Good morning Farmer Family …
US markets were shut yesterday due Thanksgiving holiday.
Thus, we will return to these topics tomorrow morning, with all the latest insights and analysis from this short Friday’s session.
Meantime, in energy markets, oil prices rose in Asia on Friday, despite thin market liquidity, after a week marked by worries about Chinese demand and haggling over a Western price cap on Russian oil.
Brent crude futures, indeed, rose by 41 cents, or 0.48%, to trade at $85.75 a barrel at 07:30 GMT.
U.S. West Texas Intermediate (WTI) crude futures went up by 57 cents, or 0.73%, from Wednesday’s close to $78.51 a barrel.
Both contracts were still headed for their third consecutive weekly decline, on track to fall by around 2% or more with worries about tight supply easing.
The resurgence in COVID cases in China remains the main bearish factor.
On the Russian oil price cap, G7 and European Union diplomats have been discussing levels between $65 and $70 a barrel.
However, Russian President Vladimir Putin has said Moscow will not supply oil and gas to any countries that join in imposing the price cap, the Kremlin reiterated on Thursday.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index touched a one-week high on Thursday, propelled by stronger demand across vessels segments.
The overall index, indeed, added 58 points, or about 4.9%, to 1,242.
Notabily, the capesize index jumped 165 points, or 13.5%, to 1,384, its highest since Nov. 14.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes of coal and steel-making ingredient iron ore, increased $1,373 to $11,479.
The panamax index snapped a five-session losing streak and edged up 2 points, or 0.1%, to 1,466.
Average daily earnings for panamax vessels, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, increased by $15 to $13,195.
The supramax index rose 11 points to 1,174.
In equity markets, Asia-Pacific share markets were mixed, with Australia’s benchmark managing a 0.24% rise, but a sell-off in Hong Kong shares weighed on sentiment in other parts of the region.
China on Friday reported another record high of daily COVID-19 cases.
Thus, tech giants listed in Hong Kong lost 2.1% to drag the city’s Hang Seng benchmark on mainland’s COVID worries, with index heavyweights Tencent and Meituan down 3.7% and 2.9%, respectively.
Consequently, Hong Kong’s Hang Seng Index and the Hang Seng China Enterprises Index declined 0.9% each.
However, the blue-chip CSI 300 Index rose 0.5% by the end of the morning session, while the Shanghai Composite Index added 0.4%.
China’s biggest commercial banks have pledged at least $162 billion in fresh credit to property developers, bolstering recent regulatory measures rolled out to ease a stifling cash crunch in the sector and lifting property shares.
As a result, Chinese real estate developers jumped more than 5%, and banks gained 2.1%.
Shares of Chinese state-owned enterprises (SOEs) also outperformed the broad market.
An index measuring China infrastructure companies, with most constituents being SOEs, rose 2.6%.
The Nikkei fell 0.35% to close at 28,283.03, but gained 1.37% for the week.
The broader Topix was down 0.04% to 2,018.00 but jumped 2.59% for the week.
Investors saw some dovish hints in the minutes from the European Central Bank’s most recent policy meeting, which was published Thursday, even as they showed policymakers’ fears that inflation might be becoming entrenched.
The Nikkei’s jump in the previous session was underpinned by hopes for a slower pace of interest rate hikes by the U.S. Federal Reserve.
Nikkei ends at over 2-month highs on hopes Fed slowdown hopes.
South Korea’s Kospi edged down 0.08%.
India’s main benchmark indexes scaled fresh peaks on Friday, but struggled to hold on to gains to extend a three-day rally, with investors digesting the prospects of the path of global monetary policy and its effects on corporate earnings.
The benchmark S&P BSE Sensex rose 0.28% to an all-time high of 62,447.73, before reversing to trade 0.17% lower at 62,166.12 by midday.
The NSE Nifty 50 index was down 0.1% at 18,464.90, also having reversed course after a 0.27% bump intraday to a 52-week high of 18,533.15.
Both indexes have rallied about 1.8% in the past three days after the minutes from the latest U.S. Federal Reserve raised the prospects of slowing monetary policy tightening as soon as December.
In currency trading, the dollar index , which measures the greenback against the euro, yen and four other rivals, on this morning, retreated 0.11% to 105.76, heading back toward Thursday’s low of 105.62.
The U.S. dollar hovered near a three-month low and was headed for a weekly loss, as the prospect of the Federal Reserve slowing monetary policy tightening as soon as December preoccupied investors.
The euro edged up after the GfK institute survey showed German consumer sentiment is expected to stabilise next month with the help of energy measures.
Risk-sensitive sterling was near a three-month high against the U.S. currency.
In this context, the euro gained 0.1% to $1.0420 against the dollar, edging toward an over four-month high of $1.0481 hit last week.
The Japanese yen was unchanged on the day at 138.63 to the dollar.
The New Zealand dollar fell 0.26% to $0.6248 but remained close to its three-month peak hit in the previous session.
The kiwi was eyeing a weekly gain of more than 1.5%, aided by the Reserve Bank of New Zealand’s 75 bp rate increase this week and its hawkish rate outlook.
In China, markets were closely watching for an expected cut in banks’ reserve requirement ratio.
China will use timely cuts in banks’ RRR, alongside other monetary policy tools, to keep liquidity reasonably ample, state media quoted a cabinet meeting as saying.
However, the offshore Chinese yuan was last at 7.1662 to the dollar and was headed for a second weekly loss, as COVID worries continue to weigh.
Analyzing the main world agricultural markets …
In South America, protests over Brazil’s election result that blocked roads in Mato Grosso state earlier this week lifted truck freight prices, affecting the operations and margins of global grain traders at a time when farmers are selling their abundant second corn crop.
Notabily, truck freight rose 20% or 50 reais ($9.40) per tonne in Mato Grosso, Abiove said on Thursday.
The most affected routes are the Sorriso-Miritituba and the Sinop Miritituba to Brazil’s northern ports.
As a result of the disruption, certain Abiove members expressed concern about failing to honor corn export contracts or facing demurrage costs.
However, Brazil’s federal highway police said all Mato Grosso federal roads are clear at the current time as authorities had acted to lift the blockades that had caused long lines of trucks in some places.
Abiove declined to estimate by how much Brazil’s overall corn export volumes could be affected in November as a result of the protests.
Meanwhile, Anec this week, projected overall exports this month at 6.4 million tonnes.
In Argentina, country’s soybean planting for the 2022/23 cycle is facing severe delays compared to last year.
The country is enduring a prolonged drought and expects only scant rainfall in the coming days, the Buenos Aires Grains exchange said on Thursday.
So far just 19.4% of the area has been planted, the exchange said in a weekly report, 19.9 percentage points behind this time last year.
Though this year’s planting area is forecast at 16.7 million hectares (41.3 million acres) – slightly above last cycle’s 16.3 million hectares (40.3 million acres), the drought has left very little moisture in the soil.
Last cycle, farmers produced 43.3 million tonnes of soybean.
Corn planting is also facing delays, the exchange added.
Until Wednesday, producers had planted 23.8% of the 7.3 million hectares expected for the 2022/23 crop, 6.2 percentage points behind this time last year.
Meantime, the exchange projected Argentina’s wheat production at 12.4 million tonnes this cycle.
In Europe, the eurodollar parity is causing price adjustments.
Imports products are cheaper and export goods are losing competitiveness.
That has weighed on European grain.
Wheat prices were back to last week’s levels.
Also, the recent renewal of the secure corridor also continued to drag down corn prices, despite a loading rate that is still struggling to accelerate in Ukrainian ports.
Road blockages in Brazil, however, have limited the loss.
In oilseeds, after the strong decline of the previous day, Euronext rapeseed finally closed the session slightly up.
The return of containment measures in China, however, maintained significant pressure on the entire oil sector.
Meantime, French farmers had sown 98% of the expected soft wheat area for next year’s harvest by Nov. 21, against 97% a week earlier, farm office FranceAgriMer said on Friday.
That also compared with 97% progress by the same week last year, FranceAgriMer said in a cereal crop report.
French soft wheat and winter barley crops are still about a week ahead of their usual rate of development following a mild autumn.
Soft wheat, had emerged from the ground on about 93% of the expected crop area by Nov. 21, with the median date of emergence six days earlier than the average of the past five years.
Soft wheat crops on 38% of the area had also reached the subsequent tillering stage, when shoots start to form from the stem, compared with just 7% a year ago.
For winter barley, crops had emerged on 97% of the area and development pace was seven days ahead of the five-year average.
Crops had started tillering on 59% of the area versus 21% a year ago.
The fast initial growth has raised concern about crops being vulnerable to frost, although a progressive cooling in temperatures expected in the week ahead may slow development and improve plants’ hardiness.
Nearly all soft wheat and winter barley remained in good shape, with 98% of crops for both varieties rated as being in good or excellent condition, according to FranceAgriMer.
For durum wheat, sowing was 84% complete and crops had emerged on 58% of the area.
From the Black Sea basin, since the Ukrainian grain deal, was extended beyond Nov. 19, no more than five ships a day have departed Ukraine, U.N. data show.
That was down from previous weeks and months when up to 10 departed.
A U.N. spokesperson, Ismini Palla, said vessel flows were affected by past uncertainty over extending the deal, poor Istanbul weather conditions for inspections, and a rotation of new staff and inspectors at a Joint Coordination Centre (JCC).
Some 112 vessels await checks in waters off Istanbul, including some stalled more than a month, the four-party JCC said on Wednesday, adding it was discussing ways to ramp up successful inspections.
However, despite the reopening of the Ukrainian export corridor, the massive barrage of missiles that have targeted power infrastructure throughout the Ukraine has left a part of the country without power, including the port of Odessa.
With shipping delays reaching out to two weeks the cost of execution is getting punchy.
Meantime, representatives from Russia and Ukraine met in the United Arab Emirates last week to discuss the possibility of a prisoner-of-war swap that would be linked to a resumption of Russian ammonia exports, which go to Asia and Africa, via a Ukrainian pipeline.
The talks were being mediated by the Gulf Arab state and did not include the United Nations.
However the talks aim to remove remaining obstacles in the initiative extended last week and ease global food shortages by unblocking Ukrainian and Russian exports.
The Ukrainian ambassador to Turkey, Vasyl Bodnar, said that “releasing our prisoners of war is part of negotiations over opening Russian ammonia exports”.
Putin had said on Wednesday that Russian officials would work to unblock Russian fertilisers stuck in European ports and to resume ammonia exports.
UAE’s Assistant Minister of Foreign Affairs and International Cooperation, said Abu Dhabi remains firmly committed to help keep channels of communication open, encourage dialogue and support diplomacy to end the war in Ukraine.
Abu Dhabi’s efforts follow in the footsteps of Saudi Arabia, which scored a diplomatic win by securing freedom for foreign fighters captured in Ukraine in September.
The UAE, like Saudi Arabia, is a member of the OPEC+ oil alliance that includes Russia and has also maintained good ties with Moscow despite Western pressure to help isolate Russia.
From South East Asia, Indian farmers have planted wheat on 15.3 million hectares since Oct. 1, when the current sowing season began, up nearly 11% from a year ago, the government data showed on Friday, as record high prices have encouraged planting.
Farmers have also increased acreage under rapeseed, the key winter-sown oilseed, to 7.1 million hectares as of Nov. 25, up from last year’s 6.2 million hectares, the Ministry of Agriculture & Farmers’ Welfare said in its weekly update of sowing data.
From Australia, local markets round out the week feeling the harvest pressure that is now starting to ramp up.
With a clear run of weather, trade markets were a few bucks softer across the boards.
Jan ASX continued to find weakness whilst it was wide bid offer spread and settled a further $7/t lower by the close.
Grower bids on the boards were all off by the days end with SA grower bids on wheat and barley all coming off $10/t.
Buyers were getting their fill for the day as headers got back on the paddock and growers let more go.
With a clear weekend ahead we will see great progress.
Canola also found further weakness with bids off $20/t in WA and in the eastern states.
Whilst there is appx 905,000t to be loaded this month and into December, but with current values do we see the grower start to shut up shop with selling with bid prices off $50/t for the week.
On the international trade scene, Turkey’s state grain board TMO has issued an international tender to purchase about 455,000 tonnes of milling wheat.
The deadline for submission of price offers in the tender is Nov. 29.
Wheat shipment is sought in two periods, Dec. 7, 2022, to Jan. 9, 2023, and between Jan. 1 to Feb. 17, 2023.
Red milling wheat is sought in a series of consignments to the Turkish ports of Derince, Iskenderun, Mersin, Izmir, Bandirma, Tekirdag, Samsun, Trabzon and Karasu.
Wheat already in warehouses in Turkey can also be offered in the tender.
The TMO reserves the right to buy up to 5% more or less than the tender volume at its own discretion.
In its last reported wheat tender on Oct. 21, the TMO bought around 470,000 tonnes.
Meanwhile, both Russia and the Ukraine sold a bunch of wheat to Egypt at USD$361/t CNF.
This equates to $1.50/t lower than their last purchase back on the 11th of Nov.
Notabily, direct negotiations ended with a purchase of 175,000 t of Black Sea wheat, split between 35,000 t of Ukrainian and 80,000 t of Russian.
Iraq has also finalised its tender with the purchase of 300,000 t of wheat from Canada and Australia.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
