US farm markets, for most contracts, have seen solid gains during yesterday’s session.
Corn rose by 0,65%.
Soybeans went home basically unchanged, down only 0,1%.
Soybean meal was down 2,11%.
Soybean oil gained 1,23%.
But was wheat complex to led the charge, as strong demand fundamentals and tightening supplies, spurred another round of technical buying.
Thus, CBOT wheat continued its way higher, closing with 1,21% higher.
Kansas wheat jumped 1,97%.
Minny was 1.44% higher.
On macro markets, oil prices on this morning substantially held yesterday’s gains, with investors sceptical about the effectiveness of a U.S.-led coordinated release of stocks from strategic reserves.
Indeed, the coordinated release may add about 70 million to 80 million barrels of crude supply, smaller than the more-than-100 million barrels the market has been pricing in.
Analysts said the effect on prices of the coordinated release was likely to be short-lived after years of declining investment and a strong global recovery from the COVID-19 pandemic.
Thus, all eyes are on how the OPEC+, will react to the joint reserve release when they meet on Dec. 2 to discuss policy.
However, the United Arab Emirates energy minister said on Tuesday he saw no logic in the Gulf OPEC producer supplying more oil to global markets when all indicators pointed to a supply surplus in the first quarter of next year.
In fact, U.S. crude and gasoline stocks rose last week while distillate inventories fell, according to market sources citing American Petroleum Institute figures on Tuesday.
Crude stocks rose by 2.3 million barrels for the week ended Nov. 19, against an analyst expectation of a decline by about 500,000 barrels.
Thus, on this morning Brent crude futures slid only 7 cents, or 0.1%, to $82.24 a barrel by 04:32 GMT, having risen 3.3% on Tuesday.
U.S. West Texas Intermediate (WTI) crude futures rose 10 cents, or 0.1%, to $78.60 a barrel, following a 2.3% gain in the previous day.
On equities markets, US stocks settled mixed yesterday, with the Nasdaq 100 falling to a 1-week low.
Economic news were mixed.
The U.S. Nov Markit manufacturing PMI rose +0.7 to 59.1, right on expectations, but the Nov Markit services PMI unexpectedly fell -1.7 to 57.0, weaker than expectations of an increase to 59.0.
Gains in energy stocks and energy service providers lifted the overall market.
However, higher T-note yields on Tuesday sparked a rotation out of high-growth technology stocks and into cyclical stocks.
Additionally, U.S. stocks were undercut also due a slide in European stocks Tuesday to a 3-week low, as the Eurozone grapples with a surge in Covid infections.
Thus the S&P 500 Index closed up +0.17%, the Dow Jones Industrials Index closed up +0.55% and the Nasdaq 100 Index closed down -0.45%.
Meantime, Asian shares fell on this morning as worries about inflation set off expectations the U.S. Federal Reserve might raise interest rates.
Investors will be watching for U.S. data being released later in the day.
Meantime, some Asian central banks have already begun to raise interest rates to tamp down inflation.
New Zealand’s raised its benchmark interest rate by 0.25% Wednesday to 0.75%.
Thus, Japan’s Nikkei 225 dropped 1.1% to 29,436.73 in early trading, following a national holiday Tuesday.
South Korea’s Kospi slipped 0.3% to 2,988.40. Australia’s S&P/ASX 200 edged down nearly 0.1% to 7,403.30.
Hong Kong’s Hang Seng shed 0.3% to 24,588.48, while the Shanghai Composite fell 0.4% to 3,575.93.
On the weather side, coastal rain and higher elevation snow for the Pacific Northwest.
Snow of the Upper Great Lakes starting Wednesday evening into
Critical Risk of fire weather over parts of the Central/Southern High
Particularly, a bit of wet weather will develop across large portions of the eastern Corn Belt between today and Saturday, but few areas will gather more than 0.25” during this time, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts seasonally warm, dry conditions for much of the Midwest and Plains between November 30 and December 6.
Coming back on grain markets, after an attempted turnaround sell off, in the afternoon trading pulled corn futures higher as they enjoyed by higher wheat prices.
Soybeans, on their parts, had losing ground against a backdrop of declining demand from China and, even if they rallied off of their morning lows but were still in the red at the bell.
Soymeal extended Monday’s losses with another $7.20 to $7.80/ton down day, weighening on the soy complex.
December soymeal is now $19.80/ton off the 11/17 high.
Meantime, soy oil futures gained 1.2% on the day, to back above 60 cents through Jan.
As for wheat complex, rain in Australia was the main reason to buy.
Wheat prices in Chicago have reached the highest levels since 2012, in a context of tension on this product after the climatic incidents in the northern USA and Canada this summer.
But now to this is added the qualitative deterioration of Australian origins.
Thus market is working out to know what it really situation.
Are we simply short of global protein or do we have a bigger supply issue?
The fact the global consumer has been aptending waiting for the massive crop coming out of Australia is fuel to the fire.
On the other hand, for the global feed consumer, there could now be an alternative to relatively high-priced corn.
Certantly, today traders will finish squaring their positions ahead of the Thanksgiving holiday.
Tomorrow the American markets will be closed and will only partially open on Friday.
In this context, a certain number of operators could be tempted to reduce their positions before this long weekend.
Meantime, corn basis bids were steady to firm after rising 2 to 11 cents higher across five Midwestern locations.
Soybean basis bids were mixed but mostly higher, falling 2 to 5 cents lower at two interior river terminals while firming 5 to 10 cents higher at four Midwestern processors.
The funds were net buyers yesterday for 4,500 lots of corn and 7,000 lots of wheat.
On the other hand, they were net sellers for around 1,000 lots of soybeans.
From Canada, the flooding in British Columbia has washed out the infrastructure (roads and rail lines) that Canada relies on for exports to Asian markets.
Exports from the Pacific coast account for one third of Canada’s GDP.
The wheat market is susceptible to shipping delays as Canadian exporters will still export a large portion of the commodity compared to other crops like canola, which will also be supported by domestic crush.
The railroads seem optimistic that the disruptions will be temporary.
CN says they are working “around the clock” to restore the track.
However, railways did not able to deliver empty cars to country elevators and crushing plants.
Thus, many producers have been requested to stop delivering, although the will of the producer and of the receiving locations are of the opposite mind.
In this context, if the empties are not getting delivered for loading, this will quickly disrupt the flow of commodities.
Canadian Rail disruptions are concerning.
It should to note that the main/ most important wheat export season for Canada starts in January, when exports from the Black Sea and Europe should slow down.
Consequentially, Canadian operators are hopefully that the railroads are correct in their most recent estimate that states traffic will resume mid-week.
On European market, Euronext confirmed its new upward acceleration Tuesday evening with wheat contracts which notably went to build new historical records posting € 311.50 / t on the December 2021 deadline.
However, european rapeseed futures stand out in the international complex, after completing another 1.8% drop for a net 30 euro/MT drop from the 11/12 high of 710.25 euro/MT high.
Meantime, according to the European Commission, soft wheat exports from the EU in the 2021/22 season that started in July are running in large ahead of the previous season despite some French volumes missing from the total, as they are complete for France only up to July 2021.
Indeed, as of Nov. 21, EU soft wheat exports had reached 10.27 million tonnes, up from 9.88 million tonnes by the same week in 2020/21.
The Commission recorded only 823,000 tonnes of French soft wheat exports so far this season while port data compiled by Refinitiv, shows France had shipped 3.2 million tonnes of soft wheat outside the European Union as of Monday.
As for durum wheat, EU export were at 246.412 t.
That was up from 241.236 of prior week, noticeably up from 91.284 t by the same week in 2020/21 and up from 226.941 t by the same week in 2019/20.
As for barley, EU data showed 2021/22 exports at 3.10 million tonnes, against 3.24 million a year ago.
Of that, only 725,000 tonnes were from France, while Refinitiv data pegged French non-EU barley exports by Nov. 22 at 2.16 million tonnes.
Meantime, EU corn imports were at 4.79 million tonnes, against 6.90 million a year ago, the Commission data showed.
EU 2021/22 soybeans import, had reached 4.79 million tonnes, down from 5,63 million tonnes in 2020/21 at same week.
EU 2021/22 rapeseed imports, were at 1,7 million tonnes, down from 2,74 million tonnes a year ago.
From the Black Sea basin, wheat prices progressed in the wake of other international markets, while there is a fall in corn prices on an fob basis for the Ukraine origin, which has to face the competitiveness of other origins.
To note Ukraine has lifted its corn crop estimate by 40mmt, up 32pc from a year ago.
On the weather side, the region is due to get some decent falls over the next 15 days.
Thus Ukraine will be watched closely because parts of the wheat belt have been falling behind the normal moisture.
Snow has appeared in Kiev since yesterday with temperatures around zero degrees.
In Moscow we recorded this morning a temperature of -8 degrees Celsius.
Meantime, on November 23, harvesting and winter sowing in Russia have already been completed in most regions, with grain received around 125.5 million tonnes.
Of that, wheat was 78.6 mmt, barley 18.9 mmt, corn 15.1 mmt, sunflower 15.4
mmt, rapeseed 3.0 mmt, soybeans 4.9 mmt.
But in the Far Eastern, Ural and North Caucasian federal districts, it is necessary to harvest another 1 million hectares.
At the same time, Russian farmers have already sown winter grains for next year’s crop on 18.4 million hectares compared to 19.3 million hectares on Nov. 23, 2020, the data showed.
Minister of Agriculture Dmitry Patrushev, at an off-site meeting of the operational headquarters of the Ministry of Agriculture for monitoring the situation in the agro-industrial complex, discussed the dynamics of seasonal field work in Russia.
In this context, Dmitry Patrushev drew attention to the need for a detailed analysis of acreage plans for 2022.
One of the main topics of the meeting was the provision of farmers with mineral fertilizers: in this segment, the Government is taking a whole range of measures.
In particular, from December 1, a temporary quantitative restriction on the export of certain types of fertilizers is introduced.
Thanks to this measure, farmers will be able to purchase the amount of fertilizers they need at affordable prices.
On the other hand, rapeseed oil exports from Russia have been growing for the sixth year in a row amid increasing demand from China.
The production and export of Russian rapeseed oil in the 2021/22 season may reach record levels and amount to 852.5 thousand tons (+23% compared to the previous season) and 835 thousand tons (+12%), respectively.
In addition, expectations of a record rapeseed harvest this year and the current export duty of 30% on it will be additional factors in increasing processing within the country.
Since 2017, rapeseed production in Russia has increased by an average of 18% from season to season, oil production has also increased: according to forecasts for the current season, the Oil and Fat Union sees a record growth of 28.5% compared to the 2020/21 season – from 666 thousand tons to 928 thousand tons.
From the Middle Kingdom, there are reports of several boats trading from West Australia for AGP/ASW-type wheat.
Meantime, on Dalian corn prices were weaker on Tuesday, starting the week with a 23 yuan loss to 2,659 yuan/MT (~ $10.56/bu).
Dalian soybean prices were weaker also on Tuesday to 6,269 yuan/MT (~ $26.51/bu).
The import quality futures, Dalian No2 Soybean Prices were higher by 44 yuan to 4,211/MT (~ $17.92/bu).
From Australia, the east coast weather has become problematic for the market.
Feedback from the field confirms market fears with particularly low protein levels.
The supply in milling quality for the second part of the season therefore risks being extremely reduced.
We are watching a sit-and-wait type of harvest, South Australia growers received scatted showers over the past 24hrs putting further delays to their harvest.
Victorians have had a run with pulses and barley through the Wimmera/Mallee.
NSW harvest is patchy, southern areas around Tocumwal through to Brocklesby have been going on around the clock on canola to get as much off before the rain really sets in today.
On this wake, growers in southern NSW and Victoria are still going hard to get canola off and windrowed with the first for the season NSW canola vessel on the shipping stem.
To note that WA canola shipments scheduled to take place in November are a record 575,000t.
Thus, there were explosive markets yet again, with local cash markets were strong with wheat bids up $10-20/mt on APW and $10-15 on ASW1 in SA and up the east coast.
Aussie wheat prices are now at similar prices to what experienced during the drought two years ago.
Barley values were also stronger across the day with Victoria track bids $300/t and SA bids around the $320 level to the grower.
Canola bounced yesterday with international markets rallying.
On the international trade scene, Egypt’s supply minister told reporters recently that the country’s strategic wheat reserves are enough to cover the next five months of consumption.
Egypt is often ranked as the world’s No. 1 wheat importer, and when this tipe of annuncement come there are good chance of a GASC tender soon.
Turkey would have bought around 370,000 t of feed barley.
South Korea purchased 16,000 metric tons of soymeal, expected to be sourced from South America, in an international tender that closed yesterday.
The grain is set for arrival around April 25.
South Korea purchased 46.000 t of animal feed corn that was probably sourced from South America in an international tender that closed yesterday.
The grain is for shipment in mid-February and for arrival by late April.
Author: Sandro F. Puglisi