Good morning Farmer Family …
US farm markets were mixed but mostly higher to start the week.
Corn prices rose 1.55%.
Soybeans failed to follow suit, and lost 1.57%.
Soymeal dropped 4.54%, while soy oil rallied back by triple digits, by 3.65%.
Wheat prices saw double digit gains, with Kansas City wheat leding the rally, as rose 3.51% on the day.
Chicago wheat price ended with 2.79% gains.
Minneapolis spring wheat prices closed with 1.64% gains.
Corn and wheat prices rose after reports came out of Ukraine that on Sunday the port of Odesa suspended operations following a Russian bombing there.
Operations resumed yesterday.
However the attack underscored once again the vulnerability of Ukrainian infrastructure and its ability to ship grain and other goods during this wartime.
Soybean prices, meantime, suffered a setback, dragged down by meal contracts, after timely rains in South America spurred some technical selling, .
Due extremaly dry weather conditions, last week we saw a strong meal rally (~16%) and soybeans followed the meal higher.
USDA’s weekly inspections report yesterday showed 505k MT of corn was exported during the week that ended 12/08.
That was down from 824k MT last week and was 46% below the same week last year.
Mexico, China, Honduras, Japan and Costa Rica were the top five destinations.
USDA also added 300k MT of late reported exports to previous reports, bringing the total to 7.147 MMT.
That is still down 3.2 MMT yr/yr.
As for soybean, USDA reported 1.84 MMT of soybeans were exported during the week that ended 12/8.
That was down from 2.08 MMT last week but was 91,369 MT higher yr/yr.
China, South Korea, Bangladesh, Japan and Pakistan were the top five destinations.
USDA also added 358k MT to past reports for a season total of 23.374 MMT.
Last year had 25.518 MMT shipped during the same time.
As for wheat, the report showed 218,460 MT of wheat was shipped during the week that ended 12/8.
That was down 123k MT wk/wk and 50.5k MT from the same week last year.
Japan, Mexico, South Korea, Nigeria and Trinidad were the top five destinations.
Accumulated wheat exports remain 286k MT behind last year’s pace with 11.135 MMT shipped through 12/8.
In this context, corn basis bids were steady to mixed on Monday after rising as much as 11 cents at a Nebraska processor and falling as much as 3 cents at an Iowa processor.
Soybean basis bids were mostly steady across the central U.S., but did tilt 10 cents higher at an Illinois river terminal and 10 cents lower at an Iowa processor.
Commodity funds were net buyers of CBOT wheat, corn and soyoil futures contracts.
The funds were net sellers of soybean and soymeal futures.
On this morning, Chicago wheat rose for a second consecutive session, fuelled by concerns over exports from the Black Sea region.
Corn also rose.
Soybeans edged up after closing lower on Monday, underpinned by strong U.S. exports to China, although rains in Argentina and forecasts of wet weather in Brazil limited the gains.
Thus, the most-active wheat contract on the Chicago Board of Trade was up 0.9% at $7.61-1/4 a bushel, as of 04:10 GMT.
Soybeans rose 0.3% to $14.64-1/2 a bushel, and corn climbed 0.2% to $6.55-1/4 a bushel.
In energy markets, oil extended gains on Tuesday as a key pipeline bringing supply to the United States remained shut.
Brent crude futures, indeed, rose $1.33, or 1.7%, to $79.32 per barrel by 07:25 GMT, while U.S. West Texas Intermediate (WTI) crude futures gained $1.15, or 1.6%, to $74.32.
Both benchmarks settled up more than 2% in the previous session.
The closure of TC Energy Corp’s Keystone Pipeline, which ships 620,000 barrels per day of Canadian crude from Alberta to the United States, has raised the prospect that inventories at the Cushing, Oklahoma, storage hub will decline.
Cushing is also the delivery point for the WTI crude futures contract.
Keystone has remained shut since a 14,000-barrel leak in the U.S. state of Kansas was reported on Dec. 7.
Expectations are that the pipeline closure will cause U.S. crude inventories to decline.
According to analysts, indeed, stockpiles dropped by 3.9 million barrels in the week to Dec. 9.
Expectations that loosening COVID-19 restrictions in China, will boost demand also supported oil’s advances.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index fell on Monday to mark its worst day in almost three weeks, pressured by lower rates for larger capesize and panamax vessel segments.
The overall index, indeed, fell 25 points or about 1.8% to 1,361, its biggest percentage loss since Nov. 22.
Notabily, the capesize index shed 64 points, or about 3.8%, at 1,619.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, decreased $533 to $13,424.
The panamax index fell 16 points, or about 1% to 1,643, to mark its worst day in more than two weeks.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, decreased $138 to $14,789.
The supramax index inched one point higher at 1,153.
In equity markets, US stock indexes trended higher on Monday throughout the day and finished near their highs.
Notabily, the S&P 500 rallied 1.4% while the Dow Jones Industrial Average added 1.6%.
The Nasdaq climbed 1.3% and the Russell 2000 gained 1.2%.
A rally in energy stocks, supported the overall market.
Exxon Mobil rose 2.5%.
Speculation that U.S. consumer prices may have eased in November also sparked short covering in stocks on Monday.
The consensus is that Tuesday’s Nov CPI will ease to +7.3% y/y from +7.7% y/y in Oct.
Meantime, the markets are awaiting the outlook for the Fed’s rate-hike regime after the Tuesday/Wednesday FOMC meeting and Fed Chair Powell’s regular post-meeting press conference.
A bearish factor for stocks yesterday was concern the reopening of China’s economy will be delayed due to the rapid spread of Covid.
An increase in T-note yields was also a negative factor for stocks.
Notabily, the yield on the 10-year Treasury, which helps set rates for mortgages and other loans, rose to 3.61% from 3.59% late Friday.
The two-year yield, which tends to more closely track expectations for the Fed, rose to 4.39% from 4.34%.
On this morning, Asian shares were mostly higher though in a cautious trading.
Tokyo’s Nikkei 225 rose 0.4% to 27,961.66 while the Hang Seng in Hong Kong gained 0.5% to 19,559.93.
Australia’s S&P/ASX 200 picked up 0.3% to 7,203.30.
In Seoul, the Kospi shed 0.3% to 2,366.89.
The Shanghai Composite index was flat at 3,179.71.
Shares fell in India and Taiwan but rose in Singapore and Bangkok.
In currency trading, the dollar index hovered at 105.01 on Tuesday.
Notabily, the dollar was flat at 137.68 Japanese yen.
It also held onto gains versus the Australian dollar at $0.6759.
The euro climbed to $1.0549 from $1.0534, meanwhile, the sterling was steady at $1.2268.
The Swiss franc was at 0.9360 per dollar.
The U.S. dollar has been supported by high and rising interest rate expectations as the Fed has hiked its benchmark funds rate to counter inflation, leaving the currency vulnerable to selling if inflation seems to be cooling.
Now traders are watching closely Thursday meetings of the European Central Bank, Bank of England and Swiss National Bank.
Going back to analyzing the other agricultural markets …
From South America, the sowing of Brazil’s 2022/23 soybean crop has reached 95% of the estimated area, slightly below last year’s level of 96%, agribusiness consultancy AgRural said on Monday, as producers hope for rains to secure good yields.
According to AGrural, soybean production could reach 153.48 million tons this year and that of corn 125.83 million.
Growers, however, are still alert about the poor distribution of rainfall, though no severe losses have been registered so far and forecasts point to showers covering much of the country in the coming days, AgRural said.
Argentina cropping regions last weekend also received better-than-expected rainfall which is forecast to linger in the north this week and the far south next week.
More hot and dry weather is forecast after that.
In Europe, grain prices rebounded yesterday.
The geopolitical context and tensions in the Black Sea basin are far from having disappeared.
The oilseeds market, in contrast, was once again struggling yesterday, with rapeseed down 1.81%.
The week, indeed, promises to be crucial for interest rates with a meeting of the ECB and the BOE.
Meantime, France’s farm ministry on Tuesday estimated that the area sown with soft wheat for the 2023 harvest will increase to 4.75 million hectares.
That is 1.7% higher compared with the area harvested this year.
The expected level would also be 0.1% above the average of the previous five years, the ministry said.
In contrast, sowing of durum wheat was estimated down 4.4% on year at 233,000 hectares, or 12.5% below the five-year mean.
The ministry also projected that the winter barley area would reach 1.30 million hectares, up 1% from 2022 and 3.9% above the five-year average.
The rapeseed area was pegged at 1.29 million hectares, up 4.9% on year and 6.5% above the five-year average.
The increased sowing areas coupled with favourable early growing conditions suggest good production prospects for 2023, although weather from spring onwards tends to have more of a bearing on final yields.
In revisions to 2022 harvest estimates, the ministry pegged drought-hit grain maize production at 10.58 million tonnes, down from 10.74 million expected a month ago.
That means a production down 30.4% below last year’s bumper harvest and 22.6% below the five-year mean.
The ministry kept almost unchanged its estimates of 2022 production of soft wheat, barley and rapeseed.
Meantime, Euronext is changing for the November 2023 deadline, its specifics on its corn contract.
The broken grain limits, indeed, are increased to 5% with a maximum of 3.5% impurities.
From the Black Sea basin, as we said yesterday, over the weekend Russian missiles, artillery and drones hammered targets in eastern and southern Ukraine, suspending operations in Odessa Port.
Odesa Port, however, on Monday has resumed operations.
Ukrainian Agriculture Minister Mykola Solsky had said on Sunday that two other ports Chornomorsk and Pivdennyi were partially operating again.
Meantime, the United States has shipped the first part of its power equipment aid to Ukraine, U.S. officials said on Monday.
The first tranche was power equipment worth about $13 million, one of the officials said.
Two more planeloads of equipment would leave from the United States this week.
Ukraine’s Ag Ministry reported that at 9 December cumulative 2022-23 (Jul/Jun) grain exports totalled 19.1Mt compared to 28.3Mt last year, including wheat 7.2Mt (15.1Mt), barley 1.5Mt (5.0Mt) and maize 10.2Mt (7.8Mt)
Meantime, SovEcon expects December Russian grain exports to reach at 4.5Mt, down from the 4.9Mt exported in November.
That would be a month-over-month decline of around 7%, if realized.
However it is still up compared to December last year.
From the Middle Kingdom, China’s hog futures closed 6.6% lower yesterday and is at the lowest level since June, amid concerns over possible weak demand ahead of the country’s Lunar New Year holiday in January.
Hog prices are still relatively high from a historical standpoint, but the current price slump will be worth watching as it relates to feed demand.
From South East Asia, Indonesia plans to set the crude palm oil reference price for Dec. 16-31 at $871.99 per tonne, deputy coordinating minister of economic affairs Musdhalifah Machmud said on Tuesday, up from $824.32 per tonnes for Dec. 1-15.
The reference price would put the export tax for the period at $52 per tonne and the export levy at $90 per tonne.
The trade ministry, however, has not yet issued the official document stating the reference price.
From Australia, local markets started the week stable.
Cash wheat grower bids were slightly firmer through SA and eastern states bids by the end of the day were largely unchanged.
Yields in southern parts of NSW continue to come in below growers’ expectations while in Vic and SA they are above expectations.
It remains a stop start harvest with some light showers pushing through parts of Vic today which will keep some growers off the paddocks.
Significant volumes of grain continue to pour into the CBH Group network, with an additional 3 million tonnes delivered in the week to Sunday to take total receivals 13.4Mt and despite some rainfall events and harvest bans, sites continued to break records last week.
Graincorp received 1.8Mt last week, taking their total to 6.4Mt with the full spectrum of grades delivered being delivered into the network, including milling wheat and malting barley.
The Central Queensland and Western Downs clusters have recorded their best winter crop harvest season, with over 10 sites breaking receival records to date.
On the international trade scene, Algeria is once again buying.
Offers must be valid until tomorrow, December 14.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
