Good morning Farmer Family …
US farm markets jumped substantially higher on Wednesday.
Corn prices closed with gains of 1.19%.
Soy meal shot higher 3.21%.
Those gains helped pull beans higher as well with Jan up by 1.64%.
Soy oil, in contrast, was left behind, closing the day triple digits weaker with a 2.73% loss for Jan contract.
The wheat complex, showed some variability.
Chicago SRW prices, indeed, rallied by 1.42%.
Kansas City HRW closed up by 0.34%.
Minneapolis spring wheat prices closed fractionally lower by 0.03%, meantime.
A weather market has begun to unfold in South America, thus, corn and soybean prices continued to find support as a lack of rainfall in key growing areas of Argentina threatening the crops.
Wheat, on its part, has rallied in recent sessions as extreme cold weather gripped the United States, threatening to hurt winter wheat crops already weakened by drought.
However, between today and Sunday, plenty of additional rain and snow will be building in a band stretching from the Mid-South into the eastern Corn Belt and Great Lakes region.
Also, the 8-to-14-day outlook predicts more seasonally wet weather in store for the central U.S. between January 4 and January 10, with warmer-than-normal conditions probable for the eastern half of the country during this time.
The easement of covid-related restrictions in China, which could bode well for U.S. export demand moving forward, supported all three markets.
EIA’s weekly ethanol report is scheduled for release today with a day delay for the Monday holiday.
Meantime, corn basis bids were mostly steady to weak across the central U.S., after sliding 5 to 7 cents lower at three Midwestern locations.
An Illinois river terminal bucked the overall trend after tracking 2 cents higher.
Soybean basis bids held steady across the central U.S..
Commodity funds were net buyers of CBOT soybean, soymeal, corn and wheat futures contracts, and net sellers of CBOT soyoil contracts.
On this morning, Chicago soybean futures were largely unchanged.
Wheat and corn fell, meantime.
Notabily, the most-active soybean contract on the Chicago Board of Trade (CBOT) unmoved at $15.14-1/4 a bushel, as of 03:31 GMT, wheat gave up 0.1% to $7.84-3/4 a bushel and corn fell 0.4% to $6.80 a bushel.
In energy markets, oil prices continued to dip on Thursday as surging COVID-19 cases in China dimmed hopes of a recovery in fuel demand for the world’s largest crude oil importer.
Brent futures for February fell 79 cents, or 1.0%, to $82.47 a barrel by 07:30 GMT, while U.S. crude fell 80 cents, or 1.0%, to $78.16 a barrel.
The scale of the latest outbreak and doubts over official data prompted some countries to enact new travel rules on Chinese visitors.
Oil markets were also buffeted, as U.S. crude oil inventories fell less than expected, by about 1.3 million barrels, in the week ended Dec. 23, according to market sources citing American Petroleum Institute figures.
That compared with estimates for a draw of 1.5 million barrels, according to analysts’ estimates.
Also weighing on prices, pipeline operator TC Energy said it was working to restart the portion of the Keystone pipeline that was shut down after a leak this month.
Markets, however, drew some support from Russian President Vladimir Putin’s ban on exports of crude oil and oil products from Feb. 1 for five months to nations that abide by a Western price cap.
Germany said the ban has “no practical significance” as the country has been working since spring to replace Russian oil supplies and ensure security of supply.
In equity markets, on Wall Street the S&P 500 fell 1.2% to 3,783.22.
The Dow Jones Industrial Average dropped 1.1% to 32,875.71.
The Nasdaq slid 1.4% to 10,213.29.
The Russell 2000 gave up 1.6%, ending at 1,722.02.
With two more days of trading left in 2022, the S&P 500 is headed for a roughly 20% drop for the year.
The Dow is on pace for a 9.5% drop, while the Nasdaq is doing much worse, on pace to plunge 34.7%.
Southwest Airlines slid 5.2%.
Delta Air Lines dropped 2.8% and United Airlines fell 2.4%.
Tesla rose 3.3% as it stabilized from steep losses it suffered on Tuesday.
Yesterday we saw a winding down with little in the way of data to drive trading.
U.S. economic news was mixed.
Nov pending home sales fell -4.0% m/m, weaker than expectations of -1.0% m/m.
Conversely, the Dec Richmond Fed manufacturing index unexpectedly rose +10 points to an 8-month high of 1, stronger than expectations of a decline to -10.
Later on this morning, the U.S. government would to release jobless claims, a measure of employment that could provide insight into how the economy is faring.
Meantime, bond yields were mixed.
The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.88% from 3.85% Tuesday.
The yield on the two-year Treasury fell to 4.34% from 4.38% late Tuesday.
On this morning, shares in Asia slipped.
Tokyo’s Nikkei 225 index lost 1.3% to 25,990.68.
The Hang Seng in Hong Kong shed 1.1% to 19,681.70, while the Shanghai Composite index was down 0.3% at 3,077.80.
Australia’s S&P/ASX 200 gave up 1.2% to 7,004.40.
Bangkok’s SET index edged 0.1% higher.
The Kospi in Seoul sank 1.8% to 2,240.81.
Investors are watching to see how China’s relaxation of its stringent COVID-19 policies, and the outbreaks of infections that have followed, will affect business activity and travel.
However, one of the main concerns is that the massive outbreaks could generate new, potentially vaccine resistant variants of the virus, “leading to knock-on virus surges across the globe.
Meantime, South Korea’s industrial production fell minus 3.7% from a year earlier in November, worse than forecast and a bigger drop than the minus 1.2% the month before. Retail sales were down 1.8% from the month before.
In currency trading, the U.S. dollar fell to 133.85 Japanese yen from 134.39 yen late Wednesday.
The euro rose to $1.0624 from $1.0613.
Going back to analyzing the other agricultural markets …
From South America, Anec expects the December corn export from Brazil will be 6.191 MMT, down from their prior 6.579 MMT forecast.
Brazilian soy exports are forecasted as 1.715 MMT for December according to Anec.
That is a slight drop from their prior forecast.
Argentina’s bottom line remains one of concern as poorly distributed rainfall.
Persistent drought conditions in Argentina had the country’s Rosario grains exchange reducing its 2022/23 wheat production estimates by another 300k MT for a total of 11.5 MMT.
Per-acre yields are at the lowest levels in more than a decade, according to the exchange.
Planting of corn for the 2022/23 cycle began in September
However, the prolonged drought affected the development of early-planted grains, the Rosario grains exchange said.
The rain expected this weekend into Monday will be extremely important and producers may advance with planting to take advantage of the moisture boost, while noting the lateness of the planting season.
Opportunities to plant crops will begin to run out in the middle part of January.
In this context, crop analyst Michael Cordonnier reduced projected Argentine soybean production to 43 MMT, down 2 MMT from his previous and vs. USDA at 49.5 MMT in December.
He has lowered his Argentine estimates 5 weeks in a row.
Meantime, Argentina’s farmers have sold 78.9% of the 2021/2022 soybean harvest so far, the agriculture ministry said on Wednesday, as producers continue to benefit from a preferential exchange rate aimed at attracting sorely needed U.S. dollars.
Notabily, between Dec. 15 and Dec. 21, producers in Argentina sold 730,300 tonnes of the 44 million-tonne 2021/2022 soybean crop, one of the highest weekly figures in recent months.
Also, the government said 74% of the country’s 2021/2022 corn crop, which totaled 59 million tonnes, had been sold to date, behind the 76.8% sold in the same period during the 2020/2021 cycle.
Farmers have also sold 6.4 million tonnes of wheat from the 2022/23 campaign, which represents 48% of the total production of 13.4 million tonnes estimated by the government.
In Europe, after the rebound in prices observed at the beginning of the week, activity on the physical market nevertheless remains reduced.
Wheat price eased.
Corn prices were unchanged.
Rapeseed price showed a slight decline.
The euro/dollar parity has not implied any price adjustment effect.
Meantime, per latest data published by Euronext , non-commercial market participants cut their net short position in Euronext’s milling wheat futures and options in the week to Dec. 23.
Notabily, non-commercial participants reduced their net short position to 4,957 contracts from 8,911 a week earlier, the data showed.
Commercial participants increased their net short position to 12,962 contracts from 6,933 a week earlier.
In Euronext’s rapeseed futures and options, non-commercial market participants reduced their net short position to 34,670 contracts from 38,849 a week earlier.
Commercial participants similarly decreased their net long position in rapeseed to 33,138 contracts from 37,700 a week earlier.
From the Black Sea basin, as of December 28, Ukraine has exported 22.024 mln tonnes of grains and pulses, including 4.141 mln tonnes so far in December, the Ministry of Agrarian Policy informed.
The total included 8.167 mln tonnes of wheat, 1.608 mln tonnes of barley, 12.165 mln tonnes of corn, 12.5 thsd tonnes of rye.
Ukraine has exported 67.7 thsd tonnes of flour, including 64.3 thsd tonnes of wheat flour.
All grain shipments trail last season by 30% through 12/28.
Russia’s Ag Ministry expects their wheat crop is 105.7 MMT, compared to USDA’s official forecast of 91 MMT.
Sovecon raised their private outlook by 300k MT for a 101.2 MMT 22/23 output, citing better yields in the country’s Central and Siberian production regions.
Meantime, ship insurers said they are cancelling war risk cover across Russia, Ukraine and Belarus, following an exit from the region by reinsurers in the face of steep losses.
Reinsurers, who insure the insurers, typically renew their 12-month contracts with insurance clients on January 1, giving them the first opportunity to scale back exposure since the war in Ukraine started, after being hit this year by losses related to the conflict and from Hurricane Ian in Florida.
P&I (protection and indemnity) clubs American, North, UK and West are no longer able to offer war risk cover for some liabilities in the region from January 1, they said in recent notices on their websites.
The clubs are among the biggest P&I insurers who cover around 90% of the world’s ocean-going ships.
“The Club’s reinsurers are no longer able to secure reinsurance for war risk exposure to Russian, Ukrainian or Belarus territorial risks”, – it said.
Ships typically have P&I insurance, which covers third-party liability claims including environmental damage and injury.
Separate hull and machinery policies cover vessels against physical damage.
The withdrawal of cover for Ukraine and Russia applies to some but not all types of policy offered by the P&I clubs, three P&I insurance sources said.
The exclusions will make it harder for charterers to find insurance, increase prices and may mean some ships sail uninsured, industry sources say.
Providers of reinsurance and retrocession include global players Hannover Re, Munich Re and Swiss Re, as well as syndicates in the Lloyd’s of London market.
The firms all declined to comment.
From the Middle Kingdom, China’s top diplomat Wang Yi, speaking this past weekend at a symposium on foreign relations, hinted that the country plans to ramp up efforts to improve the trade temperature with the United States and other partners, including a “follow through on the common understandings reached between the Chinese and U.S. Presidents.”
Wang also said China will increase high-level negotiations with Europe.
Meantime, the dismantling of health restrictions in China has extended to food imports, as checks have been lifted on imported chilled and frozen foods, beginning Jan. 8.
However, there is caution in global markets about the short-term, as the surge in infections straining hospitals and prompted some countries to consider new rules for Chinese visitors.
Meantime, China’s state-owned grains trader COFCO said on Thursday a new joint venture it has set up with state stockpiler Sinograin to manage the country’s huge grain reserves will officially begin operations next month.
The China Enterprise United Grain Reserve Co Ltd was established in September, according to the COFCO statement on its public WeChat account, and is part of the state’s efforts to improve the efficiency of its grain reserves and better ensure food security.
From South East Asia, the capped Malaysian palm export tax will remain at 8% through January.
Their system, since Jan 2021, has a scaled tax level which is 8% above 3,450 ringgits (starting at 3% for 2,250-2400 ringgits).
Meantime, Malaysian palm oil prices extended losses for a second day on Thursday as demand remained sluggish, while traders booked profits following a rally earlier this week.
Notabily, the benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange slid 37 ringgit, or 0.91%, to 4,050 ringgit ($916.70) a tonne by the midday break.
Although production is lower, traders are concerned about demand momentum.
Indonesia, the world’s largest producer, will start its mandatory palm oil biodiesel 35% blending on Feb. 1, a month later than initially planned, the energy ministry said.
Key export market, India, extended a policy to import refined palm oil at a lower duty and allowed imports of 51,000 tonnes of cotton at nil duty in 2023, the government said in a notification late on Thursday.
The move by China to lessen their restrictions added with India’s move to allow free imports of edible oils is seen to greatly benefit Indonesia.
From Australia, the country is making no change to its rules around allowing travellers from China into the country, despite measures by some countries to require mandatory COVID-19 tests, Australian Prime Minister Anthony Albanese said on Thursday.
Since China relaxed strict measures to stop the spread of the coronavirus, the country has experienced a surge of cases, overwhelming hospitals and prompting countries including the United States, India and Japan to impose restrictions on travellers from the mainland.
Australia and China recently resumed diplomatic dialogue.
This month, Australian Foreign Minister Penny Wong became the country’s first government minister to visit China since 2019.
On Thursday, Australian Trade Minister Don Farrell said he was willing to visit China to talk through Beijing’s bans on imports of Australian barley and wine.
On the international trade scene, Egypt’s General Authority for Supply Commodities said it contracted for a quantity of 200,000 tonnes of Russian wheat in a World Bank-funded tender held on Tuesday.
The purchase was divided into five shipments of 40,000 tonnes from the supplier Grain Flower at a price of $339 per tonne.
Payment will be at sight on a C&F basis, with shipment between Feb. 1 and Feb. 15, 2023.
The tender comes within the framework of the Food Security and Resilience Support Program funded by the World Bank with Loan No. EG-9399.
Traders on Tuesday said GASC had initially booked 80,000 tonnes of Russian wheat and was in talks to buy three more 40,000 tonne cargoes.
Egypt purchased 30,000 metric tons of soyoil plus another 12,000 MT of sunflower oil in an international tender that closed on Wednesday.
Additional shipping details were not immediately available.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
