Good morning Farmer Family …
US farm markets were mixed on Tuesday.
Corn prices faded 0.45% lower.
Soybeans captured 0.15% gains.
Meal prices ended with 1.23% losses
Soy oil bounced back from midday lows to close 0.62% higher.
Wheat prices were also mixed but mostly lower.
Chicago wheat contract firmed up 0.13%.
Kansas City wheat continued lower, dropping another 0.41%.
Minneapolis spring wheat prices closed 1.16% in the red.
Traders awaited fresh signals on several fronts, including whether China will ease Covid-19 restrictions currently in place.
South American weather forecasts and the ongoing war in Ukraine were still in focus as well.
Corn prices dipped over concerns about export demand for U.S. supplies.
The United States is considering legal action against Mexico amid its plans to ban all GMO corn imports by 2024.
This move would be a violation of the USMCA trade pact, according to Secretary of Agriculture Tom Vilsack.
“The U.S. Government would be forced to consider all options, including taking formal steps to enforce our legal rights under the USMCA,” Vilsack said.
“Mexico’s import ban would cause both massive economic losses for Mexico’s agricultural industries and citizens, as well as place an unjustified burden on U.S. farmers”, he added.
Meantime, USDA office in Brazil has forecast the country will produce a record 126 million tonnes of corn in 2022/23.
Soybeans, in contrast, gained on optimism about China.
A senior Chinese health official said on Tuesday that public complaints about COVID-19 controls stem from overzealous implementation, fuelling investor expectations that Beijing may ease restrictions that have prompted unusual public protests.
Wheat prices were mostly lower as cheap supplies from Russia and elsewhere in the Black Sea are leading to stiff competition for U.S. suppliers.
Purchases in recent days by Egypt’s state buyer GASC and Turkey’s state grain board TMO have underlined competitive prices for Black Sea origins.
Due to “system outages,” USDA has not published regularly its latest crop progress report, which was originally scheduled to be released on Monday night.
Analysts are expecting to see winter wheat quality ratings improve a point, with 33% of the crop in good-to-excellent condition.
Individual trade guesses ranged between 32% and 35%.
The USDA, on Tuesday rated 34% of U.S. winter wheat in good to excellent condition, up 2 percentage points from the previous week and a bigger improvement than most analysts had expected.
However, it should to note, the USDA’s figure, is down from 44% a year ago, and is the lowest rating for this time of year since late November of 2012.
Also, dry conditions are the main concern.
About 75% of the U.S. winter wheat production area, indeed, was experiencing drought as of Nov. 22, according to the government.
The next crop rating will not be published until the beginning of April as crops are going dormant.
In this context, corn basis bids were mostly steady across the central U.S. on Tuesday but did firm 3 cents at an Illinois river terminal while sliding 2 to 4 cents lower at two other Midwestern locations.
Soybean basis bids were mostly steady across the central U.S., but did tilt 10 cents higher at an Illinois river terminal and 5 cents lower at an Iowa processor.
Farmer sales have been generally slow so far this week.
Commodity funds were net buyers of CBOT soybean and wheat futures contracts, meanwhile they were net sellers of soymeal and corn futures and net even in soyoil.
On this morning, Chicago wheat firmed, on expectations of China loosening its COVID-19 restrictions, although the market was poised for a second monthly decline due more Black Sea supplies.
Soybeans inched higher and were on track for their second straight monthly gain, while corn slid en route to its first monthly loss in four.
Notabily, the most-active wheat contract on the Chicago Board of Trade rose 0.6% to $7.86 a bushel, as of 03:57 GMT, soybeans added 0.2% to $14.62-1/2 a bushel and corn lost 0.1% to $6.68-3/4 a bushel.
For the month, wheat is down 11%, soybeans have added 3% and corn has lost 3.2%.
In energy markets, oil prices firmed in Asian trade on Wednesday.
Brent crude futures, indeed, had firmed 70 cents or 0.84% to $83.73 per barrel by 07:32 GMT, while U.S. West Texas Intermediate (WTI) crude futures climbed 56 cents or 0.72% to $78.76 per barrel.
U.S. crude oil stocks were expected to have dropped by about 7.9 million barrels in the week ended Nov. 25, according to market sources citing American Petroleum Institute figures on Tuesday.
Official figures are due from the U.S Energy Information Administration on Wednesday as usual.
Optimistic sentiment in relation to China contributed to the uptrend in the Asian afternoon trade.
Slight support also came from a weaker U.S. dollar.
Fed Chair Jerome Powell is scheduled to speak about the economy and labour market at a Brookings Institution event due on this morning.
On the supply side, a high likelihood that OPEC+ would leave output unchanged at its upcoming meeting limited gains.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index snapped its four-session winning streak on Tuesday, as capesize rates slipped.
The overall index, indeed, fell 20 points, or about 1.5%, to 1,327, a day after hitting a more than two-week high.
Notabily, the capesize index lost 80 points, or 4.8%, to 1,589.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, decreased $668 to $13,177.
The panamax index was up 28 points, or about 1.9%, to 1,524, its biggest daily percentage gain since Oct. 18.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, increased $250 to $13,718.
The supramax index edged 3 points lower to 1,177.
In equity markets, Wall Street capped an unsteady day of trading with an uneven finish, as gains by energy companies were offset by losses in technology and other sectors.
Notabily, the S&P 500 slipped 0.2% to 3,957.63, its third straight drop.
The tech-heavy Nasdaq composite fell 0.6% to 10,983.78, while the Dow Jones Industrial Average ended just barely in the green, at 33,852.53.
The Russell 2000 index of small company stocks rose 0.3% to 1,836.55.
Technology stocks were the biggest drag on the broader market.
Higher bond yields Tuesday weighed on mega-cap tech stocks and the overall market, as the 10-year T-note yield rose +6.7 bp to 3.748% as China Covid unrest eased, curbing safe-haven demand for T-notes.
Also, supply pressures pushed yields higher after Amazon.com announced an unexpected $8.25 billion 5-part bond sale.
In this context, Apple fell 2.1%.
Financial and industrial stocks, in contrast, were among the gainers.
American Express added 2% and United Parcel Service rose 2.8%.
Energy stocks rose as U.S. crude oil prices climbed 1.2%.
Hess rose 1.8%.
Railroad operators rose amid hopes that a rail strike can be averted if Congress votes to impose a deal that unions agreed to in September.
Union Pacific rose 2% and CSX gained 1.8%.
The Conference Board reported on Tuesday that consumer confidence fell slightly in November from October, but remains relatively strong.
Notabily, Nov consumer confidence index fell -2.0 to a 4-month low of 100.2, slightly stronger than expectations of 100.0.
Meantime, the Sep S&P CoreLogic composite-20 home price index rose +10.43% y/y, slightly below expectations of +10.55% y/y and the slowest pace of increase in 1-3/4 years.
The U.S. government will be releasing several reports about the labor market this week.
A report about job openings and labor turnover for October will be released today, followed by a weekly unemployment claims report Thursday.
The closely watched monthly report on the job market will be released on Friday.
Meantime, Asian shares were mostly lower on Wednesday.
Shares fell in Tokyo but were higher in Sydney, Seoul, Hong Kong and Shanghai.
Notabily, Japan’s benchmark Nikkei 225 lost 0.2% to finish at 27,968.99 after reports said industrial production contracted 2.6% in October, compared with 1.7% in September, amid weakening demand from China and other world markets.
Hong Kong’s Hang Seng added 2.1% to 18,584.49.
The Shanghai Composite index inched up less than 0.1% to 3,151.34.
Australia’s S&P/ASX 200 rose 0.4% to 7,284.20, while South Korea’s Kospi rose 1.6% to 2,472.53.
Traders are awaiting a speech by the Federal Reserve chief that may give clues about future interest rate hikes.
Investors were also eyeing developments in China.
China has eased some controls after demonstrations in at least eight mainland cities and Hong Kong.
It’s unclear if protests will start up again after authorities detained an unknown number of people and stepped up surveillance.
Renewed restrictions on businesses and other activity have hit manufacturing, with an official survey announced Wednesday showing the purchasing managers index falling to 48.0 in November from 49.2 the month before.
The index is on a scale of 0 to 100 where readings 50 and above show expansion.
In currency trading, the U.S. dollar rose to 138.76 Japanese yen from 138.65 yen.
The euro cost $1.0346, up from $1.0331.
Going back to analyzing other agricultural markets…
From Canada, ahead of an upcoming Statistics Canada crop production report out Friday afternoon, pre-report estimates for StatsCan production data have Canadian corn production pegged at 14.8 MMT.
Their prior estimate in September was 14.9 MMT, with the full range of estimates between 14.3 and 15.1 MMT.
As for canola, analyst estimates is expected to be between 18.6 MMT and 20.5 MMT vs. September’s 19.1 MMT estimate.
The average guess is for a 100k MT boost.
Soybean production estimates range 6.3 to 6.8 MTM from 6.5 MTM in September’s report, the average is to see no change.
As for wheat, estimates show traders expect Canadian wheat to increase 100k MT to 34.8 MMT from the prior estimate.
The full range is to see between 33.8 MMT (-0.9 MMT) and 35.5 MMT (+0.8 MMT) ahead of the data.
Spring wheat specifically is expected to be revised down by 200k MT to 25.9 MMT, with durum expected to drop 200k MT to 5.9 MMT.
From South America, USDA’s Ag Attache forecasted 2022/2023 corn production at a record 126 million metric tons (MMT) based on the growing demand and price for corn both in domestic and international market.
This is up 8.6 percent on the 2021/2022 production estimated at 116 MMT.
The Attaché, increased also the forecast for corn exports for MY 2022/2023 to 47 MMT, up 2.5 MMT on the current season.
The Attaché forecasted a record wheat production for MY 2022/2023 with production at 9.4 MMT, up 21 percent on the 2021/2022 harvest.
This forecast is based on continued interest by Brazilian growers in the strong demand for wheat and rising global commodity prices.
Meantime, Brazil’s Anec estimates that the country’s corn exports in November will reach 5.94 MMT, which is moderately lower than its prior projection a week earlier.
Anec estimates that the country’s soybean exports will reach 2.05 MMT in November, which is modestly lower than its prior estimate from a week earlier.
Anec also estimates that the country’s soymeal exports will reach 1.485 million metric tons this month.
In Europe, there was little change yesterday.
Operators were focusing on events in China.
In spite the competitiveness of French origins is strengthening following the recent downward adjustment in prices, the Black Sea origin remained the cheapest on tenders.
Thus wheat and corn prices have lost ground in the face of international competition.
Rapeseed, on its part, was supported by the rebound in vegetable oils, particularly palm and canola.
The price of palm oil recorded an increase, driven by an acceleration of Nov Malaysian exports.
Rapeseed prices were back in positive territory on Tuesday mid-session on Euronext while crude prices were jumping.
Meantime, European Union soft wheat exports during the 2022/23 marketing year were 13.89 Mt through November 27, which is slightly ahead of last year’s pace so far.
France on its own accounted for 5.65 Mt of the total, with North Africa as the main destination.
Algeria, Morocco, Egypt, Nigeria and Saudi Arabia were the top five destinations.
EU barley exports were at 2.74 MMT vs 4.63 MMT last year’s pace so far.
Meantime, EU corn imports are more than doubling last year’s pace so far, with 12.12 Mt, through November 27.
Spain, the Netherlands, Poland, Portugal and Italy have been the top five buyers.
EU soybean imports reached 4.28 MMT through November 27, which is moderately below last year’s pace so far.
EU soymeal imports were also slightly lower year-over-year, with 6.54 million metric tons during the same period.
It should be noted, however, that rapeseed imports are estimated at 2.9 Mt by the European Commission so far, up 840 kt over one year.
From South Africa, farmers are expected to harvest 5.7% less maize in the 2021/2022 season compared with the previous season, the government’s Crop Estimates Committee (CEC) said on Tuesday.
The CEC’s final summer crop forecast estimates the 2022 harvest at 15.387 million tonnes, down from the 16.315 million tonnes harvested last season.
The harvest is expected to consist of 7.790 million tonnes of white maize, used for human consumption, and 7.597 million tonnes of yellow maize, used mainly in animal feed.
From Ukraine, 2022/23 winter grain sowing is almost complete as farmers have sown 4.5 million hectares or 94% of the expected area as of Nov. 29, the agriculture ministry said on Tuesday.
The acreage included 3.8 million hectares of winter wheat, accounting for 94% of the forecast, ministry data showed.
Farmers have also sown 613,000 hectares of winter barley and 79,200 hectares of rye.
The ministry said only 4,600 hectares of winter grains were sown over the past seven days.
Meantime, around 450,000 tonnes of Ukrainian grain are being transported via Poland monthly, over 50% more than in the middle of the year, Poland’s infrastructure minister said on Wednesday, as Warsaw helps its neighbour to increase its food exports.
“Within the so-called solidarity lanes about 452 thousand tonnes of (Ukrainian) grains are currently transported through the territory of Poland, over 50% more than in the middle of the year,” Andrzej Adamczyk said.
“Compared to October last year, the increase in grain transport in the same period of 2022 is over 16 times,” he added.
From Russia, Russian ag Min said that 155.5 MMT of grain, including 100 million tons of wheat, has been harvested from 97% of area.
Corn, sunflower and sugarbeet harvesting continues in some regions of Central Russia and Volga Valley.
Meantime, winter sowing has been done on 17.7 MHA.
Since the beginning of the 2022-2023 agricultural year (July 2022 – June 2023), grain exports from the Russian Federation have approached last year’s figures, despite barriers.
The grain export forecast for the current agricultural year remains unchanged.
“Despite the sanctions pressure, logistical, financial restrictions, exports are approximately at the level of last year. Last year, on the same date, we exported 15.6 million tons, today – 15.7 million tons reported the Russian Agriculture Department.
Exports of Russian wheat since the beginning of the current agricultural year amounted to 13.4 million tons against 13 million tons a year earlier, she said.
The forecast for grain exports from Russia in the current season remains unchanged (previously, exports forecast was set at 50 million tons).
The subcommittee on customs and tariff regulation supported the proposal of the Ministry of Agriculture to increase the quota for grain exports to 25.5 million tons in 2023 (this year the quota was 11 million tons).
It is assumed that the quota will be valid from February 15 to June 30.
From South East Asia, India is expected to harvest a bumper wheat crop in 2023 as high domestic prices and replenished soil moisture help farmers surpass last year’s planting.
Although the wheat area has almost reached a plateau in India’s traditional grain belts in the northern states such as Punjab, Haryana and Uttar Pradesh, growers are planting the crop on some fallow land in the country’s west where farmers have traditionally grown pulse and oilseeds.
Domestic wheat prices have jumped 33% so far in 2022 to a record 29,000 rupees ($355.19) per tonne, far above the government-fixed buying price of 21,250 rupees.
Farmers have planted wheat on 15.3 million hectares since Oct. 1, when the current sowing season began, up nearly 11% from a year earlier, according to provisional data released by the Ministry of Agriculture & Farmers’ Welfare.
In this context, some analysts forecasts an initial crop estimate for 2023 at around 110 Mt.
From Australia, as harvest ramps up across the country yesterday’s cash grower wheat bids were off $8-10/t, while barley held some ground and canola was relatively unchanged.
ASX eastern wheat Jan contract, trading small volumes, eased another 1pc to settle at A$403/t.
Wheat and barley harvest results are a mixed bag off the header.
Some AH9 wheat is reported in central NSW, and test weight is pushing barley in Victoria into BAR2 and BAR3 grades, though yields are still impressive.
Viterra reported its receivals this week totalled 639,914t, bringing the cumulative total to 1.2Mt, the pace accelerating amid better weather conditions.
According to line ups port data, there are two vessels due to load around 120,000t canola and one vessel 60,000t barley destined for China.
These vessels will be closely tracked and further updates will be given when we have more certainty about their destination.
On the international trade scene, Jordan made no purchase in their international tender for 120,000t milling wheat, despite receiving offers from five participating companies.
Algeria is seeking offers tomorrow for a nominal 50,000t optional-origin milling wheat, January shipment.
Turkey has bought 395,000t wheat so far in its tender for up to 455,000t for Dec-Jan-Feb shipment.
South Korea’s Nonghyup Feed Inc. (NOFI) purchased around 138,000t feed corn from optional origins (excl. Ukraine, Russia and Paraguay), for Mar arrival.
The first consignment was partly secured at US$332.39/t c&f and partly at a basis premium of $1.827/bu + CME Mar c&f.
The second consignment was around $1.790/bu + CME Mar c&f plus a $1.75/t port unloading surcharge.
The lowest price offered in the tender from Pakistan to purchase 500,000 tonnes of wheat which closed on Wednesday was believed to be $372.00 a tonne c&f thought to be for Russian-origin wheat.
Around nine trading houses were initially assessed to be participating in the tender.
The state agency Trading Corporation of Pakistan (TCP) is still considering the offers and no purchase has been reported.
A decision is expected later this week.
Trading houses that submitted offers in the tender were:
Cereal Crops, 130,000 tonnes Russian $372.00 C&F;
Agrocorp, 120,000 tonnes $373.00 C&F;
Aston, 130,000 tonnes $376.90 for unloading in Karachi port $385.90 for unloading in Gwadar port;
Grainflower/GTCS, 105,000 tonnes $377.00 C&F;
Falconbridge, 110,000 tonnes $378.90 for unloading in Karachi port $383.49 for unloading in Gwadar port;
Cargill, 120,000 tonnes $380.50 C&F;
Harvest Group, 120,000 tonnes $390.00 C&F;
Ameropa,110,000 tonnes $395.00 C&F;
CHS, 120,000 tonnes $397.80 C&F.
More detailed assessments of prices and tonnage offered are still possible later.
Offers must remain valid for 80 hours after submission.
The tender seeks rapid shipment between Dec. 16, 2022, and Feb. 8, 2023.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
