Good morning Farmer Family …
US farm markets were mostly lower to start the week.
A broad selloff on Wall St. due recession fears, sank energy prices.
Meanwhile a stronger U.S. Dollar generated an ample downward pressure over all commodities.
Corn prices, indeed, were down 0.89% at the bell.
Soybeans closed the session with fractionary losses by -0.05%.
Soybean oil continued to fade closing 4.06% lower.
Meal on the other hand rallied, ending the day with1.89% gains.
Wheat prices were hit the hardest.
Chicago SRW ended the day with 2.89% losses.
Kansas City HRW dropped 3.33% on the day.
Minneapolis spring wheat was 2.09% lower.
Weekly export inspections report from the USDA, showed that 524,313 MT of corn were inspected for the week that ended 12/1.
That was up from 311k MT the previous week but was 263k MT under the same week last year.
USDA had the season’s total export at 6.341 MMT through 12/1, trailing 9.42 MMT shipped during the same time last year.
As for soybean, the report showed 1.722 MMT of soybeans were exported during the week that ended 12/1.
That was was down from 2.226 MMT the prior week.
USDA also added 205k MT to past reports taking the season’s accumulated export to 21.176 MMT.
That was down from last year’s 23.769 MMT.
As for wheat, USDA’s Export Inspections report showed 334,653 MT of wheat was exported during the week that ended 12/1.
That was up from 284k MT last week and was above the 248k MT from the same week last year.
Soft white shipments made up the majority of the total with 140k MT, followed by ~80k MT each for HRS and HRW.
There were also 32k MT of durum wheat.
USDA had the season’s total shipment at 10.9 MMT as of 12/1.
That was down 243k MT from last year’s pace.
Chicago wheat dropped, pressured by higher global supplies despite stronger-than-expected weekly U.S. exports.
Russia is setting the price tone, amid a record harvest in Russia and active supplies from the Black Sea.
Also, Australia is expected to produce a record wheat crop, despite widespread flooding in eastern regions of the country.
Corn, on its part, eased, pressured by lower wheat, though dry conditions in South America added some support to prices.
Soybeans also ended lower weighened by wheat, in spite were underpinned by export demand and strong meal trade.
Private exporters, indeed, reported to the USDA having sold 130,000 tonnes of soybeans for delivery to China.
Meanwhile, further easing of COVID-19 quarantine rules in some Chinese cities could increase demand for U.S. commodities especially for soybeans.
In this context, corn basis bids were steady to mixed to start the week, moving as much as 5 cents higher at an Illinois river terminal and as much as 5 cents lower at a Nebraska processor on Monday.
Soybean basis bids were steady to weak after spilling 5 to 10 cents lower across three Midwestern locations.
Commodity funds were net buyers of CBOT soymeal and soybean futures contracts, and net sellers of soyoil, wheat and corn wheat futures.
On this morning, Chicago wheat prices inched higher, rising for the first time in four sessions as strong U.S. weekly exports supported the market.
Soybeans gained ground on expectations of a recovery in demand with China gradually easing COVID-19 restrictions.
Corn prices also rose.
Notabily, the most-active wheat contract on the Chicago Board of Trade added 0.2% to $7.40-3/4 a bushel, as of 03:41 GMT.
Soybeans gained 0.3% at $14.42-1/4 a bushel and corn rose 0.2% to $6.41-1/2 a bushel.
In energy markets, oil rebounded on Tuesday after plunging by more than 3% in the previous session.
Brent crude futures, indeed, had gained 85 cents to $83.53 a barrel by 07:33 GMT.
West Texas Intermediate crude (WTI) rose 68 cents to $77.62 a barrel.
Crude futures on Monday recorded their biggest daily drop in two weeks, after U.S. service sector data raised worries that the Federal Reserve could continue its aggressive policy tightening path.
Saudi Arabia, cut the January official selling price for its flagship Arab Light crude for Asian buyers to a 10-month low.
The market also watched a traffic jam of oil tankers off the coast of Turkey on Monday, with Ankara insisting on new proof of insurance for all vessels.
The threat of losing protection and indemnity (P&I) insurance surely will limit Russia’s access to the tanker market.
That could reduce crude exports to 2.4 million barrels per day (bpd), which means 500,000 bpd lower than levels seen before Russia-Ukraine war started.
In China, more cities are easing COVID-19-related curbs, prompting optimism.
However, it still may take time to confirm a sustained recovery in Chinese consumption, as well as the supply impact of Russian sanctions.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index was little changed on Monday as gains in the panamax segment were countered by a decline in capesize rates.
The overall index, indeed, inched 1 point lower to 1,323.
Notabily, the capesize index shed 17 points, or about 1.1%, to 1,502, its lowest in more than a week.
Average daily earnings for capesizes , which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, decreased $141 to $12,457.
The panamax index climbed 20 points, or about 1.2%, to a more than two-week high of 1,638.
Average daily earnings for panamaxes , which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, increased $177 to $14,741.
The supramax index fell 4 points to 1,158.
In equity markets, stocks on Monday closed sharply lower.
Stronger-than-expected U.S. economic news, indeed, sent bond yields soaring, as the market is concerned the Fed will need to keep interest rates higher for longer to combat persistent inflation.
Notabily, U.S. Oct factory orders rose +1.0% m/m, stronger than expectations of +0.7% m/m and the biggest increase in 4 months.
The U.S. Nov ISM services index unexpectedly rose +2.1 to 56.5, stronger than expectations of a decline to 53.5.
Thus, the yield on the 10-year Treasury, which influences mortgage rates, rose to 3.59% from 3.49% late Friday.
Oil and gas company stocks fell amid a broad pullback in energy prices, including an 11.2% slump in natural gas.
Exxon Mobil fell 2.7%.
Chipmaker Nvidia fell 1.6%, Bank of America slid 4.5% and Amazon dropped 3.3%.
Meantime, a fall of more than -6% in Tesla undercut technology stocks.
As a results, the S&P 500 fell 1.8% to 3,998.84.
The Dow Jones Industrial Average lost 1.4% to 33,947.10 and the tech-heavy Nasdaq gave back 1.9%, closing at 11,239.94.
Small-company stocks fell even more, sending the Russell 2000 index 2.8% lower to 1,840.22.
Wall Street will get a weekly update on unemployment claims Thursday.
November’s monthly report on producer prices is due Friday.
Meantime, on this morning, Asian shares were mostly lower.
Tokyo rose, Shanghai was flat and other regional markets declined.
Notabily, Hong Kong’s Hang Seng fell 0.7% to 19,367.84 and the Kospi in South Korea fell 1.1% to 2,393.16.
The Shanghai Composite index was flat at 3,212.53.
Tokyo’s Nikkei 225 index closed 0.2% higher at 27,885.87.
Shares also fell in Bangkok and Taiwan.
Adding to worries over the potential for recession, Fitch Ratings revised its forecasts for world economic growth downward on Tuesday to reflect the Fed and other central banks’ interest rate hikes.
Particularly, its Global Economic Outlook report estimated global growth at 1.4% in 2023, revised down from 1.7% in its September forecast.
It put U.S. growth in 2023 at 0.2%, down from 0.5%, as the pace of monetary policy tightening increases.
China’s growth forecast was cut to a 4.1% annual pace from 4.5%.
In currency trading, the U.S. dollar rose to 137.08 Japanese yen from 136.71 yen late Monday.
The euro slipped to $1.0489 from $1.0491.
Going back to analyzing the other agricultural markets …
From Central America, Mexico could achieve its goal of replacing half its import needs with non-genetically modified corn but would struggle to meet the deadline for a controversial ban and could suffer a bout of fresh inflation for its key staple crop, experts said.
Mexico, which imports about 17 million tons of mostly genetically modified (GM) corn from the United States, has a presidential decree that would phase out GM corn and the herbicide glyphosate by Jan. 31, 2024.
After pressure from the U.S. and threats of a dispute under the United States-Mexico-Canada Agreement (USMCA), Mexican President Andres Manuel Lopez Obrador said in November that imports of GM yellow corn for animal feed would still be allowed, pending an annual permit from health regulator COFEPRIS.
Mexican officials, however, have not stated how much GM yellow corn they will continue to buy and if the plan to dramatically slash imports still stands.
Deputy Agriculture Minister Victor Suarez said in October that Mexico, was on track to halve its corn imports in 2024.
It would make up the difference by increasing domestic production and seeking deals with U.S., Argentine or Brazilian farmers for non-GM corn, he said.
In theory, there is enough U.S. farmland producing some form of non-biotech corn to meet Mexico’s current import demand.
Mexico imported a total of 17.3 million tonnes from July 2021 through June 2022, with 16.9 million tonnes coming from the U.S., according to trade data.
To produce that volume of corn would take about 3.9 million acres, if each acre yielded the latest corn yield average of about 172 bushels per harvested acre, according to USDA data.
U.S. farmers planted and harvested about 5.7 million acres of non-biotech corn for grain in 2022 – about 7% of the nation’s total corn acres, according to the latest USDA data.
However, it is “totally unrealistic” to expect farmers in the United States, or alternative major suppliers like Argentina and Brazil, to make the needed switch.
From South America, the sowing of Brazil’s 2022/2023 soybean crop reached 91% of the estimated area, below last year’s level of 94%, data from agribusiness consultancy AgRural showed on Monday.
However, private forecasters and the government still anticipate a record soy crop above 153 million tonnes this season.
Hot and dry weather is also beginning to weigh on Brazil’s first corn in the center south, AgRural data showed.
The planting the first corn crop indeed reached 93% of the estimated area, down compared last year, when growers had planted 94% of their first corn at this time.
In Europe, sharp drop in prices yesterday, has been mainly dued to the Abares report, which showed a record winter grain harvest in Australia.
Other factors influenced the markets were, export activity from the Black Sea origin, combined with the strengthen of euro against the dollar, that is penalizing the competitiveness of European origins.
However, the risk of a longer-than-expected policy of raising key rates in the USA, could motivate a downward reversal in the eurodollar parity, limiting the losses in quotations on Euronext.
Brazilian competition is still weighing on the corn market with a record export rate recorded last month, at 6.1 Mt.
The good progress of sowing work in the country is also likely to drive prices on a more decline.
Rapeseed output in the European Union is set to remain stable next year at 19.5 million tonnes, while the sunflower seed crop could rebound nearly 25%, consultancy Strategie Grains said in initial projections.
Notabily, for sunflower seeds output is predicted to rebound to 11.2 million tonnes from a revised 9.0 million in 2022.
The soybean harvest is seen rising 30% to 3.1 million tonnes, Strategie Grains added.
On the other hand, the Czech Republic started culling over 15,000 ducks from a farm in the country’s south due to an outbreak of bird flu, CTK news agency reported on Monday.
The farm in the town of Frahelz, 130 km (80 miles) from Prague, had 22,000 ducks originally, of which 7,000 died last week due to the highly pathogenic H5N1 virus, CTK said.
Hungary last week reported an outbreak of the same virus, and a farm was forced to kill 3,000 geese.
From North Africa, Egypt’s wheat strategic reserves are sufficient for five months, Supply Minister said on Monday.
The country’s sugar, vegoils, rice strategic reserves were sufficient for 3.8 months, 5.7, 6.6 months respectively.
From Levant, Jordan prime Minister Bisher Khasawneh said that despite major economic challenges, Jordan’s inflation rate remained within the 4 per cent range, far below that of European states or the US.
The premier said that the Kingdom has a comprehensive reform and modernisation project for the Jordanian state, which aims to improve many areas as well as the general quality of life.
There are signs that the national economy has started to recover, such as Jordan’s 43 per cent increase in exports compared to last year.
According to the prime minister, the rising costs of staple foods in the wake of the Russian-Ukrainian conflict and the Jordanian government’s plan to keep strategic stocks of wheat, sufficient for over a year and a half, and barley, sufficient for more than 10 months, posed the greatest challenge.
In April, indeed, the government made the strategic decision to keep buying wheat and barley to maintain the strategic stock, despite the fact that doing so resulted in a higher bill given the $517 price tag attached to a tonne of wheat.
The prime minister also stressed the government will continue bread subsidies.
He noted that the bread subsidy is included in the draft general budget, with an allocation exceeding JD200 million.
From Russia, farmers have planted winter grains on 17.7 million hectares, sligthly down compared with 18.4 million hectares around the same date a year earlier.
The weather conditions remain good for winter wheat in the Volga and the central regions of Russia, while it is dryer than normal in the southern region.
In this context, Russian wheat export prices fell slightly last week.
Notabily, according to the IKAR, prices for Russian wheat with 12.5% protein content and for supply from Black Sea ports in late December-early January were at $315 a tonne free on board (FOB) on Friday evening, down $2 from a week earlier.
According to Sovecon, wheat prices for immediate delivery fell by $1 to $314-318 per tonne.
As a results, Russia continued to export wheat in relatively fast mode for this time of the season.
Russia’s wheat exports tend to find seasonal peaks around October through December.
Russian wheat exports are expected reached 4.3 MMT in November, which would match October’s tally, if realized.
Per latest port data, 1 million tonnes of grain were exported last week.
Meantime, Russia’s agriculture ministry has already bought 2.21 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.
As for other products, price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 12,650 rbls/t unchanged from prior week (Sovecon).
Price for sunflower seeds was at 23,875 rbls/t +1,300 rbls (Sovecon).
Price for domestic sunflower oil was at 73,825 rbls/t -100 rbls (Sovecon).
Price for domestic soybeans was at 31,300 rbls/t +400 rbls (Sovecon).
Export price for sunflower oil was at $1,180/t -$60 (Sovecon).
Export price for sunflower oil was at $1,100/t -$90 oil (IKAR).
Price for white sugar, Russia’s south was at $744.1/t -$1.1 (IKAR).
From Ukraine, Ukrainian wheat exports fell to 1.58 million tonnes in November from 1.98 million tonnes in October, the UGA Ukrainian grain traders union said on Monday.
The UGA also said Ukrainian exporters had declared 5 million tonnes of grains and oilseeds for export during November and the ‘grain corridor’ contributed 2.3 million tonnes last month, down more than 1.2 million tonnes from October.
The Ukrainian agriculture ministry said on Monday the country had exported almost 18.3 million tonnes of grain so far in the 2022/23 season, down 29.9% from the 26.1 million tonnes exported by the same stage of the previous season.
The volume included more than 6.9 million tonnes of wheat, 9.8 million tonnes of corn and about 1.5 million tonnes of barley.
Meantime, according to the UAE’s economy ministry, the United Arab Emirates and Ukraine agreed on Monday to begin talks on a bilateral trade deal, expected to conclude by the middle of next year.
The UAE has tried to remain neutral in the Ukraine conflict.
UAE minister of state for foreign trade Thani Al Zeyoudi and Ukrainian economy minister Yulia Svyrydenko signed a joint statement on negotiations towards a Comprehensive Economic Partnership Agreement (CEPA), the ministry said.
This would “help to drive Ukraine’s economic recovery and create new opportunities for exporters, investors and manufacturers, and facilitate collaboration in high-value sectors such as infrastructure, heavy industry, aviation, IT & food security,” Al Zeyoudi tweeted.
Talks will likely centre on opportunities in the services sector and food security, where the UAE is making a push.
Ukraine is a major supplier of grain to the Middle East.
A CEPA with Ukraine would open up access to new markets in Asia, Africa and the Middle East for Ukraine’s agricultural and industrial output, Al Zeyoudi said.
From the Middle Kingdom, China sold 39,709 MT of wheat from state reserves on 11/30.
That was the entirety of the offer, on an average price of 2,797 yuan ($401.35) per MT.
From Australia, “the winter crop is forecast to be the second largest on record at over 62Mt”, according to estimates released yesterday by ABARES in its quarterly Australian Crop and Agricultural Commodities reports.
According to ABARES, indeed, while spring rain has impacted production, yields and quality in some parts of the country, some states are experiencing their best winter crops on record.
Notabily, the country wheat production is forecast to reach 36.6 million tonnes (Mt).
The country will also produce 13.4Mt of barley and 7.3Mt of canola from the winter-crop harvest now under way.
The wheat figure is up 14pc from the previous estimate released in September of 32.2Mt, and breaks the national production record set in 2021-22 of 36.3Mt.
The canola estimate is up 11pc from 6.6Mt forecast in September, and breaks last year’s record of 6.8Mt.
While barley is up 10pc on the previous estimate of 12.3Mt, it is expected to be fourth-largest crop on record for barley, with its area being down on last year’s compared with increases for wheat and canola.
“The gross value of agricultural production is forecast to be a near-record $85 billion in 2022-23, just shy of the record set the previous year”.
The gross value of crop production is forecast to remain at near record levels in 2022–23 at almost $51B.
The gross values of wheat and barley production are forecast to reach record highs, both surpassing the previous record levels reached in 2021-22, while the gross value of canola production is forecast to be the second highest on record in 2022-23.
Livestock production was expected to hold steady, contributing $34B to the national total.
Australia’s agricultural exports are forecast to break records at over $72B in 2022-23.
On the international trade scene, a government agency in Pakistan is believed to have bought about 500,000 tonnes of wheat in an international tender for the same volume which closed last week, bringing total imports on Monday to 950,000 tonnes.
The tender purchase was in addition to a separate deal announced on Monday by Pakistan for 450,000 tonnes of Russian wheat in an inter-government deal from the Russian state firm Prodintorg at $372 per tonne.
The Trading Corporation of Pakistan (TCP) bought the 500,000 tonnes all at $372 a tonne c&f.
It’s believe the sellers were Cereal Crops with 130,000 tonnes, Agrocorp with 120,000 tonnes, Aston 190,000 tonnes and Grainflower/GTCS 60,000 tonnes.
The tender sought rapid shipment between Dec. 16, 2022, and Feb. 8, 2023.
The wheat can be sourced from optional origins but traders expected Russia to be a substantial source.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
