Good morning Farmer Family …
US farm markets were mixed but mostly lower yesterday.
Corn prices saw a 0.48% declines.
Soybeans had bucked the overall trend, and kept 0.15% gains by the close.
Thursday’s gains for beans were mainly led by soy oil which closed 0.91% higher.
Meal prices pulled back, meantime, posting a 0.47% losse.
The wheat complex faced more severe cuts.
Chicago prices ended the day 1.46% lower.
Kansas City HRW settled with 1.79% losses.
Minneapolis spring wheat was 2.14% in the red at the closing bell.
Corn prices faded, as traders digested a disappointing round of ethanol production data and anticipate a good-but-not-great round of weekly export sales data.
Notabily, EIA data showed ethanol producers averaged 963k barrels of output per day through the week that ended 12/23.
That was down by 66k barrels per day from last week and marked the first sub-1m bpd week since October 14th.
Despite the reduced output, stocks rose 569k barrels to 24.636 million, the largest since April.
Soybean stayed firm, lifted by a drought in key supplier Argentina and expectations of strong demand from China.
Wheat prices had a setback, as the recent weather rally finally sputtered and gave way to some profit-taking.
Between today and Monday, most areas east of the Mississippi River will get at least some measurable rain or snow.
The West Coast and western Rocky Mountains will also receive ample moisture during this time, while the Northern and Central Plains should remain relatively dry.
NOAA’s new 8-to-14-day outlook predicts a bit of seasonally wet weather likely for parts of the western Corn Belt and Central Plains between January 5 and January 11, with widespread warmer-than-normal conditions in the central U.S. during this time.
Meantime, ahead of the USDA weekly export sales report, covering the week through December 22, analysts are expecting the agency to show old crop corn sales ranging between 600k MT and 850k MT.
No new crop sales are expected.
As for soybean, analysts think the agency will show soybean sales ranging between 500,000 and 900,000 MT.
New crop bookings are expected to be below 50k MT.
For meal, analysts anticipate USDA will show between 125k and 320k MT of sales.
Bean oil bookings are expected to be below 30k MT.
As for wheat, analysts are expecting the agency to show wheat sales ranging between 200k and 450k MT of old crop wheat sales.
New crop bookings are expected to be below 25k MT.
In this context, corn basis bids eased 2 to 5 cents lower at three Midwestern ethanol plants and dropped 3 cents at an Iowa processor while holding steady elsewhere across the central U.S..
Soybean basis bids were mostly steady across the central U.S., but did ease a penny lower at an Iowa river terminal.
Commodity funds were net buyers of CBOT soybean and soyoil contracts, and net sellers of corn, soymeal and wheat futures contracts.
On this morning, Chicago soybeans rose, with the market poised to gain for a fourth straight year.
Wheat prices edged higher, putting the market on track to finish 2022 largely unchanged.
Notabily, the most-active soybean contract on the Chicago Board of Trade rose 0.7% to $15.26-1/4 a bushel, as of 04:45 GMT, wheat gained 0.2% to $7.75-3/4 a bushel and corn rose 0.1% to $6.80-1/4 a bushel.
For the year, corn has gained about 15%.
Soybeans are up almost 14%.
As for wheat, which has closed higher for the last five years, it has added less than 1% this year.
In energy markets, oil prices edged up on this morning.
Notabily, Brent crude futures rose 59 cents, or 0.7%, to $84.05 a barrel by 07:30 GMT, after settling down 1.2% in the previous session.
U.S. West Texas Intermediate crude was at $78.90, up 50 cents, or 0.6%, after closing 0.7% lower on Thursday.
Overall, oil prices are on track for their second straight annual gains.
Notabily, Brent looked set to end the year with a gain of 8%, after jumping 50.2% in 2021.
WTI, meanwhile, is on track to rise 4.8% in 2022, following last year’s gain of 55%.
It was a stormy year.
Prices had surged in March to a peak of $139.13 a barrel, a level unseen since 2008, after war started in Ukraine, sparking supply and energy security concerns.
Oil prices, however, cooled quickly in the second half of this year as central banks hiked interest rates to fight inflation, boosting the U.S. dollar.
That made dollar-denominated commodities a more costly investment for holders of other currencies.
A weakening demand from China, also weighed on oil prices, meantime.
China’s zero-COVID restrictions, which were only eased this month, squashed oil demand recovery hopes for the year.
Also, China is expected to slowly recover in 2023, as a surge in COVID infections and global recession concerns are clouding the commodities demand outlook.
Looking ahead, on supplies side Western sanctions will push Russia to divert more crude and refined products exports from Europe to Asia.
In the United States, output growth in top oil-producing states has slowed despite higher prices. Inflation, supply chain snags and economic uncertainty have led executives to lower their expectations.
The global unemployment rate is expected to rise rapidly in 2023, restraining energy demand.
Likely, next year is set to be another year of uncertainty, with plenty of volatility.
In this context, oil prices may fall to $60 next year.
In equity markets, US stocks on Thursday settled moderately higher.
Strength in technology stocks lifted the overall market.
Tesla rose more than +8% after Morgan Stanley reiterated its overweight rating on the stock and said the recent slump in the stock had created a buying opportunity.
Also, Netflix climbed more than +5% after CFRA upgraded the stock to buy from sell.
Stock indexes extended their gains after Thursday’s U.S. economic news.
Notabily, U.S. weekly initial unemployment claims rose +9,000 to 225,000, right on expectations.
However, weekly continuing claims rose +41,000 to a 10-1/2 month high of 1.71 million, showing a weaker labor market than expectations of 1.69 million.
That was dovish for Fed policy and knocked T-note yields lower.
Notabily, the 10-year T-note yield fell -4.6 bp to 3.837%.
A negative factor for stocks is concern that there could be a global resurgence of Covid after China ended its Covid Zero policies and reopened its borders.
The U.S. and Italy announced Wednesday that all air passengers from China would be required to test for Covid after almost half of the passengers on two flights from China to Milan were found to be infected with the virus.
In this context, on Wall Street, the S&P 500 rose 1.7% to 3,849.28.
The Dow Jones Industrial Average gained 1% to 33,220.80.
The Nasdaq composite added 2.6% to 10,478.09.
Each major U.S. index is headed for a loss in December.
Companies in the S&P 500 took in record profits in 2022 but the index will end the year down about 20%, which would be the benchmark’s biggest annual decline since 2008.
On this morning, Asian stock markets followed Wall Street higher, but were headed for double-digit losses for the year.
Notabily, the Shanghai Composite Index gained 0.6% to 3,092.50.
The Chinese benchmark is on track to end 2022 down more than 14% after the world’s second-largest economy was depressed by anti-virus controls and a crackdown on corporate debt.
Tokyo’s Nikkei 225 gained 0.3% to 26,181.11.
It is headed for an annual loss of almost 10%.
The Hang Seng in Hong Kong added 0.8% to 19,918.58. It is off more than 14% this year.
Sydney’s S&P-ASX 200 was 0.5% higher at 7,056.60.
India’s Sensex opened up 0.4% at 61,133.88.
New Zealand declined while Southeast Asian markets rose.
South Korean markets were closed for a holiday.
The country’s benchmark Kospi index is headed for a loss of more than 25% for the year.
In currency trading, the dollar declined to 132.56 yen from Thursday’s 132.90 yen.
The euro edged lower to $1.0657 from $1.0677.
Going back to analyzing the other agricultural markets …
From South America, Argentina’s estimated wheat production for the 2022/2023 season could be slashed again in coming weeks as yields come in lower than expected, the Buenos Aires grains exchange said on Thursday.
Until Wednesday, Argentine farmers had harvested 91.4% of the 6.1 million hectares planted with the grain.
Late frosts and a historic drought have caused the exchange already to cut its estimate for the South American country’s wheat crop to 12.4 million tonnes.
But operators continue reporting significant variability and average yields below those initially expected.
Thus, if this average yields trend continues, the current production projection of 12.4 million tonnes could be changed again.
Drought has also delayed the planting soybean and corn crop.
The current soybean planted area is estimated at 16.7 million hectares, but sowing currently is only 72.2% complete.
That is 9.2 percentage points delayed when compared to the previous season.
As of December 22, 12% of the soy crop was rated in good-to-excellent condition, with 68% rated fair and the remaining 25% rated poor or very poor.
Argentine farmers have planted 62.9% of the 7.3 million hectares seen for 2022/2023 corn season.
Recent rains helped a little bit, however, if new rains do not register that allow the progress of the seeders to be unlocked, some 500,000 hectares of soybean could be left out of the current productive cycle.
In Europe, yesterday’s session was marked by a decline in grain prices.
The upward movement of the last few days, thus, has been partially erased.
European wheat prices adjusted downwards in the face of other origins and in particular the competitive prices of the Black Sea.
The downward movement in wheat prices also weighed on corn prices.
Rapeseed, in contrast, rose yesterday, supported by Canadian canola and the firmness of soybean prices in the USA.
From North Africa, Egypt’s central bank on Thursday cancelled a February 2022 circular requiring the use of letters of credit for imports, one of several requirements by the International Monetary Fund for a $3 billion support package approved this month.
The government will now allow direct payment instead, the statement said.
“It has been decided to cancel the letter … issued on February 13, 2022, and to allow acceptance of documentary collection to carry out all import operations,” the central bank said in a statement on its website.
From Levant, cereals production in Turkey increased 21.3% year-on-year in 2022 to some 38.7 million tonnes, with wheat output rising 11.9% to 19.8 million tonnes, official data showed on Friday.
Barley output rose 47.8% to 8.5 million tonnes in 2022, while maize production was up 25.6% to 8.5 million tonnes.
The production of oats jumped 32.2% to 365 thousand tonnes, the Turkish Statistical Institute said.
It also said vegetables production fell slightly by 0.5% to 31.6 million tonnes during the year while fruits, beverage and spices crops output was up 7.7% to 26.8 million tonnes.
From the Black Sea basin, data from the Grain Initiative, reported 1.2 MMT of grain left Ukraine ports during the week that ended 12/25.
That was double the previous week’s volume, and included 6 corn cargoes destined for China.
Data from the Ukrainian Ag Ministry has wheat exports at 8.2 MMT for the season, a 48% drop from last year’s pace.
All grain shipments trail last season by 30% through 12/28.
Since the beginning of 2022, the export of grains and by-products from Russia increased by 3% y/y.
Russian products were delivered to 126 countries, Rosselkhoznadzor informed.
The countries of Middle East remained the key destinations for Russia grain with the share of 39% in the overall export.
Africa countries accounted for 20%, Asia for 31%, the EU for 7%.
The shipments of Russia grain to the EAEU states increased by 1.6 times y/y.
Particularly, the export to Belarus grew by 72%, to Kazakhstan by 55%, to Kirgizia to 64%, to Armenia by 49%.
The export of grain by-products increased by 69% y/y to 1.3 mln tonnes, mainly due to three times higher shipments of wheat flour (722 thsd tonnes).
The export of groat increased by 37% to 163 thsd tonnes.
From South East Asia, India has extended policy to allow imports of lentils and vegetable oils such as palm oil, soyoil and sunflower oil at lower taxes by a year until March 2024, the government said in a notification late on Thursday.
The lower import duty policy had been due to expire on March 31, 2023.
The south Asian country currently levies 5.5% tax on crude palm oil imports, down from 35.75% at the start of 2021.
The country imports palm oil mainly from top producers Indonesia and Malaysia, while other oils, such as soy and sunflower, come from Argentina, Brazil, Ukraine and Russia.
As a reminder, European grain markets will be open all day today for the last session of the year and will reopen normally from Monday, January 2, 2023.
US farm markets, will also be open today, but will remain closed on January 2, 2023
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
