Good morning Farmer Family …
USDA November WASDE, left US farm markets mixed but mostly lower yesterday.
Wheat prices saw the most downside, incurring double-digit losses.
Notably, Chicago SRW was down 2.57% to the lowest print since Sep 6th, though remained above the $8 mark.
Kansas City HRW traded 1.67% lower on the day, taking Dec KC wheat to $9.30 flat.
Minneapolis spring wheat prices faded 1.29% on the day.
Losses for corn were much more moderate, meantime, as prices were down 0.45% by the close.
Soybeans stayed in the green, in contrast, with Jan contract climbing another 0.38%% higher.
Soymeal prices were down by 0.41% on the day.
Soy oil prices closed 0.68% higher.
A firmer U.S. dollar weighed on wheat prices, along with optimism about the continued unfettered flow of grain from Ukraine’s Black Sea ports under the wartime shipping deal.
Uncompetitively export prices also weighed a lot on the wheat market.
Concerns about Mexican demand for U.S. corn after government statements against biotech crops, dragged down the corn market.
EIA data had 1.051m bpd of ethanol output during the week that ended 11/4.
That was 11k barrels per day more than the week prior.
That’s the highest weekly total since late June.
Ethanol stocks tightened by 40k barrels to 22.192 million.
Chinese demand for U.S. soybeans, in contrast, supported soybean prices, although Beijing’s COVID-19 restrictions limited gains.
Private exporters, indeed, reported to the USDA having sold 264,000 metric tons of soybeans for delivery to China during the 2022/2023 marketing year, and 198,000 metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year.
The monthly USDA updates showed corn yields were raised 0.4 bpa to 172.3 nationally.
That was within the range of estimates.
That left production at 13.930 bbu, compared to 13.895 in October’s estimates.
The WASDE then increased feed and residual demand by 25 mbu.
Carryout was then figured to be 1.118 bbu.
On the global stage, production was only reduced by 350k MT as the U.S. and smaller countries’ increases offset a trim to EU and South Africa.
Carryout was reduced by 430k MT to 300.76 MMT.
As for soybean, USDA revised the average soybean yield 0.4 bpa higher to 50.2 bpa.
That compares to the average 51.7 bpa last year.
Production is now figured at 4.346 bbu.
On the demand side, USDA raised crush by 10 mbu.
With exports unchanged, soybean ending stocks are raised 20 million bushels to 220 million.
Globally, the WAOB trimmed production by 460k MT to 390.53 MMT mostly via a 1.5 MMT reduction in Argentina.
Brazil was left unchanged in the report at 152.
Global oilseed ending stocks are projected at 121.9 million tons, up 1.4 million.
Soybean stocks account for most of the change with an increase to China ’s stocks based on a revision to 2021/22 imports.
As for wheat, USDA made minimal revisions.
The only domestic changes were for a 7 mbu higher food use seen now to a record 977 million, and a 2 mbu seed use trim.
All wheat exports were unchanged at 775 million bushels, with offsetting changes for White wheat and Durum.
Projected 2022/23 ending stocks are lowered 5 million bushels to 571 million, the lowest level since 2007/08.
The global wheat outlook for 2022/23 is for increased supplies, consumption, trade, and ending stocks.
Supplies are projected up 1.3 million tons to 1,059.0 million based on increases in beginning stocks and production.
World production is raised 1.0 million tons to 782.7 million.
Production in Australia was raised 1.5 million tons to 34.5 million.
Argentina production was lowered.
Feed and residual use was raised 0.9 million tons.
However, FSI consumption was lowered 1.5 million tons.
The global forecast for trade was increased 0.3 million tons to a record 208.7 million.
Projected global ending stocks were increased 0.3 million tons to 267.8 million.
As for prices, USDA did not adjust the average cash price for corn from $6.80 per bushel.
Ditto for the cash bean at $14.00 per bushel and cash soy oil prices at 69 cents per pound, but raised meal by $10/ton to $400 flat.
The projected 2022/23 seasonaverage farm price for wheat remained unchanged at $9.20 per bushel.
Export Sales estimates for corn ahead of today’s update are for 300k to 650k MT for the week that ended 11/3.
New crop bookings are estimated to be below 50k MT.
As for soybean, estimates are to see between 600k and 1.2m MT of soybean bookings in the week that ended on 11/3.
New crop sales are expected to be below 50k MT.
As for wheat, weekly export sales are estimated to be between 250k MT and 600k MT for the week that ended 11/3.
In this context, corn basis bids were mostly steady to firm after trending 9 to 10 cents higher at three Midwestern locations.
An Iowa processor bucked the overall trend after spilling 10 cents lower.
Soybean basis bids were steady to firm across the central U.S. after rising 10 to 23 cents higher at five Midwestern locations.
Commodity funds were net sellers of CBOT wheat, corn and soymeal futures contracts, and net buyers of soybean and soyoil futures.
On this morning, Chicago wheat bounced off a two-month low to rise for the first time in four sessions, although the U.S. government forecast of higher world supplies limited gains, while corn and soybeans lost ground.
Notabily, the most-active wheat contract on the Chicago Board of Trade added 0.1% to $8.07 a bushel, as of 02:50 GMT.
Corn lost 0.1% to $6.63-1/2 a bushel and soybeans gave up 0.1% to $14.50-/4 a bushel.
In energy markets, oil extended losses on Thursday for a fourth consecutive session.
Brent crude, indeed, was down 27 cents, or 0.3%, to $92.38 a barrel at 0903 GMT.
U.S. West Texas Intermediate (WTI) crude was down 33 cents, or 0.4%, at $85.50.
The market came under pressure on Wednesday from a big rise in U.S. crude inventories.
They rose by 3.9 million barrels, taking inventories to their highest since July 2021.
Prices have fallen on concern of recession and Brent has dropped more than 6% this week.
With no final results yet available from the U.S. mid-term elections, in focus later on Thursday will be inflation data which is likely to show a slowing in both the monthly and yearly core numbers for October.
That may lead the U.S. Federal Reserve to reduce the size of its planned interest rate increases, which would be considered positive for economic and oil demand growth.
Meantime, China is battling a rebound in infections in several economically vital cities, including the capital Beijing.
And that raised concern about fuel demand.
A reinvigorated dollar and a loose fourth-quarter oil balance could push prices further south.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index rose for a fourth straight session on Wednesday to mark its biggest one-day percentage gain in a month, supported by stronger demand for capesize vessels.
The overall index, indeed, rose 37 points, or about 2.7%, to 1,393, the highest level since Oct. 31.
Particularly, the capesize index rose 144 points, or about 9.7%, to 1,637, the highest level since Oct. 28.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, were up $1,199 at $13,578.
The panamax index lost 28 points, or about 1.7%, to a two-month trough at 1,641.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, decreased $257 to $14,767.
The supramax index shed 9 points to 1,232, the lowest since February 2021.
In equity markets, Wall Street’s benchmark S&P 500 index tumbled Wednesday as votes were counted to decide whether Republicans take control of Congress, possibly leading to changes that can unsettle markets.
Investors were also rattled by the crypto industry’s latest crisis of confidence and weaker profit reports from The Walt Disney Co. and some other companies.
Thus, the S&P 500 lost 2.1%, erasing gains from a three-day rally leading up to Election Day.
Disney sank 13.2% for the largest loss in the S&P 500.
The Dow fell 2% and the Nasdaq composite, dominated by tech companies, tumbled 2.5%.
Cryptocurrencies fell amid worries about the industry’s financial strength after a big player, Binance, called off a deal to buy troubled rival FTX.
That at least temporarily ended hopes for a bailout after FTX users scrambled to pull out their money.
Bitcoin fell 14% from a day earlier to $15,900.
That is down 77% from last year’s high of $69,000.
Facebook parent Meta Platforms, meantime, rose 5.2% after saying it will cut costs by laying off 11,000 employees, or about 13% of its workforce.
It is down nearly 70% for the year.
With no final results yet available from the U.S. mid-term elections, in focus later on Thursday will be inflation data which is likely to show a slowing in both the monthly and yearly core numbers for October.
Traders hope indicators that show U.S. housing sales and other activity weakening might prompt the Fed to back off plans for more rate hikes.
Forecasters expect Thursday’s data to show inflation decelerated to 7.9% in September from the previous month’s 8.3%.
However, prices were expected to rise 0.6% compared with August, accelerating from July’s 0.1% increase.
Core inflation, which strips out volatile food and energy prices to show a clearer trend, is expected to accelerate to 6.5% from August’s 6.3%.
That suggests costs of rent, medical services, autos and other goods and services still are rising in response to strong demand.
In this context, traders expect the Fed to raise rates again next month but by a smaller margin of one-half percentage point after a series of 0.75 percentage-point increases.
The Fed’s key lending rate is a range of 3.75% to 4%, up from close to zero in March.
A growing number of investors expect it to exceed 5% next year.
Meantime, the yield on the 10-year Treasury, which helps dictate rates for mortgages and other loans, fell to 4.08% from 4.13% late Tuesday.
The two-year yield, which tends to more closely track expectations for Fed action, dropped to 4.60% from 4.66%.
On this morning, in Asia, Hong Kong’s Hang Seng index fell 1.7% to 16,081.04 and the Nikkei 225 in Tokyo sank 1% to 27,446.10.
The Shanghai Composite Index lost 0.4% to 3,036.13.
The Kospi in Seoul declined 0.9% to 2,407.70 and Sydney’s S&P-ASX 200 was off 0.5% at 6,964.00.
India’s Sensex shed 1% to 60,447.97.
New Zealand, Bangkok and Jakarta declined while Singapore and Malaysia gained.
The Philippines’ market benchmark lost 0.5% after the government reported the economy grew by 7.6% in the three months ending in September.
In currency trading, the dollar gained to 146.31 yen from Wednesday’s 145.56 yen.
The euro declined to 99.83 cents from $1.0073.
From South America, Argentina’s 2022/23 wheat harvest forecast was further cut to 11.8 million tonnes from 13.7 million tonnes previously, the Rosario grains exchange said on Wednesday, warning it could fall further amid a protracted drought that is hammering farmers.
Brazil’s Conab is predicting a 2022/23 corn production of 126.4 MMT for the 2022/23 season.
Corn exports are expected to reach 45 MMT in the current marketing year.
Brazil’s Conab expects the country’s 2022/23 soybean footprint grow another 4.2% to an unprecedented 106.848 million acres.
That could lead to an expected record-breaking production of 153.55 MMT.
Conab forecasts Brazilian soybean exports at 96.45 MMT in the current marketing year.
El Salvador’s President Nayib Bukele will receive more than 1,400 tonnes of fertilizer and more than 900 tonnes of wheat flour from China, the country’s presidency said on Twitter on Wednesday afternoon.
The tweet was accompanied by a photo of a bag of wheat flour reading “Chinese assistance, for a shared future” in Spanish.
Earlier on Wednesday, the presidency’s press office said in a tweet that Bukele would receive the donation “to mitigate the impact of the worldwide economic crisis.”
In Europe, grain prices maintained a downward pace on Wednesday evening, in a market still weighed down by Russian competition.
FranceAgriMer in its monthly report revised its wheat export estimate slightly downwards to third countries to 10.00 million tonnes and intra-community to 6.94 million tonnes against 10.10 and 7.07 estimated last month.
This leads to an upward revision of the end of campaign stock to 2.56 million tonnes against 2.13 previously.
In corn, the end stock is left almost unchanged at 2.04 million tonnes against 2.01 posted last month.
In barley, the end stock is revised slightly up to 1.81 million tonnes against 1.77 posted last month.
Meantime, non-commercial market participants lifted their net long position in Euronext’s milling wheat futures and options in the week to Nov. 4, data published by Euronext on Wednesday showed.
Notabily, non-commercial participants, increased their net long position to 77,320 contracts from 71,632 a week earlier, the data showed.
Commercial participants similarly increased their net short position to 96,978 contracts from 90,733 a week earlier.
In Euronext’s rapeseed futures and options, non-commercial market participants reduced their net short position to 8,925 contracts from 14,577 a week earlier.
Commercial participants also cut their net long position in rapeseed to 8,709 contracts from 14,326 a week earlier.
From North Africa, Tunisia’s imports of French wheat are expected to be 250,000 tonnes in 2022-2023 season, Yann Lebeau, head of the Maghreb region at France’s wheat professionals group Intercereales said on Wednesday.
Tunisia did not import wheat from France last season due to low production, state news agency quoted Lebeau as saying.
From the Black Sea basin, the uncertainty over whether or not Russia will extend the export corridor deal beyond Nov. 19 deadline helped to provide some support.
Top U.N. officials will meet a senior Russian delegation in Geneva on Friday to discuss extending the grain export deal and efforts to smooth shipments of Russian food and fertilizers to global markets.
Meantime, Russia’s Defence Minister has ordered his troops to withdraw from the city of Kherson and surrounding areas on the west bank of the Dnipro River.
In a televised meeting he said: “Having comprehensively assessed the current situation, it is proposed to take up defence along the left bank of the Dnipro River”.
However, Ukraine remains sceptical of the announcement with a senior adviser to Zelenskyy saying no signs are evident that Russia is leaving Kherson without a fight, and that a Russian presence exists in the city, with additional reserves charged to the region.
From Russia, according to Refinitiv Commodities Research, projected gains in Russian spring wheat area will more than offset a drop in winter sowings, with 2023-24 all-wheat plantings projected to increase by 2pc year on year to 29.7 million hectares (Mha).
However, factoring in a return to trend yields, total wheat production is projected to decline to 81.6Mt (13pc below Refinitiv’s 2022-23 forecast).
In addition to unattractive prices and uncertainties around conflict escalation, winter planting intentions were likely curtailed by excessive rains in some areas, especially in the Central Federal District, where harvest delays have been problematic.
Longer-range weather outlooks show mild conditions are expected during December-February, with widespread warmth and near or above-normal precipitation across most of the country and dryness limited only to southern regions.
This favourable weather outlook currently suggests low probabilities of winterkill damage.
From Australia, the country exported 27.6 million tonnes (Mt) of wheat in the year to 30 September 2022, with China its biggest market by far as the destination for 6Mt, or 22 per cent, of the total.
Indonesia on 3.8Mt was the next biggest market, followed by Vietnam on 3Mt and The Philippines on 2.8Mt.
The figures have been compiled from Australian Bureau of Statistics (ABS) data, with September figures released last week.
They show 2021-22 as Australia’s biggest year for wheat exports ever, ahead of 24.6Mt shipped in 2011-12, and 24.3Mt in 2020-21.
According to data released in an Australian Competition and Consumer Commission report, Australia exported 33.3Mt of grain in 2020-21, enough to break the previous record set in 2016-17 of 31.5Mt.
Everything points to 2021-22 setting a record for all grains, with wheat and barley alone eclipsing the 2020-21 total.
In September, Indonesia on 426,755t was the biggest market for Australian wheat, followed by China on 265,009t and Vietnam on 197,367t.
Meantime, prices for white grains in the north have softened this week as harvest sputters along in Queensland amid some patchy rain and widespread boggy conditions.
Local markets slid a little also yesterday as more grain hits the market.
Market shorts are still squeezed for prompt demand in central and southern zones, where we are seeing a significant inverse building.
However, in Queensland and New South Wales, although harvest is still not in full swing, it has certainly built pace.
In the south, prompt wheat has rallied as the latest rain event further delays harvest progress and shorts fight it out to secure what limited grain can be found in the prompt market.
Flooding in parts of New South Wales and Victoria is thwarting the movement of grain, and a front now moving east across the states looks to further delay the start of the cereal harvest.
However, some crops on light and sloping country are being harvested in NSW, but windrowing of canola where possible remains the focus.
With rain on the horizon, operations are pumping where they can to get as much in as possible.
The forecast rainfall over the next eight days is certain to bring harvest to a standstill again, with NSW, Victoria, south-west Queensland and eastern South Australia set to receive 25-50 millimetres.
With floods affecting large parts of the eastern states in recent months, health authorities are urging people in rural areas to vaccinate themselves for Japanese Encephalitis Virus.
On the international trade scene, Saudi Arabia’s main state wheat buying agency, the Saudi Grains Organization (SAGO) issued an international tender on Thursday to purchase an estimated 595,000 tonnes of wheat.
The deadline for submissions of price offers in the tender is Friday, Nov. 11.
Arrival in Saudi Arabia is sought between April and June 2023.
Results are expected on Monday, Nov. 14.
The tender seeks hard wheat, with 12.5 percent protein content, in a series of 60,000-tonne and 55,000-tonne consignments.
About 180,000 tonnes is sought for arrival in each of the three ports of Jeddah, Yanbu and Damman between April 10 and June 25.
Another 55,000 tonnes is sought for arrival in Jizan port from June 10 to 25.
In its last reported tender on Oct. 24, SAGO bought 566,000 tonnes of hard milling wheat for arrival in March-April 2023.
South Korea’s Major Feedmill Group (MFG) has issued an international tender to purchase up to 140,000 tonnes of animal feed corn.
The deadline for submission of price offers in the tender is also Thursday, Nov. 10.
The corn is sought for arrival in South Korea in two consignments in February 2023.
The Philippines issued a tender to purchase 60k mt of animal feed wheat that closes on Thursday.
The grain is for shipment in a range of potential periods stretching from late November to early March.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
