Good morning Farmer Family …

US farm markets were mixed but mostly higher yetserday. 

Corn prices, suffered a moderate setback, closing 0.56% weaker at the bell.

Soybeans, in contrast, saw decent forward momentum, rising another 0.69%. 

Soybean meal prices stayed near their high for the close, gaining 2.25%. 

Bean oil prices worked lower, closing 1.71% in the red. 

Wheat prices saw the biggest boost, capturing double-digit gains on the session. 

Notabily, Chicago SRW wheat prices closed the session 1.81% higher.

Kansas City wheat prices were up 1.36%. 

Minneapolis spring wheat was up 1.75%.

Corn dropped on concerns about export demand and weighed down by profit-taking by funds holding long positions.

Soybeans ticked up, touching a two-month peak, as optimism that China will ease its Covid restrictions soon, boosted expectations for Chinese demand.

Guangzhouon Wednesday relaxed COVID prevention rules in several districts, a move that followed protests in the southern Chinese city.

Gains were limited, as participants looked ahead to the speech by the U.S. Federal Reserve chief later on Wednesday (read more below). 

The wheat complex, on its part, rose for a second straight session on Wednesday, supported by end-of-the-month short-covering and investor hopes that China will loosen COVID-19 rules.

Concerns about dry conditions harming U.S. and Argentine wheat crops have been mostly offset by a bumper Canadian harvest and improving Australian crop.

For the month, wheat closed down nearly 10%, corn has lost 3.5%, meanwhile, soybeans have added nearly 4%.

The U.S. Environmental Protection Agency will propose increases in the amount of ethanol and other biofuels that oil refiners must blend into their fuel over the next three years. 

The EPA will also seek for the first time to make the use of biofuels to charge electric vehicles part of the renewable fuel program, giving car makers the ability to generate tradable credits. 

The EV proposal will add up to 1.4 billion new credits by 2025.

Earlier this year, the EPA had set biofuel blending mandates for 2022 at 20.63 billion gallons and retroactive volume mandates for 2021 at 18.84 billion gallons and for 2020 at 17.13 billion gallons.

The agency’s long-awaited proposal, expected later this week, will call for overall blending mandates of 20.82 billion gallons in 2023, 21.87 billion gallons in 2024 and 22.68 billion gallons in 2025, the sources said.

In each of those years, volumes of conventional biofuels like corn-based ethanol will be set at 15 billion gallons or higher, the sources said – specifically 15 billion in 2023 and 15.25 billion each in 2024 and 2025, the sources said.

So-called D3 credit volumes will grow from 720 million in 2023 to 2.13 billion by 2025, with overwhelming majority of the growth coming from credits generated by electric vehicles, or E-RINs. 

The electricity to power the cars must come from renewable sources of biogas, such as methane from landfills.

The EPA’s biofuel mandate for the current year is 20.88 billion gallons, which includes the annual volume requirement plus a supplemental 250 million gallons added to compensate for volumes that were not blended in previous years.

Under the Renewable Fuel Standard (RFS), oil refiners are required to blend billions of gallons of biofuels into the nation’s fuel mix, or buy tradeable credits from those that do.

While Congress set out specific goals through 2022, the law expands the EPA’s authority for 2023 and beyond to change the way the RFS is administered. 

Starting next year, the agency has leeway to set multi-year mandates and make other changes.

Advanced biofuel blending volume mandates in the EPA proposal will be set at 5.82 billion gallons in 2023, 6.62 billion gallons in 2024 and 7.43 billion gallons in 2025, the sources said. 

Meantime, yesterday EIA reported 1.108m barrels of ethanol were produced daily during the week that ended 11/25. 

That was down 23k barrels per day from the week prior. 

However, ethanol stocks were 105k barrels higher at 22.934 million, reaching a 25-week high.

Ahead of today’s weekly export sales report from USDA, analysts expect the agency to show corn sales ranging between 475,000 and 1 MMT for the week ending November 24.

New crop bookings are expected to be below 100k MT. 

As for soybean, analysts think the agency will show soybean sales ranging between 550k MT and 1 MMT. 

Analysts also expect to see soymeal sales ranging between 15,000 and 550,000 metric tons, plus up to 30,000 MT of soyoil sales.

As for wheat, analysts think the agency will show wheat sales ranging between 300,00 and 625,000 MT for the week ending November 24.

New crop wheat bookings are estimated below 100k MT. 

Meantime, private exporters reported yesterday to the USDA having sold 136,000 metric tons of soybeans for delivery to China during the 2022/2023 marketing year.

Ahead of the USDA NASS Fats and Oils report will out overnight, analysts expect the agency to show total soybean crush in October at 195.9 million bushels.

If realized, that would be substantially higher than September’s one-year low of 167.6 million bushels and the third-largest October crush on record. 

The full range of estimates is from 194 to 197.1 mbu.

Analysts also expect to see U.S. soyoil stocks up to 2.107 billion pounds through the end of October.

In this context, corn basis bids were steady to weak after fading 1 to 10 cents lower across half a dozen Midwestern locations on Wednesday.

Soybean basis bids were mostly steady across the central U.S., but did tilt 5 cents higher at an Ohio elevator and 5 cents lower at an Iowa processor.

Commodity funds were net buyers of CBOT wheat, soymeal and soybean futures contracts, and net sellers of corn and soyoil futures.

On this morning, Chicago soybeans ticked lower.

Wheat and corn also lost ground.

Notabily, the most-active soybean contract on the Chicago Board of Trade fell 0.4% to $14.64-1/4 a bushel, as of 07:28 GMT, after climbing to its highest since Sept. 21 at $14.78-1/2 on Wednesday.

Wheat lost 1.1% to $7.86-1/2 a bushel and corn gave up 0.7% to $6.62-1/2 a bushel.

Talk that China is relaxing COVID-19 restrictions in certain cities helped to support markets.

However, Argentine farmers nearly doubled soybean sales on Tuesday from the day before, after a preferential exchange rate went into effect for exports of the cash crop.

Meantime, cheap supplies from Russia and elsewhere in the Black Sea region weighed on wheat and corn prices.

In energy markets, oil prices settled up by over $2 per barrel on Wednesday.

Brent crude futures, indeed, settled up $2.40, or 2.8% to $85.43 per barrel while U.S. West Texas Intermediate (WTI) crude futures settled up $2.35, or 3.01%, to $80.55.

Support followed expectations of tighter crude supply.

U.S. crude oil stocks plunged by by 12.6 million barrels, the most since 2019, in the week ended Nov. 25, according to the Energy Information Administration.

That is compared with earlier analysts’ expectations for a 2.8 million-barrel drop.

But heating oil demand fell for the second consecutive week heading into winter, curbing price support.

Likewise, U.S. oil output climbed 2.4% to 12.27 million barrels per day (bpd) in September, government figures showed on Wednesday, the highest since the onset of the COVID-19 pandemic.

The International Energy Agency expects Russian crude production to be curtailed by some 2 million barrels of oil per day by the end of the first quarter next year, its chief Fatih Birol said on Tuesday.

Russia would not supply oil to countries imposing a price cap, Russia’s foreign ministry spokesperson Maria Zakharova said.

On the demand side, further support came from optimism over a demand recovery in China.

A fall in the U.S. dollar was also bullish for prices. 

On this morning, oil prices dipped in Asia trade as uncertainty lingered ahead of Sunday’s OPEC+ meeting.

Brent crude futures, indeed, fell 43 cents, or 0.5%, to $86.54 per barrel by 07:40 GMT, while U.S. West Texas Intermediate crude futures eased 42 cents, or 0.5%, to $80.13.

In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index rose to a near three-week high on Wednesday, supported by higher rates for capesize and panamax vessels.

The overall index, indeed, rose 28 points, or about 2.1%, to 1,355, its highest since Nov. 11.

Notabily, the capesize index added 54 points, or about 3.4%, to 1,643.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, increased $447 to $13,624.

The panamax index was up 44 points, or about 2.9%, to 1,568, to mark its best day since Oct. 5.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, increased $394 to $14,112.

The supramax index shed 5 points to 1,172.

In equity markets, US stocks on Wednesday erased early losses and rallied sharply. 

Stocks surged after Fed Chair Powell signaled the Fed would begin to slow the pace of its rate hikes next month.  

As a results, the yield on the 10-year Treasury dropped to 3.62% from 3.75% late Tuesday. 

The yield on the two-year note, which tends to track market expectations of future Fed action, fell to 4.34%. 

It was trading at 4.48% late Tuesday and had been as high as 4.53% shortly before Powell’s speech.

U.S. stock indexes had carry-over support also from a rally in China’s Shanghai Composite Stock Index to a new 2-1/2 month high.  

Also, a rally in European stocks supported U.S. equities after Eurozone consumer prices in November slowed more than expected. 

The Fed Beige Book, however, was mixed for stocks.  

The Fed Beige Book said U.S. economic activity was flat or up slightly from prior data, with many contacts saying they are more uncertain and pessimistic over the economic outlook.  

Also, the pace of price increases “slowed on balance,” and labor demand weakened overall, but the labor market remained tight.

Wednesday’s U.S. economic news was also mixed for stocks.  

Notabily, U.S. Nov ADP employment rose +127,000, weaker than expectations of +200,000 and the smallest increase in 22 months.

U.S. Q3 GDP was revised upward by +0.3 to +2.9% (q/q annualized), slightly stronger than expectations of 2.8%, as Q3 personal consumption was revised up by +0.3 to +1.7%, slightly better than expectations of 1.6%.

The U.S. Q3 core PCE deflator was unexpectedly revised upward by +0.1 to +4.6% q/q, stronger than expectations of unchanged at +4.5% q/q.

U.S. Oct wholesale inventories rose +0.8% m/m, higher than expectations of +0.5% m/m.

The U.S. Nov MNI Chicago PMI unexpectedly fell -8.0 to a 2-1/2 year low of 37.2, weaker than expectations of an increase to 47.0.

U.S. Oct pending home sales fell -4.6% m/m, a smaller decline than expectations of -5.3% m/m. 

U.S. Oct JOLTS job openings fell -353,000 to 10.334 million, showing a stronger labor market than expectations of a decline to 10.250 million.

In this context, the benchmark S&P 500 rose 3.1%, snapping a three-day losing streak and closing at 4,080.11. 

The Dow Jones Industrial Average gained 2.2% to 34,589.77 and the Nasdaq composite climbed 4.4% to 11,468.

Small company stocks also rallied. 

The Russell 2000 index rose 2.7% to 1,886.58.

On this morning, shares advanced in Asia on the wake of Wall Street higher.

Signs that China may be shifting its approach to containing COVID-19 outbreaks to focus more on vaccinations also helped drive buying of shares across the region.

Thus, Tokyo’s Nikkei 225 index added 0.9% to 28,226.08 while the Hang Seng in Hong Kong advanced 1.4% to 18,859.73. 

The Shanghai Composite index climbed 0.5% to 3,166.23. 

In Seoul, the Kospi picked up 0.3% to 2,479.84. 

Australia’s S&P/ASX 200 gained 1% to 7,354.40.

Bangkok’s SET rose 0.9% a day after the central bank raised its key interest rate by a quarter point to 1.25%, aiming to curb inflation.

In currency trading, the U.S. dollar fell to 136.32 Japanese yen from 138.09 yen on Wedsneday. 

The euro rose to $1.0454 from yesterday’s $1.0409.

Going back to analyzing other agricultural markets…

From South America, delivery of goods by road to Brazil’s busiest port for grains and sugar has been cut off by a landslide caused by heavy rainfall in the southern parts of the country, the Paranagua port authority said on Wednesday.

About 80% of goods to the port come by trucks and it is too early to estimate the potential losses from the disruptions, the port authority said.

Operators and terminals are now moving stockpiled goods that are expected to last until the weekend and it was still not clear when the roadblocks will be removed.

Meanwhile, rail operator Rumo said cargo train service to Paranagua resumed with restrictions.

The main products that arrive by rail are sugar, soybeans and corn, according to the port authorities.

Rumo said at this time goods are being delivered to the port and that it was monitoring the conditions of the tracks. 

In Argentina, according to the Buenos Aires grains exchange, farmers nearly doubled soybean sales on Tuesday from the day before, after a preferential exchange rate went into effect for exports of the cash crop.

Notabily, soy producers sold 567,815 tonnes of the 2021/22 soybean harvest, exceeding the two-month high of 298,911 tonnes sold Monday.

The new policy, which allows farmers to settle sales for 230 pesos per dollar, nearly 40% above the official rate, boosted sales from the 78,303 tonnes sold Friday, the exchange said.

In Europe, Euronext wheat rose on Wednesday recovering from a three-month low.

March milling wheat, indeed, settled 1% higher at 316 euros a tonne.

On Tuesday, it had touched its lowest since Aug. 22 at 311.75 euros ($321.45).

Physical premiums in France and Germany were being underpinned by loading of previous sales. 

Inland demand from mills and feed makers was also supporting the German market.

However, over November, the contract in Paris based Euronext, showed a 10% fall.

Traders keepped closely eye on the Algerian tender, the origins of which remain optional. 

The volume purchased would be in the order of 400,000 t at a price of around 355 usd/t cif. 

Black Sea origins are the most competitive, although France remains a historical partner.

February rapeseed, meantime, settled 2.3% higher at 599.75 euros a tonne, spurred by a rally in crude oil.

Hungary has reported an outbreak of the highly pathogenic H5N1 bird flu virus at a goose farm, the National Food Chain Safety Office (Nebih) said on Wednesday.

The outbreak in the county of Bekes led to the slaughter of more than 3,000 geese on the farm where the virus was detected.

Earlier this month Nebih reported H5N1 outbreaks at two farms in neighbouring Bacs-Kiskun county.

Meantime, per latest data published by Euronext on Wednesday, non-commercial market participants reduced their net long position in Euronext’s milling wheat futures and options in the week to Nov. 25.

Notabily, non-commercial participants, cut their net long position to 46,901 contracts from 55,632 a week earlier, the data showed.

Commercial participants similarly lowered their net short position to 57,516 contracts from 63,295 a week earlier.

In Euronext’s rapeseed futures and options, non-commercial market participants expanded their net short position to 25,961 contracts from 19,219 a week earlier.

Commercial participants lifted their net long position in rapeseed to 26,084 contracts from 19,965 a week earlier.

From North Africa, Upper Egypt Mills Company (UEFM) reported a 25.67% year-on-year (YoY) increase in consolidated net profit after tax during the first quarter (Q1) of fiscal year (FY) 2022/2023, according to the consolidated financial income statement filed to the Egyptian Exchange on November 28th.

The company recorded a consolidated net profit after tax of EGP 35.73 million in the three-month period ended September 30th, compared to EGP 25.075 million in the same period a FY earlier.

Operating revenues grew to EGP 221.57 million in Q1 FY 2022/2023 from EGP 148.32 million in the same quarter of FY 2021/2022.

Upper Egypt Mills is an Egypt-based company that operates in the manufacturing, processing, import, export, warehousing, and distribution of different types of grains and grain derivatives.

From the Black Sea basin, U.N. aid chief Martin Griffiths said on Wednesday a deal is close on resuming Russian ammonia exports through a pipeline to a Ukrainian Black Sea port.

Meantime, the first shipment of Russian fertiliser bound for Africa has left the Netherlands. 

Dutch and UN officials said 20,000t of nitrogen, phosphorus and potassium (NPK) left on Tuesday afternoon, bound for Malawi. 

There is around 260,000t of Russian-produced fertiliser stored in ports around Europe. 

The shipment is the first of many, UN Secretary-General António Guterres, said in a statement. 

The UN was continuing “intense diplomatic efforts with all parties to ensure the unimpeded exports of critical food and fertilisers from Ukraine and the Russian Federation, exempt from sanction regimes, to the world markets.

In Ukraine, according to APK-Inform, the bid prices of traders for Ukrainian wheat and corn remained stable last week in the ports of the Danube and Great Odesa due to lower trade amid temporary blackout in the country.

After Russian missile strikes on Ukraine’s energy infrastructure on November 23, 90% of Ukrainian territory was left without electricity, which negatively affected logistics, transshipment and, in general, the operation of the local export market. 

A number of checkpoints at the border temporarily did not work. 

A number of sections of the railroad were without energy. 

Almost all sea and river ports of Ukraine were forced to suspend work.

Meantime, the supply was still prevailing over the demand. 

As a results, traders’ prices of corn in the ports of the Danube and Great Odesa totaled 162-190 USD/t CPT-port, sometimes maximal prices were announced at 195-205 USD/t. 

The bid prices of corn totaled 265-275 EUR/t CIF Constanta. 

Traders’ prices of food and feed wheat totaled 168-205 and 160-190 USD/t CPT-port, sometimes maximal prices were announced at 210-215 and 195 USD/t.

Expensive logistics, slow progress of the harvesting campaign and desire of farmers to keep the prices at higher level limited the pressure.

In October 2022, Kazakhstan exported 796 thsd tonnes of soft wheat, which is an absolute record for this period for the last 7 seasons. 

The export of soft wheat increased by 1.8 times m/m and by 1.45 times y/y. 

This data was published by the Kazakh Grain Union with reference to the State Revenue Committee of the Ministry of Finance of Kazakhstan.

At the same time, supplies of durum wheat to external markets totaled only 11 thsd tonnes in October (4.1 thsd tonnes in September 2022; 13.1 thsd tonnes in October 2021).

From the Middle Kingdom, there are increasing reports coming out of China in relation to problems with its rapeseed crop, with a working group of oilseed experts reportedly dispatched. 

China’s rapeseed crop is mostly grown in the middle and lower portions of the Yangtze River Valley, which suffered significant drought stress during the planting window. 

The crop is reportedly underdeveloped heading into winter, which will make it more vulnerable to cold conditions.

Meantime, China plans to auction another 40k mt of its imported state wheat reserves on December 7. 

The country has held a series of similarly sized auctions earlier this fall in an attempt to boost local supplies.

From Southeast Asia, Indonesia set reference price of its crude palm oil (CPO) at $824.32 per tonne for Dec. 1-15 shipments, Trade Ministry regulation showed on Wednesday.

The reference price would put the export tax for the period at $33 per tonne and levy at $85 per tonne, unchanged from Nov. 16-30 period.

From Australia, a charge on harvest in New South Wales under mostly clear skies has seen a flurry of selling activity in the past week that has enabled most consumers to get covered into the New Year.

The Victorian harvest has also cranked up, and to everyone’s delight, rainfall recorded for both states in growing areas in the week to today has been minimal at most.

In the north, feed barley is in demand, and an unusually high proportion of malting has tightened supply in the near term.

In this context, harvest cash markets continued their downward trend for the week and bids were off another A$7-$10/t along the east coast for wheat and barley. 

In South Australia, cash bids continued to pull back over the course of the day, while ASW1 in WA was still trading at $335 FIS on Clear Grain Exchange.

Harvest bans were in place in WA yesterday due to predicted extreme fire-danger conditions in the Midwest.

PIRSA has released its first production estimate for the 2022-23 cropping season. with a new SA record of 12.1 million tonnes (Mt) expected to easily exceed the previous record of 11.1Mt set in 2016–17.

On the international trade scene, Turkey’s State Grain Board has provisionally purchased an estimated 455,000t of milling wheat, expected to be mostly sourced from Ukraine, at around US$329.90-$344 c&f, for Dec-Feb shipment.

TMO has also started buying animal feed barley in an international tender on Thursday with about 150,000 tonnes initially bought.

The tender sought a total 495,000 tonnes and more is expected to be purchased later on Thursday.

Barley shipment or delivery from warehouses is sought in two periods in 2023 between Jan. 1-31 and Feb. 1-28.

These firts purchases compound: 25,000t bougth from Viterra at $312.00, 25,000t from Grain Star at $311.90, 50,000t from Viterra at $312.00, 25,000t from Yayla at $304.90 and 25,000 from Ameropa at $305.65.

South Korea’s MFG bought another 69,000t of South American corn in addition to 70,000t purchased in a tender yesterday.

The 69,000 tonnes was believed to have been bought from trading house Cargill, with 50% bought at an outright price of $336 a tonne c&f and 50% at an estimated premium of 184.23 U.S. cents a bushel c&f over the Chicago March corn contract CH3.

Both terms have an additional a $1.50 a tonne surcharge for additional port unloading with arrival in Korea around March 20, 2023. 

Shipment from South America is between Jan. 10 and Feb. 8.

South Korea’s Feed Leaders Committee (FLC) purchased about 65,000 tonnes of animal feed corn expected to be sourced from South America in a private deal on Wednesday without an international tender being issued.

The corn was purchased at an estimated $335.95 a tonne c&f with an additional $1.25 a tonne surcharge for additional port unloading.

It was for shipment from South America in 2023 between Jan. 1 and Jan 20 with arrival in Korea around March 2. 

Seller was believed to be trading house Zen-Noh.

The Korea Feed Association (KFA) has issued an international tender to purchase up to 69,000 tonnes of animal feed corn to be sourced from optional origins.

The deadline for submission of price offers in the tender is also Thursday, Dec. 1.

The corn was sought by the KFA’s Busan section for arrival in South Korea around March 1, 2023.

Russian and Ukrainian corn is excluded as an origin in the KFA’s new tender.

Shipment is sought by the KFA in 2023 between Jan. 26-Feb. 14 if the corn is sourced from the U.S. Pacific Northwest coast, between Jan. 6-Jan. 25 if from the U.S. Gulf or Europe, between Jan. 1-Jan. 20 if from South America, and between Jan. 11-Jan. 30 if from South Africa.

Pakistan is seeking 500,000t of wheat in a tender, with its lowest offer coming from Russia at $372/t C&F. 

Offers range up to $398/t.

That’s all, thank you.

We wish you a good day.

Author: Sandro F. Puglisi

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