Good morning Farmer Family …

US farm markets slumped lower on Thursday.

Corn prices settled down 0.97%. 

Soybeans fell 2.71%.

Soybean oil, closed 6.26% lower. 

Soymeal prices, meantime, bounced in the afternoon, and ended the session with 0.91% gains. 

The wheat complex also closed in the red. 

Chicago SRW gave back 1.57% by the close. 

Kansas City HRW ended 1.06% down. 

Minneapolis spring wheat prices settled down 0.53%. 

The ample selling has been spurred by several different factors. 

First, corn and wheat prices trended lower on general optimism that Black Sea exports are proceeding as well as they are able given the ongoin war.

Very weak US export news added more pressure on prices.

Notabily, the U.S. Agriculture Department (USDA) said export sales of wheat totalled 162,500 tonnes in the week ended Nov. 24, well below the low end of analysts’ forecasts that ranged from 300,000 to 725,000 tonnes.

Algeria was the top buyer with 58.3k MT. 

Week’s export shipments were 271,230 MT for a season total of 9.495 MMT. 

That is below last year by 3.4% and is broken out with 2.8 MMT of HRW, 2.77 MMT of HRS, 2.146 MMT of white, 1.68 MMT of SRW and 96.5k MT of durum. 

The USDA reported weekly corn export sales of 632,700 tonnes. 

The market had expected 475,000 tonnes to 1.1 million tonnes.

That was down from 1.85 MMT the week prior and was 59% of the sale made during the same week last year. 

Mexico was the week’s top buyer with 387k MT, and they also booked 30k MT for new crop. 

Mexico and China were the top destinations for the week’s 344k MT of exports. 

Accumulated shipments sat at 5.773 MMT (227 mbu) as of 11/24. 

As for soybean, USDA confirmed Weekly Export Sales at 693,838 MT. 

Analysts were expecting to see at least 550k MT. 

China was the top buyer, with 110k MT previously announced. 

China was also the destination for over half (71%) of the week’s export shipments, which totaled 2.1 MMT to all destinations. 

The accumulated soybean export reached 19 MMT through 11/24.

As for products, FAS data had soymeal sales at 185k MT, compared to 516k MT last week and 150 – 500k MT expected. 

Accumulated soymeal exports were 1.494 MMT through 11/24, trailing last year by 19.3%. 

For bean oil the weekly report showed 2,306 MT of net cancelations, compared to pre-report estimates of 0-20k MT. 

Soy oil exports were at 11,474 MT for the season through 11/24 – trailing last year by 78%. 

Separately, yetserday private exporters reported to the USDA having sold 114,300 metric tons of corn for delivery to Mexico during the 2022/2023 marketing year.

Corn, beans and soybean oil, meantime, fell sharply, after some disappointing biodiesel blending recommendations were released by EPA. 

The U.S. Environmental Protection Agency, indeed, boosted required biofuel use to 20.82b gallons of renewable fuels for 2023, of which 5.82 billion would be advanced biofuels (mostly from soy oil). 

The prior requirement was 20.63b gallons, so the 2023 number is just a ~1% increase. 

That suggests around 15b gallons of ethanol will be required under the new quotas in 2023, with a very small increase by 2025. 

Ultmately, in the afternoon USDA released their’s monthly Grain Crushing and Fat & Oil reports.

Notabily, data showed 448.895 mbu of corn was used for ethanol during October. 

That was up 17% from September’s pull, but down 4% yr/yr. 

With that, 1.745m tons of DDGS were produced, and 186,770 tons of corn oil – a 3-mo high. 

NASS also confirmed 196.64 mbu of soybeans were processed during October. 

That was above the average of pre-report estimates (195.9), was up 17.33% from September, and was just 0.8% below the all time record. 

Soybean oil stocks, however, were 2.094b lbs, near what trade looking for 2.107b ahead of the report. 

In this context, corn basis bids were mostly steady to firm after rising 1 to 10 cents higher across five Midwestern locations. 

An Iowa ethanol plant bucked the overall trend after dropping 5 cents lower.

Soybean basis bids were steady to mixed after rising 5 to 28 cents higher at three Midwestern locations while dropping 5 to 8 cents lower at three other Midwestern locations.

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

On this morning, Chicago wheat prices lost more ground and were set for a fourth straight weekly drop.

Corn prices fell as well.

Soybeans, meantime, inched higher after the previous session’s deep losses.

Notabily, the most-active wheat contract on the Chicago Board of Trade slid 0.7% to $7.77-1/4 a bushel, as of 03:53 GMT, soybeans added 0.3% to $14.33-1/2 a bushel and corn gave up 0.1% to $6.60 a bushel.

For the week, wheat is down around 2.5%, corn has dropped 1.7% and soybeans are little changed.

In energy markets, oil prices were mixed on Friday.

Notabily, Brent crude futures were down 1 cent, or 0.01%, at $86.87 per barrel by 07:31 GMT, after earlier rising to $87.40.

U.S. West Texas Intermediate (WTI) crude futures slipped 21 cents, or 0.3%, to $81.01 per barrel, after climbing to $81.63 earlier in the session.

Both benchmarks were on track for their first weekly gains after three consecutive weeks of decline.

Hopes for further relaxation of COVID curbs in China, which could help demand recover, boosted market sentiment.

European Union governments tentatively agreed on a $60 a barrel price cap on Russian seaborne oilwith an adjustment mechanism to keep the cap at 5% below the market price.

All EU governments must approve the agreement in a written procedure by Friday. 

Capping prices for Russian crude could lead to buyers paying more for oil on the global market, and represented “a major upside risk to prices in 2023.

The International Energy Agency has pencilled in output of 9.59 million bpd.

But, if Russia ended up producing significantly less oil it could “turbocharge oil prices higher”. 

The oil market, however, was subdued by the U.S. dollar, on this morning.

In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index slipped from a near three-week peak on Thursday, as a drop in capesize rates outweighed gains in the panamax segment.

The overall index, indeed, fell 17 points, or about 1.3%, to 1,338, a day after hitting its highest since Nov. 11.

Notabily, the capesize index shed 73 points, or about 4.4%, to 1,570.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, decreased $604 to $13,020.

The panamax index climbed 34 points, or about 2.2%, to 1,602, its highest in two weeks.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, increased $310 to $14,422.

The supramax index fell 7 points to 1,165.

In equity markets, US stocks settled mixed on Thursady.  

Indexes initially moved higher Thursday morning on positive carry-over from Wednesday when Fed Chair Powell confirmed the Fed would slow its interest rate hikes.

Consequently, the 10-year T-note yield dropped to a 2-1/4 month low of 3.522%.

Market sentiment also improved Thursday after China’s Shanghai Composite Stock Index rallied to a new 2-1/2 month high on signs that China is continuing to ease its Covid restrictions.

Meantime, Thursday’s U.S. economic news were mixed for stocks.

U.S. weekly initial unemployment claims fell -16,000 to 225,000, showing a stronger labor market than expectations of 235,000.

U.S. Oct personal spending rose +0.8% m/m right on expectations and the largest increase in 4 months.  

Oct personal income rose +0.7% m/m, stronger than expectations of +0.4% m/m and the biggest increase in a year.

The U.S. Oct PCE core deflator, the Fed’s preferred inflation gauge, rose +5.0% y/y, right on expectations, and eased from Sep’s +5.2% y/y pace.

U.S. Oct construction spending fell -0.3% m/m, weaker than expectations of -0.2% m/m.

However, stock prices fell back from their best levels mainly on concern that Fed tightening will push the U.S. economy into recession after economic news showed the Nov ISM manufacturing index contracted at its steepest pace in 2-1/2 years. 

Notabily, the U.S. Nov ISM manufacturing index fell -1.2 to 49.0, weaker than expectations of 49.7 and the steepest pace of contraction in 2-1/2 years. 

The Nov ISM prices paid sub-index fell -3.6 to a 2-1/2 year low of 43.0, weaker than expectations of 45.9.

Also, long liquidation pressures ahead of Friday’s monthly U.S. payroll report weighed on stocks.

Thus, the S&P 500 retreated 0.1%, closing at 4,076.57. 

The Dow Jones Industrial Average fell 0.6% to 34,395.01, while the Nasdaq edged 0.1% higher to 11,482.45.

The Russell 2000 index of small companies also took a step back, falling 0.3% to close at 1,881.68.

On this morning, shares retreated in Asia after the mixed day on Wall Street.

Activity in American manufacturing contracted in November for the first time since May 2020. 

The report also showed that prices are falling.

Slower growth due to tighter monetary policies has slowed new orders and order backlogs. 

That may suggest that with “inflation risks behind us now, ‘bad news’ in economic data may not be ‘good news’ for markets as recession fears could be brewing,”, some analysts said .

In add, signs of weakening trade, especially for export dependent economies in Asia, have deepened worries over slowing growth in China and its implications for the global economy.

As a results, Tokyo’s Nikkei 225 index lost 1.6% to 27,777.90 and the Hang Seng in Hong Kong edged down 0.1% to 18,717.28. 

The Kospi in Seoul shed 1.8% to 2,434.33.

The Shanghai Composite index gave up 0.3% to 3,156.14 and Australia’s S&P/ASX 200 slipped 0.7% to 7,301.50.

Bangkok’s SET index lost 0.3% and the Sensex in Mumbai was down 0.8%.

In currency trading, the U.S. dollar slipped to 134.62 Japanese yen from 135.31 yen late on Thursday. 

The euro rose to $1.0540 from $1.0522.

Going back to analyzing other agricultural markets …

In Canada, Canadian canola prices participated in the sell-off on Thursday, dropping 3.6% on the day and giving back most of the week’s earlier gains.

From South America, Brazilian soybean crop, which farmers are finishing sowing, will reach an estimated record of 153.3 million tonnes in the 2022/2023 cycle driven by area growth, agribusiness consultancy Datagro said on Thursday.

If the projection is confirmed, production will rise by almost 21% from the previous season, Datagro said.

Farmers are planting an estimated 43.79 million hectares (108.2 million acres) with the oilseed this season, an increase of 762,000 hectares from the forecast in July and a 1.98 million hectare rise from the previous year.

“The increase in area takes place throughout Brazil, but more intensely in the states of the north, northeast and center west.”

However, Datagro also said farmers face concerns in the center-south region due to the La Nina weather phenomenon.

StoneX, on its part, pegged the current Brazilian soybean crop at 155.09 million tonnes, up from 154.35 Mt last month and up from 127.23 Mt last year. 

Meantime, Brazil’s corn exports hit 6 million tonnes in November, significantly higher than the 2.4 million tonnes exported in November last year. 

Soybean exports in November were 2.6 million tonnes, up slightly compared to the 2.5 million tonnes shipped in November last year.

In Argentina, wheat production outlook is likely to face more cuts due to lower-than-expected yields, the Buenos Aires grains exchange said on Thursday, as the harvest of the grains advances.

In a weekly crop report, the exchange indeed said 2022/23 wheat production, which it current estimates at 12.4 million tonnes, is showing “yields below expected” as the harvest gained pace.

Until Wednesday, Argentine farmers had harvested 23% of the wheat planting area, a 22 percentage point delay versus the harvest a year earlier.

On the other hand, the exchange also added that the planting of 2022/23 soybeans continued to be delayed.

Soybean planting, was 29.1% complete.

That was 17.2 percentage points behind the previous season overall.

It’s estimates 16.7 million hectares will plant this season.

However, sowing was still being held up by “the lack of surface humidity and high temperatures”, despite some rains in recent days.

Meantime, corn planting for the 2022/2023 season is 25.4% complete on the 7.3 million hectares projected, while producers have begun to sow batches of late-planted corn.

Refinitiv Commodities Research reports that due to persistent drought and planting delays in Argentina 2022-23 maize production forecast has been cut by 1.2Mt, to 48.0Mt. 

Long-awaited rains during second the half of November were insufficient to recharge soil moisture reserves, which are at a five-year low in most major producing provinces. 

The latest ENSO outlook indicates that the current La Niña event is expected to last until end 2022, and may not completely dissipate by early 2023.

In Europe, grain prices fell as well, yesterday.

The rise of the euro is penalizing EU export competitiveness.

Recession fears and competitiveness of Black Sea origins, made an additionally pressure. 

France saw a brisk start to its grain export season as war disruption to Black Sea trade led importers to turn more to western European supplies.

In recent weeks, traders have also reported large French wheat sales to China, with volumes reported ranging between 400,000 and 700,000 tonnes. 

Expectations that most of the volume was for shipment this month had fuelled a spike in December wheat futures on Euronext.

A vessel is due to call at Dunkirk on Dec. 9 to load 25,000 tonnes of wheat for China, after taking 40,000 tonnes at Rouen, according to Refinitiv port data.

China has become French main destination by far in the past years, with 1.2 million tonnes exported to the Asian giant in 2021/22 and 1.6 million in 2020/21.

France’s main grain export hubs are the ports of Rouen, La Pallice and Dunkirk.

However, the jump in the eurodollar parity to its highest level since the end of June, degraded the competitiveness of EU cereals in the face of non-EU origins.

Rapeseed, on its part, fell in the wake of soybean oil, as traders expressed their disappointment with the Biden administration’s new biofuel mandate.

From Russia, state controlled trader United Grain Company (UGC) expects Russia to export 53-54 million tonnes of grain in the 2022/23 season, its deputy head Ksenia Bolomatova told an agriculture conference on Thursday.

The country’s agriculture ministry in September forecast grain exports of between 50-60 million tonnes in the 2022/23 season.

On the other hand, the Ministry of Agriculture of Russia does not expect a decrease in the planted area under agricultural crops in 2023, Deputy Minister of Agriculture Andrey Razin stated on December 1, Interfax reports.

Moreover, according to him, it is possible that there will be a slight increase in the planted area in 2023 compared to the current year, but it will be insignificant.

A. Razin reminded that the total planted area was increased by 1 mln ha in 2022 compared to 2021.

Earlier, the head of the Ministry of Agriculture of Russia Dmitry Patrushev predicted an increase in the planted area for the 2023 harvest by approximately 200 thsd ha to more than 82 mln ha.

From Ukraine, the country has exported almost 18.1 million tonnes of grain so far in the 2022/23 season, down 29.6% from the 25.8 million tonnes exported by the same stage of the previous season, agriculture ministry data showed on Friday.

The volume included more than 6.9 million tonnes of wheat, 9.7 million tonnes of corn and about 1.5 million tonnes of barley.

From Australia, local markets found some ground yesterday holding on the boards for the day on wheat, while ASX Jan East Coast contract traded at $402/mt and on the roll to march traded at $405/mt. 

Barley values continued to pull back in SA as yields are coming in over expectation and growers continue to let it go. 

Canola values were relatively unchanged for the day.

Harvest pace has ramped up from northern NSW down into Victoria across to SA and well and truly into WA with relatively clear skies forecast for the next 8 days. 

The whole country thus, is going at once this year putting further pressure on trucks and harvest contract teams. 

The excitement over vessels on the stem heading to China has turned out to be a fizzer.

The canola is off to the EU and barley off to the UAE.

On the international scene, Turkeys state grain board tender for 495,000 t feed barley – the lowest offer received was quoted at $312.90 c&f, Jan/Feb shipment, with around 100,000 t bought so far.

Algeria purchased 450-500k tonnes of milling wheat in their international tender, at $354-356/tonne C&F for Jan shipment. 

FAO FOOD PRICE IDEX – DEC UPDATE

The FAO’s world price index fell marginally in November, marking an eighth straight monthly fall since a record high in March.

Notabily, FAO price index, which tracks the most globally traded food commodities, averaged 135.7 points last month, down from 135.9 for October.

The October figure was unchanged from the FAO’s previous estimate.

Lower readings for cereals, meat and dairy products in November offset higher prices for vegetable oils and sugar, the FAO said.

Notabily, the FAO Cereal Price Index averaged 150.4 points in November, down 1.9 points (1.3 percent) from October, but still 9.0 points (6.3 percent) above its value a year ago. 

World wheat prices registered a 2.8-percent decline during the month of November. 

International prices of coarse grains also eased in November, down 1.0 percent from October. 

Maize prices declined by 1.7 percent month-on-month. 

International prices of sorghum declined by 1.2 percent in November in tandem with maize prices, while those of barley increased by 2.5 percent. 

International rice prices moved up by another 2.3 percent in November.

The FAO Vegetable Oil Price Index averaged 154.7 points in November, up 3.4 points (2.3 percent) after declining for seven consecutive months. 

The increase was driven by higher international palm and soy oil prices, more than offsetting lower rapeseed and sunflower oil quotations. 

The FAO Dairy Price Index averaged 137.5 points in November, down 1.7 points (1.2 percent) from October, marking the fifth consecutive monthly decline, but remained 11.6 points (9.2 percent) above its value a year ago. 

The FAO Meat Price Index averaged 117.1 points in November, down 1.1 points (0.9 percent) from October, also marking the fifth consecutive monthly decline, but remained 4.6 points (4.1 percent) above its value a year ago. 

The FAO Sugar Price Index averaged 114.3 points in November, up 5.7 points (5.2 percent) from October, marking the first increase after six consecutive monthly declines. 

Despite the November increase, international sugar price quotations remained 5.9 points (4.9 percent) below their levels in the same month of last year, weighed down by prospects of ample global supplies in the 2022/23 season.

The slight decrease in November meant that the FAO food index is now only 0.3% above its level a year earlier, the agency said.

The indicator, however, remains at historically high levels.

The FAO warned last month that expected record food import costs in 2022 would lead the poorest countries to cut back on shipped volumes.

FAO SUPPLY & DEMAND – DEC UPDATE

In separate cereal supply and demand estimates, the FAO lowered its forecast for global cereal production in 2022 to 2.756 billion tonnes from 2.764 billion estimated last month.

The forecast was 2% below the estimated output for 2021 and would mark a three-year low, the FAO said.

The downward revision to the global cereal crop projection mainly reflected weak corn prospects in Ukraine.

Projected world cereal stocks by the end of the 2022/23 season were revised down by 1.1 million tonnes to 839 million tonnes, 2.2% below the previous season and the lowest level for three years.

The 2022/23 global cereal stock-to-use ratio, often used as a supply indicator, would drop to its lowest since 2013/14, but at a forecast 29.3% it would still represent a relatively comfortable level, the FAO added.

That’s all, thank you.

We wish you a good day.

Author: Sandro F. Puglisi

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