Good morning Farmer Family …
US farm markets were mixed but mostly lower yesterday.
Wheat trended lower after the critical deal to keep Black Sea vessels safe was extended.
Thus, Chicago SRW wheat prices ended the day with a 1.31% pullback.
Kansas City HRW faded by 1.83%.
Minneapolis spring wheat prices were down 1.22%.
The soybean complex fell too on general demand concerns, in the wake of oil prices and expectations for a record-breaking Brazilian production this season.
Notabily, soybean prices ended the day 0.86% in the red.
Meal stayed weaker as well with 0.22% losses to close.
Bean oil prices closed off their lows, but again led the complex lower, posting 2.63% losses.
Corn prices struggled but managed to move modestly higher by the close, as were 0.34% higher.
As we said yesterday, the deal aimed at easing global food shortages by helping Ukraine export its agricultural products from Black Sea ports was extended for four months, though Russia said its own demands were yet to be fully addressed.
News of the deal pressured grain prices in early moves, but markets likely had already priced the news.
Thus corn prices pared their losses turning higher, after USDA data showed in the weekly export sales report, that 1.17 MMT of corn was sold during the week that ended 11/10.
That was near the top end of estimates and was 340% above the week prior as a MY high.
That was 29% above the same week last year.
However, the total corn commitments were still a half of last year’s pace with 15.9 MMT.
Meantime, the U.S. Environmental Protection agency reported yesterday that the U.S. generated 1.24 billion ethanol blending credits.
That was a modest improvement over September’s tally of 1.13 billion.
As for soybean, prices followed oil crude down more than $3 a barrel, on rising numbers of COVID-19 cases in China.
Then, the market was also pressured by weakness in soyoil, given it’s role as the main U.S. feedstock for biodiesel fuel.
Meanwhile, according to the U.S. Environmental Protection agency, the U.S. generated 477 million biodiesel blending credits last month, down from September’s tally of 502 million.
Forecasts for beneficial rains in some soy areas of Brazil, offsett larger-than-expected weekly U.S. soybean exports.
USDA’s FAS, indeed, had 3.03 MMT of soybean bookings for the week that ended 11/10.
That was 317% higher on the week, was above the range of estimates, and was double the same week last year.
It was the largest weekly soybean sales total since September 17, 2020.
The report included 1.14 MMT of previously announced sales including Mexico, China, and Unknown.
China was the top buyer for the week with 1.54 MMT.
Total soybean commitments, at 35.984 MMT, are staying 4% ahead of last year’s pace.
Soymeal sales were 267k MT, up by 57% from last week and 46% above the same week last year.
Commitments were 4.4 MMT as of 11/10, which is 14% behind last year’s pace.
For soy oil, the report had 374 MT, below the estimates and 0.6% of the same week last year.
In other news, the International Grains Council maintained its 2022/23 world corn crop outlook at 1.166 billion tonnes.
Trade was reduced by 2 MMT to 170 MMT.
Estimated ending stocks were 1 lighter to 257 MMT.
Meanwhile, the IGC raised their world soy production outlook by 2 MMT to 388 MMT.
Global trade was upped by 1 for an unchanged 54 MMT carryout.
As for wheat, prices edged lower after the critical Black Sea transportation deal was extended for another 120 days, which triggered plenty of technical selling.
Also, the weekly Export Sales report showed 290,299 MT of US wheat was sold for export during the week that ended 11/10.
That was a 4-wk low and was at the bottom end of estimates.
Losses were limited by the news from the International Grains Council which reduced their world wheat output from 792 MMT to 791 MMT.
The main difference was via a 4.5 MMT reduction in Argentina (13 MMT), partially offset by an increase in Australia (to 34.7 MMT).
Trade was maintained unchanged but stocks fell by 4 MMT, as carry-in from 21/22 was reduced.
In this context, corn basis bids were steady to firm after improving 1 to 12 cents across four Midwestern locations on Thursday.
Soybean basis bids were steady to firm after trending 5 to 20 cents higher at three Midwestern locations.
Commodity funds were net sellers of CBOT soybean, wheat, soyoil and soymeal futures contracts on Thursday, and were net even in corn futures.
On this morning, Chicago wheat prices rose for the first time in three sessions, on concerns over adverse weather conditions in key exporting countries.
Corn rose for a second session while soybeans gained ground.
Particularly, the most-active wheat contract on the Chicago Board of Trade (CBOT) was up 0.7% at $8.12 a bushel, as of 03:13 GMT, but the market has lost 0.2% this week.
Corn rose 0.5% to $6.70-1/2 a bushel and soybeans gained 0.3% at $14.20-1/2 a bushel.
For the week, corn is up 1.9%, while soybeans have lost around 2%.
In energy markets, oil rebounded on this morning, as the dollar dipped, but prices were on track for a steep weekly decline on concerns about weakening demand in China and further interest rate hikes by the U.S. Federal Reserve (read more below).
Notabily, Brent crude futures clawed back 64 cents to stand up 0.7% to $90.42 a barrel at 04:46 GMT, but were not far off four-week lows of $89.53 hit in the previous session.
U.S. West Texas Intermediate (WTI) crude futures rose 75 cents, or 0.9%, to $82.39 a barrel, but held near a six-week low.
Benchmark U.S. crude fell $3.95 on Thursday to $81.64.
Brent crude lost $3.08 the previous session to $89.78.
For the week, WTI is down more than 7% so far this week, while Brent is down nearly 6%.
Recession concerns have dominated this week even with the European Union’s ban on Russian crude looming on Dec. 5 and the OPEC+ tightening supply.
The premium for front-month WTI futures over barrels loading in six months was pegged at $2.63 a barrel, the lowest level in three months, indicating less worry about future supply.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index extended its losing streak to a sixth consecutive session on Thursday, pressured by lower rates across vessels led by a slide in the capesize segment.
The overall index, indeed, fell 60 points, or 4.7%, to its lowest since Sept. 9 at 1,228.
Particularly, the capesize index lost 145 points, or about 10.9%, to 1,188, the lowest since Sept. 13.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes of coal and steel-making ingredient iron ore, decreased $1,199 to $9,855.
The panamax index snapped a four-session winning streak and lost 38 points, or 2.3%, to 1,650.
Average daily earnings for panamax vessels, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, decreased $346 to $14,850.
The supramax index extended its decline for a 19th straight session, losing 5 points to 1,175.
In equity markets, on Wall Street the S&P 500 declined 0.3% to 3,946.56.
The Dow Jones Industrial Average slipped less than 0.1% to 33,546.32.
The Nasdaq composite closed 0.3% lower at 11,144.96.
The major indexes are all headed for weekly losses.
Traders expect the Fed to raise its benchmark lending rate again at its December meeting but by half a percentage point after four straight 0.75 percentage point increases, three times its usual margin.
However, the Fed’s key short-term lending rate may have to rise to between 5% and 7%.
That would require more sharp increases in the Fed’s benchmark rate, which stands at 3.75% to 4%.
That helped push the 10-year T-note yield up +8.1 bp to 3.771%.
Two-year yields crept back up to 4.46%, retracing a little of last week’s sharp inflation-driven drop of 33 basis points to a low of 4.29%.
That left them 69 basis points above 10-year yields, the largest inversion since 1981.
Stock losses were limited Thursday on better-than-expected quarterly earnings results from Cisco Systems, Nvidia, Copart, and Macy’s.
However, U.S. economic news Thursday was mixed for stocks as showed U.S. weekly initial unemployment claims unexpectedly fell -4,000 to 222,000, showing a stronger labor market than expectations of an increase to 228,000.
U.S. Oct housing starts fell -4.2% m/m to 1.425 million, stronger than expectations of 1.410 million.
Oct building permits, a proxy for future construction, fell -2.4% m/m to a 2-year low of 1.526 million, although that was stronger than expectations of 1.514 million.
The U.S. Nov Philadelphia Fed business outlook survey unexpectedly fell -10.7 to a 2-1/2 year low of -19.4, weaker than expectations of an increase to -6.0.
Investors, meantime, were also worry about the impact of war in Ukraine and increased anti-virus controls in China.
On this morning, Asian stocks were mixed.
Shanghai and Hong Kong gained while Tokyo declined.
Notabily, the Shanghai Composite Index gained 0.2% to 3,121.42 while the Nikkei 225 in Tokyo lost 0.1% to 27,893.24.
The Hang Seng in Hong Kong added 0.7% to 18,179.14.
The Kospi in Seoul was 0.1% higher at 2,445.76 and Sydney’s S&P-ASX 200 added 0.2% to 7,151.80.
India’s Sensex opened down 0.4% at 61,503.62.
New Zealand, Jakarta and Bangkok gained while Singapore declined.
In currency trading, after bouncing overnight, the dollar index ran into renewed selling and eased to 106.460 on a basket of currencies, back toward a three-month trough of 105.30 touched early in the week.
Notabily, the dollar edged down to 139.78 yen from Thursday’s 140.25 yen, but held above its recent low of 137.67.
The euro held at $1.0376 from yesterday’s $1.0364, after easing from a four-month peak of $1.0481 hit on Tuesday as some policy makers argued for caution on tightening.
ECB President Christine Lagarde will give a keynote speech later on Friday that may offer guidance on which way the majority at the bank may lean.
The situation is radically different in Britain, where finance minister Jeremy Hunt have just announced tax rises and spending cuts in an effort to reassure markets the government was serious about fighting inflation.
Dire predictions that the economy was already in recession saw sterling stand at $1.1916 , off the week’s high of $1.2026.
Going back to the analysis of the other agricultural markets …
From Argentina, country’s wheat production for the 2022/2023 season is estimated at 13.4 million tonnes, down 39.4% from 22.1 million tonnes harvested in the previous season, the South American country’s economy ministry said on Thursday.
At the beginning of the month, Argentina authorized agro-export companies to reschedule grain sales for up to 360 days due to fears it would not be possible to supply both foreign and domestic demand amid a lack of grains.
Producers have already started the wheat harvest, which will begin to intensify in the coming weeks and is set to end in January.
Meanwhile, the government increased its soybean planting forecast to 16.5 million hectares, from the 16.3 million hectares projected in its October report.
“Planting accelerated in several areas after the rainfall recorded in recent weeks, while in the regions less benefited by the rains, we expect moisture in the planting beds to improve, in order to progress with planting,” the ministry said.
However, according to the Buenos Aires grains exchange, Argentina farmers could reduce the area they plant with soy if more rain does not bring relief to drought-plagued farmlands soon.
Weather forecast from exchange, indeed, have moderate showers in parts of the country’s farm belt.
Planting soy is only 12% complete, versus 29% at the same date last year.
The current crop’s total planted area is projected at 16.7 million hectares (41.3 million acres), the exchange said.
On this wake, Bolsa de Cerales projected Argentina’s soy crop at 47.8 MMT for the 22/23 season, down 2% from their prior forecast.
On the other hand, Refinitiv Commodities Research reported that despite recent welcome rains across a number of core growing areas in Argentina, the 2022-23 maize-production forecast is down 3pc from the previous figure to 49.2 million tonnes from a planted area of 7.7M hectares, owing to earlier dryness over a sustained period and delayed plantings.
From Brazil, Anec expects the country’s corn exports to reach 6.64 MMT in November.
That’s roughly 10% higher than the group’s last estimate made a week ago.
Total corn exports for the first 11 months of the year are likely to reach 38.51 MMT, according to Anec.
Brazil’s Anec also expects the country’s November soybean exports to reach 2.23 MMT, which is slightly below its prior estimate from a week ago.
Soymeal exports are expected to reach 1.59 million metric tons this month.
In Europe, wheat and feed barley prices were supported on Euronext by French sales to China, despite pressures from extension of Black Sea grain deal.
The volumes of these sales have not been confirmed.
Rapeseed prices, meantime, continued to fall sharply, mainly due to a significant drop in demand for vegetable oils and biofuels as a result of the global economic slowdown.
Stratégie Grains reported that despite a late start to the season due to sub-optimal weather in some areas, conditions have generally been favourable for 2023-24 EU crop development.
Dry weather during October aided fieldwork and plant growth, particularly in western regions, including France, although this has led to heightened concerns about pest pressure.
However, more precipitation would be beneficial in terms of ongoing winter plantings in Bulgaria and parts of Romania.
Total common wheat area in 2023-24 is seen at 21.7Mha (21.8Mha previous year) with area potential limited by larger canola plantings.
Barley area is seen at 10.4Mha (10.3Mha previous year), while maize area is seen at 8.8Mha vs 8.9Mha.
Meantime, Farmers in France, had almost completed soft wheat and winter barley sowing by Nov. 14, and nearly all emerged crops were in good shape, data from farm office FranceAgriMer showed on Friday.
Notabily, farmers had sown 97% of the expected soft wheat area and 99% of the anticipated winter barley area.
An estimated 98% of soft wheat and winter barley crops were in good or excellent condition.
For durum wheat, 74% of the anticipated area for next year’s harvest had been sown.
Grain planting and crop emergence have been favoured by mild weather and adequate rainfall this autumn.
Emergence of soft wheat and winter barley crops was running about a week ahead of the usual pace, FranceAgriMer’s data showed, reflecting the impact of an exceptionally warm October.
Showers this week are expected to give crops a further boost in the run-up to the winter dormancy period.
From UK, Britain’s wheat imports rose in September but are still running well behind last year’s pace, customs data showed on Thursday.
Notabily, wheat imports for the month totalled 128,337 tonnes, up from 78,233 tonnes in August.
Canada was the largest supplier in September, shipping 60,953 tonnes.
Cumulative imports since the start of the 2022/23 season on July 1 totalled 342,684 tonnes, down from 631,980 in the same period a year earlier.
Canada has been Britain’s largest supplier in the 2022/23 season so far, with shipments of 131,574 tonnes.
From Africa, Kenya is set to import its first genetically modified maize, the trade cabinet secretary has said, as the government seeks to ease food shortages caused by the country’s worst drought in 40 years.
Local media reported that Kenya will on Friday authorise the duty-free importation of 10 million bags of maize over the next six months, and for the first time it will include genetically modified maize.
The imports will be the first since President William Ruto lifted a decade-long ban last month on the cultivation and importation of genetically modified crops, which authorities hope will improve crop yields and food security as millions face hunger.
Annual rains have failed across Kenya, Ethiopia and Somalia for the last four seasons, forcing 1.5 million people out of their homes in search of water and food elsewhere.
From the Black Sea basin, export corridor was extended!
The UN Secretary has welcomed the agreement by all parties to extend the Black Sea grain deal.
He also said the UN was committed to removing the remaining obstacles to exporting food and fertilisers from the Russian Federation.
The renewal of the corridor has been confirmed for another 120 days from 18 November, allowing exports to leave from three Ukrainian ports (no new ports added).
The deal was only not extended for the full year the UN and Ukraine were hoping for.
Russia will be waiting to see if its demands are sufficiently met before they agree to anything longer.
Turkey’s President Erdogan issued a statement thanking the United Nations, Russia and Ukraine for extending a current deal.
The deal has led to more than 11 million metric tons of grain exports over the past four months, highlighting its importance to global food security, Erdogan noted.
Meantime, Ukrainian farms had harvested 39.1 million tonnes of grain from 81% of the expected area as of Nov. 17, the agriculture ministry said on Friday.
The ministry said in a statement farmers had harvested 9 million hectares of crops, with the grain yield averaging 4.34 tonnes per hectare.
It said farmers had completed the 2022 wheat and barley harvests, threshing 19.4 million and 5.6 million tonnes respectively.
The total volume also included 12.3 million tonnes of corn, harvested from 50% of the expected area with a yield of 5.81 tonnes per hectare.
The ministry said farmers also harvested 9.8 million tonnes of sunflower seeds from 96% of the planted area, and 7.9 million tonnes of sugar beet from 90% of the sown area.
Meantime, as of November 18, Ukraine has exported 15.949 mln tonnes of grains and pulses, including 2.747 mln tonnes so far in November, the Ministry of Agrarian Policy informed.
At the same date last year, the export amounted to 23.204 mln tonnes, including 3.76 mln tonnes in November.
The total included 6.141 mln tonnes of wheat (1.143 mln tonnes in November), 1.305 mln tonnes of barley (199 thsd tonnes), 8.436 mln tonnes of corn (1.385 mln tonnes), 11.2 thsd tonnes of rye (5thsd tonnes).
Ukraine has exported 47.6 thsd tonnes of flour (9.5 thsd tonnes), including 44.6 thsd tonnes of wheat flour (9.2 thsd tonnes).
From the Middle Kingdom, China sold 40.000t of its state reserves of imported wheat on auction, which was 100% of the amount available for sale.
China has offered a handful of similarly sized auctions earlier this fall to boost local supplies.
On the other hand, China has been sporadic in the U.S. soybean market lately, though its purchases last week were unexpectedly large.
Through October, China’s 2022 soybean imports of 73.2 million tonnes were down 7.5% on the year, though its U.S. purchases for shipment through August 2023 were close to 21 million tonnes as of Nov. 10, up 12% from the same time last year.
Thus, China’s pig industry, could be on rocky ground as evidenced by higher hog prices, suggesting that supplies have fallen due some problem in its sow herd and pork imports may need to increase once again.
China reported its sow herd as of September was down just 4% on the year, though live hog prices last month rose to the highest levels since early 2021.
Consequentily, analysts there say such strong prices would be unlikely without pig population issues.
Really China’s pork imports have risen a bit since the mid-year slump.
U.S. shipments to China in August also reached the highest levels in more than a year, but the difference is slighter.
From South East Asia, Indian farmers have planted wheat on 10.1 million hectares since Oct. 1, when the current sowing season began, up nearly 15% from a year ago, the latest data from the farm ministry showed on Friday.
Farmers have also increased area under rapeseed, the key winter-sown oilseed, to 6.3 million hectares as of Nov. 18, up from last year’s 5.5 million hectares, the Ministry of Agriculture & Farmers’ Welfare said in a statement.
From Australia, local markets started to feel the heat yesterday and new-crop wheat and canola bids came off.
Barley was still well bid for prompt into Melbourne/Geelong.
Most of South Australian and Victoria is forecast to receive 10-25 millimetres of rain over the next four days, with southeast Victoria looking at 25-50mm.
Southern NSW is forecast to receive 5-15mm with the rest of NSW and Queensland looking at less than 5mm.
Most of the WA grainbelt is forecast to receive less than 10mm, with the exception of southern coastal areas which are set to receive up to 15mm. Please stop bloody raining!
The Fair Work Commission has ordered Svitzer Australia to scrap its planned lockout of tugboat workers tomorrow.
The commission on Thursday ruled it was satisfied the lockout of maritime workers would cause significant damage to the Australian economy.
Earlier this week, the Danish-owned company announced it would shut out almost 600 tugboat workers from 17 ports across the county.
The commission heard if the action went ahead, shipping would be reduced by 90pc at the majority of ports where the company operated.
The company has been bargaining with the unions for three years over a new enterprise agreement.
On the international trade scene, a government agency in Pakistan has issued a new international tender to purchase and import 500,000 tonnes of wheat.
The deadline for submission of price offers in the optional-origin tender from the Trading Corporation of Pakistan (TCP) is Nov. 28.
Egypt’s state grains buyer, the General Authority for Supply Commodities, is believed to have bought 60,000 tonnes of wheat on Thursday via private talks with suppliers.
Details of the purchase have not been announced, but traders say the cargo was sold at a price of $361.5 per tonne from Egyptian African Company.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
