Good morning Farmer Family …
US farm markets were mixed but mostly higher on Thursday.
Corn managed modest gains around 0.2%.
Soybeans showed the most upside, as closed 0.97% higher.
Meal price was 1.61% stronger on the day.
Bean oil price was 0.57% higher.
Wheat turned in a mixed performance.
Minneapolis spring wheat prices firmed 0.83%%, while Chicago SRW and Kansas City HRW wheat prices faded 0.43% and 0.47% lower respectively.
Soybean prices climbed, supported by strong export demand.
Yestewrday private exporters reported to the USDA having sold 118,000 metric tons of soybeans for delivery to China during the 2022/2023 marketing year and 718,000 metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year.
Meantime, Argentina’s estimated area for 2022/23 soybeans, could be cut due to the effects of prolonged drought in the region, as reported by the Buenos Aires Grains Exchange Wednesday.
That pushed the oilseed to nearly 3-month highs.
In this context, corn also followed soybeans higher, despite less-than-impressive export data from USDA.
Wheat, in contrast, traded near even, after Wednesday’s rebound from a one-year low, as remained capped by competition from record high Russian supplies.
Weekly export sales, were also relatively disappointing for wheat.
Notabily, going into weekly export sales report, yesterday USDA showed corn bookings at 691,556 MT for the week ending 12/1.
That was up 14% from last week, but was down 39% from the same week last year.
There were no new crop bookings reported.
Accumulated commitments were 19.04 MMT as of 12/1.
That remains 48% behind last year’s pace.
As for soybean, USDA reported weekly bean bookings were 1.716 MMT for the week that ended 12/1.
That was more than double last week, and was 31% higher than the same week last year.
The week’s shipments were 2.25 MMT for a season total of 21.17 MMT.
That, compared last year, is still trailing by 16%.
New crop bookings were 30k MT.
The total forward sale sits at 40k MT.
For the products, soymeal sales were 226,200t and bean oil bookings were only 500 metric tonnes.
Accumulated shipments sit at 1.755 MMT for meal and 11.8k MT for soy oil.
As for wheat, USDA Export Sales data showed 189,858 MT of wheat sold in the week ending 12/1.
That is a 22% increase over the previous week.
Accumulated wheat commitments 13.64 MMT, compared to 14.56 MMT last season.
It should to note, however, that yesterday grain movements, were limited also because traders are awaiting monthly world crop forecasts from the USDA will out this afternoon.
Pre-report estimates for the December WASDE have, a U.S. corn carryout of between 1.170 and 1.350 bbu.
Pre-report surveys don’t expect much change in the world ending stocks, with the average estimate of 301 MMT up just 200,000 from November.
As for soybean, pre-report estimates, have soybean carryout at 233.3 mbu on average.
That would be a 13.3 mbu increase from the November estimate.
The expected world ending stocks average at 102.3 MMT, up 100,000 from last month.
As for wheat, the average trade estimate is for a 581.3 mbu of US wheat carryout.
That would be a 10.3 mbu increase from November if realized.
World stocks ideas run 262.5-276 MMT, with an average of 268 MMT.
That would just be 200,000 MT over last month.
In this context, corn basis bids were mostly steady to firm after rising 1 to 8 cents higher at three Midwestern locations, on Thursday.
An Iowa processor bucked the overall trend after easing 2 cents lower.
Soybean basis bids fell 5 to 10 cents lower at two Midwestern processors and dropped 5 cents at an Iowa river terminal while holding steady elsewhere across the central U.S..
Commodity funds were net buyers of CBOT soybean, soymeal, corn and soyoil futures contracts, and net sellers of wheat futures.
On this morning, Chicago soybeans gained more ground, trading close to their highest since mid-September.
Corn and wheat also rose.
Notabily, the most-active soybean contract on the Chicago Board of Trade rose 0.1% to $14.88 a bushel, as of 03:35 GMT, wheat added 0.1% to $7.47-1/4 a bushel, and corn gained 0.1% to $6.43 a bushel.
However, while soybeans were likely to post a weekly gain, wheat was on track for a fifth consecutive weekly decline and corn was down for a second straight week.
For the week, indeed, soybeans have gained about 3.5%, while wheat was down 1.8% and corn has given up around half a percent.
Strong demand led by top importer China underpinned the soyben market.
In energy markets, oil prices bounced higher on Friday.
Brent crude futures, indeed, were at $76.73 a barrel, up 58 cents, or 0.76%, at 07:16 GMT, after dropping 1.3% on Thursday.
U.S. West Texas Intermediate crude rose 52 cents, or 0.73%, to $71.98 a barrel, having settled 0.8% lower in the previous session.
News of an accident closing Canada’s TC Energy’s Keystone pipeline in the United States prompted a brief rally on Thursday.
Also, more than 14,000 barrels of crude oil spilled into a creek in Kansas, making it one of the largest crude spills in the United States in nearly a decade.
Prices, however, finally eased as the market took a view that the closure would be brief, max two week.
Thus, both benchmarks were headed for their biggest weekly drop in months on worries over slowing global demand growth.
Meantime, Russia’s Lukoil and U.S. private equity firm Crossbridge are close to a deal for the sale of the Russian group’s refinery in Sicily.
The agreement between Lukoil and Crossbridge, which is supported by Swiss commodity trader Vitol, could be worth just under 1.5 billion euros ($1.58 billion).
The Lukoil-owned site in Sicily refines a fifth of Italy’s crude and directly employs about 1,000 people in an economically depressed area.
The refinery, had relied on mainly Russian crude in recent months.
But now is unable to take its mainstay feedstock after the European Union embargo came into force on Monday.
Last week, Rome laid down a scheme to place the plant in the hands of trustees to protect jobs and domestic refinery capacity from the embargo.
Thus, the possibility that the refinery may end up under a trusteeship has accelerated negotiations between Lukoil and Crossbridge.
The refinery’s revenues are projected to more than triple this year, surpassing 10 billion euros ($10.55 billion) on the back of higher prices for diesel and gasoline.
Any agreement to sell the plant will be subject to government scrutiny under the so-called golden power regulation, which gives Rome the possibility to block the transaction should it harm jobs or strategic production in the country.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index rose for a third straight session on Thursday, helped by stronger demand for capesize vessels.
The overall index, indeed, rose 12 points, or about 0.9%, to 1,385, its highest in four weeks.
Notabily, the capesize index gained 40 points, or 2.5%, to 1,675, its highest since Oct. 27.
Average daily earnings for capesize, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, increased $327 to $13,888.
The panamax index was up 2 points at 1,661, extending its gain for an eleventh straight session.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, increased $15 to $14,950.
The supramax index shed 5 points at 1,153.
In equity markets, US stocks on Thursday posted moderate gains, led by strength in technology stocks.
A rally in beaten-down chip stocks, led the technology sector higher.
Chipmaker Nvidia climbed 6.5%.
Microsoft rose 1.2%.
Health care companies and retailers also supported stocks with Pfizer up 3.1% and Nike 2.8% on the day.
Stock indexes extended their gains after Thursday’s news showed U.S. weekly continuing unemployment claims jumped to a 9-1/2 month high.
Notabily, weekly initial unemployment claims rose +4,000 to 230,000, right on expectations.
However, weekly continuing claims rose +62,000 to a 9-1/2 month high of 1.671 million, showing a weaker labor market than expectations of 1.618 million.
That suggests that workers who are losing their jobs are having more trouble finding new ones, which shows labor market weakness that may prompt the Fed to slow its pace of interest rate hikes.
Meantime, however, bond yields mostly rose.
Notabily, the yield on the 10-year Treasury note, which helps set mortgage rates, increased to 3.49% from 3.42% late Wednesday.
Markets are awaiting fresh inflation news, with the U.S. PPI report due this Friday and U.S. CPI report due next Tuesday.
The consensus is for Friday’s Nov PPI final demand to ease to 7.2% y/y from 8.0% y/y in Oct.
In this context, the S&P 500 rose 0.8% to 3,963.51, while the tech-heavy Nasdaq composite closed 1.1% higher, at 11,082.
The Dow Jones Industrial Average added 0.5% to 33,781.48.
Small company stocks gained ground.
The Russell 2000 index added 0.6% to 1,818.29.
Thus, major indexes are all in the red for the week.
The Fed will meet next week and is expected to raise its benchmark interest rate by a half-percentage point.
Meantime, shares rose in Asia on Friday.
Hong Kong’s Hang Seng index rose 1.9% to 19,810.42.
The Shanghai Composite index climbed 0.3% to 3,205.62.
Tokyo’s Nikkei 225 index gained 1.2% to 27,901.01 and the Kospi in Seoul rose 0.8% to 2,389.04.
Australia’s S&P/ASX 200 picked up 0.5% to 7,213.20.
Chinese benchmarks rose on reports the government is planning new measures to support the ailing property sector, which has dragged on growth over the past several years.
The relaxation of some of the country’s “zero-COVID” rules is also boosting hopes for the economy will gain momentum, though experts say it will take months for tourism and other business to recover from the disruptions of the pandemic.
In currency trading, the U.S. dollar slipped to 136.02 Japanese yen from 136.69 yen on Thursday.
The euro rose to $1.0578 from $1.0556.
Going back to analyzing the other agricultural markets ..
From Central America, Mexico’s controversial move to ban imports for all genetically modified corn by 2024 has now been postponed until 2025 and the country’s economy minister reported that there will be possible moves that could ultimately overhaul the plan.
From South America, Brazil’s CONAB reduced their corn production forecast by 0.57 MMT to 125.83 MMT.
CONAB also trimmed their soybean production estimate slightly (~60k MT) from November to 153.48 MMT.
However, Brazil’s total grain crop is expected to reach a record 312.2 million tonnes.
That is up 15% from the previous year though slightly down from a previous estimate of 313.04 million tonnes.
Thus, soybean production is seen now, up 22.2% year-on-year, while total corn output is expected to jump 11.2% year on year.
In this context, Conab raised the 2022-23 Brazilian soybean export forecast to 96.6Mt, up 140,000t from last month, and kept the corn-export forecast steady at 45Mt.
Brazil’s corn exports to China are set to boom this month, with nine vessels carrying a total of 606,540t reportedly showing on shipping line-ups.
Two shipments totaling 93,250t set sail in November.
Brazilian soyoil production, meantime, is expected to increase slightly year-over-year, to 10.7 million metric tons.
In Europe, we saw little change in the markets yesterday.
Caution prevails ahead of tonight’s USDA report.
Economic growth is perhaps the main market driver at the moment, with the risk of recession.
The situation in China is also being closely monitored.
Nearly all French wheat and barley fields are in good condition as crops head into their winter dormancy phase.
Regular rainfall and warm temperatures during autumn helped sowing and early cereal growth.
Per latest data from farm office FranceAgriMer, indeed, an estimated 97% of soft wheat was in good or excellent condition in the week to Dec. 5.
That was down slightly from 98% the previous week and also just below a 98% rating in the same week last year, it said.
However, nearly all soft wheat and barley crops had emerged and were running about a week ahead of the average growth pace of the past five years.
The favourable growing conditions suggest strong yield potential for next year’s harvest, alyhough French crops tend to be more affected by weather from spring onwards, like this year.
FranceAgriMer will resume its weekly cereal reports in February after a winter break for the dormancy period.
Meantime, rapeseed prices continued to fluctuate while the European Commission is taking measures to significantly reduce the incorporation of palm oil in biofuels and food in the coming years.
The same is true for soybean oil, both of which are considered responsible of deforestation.
Notabily, the share of palm oil in biodiesel and in food in the European Union is expected to fall significantly within the next 10 years, leading to a sharp drop in imports, the European Commission said on Thursday.
In its 2022-2032 Agricultural Outlook, the Commission projected palm oil would account for 9% of total biodiesel output by 2032, down from an average 23% for 2019/2021.
Under the EU’s renewable energy directive, palm oil-based fuels, accused to be linked to deforestation, are to be phased out progressively by 2030.
The move raised outcry from the world’s two largest palm oil producers Malaysia and Indonesia.
In contrast the share of advanced biodiesels was expected to grow to 42% by 2032 from 29% in 2019/2021.
Of this biodiesel from waste oils and fats would account for 26%, up from 23%, and other advanced biodiesels for 16%, up from 6%.
“This increase is mainly driven by specific fuel blending targets for advanced biofuels and the fact that they can be double counted towards the overall mandatory blending targets”.
The use of other vegetable oils, primarily rapeseed oil, in biodiesel was expected to remain relatively stable at around 50% of biodiesel feedstock.
In food, the use of vegetable oils was expected to rise by 2.9% compared with the 2020/2022 average to 10.6 million tonnes in 2032.
But efforts to cut the use of palm and soybean oil in the EU would lead to a significant change in balance between the different types of vegetable oils, the Commission forecast.
Palm oil use in food would fall by 35.7% and soybean oil by 23.5% while rapeseed oil would gain 12.6% and sunflower oil would rise 27.5%, the Commission said.
This would eventually lead palm oil imports into the bloc to fall to 3.3 million tonnes in 2032 from 6.0 million tonnes in 2020/2022, it said.
From the Black Sea basin, Turkish President Tayyip Erdogan said on Friday that he will speak to Russia’s Vladimir Putin on Sunday, and he will also speak to Ukraine’s Volodymyr Zelenskiy in order to strengthen the U.N.-backed Black Sea grain deal.
From the Middle Kingdom, China’s securities regulator said on Friday it will permit international participation in trading of its soybean and soymeal futures contracts from Dec. 26.
The contracts are traded on the Dalian Commodity Exchange.
From Australia, the country exported 2,042,497 tonnes of wheat in October, according to the latest export data from the Australian Bureau of Statistics (ABS).
That is up 14pc from 1,785,830t in September.
The month is the first for the Australian marketing year, and saw inflows of new-crop wheat in zones around Australia’s northernmost bulk grain ports, namely Geraldton in Western Australia, and Gladstone and Mackay in Queensland.
Indonesia has continued its trend of recent months in being the biggest market for Australian bulk wheat, with 438,282t shipped in October, just ahead of China on 419,204t.
In third place for bulk buying in October was South Korea on 299,307t and The Philippines on 215,075t.
In containerised exports, Vietnam on 79,736t, Taiwan on 34,731t and Thailand on 31,194t were the biggest markets.
Meantime, local markets found some ground on the cash boards with wheat and barley markets relatively unchanged for the day.
Delivered markets were a dollar or two stronger through the Geelong/Melbourne zone.
ASX wheat was also firmer throughout the trading day.
Growers continue to let go of grain as it comes off the header and cash bids get hit, and around 20,000t traded on Clear Grain Exchange yesterday.
On the international trade scene, Japan’s MAFF purchased 154,957t of milling wheat from the US, Canada and Australia, including 31,425t US HRW, 27,290t US DNS of 14pc protein, 4187 t US WW, 64,628t CWRS of 13.5pc protein from Canada and 27,435t of ASW from Australia.
Importers in Thailand have reportedly purchased 65,000t feed wheat from optional origins, at US$339.90 c&f for Feb-Mar shipment.
Egypt would have purchased 260,000 t of Russian wheat in private negotiations at $354/t CFR.
The Philippines issued an international tender to purchase 135,000 metric tons of soymeal from optional origins that closes on Friday.
The Philippines also issued an international tender to purchase 110k MT of feed wheat from optional origins that closes on Friday.
The grains are for shipment between February and May, depending on where it is sourced.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
