Good morning Farmer Family …
US farm markets were mostly weaker on Thursday, despite the U.S. dollar tumbled on news that U.S consumer prices rose less than expected in October.
Corn prices, indeed, saw doble digit losses, easing by 1.69%.
Soybeans saw the biggest cuts, spilling 2% lower.
Meal prices tumbled 3.23%, while soyoil was spared, as closed 0.73% higher on the day.
Wheat contracts all trended lower.
Chicago SRW dropped 0.37%, Kansas City HRW fell 0.51% and Minneapolis spring wheat were also down 0.72%.
Given what’s happened to the dollar yesterday, it was somewhat surprising.
But, commodities ag had already been weighed down by WASDE report on Wednesday saying that U.S. corn and soybean inventories will be bigger than previously thought.
Expectations of higher wheat world supplies also weighed on the markets.
Then a poor set of export sales data from weekly USDA report, triggerd a round of technical selling and profit-taking.
Weekly FAS data, indeed, had 265k MT of corn bookings for the week that ended 11/3.
That was down from the prior week, below the range of estimates and down 75% from the same week last year.
Corn export shipments were also relatively disappointing, with 259k MT.
Accumulated corn commitments were 14.73 MMT (580 mbu) as of 11/3.
That is 27% of USDA’s forecasted total for the season.
As for soybean, FAS Export Sales data showed 795k MT of soybeans were booked during the week that ended 11/3.
That was within the range of estimates, although toward the lower end of trade estimates.
Accumulated soybean commitments reached 33.1 MMT (1.216 bbu) as of 11/3.
That trails last year’s pace by just 0.4% – representing 60% of the forecast; also matching last year’s pace.
Soybean export shipments were extremely healthy, moving to 2.75 MMT.
In the products, USDA had 170k MT of soymeal bookings and 2.7k MT of bean oil sales for the week.
As for wheat, the report had 322,501 MT of wheat sold during the week that ended 11/3.
That was down slightly from the prior week’s tally, though within the range of estimates.
Wheat export shipments were also tepid at 151k MT, for a MYTD total of 8.967 MMT.
Total wheat commitments sit at 12.5 MMT (459 mbu) as of 11/3 – a historically slow pace, but on track for 59.2% of the USDA forecast.
Export shipments, meantime, are at 42.5% of the forecast through the first 23 weeks.
Separately, USDA reported private exporters having sold 209,931 metric tons of corn for delivery to Mexico during the 2022/2023 marketing year.
Meanwhile, soybean prices slipped also in part on a news report that Argentina could be considering whether to bring back measures to boost soy exports.
In this context, corn basis bids were steady to mixed after trending 9 cents lower at an Ohio elevator while improving 10 cents at two other Midwestern locations.
Soybean basis bids were steady to mixed after tracking 5 cents higher at two interior river terminals while falling 16 cents lower at an Ohio elevator.
Commodity funds were net sellers of CBOT corn, soybean, wheat and soymeal futures contracts, and net buyers of soyoil futures.
On this morning, Chicago wheat prices firmed a bit.
Soybeans gained about half a percent, and corn ticked higher too.
Notabily, the most-active wheat contract on the Chicago Board of Trade rose 0.4% to $8.07 a bushel, as of 04:49 GMT, soybeans added 0.8% to $14.34-3/4 a bushel and corn gained 0.4% to $6.56 a bushel.
However, wheat is down around 5% so far this week, heading for its biggest weekly loss in four months.
Corn is down 4%, heading for its biggest weekly fall since late July.
Soybeans have lost about 2% this week, on track for their first weekly drop in six.
In energy markets, oil prices jumped more than 2% on Friday after health authorities in China, eased some of the country’s heavy COVID curbs.
Brent crude futures, indeed, rose $2.39, or 2.6%, to $96.06 a barrel by 07:45 GMT, extending a 1.1% rise in the previous session.
U.S. West Texas Intermediate (WTI) crude futures gained $2.24, or 2.6%, to $88.71 a barrel, after climbing 0.8% in the previous session.
The contract rose 64 cents to $86.47 on Thursday.
The easing curbs include shortening quarantine times for close contacts of cases and inbound travellers by two days, as well as eliminating a penalty on airlines for bringing in infected passengers.
Thus, oil traders were applauding the news.
Prices also picked up on Friday after milder-than-expected U.S. inflation data reinforced hopes that the Federal Reserve would slow down rate increases.
A weaker U.S. dollar also supported oil prices as it makes the commodity cheaper for buyers holding other currencies.
Still, the benchmark oil contracts were headed for weekly declines of more than 1% due to rising U.S. oil inventories, and lingering fears over capped fuel demand in China amid an uptick in daily COVID cases.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index edged down on Thursday to snap a four-session winning streak, as declines in the panamax and supramax segments countered gains in capesize rates.
The overall index, indeed, was down 3 points, or about 0.2%, at 1,390,
Particularly, the panamax index lost 22 points, or about 1.3%, to a two-month trough at 1,619.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, decreased $193 to $14,574.
The capesize index rose 15 points, or about 0.9%, to 1,652, the highest level since Oct. 28.
Average daily earnings for capesizes (.BATCA), which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, increased $124 at $13,702.
The supramax index shed 5 points to 1,227, the lowest since February 2021.
In equity markets, on Wall Street, the S&P gained 5.5% to 3,956.37, propelled by big gains for tech heavyweights.
Amazon soared 12.2%, Apple rose 8.9% and Microsoft climbed 8.2%.
The Dow Jones Industrial Average gained 3.7%, or more than 1,200 points, to 33,715.37.
The Nasdaq composite, dominated by tech stocks, shot up 7.4% to 11,114.15 for its best day since March 2020.
Investors were reassured that U.S. inflation was declining from its June peak of 9.1%, though forecasters said the Fed’s campaign to cool price rises was far from over.
Tthe government reported consumer prices rose 7.7% over a year ago in October.
That was lower than the 8% expected by economists and the fourth month of decline.
Core inflation, which strips out volatile food and energy prices and is more closely watched by the Fed, was 6.3% over a year earlier, down from September’s 6.6% and below the consensus forecast of 6.5%.
Core prices rose 0.3% month on month, half of September’s 0.6% gain.
Thus, the yield on the 10-year Treasury, which helps set rates for mortgages and other loans, fell to 3.82% from 4.15%.
The two-year yield, which more closely follows expectations for Fed action, fell to 4.32% from 4.62% and was on pace for its sharpest fall since 2008.
On this morning, Asian stock markets surged, in the wake of Wall Street higher.
Hong Kong’s market benchmark jumped 5.4%.
Seoul and Sydney rose almost 3%.
Shanghai and Tokyo also advanced.
Hong Kong’s Hang Seng index soared to 16,948.96 and the Nikkei 225 in Tokyo gained 2.7% to 28,186.34.
The Shanghai Composite Index added 1.2% to 3,073.36 after the ruling Communist Party promised to alter quarantine and other anti-virus tactics to reduce the cost of China’s severe “zero-COVID” strategy that has disrupted the economy.
The Kospi in Seoul rose 2.8% to 2,471.10 and Sydney’s S&P-ASX 200 was 2.4% higher at 7,128.40.
New Zealand, Singapore and Jakarta gained while Bangkok declined.
In currency trading, the dollar rose to 142.08 yen from Thursday’s 141.83 yen.
The euro edged up to $1.0186 from $1.0180.
From South America, the Argentine wheat crop is getting smaller each week, with two agencies slashing forecasts this week.
The Rosario Board of Trade said frosts have compounded the drought, resulting in a wheat crop of 11.8 million tonnes (Mt) compared with their 13.7Mt estimate in October.
The average yield is estimated to be the lowest since the drought of 2008-09.
The Buenos Aires Grain Exchange releases weekly reports on its website and has lowered its estimate by 1.6Mt to 12.4Mt after a 1.2Mt cut last week.
Crop conditions are obviously much worse than the 15.5Mt estimate put out by the USDA this week.
However, a forecast of rainfall ahead for key farming regions spelled more positive news for soy.
Argentina 2022/23 combined soy, corn and wheat harvest will have an estimated value of $49.6 billion, investment bank J.P. Morgan Chase & Co said in a note on Thursday.
That is only slightly below the season earlier as high global prices offset the impact of the recent drought.
J.P. Morgan said that Argentina’s 2023 exports of the three grains should value around $41 billion.
Meantime, Argentina raised their 2023 corn export quota by 100% to 20 MMT for the 2023 crop.
In Europe, European wheat prices slipped to a new seven-week low.
A jump in the euro, and hopes of a continuation of the shipping corridor from Ukraine, from Friday’s talks, weighed on the grain market.
Thus, December milling wheat on Paris-based Euronext settled down 0.5% at 327.25 euros ($331.73) a tonne.
Corn fell €2.25/t at €321.25/t.
Rapeseed was also down €7/t to settle at €637/t.
Top U.N. officials are due to meet a senior Russian delegation for talks on Friday in Geneva over extending the grain shipment corridor that currently runs to Nov. 19.
In Germany, there was hope the tender announced by Saudi Arabia, could bring some fresh demand.
Thus, premiums in German ports remained supported by shipment of previous export sales and a lack of farmer selling.
Sellers of standard 12% protein wheat for November delivery in Hamburg, indeed, were seeking a premium of about 12 euros over Euronext December, with buying interest around 11 euros over.
Meantime, France has put the country on “high” alert for bird flu, forcing poultry farms to keep birds indoors to contain the spread of the highly contagious disease, the agriculture ministry said on Thursday.
The country, indeed, has detected a fresh rise in bird flu outbreaks in the past months after this year seeing its worst-ever wave of the disease, with about 22 million birds culled.
Between Aug. 1 and Nov. 8, 49 outbreaks of highly pathogenic avian influenza (HPAI), commonly called bird flu, were detected on French farms, with a large and rising number of cases found in domesticated fowl in backyards and among wild birds, the ministry said.
The “high” risk level, which was previously set at “moderate”, implies that all poultry should be kept inside on farms and additional security measures taken, including for hunting, to avoid a spread of the disease.
Europe has experienced its worst bird flu crisis ever this year, with nearly 50 million head of poultry culled.
($1 = 0.9865 euros).
From Ukraine, the USDA’s Foreign Agricultural Service has pegged Ukraine’s 2022-23 corn production at 25.8Mt, well below the latest official USDA forecast of 31.5Mt.
The report noted that harvest has been delayed and large areas won’t be done by December, when it is normally complete. The office estimates around 10 per cent of planted corn area might not be harvested, as farmers are facing both shortages of funds for fuel and available storage.
Costs for natural gas used to dry harvested grain is also a factor.
The report also said wheat exports for the season are seen at 12.4Mt, well above the USDA forecast of 11Mt.
This factors in a potential shutdown of the Black Sea crop-export corridor in mid-November, the agency says.
Limited export opportunities for Ukraine remain via rail, road and river.
Meantime, Ukrainian farmers lined up to collect U.N.-supplied grain sleeves to store crops over winter as the country faces a significant shortage of storing capacity caused by Russian shelling.
Ukraine has said it may lack up to 15 million tonnes of regular grain storage capacity this season to store its 60 million- to 65 million-tonne grain and oilseed harvest after a large number of silos were destroyed or damaged during the hostilities.
The United Nations Food and Agriculture Organisation (FAO), says it has secured over 30,000 bags which will help to alleviate the storage deficit by 6 million tonnes.
Over 7,500 bags have already been given to 356 farms.
Nearly 1,500 farms across Ukraine are being given the sleeves. Each of them can hold around 200 tonnes of grains for up to nine months.
From Russia, the Kremlin said on Friday that work was underway to address a number of Russian concerns regarding the Black Sea grain initiative, which is due to expire on Nov. 19.
There is a “reciprocal understanding” about Russia’s calls for the West to remove “obstacles” to its own fertilisers and grain exports, while negotiations and contacts are continuing, Dmitry Peskov said.
Russia’s agricultural exports have not been explicitly targeted by Western sanctions, but Moscow says blocks on Russia’s payments, logistics and insurance industries were a “barrier” to Russia being able to export its own grains and fertilisers.
Meantime, the Russian agriculture ministry revised the export tax for wheat, corn and barley.
Particularly, as of Nov. 16, the export duty on wheat will decrease to 2,922.1 from 3,012.0 rubles per ton a week earlier.
The duty on barley, in contrast, will increase to 2,686.7 rubles from 2,495.6 rubles per ton a week earlier.
For corn, in contrast, will down to 447.5 rubles from 1,114.3rubles a week earlier.
This new duty rates will be in effect through November 22, inclusive.
The duties were calculated based on indicative prices: $312.3 per ton for wheat ($314 a week earlier), $288.5 for barley ($283.7), $236.4 for corn ($251.6).
From the Middle Kingdom, China’s COFCO expects soy crush to total 94 MMT in 2022.
That would be 3 MMT above the last year’s crush.
From South East Asia, soaring wheat prices in India could prompt price-cooling measures such as the release of state reserves into the open market, meanwhile operators hoping an easing the 40% tax on imports.
Local wheat prices jumped to a record 26,500 rupees ($324.18) a tonne on Thursday, up nearly 27% since the May ban on exports.
Demand is robust, but supplies are dwindling, thus, prices are rising and will remain firm until the new-season crop starts next year.
Consequentially, the country could consider offloading state stocks in the market for bulk consumers such as flour and biscuit makers to reduce prices.
However, New Delhi could not release massive stocks so far owing to low inventories.
This year’s production has been around 95 million tonnes, far lower than the government’s projection of 106.84 million tonnes.
At the start of October wheat stocks in state warehouses totalled 22.7 million tonnes, down from 46.9 million tonnes a year earlier, after 2022 domestic wheat purchases fell 57%.
Thus, the government could also drop the 40% wheat import tax.
($1 = 81.74 rupees).
From Australia, local markets were softer again yesterday as harvest ramps up.
The Australian dollar is contributing to the softening of values as it tips over US66c.
Quality coming off to date remains a mixed bag.
Rainfall through eastern Australia over the past 24 hours was somewhat limited but there is more to come.
The Victorian crop outlook is still strong, despite localised flooding, but the rain forecast for this weekend remains a concern.
Many will be hoping the forecast is wrong, but it hasn’t seemed to be wrong since the start of spring.
WA harvest is having better luck and is starting to get a roll on with canola coming off first.
On the international trade scene, Tunisia’s state grains office is seeking 100,000t each of durum and soft wheat and 75,000t of barley in a recent tender.
Grains are for shipment between early December and late January.
Saudi Grains Organization has released a tender to buy 595,000t of hard milling wheat of minimum 12.5pc protein from global suppliers for delivery in April through June 2023.
South Korea purchased 134k mt of animal feed corn from optional origins in an international tender that closed yesterday.
The grain is for shipment in late February.
Another South Korean group purchased an additional 60k mt of animal feed corn, likely sourced from South America, in a private deal that yesterday.
Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 94,603 tonnes of food-quality wheat from the United States and Canada in regular tenders that closed on Thursday.
Egypt’s state grains buyer, the General Authority for Supply Commodities, is believed to have bought 280,000 tonnes of Russian wheat via direct purchases, at $362.5/t.
Grain Flower sold 2x 40,000 t , with consignement in the first half of December.
Grain Flower sold 2x 40,000 t, with consignement in the second half of December.
Aston sold 60,000 t, with consignement in the second half of December.
Viterra sold 60,000 t, with consignement in the second half of December.
The purchases comes a few days after GASC cancelled its first international wheat tender since July on Monday, citing high prices.
The lowest C&F offer at the tender was $369.95 per tonne for 40,000 tonnes of Russian wheat, with traders adding that GASC was negotiating for a price of $360 per tonne.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
