Good morning Farmer Family …
US farm markets, yesterday were low enough to spur some buying, in a renewed hope that export sales will pick up after the holidays.
Thus, corn trended 0.73% higher.
Soybean prices saw the most upside, rising 1.22% higher.
Soybean oil led the complex higher, with a triple digit gain day of 2.55%.
Soymeal prices recovered 0.73% on the day.
Wheat gains were variable.
Chicago SRW closed 0.27% higher.
Kansas City wheat prices went home 0.41% gains.
Minneapolis spring wheat settled up by 0.85%.
Corn was supported by good demand from China.
As for soybean, while Brazil, has been far less impacted by dry conditions, and is expected to begin harvesting soybeans by late-January, doubts around Argentina’s crops continue.
Thus, a lack of rains there is underpinning both corn and soybean market.
Soybean planting is well behind, with only 50.6% completed at of Dec. 15.
Conditions are reported at 19% good/excellent versus 85% last year.
Some areas that would normally require replanting may be abandoned for this year.
However, a slowing U.S. soybean sales to China in November limited gains in soybean prices.
For wheat, temperatures in the United States dropped well below freezing.
A winter storm will dump snow and frigid temperatures across a large swath of the central U.S. later this week, with most areas north of I-10 likely to be affected in some capacity.
That, could damage winter wheat crops in parts of the Great Plains that haven’t received protective snowcover.
However, NOAA’s 8-to-14-day outlook shows a probable return to above-average temperatures between December 27 and January 2, with wetter-than-normal conditions likely for most of the U.S. during this time.
In this context, corn basis bids were steady to mixed across the central U.S. on Tuesday after moving as much as 4 cents higher at an Iowa ethanol plant and as much as 5 cents lower at an Iowa processor.
Soybean basis bids tilted 4 cents higher at an Ohio elevator and 5 cents higher at an Indiana processor while holding steady elsewhere cross the central U.S..
Commodity funds were net buyers of CBOT soybeans, soyoil, corn, wheat and soymeal futures contracts.
This morning, both corn, soybean and wheat rose.
Notabily, the most-active soybean contract on the Chicago Board of Trade (CBOT) rose 0.1% to $14.79-1/2 a bushel, as of 03:48 GMT, wheat added 0.4% to $7.53-3/4 a bushel and corn gained 0.2% to $6.53 a bushel.
In energy markets, oil prices were little changed on Wednesday.
Brent crude futures rose 8 cents, or 0.1%, to $80.07 per barrel by 0715 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 1 cent to $76.22.
U.S. crude inventories fell by about 3.1 million barrels in the week to Dec. 16, according to the American Petroleum Institute, while analysts had estimated a 1.7 million barrel drop in stocks.
This larger-than-expected draw, coupled with U.S. plans to refill their Strategic Petroleum Reserve have supported oil prices.
However, optimism has been capped by downside pressures from rising global economic headwinds.
US gasoline inventories rose by about 4.5 million barrels in the week to Dec. 16, while distillate stocks rose by 828,000 barrels.
In this context, Saudi energy minister said the OPEC+ decision to cut oil output, which was heavily criticised, turned out to be the right one for supporting the stability of the market and the industry.
That, underpinned oil prices, as suggest that OPEC+ may continue to keep supply tight to support oil prices.
However, growing worries about a surge in COVID-19 cases in China kept oil prices from moving higher, as Chinese refiners had rushed to secure more cargoes, ahead of the price cap imposed by the Group of Seven nations on Dec. 5.
China’s crude oil imports from Russia in November, indeed, rose 17%from a year earlier.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index rose on Tuesday, as a jump in capesize segment to its highest in over 10 weeks offset a decline in rates for the smaller vessel segments.
The overall index, indeed, gained 48 points, or about 3.1%, to its highest since late October at 1,596.
Notabily, the capesize index climbed 179 points, or about 8.2%, to 2,365, its highest level since Oct. 7.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, increased $1,491 to $19,617.
The panamax index fell 23 points, or about 1.4%, to its lowest in over two weeks at 1,622.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, decreased $213 to $14,595.
The supramax index shed 15 points at 1,131.
In equity markets, US stocks on Tuesday settled mixed.
Energy stocks rose and supported the overall market after WTI crude rose more than +1%.
Also, Adobe rose nearly +3% on earnings optimism.
On the negative side, Tesla fell more than -8% and General Mills closed down more than -4%, as fears about demand increased.
Tuesday’s action by the BOJ to widen the upper limit of its 10-year yield target range to 0.50% from 0.25% pushed the 10-year Japan JGB bond yield to a 7-year high of 0.444%.
The surge in Japanese government bond yields also helped push other global government bond yields higher.
The 10-year German bund yield rose to a 6-week high of 2.310%.
The 10-year UK gilt yield rose to a 6-week high of 3.658%.
The yield on the 10-year Treasury rose to 3.70% from 3.59% late Monday.
The two-year U.S. Treasury yield, held steady at 4.26%.
Tuesday’s U.S. housing news was mixed for stocks.
Nov housing starts fell -0.5% m/m to 1.427 million, stronger than expectations of a decline to 1.400 million.
However, Nov building permits, a proxy for future construction, tumbled -11.2% m/m to a 2-1/2 year low of 1.342 million, weaker than expectations of 1.480 million.
As a results, the S&P 500 rose 0.1% after flipping between small losses and gains in the early going. It closed at 3,821.62.
The Dow Jones Industrial Average rose 0.3% to 32,849.74 and the Nasdaq composite barely budged after closing less than 0.1% higher, at 10,547.11.
Small company stocks outdid the broader market, lifting the Russell 2000 index 0.5% higher, to 1,748.02.
On this morning, shares were mixed in Asia.
Tokyo’s benchmark Nikkei 225 index slipped 0.2%, to 26,387.72, a day after the Bank of Japan gave in to pressure on the yen by expanding the cap on the yield of the 10-year Japanese government bond.
In other Asian trading, Hong Kong’s Hang Seng inched up less than 0.1% to 19,103.10 and the Shanghai Composite index slipped 0.3% to 3,065.78.
South Korea’s Kospi lost 0.2% to 2,328.95.
In Sydney, the S&P/ASX 200 gained 1.3% to 7,115.10.
Shares rose in Bangkok and Taiwan but fell in Mumbai.
In currency trading, the dollar rose to 132.09 Japanese yen from 131.62 yen.
Tokyo’s surprise move on Tuesday pulled the dollar 4% lower against the yen.
The euro fell to $1.0615 from $1.0626.
Going back to analyzing the other agricultural markets …
From South America, Brazil’s Anec estimates that the country’s corn exports will reach 6.35 MMT in December.
That’s slightly below the group’s prior forecast issued a week ago.
Anec also expects the country’s soybean exports to reach 1.75 MMT in December, which is slightly below the group’s prior projection made a week earlier.
Ultmatly, Anec anticipates Brazilian soymeal exports will reach 1.523 million metric tons this month.
In Europe, yesterday we saw a new erosion on the markets in a context of fears of economic recession.
The weather seems favorable for the moment for the state of winter crops.
Meantime, European Union soft wheat exports during the 2022/23 marketing year are trending moderately above last year’s pace so far after reaching 15.70 million tonnes through December 18.
In contrast, EU barley exports are sharply lower this season, with 127.7 million bushels during the same period.
Corn imports have reached 13.46 million tonnes through December 18.
That’s more than double last year’s pace so far.
Rapeseed imports are also up at 3.27 million tonnes against 2.33 million last year.
Soybean imports in contrast are trending moderately below last year’s pace so far after reaching 5.06 million tonne through December 18.
EU soymeal imports are slightly down year-over-year, with 7.36 million metric tons during the same period.
From the Black Sea basin, Russian origins continued to be very competitive in international markets.
That is reinforced by a sharp fall in the ruble against all the other currencies.
On the other hand, Russia has set its fertiliser export quota at 11.8 million tonnes for January-May to ensure enough supply of crop and soil nutrients to farmers at home, the government said in a statement on Wednesday.
Russia exported more than 25 million tonnes of fertilisers in the first 11 months of 2022, according to President Vladimir Putin.
Meantime, Russia has received permission to export fertilizers, which are located in the ports of the Netherlands (Rotterdam), Belgium (Antwerp) and Estonia, UN Secretary General António Guterres stated.
He recalled that earlier a ship with Russian fertilizers had departed from the Netherlands to Mozambique, and the cargo would then be delivered by land to Malawi.
“At the moment, inspections of other cargoes in Rotterdam, Antwerp and Estonia have also been completed, permission for their export has already been received”, – he said.
In addition, according to A. Guterres, Latvia agreed to carry out inspections for the export of 190 thsd tonnes of Russian fertilizers.
In Ukraine, the government is favoring the agricultural sector for energy supply in the current difficult context, deeming this sector a priority.
Meantime, Ukraine’s Danube river ports have boosted grains transshipments by 42 times to an all-time high of 6.1 million tonnes so far in 2022, Ukraine’s seaport authority said on Tuesday.
The authority said on Facebook that overall turnover at the Danube ports had risen by 294% to 14.5 million tonnes so far this year.
However, seaborne Ukrainian grain flows through the Black Sea slumped another 22% on the week to reach 514,848 mt during the Dec. 12-18 period, with the average cargo size shrinking by 26%.
We’ll probably see an improvement by February or March,” said a shipbroker, pointing to unfavorable weather, harvest delays, and bombing as the major factors pushing weekly Ukrainian grain seaborne exports to the lowest levels observed since August.
The Black Sea Grain Initiative, had cumulative grain shipments reaching almost 14.2 million mt as of Dec. 18.
However, they declined significantly over the weeks, and the size of the average shipment over Dec. 12-18 reached as low as 25,742 mt, dipping below the August – December weekly average size of 26,336 mt for the first time since early November.
The JCC said late Dec. 18 that “84 vessels are waiting in Turkish territorial waters. Out of those 84, 65 are waiting to move – following inspections – into Ukrainian ports with the capacity to export approximately 2.5 million tons of grain and other food products.”
Some of the vessels have waited for over a month, with the remaining 19 vessels already loaded with cargo and awaiting outbound inspection.
According to the JCC, the number of inspection teams has not increased and remains stable at three per day, with plans to conduct 12 inspections Dec. 19, split equally between inbound and outbound vessels.
In this context, since the beginning of December, the bid prices for Ukrainian corn and wheat have been decreasing for delivery to European ports and western borders at most of destinations.
Some support was provided by the prospect of smaller agricultural production in Ukraine next season as well as the increase in the cost of crop production.
However, active export of Brazilian corn, among pressure from the domestic market, expensive and overloaded logistics impacted Ukrainian market.
This was somewhat offset by smaller number of offers from farmers, difficulties in elevators operation and, accordingly, treatment of wet corn.
Still, last week, the bid prices of corn for January-February delivery decreased to 190-215 EUR/t DAP at the borders with Poland, Slovakia, Romania, they reached 230 EUR/t DAP at Hungarian border.
The bid prices of food wheat also remained pressured in Romanian ports of Constanta and Dornești, although they remained quite stable at 290-300 and 245-255 EUR/t DAP correspondingly (January).
The bid prices of corn totaled 265-280 and 220-230 EUR/t DAP in ports of Constanta and Dornești correspondingly (January).
From the Middle Kingdom, overall China soybean imports fell 14% in November from a year earlier to 7.35 million tonnes, data showed this month.
Notabily, China’s November soybean imports from the United States fell 6.9% from a year earlier, data showed on Tuesday.
China, indeed, imported 3.38 million tonnes of the oilseed from the United States last month, down from 3.63 million tonnes a year earlier, according to the General Administration of Customs.
Total bean imports from the United States for January-November came in at 23.01 million tonnes, down from 26.2 million tonnes the previous year.
Imports from Brazil, fell 32.3% in November to 2.54 million tonnes.
For the first 11 months of the year, China brought in 51.83 million tonnes of Brazilian beans, down from 56.5 million tonnes in the same period of 2021.
On the international trade scene, Japan issued a regular tender to purchase 144,441 t of food-quality wheat from the United States and Canada that closes on Thursday.
Of the total, 58% is expected to be sourced from the U.S.
The grain is for shipment starting in mid-January.
Taiwan issued an international tender to purchase 56,000 t of grade 1 milling wheat from the United States that closes on Thursday.
The grain is for shipment in February and seeks a blend of dark northern spring, hard red winter and white wheat.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
