the country’s newest COVID epicentre.
And, a rebound in COVID-19 cases in the country would hurt fuel demand, despite tight supply in the physical markets.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index touched a one-week high on Tuesday, supported by gains in the capesize vessel segment.
The overall index, indeed, added 19 points, or about 1.4%, to 1,356, the highest level since Nov. 1.
Particularly, the capesize index rose 89 points, or about 6.3%, to 1,493, the highest level since Oct. 31.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, were up $731 at $12,379.
The panamax index slipped 27 points, or about 1.6%, to 1,669, its lowest level in about two months.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, lost $241 to $15,024.
The supramax index shed 10 points to 1,241, lowest since February 2021.
In equity markets, all eyes were on the midterm elections, which could determine how much is done in the next several years in Washington, and possibly beyond.
Americans were voting at a time of high inflation and warnings of recession.
Investors appeared to be betting that Republicans will gain control of at least one house of Congress.
That combined with a Democratic White House could stymie progress on legislation and increase the risk of a funding crisis for the federal government.
If Republicans do end up wining control of at least the House of Representatives, the ensuing reaction in financial markets could be modest since stocks already have rallied in anticipation of such a change.
A surprise win by Democrats could upset the market if investors expect higher corporate taxes and other policy changes.
But a Republican win could also mean less help from Congress during a possible recession than under a Congress controlled by Democrats.
And economists are forecasting a downturn in coming months as interest rate hikes meant to tame inflation put the brakes on business activity and spending.
A major inflation update is due on Thursday.
A softer reading than expected, could give the Fed leeway to loosen up a bit.
Economists expect the report to show a continued, slight moderation from a peak set during the summer.
But a worse-than-expected reading could have the opposite effect.
In this context, on Wall Street, the S&P 500 rose 0.6% on Tuesday to 3,828.11, while the Dow Jones Industrial Average climbed 1% to 33,160.83 and the Nasdaq composite gained 0.5%, to 10,616.20.
On this morning, Asian shares were mixed, as investors awaited the outcome of the U.S. midterm elections.
Tokyo’s Nikkei 225 index slipped 0.6% to 27,716.43 after the Cabinet on Tuesday approved a 29.1 trillion yen ($190 billion) supplementary budget to fund planned economic stimulus for the world’s third-largest economy.
Chinese markets declined after the government reported consumer price inflation eased to 2.1% in October from 2.8% in September.
Producer price inflation (PPI) dropped into deflationary territory, falling to minus 1.3% from 0.9% in October, the 21st straight month in an even stronger sign that the Chinese economy is slowing.
Thus, Hong Kong’s Hang Seng lost 1.5% to 16,307.72 and the Shanghai Composite index shed 0.4% to 3,052.48.
In Seoul, the Kospi gained 0.8% to 2,418.70 while Australia’s S&P/ASX 200 rose 0.6% to 6,999.30.
In currency trading, the dollar slipped to 145.82 Japanese yen from 145.65 yen.
The euro fell to $1.0062 from $1.0076.
From South America, grains exports from Argentine have stalled, after strong soybean sales in September and a drought that is hitting wheat and corn.
Argentine farmers, indeed, sold as of last week about 72% of the current soybean harvest, government data showed on Tuesday.
During the same time last season, farmers had sold a little over 73% of the soybean harvest.
However, farmers sold only about 248,000 tonnes from Oct. 27 to Nov. 2, down by half compared to the same week during the previous 2020/2021 season, the data showed.
Total soy production from the 2021/2022 harvest is seen at 44 million tonnes.
Meanwhile, Argentine farmers have sold 70% of the 59-million-tonne 2021/2022 corn crop, according to the ministry, about two percentage points down from sales notched during the same period in the previous season.
Since last week, 2022/2023 wheat sales total 5.6 million tonnes, or about 41% of the expected crop.
The 2022/2023 season’s corn plantings, which kicked off in September, were delayed by extended drought which forced farmers to cut the area planted with corn to its lowest level in six years.
Due largely to dry weather, the Rosario grains exchange recently lowered its wheat production forecast to 13.7 million tonnes.
Also, recent frosts forced farmers to delay planting of soy in the country’s core farm belt region, risking billions of dollars in potential losses.
Thus, grains exports from Argentine have stalled.
That put the Argentine central bank’s already depleted reserves under renewed pressure.
The country’s central bank, indeed, sold some $150 million on Monday, the largest daily fall in reserves since early August, adding to drops of some $368 million last week and $72 million the week before.
It sold $145 million on Tuesday.
The government-spurred soybean export push in September had helped bring in some $5 billion in hard currency reserves for the country.
In Europe, Euronext wheat fell sharply on Tuesday to touch a seven-week low.
Russian competition in international tenders as well as expectations that an export corridor from Ukraine will be maintained, weighed on prices.
Gasc cancelled their wheat tender despite competitive Russian offers.
OAIC would have once again favored Russian origin in its last call for tenders.
Once again prices were put under pressure also from the renewed Eurodollar parity.
Meantime, weekly European Union data showed the EU had exported 12.52 million tonnes of soft wheat so far in the 2022/23 season, which the European Commission said compares with 11.9Mt in the similar 2021 period.
That means up 5% from a year earlier.
EU barley exports, in contrast, are trending significantly below last year’s pace, with 2.47 MMT compared to 4.27 MMT during the same period.
Meantime, the European Commission, increased the total imports of corn since the start of the campaign, to 10.18 Mt, against 4.64 Mt last year at the same period.
European Union rapeseed imports also increased, to 2.49 Mt, against 1.77 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 3.88 MMT through November 7.
EU soymeal imports have seen modest year-over-year increase, with 5.6 million metric tons over the same period.
In this context, December milling wheat settled down 1.8% at 330.00 euros ($332.87) a tonne, after touching its lowest since Sept. 20 at 328.75 euros.
In Germany, sellers of standard 12% protein wheat for November delivery in Hamburg were seeking a premium of about 10 euros over the Euronext December contract against 11 euros over on Monday.
Corn fell by €4.5/ton, to settle at €326.75/t.
Rapeseeds were down €7.25/t to €641.5/t.
Meantime, durum wheat prices in France suffered further losses last week.
And this in spite the 2022 harvest appears to be particularly small this year.
Agreste figures, indeed, had the French harvest at 1.3 Mt, against 1.59 Mt last year.
But imports pressure and the lack of competitiveness of the French source towards southern Europe pushed down French durum prices.
Loadings from Canadian ports, indeed, maintained a dynamic rate for the time of year, with more than 260 kt still loaded during the last fortnight.
Only thanks to a dynamic demand from Spanish, Italian and French buyers, the market maintained a little firmness.
In add, farmer retention of products, is an additionally reported in this season.
($1 = 0.9914 euros).
From the Black Sea basin, Ukraine president Volodymyr Zelenskyy has told the visiting US Ambassador to the United Nations that the grain export deal must be extended.
Mr Zelenskyy said Ukraine maintained the line the “initiative must continue regardless of whether the Russian Federation is willing,” and that Ukraine is ready to remain the guarantor of world food security.
Turkey’s Defence Minister has said Turkey is working on a proposal for the deal to be extended for one year, rather than 120 days, beyond November 19.
From Russia, reflecting an accelerated pace of shipments, SovEcon has increased its 2022-23 Russian wheat export forecast by 300,000t to 43.7Mt vs 39.1Mt in the previous year.
SovEcon has also reported 2023-24 winter crop sowing is complete at 17.3Mha (18.1Mha last year).
Overall conditions are favourable for crop development, albeit with some dryness in southern regions.
In Ukraine, according to Ukraine’s Agriculture Ministry, 4.3 million hectares (Mha), or 90pc of projected area of winter crop has been planted.
Wheat accounted for 3.6Mha, barley 568,000ha and rye 79,000ha.
The sowing of winter rapeseed has been completed on 999,000 hectares, or 104pc of projected area.
From Australia, harvest is ramping up where possible between bog holes in Queensland and northern New South Wales.
Early quality results are pleasing but are likely to be skewed as better crops are being harvested first.
Meantime, domestic markets traded sideways again yesterday, with still only a trickle of sellers.
The Australian dollar firmed while futures relaxed slightly again which is is seeing basis fluctuate as local value remains stagnant.
The rainfall forecast is ugly for NSW, Victoria, eastern South Australia and southern Queensland, with Victoria perhaps looking to be in for the worst.
On the international trade scene, Algeria’s state grains agency OAIC has bought about 400,000 tonnes of milling wheat in an international tender which closed on Tuesday.
Initial purchases reported were around $367 to $368 a tonne, cost and freight (c&f) included.
Some estimates of the highest price were at $368.50 a tonne c&f.
Some traders said more than 400,000 tonnes may have been purchased.
A big part of the purchase, perhaps the majority, will come from Russia.
Only a small part of the volume could be sourced from France.
The wheat is sought for shipment in two periods from the main supply regions including Europe, from Dec. 1-15 and Dec. 16-31. If sourced from South America or Australia, shipment is one month earlier.
Egyptian GASC on Monday cancelled an international wheat purchase tender after asking suppliers to cut their price offers to $360 c&f in negotiations for wheat from any origins, with traders declining the request.
Taiwan’s MFIG purchasing group has bought about 65,000 tonnes of animal feed corn expected to be sourced from Brazil in an international tender that closed on Wednesday.
It was believed to have been sold by trading house Cargill.
The corn was purchased at an estimated premium of 192.69 U.S. cents a bushel c&f over the Chicago March 2023 corn contract.
Offers had been sought for corn sourced from the United States, Brazil, Argentina or South Africa.
Traders said Brazilian corn dominated offers in the tender, with a total of eight shipments from Brazil each of 65,000 tonnes submitted, including Cargill’s winning offer.
One offer was submitted for 65,000 tonnes of Argentine corn believed to come from trading house Pan Ocean at an estimated premium of 191.44 U.S. cents a bushel c&f over the Chicago March 2023 corn contract.
But Argentine corn was not favoured because of quality concerns and the group was seeking premiums from Argentina well below other origins.
No offers were reported for corn from the United States or South Africa.
Shipment was sought between Jan. 8 and Jan. 27, 2023, if the corn is sourced from Brazil.
Japan’s Ministry of Agriculture, Forestry and Fisheries is seeking to buy a total of 94,603t of food-quality wheat from the US and Canada in regular tenders that will close on Thursday.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
