Good morning Farmer Family …
US farm markets mostly eased on Tuesday.
Corn prices added another 0.42% to the downside.
Soybeans posted 0.49% losses.
Meal prices dropped 0.68%.
Soy oil rose 1.15%.
Chicago SRW wheat prices ended 0.97% lower.
Kansas City HRW wheat prices was 0.94% lower.
Minneapolis spring wheat prices stayed relatively firm but ended the day down by 0.21%.
Corn prices faced some headwinds, following estimates from a
Brazil’s National Association of Grain Exporters said the country’s corn exports could jump exponentially next year if farmers harvest a full crop and Chinese demand is strong.
Corn prices, also, were dragged down by weakness in the wheat market.
Soybean prices closed lower, on worries about rising COVID-19 cases in China.
Soymeal prices drifted lower on soft end user demand ahead of the Thanksgiving holiday.
Many feed buyers, indeed, booked soymeal purchases in advance of the holiday, slowing end user orders even as crush margins are profitable and soymeal supplies are accumulating.
Soyoil prices rose, following higher Malaysian palm oil prices due to some bargain buying and favorable results from Indonesian biodiesel blending trials, which support higher usage of palm oil.
Some support was also derived from gains in the energy market after OPEC+ stood by its decision to keep planned output reductions in place going forward.
The wheat complex fell, as market players have been speculating that the U.S. has imported wheat from the European Union.
Seems that a Florida mill has purchased either German or Polish wheat.
Losses were limited by dry weather across the U.S., which continues to stunt winter wheat crop development across the Heartland, but especially in the Southern Plains.
It should to note, US farm markets were marked yesterday by low trading volumes.
This week, a lot of traders in the USA are out of the office for the Thanksgiving holiday, so there might be some price activity that seems erratic and not easily explained.
Meantime, commodity funds were net sellers of 3,000 lots of corn, 1,500 lots of soybeans and 3,000 lots of wheat.
On this morning, Chicago wheat prices edged down.
French wheat sales to China and talk of Polish or German wheat being booked in the United States are creating an unexpected wave of demand for EU supplies after exports had been curbed by Russian competition in recent weeks, traders said.
Talks of a record crop from Russia helped to add to the bearish tone.
Corn prices, on their part, continued to see pressure from wheat and by a lack of fresh news.
Soybean prices are still holding a risk premium for potential weather problems in Brazil and Argentina, but rising COVID-19 cases in China, increased concerns that this could also dent the country’s commodities demand, especially for soybeans.
Thus, the most-active wheat contract on the Chicago Board of Trade (CBOT) slipped 0.25% to $8.08-1/2 a bushel.
Soybeans rose 0.14% to $14.31-3/4 a bushel, and corn rose 0.04% at $6.59-1/2 a bushel.
The market will be closed on Thursday for a public holiday.
In energy markets, oil prices rose about 1% on Tuesday after the United Arab Emirates, Kuwait, Iraq and Algeria reinforced comments from Saudi Arabia’s energy minister that the OPEC+ were not considering boosting oil output.
OPEC+ next meets to review output on Dec. 4.
On this morning, both benchmark inched higher as data showed a larger-than-expected U.S. crude drawdown last week.
Notabily, U.S. crude inventories fell by about 4.8 million barrels for the week ended Nov. 18, data from the American Petroleum Institute showed.
Analysts had expected a 1.1 million barrel drawdown in crude inventories.
Distillate stocks, which include heating oil and jet fuel, in contrast, rose by about 1.1 million barrels compared with analysts’ expectations for a drop of 600,000 barrels.
Thus, Brent crude futures rose 27 cents, or 0.3%, to $88.63 a barrel at 07:19 GMT, while U.S. West Texas Intermediate (WTI) crude futures gained 25 cents, or 0.3%, to $81.20 a barrel.
Uncertainty over how Russia will respond to plans by the G7 nations to cap Russian oil prices also provided some support to the market.
The price cap is due to be announced soon, and it will probably be adjusted a few times a year.
Traders closely monitor Russia’s exports and will look to understanend for how much they might trim the nation’s foreign sales in retaliation.
Traders are also being cautious ahead of the release of the U.S. Federal Reserve’s minutes from its November policy meeting due at 19:00 GMT.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index dropped on Tuesday, hovering around a 2-1/2-month low hit in the previous session, on lower rates across vessels as rising COVID cases in China dented demand.
The overall index, indeed, dropped 28 points, or about 2.4%, to 1,149, its lowest since Sept. 7.
Particularly, the capesize index hit its lowest in more than two months and lost 37 points, or 3.3%, to 1,092.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes of coal and steel-making ingredient iron ore, decreased $306 to $9,057.
The panamax index shed 53 points, or 3.4%, to a more than 11-week low of 1,496.
Average daily earnings for panamax vessels, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, decreased $474 to $13,463.
The supramax index lost 4 points to 1,160, at its lowest since early February 2021.
In equity markets, US stocks on Tuesday settled moderately higher.
A jump of +12.8% in Best Buy Tuesday improved market sentiment about the upcoming holiday shopping season.
Analog Devices closed up more than +5% to leading gains in technology stocks.
Dell Technologies rose 6.8%.
Chipmaker Nvidia rose 4.7%.
Several retailers made particularly strong gains following solid financial results.
Abercrombie & Fitch surged 21.4% and American Eagle jumped 18.2%.
In addition, energy stocks moved higher, with crude up more than +1%.
Chevron rose 2.6%.
In a supportive factor, the 10-year T-note yield on Tuesday fell -6.4 bp to 3.763%.
The 10-year yield is trading at a comfortable half-percentage-point below the mid-October 15-year high of 4.34%.
Thus, the S&P 500 rose 1.4% to 4,003.58 and the Dow Jones Industrial Average added 1.2% to 34,098.10.
The tech-heavy Nasdaq composite added 1.4% to 11,174.41.
Smaller company stocks also got a boost.
The Russell 2000 rose 1.2%, to 1,860.44.
Meantime, Fed comments Tuesday were slightly hawkish and bearish for stocks.
In a negative factor for global stocks, China reported 27,307 new Covid infections on Monday, the most in more than 6-3/4 months and just below April’s record of 28,793.
Covid control restrictions now cover 20% of China’s economy, up from 15.6% last Monday, according to Nomura.
The Organization for Economic Co-operation and Development (OECD) predicts global economic growth will slow to +2.2% in 2023 from +3.1% in 2022.
On this morning, Asian shares advanced.
Benchmarks rose in Hong Kong, Seoul and Sydney but fell in Shanghai.
Notabily, Hong Kong’s Hang Seng index surged 1% to 17,600.93 and the Kospi in Seoul rose 0.7% to 2,421.84.
In Sydney, the S&P/ASX 200 climbed 0.5% to 7,220.40.
The Shanghai Composite index slipped 0.2% to 3,082.95.
Shares rose in Southeast Asia..
Markets were closed in Japan for a holiday.
New Zealand’s share benchmark fell 0.9% after the Reserve Bank of New Zealand raised its benchmark rate by three-quarters of a point to 4.25%, striving to rein in inflation that is now at 7.2%.
It’s the first time the bank has raised rates by more than a half-point since introducing the Official Cash Rate in 1999.
The new rate is the highest in New Zealand since early 2009.
In currency trading, the U.S. dollar held firm on Wednesday ahead of the release of minutes from the Federal Reserve’s latest policy meeting.
Notabily, the U.S. dollar index, was broadly flat at 107.1, after shedding 0.65% the previous day amid a pick-up in sentiment that supported riskier currencies.
The New Zealand dollar gained as much as 0.7%, nearing a three-month high, after the country’s central bank lifted interest rates by a record amount despite warning the economy might spend an entire year in recession.
The kiwi was last up 0.3% on the day at $0.61715.
The euro was last up 0.1% at $1.03090 , after fresh data showed the downturn in euro zone business activity eased slightly in November.
The sterling was broadly unchanged at $1.18915 , after a separate survey showed British economic activity fell at its fastest pace in nearly two years in November.
Going back to analyzing the other agricultural markets …
From South America, Brazilian agricultural consultancy AgRural reported at 21 November the 2022-23 soybean plantings were estimated to be 80pc complete (69pc week ago, 86pc year ago).
Seeding in centre west areas is largely finished, although recent irregular rains have heightened worries among growers.
Low humidity was noted in parts of Mato Grosso, Minas Gerais and Goiás.
Nevertheless, there are no significant risks to yields in core areas, especially if more precipitation is received in the coming weeks.
The 2022-23 primary (full-season) maize sowings were pegged at 82pc complete (70pc, 91pc), with fields in southern areas developing well despite earlier weather-related concerns.
The Ministry of Industry, Trade and Services (MDIC) in Brazil estimated maize exports in the week to 20 November at 1.2Mt and cumulative MY (Mar/Feb) shipments at 32.1Mt (+144pc on one year ago).
Soybean exports that week were 660,300t, and the MY (Feb/Jan) total was 74.6Mt (-14pc).
Meantime, Brazilian trade group, Anec, expects that Brazil will export up to 50 MMT of corn next year, provided that La Niña weather conditions do not cause a yield-crushing drought in the coming months in Brazil.
Brazil recently implemented a new trade agreement with China that will increase Brazilian corn export sales to China.
Anec officials expect that up to 5 MMT of those Brazilian corn will be shipped to China, which would make Brazilian corn more competitive with U.S. supplies as China seeks to diversify its grain originators.
In Europe, wheat prices on Euronext showed an high volatility yesterday.
The demand remains strong on the physical market.
French wheat sales to China and talk of Polish or German wheat has being booked in the United States, created an unexpected wave of demand for EU supplies.
These opportunities could push 2022/23 European Union wheat shipments further ahead of last season’s pace and use up most of export surplus in France.
Indeed, after talk early last week that Chinese importers had purchased two cargoes of French wheat, traders have cited further deals that could bring the volume to several hundred thousand tonnes.
Notabily, five traders said seven to eight panamax vessels had been sold, or some 400,000 to 500,000 tonnes, while several traders said around 10 cargoes may have been booked, representing 600,000 to 700,000 tonnes.
The expectation that most of the volume is for shipment next month has fuelled a spike in December wheat futures on Euronext.
Meantime, France is also seeing a fresh wave of sales to Morocco, with at least several vessels thought to be booked for the month ahead.
More unusually, sales of Polish, or possibly German, wheat to the United States have been talked of.
Some traders cited talk that about 100,000 tonnes of wheat from Poland was bought last week by U.S. millers for shipment to the U.S. East Coast at c&f prices at least $50 to $75 a tonne cheaper than U.S. hard red winter wheat, including port unloading.
Indeed, talk is that Polish wheat can be shipped to Florida in a range between $360 and $370 a tonne c&f.
Interest from U.S. buyers for EU wheat continued this week but it was unclear if deals were struck.
Meantime, as of 20 November, per latest data from EU Commission, the EU has exported 13.63 Mt of wheat to date, compared to 13.09 Mt last year.
Unsurprisingly, Algeria and Morocco are the two main destinations for these exports, with a market share of 14.0% and 12.9% respectively.
Egypt comes in third place with 11.0% of the market share of EU exports.
However, EU weekly wheat exports at 201k mt, were down 24% w-o-w.
EU barley exports so far in 2022/23 totalled 2.74 million tonnes, down from 4.6 million a year ago, the data showed.
EU maize imports so far in 2022/23 were at 11.54 million tonnes, more than double a year-earlier volume of 5.09 million.
EU soybean imports, meantime, have reached 4.16 MMT through November 20, which is moderately below of 4.85 MMT last year’s pace so far.
EU soymeal imports trended fractionally higher year-over-year, meantime, with 6.32 million metric tons during the same period.
The EU had imported 2.85 Mt of rapeseed, compared to 2.0 Mt last year to date.
From UK, in 2022/23, total availability of wheat is forecast to rise 8% on the year to 18.735Mt, driven by a rise in production and carry-in stocks, outweighing a drop in imports.
On the back of higher than average yields, UK wheat production for 2022 is provisionally forecast at 15.664Mt, 12% higher than 2021 levels.
With a larger domestic crop this season full season imports are expected to be 39% lower on the year at 1.225Mt as they are not pricing competitively.
Total domestic consumption of wheat this season is forecast to increase by 2% on the year to 14.982Mt, with a rise in usage by the bioethanol and starch sectors expected to outweigh a drop in animal feed demand.
Bioethanol demand is expected to be up on last year’s levels, with wheat pricing favourably and both plants expected to be online.
However, it is not anticipated that both plants will be operating at full capacity for the full season, partly due to longer maintenance periods.
Demand by flour millers is forecast to come back ever so slightly, with the increase in the cost of living expected to impact flour used in premium and alternative products.
Demand for wheat in feed rations is expected to remain relatively stable on the year.
Even though wheat is forecast to be included at a higher rate this year, the overall projected decline in animal feed production (driven by the monogastric sector) will cap any gains.
With supply expected to outweigh demand this season for wheat, the balance has increased by 40% on the year to 3.752Mt.
Taking into account an operating stock requirement of 1.500Mt, this leaves a surplus available for export or free stock of 2.252Mt, over 1.5 times the volume in 2021/22.
As for barley, the balance is higher, but remains below five-year average.
Despite decade low carry-in stocks, a rise in production has led to a 1% increase in available supplies this season at 8.226Mt.
Barley production is provisionally estimated at 7.190Mt, up 3% on the year, driven by higher-than-average yields outweighing a drop in planted area.
In terms of demand, total domestic usage is expected to fall by 3% on the year to 6.138Mt.
This is driven by a drop in animal feed demand outweighing a rise in usage by the brewing malting and distilling sectors (BMD).
Despite the recession, BMD demand is expected to remain robust this season with new distilling capacity online in Scotland.
At the start of last season barley was being included heavily in rations, which was a lag from 2020/21 when there was ample supply.
As there was a large wheat crop last season, wheat featured more heavily in rations from Oct-Dec ‘21 at the expense of barley.
With plentiful supply of wheat in 2022/23, this trend is expected to continue.
With the rise in supply, outweighing a fall in demand, the barley balance has grown this season to 2.088Mt, 16% up year on year.
However, this remains lower than the previous five-year average and is the third lowest in a decade.
As for corn, as corn usage expected to come back this season, imports are forecast to fall by 9% to 2.010Mt.
From July to September 22, the UK imported 627Kt of maize, nearly double the volume imported during the same period last year.
However, with plentiful supply of domestic grain, and maize not pricing competitively, imports will steady.
In terms of usage, bioethanol demand for maize is expected to be down on the year, but not drop out of inclusions completely.
For animal feed, maize usage is expected to fall back to 1.150Mt, levels last seen in 2016/17.
From North Africa, Egypt’s GASC will start offering wheat from state reserves to millers twice a week via the country’s commodity exchange, starting Sunday 27 November.
From Central Africa, Swiber Africa and Power Construction Corporation of China (PowerChina) have signed an agreement to build a $500 million agro-industrial park in Igbere town in Abia state, Nigeria, the local daily This Day reported.
Construction on the project called United Integrated Agro-industrial Park is likely to start in January 2023.
PowerChina’s Chief Representative in Nigeria Diego Tian said the project is an agriculture industrial zone, which includes crop planting and processing plants for rice, cassava, cashew nuts and related products.
Meanwhile, Swiber Africa Chairman Emeka Ebo said the funding for the project will be executed jointly, the news report said.
From the Black Sea basin, according to APK-Inform, the indicative offer FOB prices of Ukrainian wheat for delivery in December from deep-sea ports increased slightly last week.
The prices were supported by the strengthening of the demand after the prolongation of the “grain agreement” for another 120 days.
In contrast, bid prices of Ukrainian corn continue declining at the western borders, head of local markets department at APK-Inform, Anna Tanskaya said.
“Despite official statements that there is no shortage of storage capacities in Ukraine, the prices continued to be pressured by the saturation of the local market with the supply of grain of harvest-2022 and the lack of elevator capacity and the high cost of their services.
Also, there is a need to sale grain stored in alternative facilities with a limited storage period.
In addition, according to KSE and the Ministry of Agrarian Policy, Ukraine has already lost almost 10 mln tonnes of elevator capacity due to the war”, – she explained.
A. Tanskaya added that the lower demand for Ukrainian corn from European importers pressured the prices as well.
In this context, last week, the importers’ prices of corn for delivery in December decreased to 205-220 EUR/t DAP (Polish border), 220-230 EUR/t DAP (Romanian border), 215-240 EUR/t DAP (Slovak border), and 225-240 EUR/t DAP (Hungarian border).
They decreased to 250-275 EUR/t CIF in the port of Constanta.
As of the morning of November 22, 76 vessels were waiting for permission to enter the ports of Ukraine for loading under the “grain initiative”.
Another 33 loaded bulkers are being prepared for inspection in Turkish territorial waters in order to move on to their destinations, Інтерфакс-Україна reports with reference to the Joint Coordination Center (JCC).
The center also noted that 3 bulkers left Ukrainian ports on November 21 carrying a total of 90.428 thsd tonnes of Ukrainian agricultural products.
Particularly, Ellirea will deliver 44.699 thsd tonnes of corn and 12.441 thsd tonnes of wheat to Israel, AG Valor will transport 27.5 thsd tonnes of wheat to Turkey, Mrc Semiramis will deliver 5.788 thsd tonnes of vegetable oil to Spain.
In addition, 3 bulkers, which passed through the maritime humanitarian corridor on November 21, are heading to Ukrainian ports.
“As of November 21, the total tonnage of grain and other agricultural products exported from three Ukrainian ports exceeded 11.677 mln tonnes.
In total, 960 vessels have been allowed to move: 477 for arrival at Ukrainian ports and 483 for departure from them”, – the SCC summarized.
On November 22, only one ship with Ukrainian agricultural products was sent through the “grain corridor.
Notabily, the ship Eider S left the port of Odesa and it is transporting 50 thsd tonnes of corn to the ports of Spain.
Meantime, two vessels that passed through the maritime humanitarian corridor on November 22 are heading to Ukrainian ports.
In Russia, as of November 1, 2022, the stocks of grains in agricultural organizations of the Russian Federation totaled 42.6 mln tonnes, up by 10.2 mln tonnes (31%) compared to the figure on the same date in 2021, declared the Federal State Statistics Service (Rosstat).
In particular, wheat stocks amounted to 28.9 mln tonnes, up by 9.3 mln tonnes (48%) compared with the same date in 2021, corn stocks – 2.3 mln tonnes, down by 1.8 mln tonnes (44%).
Sunflower seed stocks totaled 1 mln tonnes, down by 2.6 mln tonnes (29%).
Meantime, Russian wheat exports have spiked between October and mid-November, according to figures attributed to industry organisation, the Russian Grain Union.
At 18 Nov the 2022-23 (Jul/Jun) wheat exports projection would be 21Mt, up 2pc year on year and the pace of exports had picked up from October onwards.
It said Russia had exported 3.2Mt wheat in the first 18 days of November, up 120pc y/y and the November total would be 5.5Mt, almost 3.0Mt higher y/y.
Russia has to export at least 60 mln tonnes of grain in 2022/23 MY, president of Russian Grain Union Arkadiy Zlochevskiy said on November 21.
Demand of Russian wheat has been quite dynamic this seaso, as Turkey and Iran, which were the leading buyers of Russian grain last season, have sharply reduced their purchases.
The terms of conversion of the national currency changed in Iran, which led to such changes there.
Meantime Turkey stopped buying from Russia due to the implementation of the grain agreement with Ukraine and switched to Ukrainian grain.
In contrast, there have been growing purchases from Saudi Arabia, Pakistan, and Algeria.
From the Middle Kingdom, China will sell 40,000 tonnes of wheat from state reserves on Nov.30, the National Grain Trade Center said on Wednesday.
From Australia VITERRA’S first shipment of new-crop South Australian grain has set sail from its Thevenard port terminal.
The 24,000-tonne cargo of wheat has kicked off a record-breaking 7 million tonnes (Mt) of forward shipping booked for grain delivered into the Viterra network.
Across Viterra’s sites, growers have already been delivering barley, wheat, lentils, peas, canola and faba beans, and the business is well prepared for the increase in deliveries once the weather improves.
In its latest weekly harvest update, Viterra announced deliveries in the harvest to November 20 of 566,671t after 196,186t was received in the week to date.
Meantime, local markets eased further in harvest slots and forwards.
Prompt wheat and barley continued well bid.
We finally have a clearer rainfall forecast on the horizon for growers to get a decent run at harvest coming into the back end of this week, which may see further pressure on forward prices.
On the international trade scene, Taiwan millers bought 43,400t US origin milling wheat in a tender closing late last week, for early-mid January shipment, prices for diverse types ranging from US$355-425/t FOB PNW.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
