Good morning Farmer Family ….
US farm markets were mixed but mostly lower on Monday.
Corn prices worked lower, and closed the first trade day of the week with 1.24% losses.
Bean prices bounced back from a red start and ended the session with a 0.6% gain.
Soymeal faded from the intra day highs, but still closed 0.24% higher.
Soy oil prices were 0.36% higher at the bell.
The wheat complex started the week sharply lower, but bounced in the afternoon and limited the drop.
Thus, Chicago SRW closed down by 0.5%.
Kansas City ended the session unchanged.
Minneapolis spring wheat closed 0.37% in the red.
The U.S. Department of Agriculture’s monthly Cattle on Feed report on Friday said the number of cattle placed into feedlots during October was down 6% from a year ago, while analysts expected a decline of only 3.5%.
A stronger dollar yesterday made U.S. commodities look less attractive to importers.
Meanwhile traders were worried that rising COVID-19 cases in China could dent commodity demand.
Grain exports continue to be a concern.
Weekly Export Inspections data, indeed, showed only 495,395 MT of corn was shipped during the week that ended 11/17.
That was down from 535k MT last week and from 826k MT during the same week last year.
China and Mexico were the top destinations each with over 150k MT.
USDA had the season total at 5.48 MMT through 11/17, trailing last year by 2.35 MMT.
As for soybean, weekly export inspections had 2.33 MMT of soybean exported during the week that ended 11/17.
That was a 19% increase over last week but was down 7% from the same week last year.
China was the top destination with 75% of the total.
MYTD soybean shipments reached 17.128 MMT as of 11/17, a 2.01 MMT decline from last year’s pace.
As for wheat export inspections showed 279,904 MT were shipped during the week that ended 11/17.
That was a 109k MT increase wk/wk, and was up 87k MT from the same week last year.
White wheat made up 43% of the total, with HRW for 34%.
However, MYTD wheat shipments reached 10.279 MMT as of 11/17, still down from 10.513 MMT last year’s pace.
Thus, the increase of COVID-19 cases in China which is seen as a bearish demand factor for food and energy consumption globally, increased worries for US grain exports.
A stronger dollar underscored a lack of competitiveness for U.S. products.
In this context, commodity funds yesterday were net buyers of CBOT soybean, soymeal and soyoil futures contracts, while were net sellers of corn and wheat futures.
Meantime, after the sessions close, USDA’s weekly Crop Progress report showed winter wheat emergence reached 87% as of 11/20.
That is 1% point ahead of the 5-yr average.
They also rated 32% of the U.S. winter wheat crop in good to excellent condition.
That was unchanged from the previous week, while analysts on average had expected a 1-point improvement.
The wheat ratings are the lowest for this time of year in USDA records dating to 1986.
Just for exemple, a year ago, 44% of the winter wheat crop was rated good to excellent.
The USDA will report on winter wheat condition ratings once more, on Nov. 28, before suspending its weekly U.S. crop progress reports until April.
For corn, the government said the U.S. harvest was 96% complete, below the average analyst estimate of 97% but ahead of the five-year average of 90%.
As a result, on this morning, Chicago wheat edged lower, due ample supplies from the Black Sea region, but concerns over dryness across U.S. winter crop areas curbed losses.
The newly planted wheat crop has struggled with dry conditions.
Around 75% of the U.S. winter wheat production area is experiencing drought, according to the government.
U.S. hard red winter wheat areas will continue dry biased and warming this week, will stimulate new plant development in the southern Plains.
Meantime, traders are also worried about a potential year-end U.S. rail strike, after workers at the largest rail union voted against a tentative contract deal reached in September.
Soybeans, on their part, slid on concerns over demand from top importer China, which is facing rising number of COVID-19 cases.
Corn prices, in contrast, lifted a bit.
Notabily, the most-active wheat contract on the Chicago Board of Trade slid 0.2% to $8.16-1/2 a bushel, as of 04:29 GMT.
Soybeans lost 0.1% to $14.36 a bushel and corn gained 0.1% at $6.64 a bushel.
In energy markets, oil prices were little changed on Tuesday.
Brent crude futures, indeed, rose 30 cents, or 0.3%, to $87.75 by 07:31 GMT.
U.S. West Texas Intermediate (WTI) crude futures for January began trading Tuesday, rising 9 cents, or 0.1%, to $80.13 a barrel.
Both benchmarks had dived more than $5 a barrel on Monday, hitting 10-month lows, after the Wall Street Journal (WSJ) reported an increase of up to 500,000 barrels per day would be considered at the OPEC+ meeting on Dec. 4.
However, prices rebounded quickly in full after Saudi Arabian energy minister said the kingdom is sticking with output cuts and not discussing a potential oil output increase with other OPEC oil producers, denying the WSJ report.
Meantime, global recession worries and concerns about China’s rising COVID-19 case numbers denting demand, were partly offset by the positive impact of a retreat in the U.S. dollar.
Also, in the United States, crude oil stocks were estimated to have fallen by about 2.2 million barrels in the week to Nov. 18.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index on Monday dropped to its lowest in more than two months as demand reduced for panamax and supramax vessels.
The overall index, indeed, was down 12 points, or about 1%, to 1,177, its lowest since Sept. 8.
Particularly, the capesize index snapped a six-day losing streak and added 7 points, or 0.6%, to 1,129.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes of coal and steel-making ingredient iron ore, increased $58 to $9,363.
The panamax index fell 45 points, or 2.8%, to a more than 10-week low of 1,549.
Average daily earnings for panamax vessels, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, decreased $406 to $13,937.
The supramax index dropped to its lowest in more than a year and lost 6 points to 1,164.
In equity markets, US stocks fell on Monday on fears of fresh Chinese lockdowns.
Thus, on Wall Street, the S&P 500 fell 0.4% to 3,949.94.
The Nasdaq composite, dropped 1.1% to 11,024.51.
The Dow Jones Industrial Average, edged down 0.1% at 33,700.28.
Apple slid 2.2% and Visa fell 2.1%.
Tesla tumbled 6.8%.
Consumer and energy stocks also declined.
Target fell 3% and Exxon Mobil dropped 1.4%.
Bond yields fell.
The yield on the 10-year Treasury, which influences mortgage rates, slipped to 3.82% from 3.83% late Friday.
U.S. markets close Thursday for the Thanksgiving holiday and have a shortened trading day Friday.
On Wednesday, the Fed is due to release minutes from its latest meeting, which might give investors more insight into plans to fight inflation.
Traders expect the Fed to raise rates again at its December meeting but by one-half percentage point after four hikes of 0.75 percentage points.
On this morning, Asian stock markets were mixed after Wall Street sank and Chinese anti-virus controls fueled concern about an economic slowdown.
The Shanghai Composite Index lost 0.1% to 3,081.89 while the Nikkei 225 in Tokyo rose 0.7% to 28,150.50.
The Hang Seng in Hong Kong sank 1.1% to 17,473.13.
The Kospi in Seoul shed 0.2% to 2,414.70 while Sydney’s S&P-ASX 200 gained 0.6% to 7,181.20.
New Zealand and Jakarta declined while Singapore advanced.
In currency trading, the dollar declined to 141.78 yen from Monday’s 142.17 yen.
The euro edged down to $1.0235 from $1.0240.
Going back to analyzing the other agricultural markets …
In Canada, one of the few changes made in the November Outlook for Principal Field Crops, by Agriculture and Agri-Food Canada (AAFC), was a 200,000 metric ton increase in the forecast for Canada’s all-wheat exports, now seen to 23.5 million metric tons.
This consists of 18.5 mmt of wheat exports, where the upward revision was made, along with 5 mmt of durum exports, which was left unchanged this month.
This marks a third consecutive month where an upward revision was made for the wheat export forecast (excluding durum), although the revisions have been small at 100,000 mt in October and 200,000 mt in September and November.
As we said in the latest two report, in week 15, Canadian wheat exports (excluding durum) totalled 5.5334 mmt, up 48.3% from the same period in 2021-22 and 12.9% higher than the five-year average for this period.
Thus, exports through licensed facilities are very close to the steady pace needed to reach the current forecast, while excluding the export of flour and unlicensed exports.
Durum exports of 1.0779 mmt are surely up 8.3% from last year.
However they are down 9.3% from the five-year average.
Over 15 weeks, indeed, exports are roughly 364,400 mt behind the steady pace needed to reach the current export demand forecast of 5 mmt.
From South America, Brazilian soybean planting is now 80% complete, according to Brazilian agribusiness consultancy AgRural.
While that figure represented an 11% increase in planted area from the previous week, it remains 6% behind year-ago paces.
Irregular rains have made planting season in Brazil a little dicey this season, though at this point AgRural does not believe there is significant cause for concern with regard to yield and production prospects.
Thus, Brazil is expected to harvest its largest soybean crop in history early next spring and as the world’s largest soybean exporter.
Planting paces for Brazil’s first corn crop of the season are also lagging slightly behind last year’s speeds.
About 82% of the crop has already been planted in Brazil’s center-south states, up 12% on the week but still 9% slower than a year ago.
Brazil’s first crop of corn typically represents 25% of its annual production.
Ditto in Argentina.
Soybean and corn planting in Argentina is off to an unusually slow start.
Soybeans were only 17% planted in the top soy product exporter as of last Thursday versus last year’s relatively normal 31%.
Corn at 32% complete was down sharply from 48% a year ago, and the sowing paces for both crops are the slowest in at least two decades.
Despite the below-normal planting pace, recent rain showers prompted Argentina’s agriculture ministry last week to up its soybean planted area estimate by 0.2 million hectares to 16.5 million, above last season’s 16.1 million.
Meantime, the ministry reduced corn area by the same amount, resulting in 10.2 million hectares versus 10.6 million last year.
Argentine farmers were expected to preference soybeans over corn a little more this year due to the cost of production advantage, but they may have extra incentive based on the government’s push to raise cash through increased soybean exports.
That would mean the government would need to get comfortable with smaller soybean inventory, especially if the upcoming crop will disappoint.
According to the Rosario Grain Exchange, indeed, due insufficient moisture and the impact of a third consecutive La Niña, the early crop 2022-23 soybean yield expectation has been revised down to 3.5t/ha, compared to an average of 4.0-5.0t/ha in core growing areas.
Meantime, the ministry pegs soy stocks for the season ended March 2023 near 4 million tonnes, half the previous year’s levels and down from 9.3 million in the season before that.
Corn stocks in February 2023 are seen at 5.4 million tonnes versus 4.1 million the prior year, based on lighter exports.
In Europe, Euronext wheat closed higher on Monday, led by a late surge in December contracts as export sales fuelled volatility, especially on the front-month position.
December milling wheat on Paris-based Euronext, indeed, settled up 5 euros, or 1.5%, at 330.75 euros ($338.49) a tonne.
After trading little changed earlier in the session, it added as much as 3.1% in the closing minutes of the session to reach a near two-week top of 335.75 euros.
December wheat prices had already rallied last week amid talk of large volumes of export sales to China and Morocco for nearby shipment.
There was ongoing chatter about the size of French wheat purchases by Chinese importers in the past week, with volume possibly rising to several hundred thousand tonnes.
Thus, merchants had looking to hedge sales for upcoming shipments.
The March contract, indeed, settled up just 0.75 euro at 321.75 euros.
Meantime, winter crops in most of Europe were off to a good start, helped by historically warm weather and sufficient moisture.
However, a lack of rain is prompting some concern in the southern region.
According to the European Union’s crop monitor MARS, indeed, in most regions, the exceptional warm temperatures, combined with adequate topsoil moisture conditions, favoured emergence and early establishment of winter crops, and allowed late sown crops to catch up in development.
The period under review in the report, between Oct. 1 and mid-November, was the warmest on MARS’ records going back 31 years.
Negative effects from warmer-than-usual temperatures, including low frost tolerance and increased pest and disease pressure, were not yet alarming however.
The situation was most serious in southeastern Bulgaria.
Some rainfall deficits were also observed in southern France, north-eastern Germany, eastern Poland, Lithuania, Slovenia and Croatia but so far without substantial impacts on winter cereals.
For rapeseed, sown earlier than wheat and barley, MARS said the warm October had favoured crops’ development in the main producing countries.
It added, however, that considerable pest pressure had been reported during the review period.
The seasonal outlook up to the end of February was for likely warmer-than-usual conditions in Central and Eastern Europe and highly likely warmer-than-usual conditions in Scandinavia and northern European Russia, MARS also said.
From Levant, Turkish President Tayyip Erdogan said he had agreed with Russia’s Vladimir Putin to produce flour in Turkey from Russian wheat and send it for free to the least developed countries in order to ease a global food crisis, broadcaster Haberturk reported.
Erdogan made the comments to journalists on a flight back from Qatar.
From Russia, the agriculture ministry has already bought 1.74 million tonnes of grain from the domestic market for the state stockpile in the current July-June season.
Farmers have planted winter grains on 17.6 million hectares, compared with 18.3 million hectares around the same date a year earlier.
Weather conditions remain friendly for winter wheat.
Meantime, the country’s grain exports at 1.03 million tonnes last week were unchanged from the previous week.
Sovecon estimated that monthly Russian wheat exports will reach a new season’s high in November at 4.4 million tonnes.
In this context, IKAR forecasts Russian wheat exports at 44 MMT, up from their 42 MMT prior estimate on 101.5 MMT of production.
Russia’s IKAR also expects 2.5 MMT of corn will be shipped during the 22/23 campaign.
Russian wheat prices fell last week.
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 $314 a tonne free on board (FOB) on Friday evening, down $3.5 from a week earlier.
Price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 12,700 rbls/t -125 rbls (Sovecon).
Price for sunflower seeds was at 21,550 rbls/t +500 rbls (Sovecon).
Price for domestic sunflower oil was at 73,750 rbls/t, unchanged (Sovecon).
Price for domestic soybeans was at 30,375 rbls/t +75 rbls (Sovecon). Export price for sunflower was at $1,260/t -$40 (Sovecon).
Export price for sunflower oil was at $1,200/t -$50 oil (IKAR).
Price for white sugar, Russia’s south, was at $758.4/t -$9 (IKAR).
From Ukraine, the Ag. Ministry reported that owing to the challenges related to the ongoing Black Sea conflict, including limited access to financing, high fuel prices and logistical difficulties, 2023-24 total winter crop acreage could fall by 20pc-30pc with total production of grains and oilseeds projected at 65Mt-67Mt.
As at 18 Nov, Ukraine’s cumulative 2022-23 (Jul/Jun) grain exports totalled 15.9Mt (23.2Mt same period year ago), including wheat at 6.1Mt (13.7Mt), barley at 1.3Mt (4.9Mt) and maize at 8.4Mt (4.3Mt).
From the Middle Kingdom, China has locked down the largest district in Guangzhou Province while schools across Beijing have moved to online classes as authorities battle surging COVID-19 cases.
Guangzhou, a southern metropolis that is home to almost 19 million people, announced a five-day lock down yesterday for the most populous district of Baiyun, and suspended dining-in services and shut nightclubs and theatres in the main business district.
Beijing shut parks, shopping malls and museums on Tuesday and more Chinese cities resumed mass testing.
The Chinese capital on Monday warned that it is facing its most severe test of the pandemic and tightened rules for entering the city.
Tightened COVID-19 rules in China fuelled worries over the global economic outlook and demand for commodities.
Meantime, China released 40,152 MT of wheat from state reserves, 100% of the offer, on 11/16, at an average price of $11.14 per bushel.
From South East Asia, according to some government and industry sources, Russia for the first time became the biggest fertilizer supplier to India in the first half of the 2022/23 fiscal year by offering discounts over prevailing global prices, cornering more than a fifth of the market share.
India’s fertilizer imports from Russia surged 371% to a record 2.15 million tonnes in the first six months of the year started on April 1.
In value terms, India’s imports during the period spiked 765% to $1.6 billion.
In the last entire fiscal year India imported 1.26 million tonnes from Russia.
In June, India secured di-ammonium phosphate (DAP) from Russia at $920-925 per tonne on a cost and freight basis (CFR), when other Asian buyers were paying more than $1,000, industry officials said.
The surge in Russian supplies halved China’s exports to India to 1.78 million tonnes in the first half of 2022/23.
Exports from other destinations such as Jordan, Egypt and the United Arab Emirates also fell.
In the 2021/22 financial year Russia’s share in Indian imports was around 6%, while China cornered 24%.
Russia’s market share jumped to 21% in the first half of 2022/23, surpassing China as the biggest supplier to India.
Indian buying from Russia has not only helped local farmers, but also other import-dependent countries such as Brazil, Argentina, Malaysia, and Indonesia by curbing a rally in global prices, said another New Delhi-based industry official.
Global prices could have rallied more had India also moved away from Russia to other suppliers such as China and Morocco, which have limited supplies for exports, he said.
India’s total fertilizer imports in the first half of 2022/23 fell 2.4% from a year ago to 10.27 million tonnes, although in value terms imports during the period surged 59% to $7.4 billion, the government official said.
Combined, Russia and Belarus accounted for more than 40% of global exports of potash last year.
Russia accounted for about 22% of global exports of ammonia, 14% of the world’s urea exports and about 14% of monoammonium phosphate (MAP) – all key kinds of fertilizers.
From Australia, Graincorp’s second harvest update for this season reports that receivals are finally gathering pace in recent days amid fine weather with 1.7Mt being delivered to date.
The update noted that CQ growers were enjoying the biggest yields they have seen in more than a decade.
Good progress was being made in Goondiwindi and Western Downs clusters last week with improved weather.
Northern New South Wales sites across the Moree, Burren Junction and Narrabri regions have ramped up after favourable weather last week.
Southern NSW sites are receiving predominantly canola so far, however, on-farm harvest activity has been delayed by rain events impeding machinery access into paddocks.
Graincorp noted that a wide range of quality and grades are being received across the network, including good quantities of milling wheat.
In this context, local markets remained subdued yesterday.
The ASX January 2023 eastern wheat contract settled A$10/t lower at $440/t.
Meantime, bulk handlers have now started opening up segregations for canola with mould in eastern Australia to cater for weather damage.
On the international trade scene, Jordan’s state grains buyer seeks 120,000t feed barley from optional origins, for Mar/Apr shipment.
Algeria’s state grains agency OAIC has issued an international tender to purchase a nominal 50,000 tonnes of durum wheat.
The deadline for submissions of price offers in the tender is Wednesday, Nov. 23, with offers having to remain valid until Thursday, Nov. 24.
Shipment is sought in three periods: between Dec. 16-31, 2022, and in 2023 between Jan. 1-15 and Jan. 16-31.
Volumes in Algeria’s tenders are nominal and the country frequently purchases more than the volumes initially sought.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
