Good morning Farmer Family…
US farm markets started the week with mixed results.
Corn prices failed to move the needle much in either direction, and ultimately finished the session with fractionally gains by 0.11%.
Soybeans were the winner of the session, tracking 1.46% higher.
Meal prices strengthened 1.17%.
Bean oil prices gained 2.08%.
Wheat prices were all weaker at the bell.
Chicago SRW settled 2.42% lower.
Kansas City HRW ended the day 1.87% weaker.
Minneapolis spring wheat held relatively firm, giving back 0.63% on the session.
Wheat prices fell, as commodity and equity markets have been hit by concern about the impact of rare protests in China against its strict anti-COVID-19 policy.
Supplies from Russia and elsewhere in the Black Sea have also increased.
Modest precipitations last week in parts of Texas and Oklahoma may have improved winter wheat growing conditions.
Corn, on its part, ended mixed, likely because there were simultaneous purchases of corn, when there were sales of wheat and that may have underpinned corn prices.
Soybeans gained, meantime, supported by an annuncement of a large export sale’s by USDA.
A spike in soyoil prices mid-session also pulled up beans.
That was related to bullish expectations for the U.S. Environmental Protection Agency’s annual setting of renewable volume obligations for transportation fuel.
Dry weather in central-west Brazil made an additional support.
Meantime, Weekly Export Inspections data showed 302,350 MT of corn was shipped during the week that ended 11/24.
That was down from 499k MT last week and was well below the 806k MT from the same week last year.
USDA also added 26k MT of corn exports to past reports bringing the season’s total to 5.808 MMT.
That is compared with last year’s 8.633 MMT shipped through 11/24.
As for soybean, weekly inspections data had 2.022 MMT of soybean exports for the week that ended 11/24.
That was down 403k MT from the week prior and was 237k MT smaller than the same week last year.
USDA added 97.6k MT to recent reports, taking the season’s total to 19.248 MMT.
That is compared with last year’s 21.4 MMT.
As for wheat, USDA reported 198,519 MT of wheat was inspected for export during the week that ended 11/24.
That was 93k MT below last week and is down 192,252 MT from the same week last year.
The season’s total are now to 10.49 MMT, vs 10.90 MMT last year at the same week.
Meantime, private exporters reported to the USDA having sold 110,000 metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year.
Due to system outages, USDA’s National Agricultural Statistics Service delayed the release of Crop Progress report until today, Nov. 29, at 4 p.m. EST.
On the other hand, the delayed CFTC data as of 11/22 had corn spec traders at 170,767 contracts net long.
Commercial corn hedgers also closed positions, with 86.8k fewer contracts in play.
On net, the commercial short was only 4k contracts weaker to 420,505.
Recall Dec options expired on Nov 25.
As for soybean, CoT report had soybean spec traders 82,135 contracts net long as of 11/22.
That was a 10,830 contract weaker net long wk/wk.
Commercials lightened their net short hedges by 6.5k contracts to 128k.
In the products, CFTC’s data showed manage money was 3,895 contracts less net long in meal to 71,815.
Soy oil spec traders were 100,274 contracts net long on 11/22, a 10k contract drop through the week.
As for wheat, the report had managed money funds 53,402 contracts net short in CBOT wheat as of 11/22.
That was a 6,622 contract stronger net short through the week on net new selling.
Kansas City wheat spec traders were 3,973 contracts less net long at 17,308 contracts – a 10-wk low.
In spring wheat, the funds flipped net short by 652 contracts mostly via long liquidation.
In this context, corn basis bids were mostly steady across the central U.S. on Monday but did tilt 7 cents lower at an Iowa processor.
Soybean basis bids held steady across the central U.S..
Commodity funds were net sellers yesterday for 9,500 lots of wheat and net buyers for soybeans for 8,500 lots.
They were corn neutral.
On this morning, Chicago wheat edged higher, after hitting a more than three-month low in the previous session.
Soybeans climbed to a two-week high, while corn eased.
Notabily, the most-active wheat contract on the Chicago Board of Trade rose 0.5% to $7.84-3/4 a bushel, as of 04:34 GMT, after dropping on Monday to its lowest since Aug. 22 at $7.73-1/4.
Soybeans added 0.3% to $14.61-3/4 a bushel and corn was down 0.1% at $6.70-1/2 a bushel.
In energy markets, oil jumped on Tuesday, buoyed by hopes that China would relax its COVID-19 controls after rare protests against the country’s zero-COVID strategy over the weekend in big Chinese cities.
Brent crude futures, indeed, advanced $1.4, or 1.7%, and traded at $84.57 a barrel at 06:45 GMT.
U.S. West Texas Intermediate (WTI) crude futures rose $1.17, or 1.5%, to $78.39 a barrel.
Both benchmarks gained more than $2 earlier in the day.
Oil prices are also supported by the expectation that major oil producers would adjust their production plans at the upcoming meeting.
The OPEC+, are set to hold a meeting on Dec. 4.
Analysts at Eurasia Group suggested in a note on Monday that weakened demand out of China could spur OPEC+ to cut output.
Markets are also assessing the impact of an upcoming Western price cap on Russian oil.
Group of G7 and European Union diplomats have been discussing a cap of between $65 and $70 a barrel.
But EU governments failed to agree on Monday on the cap, with Poland insisting the cap should be set lower than proposed by the G7, diplomats said.
The price cap is due to come into effect on Dec. 5.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index rose to a more than two-week high on Monday, supported by higher rates for capesize and panamax vessels.
The overall index, indeed, rose 23 points, or about 1.7%, to 1,347.
Notabily, the capesize index added 56 points, or about 3.5%, to 1,669, the highest level since Oct. 28.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, were up $472 at $13,845.
The panamax index was up 17 points, or about 1.2%, to 1,496.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, increased $158 to $13,468.
The supramax index edged 2 points lower to 1,180.
In equity markets, US stocks on Monday posted moderate losses.
The S&P 500 fell 1.5% to 3,963.94.
The Dow dropped 1.4% to 33,849.46.
The tech-heavy Nasdaq lost 1.6% to close at 11,049.50.
Concern on worsening pandemic in China increased.
That likely will prompt the government to tighten lockdowns and restrictions, undermining the prospects for global growth.
As we know, nationwide protests in China have broken out in recent days just over the government’s strict Covid Zero policies.
Also, a fall of more than -2% in Apple weighed on technology stocks.
Stocks sank to the lows after T-note yields moved higher on hawkish comments from several Fed members who stressed that interest rates would continue to rise to combat inflation.
As a result, the 10-year T-note yield jumped from a 7-week low of 3.619% and rose +2.2 bp to 3.700%.
Monday’s economic news was supportive for stocks, meantime.
The Nov Dallas Fed manufacturing activity, indeed, unexpectedly rose +5.0 to -14.4, stronger than expectations of a decline to -21.0.
The Conference Board will release its consumer confidence index for November on this morning.
That could shed more light on how consumers have been holding up amid high prices and how they plan on spending through the holiday shopping season and into 2023.
The U.S. government will release several reports about the labor market this week that could give Wall Street more insight into one of the strongest sectors of the economy.
A report about job openings and labor turnover for October will be released on Wednesday, followed by a weekly unemployment claims report on Thursday.
The closely watched monthly report on the job market will be released on Friday.
On this morning, Asian shares were mostly higher, as jitters over protests in China subsided.
Chinese shares rebounded after they were hit by sharp losses on Monday.
Hong Kong’s Hang Seng jumped 4% to 17,981.31, while the Shanghai Composite added 2.3% to 3,148.17.
Japan’s Nikkei 225 lost 0.5% to 28,016.58.
Australia’s S&P/ASX 200 gained 0.3% to 7,249.80.
South Korea’s Kospi added 0.8% to 2,427.13.
Although market sentiment has been weighed down by the recent demonstrations in China, the absence of any clear escalation in protests could aid to bring some calm to markets.
A lot of people are worried about what the fallout will be, but business was returning as usual.
The heavy police presence may unnerve Western investors.
However, local investors, took a more pragmatic approach to the current COVID proceedings, as a probable outcome is a quicker loosening of restrictions once the current COVID wave and numerous protest flash points subside.
In currency trading, the U.S. dollar fell to 138.53 Japanese yen from 138.90 yen.
The euro cost $1.0387, up from $1.0344.
Going back to analyzing other agricultural markets…
From Central America, Mexican President Andres Manuel Lopez Obrador met U.S. Secretary of Agriculture Tom Vilsack to discuss genetically modified corn.
Mexico is set to ban genetically modified corn in 2024, which will cause it to halve its U.S. imports of yellow corn.
Vilsack has expressed his concern in the matter.
From South America, Brazilian soybean planting reached 87% of the estimated area in the 2022/2023 cycle, according to agribusiness consultancy AgRural.
Although sowing is slightly behind last season’s pace, Brazil is poised to harvest a bumper crop based on historical yield trends and the estimated size of the planted area, AgRural said.
Based on historical yield trends and a 4% expansion of the planted area – to above 43 million hectares (106.2 million acres)- AgRural, indeed, projects Brazilian soy output at 150.5 million tonnes in 2022/2023.
Meantime, summer corn is 88% sown in the center-south states of Brazil, AgRural said.
Last year at this time, first corn planting had reached 93% of the area.
In general, Brazil’s first corn planting occurred without major issues, but low rains in certain areas has some farmers “on alert,” AgRural noted.
The next corn harvest in Brazil is expected at a record level of 126 million tonnes.
In Argentina, Economy Minister has announced Argentina will reintroduce a preferential currency exchange rate (“soy dollar”) scheme for soybean and by-product exports between 28 Nov and 31 Dec which will be set at 230 Argentine Peso (ARS230) to one US dollar.
Market rate presently is ARS166.
In Europe, markets were a little gloomy yesterday, with a general decline in grain and oilseed prices.
Euronext wheat fell, as last week’s export-fuelled strength subsided.
Chatter about heavy export demand from China for French wheat for shipment in the coming weeks had fanned short-covering in the December contracts.
Meantime, fears over Chinese demand increased.
Also, we saw an aggressive Black Sea competition.
Loading activity in France remained brisk thamks past deals, with a series of shipments for Morocco to be followed by large volumes for China in the month ahead.
However, the further strengthening of the Eurodollar parity and Russian competitive prices, continued to block future French wheat exports.
Cheap offers of Russian and other Black Sea region wheat depressed the export outlook in Germany too.
Thus, March milling wheat, the most active position on the Paris-based Euronext exchange, unofficially closed down 0.9%, or 3.00 euros, at 315.50 euros ($327.30), after earlier falling to a three-month low of 312.00 euros.
Meanwhile imported corn found its place on the Community market.
Rapeseed prices suffered further significant losses on Monday at mid-session on Euronext.
The market has been mainly weighed down by fears over Chinese demand.
In addition to the risk on Chinese consumption, forecasts of milder temperatures than initially were also weighing on the trend.
A further strengthening of the euro-dollar parity also deteriorates the competitiveness of European rapeseed against imported seeds.
From North Africa, Egypt’s state grains buyer will be able to make international wheat purchases through the newly-launched exchange that is also aimed at eliminating local price distortions, its chairman said.
With grain markets disrupted, GASC has been diversifying its purchasing methods.
GASC recently opted to buy directly from global suppliers, instead of through its traditional tender system.
GASC can also procure local wheat from farmers via the exchange.
GASC had asked global suppliers to register at the bourse by November.
On Sunday GASC offered on the new exchange 12,000 tonnes of Russian wheat from its reserves to private sector mills.
The new exchange is designed to operate as a spot market with prices determined by supply and demand.
On the first day of trading on Sunday, wheat was sold at 9,750 Egyptian pounds ($397) per tonne in 18 transactions, the supply ministry said on Monday.
Two hundred companies, including 36 mills, have so far registered on the exchange in Cairo, where the Egyptian government is studying the possibility of trading 10 more commodities, including rice, gold and steel.
($1 = 24.5400 Egyptian pounds).
From the Black Sea basin, Joint Coordination Centre said on Monday currently 98 vessels were waiting in Turkish territorial waters.
Of the 98, 75 inbound were waiting to move, pending inspection, into Ukrainian ports which it said had capacity to export approximately 1.7Mt grain and other food products.
It also said some vessels have waited for over a month and 23 vessels already loaded with cargo were awaiting outbound inspection.
From Ukraine, yesterday the country infrastructure minister said November grain exports would not reach 3Mt, down from 4.2Mt in October.
Ukraine has exported almost 17.2 million tonnes of grain so far in the 2022/23 season.
That is down 31.9% from the 25.3 million tonnes exported by the same stage of the previous season.
Notabily, Ukraine Agriculture Ministry data at 28 Nov reported cumulative 2022/23 (Jul/Jun) grain exports totalled 17.3Mt (25.3Mt same period last year), including wheat at 6.6Mt (14.5Mt), barley at 1.4Mt (4.9Mt) and maize at 9.1Mt (5.5Mt).
Ministry data also showed that about 4 million tonnes of various grains were exported by Nov. 28.
However, it should to note that for many farmers, electricity and internet are interrupted.
So not everyone who wants to sell has the technical ability to do it.
In addition, the execution of contracts requires the coordination of several people – both representatives of the seller and buyer counterparties.
The lack of stable internet connection affects not only communication, but also document flow.
Meantime, APK-Inform expects the 22/23 Ukrainian corn crop will be 27.9 MMT.
APK-Inform estimates Ukraine’s 22/23 wheat harvest will reach 19 MMT.
The consultancy forecasts all grain exports between 24.3 MMT and 40.3 MMT, depending on the logistics situation.
From Russia, winter wheat acreage is expected to be slightly down on last year, leading to a 2023 production estimate lower than this year’s record.
Farmers have, indeed, planted winter grains on 17.7 million hectares, compared with 18.4 million hectares around the same date a year earlier.
However, weather conditions remain friendly for winter wheat in the Volga and central regions of Russia, although Russia’s southern regions of Krasnodar and Stavropol are a bit dry.
Russia’s grain exports fell to 780,000 tonnes last week from 1.0 million tonnes the previous week, per latest port data.
However, Russian consultancy Sovecon estimates that the country’s wheat exports will reach 4.4 MMT in November.
That will be slightly above October’s tally, and it will be the highest monthly total in more than a year, if realized.
In this context, Russian wheat prices rebounded slightly last week from a week earlier.
According to the IKAR, indeed, prices for Russian wheat with 12.5% protein content and for supply from Black Sea ports in December were at $317 a tonne free on board (FOB) on Friday evening.
That was up $3 from a week earlier.
According to Sovecon, in contrast, wheat prices for immediate delivery were stable at $315-319 per tonne, meantime.
Other prices reported showed that price for domestic 3rd class wheat, European part of Russia, excludes delivery, was at 12,650 rbls/t -50 rbls (Sovecon).
Price for sunflower seeds was at 22,575 rbls/t +1,025 rbls (Sovecon).
Price for domestic sunflower oil was at 73,925 rbls/t +175 rbls (Sovecon).
Price for domestic soybeans was at 30,900 rbls/t +525 rbls (Sovecon).
Export price for sunflower oil was at $1,240/t -$20 (Sovecon).
Export price for sunflower oil was at $1,190/t -$10 (IKAR).
Price for white sugar, Russia’s south, was at $745.2/t -$13.2 (IKAR).
Meantime, Russia’s agriculture ministry has already bought 1.94 million tonnes of grain from the domestic market for the state stockpile in the current July-June season.
The ministry plans to buy up to 3 million tonnes this season.
Russia has increased its export quota on nitrogen fertilisers by 750,000 tonnes to +9 MMT until the end of 2022, the government said on Monday.
Moscow imposed quotas on fertiliser exports last year after the price of gas – which is used to produce nitrogen fertilisers – went up.
It said the move was needed to prevent a shortage on the domestic market and curb rising food prices.
From Australia, CBH received 2.983Mt for the week taking the total to 6.934Mt.
Its latest harvest report notes that due to improved weather conditions, most growers across the state have finally experienced some good harvesting conditions and some higher-than-expected yields.
Better weather conditions led to CBH breaking several site receival records last week.
In this context, local markets started the week down.
Wheat was down around $10/t on the cash boards and trade markets for Jan-plus-carry were softer by $5-7/t.
Barley was also down $3-5/t in the eastern states.
On the international scene, the World Trade Organization said on Monday that its goods barometer had fallen below trend to 96.2 from its previous reading of 100.
That is indicating that trade growth was set to slow in the closing months of 2022 and into 2023.
Meantime, operators are closely scrutinizing the results of tenders from Turkey for around 455,000 t of wheat (initial purchases reported saw 50k mt sold by Yayla at $344.00 ex warehouse in Turkey; 25k mt sold by Tiryaki at $330.90 C&F; 50k mt sold by Yayla at $329.90), from Pakistan for 500,000 t and from Jordan for 120,000 t.
South Korea’s Major Feedmill Group (MFG) has issued an international tender to purchase up to 140,000 tonnes of animal feed corn.
The deadline for submission of price offers in the tender is Tuesday, Nov. 29.
Algeria is once again purchasing soft wheat.
China sold 39,995 MT of wheat from state reserves on 11/23 for an average price of 2,815 yuan/MT (~ $389.59/MT).
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
