Good morning Farmer Family …
“UN SECRETARY GENERAL SAYS, BLACK SEA GRAIN DEAL EXTENDED …”
US farm markets were back in the red on Wednesday.
Corn prices posted 0.22% losses.
Soybean complex was hit the hardest, as soybean closed 1.92% lower, meal price was 0.81% weaker, and soy oil fell 3.77% dragging down all the complex.
Wheat losses were variable, as Chicago SRW was 1.3% lower on the day, Kansas City HRW gave back 0.78%, and Minneapolis spring wheat closed with 0.87% losses.
Wheat and corn prices declined on optimism about the extension of Black Sea grain deal, and as fears eased that the Ukraine war would escalate after a missile hit Poland.
Corn prices had some support from fresh export business, as the U.S. Department of Agriculture confirmed private sales of 1,866,900 tonnes of U.S. corn to Mexico.
Of the total, 1,242,060 metric tons is for delivery during the 2022/2023 marketing year and 624,840 metric tons is for delivery during the 2023/2024 marketing year.
Ethanol production saw a moderate decline in the week ending November 11, with a daily average of 1.011 million barrels, versus 1.051 million daily barrels the week prior, according to the latest data from the U.S. Energy Information Administration.
However, production has stayed above the 1-million-barrel-per-day benchmark for the fifth consecutive week, while ethanol stocks moved another 4% lower to the tightest levels so far this year.
Notabily stocks were down 894k barrels to 21.298 million.
Soybeans, on their part, have followed soy oil down that, after reaching a five-month high set last week, with the crude oil market down, triggered a round of technical selling and profit taking.
Rising COVID-19 cases in China, the world’s top importer of crude and soybeans, have indeed raised worries about demand for the commodities.
Beneficial rains in South America added more pressures.
Prior today’s export sales report from USDA, analysts expect the agency to show solid corn sales for the week ending November 10, with trade guesses ranging between 700k MT and 1.4 MMT.
New crop bookings are expected to be below 100k MT.
As for soybean, weekly export sales are expected to be between 900k MT and 1.7 MMT.
New crop soybean sales are estimated between 0-100k MT.
For the products, traders are looking for between 90k MT and 300k MT of meal sales and 0-20k MT for soy oil.
As for wheat, analyst estimates show wheat export sales would be between 250k MT and 500k MT for the week that ended 11/10.
Meantime, yesterday private exporters reported to the USDA having sold 150,000 metric tons of hard red spring wheat for delivery to Iraq during the 2022/2023 marketing year.
In this context, corn basis bids were steady to firm on Wednesday after improving 5 to 20 cents across four Midwestern locations.
Soybean basis bids fell 2 cents at an Ohio elevator and firmed 5 cents at an Iowa river terminal while holding steady elsewhere across the central U.S..
Commodity funds were net sellers of CBOT soybean, soyoil, wheat, soymeal and corn futures contracts.
On this morning, Chicago wheat lost more ground, as global supply concerns eased with the extenction of Black Sea grain deal.
Soybeans and corn also fell.
Particularly, the most-active wheat contract on the Chicago Board of Trade (CBOT) lost 0.5% to $8.13-3/4 a bushel, as of 02:46 GMT, soybeans gave up 0.2% to $14.26 a bushel and corn fell 0.3% to $6.63-1/4 a bushel.
After the news, wheat prices fell 2.75% at $7.95 a bushel while corn prices fell 1.3% to $6.60-1/2 a bushel.
The United Nations Secretary General said he welcomed an agreement by all parties to extend the Black Sea grain deal to facilitate Ukraine’s agricultural exports from its southern Black Sea ports.
Gueterres also said the UN was also “fully committed to removing the remaining obstacles to exporting food and fertilisers from the Russian Federation” – a part of the deal Moscow sees as critical.
Ukraine’s infrastructure ministry said agreement had been reached to extend the Black Sea grain initiative by 120 days.
In energy markets, oil prices extended declines on Thursday as concerns over geopolitical tensions eased, while rising numbers of COVID-19 cases in China added to demand worries.
Brent crude futures, indeed, fell by 58 cents, or 0.6%, to $92.28 a barrel by 07:30 GMT.
U.S. West Texas Intermediate (WTI) crude futures slid 74 cents, or 0.9%, to $84.85 a barrel.
On Wednesday Brent dropped by 1.1% and WTI 1.5% after Russian oil shipments via the Druzhba pipeline to Hungary restarted.
Crude oil fell after NATO cleared Russia of suspicion in a missile strike on Poland.
Prices also struggled for direction after a mixed inventory report from the Energy Information Administration.
Crude stocks in the United States, indeed, fell by 5.4 million barrels in the week ended Nov. 11 to 435.4 million barrels, the EIA said on Wednesday.
However, inventories of gasoline and distillate fuels both rose by more than expectations.
TC Energy lifted a force majeure on its 622,000-barrel-per-day Keystone pipeline that supplies the Midwest and Gulf Coast, after shipments had been reduced by 7%.
Sustained concerns about weak demand in China are also “keeping markets grounded”.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index BDI, fell to its lowest in more than two months on Wednesday, weighed down by a dip in capesize rates.
The overall index, indeed, fell 12 points, or 0.9%, to its lowest since Sept. 13 at 1,288.
Particularly, the capesize index lost 38 points, or about 2.8%, to 1,333.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes of coal and steel-making ingredient iron ore, decreased $317 to $11,054.
The panamax index gained 7 points, or 0.4%, to 1,688.
Average daily earnings for panamax vessels, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, increased by $65 to $15,196.
The supramax index extended its decline for an 18th straight session, losing 6 points to 1,180.
In equity markets, on Wall Street, the S&P 500 fell 0.8%, the Dow Jones Industrial Average fell 0.1% and the Nasdaq lost 1.5%.
Notabily, the S&P 500 fell 32.94 points to 3,958.79.
The Dow slid 39.09 points to 33,553.83.
The tech-heavy Nasdaq dropped 174.75 points to 11,183.66.
Smaller company stocks also lost ground as the Russell 2000 index fell 36.04 points, or 1.9%, to 1,853.17.
Stock indexes initially had rose on reduced geopolitical risks.
However, retailers and technology companies led a broad sell-off.
Target slumped 13.1%.
The retailer also said its sales slowed sharply in recent weeks.
Other retailers also helped drag the market lower.
Advance Auto Parts fell 15.1% after reporting weak financial results.
Best Buy slumped 8.6%. Macy’s, which reports its financial results on Thursday, fell 8.1%.
Losses in semiconductor stocks, weighed on technology stocks after Micron Technology warned that its market outlook for 2023 had weakened.
Really, Wednesday’s U.S. economic news was mixed.
The latest government report on retail sales for October shows that consumer spending remains strong, although it’s unclear whether that’s because of more purchases or higher prices.
Notabily, U.S. Oct retail sales rose +1.3% m/m, stronger than expectations of +1.0% m/m and the biggest increase in 8 months.
Also, Oct retail sales ex-autos rose +1.3% m/m, stronger than expectations of +0.5% m/m.
The U.S. Oct import price ex-petroleum index fell -0.2% m/m, the sixth consecutive month prices have fallen but a smaller decline than expectations of -0.8% m/m.
U.S. Oct manufacturing production rose +0.1% m/m, weaker than expectations of +0.2% m/m.
But, Sep manufacturing production was revised lower to +0.2% m/m from the initially reported +0.4% m/m.
The U.S. Nov NAHB housing market index fell -5 to a 2-1/2 year low of 33, weaker than expectations of 36.
The better-than-expected retail sales results don’t bolster the case that the Fed” can ease up on its campaign to slow the economy with high interest rates.
Thus, bond yields were mixed.
The yield on the 10-year Treasury, which influences mortgage rates, fell to 3.69% from 3.78% from late Tuesday.
The yield on the two-year Treasury rose to 4.37% from 4.35% from late Tuesday.
On this morning, Asian shares mostly declined.
Japan’s benchmark Nikkei 225 shed 0.4% to finish at 27,930.57.
Australia’s S&P/ASX 200 gained 0.2% to 7,135.70, after government data showed that the employment situation had improved in October from September.
South Korea’s Kospi slipped 1.4% to 2,442.90.
Hong Kong’s Hang Seng dropped 1.2% to 18,045.66, while the Shanghai Composite fell 0.2% to 3,115.43.
Japan marked a trade deficit for the 15th month in a row in October, as both imports and exports reached record highs amid the soaring costs of energy and food and a drooping yen, according to government data released Thursday.
The deficit, at 2.16 trillion yen ($15 billion), was the highest for the month of October since comparable data was first compiled in 1979, and came despite a solid growth in exports, which rose 25.3% last month to 9 trillion yen ($64 billion) from a year ago.
Among the products boosting exports were vehicles, medical products and electrical machinery, according to the ministry.
In currency trading, the U.S. dollar inched down to 139.47 Japanese yen from 139.51 yen.
The euro cost $1.0389, down from $1.0396.
In Europe, markets were uncertain yesterday.
Grain prices were penalized both by the rise of the euro and the prospect of an agreement on the extension of Ukrainian deal.
However, that has been partly offset by some Chinese buying interest in French wheat origin.
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 Nov. 11.
Non-commercial participants, which include investment funds and financial institutions, reduced their net long position to 48,054 contracts from 77,320 a week earlier, the data showed.
Commercial participants similarly lowered their net short position to 70,887 contracts from 96,978 a week earlier.
In Euronext’s rapeseed futures and options, non-commercial market participants reduced their net short position to 7,626 contracts from 8,925 a week earlier.
Commercial participants lifted their net long position in rapeseed to 13,700 contracts from 8,709 a week earlier.
From UK, Agriculture and Horticulture Development Board foresees 1.803 mHA of 23/24 wheat area.
That would be down 0.1% from this season as they foresee fertilizer price pressure.
From North Africa, Agence Francaise de Developpement (AFD), is to allocate €60m to enable the Egyptian government to increase its wheat storage capacity by 500,000 tonnes, Africa Intelligence has learned, as part of an aid program to be announced in early 2023.
Since the Russian – Ukraine war started, Egypt has had to buy wheat at high prices and hopes that bigger stocks will enable it to deal better with future supply crises.
From the Black Sea basin, NATO Secretary General Jens Stoltenberg said on Wednesday the deadly explosion in Poland was probably the result of Ukrainian anti-aircraft fire and that it is not Russia’s fault.
He said an investigation into the incident is ongoing, and preliminary analysis suggests the blast was likely caused by a Ukrainian missile fired to defend Ukrainian territory against Russian cruise-missile attacks.
Meantime, as we said, on this morning the deal aimed at easing global food shortages by facilitating Ukraine’s agricultural exports from its southern Black Sea ports was extended for 120 days.
Since July, some 11.1 million tonnes of agricultural products have been shipped under the grain deal, including 4.5 million tonnes of corn and 3.2 million tonnes of wheat.
The export of Russian ammonia via a pipeline to the Black Sea has not yet been agreed as part of the renewal, but “solving the fertilizer crunch must come next”, Rebeca Grynspan, secretary-general of the U.N. Conference on Trade and Development said.
Russia is not prepared to “chop up” the Black Sea grain deal, but a relaxation of sanctions on its own agricultural and fertiliser exports are a vital part of the deal, the TASS news agency quoted Russia’s deputy foreign minister as saying on Thursday.
Turkish President Tayyip Erdogan on Thursday thanked the United Nations, Moscow and Kyiv for extending the deal that has allowed Ukrainian grain exports to resume.
Turkish President also said Russian grain exports could be processed into flour in Turkey and then shipped to Africa to help relieve food shortages there.
Speaking on his flight back from the G20 summit in Bali, Erdogan said Russian grain was meant to be delivered to countries such as Mali, Djibouti, Sudan and Somalia free of charge.
From the Middle Kingdom, China plans to auction off another 40.000t of its state wheat reserves on November 23.
The country has offered a series of similarly sized auctions in recent weeks to boost local supplies.
From Australia, compounding effects of rain and flooding are driving apart prompt and new-crop prices in southern markets as harvest delays and logistics issues confound any hopes of volume off-the-header business for the rest of this month.
In the northern market, values have softened as new-crop from Queensland and pockets of northern New South Wales provide sufficient volume to cover consumers’ nearby needs.
Grade spreads for milling wheat and malting barley over feed have blown out this week to reflect the impact of rain and unseasonably cool weather on grain quality, and cottonseed prices have shot up in response to logistics problems caused by flooding in New South Wales.
Meantime, local markets yesterday remained largely unchanged on wheat and barley, especially over in Western Australia, where harvest is getting a decent run.
ASX January Wheat contract traded nearly A$7/t lower over the day and settled at $462.50/t.
Canola bids were also off $10/t on the grower boards.
On the international trade scene, Egypt’s state grains buyer, the General Authority for Supply Commodities, is believed to have bought 300,000 tonnes of Russian wheat via private talks.
Notabily, Solaris sold 4X 60,000 t of Russian wheat at $362/t, with shipment between Dec 1-15, Dec 15-31, Jan 1-15, Jan 15-31.
Aston sold 60,000 t of Russian wheat at $362/t with shipment between Jan 1-15.
Last week, GASC also bought 280,000 tonnes of Russian wheat via direct purchases, a few days after cancelling its first international wheat tender since July, citing high prices.
Tunisia’s state grains agency has issued an international tender to buy 100,000 tonnes of barley.
The tender deadline is on Friday.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
