Good morning Farmer Family …
US farm markets were mixed to start the week.
Corn tested some gains briefly early in the morning but ultimately settled back into the red, posting 0.11% losses by the close.
Soybeans dropped too, by nearly 0.7% .
Soymeal prices closed 0.34% weaker.
Bean oil prices faded 0.9% on the day.
Wheat contracts, in contrast, were the only beneficiaries of the day as Chicago SRW grabbed 0.58% gains, Kansas City HRW closed 1.35% higher and Minneapolis spring wheat went home 1.82% stronger.
Soybean and corn prices fell on spillover pressure from crude oil along with uncertainty about export demand for U.S. supplies of both crops.
Weekly export shipments were still not very good.
Notabily, USDA data showed 484,001 MT of corn was shipped during the week that ended 11/10.
That was up 251k MT from last week but was under the 867k MT shipped during the same week last season.
USDA listed the MY total shipment at 4.933 MMT as of 11/10, down 29.5% from last year’s pace.
As for soybean, USDA confirmed 1.858 MMT of soybeans were exported through the week that ended 11/10.
That was down from 2.61 MMT last week and was below the 2.43 MMT shipped during the same week last year.
China was the destination for 1.27 MMT of the total.
USDA also added 20.5k MT of soybean exports to past reports for a season total of 14.69 MMT through 11/10.
Last year had 16.625 MMT shipped through the same period.
As for wheat export data showed 76,408 MT of shipments for the week that ended 11/10.
That was down 106k MT from last week, and was 323.8k MT lighter yr/yr.
Weekly data had 9.905 MMT shipped for the season through 11/10 – compared to 10.32 MMT at the same time last year.
A bounce in the dollar yesterday, made U.S. grains still less competitive globally.
Then, traders have turned their focus toward crop development in South America where much-needed rains in Argentina arrived in the weekend, aiding soybean planting, while forecasts called for beneficial showers this week also in Brazil.
Wheat, meantime, rose moderately on signs of global export demand, when Saudi state buyer SAGO on Monday said it had bought just over 1 million tonnes of wheat in an international tender.
However, traders suggested that also Russian wheat may be used to cover a large part of the optional-origin purchase.
Thus, traders continued to monitor prospects for the renewal of an export corridor from Ukraine, and about that, Moscow described talks with the United Nations as “fairly constructive” though agreement was yet to be reached.
After the sessions close, Weekly Crop Progress data showed 93% of the 22/23 corn crop was harvested as of 11/13.
That was up by 6% points through the week.
The 5-yr average pace would be 85% harvested by 11/13.
As for soybean, NASS reported soybean’s harvest advanced 2% points to 96% complete.
That is 5% points ahead of average.
As for wheat, data had 96% of the 23/24 winter wheat crop planted as of 11/13.
That is up 4% points from last week and is 3% points ahead of average.
Emergence reached 81%, matched with the average.
Winter wheat conditions improved to 32% good/ex.
Meantime, the Commodity Futures Trading Commission’s weekly commitments of traders report, delayed due Veteran’s Day, showed large speculators cut their net long position in CBOT corn futures in the week to Nov. 8.
The report also showed that non-commercial traders, a category that includes hedge funds, increased their net short position in CBOT wheat and cut their net long position in soybeans.
In this context, corn basis bids were steady to firm after rising 11 cents higher at an Ohio elevator and improving 10 to 15 cents at two Midwestern processors on Monday.
Soybean basis bids were mostly steady across the central U.S., but did firm 4 cents at an Ohio elevator.
On this morning, Chicago wheat prices slid, falling for the first time in three sessions, weighed down by rising expectations that export corridor deal for Ukrainian grains would be renewed.
Corn ticked lower too.
Private analytics firm IHS Markit Agribusiness, projected an increase in U.S. corn plantings for 2023.
Notabily the firm projected U.S. 2023 corn plantings at 91.968 million acres, up some 25,000 acres from its October forecast and up from the 88.608 million acres farmers planted in 2022.
Meanwhile soybeans firmed a bit.
Particularly, the most-active wheat contract on the Chicago Board of Trade fell 0.1% to $8.17-3/4 a bushel, as of 02:58 GMT.
Corn lost 0.2% to $6.56-1/4 a bushel, while soybeans added 0.2% to $14.42-3/4 a bushel.
In energy markets, oil prices held steady on Tuesday as rising COVID-19 cases in China sparked fears of lower fuel consumption and a cut in OPEC’s 2022 global demand forecast offset worries about tight supply.
Thus, Brent crude futures edged up 11 cents, or 0.1%, to $93.25 a barrel by 07:15 GMT after settling 3% lower on Monday.
U.S. West Texas Intermediate crude was at $85.68 a barrel, down 19 cents, or 0.2%, after tumbling 3.5% in the previous session.
The International Monetary Fund said on Sunday the global economic outlook has become gloomier than projected last month, citing a steady worsening in purchasing manager surveys in recent months.
However, concerns about tight supplies this winter continued to support oil prices.
U.S. crude oil stocks were expected to have dropped by about 300,000 barrels in the week to Nov. 11.
Elsewhere, oil output in the Permian Basin is set to hit another record of 5.499 million barrels per day (bpd) in December, the EIA said in its monthly productivity report on Monday.
However, aging shale regions are showing weaker per-well output, causing overall U.S. crude oil production in shale regions to rise by a mere 91,000 bpd to 9.191 million bpd in December, despite a surge in prices.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index slipped to its lowest in more than a week on Monday, pressured by declines in the capesize and supramax segments.
The overall index, indeed, dropped 30 points, or about 2.2%, to 1,325, its lowest since Nov. 4.
Particularly, the capesize index lost 98 points, or about 6.4%, to 1,446.
Average daily earnings for capesize, which typically transport 150,000-tonne cargoes of coal and steel-making ingredient iron ore, decreased $812 to $11,995.
The panamax index was up 30 points, or about 1.8%, to 1,667.
Average daily earnings for panamax, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, gained $268 to $15,003.
The supramax index lost 16 points to 1,197, extending its declines for a 16th straight session.
In equity markets, stocks fell on Wall Street on Monday, giving back some of their huge gains made last week.
The S&P 500 fell 0.9%, or 35.68 points, to 3,957.25.
The Dow Jones Industrial Average lost 0.6%, or 211.16, to 33,536.70, and the Nasdaq composite fell 1.1%, or 127.11, to 11,196.22.
Analysts have called Wall Street’s recent rally overdone.
Some officials at the Federal Reserve have also urged caution.
Such warnings weighed on stocks Monday, as did a rise in Treasury yields.
Notabily, the yield on the 10-year Treasury, which helps set mortgage rates, rose to 3.87% from 3.81% late Thursday.
Several economic reports due this week could offer more clues about where inflation is heading.
Today, the US government will issue its October report on prices at the wholesale level.
Economists say inflation there likely slowed to 8.3% from September’s 8.5% rate for year-over-year price changes.
On Wednesday, markets will see how resilient U.S. households have been in their spending when the government gives its latest monthly update on sales at retailers.
Economists say retail sales likely grew 0.9% in October from a month earlier, a much stronger showing than September’s flat performance.
The data, though, does not take inflation into account and could be a reflection of nothing more than higher prices being charged at the register.
On this morning, global stocks gained.
Frankfurt, Shanghai, Tokyo and Hong Kong advanced, London was little changed.
On Monday, Presidents Joe Biden and Xi Jinping met during a summit of the Group of 20 major economies in Indonesia.
That fed hopes for an easing of U.S.-Chinese tension over security, trade, technology and human rights.
Over the weekend, China released a rescue plan for its property sector.
Also, China’s consumer spending shrank by 0.5% in October, in a sign its economy is weakening.
Growth in factory activity also weakened.
The performance was worse than expected by forecasters who say Chinese economic activity will cool as interest rate hikes by global central banks depress demand for exports.
Thus, in Asia, the Shanghai Composite Index rose 1.6% to 3,134.07.
The Hang Seng in Hong Kong advanced 4.1% to 18,343.12 and the Nikkei 225 in Tokyo gained 0.1% to 27,990.17.
Seoul’s Kospi was up 0.2% at 2,480.33 while Sydney’s S&P-ASX 200 shed less than 0.1% to 7,141.60.
India’s Sensex opened lost less than 0.1% to 61,559.08. New Zealand and Southeast Asian markets advanced.
In early trading, the FTSE in London shed less than 0.1% to 7,380.66.
Frankfurt’s DAX gained less than 0.1% to 14,326.36 and the CAC 40 in Paris added 0.3% to 6,628.70.
In currency trading, the dollar edged down to 139.72 yen from Monday’s 139.92 yen.
The euro gained to $1.0404 from $1.0353.
Going back to analyzing the other Ag markets …
From South America, rains in Argentina’s farm belt over the weekend will allow farmers to speed up the delayed planting of soybeans.
Weekend rains, estimated by the Rosario grains exchange at around 20-50 millimeters, brought some relief to core farming regions and could unlock soy planting which is just 24% complete for early planted fields versus 80% a year ago.
The exchange estimates soybean planting of 17 million hectares with production of about 48 million tonnes.
However, rains largely arrived too late for the wheat crop, which is expected to be the smallest in at least seven years due to drought and frosts.
The Rosario exchange cut its wheat harvest forecast to 11.8 million tonnes from an initial 19 million tonnes.
Meantime, seventy percent of Brazil’s first corn crop has been planted so far, according to the country’s AgRural consultancy.
That’s up from 63% a week ago but well below 2021’s pace of 85%.
“The slower pace is mainly due to the irregularity of the rains in the southeast of the country and in Goiás,” according to AgRural.
On the other hand, Bayer agriculture unit in Brazil expects that its new genetically modified soybean Intacta2 Xtend will account for about 10% of the country’s total soy planting area in the 2022/23 harvest.
The Intacta2 Xtend soybean, which tolerates the Dicamba herbicide and is resistant to insects, could be sowed in an area of around 4.3 million hectares (10.6 million acres) in 2022/23, compared with 243,000 hectares in the previous crop-year.
The expected expansion of the third generation soybean seed technology will follow after the seed was “tried and tested over the past two years in more than 500 areas across Brazil,” ensuring high yields, with dozens of producers recording averages of 100 60kg-bags per hectare, according to Bayer.
Some producers have reached more than 120 bags per hectare, said Rafael Mendes, commercial director of Intacta in Brazil’s Bayer agri division.
The yield would be almost double that of Brazil’s average, estimated at 59 bags per hectare, according to the country’s food supply agency Conab.
In Europe, markets fell yesterday.
A rebound of the euro against the dollar mechanically led to a downward price adjustment, especially since the euro/dollar parity is back on its highest level against the dollar for 4 months.
The prospects for the renewal of the export corridor from Ukraine, and news from Moscow which described talks with the United Nations as “fairly constructive” though agreement was yet to be reached, weighened still more on grain prices.
Operators however remain vigilant in the face of the rise of euro, especially as export activity remains sustained with important buyers present.
Meantime, according to FranceAgriMer, by Nov. 7, French farmers had planted 92% of the expected soft wheat area while 97% of the anticipated winter barley had been sown.
Emergence of soft wheat and winter barley crops was running about a week ahead of the usual pace, reflecting the effect of an exceptionally warm October in the European Union’s biggest grain producer.
Particularly, soft wheat had emerged from the ground on about 76% of the expected area by Nov. 7, up from 61% a year ago and six days ahead of the average development pace of the past five years, FranceAgriMer said.
Winter barley had emerged on 88% of the projected area, with crops running seven days ahead of the five-year average.
Durum wheat sowing was 50% complete, against 36% a year earlier, while 13% of durum crops had emerged, compared with 4% a year ago.
Common wheat condition was rated at 98pc good to very good (99pc, 97pc), and winter barley at 99pc, the same as last week and this time last year.
On the other hand, harvesting of grain maize ended 18 days ahead of the five-year average while crop conditions had their lowest rating in data going back to 2011, and it’s expected a smallest French maize harvest in three decades.
From Russia, Russian officials indicated yesterday that negotiations held with the United Nations last week were “fairly constructive” regarding an extension of a current deal that allows safe passage for Ukrainian cargo ships in the Black Sea.
The current deal is set to expire in November 19 but will be extended as long as no party objects to its current conditions.
Meantime, Russia’s Sovecon consultancy expects the country’s wheat exports to reach 4.4 MMT in November.
That would be slightly above October’s total of 4.3 MMT and the highest monthly tally in more than a year, if realized.
Grain exports at 1.0 million tonnes last week were unchanged from the previous week.
Consequentily, Russian wheat prices rose moderately last week.
A strengthen of rouble, made an additional support.
Notabily, according to the IKAR, prices for Russian wheat with 12.5% protein content and for supply from Black Sea ports in December were at $317.5 a tonne free on board (FOB) on Friday evening, up $5.5 from a week earlier.
Price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 12,825 rbls/t ($212.9) +50 rbls (Sovecon).
Price for sunflower seeds was at 21,050 rbls/t +75 rbls (Sovecon).
Price for domestic sunflower oil was at 73,750 rbls/t -425 rbls (Sovecon).
Price for domestic soybeans was at 30,300 rbls/t +150 rbls (Sovecon).
Export price for sunflower oil was at $1,300/t -$50 (Sovecon).
Export price for sunflower oil was at $1,250/t +$20 oil (IKAR).
Price for white sugar, Russia’s south was at $767.5/t +$4.7 (IKAR).
($1 = 60.2500 roubles).
However, “there are a lot of complaints both from exporters and domestic consumers about the lack of railcars,” Sovecon said.
Meantime, farmers have already planted winter grains on 17.5 million hectares, compared with 18.2 million hectares around the same date a year ago, Sovecon said.
Overall weather conditions remain fine for development of the winter crops.
Rains in the southern regions would improve crop conditions in this key winter wheat-producing region.
However, the harvesting of the current sunflower seeds crop lags badly.
Indeed, only 64% of the area has been harvested by now, while typically it is above 90% at this time of the year.
From Ukraine, Ministry of Agriculture reported that as at November 11, 2022-23 grain harvesting yielded 36.1 million tonnes (Mt) from 8.5m hectares, equivalent to 76pc of seeded area).
Ukraine’s maize harvest is said to have yielded 9.6Mt from 1.6Mha (39pc), and sunflower is at 9.5Mt from 4.4Mha (93pc).
Meantime, Ukraine has exported almost 15.1 million tonnes of grain so far in the 2022/23 season, down 30.6% from the 21.8 million tonnes exported by the same stage of the previous season, agriculture ministry data showed on Monday.
Particularly, Ministry data showed that exports so far in the July 2022 to June 2023 season included 5.7 million tonnes of wheat, 8.1 million tonnes of corn and 1.2 million tonnes of barley.
From the Middle East, Saudi Arabian barley imports in the 2022-23 marketing year appear likely to increase slightly compared to last season, but they are still expected to be significantly lower than the 10-year average, due to a significant increase in the global price and a reduction in demand from the world’s biggest barley importer.
According to the USDA’s Foreign Agricultural Service (FAS), indeed, barley imports are expected to be 4.5 million tonnes (Mt) in the current season, around 10pc higher than the 4.1Mt imported in the 2021-22 marketing year.
However, this is still almost 35pc lower than the 6.9Mt imported in 2020-21, and more than 45pc lower than the 8.19Mt annual average for the preceding 10 years.
While several plausible reasons have been voiced for the significant decrease in Saudi Arabian demand for barley, collectively, they suggest a fundamental, longer-term change in the country’s barley demand profile.
The high international price has no doubt had a considerable impact.
The elevated cost of stockfeed and a generational shift has seen “recreational” farmers, who only run small herds, exiting the industry.
Meantime, some traditional barley demand has been replaced by processed feed.
The Saudi Government might offer an importer subsidy of US$50/t if the international barley price continues to increase.
The government has made such a move before.
Indeed, ahead of the privatisation of the Saudi Arabian barley import program in the first half of last year, the government implemented a new animal-feed subsidy that delivers direct monthly payments to small livestock farmers on a per-head basis.
However, to be eligible, farmers can have a maximum of 300 animals from each of the four livestock categories: sheep, goats, camels, and cattle.
With an annual budget of $320M, the monthly payments per head of livestock are $2.13 for goats and sheep, $10.67 for camels, and $16 per head for cattle.
From South East Asia, Indian wheat stocks held in government warehouses were half the level of a year ago on Nov. 1, government data showed on Monday, but inventories were marginally higher than the official target.
Wheat reserves in state stores totalled 21 million tonnes at the start of this month, down from 42 million tonnes on Nov. 1, 2021, but still slightly higher than the official target of 20.5 million tonnes for the quarter ending Dec. 31.
Wheat inventories at government-run granaries stood at 22.7 million tonnes on Oct. 1.
In this context, local wheat prices jumped to a record 26,500 rupees ($324) a tonne on Thursday, up nearly 27% since the May ban on exports.
Consequentially, India is weighing dropping a 40% tax on imports.
Meantime, Indian farmers have planted wheat on 4.5 million hectares since Oct. 1, when the current sowing season began, up 9.7% from a year ago.
Thus, if weather conditions remain favourable and temperatures do not rise abnormally during March and April’s harvest, India’s wheat output could bounce back to 2021’s level of 109.59 million tonnes given the good start to the planting season.
On the other hand, India’s palm oil imports in 2021/22 fell 4.8% from a year earlier, while overseas buying of soyoil jumped 45.3% to a record high after Indonesia restricted shipments of palm oil, a trade body said on Monday.
Particularly, the country’s palm oil imports in the marketing year ended on Oct. 31 fell to 7.9 million tonnes from 8.3 million tonnes a year earlier, Mumbai-based Solvent Extractors’ Association of India (SEA) said.
Indonesia in the first half of 2022 imposed various restrictions on the exports to calm local prices.
The restrictions made palm oil as expensive as soyoil and sunflower oil.
Palm oil usually trades at discount of around $200 per tonne to rival soyoil and sunflower oil.
As a result, soyoil imports in 2021/22 jumped to a record 4.17 million tonnes.
Sunflower oil imports in 2021/22 rose to 1.94 million tonnes, up 2.7% from a year earlier.
However, with the increasing in imports, soyoil’s premium over palm oil has risen to around $450 per tonne now and is forcing Indian buyers to switch again to cheaper palm oil.
India spent a record 1.57 trillion Indian rupees on the imports of edible oils in 2021/22, up 34% from a year earlier.
From Australia, local markets kicked off the week on the quiet side as growers and buyers continue to digest this harvest which is now looking like it will be another long, drawn-out and stop-start process.
Old-crop parcels continue to trade in depot along the east coast at values that have been relatively steady.
New-crop values remain wide, with Jan ASX East Coast Wheat bid at A$460/t and offered around $480/t yesterday to settle the day out at $470/t, while barley was around $345/t along the east coast.
On the international trade scene, Saudi Grains Organization (SAGO) purchased about 1Mt of milling wheat from EU, North and South American, Australian and Black Sea origins, with prices understood to have ranged from US$374.25-$390.59/t for April-June shipment.
They booked twice the amount they tendered for.
Iraq’s state grain agency has reportedly purchased 150,000t of milling wheat from Canada, Lithuania, and Australia, trade sources said on Monday.
The cheapest volume booked was Australian wheat at $480/t c&f.
Offers were also made from Canada at $489.80/t c&f, and Lithuania at $499/t c&f.
South Korea’s Major Feedmill Group (MFG) purchased 55,000t feed wheat, likely sourced from Australia, at $354.70 c&f for March-April shipment.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
