Good morning Farmer Family …
US farm markets surged on Wednesday.
Corn prices made solid inroads, up 1.57%, grabbing double-digit gains by the close.
Soybean gains were less impressive, as creeped just 0.17% higher.
Meal prices ended the day 0.80% in the black.
Bean oil closed 0.39% higher.
Gains in wheat were more impressive, meantime.
Chicago SRW closed 2.3% higher.
Kansas City HRW was 2.01% stronger.
Minneapolis spring wheat closed 1.28% higher.
Corn prices benefited by a variety of factors: from harvest challenges in Ukraine to spillover strength from wheat.
Ukraine’s corn production, indeed, could fall to 22-23 million tonnes this year from 41.9 million in 2021 because of a reduction in the harvested area caused by the war, its agriculture minister said on Wednesday.
Weekly EIA data showed ethanol producers averaged 1.029 million barrels of production per day through the week that ended 12/16.
That was another 32k bpd reduction for the week.
However, ethanol stocks also did dip 342k barrels to 24.067 million.
Soybean prices found slim gains, mostly on spillover strength from corn and wheat.
Dry weather in Argentina continued to lend some additional support.
However, Brazil has been far less affected by the dry weather, and is expected to begin harvesting soybeans by late January.
Also, Ukraine’s possible acreage shift from corn to sunflowers in 2023 limited gains.
As for wheat, a Winter Storm Elliot made its way across the central U.S., delivering snow and other inclement conditions along with plenty of subzero temperatures.
Lack of snow coverage stretches across a majority of Kansas, Texas, and Oklahoma.
Thus, Hard red winter wheat crop in the U.S. Plains as well as soft red wheat east of the Mississippi River could face several winterkills.
Temperatures are forecast to drop further on Friday.
That has some experts worried, and prices rose significantly higher as a result.
Ahead of today’s export report from USDA, analysts expect corn bookings will be reported between 625k and 900k MT for the week ending December 15.
As for soybean, analysts expect between 800,000 MT and 1.25 MTM of soybeans were sold.
The week’s meal sales are expected to be 150k to 300k MT.
Soybean oil sales are expected to be below 10k MT.
Weekly wheat export sales are expected to be between 200k and 500k MT.
In this context, corn basis bids were mostly steady to firm across the central U.S., after rising 2 to 13 cents higher at three Midwestern locations.
An Indiana ethanol plant bucked the overall trend after spilling 5 cents lower.
Soybean basis bids were mostly steady across the central U.S., but did trend 6 cents higher at an Ohio elevator and 5 cents lower at an Illinois processor.
Commodity funds were net buyers of CBOT wheat, corn, soybeans, soyoil and soymeal futures contracts.
On this morning, Chicago wheat prices rose.
Soybeans and corn also edged higher.
Notabily, the most-active wheat contract on the Chicago Board of Trade (CBOT) rose 0.2% to $7.69-1/4 a bushel, as of 02:53 GMT, soybeans added 0.1% to $14.86-1/4 a bushel, and corn rose quarter a cent to $6.62-1/2 a bushel.
In energy markets, oil prices climbed for a fourth straight day on Thursday.
Brent crude futures gained 13 cents, or 0.16%, to $82.33 at 0713 GMT, extending gains of around 2.7% from the previous session.
U.S. West Texas Intermediate (WTI) crude futures rose 17 cents, or 0.22%, to $78.46 a barrel.
Both benchmark contracts jumped on Wednesday after government data showed U.S. crude inventories fell by much more than analysts had expected, posting a drop of 5.89 million barrels for the week ending on Dec. 16.
Notabily, U.S. inventory data showed the Strategic Petroleum Reserve falling to 378.6 million barrels, its lowest level since 1983.
Distillate stocks, which include heating oil and jet fuel, also declined, going against expectations for a build.
The falling stockpiles come as demand for heating oil is set to soar due a powerful winter storm is hitting the United States, with sub-zero wind chills expected as far south as Texas and record-breaking lows forecast for Florida and eastern states.
Jet fuel consumption is also expected to pick up with a post-COVID boom in travel for the end-of-year holiday season.
Demand worries, however, stemming from China’s COVID-19 surge and fears of a global recession may keep oil futures in check.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index rose on Wednesday, as a jump in capesize segment to its highest since mid-July offsets a decline in rates for smaller vessel segments.
The overall index, indeed, gained 127 points, or about 8%, to 1,723, its highest since Oct. 25.
Notabily, the capesize index climbed 432 points, or about 18.3%, to 2,797, its highest level since July 19.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, increased $3,580 to $23,197.
Capesize Atlantic activity set the positive tone with an injection of fresh cargoes out from Brazil, West Africa, and North Atlantic that faced a shortage of prompt tonnage and led to significant week-on-week rises.
The panamax index fell 24 points, or about 1.5%, to 1,598, to mark its worst day in four weeks.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, decreased $217 to $14,378.
The supramax index shed 28 points at 1,103.
In equity markets, US stocks on Wednesday posted moderate gains as positive corporate earnings news boosted market sentiment.
Nike rose more than +12%.
Cintas climbed more than +4%.
FedEx rallied more than +3%.
Energy stocks rose, with the price of WTI crude oil up more than +2% at a 2-week high.
Chip stocks rallied lifting technology stocks.
Apple rose 2.4%.
On the negative side, hotel stocks and drugstore chain stocks fell.
Wednesday’s U.S. economic news was mixed.
Markets got a boost from a report showing U.S. consumer confidence is surprisingly strong, despite inflation squeezing wallets.
The Conference Board’s U.S. Dec consumer confidence index, indeed, rose +6.9 to an 8-month high of 108.3, stronger than expectations of 101.0.
Conversely, Nov existing home sales fell -7.7% m/m to a 2-1/2 year low of 4.09 million, weaker than expectations of 4.20 million.
The nation’s housing market slowed last month, as sales of previously occupied homes fell for the tenth month in a row.
Rising mortgage rates, indeed, made an already tight housing market even more difficult for prospective homebuyers.
However, yesterday the U.S Mortgage Bankers Association reported that the 30-year fixed mortgage rate fell to 6.34% in the week ended December 16 from 6.42% the prior week.
That is down by -82 bp from the 20-year high of 7.16% posted in late October.
In this context, stocks closed broadly higher on Wall Street Wednesday, bringing major indexes into the green for the week.
Notabily, the S&P 500 jumped 1.5% to 3,878.44 while the Dow Jones Industrial Average advanced 1.6% to 33,376.48.
The tech-heavy Nasdaq composite rose 1.5% to 10,709.37.
Small company stocks also gained ground.
The Russell 2000 index rose 28.92 points, or 1.7%, to 1,776.94.
Treasury yields mostly fell.
The yield on the 10-year Treasury, which influences mortgage rates, slipped to 3.66% from 3.69 late Tuesday.
The US government will release Friday a closely watched monthly snapshot of consumer spending, the personal consumption expenditure price index.
The report is monitored by the Fed as a barometer of inflation, which has been easing, albeit at a slow pace.
Economists expect the report to show inflation cooled in November.
On this morning, shares advanced in Asia.
Hong Kong’s Hang Seng jumped more than 2% and benchmarks also rose in Tokyo, Sydney and Seoul.
Shanghai and Mumbai declined.
E-commerce giant Alibaba jumped 4.8% while online services company Tencent gained 3.9%.
Online shopping and food delivery platform Meituan picked up 5.7%.
By mid-afternoon, the Hang Seng was up 2.3% at 19,595.69, while the Shanghai Composite index fell 0.3% to 3,058.71.
Tokyo’s Nikkei 225 was 0.5% higher at 26,507.87 and the Kospi in Seoul rose 1.1% to 2,353.85.
In Sydney, the S&P/ASX 200 advanced 0.5% to 7,152.50.
Bangkok’s SET gained 0.2% while the Taiex in Taiwan climbed 1.5%.
In currency trading, the U.S. dollar slipped to 131.84 Japanese yen from 132.42 yen.
The euro rose to $1.0644 from $1.0606.
From South America, Refinitiv Commodities Research now estimates that Argentina’s 2022/23 wheat production potential has fallen to 12.2 MMT, basing that shift largely on dry conditions in the southeastern production region of Pampas.
Harvest is slightly ahead of last year’s pace, with 69% completed so far.
Brazil is set to produce a record soybean crop in 2023 because of larger acreage and more favorable weather, which may pull down prices and port differentials as Chinese demand remains uncertain.
The soybean crop, which begins harvesting more vigorously in January, may reach 153.5mn t in the 2022-23 season, according to national supply company Conab, above the 125.5mn t in the previous season.
Weather was more favorable for crops and the planted area increased to 43.4mn hectares (ha) from 41.5mn ha in the 2021-22 crop.
But this projection may change in the coming weeks if there is a lack of rain in southern Brazil and yield losses occur, as is happening in Argentina.
Meantime, total soybean exports may rise to 90mn t next year, from 78mn t in 2022, with greater participation of European and South Korean buyers, as lower premiums will make the Brazilian product more competitive in those markets.
In Europe, markets rebounded yesterday on Euronext in the wake of Chicago.
However, activity is becoming more and more limited as the end-of-year festivities approach.
The spread of bird flu has accelerated in the past weeks in France, the farm ministry said on Wednesday, raising concern of further shortages.
By Dec. 20, 217 bird flu outbreaks had been detected on French farms, up from 100 on Dec. 2, and the number of cases has also risen sharply in wildlife, the ministry said.
French Agriculture Minister Marc Fesneau is due to travel to the region on Thursday to put forward a vaccination strategy to fight the disease.
More than half of the outbreaks on farms are concentrated in the Pays de la Loire region with a high density of poultry.
Meantime, per latest data published by Euronext on Wednesday, non-commercial market participants flipped to a net short position in Euronext’s milling wheat futures and options in the week to Dec. 16.
Notabily, non-commercial participants, switched to a net short position of 8,911 contracts from a net long position of 11,327 a week earlier, the data showed.
Commercial participants decreased their net short position to 6,933 contracts from 21,604 a week earlier.
In Euronext’s rapeseed futures and options, non-commercial market participants extended their net short position to 38,849 contracts from 33,031 a week earlier.
Commercial participants increased their net long position in rapeseed to 37,700 contracts from 33,441 a week earlier.
On this morning, the German statistics agency, released its estimates of sowings.
They are traditionally one of the first detailed indications of prospects for the upcoming harvest in Germany.
Notabily, according to the agency, Germany’s winter wheat sown area for the 2023 harvest has been reduced by around 1.9% on the year to about 2.8 million hectares.
German farmers have turned to winter rapeseed, with sowings for the 2023 crop expanded by 7.6% to around 1.2 million hectares, the agency said.
Sowings by German farmers of winter barley, largely used for animal feed, were expanded by 5.1% to 1.3 million hectares, the agency said.
Plantings of the feed grain triticale were cut 5.9% to 304,900 hectares.
Plantings of rye and other minor winter grains were expanded by 4.3% to 612,900 hectares.
From South Africa, farmers are expected to harvest 1.6% less wheat in the 2022 season compared with the previous season, the government’s Crop Estimates Committee (CEC) said on Wednesday.
The CEC’s fifth winter wheat crop forecast estimates the 2022 wheat harvest at 2.249 million tonnes, down from the 2.285 million tonnes harvested last year.
From the Black Sea basin, the situation in Ukraine remains critical and spring planting next year could be severely reduced.
Ukraine’s corn production could fall to 22-23 million tonnes this year from 41.9 million in 2021 because of a reduction in the harvested area caused by the war, its agriculture minister said on Wednesday.
Farmers had harvested 18.4 million tonnes of corn from 70% of the expected area with a yield of 6.27 tonnes per hectare as of Dec. 15, according to agriculture ministry data.
The ministry in September, had forecasted the 2022 corn crop at 25 million to 27 million tonnes.
Farmers, facing a lack of fuel and funds, have left a lot of corn in their fields, and these areas could be harvested by spring.
However, that means less volume and worse grain quality.
Also, harvesting corn in winter means that the fields will not be ready for the spring sowing of corn and this is another reason why there will be less corn.
As a results, next year’s corn acreage could be significantly reduced in favour of sunflowers, which have much lower production costs.
From Middle East, dozens of merchant ships with grains and sugar are stuck outside Iranian ports after weeks of delays as payments snags disrupt flows of goods into the country, according to trade sources and shipping data.
Food is exempt from the West’s sanctions on Iran over its nuclear programme, but the impact of the sanctions on Iran’s financial system have created complex and erratic payment arrangements with international companies.
The latest payment issues have led to ships being unable to discharge cargoes, with at least 40 bulk carrier ships stuck outside the major Iranian ports of Bandar Imam Khomeini and Bandar Abbas, ship tracking data on Refinitiv showed.
Iran’s Ports and Maritime Organisation said in a report in November that some 37 ships loaded with 2.2 million tonnes of goods had not been able to unload due to “documentation and hard currency payment issues” at Bandar Imam Khomeini.
From South East Asia, Indonesia’s 2022 palm oil exports are estimated at 34.67 million tonnes, down from last year’s 37.78 million tonnes, partly due to a temporary export stoppage in April, the chief executive of its palm oil fund Eddy Abdurrachman, said on Thursday.
Indonesia’s 2022 palm biodiesel consumption is seen at 10.6 million kilolitres, up from last year’s 9.29 million kilolitres, Abdurrachman said.
The gradual easing of Indonesia’s export restrictions, including the so called domestic market obligation, would see shipments return to normal at around 36 million tonnes to 38 million tonnes in 2023, he added.
On the international trade scene, Iraq’s state grains buyer is believed to have purchased about 150,000 tonnes of wheat expected to be sourced from Australia in an international tender this week.
The purchase was believed to involve around 100,000 tonnes bought at an estimated $461 a tonne c&f and 50,000 tonnes bought at around $496 a tonne c&f.
The tender for a nominal 50,000 tonnes had closed on Dec. 18 seeking wheat sourced either from the United States, Australia and Canada.
The Taiwan Flour Millers’ Association purchased an estimated 56,000 tonnes of milling wheat to be sourced from the United States in a tender on Thursday.
The purchase involved various wheat types for shipment from the U.S. Pacific Northwest coast between Feb. 10 and Feb. 24, 2023.
The purchase involved 35,165 tonnes of U.S. dark northern spring wheat of a minimum 14.5% protein content bought at $411.52 a tonne FOB U.S. Pacific Northwest coast.
It also involved 14,825 tonnes of hard red winter wheat of a minimum 12.5% protein content bought at $396.27 a tonne FOB and 6,010 tonnes of soft white wheat of a maximum 9.5% protein bought at $324.31 a tonne FOB.
The purchase has an additional freight charge of $33.85 per tonne for ocean shipping from the U.S. Pacific Northwest coast to Taiwan.
Seller of the dark northern spring was said to be trading house CHS.
The hard red winter and soft white wheat was said to be trading house ADM.
Other News
Global seed maker Syngenta will release a new type of wheat developed with complex cross-breeding techniques in the United States next year, beating out rival companies that are also trying to develop higher yielding wheat at a time of diminishing global grain supplies.
Chinese-owned Syngenta said its U.S. wheat, to be sold under the AgriPro brand, could increase yields by as much as 12% to 15% and make crops more stable.
The hybrid wheat, combines positive traits from two parent plants.
Syngenta, which began working on hybrid wheat in 2010.
Next year will be enough seeds on the market for U.S. farmers to plant about 5,000 to 7,000 acres.
However, benefits of the new crop are still not certain.
Syngenta’s French unit said the company postponed the launch of a similar type of wheat tested in France following disappointing results.
The U.S. and French hybrids were tailored for local growing conditions, which can include threats from plant diseases and the need to meet quality standards for milling and baking, the company said.
Wheat “is the only major food crop that has not yet benefited from significant technification.
Hybrids will change this,” said Jon Rich, Syngenta Seeds’ head of North America cereals operations.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
