Good morning Farmer Family …
US farm markets showed a bit of optimism while they entered the last trading week of the year.
Corn prices saw the most upside closing 1.28% higher.
Soybean prices took off at the open, then they faded back from their initial gains, but still closed the day up 0.22%.
Meal prices closed red, with losses of 0.77%.
Soybean oil prices slid from their initial gains, but still went home 2.61% higher.
Wheat gains were variable.
Chicago SRW wheat ended the Tuesday session 0.19% in the red after prices had rallied double digits starting the session.
Kansas City wheat prices stayed in the black, but gains were limited to 0.51% at the close.
Minneapolis spring wheat prices were mixed at the bell, though March contract ended the session with 0.27% gains.
Corn prices rose on export optimism after a large sale to Japan was announced.
Private exporters, indeed, reported to the USDA having sold 177,500 metric tons of corn for delivery to Japan.
Of the total, 7,500 metric tons is for delivery during the 2022/2023 marketing year and 170,000 metric tons is for delivery during the 2023/2024 marketing year.
Soybean prices attempted to move significantly higher, after expected rainfall over the weekend in Argentina missed large portions of the parched growing region.
The market also found support after China announced plans to begin issuing visas next week.
However, ultimately the market settled into modest gains by the close as rising infections in China were likely to slow demand for soybeans.
For the wheat market, strong winds and temperatures well below freezing levels have threatened dormant hard red winter wheat crops across the U.S. Great Plains, especially where a lack of snow cover leaves the plants vulnerable to damage from the cold.
However, variable amounts of rain and/or snow are possible for parts of the Midwest and Plains between today and Saturday, per the latest 72-hour cumulative precipitation map from NOAA.
Parts of the Mid-South are likely to see 2” or more during this time.
Later on, NOAA’s 8-to-14-day outlook predicts seasonally wet weather for most of the central U.S. between January 3 and January 9, with warmer-than-normal conditions likely for eastern half of the country during that time.
Meantiome, all three markets found support from weekly export inspections.
USDA’s weekly Export Inspections data, indeed, showed 856,606 MT of corn was inspected for export during the week that ended 12/22.
That was up from 827k MT last week, but down by 98k MT from the same week last year.
Mexico and China were the top destinations for the week, combining for nearly 80% of the total.
The weekly report also added 83.5k MT of corn shipments to past weeks, for 8.84 MMT for the season’s total export – compared to 12.3 MMT at the same time last year.
As for soybean, weekly inspections data showed 1.753 MMT of soybeans were exported during the week that ended 12/22.
That was down from 1.963 MMT last week, but near the same week last year.
China was the destination for 61% of the total.
USDA had the accumulated export at 27.13 MMT, compared to 19.18 MMT at the same point last season.
As for wheat, USDA reported 280,554 MT of wheat was inspected for export during the week that ended 12/22.
That was down 23k MT wk/wk, and was 34k MT lighter than the same week last year.
However, it was in line with predictions of 175,000 to 450,000 tonnes.
USDA had the season’s total export at 11.72 MMT, compared to 11.97 MMT for last year.
In this context, corn basis bids were mixed at two Midwestern processors (up 5 cents at an Iowa location, down 25 cents at a Nebraska location), while holding steady elsewhere across the central U.S. on Tuesday.
Soybean basis bids eased a penny lower at an Ohio elevator while holding steady elsewhere across the central U.S..
Commodity funds were net buyers yesterday for 6,000 lots of corn, 1,500 lots of soybeans and 500 lots of wheat.
On this morning, Chicago soybean futures rose, gaining for a third consecutive session.
Wheat and corn ticked lower, meantime.
Notabily, the most-active soybean contract on the Chicago Board of Trade added 0.9% to $15.02-1/4 a bushel, as of 04:58 GMT, whereas wheat lost 0.1% to $7.74 a bushel and corn slid 0.1% to $6.74 a bushel.
In energy markets, oil prices edged higher on Wednesday.
Notabily, Brent futures for February delivery rose 9 cents, or 0.1%, to $84.42 a barrel, by 04:06 GMT.
U.S. crude advanced 10 cents, or 0.1%, to $79.63 per barrel.
Amid the optimistic market mood, both benchmarks hit their highest level in three weeks on Tuesday, although closed mixed.
There are hopes for a boost in demand for fuel in China, as the country is moving towards reopening its borders next month after three years of stringent curbs on movement and businesses to counter the spread of COVID.
However, Chinese hospitals were under intense pressure due to a surge in COVID-19 infections.
Also, the most recent COVID-19 policy easing likely will have a short-term positive effect specifically on international aviation, but to get to a full normalization of China’s demand we will need to wait two more months.
Meantime, pPrices were also buoyed by news that Russia aims to ban oil sales from Feb. 1 to countries that abide by a G7 price cap imposed on Dec. 5, according to a decree by President Vladimir Putin.
However, “while a Russian ban on oil sales would cut supply, this would be offset by lower demand due to a potential global economic recession next year” some analysts said.
Meantime, oil refiners in the U.S. on Tuesday were working to resume operations at a dozen facilities knocked offline by the Arctic blast sending temperatures well below freezing, cutting oil and gas production from North Dakota and Texas.
In this context, U.S. crude oil stocks were estimated to have fallen 1.6 million barrels last week with distillate inventories also seen down.
In ocean freight markets, the Baltic Exchange will not publish data for the main index until January 2nd, 2023.
In equity markets, US stocks on Tuesday settled mixed.
Higher T-note yields Tuesday weighed on technology stocks and the overall market.
Treasury yields mostly, indeed, rose as the U.S. bond market reopened from Christmas holidays.
Notabily, the yield on the 10-year Treasury, which influences mortgage rates, rose to 3.85% from 3.75% late Friday.
Thus, technology and communication services companies accounted for a big share of the declines in the S&P 500.
Apple fell 1.4% and Netflix lost 3.7%.
Tesla fell 11.4% for the biggest decline among S&P 500 stocks.
The electric vehicle maker temporarily suspended production at a factory in Shanghai, according to published reports.
Airlines stocks fell broadly, after a massive winter storm caused widespread delays and forced several carriers to cancel flights over the weekend.
Delta Air Lines closed 0.8% lower, American Airlines dropped 1.4% and JetBlue slid 1.1%.
Southwest Airlines slid 6%.
Tuesday’s U.S. economic news was mostly bearish for stocks.
U.S. inventory data was bearish for stocks as it showed Nov wholesale inventories rose +1.0% m/m, above expectations of +0.3% m/m.
Also, Nov retail inventories unexpectedly rise +0.1% m/m, above expectations for a -0.1% m/m decline.
In addition, the Dec Dallas Fed manufacturing outlook level of general business activity unexpectedly fell -4.4 to -18.8, weaker than expectations of an increase to -13.5.
Conversely, the Oct S&P CoreLogic composite-20 home price index eased to a 2-year low of +8.64% y/y but was stronger than expectations of +8.00% y/y.
Stocks, however, had support Tuesday from hopes that global economic growth will improve after China took steps to roll back its Covid restrictions.
Mining stocks rose, with copper prices climbing to a 6-week high, on optimism that Chinese industrial metals demand will improve.
In this context, the S&P 500 fell 0.4% to 3,829.25 and the Dow Jones Industrial Average eked out a 0.1% gain, closing at 33,241.56.
The Nasdaq dropped 1.4% to 10,353.23.
The Russell 2000 index dropped 0.7% to 1,749.52.
However, trading on Wall Street is expected to be relatively light this holiday-shortened week as investors look ahead to 2023 after a dismal year for stocks.
The benchmark S&P 500 index, indeed, set an all-time high at the beginning of January, but is now down nearly 20% for the year.
The tech-heavy Nasdaq is down nearly 34%.
On this morning, shares were mixed in Asia.
Shares fell in Tokyo, Shanghai and Seoul but rose in Hong Kong.
While the Chinese government announced it will start issuing new passports in another major step away from anti-virus travel barriers, governments in India and Japan have said they will impose extra precautions on those arriving from China due to widespread virus outbreaks there.
U.S. officials also expressed concern and said they were considering taking similar steps.
Also, Japanese government reported that Japan’s industrial production fell for a third straight month in November and said it was likely to fall further in December.
Thus, Hong Kong’s Hang Seng jumped 2% to 20,011.99.
The Shanghai Composite index gave up early gains, losing 0.2% to 3,000.23.
Tokyo’s Nikkei 225 lost 0.6% to 26,301.69.
The Kospi in Seoul declined 2.2% to 2,282.26.
In Australia, the S&P/ASX 200 dropped 0.3% to 7,086.50.
In currency trading, the U.S. dollar rose to 134.09 Japanese yen from 133.43 yen.
The euro was trading at $1.0643, up from $1.0640.
From Canada, Statistics Canada’s Crushing statistics of major oilseeds report for November showed total crush at 877,405 metric tons (mt), down only slightly from the 885,331 mt crush in the previous month.
This volume is up 12.3% from the same month in 2021, while is 4.1% higher than the three-year average for this month.
This volume is above the 798,648 mt needed this month to reach the current Agriculture and Agri-Food Canada (AAFC) crush forecast of 9.5 mmt (brown line), a forecast that was lowered by 500,000 mt in AAFC’s December Canada.
The cumulative crush for 2022-23 is calculated at 3.190 million metric tons, which is up 3% from the same period in 2021-22, although is down 3% from the three-year average.
This volume is slightly ahead of the cumulative pace needed to reach the revised forecast.
It remains to be seen how the exporters and crushers will divide the available supplies, with recent ideas reported in the media that exports may be under pressure in the remaining months of the crop year as competition with Australia intensifies.
The current crush forecast of 9.5 mmt represents 49.6% of the current available supply forecast, down from last year’s 54.7% but remains well above the five-year average of 44.3%.
A drop in the November crush was seen despite a sharp rise in the board crush margin.
A ProphetX chart approximating the Canola Board Margin Index calculates the mean crush margin index of $266.27/mt in November, up sharply from the $204.05/mt calculated for October.
The November high was $327.60/mt.
November data shows an oil content of 41.2%, the lowest monthly percentage seen this crop year.
During the first four months, the oil content is calculated at an average of 41.4%, down from the 2021-22 average of 41.8% and the five-year average of 42.9%.
Canada’s soybean crush was reported at 158,688 mt in November, down from the previous month and slightly below the volume needed this month in order to remain on track to reach the current AAFC forecast of 1.9 mmt.
Over three months, the soybean crush of 462,479 mt is 2.4% higher than the same period in 2021-22 while 4.8% higher than the three-year average.
As for wheat, and wheat flour, Statistics Canada’s Milled wheat and wheat flour produced report for November shows 284,876 metric tons (mt) of all-wheat milled during the month.
This is up from the 280,000 mt reported for October while below the 290,000 mt milled in September, the largest volume reported since July 2016.
The all-wheat volume milled during the first 11 months of the year is 3.031 million metric tons (mmt), similar to the 3.4 mmt forecast released by Agriculture and Agri-Food Canada (AAFC) for the August-to-July 2022-23 crop year.
During the first 11 months, this volume is 5.5% higher than the same period in 2021 and 3.8% higher than the five-year average.
The monthly volume milled remains above the 10-year (2012-2022) trend.
Data for durum shows a volume of 19,000 mt milled in November, the highest monthly volume in eight months.
During the first 11 months of 2022, 199,000 mt of durum has been milled, up 4.7% from last year while 2.1% lower than the five-year average.
The monthly grind remains active despite Statistics Canada’s price data released this week in their Consumer Price Index report for November.
As seen in this month’s report, prices for bread, rolls and buns continue to rise, up 18.2% from a year ago and a high for the year.
The rate of inflation for the breakfast cereal and other cereal product category fell from the high reached in October, falling from a 17.8% year-over-year increase in October to 14.4% in November.
The rate in inflation for the dry or fresh pasta category fell sharply in November, but remains at a price level that is 27.9% above one year ago.
This is down from a 44.8% year-over-year price increase reported in October.
Prices for these categories have risen at a significantly faster pace than for food overall.
Food prices continued to rise overall in November, with Statistics Canada reporting that prices for food from stores rose by 11.4% year-over-year in November, up from 11% reported in October.
From South America, Brazil’s Anec is now expecting the country’s corn exports to reach 6.19 MMT in December, which is 5.9% below its prior projection from a week earlier.
Anec also slightly reduced its estimates for the country’s December soybean exports, sliding that number down to 1.71 MMT from its last projection from a week earlier.
Anec also expects to see Brazilian soymeal exports reach 1504 million metric tons this month.
In Europe, Euronext wheat extended gains on Tuesday to its highest in over three weeks, supported by the risk of frost damage to U.S. crops.
Notabily, March wheat on Paris-based Euronext was up 1.12% at 315.25 euros ($335.69) a tonne.
However, volumes were light with many participants still away from their desks for the Christmas and New Year period.
Also, with arctic conditions subsiding in U.S. crop plains, traders were watching to see the extent of crop damage.
Meantime, the market was also underpinned by a busy export programme in France, swollen by cargoes for China.
Scheduled loadings were set to bring the volume of French soft wheat shipped outside the European Union this season to about 7.3 million tonnes by end-December, or some 70% of expected 2022/23 exports at the halfway stage of the season.
Meantime, the import tender by Egypt on Tuesday underlined Black Sea competition, with Russian wheat offered the cheapest and no offers of French wheat made.
On the other hand, February rapeseed was up 2.43% at 580.5 euros a tonne, after also reaching its highest since Dec. 1.
News that China would roll back border restrictions as it jettisons a zero-COVID policy boosted demand sentiment in commodity markets, including oilseeds.
From North Africa, Egypt released 172,000 tonnes of fodder raw materials from the ports, including corn and soybeans, at a value of $81m, last Wednesday and Thursday.
Minister of Agriculture and Land Reclamation El-Sayed El-Kosayer revealed that this was done in coordination with the Central Bank of Egypt (CBE) and through the banking sector.
This came within the framework of the state’s efforts to make special arrangements for the successive release of all goods in the ports.
Egyptian Prime Minister Moustafa Madbouly announced that goods worth about $300m were released during these two days.
El-Kosayer explained that the release included 146,000 tonnes of corn at a value of $58.4m, 26,000 tonnes of soybeans at a value of $19.2m, and feed additives worth $3.4m.
According to the Egyptian minister, the total released fodder raw materials, during the period from October 16 to December 22, 2022, amounted to about 1.427 million tonnes, at a value of $713m, including 971,000 tonnes of corn, and 456,000 tonnes of soybeans and feed additives.
From the Black Sea basin, government surveys showed Ukraine’s ’22 corn harvest was 20.2 MMT as of 12/22, though only ~75% finished.
Meantime, according to APK-Inform, the indicative FOB prices of Ukrainian corn increased slightly last week for the first time since the start of 2022/23 MY.
The prices were supported by large export of corn compared to other grains and stronger demand from China.
However, in 2022, revenue from the export of Ukrainian agricultural products will amount to about 23.3 bln USD, which is 16% less than last year, Ukrainian Club of Agrarian Business forecasts.
The largest decrease in export revenue was observed at the beginning of the war.
TOP-5 commodities with the largest revenue were traditional export products – corn, sunflower oil, wheat, rapeseed and sunflower seed.
Russia harvested 159.5 mln tonnes (in bunker weight) of grains and pulses in 2022, up by 26.6 mln tonnes compared to 2021, the Ministry of Agriculture informed.
Farmers reaped crops from 46.4 mln ha with an average yield at 3.44 t/ha.
Particularly, farmers harvested 29.9 mln ha of wheat (105.7 mln tonnes; 3.62 t/ha), 7.9 mln ha of barley (24.6 mln tonnes; 3.1 t/ha), 2.3 mln ha of corn for grain (13.93 mln tonnes).
Sunflower seed was harvested throughout 8.7 mln ha (15.5 mln tonnes; 1.79 t/ha), rapeseed – 2.2 mln ha (4.7 mln tonnes; 2.1 t/ha), soybean – 3.3 mln ha (6.3 mln tonnes; 1.9 t/ha).
Sugar beet was harvested from 1 mln ha (47.8 mln tonnes; 47.57 t/ha).
Farmers planted 17.7 mln ha with winter crops compared to 18.4 mln tonnes in 2021.
Grain production amounted to 8.69 mln tones (in weight after processing) in Belarus in 2022, which is 1.37 mln tonnes more than in 2021, the Ministry of Agriculture and Food reported.
“The country fully met its needs in food and feed grain. The production of buckwheat doubled in 2022, millet crop grew by 60%, wheat by 30%”, – the ministry noted.
On the international scene, Egypt bought 80,000 t of wheat of Russian origin at 339 usd/t cif, for Feb 1-15 delivery.
Thailand purchased 63,000 t of animal feed wheat, likely sourced from Australia, in a dealt hat closed on Friday.
The grain is for shipment in June.
South Korea issued an international tender to purchase around 24.5k MT of GMO-free food-quality soybeans from optional origins that closes on January 4.
The grain is comprised of a series of assignments that would be for delivery between December 2023 and June 2024.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
