Good morning Farmer Family …
US farm markets were mixed on Tuesday.
Corn prices faded slightly lower by -0.08%.
Soybean closed with 1.32% gains.
Soymeal prices settled 0.47% higher.
Soy oil prices posted 3.09% gains at the close.
Chicago wheat retreated 0.53% lower.
Kansas City wheat prices were up by 0.35%.
Minneapolis spring wheat was 0.71% higher.
Traders kept their eyes on South American production potential, the latest headlines from Ukraine, along with US export trends, and outside commodity action.
Notabily, corn prices inched lower on US export concerns.
Soybean prices, meantime, rebounded with double-digit gains after slumping substantially lower the previus session.
Good export demand underpinned the soybean market.
Strength in the crude oil market also spilled over to the soy complex.
Meantime, private exporters announced to USDA the sale of 140k MT of soybeans for delivery to unknown destinations during the 2023/24 marketing year, which begins September 1, 2023.
Wheat prices were mixed but mostly higher on Tuesday.
Chicago soft red winter wheat prices weakened on a profit-taking setback after a round of short-covering pushed prices to their highest in 10 days.
Kansas City hard red winter wheat and Minneapolis spring wheat closed firm, with speculative buyers pushing prices higher.
Concerns about grain shipments out of the Ukrainian port of Odesa added some support.
However weak demand for U.S. supplies on the export market continued to add pressure.
US currency weakness supported commodity prices.
In this context, corn basis bids were mostly steady across the central U.S. on Tuesday but did trend 2 cents higher at an Illinois ethanol plant while sliding a penny lower at a Nebraska processor.
Soybean basis bids were steady across most Midwestern locations but did tilt 10 cents lower at an Illinois river terminal.
Commodity funds were net buyers of CBOT soybean, soymeal and soyoil futures contracts, and net sellers of CBOT corn and wheat.
On this morning, Chicago soybeans ticked lower, giving up some of the previous session’s sharp gains.
Wheat dropped 1%, falling for a second consecutive session and corn slid.
Corn also faded.
Notabily, the most-active soybean contract on the Chicago Board of Trade gave up 0.2% to $14.77 a bushel, as of 05:17 GMT.
Wheat lost 1% to $7.43 a bushel and corn was down 0.7% to $6.49-1/4 a bushel.
It’s expect a recovery in Chinese demand as the travel resumes. China’s soybean imports in he first few months of 2023 are likely to be higher than what we have seen in the last few months.
However, forecasts for more rains in Argentina and Brazil are easing concerns over dryness hurting newly planted crops.
In energy markets, oil prices fell on Wednesday.
Brent crude futures dropped 18 cents, or 0.2%, to $80.50 per barrel at 07:27 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 34 cents, or 0.2%, to $75.05.
U.S. crude inventories rose by about 7.8 million barrels in the week to Dec. 9, according to market sources citing data from the American Petroleum Institute, while analysts had expected a 3.6 million barrel drop in stocks.
The inventory data dampened bullish sentiment that sent the market up 3% in the previous session, on hopes for a revival in Chinese demand and for a weakening dollar.
Oil prices have also been supported this week by the outage of TC Eenrgy Corp’s Keystone Pipeline, which ships 620,000 barrels per day of Canadian crude to the United States.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index slipped on Tuesday to its lowest level in a week, weighed down by a drop in capesize and panamax segments.
The overall index, indeed, fell 4 points, or about 0.3%, to 1,357 – its lowest since Dec. 6.
Notabily, the capesize index shed 18 points, or about 1.1%, at 1,601.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, decreased $148 to $13,276.
The panamax index fell 10 points, or about 0.6%, to its lowest in more than a week at 1,633.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, decreased $89 to $14,700.
The supramax index rose 14 points to 1,167.
In equity markets, the S&P 500 rose 0.7% to 4,019.65 and the Nasdaq composite gained 1% to 11,256.81.
The Dow Jones Industrial Average picked up 0.3% to 34,108.64.
Small company stocks also gained ground.
The Russell 2000 index rose 0.8% to 1,832.36.
US stock indexes closed moderately higher on Tueasday but well off their best levels posted in the session.
Stocks rallied sharply after U.S. November consumer prices rose less than expected.
Notabily, U.S. Nov CPI rose +0.1% m/m and +7.1% y/y, less than expectations of +0.3% m/m and +7.4% y/y.
The +7.1% y/y gain was the smallest increase in 11 months and was well below the 40-year high of +9.1% posted earlier this year in June.
The Nov CPI ex-food & energy rose 0.2% m/m and +6.0% y/y, slightly less than expectations of +0.3% m/m and +6.1% y/y.
The Nov core CPI increase of +6.0% y/y was a 4-month low and was 0.6 points below September’s 40-year high of 6.6% y/y.
Thus Treasury yields fell sharply.
The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, fell to 3.48% from 3.62% late Monday.
The two-year yield, which more closely tracks expectations for the Fed, dropped to 4.22% from 4.39%.
As a results, the mega-cap technology stocks moved higher on sharp drop in T-note yields.
However, stocks pared back gains as analysts cautioned investors not to get carried away by hopes for an easier Fed, as they have in the past.
The markets are now awaiting the outcome of the 2-day FOMC meeting that ends today and Fed Chair Powell’s regular post-meeting press conference overnigth.
Fed officials have recently signaled that the Fed will downshift to a +50 bp rate hike at the conclusion of this week’s FOMC meeting after four straight +75 bp increases.
On this morning, stocks were mostly higher in Asia.
Tokyo’s Nikkei 225 advanced 0.7% to 28,156.21 and the Hang Seng in Hong Kong added 0.6% to 19,722.16.
South Korea’s Kospi was up 1.1% to 2,399.25.
The Shanghai Composite index edged 0.1% lower to 3,172.33.
In Australia, the S&P/ASX 200 gained 0.7% to 7,251.30.
India’s Sensex gained 0.7% while the SET in Bangkok added 0.6%.
In currency trading, the dollar slipped to 135.43 Japanese yen from 135.59 yen.
The euro rose to $1.0638 from $1.0633.
Going back to analyzing the other agricultural markets …
From South America, according to Brazil’s AgRural, as at 12 Dec, 2022-23 soybean planting was estimated at 95pc complete (91pc previous week, 96pc previous year).
Although recent rains were poorly distributed, there are no signs yet of crop losses and rains are forecast for much of the country in the coming days.
First (full-season) maize plantings at 96pc complete (93pc previous week, 96pc previous year).
With some early sown crops in Rio Grande do Sul now in the key reproductive development phase under dry and hot weather, some yield losses are expected.
Meantime, Brazil’s Anec estimates that the country’s corn exports will climb to 6.7 MMT in December.
That is 23% higher than its prior forecast from a week ago.
Anec also estimates that the country’s soybean exports will reach 1.77 MMT in December, which is slightly above its prior forecast from a week ago.
Anec also expects to see soymeal exports at 1.6 million metric tons this month.
As for wheat Anec expects the country’s wheat exports to reach 697k MT in December, which is modestly higher than its prior forecast made last week.
In Europe, markets were mixed, yesterday.
On one hand,we saw a tense situation on export activity in Ukraine due to power supply problems, on the other hand, we are seeing a strengthening euro day after day.
The ECB is expected to raise rates by 75 basis points, tomorrow.
If confirmed, this will lead to a strengthening of the euro, which will penalise EU export competitiveness.
Meantime, per the latest data from the European Commission, EU soft wheat exports during the 2022/23 marketing year are tracking modestly higher year-over-year, reaching 15.38 MMT through December 11.
Morocco, Algeria, Egypt, Nigeria and Saudi Arabia have been the top five destinations so far.
In contrast, EU barley exports have slumped 42% lower year-over-year, with 2.76 MMT.
EU corn imports, meantime, are more than doubling last year’s pace so far, with 13.13 MMT through December 11.
Brazil, Ukraine, Serbia, Canada and South Africa have been the top five suppliers so far.
European Union soybean imports are running slightly below last year’s pace so far after reaching 4.86 MMT through December 11.
EU soymeal imports are also slightly lower year-over-year, with 7.11 million metric tons over the same period.
EU rapeseed imports as of 11 December stood at 3.15 Mt compared to 2.30 Mt last year.
France, which is Europe’s top grain producer, could increase its 2022/23 soft wheat plantings by 1.7% to 4.75 million hectares.
French winter barley plantings are expected to increase 3.9% above the prior five-year average to 1.30 Mha.
Rapeseed acreage is estimated to be up 4.9% to 1.29 Mha.
2022 corn production, in contrast, was revised down again from 10.74Mt to 10.58Mt, now over 30pc below last year’s record harvest and 23pc below the 5-year average.
From Ukraine, USDA’s Ag attaché reported Ukraine’s corn harvest in only about 40% done as of 12/12 – mainly citing delays related to the war.
The Attache sees total output at 23.1 MMT, down from USDA’s 31.5 MMT official estimate and the 42.126 MMT crop last year.
Exports were assumed higher at 20.2 MMT.
USDA’s Ag Attache sees Ukrainian wheat production at 19.9 MMT, down from the USDA’s official 20.5 MMT forecast and the 33 MMT crop last season.
Wheat exports were expected to reach 15.1 MMT, up from the official 11 MMT estimate.
Meantime, Ukraine’s UkrAgroConsult revised their corn crop 500k MT lower to 26.5 MMT – citing the same slow harvest pace.
Separately the Joint Coordination Centre reported Ukrainian Black Sea port shipments were down about 21% for the week of 12/11 under the Black Sea Grain Initiative.
Since the deal brokered in July the Ukraine has shipped 13.6 MMT of grain via the ports.
From Russia, Russia’s Ag Ministry has forecast 2023 wheat production target of 80-85 million tonnes (Mt).
Rusagrotrans, Russia’s rail infrastructure operator, estimates July to November wheat exports at 20Mt (18.7Mt previous year), including 3.6Mt to Turkey, 3.1Mt to Egypt and 1.7Mt to Iran.
From South East Asia, Indian wheat stocks held in government warehouses for December fell to the lowest in six years, government data showed on Tuesday.
Wheat reserves in state stores totalled 19 million tonnes at the start of this month, down from 37.85 million tonnes on Dec. 1, 2021.
Meantime, India needs to restrict corn exports to curb a rise in domestic prices and to ensure sufficient supplies of the main poultry feed, the country’s livestock industry said on Tuesday.
India exported 3.6 million tonnes of corn in 2021, up from 1.9 million tonnes sold on the world market in 2020, according to trade and industry estimates.
Between January and September this year, India shipped out 2.4 million tonnes of corn.
Domestic corn prices have surged, driven by high demand, increased exports and some damage to the crop following heavy post-monsoon rains.
Corn prices at the Gulab Bagh market in the eastern state of Bihar, a major corn hub, have risen by around 12% to 25,000 rupees ($302.02) a tonne over the last year, pushing up the cost of production for India’s poultry industry.
In the world market, Indian corn is priced at $315 a tonne to $320 a tonne.
India supplies corn to countries including Bangladesh, Nepal, Sri Lanka, the United Arab Emirates and Vietnam.
($1 = 82.77 rupees)
From Australia, wheat and barley bids to growers were firmer and trade values were $5/t stronger.
Canola and pulses bids remained steady.
There was action in WA throughout the day on Clear Grain Exchange. ASW1 wheat volume traded at $335/t FIS and barley trading in the Kwinana port zone at $285/t FIS.
Growers are still battling the cooler conditions and harvest is very much either stop/start or switch to different commodity at present.
Growers are switching back onto pulse crops through Vic and SA.
Clear skies are forecast widespread for the next 4 days.
On the international trade scene, the Algerian tender closes today with, as usual, optional origins.
Japan issued a regular tender to purchase 155k MT of food-quality wheat from the United States, Canada and Australia that closes on Thursday.
Of the total, 43% is expected to be sourced from the U.S.
The grain is for shipment between January 16 and February 15.
An importer group in the Philippines is believed to have bought around 119,000 tonnes of animal feed wheat expected to be sourced from Australia in an international tender which closed late last week.
It was bought in two 55,000 consignments for shipment in March and April 2023.
It was purchased at between $330 to $335 a tonne c&f.
Seller was believed to be trading house CBH.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
