Good morning Farmer Family …
US farm markets were mixed but mostly lower on Tuesday.
Corn faded 0.51% lower.
Soybeans, in contrast, saw plenty of upside as prices boosted 1.20% higher.
Soymeal ended the day with 3.82% gains.
Soy oil, meantime, continued south, with 1.52% losses.
The wheat complex continued to spiral lower, with Chicago SRW wheat prices slumped to their lowest levels in more than a year after cuts of 1.35% on the day.
Kansas City HRW wheat prices were 1.4% in the red at the close. Minneapolis spring wheat was the firmest, giving back just 0.67% on the day.
Soybeans climbed, supported by fresh export sales.
The U.S. Department of Agriculture, indeed, announced that U.S. exporters sold 264,000 tonnes of soybeans for delivery China, as well as 240,000 tonnes to unknown destinations, both during the 2022/2023 marketing year.
The easing of COVID-19 quarantine rules in China could increase demand for soybeans.
Weather concerns which threaten Argentina’s crop, made an additional support to the complex, strengthening the soybean meal market.
Wheat, on its part, ended the session lower on strong global supplies.
Russian wheat export prices fell last week amid a record domestic harvest.
A record wheat harvest is expected in Australia, meantime.
Corn followed wheat lower, despite support from the soybean complex, as the lack of export demand weighed to the market.
Census data showed 2.077 MMT of corn was exported during October.
That was down 22 mbu from September and down 48.7% yr/yr.
It was, however, 129,000 MT larger than weekly Inspections.
The season’s total through the first 2 months was 185.32 mbu.
Census also had 83.77m gallons of ethanol exports for October, which is 21% below last year.
Soybean exports for October were 9.781 MMT (359 million bushels).
That was down 9% from last year.
October meal exports were 871,000 MT, down 12% year over year.
Bean oil exports totaled only 10,000 metric tonnes, down 59.6% .
US wheat exports were 1.384 MMT in October, according to official Census numbers.
That was up 11% vs. October 2021.
That is also 256,000 MT above the weekly Inspections data.
The season’s total through October was 10.053 MMT, trailing last year by 150k MT as the slowest pace since 18/19.
In this context, corn basis bids were mostly steady across the central U.S. on Tuesday but did slide 2 cents lower at an Illinois river terminal and 15 cents lower at an Indiana elevator.
Soybean basis bids tumbled 30 cents lower at an Indiana elevator and dropped 5 cents at an Iowa river terminal while firming 2 cents at an Illinois river terminal and holding steady elsewhere across the central U.S..
Commodity funds were net buyers of CBOT soybean and soymeal futures contracts, and net sellers of soyoil, wheat and corn wheat futures.
On this morning, Chicago soybean prices gained more ground.
Wheat prices continued to face headwinds.
Notabily, the most-active soybean contract on the Chicago Board of Trade rose 0.2% to $14.58-1/4 a bushel, as of 04:03 GMT.
Wheat was down 0.3% at $7.27 a bushel, after dropping to its lowest since Oct. 2021 on Tuesday at $7.23-1/2 a bushel and corn lost 0.2% to $6.36-1/4 a bushel.
In energy markets, oil futures were little changed in Asia on Wednesday.
Brent crude futures, indeed, edged up 3 cents, or 0.04%, to $79.38 a barrel by 07:17 GMT, after they fell below $80 for the second time in 2022 during the previous trading session.
U.S. crude futures mostly traded sideways, and were down 9 cents or 0.12% to $74.16 a barrel.
Oil prices have dropped by around 9% in the latest three straight sessions, giving up most of their gains for the year.
Brent’s slump on Tuesday was the largest daily decline since late September.
Uncertainty on how the price cap on Russian oil would impact supply contributed to volatility.
Russia is considering three options, including banning oil sales to some countries and setting maximum discounts at which it would sell its crude, to counter the price cap imposed by Western powers, the Vedomosti daily reported on Wednesday.
Some weakness was also attributed to a stronger greenback and by further talk of a looming recession.
Those fears were sparked by strong economic data or hawkish signals from other policymakers.
Some optimism remained that buyers could come back if the market bottoms out, which is in the $70 region.
Meantime, expectations of rising China demand continued to be a positive driver.
The reopening could see a 1% boost to global oil demand.
Data earlier on Wedneday showed China’s crude oil imports in November rose 12% from a year earlier to their highest in 10 months, as companies replenished stocks with cheaper oil and as new plants started up.
A potential drawdown in U.S. crude stockpiles of around 6.4 million barrels, according to API figures, also gave some sentiment support on the supply front.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index snapped its three-session losing streak on Tuesday, supported by higher rates for capesize and panamax vessels.
The overall index, indeed, rose 17 points, or about 1.3%, to 1,340.
Notabily, the capesize index gained 38 points, or 2.5%, to 1,540, its biggest daily percentage gain in almost a week.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, increased $317 to $12,774.
The panamax index was up 19 points, or about 1.2%, at 1,657, its highest in nearly three weeks.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, increased $171 to $14,912.
The supramax index remained unchanged at 1,158.
In equity markets, US stocks on Tuesday fell sharply for a second day.
Global stock markets had carry-over some support Tuesday from a rally in China’s Shanghai Composite Stock Index as the Chinese government accelerates the easing of Covid restrictions.
Beijing joined Shanghai, Shenzhen, Guangzhou, and other major Chinese cities in scrapping Covid testing requirements to enter most public venues.
Lower bond yields were also supportive for stocks as the 10-year T-note yield Tuesday fell -6.4 bp to 3.510%.
Fed officials have recently signaled that the Fed will downshift to a +50 bp rate hike at next week’s FOMC meeting after four straight +75 bp increases.
However, a slump in crude prices of more than -3% on recession fears weighed on energy stocks and the overall market.
Also, a sell-off in chip stocks weighed on technology stocks and the overall market after recent sales information from the Semiconductor Industry Association showed ongoing weakness with memory products.
Losses in U.S. stock indexes accelerated, after comments from U.S. bank chiefs.
Goldman Sachs, indeed, warned about pay and job cuts, citing “some bumpy times ahead.”
JPMorgan said a “mild to hard recession” may hit next year.
In this context, Apple fell 2.5%, Disney slid 3.8% and AutoZone dropped 2.8%.
A sell-off in Meta Platforms by more than -6% was negative for the overall market, after a report that said the European Union is targeting Facebook’s ad model.
Media stocks also retreated Tuesday as Paramount Global tumbled more than -6% and Warner Bros Discovery fell more than -4%.
As a results, yesterday the S&P 500 fell 1.4%, its fourth straight loss, to 3,941.26 and the tech-heavy Nasdaq sank 2%, to 11,014.89.
The Dow Jones Industrial Average lost 1% to 33,596.34, while the Russell 2000 slipped 1.5% to 1,812.58.
Wall Street will get a weekly update on unemployment claims on Thursday.
The job market has been one of the stronger pockets in the economy.
On Friday, the government will release its November report on producer prices.
That will give investors more insight into how inflation is impacting businesses.
The University of Michigan will release its December survey on consumer sentiment on Friday.
However, the major indexes are on pace for a weekly loss after posting two straight weekly gains.
On this morning, shares fell in Asia.
The Hang Seng index in Hong Kong fell 2.5% to 18,949.24 and the Shanghai Composite index was down 0.4% at 3,199.62.
Tokyo’s Nikkei 225 index slipped 0.7% to 27,686.40 and the Kospi in Seoul gave up 0.4% to 2,382.81.
The Shanghai Composite lost 0.4% to 3,199.62, while Australia’s S&P/ASX 200 dropped 0.9% to 7,229.40.
Shares also fell in Mumbai and Bangkok.
China reported its imports and exports fell in November as global demand weakened and anti-virus controls weighed on the second-largest economy.
Customs data showed exports sank 9% from a year earlier, worsening from October’s 0.9% decline.
Imports fell 10.9%, down from the previous month’s 0.7% retreat.
Chinese trade had been forecast to weaken as global demand cooled following interest rate hikes by the Federal Reserve and central banks in Europe and Asia to rein in surging inflation.
In currency trading, the dollar rose to 137.55 Japanese yen from 136.94 yen.
The euro slipped to $1.0457 from $1.0468.
Going back to analyzing the other agricultural markets ..
From Canada, fertilizer producer Mosaic Co said on Tuesday that it has temporarily curtailed potash production at its Colonsay, Saskatchewan, mine in Canada, citing slower-than-expected demand.
Colonsay was producing at a rate of 1.3 million tonnes annually, and planed an expansion to raise output to between 1.8 million and 2 million tonnes by late next year.
Thus, its inventories are, indeed, adequate to meet demand in the short term.
Mosaic’s decision to curtail production would be on short-term, while longer-term fundamentals look positive.
The Florida-based company, indeed, expects to restart both of Colonsay’s mills in early 2023.
Meantime, rival Nutrien Ltd is carrying out a potash expansion of its own in Saskatchewan.
In Europe, we saw another session of decline on grain markets.
Fears of lower demand linked to the economic recession, weighed on prices, that are returning to the levels of just before the war in Ukraine, abandoning, at least temporarily, the premium linked to geopolitical risks.
European Union soft wheat exports for the 2022/23 marketing year were trending 3.5% above last year’s pace, reaching 14.49 Mt through December 4.
Algeria, Morocco, Egypt, Nigeria and Saudi Arabia were the top five destinations.
A breakdown of the EU data showed France remained by far the leading EU soft wheat exporting country this season, with 5.89 million tonnes shipped, followed by Romania with 1.81 million tonnes, Germany with 1.58 million tonnes and then Latvia and Lithuania with 1.22 million tonnes each.
In contrast, EU barley exports are down 41% year-over-year, with 2.75 million tonnes.
Imports of corn, meantime, stood at 12.65 Mt.
That is 119% above a year-earlier 5.77 million.
Spain is the leading EU maize importer so far in 2022/23 with 4.73 million tonnes, ahead of the Netherlands at 1.40 million, Poland with 1.06 million, Portugal with 1.05 million, and Italy with 920,000, the data showed.
Brazil, Ukraine, Serbia, Canada and South Africa were the top five suppliers.
Rapeseed imports are also up at 3.10 Mt compared to 2.20 Mt last year.
Soybean imports have reached 4.72 MMT through December 4, which is around 12% below last year’s pace so far.
The United States, Brazil, Ukraine, Canada and Uruguay were the top five suppliers.
EU soymeal imports are now running slightly ahead of last year’s pace, with 6.89 million metric tons.
Meantime, the European Union agreed on Tuesday on a new law to prevent companies from selling into the EU market coffee, beef, soy and other commodities linked to deforestation around the world.
The law will require companies to produce a due diligence statement showing that their supply chains are not contributing to the destruction of forests before they sell goods into the EU – or they could face hefty fines.
Failure to comply could result in fines of up to 4% of a company’s turnover in an EU member state.
Countries that will be impacted by the new rules, including Brazil, Indonesia and Colombia, say they are burdensome and costly.
Supply certification is also difficult to monitor, especially as some chains can span multiple nations.
EU countries and the European parliament must now formally approve the legislation.
The law can enter into force 20 days later, after which large companies have 18 months to comply, and smaller firms 24 months.
EU member nations will be required to carry out compliance checks covering 9% of companies exporting from countries with a high risk of deforestation, 3% from standard-risk countries and 1% for low-risk countries.
The EU said it would work with affected countries to build up their capacity to implement the rules.
From the Black Sea basin, Windy and rainy weather has been hitting the shallow water ports in Russia and Ukraine, with operations completely stopped in Azov until the weather improve.
Delays also were reported in the Ukrainian small water ports that have increased the congestion in the Sulina canal – the link connecting the Black Sea with the River Danube.
Russian ports have faced bad weather for a number of weeks already, but this week it’s all paralyzed.
Ukrainian small water ports have also faced challenges amid weather, with loading operations delayed amid rain.
The flow of vessels in the Sulina canal was also said to have been affected, with queues increasing to more than 100 ships and forcing an increase in the delay time of up to two weeks, according to trade sources.
However, no major changes were seen for the market in terms of freight rate ideas or delivered CFR prices for the grains shipped via such routes.
Meantime, the Joint Coordination Center reports that 67 ships are currently waiting for permission to enter Ukraine ports, while another 28 are loaded with grain or other agricultural products and are waiting for inspection to depart.
Ukraine’s grain traders’ union reported that November wheat exports are estimated at 1.6Mt down from 2.0Mt in October, maize at 2.0Mt (2.3Mt in Oct), and barley at 296,000t (383,000t in Oct).
Rapeseed shipments seen at 412,000t (778,000t in Oct).
Ukraine will likely reduce its winter grain exports in the 2023/24 season due to a smaller-than-expected sowing area caused by the war.
The ministry data showed that farmers had sown 4.5 million hectares of winter grains as of Nov. 29, or 94% of the expected area.
The acreage included 3.8 million hectares of winter wheat versus 6.2 million sowed last year.
Meantime, APK-Inform said the export of wheat could vary between 8.1 and 13.8 million tonnes in the 2022/23 July-June season, depending on the logistical situation.
Ukraine has exported 6.9 million tonnes of wheat so far in 2022/23.
Analyst APK-Inform also said Ukraine may consume up to 8 million tonnes of wheat.
From the Middle Kingdom, China’s November imports of soybeans fell 14% on the year to 7.35 million tonnes, customs data showed on Wednesday.
Logistics woes in United States helped confound expectations for a significant rise.
Several market participants had, indeed, expected arrivals of more than 9 million tonnes last month.
However, slower loading of shipments and longer customs clearance time, made those numbers, after October’s plunge in arrivals to just 4.1 million tonnes, the lowest level since 2014.
December arrivals would exceed 10 million tonnes.
However, imports in the first 11 months of the year, were down 8.1% at 80.53 million tonnes, the data from the General Administration of Customs showed.
Meantime, China’s most active live hog futures contract fell more than 3% on Wednesday.
That was the biggest decline since July, as spot prices came under pressure from weak consumption and heavy slaughter volumes.
The January contract, indeed, was down 3.05% at 20,315 yuan ($2,908.71) per tonne by 10:15 a.m. (0215 GMT).
Average national hog prices were 22.43 yuan per kilogram on Tuesday, according to Shanghai JC Intelligence (JCI) Co Ltd, and have declined 8% so far this month.
The market had expected a sharp drop in temperature this month to boost meat consumption, supporting pig prices.
But the current reality is that the consumption growth is not strong, and the supply is more abundant due to the increase in slaughter.
Beijing had urged major hog producers to step up slaughter volumes after prices rallied in the third quarter.
Top Chinese hog producer Muyuan Foods Co Ltd said on Monday it is expected to slaughter between 61 million and 62 million hogs this year, well above the 56 million it had earlier targeted.
Thus, the market no longer has good expectations for a rise in pig prices before the Spring Festival.
($1 = 6.9842 Chinese yuan).
From Australia, grower wheat and barley cash bids drifted lower again yesterday.
Barley found further weakness in eastern Australia and continued to slide.
Malting barley bids were off A$30-40/t by COB as more started to hit the bin and was being cashed.
This season most certainly does keep providing plenty of challenges and surprises.
Parcels of milling wheat in Port Kembla zone are coming to the market.
At the moment there is a bit of grain out there for all buyers which continues to fill the markets needs for now.
The run of clear skies looks to be coming to an end with showers forecast to build across all states, with 5-15mm expected for most.
South-eastern Vic looks set to receive higher totals of between 15-50mm.
On the international trade scene, the World Trade Organization said in a report on Tuesday that countries were introducing trade restrictions at an increased pace, particularly on food, feed and fertilisers.
“Out of the 78 export restrictive measures on food, feed, and fertilizers introduced since the start of the war in late February, 57 are still in place, covering roughly $56.6 billion of trade,” said WTO Director-General Ngozi Okonjo-Iweala.
“These numbers have increased since mid-October, which should be a cause for concern,” she said.
However, nearly 80 % of COVID-19 trade restrictions have been repealed, the report said, citing data through to mid-October.
Meantime, South Korean flour millers have reportedly purchased around 50,000t of US milling wheats for Feb-Mar shipment, including SW (8.5pc-11.0pc) in the low- to mid-$320 fob depending on protein content, HRW (11.5pc) in the low-$380s fob, and NS/DNS (14pc) in the mid-$390s fob.
Trading house United Grain Corporation believed to be the seller.
Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said on Wednesday that it will seek 70,000 tonnes of feed wheat and 40,000 tonnes of feed barley to be loaded by Feb. 8, 2023 and arrive in Japan by March 9, via a simultaneous buy and sell (SBS) auction that will be held on Dec. 14.
The food-quality wheat could be sourced from the United States, Canada and Australia.
Of the total, around 41% is expected to be sourced from the U.S.
South Korea purchased 60.000t of animal feed wheat, likely sourced from Australia, in a private deal that closed yesterday.
The grain is for shipment between March 23 and April 23.
The Taiwan Flour Millers’ Association purchased an estimated 42,750 tonnes of milling wheat to be sourced from the United States in a tender that closed on Wednesday.
The purchase involved various wheat types for shipment from the U.S. Pacific Northwest coast between Jan. 25 and Feb. 8 next year.
It covered 29,150 tonnes of U.S. dark northern spring wheat of a minimum 14.5% protein content bought at $401.60 a tonne FOB U.S. Pacific Northwest coast.
Also included were 9,100 tonnes of hard red winter wheat of a minimum 12.5% protein content bought at $382.10 a tonne FOB and 4,500 tonnes of soft white wheat of a maximum 9.5% protein bought at $322.68 a tonne FOB.
The purchase has an additional freight charge of $37.55 per tonne for ocean shipping from the U.S. Pacific Northwest coast to Taiwan.
The seller of the dark northern spring was said to be trading house CHS.
The hard red winter and soft white wheat were sold by trading house Columbia Grain International.
South Korea’s Feed Leaders Committee (FLC) purchased about 130,000 tonnes of animal feed corn expected to be sourced from South America in an international tender on Tuesday.
One consignment of 65,000 tonnes was purchased at an estimated $328.99 a tonne c&f with an extra $1.50 a tonne surcharge for additional port unloading.
The seller was believed to be trading house CHS.
The corn was for shipment from South America in 2023 between Jan. 5 and Jan. 20 with arrival in Korea around March 6.
A second consignment also from South America of 65,000 tonnes was also purchased at an estimated $324.00 a tonne c&f with an extra $1.50 a tonne surcharge for additional port unloading.
Seller was believed to be trading house Viterra.
The second consignment was said to involve corn already loaded on a ship.
Taiwan’s MFIG purchasing group has issued an international tender to buy up to 65,000 tonnes of animal feed corn to be sourced from the United States, Brazil, Argentina or South Africa.
The deadline for submission of price offers is Wednesday, Dec. 7.
Price offers are being sought for one consignment of yellow corn at a premium over the Chicago May 2023 corn contract CK3.
Shipment is sought between Feb. 13 and March 4 if the corn is sourced from the U.S. Gulf, Brazil or Argentina.
If sourced from the U.S. Pacific Northwest coast or South Africa, shipment is sought between Feb. 28 and March 19.
South Korea’s state-backed Agro-Fisheries & Food Trade Corp. has bought about 65,000 tonnes of soybeans free of genetically-modified organisms (GMOs) in an international tender for up to 70,000 tonnes which closed on Dec. 5.
The purchase involved 25,000 tonnes for arrival in South Korea in January 2024, 20,000 tonnes for arrival in February 2024 and 20,000 tonnes for arrival in June 2024.
The corporation regularly buys supplies for arrival several years in advance.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
