Good morning Farmer Family …
US farm markets were mostly lowere to start the week.
Corn prices dropped 0.88%.
Soybeans were down 1.3%.
Soymeal prices dropped another 3%, taking Jan to 12/06 levels.
Bean oil prices bounced back, with 1.66% gains on the day.
Wheat prices were mixed but mostly weaker.
Kansas City HRW firmed up by the close, ending the day, from a double digits losses, to fractional losses by -0.06%.
Chicago SRW went home 0.66% lower on the day.
Minneapolis spring wheat closed with 0.14% losses.
Much-needed rains have made their way to Argentina, which caused corn and soybean prices to slump.
Wheat prices finished lower with corn and soy, as lingering concerns that the economy is heading for a recession weighed on grain markets.
However, Agriculture and Agri-Food Canada’s December supply and demand tables were revised to incorporate Statistics Canada’s latest production estimates, with the November production estimates.
Comparing the government’s data for all principal field crops, the wheat production forecast (excluding durum) was revised slightly lower by Statistics Canada, althoug it remains the third largest wheat crop on record.
That supported the wheat market a bit.
Meantime, Weekly Inspections data showed 743,420 MT of corn was exported during the week that ended 12/15.
That is up 226k MT from last week but still 259k MT under the same week last year.
China was the week’s top destination with 56% of the total.
Mexico made up another 28% of the total.
Accumulated exports for the season reached 7.902 MTM according to the weekly data, down by 3.45 MMT from last year’s pace.
As for soybean, the report showed 1.62 MMT of soybeans were shipped during the week that ended 12/15.
That was down from 1.878 MMT last week and from 1.91 MMT during the same week last year.
Over half of the export left via the Gulf, with the majority of soybeans (69%) headed for China.
The weekly data had the accumulated export running at 25 MMT for the season – an 8.7% lag from last year’s pace.
As for wheat, the report showed 304k MT of wheat was exported during the week that ended 12/15.
That was up 85k MT from last week and by 70k MT from the same week last year.
The accumulated wheat export was 11.44 MMT as of 12/15 – trailing last year by 214,957 MT (1.8%).
Separately, yesterday private exporters reported to the USDA having sold 132,000 metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year, and 141,000 metric tons of corn for delivery to Mexico during the 2022/2023 marketing year.
In this context, corn basis bids were steady to firm after improving 1 to 10 cents across four Midwestern locations.
Soybean basis bids were largely unchanged across the central U.S..
Commodity funds were net sellers of CBOT corn, wheat, soybean and soymeal futures contracts, and net buyers of CBOT soyoil.
On this morning, Chicago soybean edged higher, recouping some losses from the previous session, although improved weather in key parts of Argentina and Brazil limited the upside potential in prices.
Wheat rose for the first time in three sessions.
Notabily, the most-active soybean contract on the Chicago Board of Trade added 0.1% to $14.61-3/4 a bushel, as of 03:18 GMT, corn rose a quarter of cent to $6.47-1/2 a bushel and wheat gained 0.5% to $7.52-1/4 a bushel.
In energy markets, oil prices inched higher on Tuesday, supported by a softer dollar and a U.S. plan to restock petroleum reserves, but gains were capped by uncertainty over the impact of rising COVID-19 cases in China.
Thus, Brent crude futures were up 15 cents, or 0.2%, at $79.95 a barrel at 0710 GMT, adding to a 76 cent gain in the previous session.
U.S. West Texas Intermediate (WTI) crude futures rose 32 cents, or 0.4%, to $75.51 a barrel, after climbing 90 cents in the previous session.
Both contracts rose by more than $1 earlier in the session.
Oil prices have been buoyed by a U.S. plan announced last week to buy up to 3 million barrels of oil for the Strategic Petroleum Reserve following this year’s record release of 180 million barrels from the stock.
A weaker greenback has also supported prices, making oil cheaper for those holding other currencies.
However, analysts said clear signs of growing demand were needed for prices to climb further.
About this, U.S. crude oil stocks were expected to have dropped last week by about 200,000 barrels, while gasoline and distillates inventories were seen higher.
The American Petroleum Institute on Tuesday, and the Energy Information Administration, on Wednesday will release their reports.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index declined on Monday after three sessions of gains as rates slipped across vessel segments.
The overall index, indeed, lost 12 points at 1,548.
Notabily, the capesize index shed 22 points, or about 1%, at 2,186.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, decreased $186 to $18,126.
The panamax index fell 7 points, or about 0.4%, to 1,645.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, decreased $61 to $14,808.
The supramax index shed 11 points at 1,146.
In equity markets, US stocks Monday fell for the fourth consecutive session.
Weakness in chip stocks weighed on technology stocks and the overall market after Bloomberg Intelligence warned that “demand weakness beyond consumer devices creates a high risk of further cuts to chipmaker sales and EPS estimates.”
Communications services stocks, technology companies and retailers declined.
Disney slid 4.8%, Microsoft fell 1.7% and Home Depot dropped 1.9% lower.
Facebook’s parent company fell 4.1%.
Hawkish ECB comments Monday pushed the 10-year German bund yield to a 1-1/4 month high of 2.224%.
That weighed on other global government bond markets as the 10-year UK gilt yield climbed to a 5-week high of 3.484%, and the US 10-year T-note yield rose up +9.3 bp to 3.575%.
Monday’s U.S. economic news were also bearish for stocks after the Dec NAHB housing market index unexpectedly fell -2 to a 2-1/2 year low of 31, weaker than expectations of an increase to 34.
Investor are waiting a set of data this week.
The National Association of Realtors will reports November home sales on Wednesday.
Also Wednesday, the Conference Board releases its consumer confidence report for December.
On Friday, the government will report November consumer spending.
The report is watched by the Fed as a barometer of inflation.
Meantime, Wall Street’s benchmark S&P 500 index fell 0.9% to 3,817.66.
The index is down about 20% this year with less than two weeks left in 2022.
The Dow Jones Industrial Average fell 0.5% to 32,757.54.
The Nasdaq composite lost 1.5% to 10,546.03.
On this morning, Asian stock markets extended their losses.
The Shanghai Composite Index lost 0.6% to 3,087.32 after the World Bank cut its forecast of China’s economic growth this year to 2.7% from its June outlook of 4.3%.
The bank cited repeated shutdowns of major cities to fight COVID-19 outbreaks.
The Nikkei 225 in Tokyo tumbled 2.4% to 26,575.04 after Japan’s central bank, which has avoided joining the Fed and other central banks in raising rates, widened the range in which it will allow government bond yields to fluctuate.
That will allow market interest rates to edge higher.
The Hang Seng in Hong Kong sank 1.4% to 19,089.96 and the Kospi in Seoul lost 0.7% to 2,334.05.
Sydney’s S&P-ASX 200 fell 1.5% to 7,028.40 while India’s Sensex opened up 0.8% at 61,806.19.
New Zealand and Southeast Asian markets retreated.
Markets are sliding after the U.S. Federal Reserve raised its key lending rate last week and the European Central Bank said more rate hikes are ahead.
That fueled investor fears central bankers might be willing to cause a recession to fight inflation that is at multi-decade highs.
In currency trading, the dollar declined to 133.29 yen from Monday’s 136.99 yen.
The euro held steady at $1.0604.
Going back to analyzing the other agricultural markets …
From Canada, Agriculture and Agri-Food Canada’s December supply and demand tables were revised to incorporate Statistics Canada’s latest production estimates, with the November production estimates based on producer surveys for the first time this crop year.
Comparing the government’s data for all principal field crops, total crop production was revised 1.477 million metric tons (mmt) lower this month, which resulted in a lower revision of total exports of 235,000 metric tons (mt) and domestic disappearance of 968,000 mt.
Ending stocks of all principal field crops were revised 270,000 mt lower this month to 12 mmt, up 2.327 mmt or 24% from 2021-22.
While the wheat production forecast (excluding durum) was revised slightly lower by Statistics Canada, it remains the third largest wheat crop on record.
Wheat exports for 2022-23 were revised 400,000 mt higher to 18.9 mmt, up 52.3% from last crop year while ending stocks were revised 600,000 mt lower to 4.5 mmt.
Wheat stocks are forecast up 45.4% from the previous crop year (blue bars) while 0.2% higher than the five-year average.
During the first 19 weeks of the crop year, the current pace of exports from licensed facilities is ahead of the steady pace needed to reach this revised forecast, excluding unlicensed exports and the export of flour.
As seen in Statistics Canada’s production estimates, the larger downward revision was reported for durum.
As a result of this 674,000 mt downward revision, exports were revised 200,000 mt lower to 4.8 mmt and ending stocks were revised 400,000 mt lower to 500,000 mt, just slightly lower than the previous crop year.
That represents a 13.6% drop from 2021-22 and is 54% below the five-year average.
As of week 19, cumulative licensed exports of durum are just slightly behind the steady pace needed to reach the current AAFC forecast.
AAFC’s latest revisions now show all-wheat exports at 23.7 mmt (wheat and durum), which continues to lag the 26 mmt forecast that the USDA has held to for five consecutive months.
This month’s inclusion of Statistics Canada’s lower production forecast for canola resulted in a 700,000 mt lower revision in canola exports to 8.6 mmt, a 500,000 mt lower revision in crush and a 300,000 mt increase in ending stocks.
Forecast stocks of 800,000 mt for 2022-23 are down 8.6% from last year and 69.6% below the five-year average.
It is interesting to note the lower revision in domestic crush given the record crush margins reported over the fall.
On Dec. 16, the Canadian Canola Board Margin Index showed continued strengthening, at $215.79/mt it is up from $167.74/mt from a week ago and minus $148.95/mt from a year ago.
On Dec. 22, Statistics Canada will report November crush data.
This report comes on the heels of media reports that point to industry insiders that see the potential for canola exports to fall as low as 6 mmt, given heightened competition from Australia, which bears watching.
As of week 19, cumulative exports are only slightly ahead of the steady pace needed to reach the revised export forecast, while the Canadian Grain Commission’s reported domestic disappearance is also slightly ahead of the steady pace needed to reach the revised forecast.
The most bullish revisions are seen for lentils, with ending stocks for 2022-23 of 100,000 mt down 55.5% from 2021-22 and 80.8% below the five-year average.
The most bearish data is seen for oats, with ending stocks for 2022-23 revised to 1.150 mmt from 318,000 mt in the previous year, up 261.6% from 2021-22 and 123.2% above the five-year average.
From South America, rains in parts of Argentina’s corn and soybean growing areas over the weekend have boosted crop prospects.
Rain showers that crossed Argentina on Friday and Saturday, brought needed moisture to just over half its corn and soy area.
More limited rains next week will allow crop stress to expand.
Beneficial weather is expected also in Brazil.
The country, indeed, is expect to receive beneficial rains over the next two weeks.
In the last eight-year, Brazil soy planting jumped from 12.13 million hectares in the various states of the Cerrado, excluding Matopiba, to 16.35 million hectares.
That is a 34.8% rise, Abiove data show.
In Matopiba, the increase was almost 50% to around 5 million hectares.
Farmers in Brazil have cleared land to grow soy in the new agricultural frontier known as Matopiba, according to data from Abiove.
Notabily, in Matopiba states including Maranhao, Tocantins, Piaui and Bahia, some 700,000 hectares (1.729 million acres) of native vegetation were transformed into soy fields in the period between 2013/2014 and 2021/2022, according to Abiove data.
Meanwhile, Mato Grosso, Brazil’s biggest soy producer, converted 2.8 million hectares of degraded pastureland into soybean plantations, according to Abiove data.
In Europe, there was very little movement in grain prices yesterday on Euronext.
European Union lobby group Coceral expects 2022/23 EU grains production is estimated at 304.4 Mt compared to 285.1 Mt for the 2022 harvest.
The state of the crops seems satisfactory for now in western Europe.
The low temperatures of the last few days did not impact the crops.
Per latest data from the EU’s crop monitor MARS, indeed, the significant drop in temperature earlier this month in the European Union caused only minor damage to some winter crops, while it allowed significant improvement in frost tolerance elsewhere.
The mild temperatures during the autumn resulted in slightly to partially hardening winter crops in most parts of Europe at the end of November, the crop monitor said.
Compared with last year, the hardening process is more advanced than in most parts of Europe.
However, some frost damage was confined to only some areas in central and eastern Germany and Poland.
Rain deficits, indeed, persisted in the Baltic sea region, northern Germany, Poland and south eastern Spain and Turkey, but has not had a substantial impact so far on winter cereals, MARS said.
Some drought conditions are still recorded in north western Italy and throughout the Maghreb region.
That is likely to cause a delay to sowing.
The Black Sea region’s warmer than average temperatures continued to the benefit of late sown crops.
On the other hand, intense rains in Slovenia and Croatia may have locally compromised crop establishment.
In this context, Cocereal’s soft wheat production is revised upwards to 143.2 Mt from 140.7 Mt in 2022.
That would be a year-over-year increase of 1.8%, if realized.
Expected increases in France and Germany should more than compensate for likely decreases in Romania and the United Kingdom.
Barley production is estimated at 60 Mt compared to 58.5 Mt this year.
The most spectacular increase would be in corn, at 64.5 Mt compared with only 50.7 Mt this year.
Yields are expected to rebound in multiple countries that suffered widespread hot, dry conditions in 2021/22.
Only rapeseed production would be slightly lower at 20.4 Mt compared to 20.6 Mt this year.
Meantime, traders have increased their forecasts for French wheat shipments to non-EU countries this season as the war in Ukraine continues to influence grain flows out of Black Sea ports.
France has exported twice as much wheat this year than it did in 2021.
It is forecast to export 10 million mt of wheat this season, reaching 7.5 million mt by the end of December.
Last year’s season export totaled 3.7 million mt by the end of December 2021, with total exports for last season at 7.5 million mt.
EU wheat exports reached 16 million mt as of Dec. 12, up 5.7% year on year, with the largest importers of EU wheat Morocco (2.1 million mt), Algeria (2 million mt), and Egypt (1.6 million mt), according to the EU Crop Observatory.
France is the top exporter of EU wheat in the marketing year 2022-23 at 7 million mt, according to the EU Crop Observatory.
From North Africa, Egypt’s strategic reserves of wheat are sufficient for 4.8 months, a supply ministry report showed on Monday, adding that the country has imported 3.78 million tonnes of wheat so far in 2022.
The country’s strategic reserves of rice and vegetable oils are sufficient for 5.9 and 4.9 months respectively, the report also said.
From Russia, grain production in clean weight is expected at 147-151 mln tonnes in Russia in 2022, president of the Russian Grain Union Arkady Zlochevsky said on December 19.
The last report on harvesting was a week ago at about 159 mln tonnes of grain in bunker weight.
This means that the range of 147-151 mln tonnes in clean weight announced by various analysts is the real numbers.
Rosstat will give the final official figure by the end of December, but it will be in this range, including about 100 mln tonnes of wheat.
Also, Russia entered the new season with a record, unprecedented grain stocks at more than 30 mln tonnes.
As of December 1, 2022, the stocks of grains in agricultural organizations of the Russian Federation totaled 39.4 mln tonnes, up by 10 mln tonnes (34%) compared to the figure on the same date in 2021, declared the Federal State Statistics Service (Rosstat).
In particular, wheat stocks amounted to 25.6 mln tonnes, up by 8.8 mln tonnes (52%) compared with the same date in 2021, corn stocks – 3.3 mln tonnes, down by 1.3 mln tonnes (29%).
Sunflower seed stocks totaled 3 mln tonnes, down by 250.8 thsd tonnes (8%).
Thus, the record harvest and high stocks are pressuring the market.
Prices slightly rebounded mainly due to an increase of the export.
However, Russia’s December grain exports will likely downgrades, due to low water level and ice in the Azov Sea and storms in the Black Sea.
Russian consultancy Sovecon estimates that the country’s wheat exports will 3.9 MMT in December.
That would be a monthly decrease of 9.3%, if realized.
As a results, Russian wheat prices fell last week, both amid weak domestic demand from exporters, and storms which complicated sea shipping.
Notabily, according to the IKAR, prices for Russian wheat with 12.5% protein content and for supply from Black Sea ports in late December to early January were at $312 a tonne free on board (FOB) on Friday evening, down $2 from a week earlier.
According to Sovecon, wheat prices for immediate delivery fell to $308-312 per tonne from $312-316 a week ago.
As for other products, Price for domestic 3rd class wheat, European part of Russia, excludes delivery was at 12,425 rbls/t -175 rbls (Sovecon).
Price for sunflower seeds was at 25,075 rbls/t +600 rbls (Sovecon).
Price for domestic sunflower oil was at 75,175 rbls/t +1,000 rbls (Sovecon).
Price for domestic soybeans was at 31,550 rbls/t unchanged (Sovecon).
Export price for sunflower oil was at $1,140/t unchanged (Sovecon).
Export price for sunflower oil was at $1,100/t unchanged (IKAR).
Price for white sugar, Russia’s south was at $746.5/t +$16.1 (IKAR).
In this context, Russian grain exports, however, rose to 840,000 tonnes last week from 550,000 tonnes in previous week, according to port data.
Russia’s agriculture ministry has already bought 2.75 million tonnes of grain from the domestic market for the state stockpile in the current July-June season.
Meantime, dry weather is expected in Russia’s southern region, a major winter grain producer, this week.
The weather setup in the south remains far from ideal, as only 40-60% of normal precipitation in the past 30 days came.
From Ukraine, last week, the indicative FOB prices of Ukrainian wheat for delivery from deep-sea ports decreased slightly.
Prices remained under pressure from a slower-than-expected recovery in sea exports.
Unfavorable weather, and a the decrease in ship calls to the ports of Great Odesa, restrained the demand of importers.
Indeed, despite the series of announced and held tenders past week, Ukrainian grain was offered quite rarely and won even less often, although it was usually the cheapest.
Permanent Russia’s strikes that increasingly complicated the land logistics and ports functioning and led to interruptions and forced stops, weighed on choises.
In this context, the indicative offer prices of 12.5%, 11.5% and feed wheat decreased by average 5 USD/t to 300-315, 290-310 and 250-270 USD/t FOB Black Sea (December-January).
Meantime, Ukraine’s Ag Ministry reported 70% of the corn crop was harvested as of 12/16.
That amounts to 18.4 MMT.
From the Middle Kingdom, Chinese corn imports for November came in at 740k MT, which was a year-over-year decline of 5.8%, according to newly available customs data.
Year-to-date corn imports are down 26.9% compared to 2021, with 19.75 MMT.
Chinese wheat imports climbed to 1.01 MMT in November, a year-over-year increase of 35.4%.
Year-to-date wheat imports are 0.6% ahead of 2021’s pace, with 8.88 MMT.
From South East Asia, India is set to offer 2 million to 3 million tonnes of wheat to bulk consumers such as flour millers and biscuit makers as part of efforts to cool record high prices, two government sources said, even as state reserves have dropped to the lowest in six years.
On the other hand, India’s soymeal exports in November jumped 308% from a month earlier to the highest level in 21-months.
Notabily, exports in the month stood at 164,075 tonnes, up from 40,196 tonnes in October as Vietnam and Nepal raised purchases, the Mumbai-based Solvent Extractors’ Association of India (SEA) said in a statement.
From Australia, the Grain Industry Association of Western Australia sees record wheat yields for the region.
They recently upped the Western Australia wheat crop to 13 MMT from the 12.6 MMT going forecast (and a 1.1 MMT increase yr/yr).
On the international trade scene, Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 144,441 tonnes of food-quality wheat from the United States and Canada in a regular tender that will close on Thursday.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
