Corn, soybeans and wheat were all higher for the week.

US grains markets, indeed, were able to partially resume bullish operations during Friday session.

Corn prices rose 2,34% this week, erasing loss the previous week. 

Soybeans had a promising rally early in the week, supported by a surge in Malaysian palm oil to an all time high.  

However, they were up only 0,22% net at the end of the week. 

Soybean oil, which survived a Thursday sell off to closed 1.3% higher for the week. 

Soymeal was up 3.4% week over week.

All wheat complex cruised higher at the end of the week, with MPLS spring wheat posting new life of contract highs and gaining 4.6%, acrossing $10 per bushel for the first time in nearly a decade.  

KC HRW, for its part rose 4.1% for the week.  

Chicago SRW was up a more sedate 3% week over week. 

On macro markets, oil traded just below multi-year highs on Friday with bullish sentiment about low supplies tamped by concerns from world leaders that demand disruptions from the COVID-19 pandemic may not be over.

Prices have been boosted by worries about coal and gas shortages in China, India and Europe, spurring some power generators to switch from gas to fuel oil and diesel.

However, winter weather in much of the United States is expected to be warmer than average, according to a National Oceanic and Atmospheric Administration forecast.

But, U.S. crude found support this week as investors eyed low crude stocks at the U.S. storage hub in Cushing, Oklahoma.

Indeed, U.S. Energy Information Administration data on Wednesday showed crude stocks at Cushing fell to 31.2 million barrels, their lowest level since October 2018. 

Thus, Brent crude futures rose $1,1, or 1.31%, to settle at $85.72 a barrel. 

The benchmark, which touched a three-year high of $86.10 on Thursday, was up 0,79% in the week, its seventh weekly gain.

Meantime, U.S. West Texas Intermediate (WTI) crude futures gained $1.48, or 1.79%, to settle at $83.98 a barrel, not far off a seven-year high hit this week. 

The contract gained 1.8% on the week and was up for a ninth straight week.

On the other hand, the Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials such as grains, coal, and iron ore, decreased 9% on the week to end at 4,410.

On the financial side, the S&P 500 and Nasdaq closed lower on Friday as disappointing quarterly reports from Snap Inc and Intel Corp put pressure on the communications and technology sectors and investors turned skittish as Federal Reserve Chair Jerome Powell discussed stimulus tapering.

The Dow managed to end the day with a record closing high for the first time since Aug. 16, but all three indexes had lost ground in morning trading while Powell was speaking and went on to pare losses in a choppy session.

Thus, the Dow Jones Industrial Average rose 73.94 points, or 0.21%, to 35,677.02, the S&P 500 lost 4.88 points, or 0.11%, to 4,544.9 and the Nasdaq Composite dropped 125.50 points, or 0.82%, to 15,090.20.

Still, all three indexes notched a third straight week of gains for the first time since early July, with the S&P adding 1.6% for the week while the Dow climbed 1.1% and the Nasdaq advanced by 1.3%.

Meantime, the U.S. Dollar Index decreased from last week’s 93.94 to close at 93.57.

Coming back on grains market, rainfall in Oklahoma and Texas helped alleviate some drought conditions, though southeast Oklahoma remains abnormally dry and west Texas moderately to severely dry. 

Precipitation also helped improve conditions in western Minnesota. 

Widespread showers helped diminish short-term drought conditions across much of the High Plains excluding the northwest corner of North Dakota where extreme drought continues. 

Above-average rainfall was recorded in Oregon and Washington while recent rain in Montana slightly reduced the drought intensity.

Meantime, according to USDA, as of October 17, crop progress figures had corn 52 per cent (pc) harvested, beans 60pc and milo 59pc.  

The corn crop rating remains stable at 60%, judged to be good to excellent.

Meantime, plantings of winter wheat, hit 70pc of the total intended winter wheat area for harvest in 2022, one point below the 5-year average. 

USDA also reported 44% of the country’s winter wheat has emerged, led by Nebraska at 76%, and Colorado, Idaho, and Washington tied for second at 58%.

Between today and Tuesday, plenty of wet weather is expected to develop in a band stretching between northern Missouri and Ohio, with some areas likely to see 1.5” or more during this time, per the latest 72-hour cumulative precipitation map from NOAA. 

The agency’s 8-to-14-day outlook predicts a return to seasonally dry weather for the central U.S. between October 29 and November 4, with warmer-than-normal conditions likely for most of the country next week.

On the demand side, US weekly export sales have seen corn up 22% for the week, to 1.273 MMT. 

That took the total of shipped and unshipped sales to 28.894 MMT, 2% above vs. last year at this time and now 46% of the current USDA forecast. 

As for soybeans, exporters sold 2.878 MMT of soybeans during the week of October 14. 

That was a marketing year high. 

China was stepping up purchases in seasonal fashion, committing to 1.884 MMT during the week.  

Total export commitments are now 29.268 MMT, 35% smaller than year ago. 

US Exporters have now booked 51% of the USDA estimate vs. the average 53% pace for this date. 

As for wheat, data showed a neutral 362,400 MT in sales for the week ending October 14.

Indeed, they were down 36% from last week’s 567,600 (MT) but were in line with trade expectations of 250,000 MT to 650,000 MT. . 

Total commitments for wheat exports are 12.479 MMT, which is now 52% of the USDA forecast vs. the 58% average pace for this date. 

It is down 20% from last year at this time, however.  

USDA expects a total of 2021/ 22 U.S. wheat exports will reach 23.8 MMT, 12% lower than last year if realized.

Ethanol production continues to be a dark horse for corn’s demand, as output rose to 1.096 million bpd in this week’s report. 

That was the highest weekly average since June 2019 and implies corn use of 109-110 million bushels for the week (before DDG netback). 

Meantime, the weekly CFTC Commitment of Traders report on Friday showed managed money spec funds slicing 8,363 contracts from their net long in corn futures and options during the week ending October 19. 

That took them to a net long 219,568 contracts by Tuesday.  

As for soybeans, the report showed spec funds in soybean futures and options cutting back their net long position by 10,903 contracts as of October 19. 

That dropped it to 18,165 as of Tuesday.  

That’s their smallest net long since June 2020.

As for wheat, the report showed spec funds in CBT wheat expanding their net short position just in time for the Thursday swoon. 

The net short increased 9,192 contracts in the week ending 10/19, to 17,738 contracts. 

In KC HRW, the funds trimmed 896 contracts from their net long for the week, to 47,390 contracts.

In this context, CBOT soft red winter (SRW) futures were up 22 cents to end at $7.56/bu.

KCBT hard red winter (HRW) futures were up 30,3 cents to end at $7.74/bu.

MGE hard red spring (HRS) futures increased 44,3 cents to close at $10.13/bu.

CBOT corn futures were up 12,3 cents to $5.38/bu.

CBOT soybean futures were up 2,7 cents to close at $12.21/bu.

Meanwhile, corn basis bids were steady to weak across the central U.S. after tilting 1 to 6 cents lower at four Midwestern locations on Friday.

Soybean basis bids were steady to weak , spilling 8 to 14 cents lower at three Midwestern locations while remaining unchanged elsewhere across the central U.S..

As for wheat, HRW basis was up in both the Gulf and Pacific Northwest (PNW) this week as higher HRS futures prices incentivized buyers to seek HRW as a substitute.

That increased HRW demand and driving up HRW futures prices.

Thus, as of October 22, 2021, US HRS 13,5% prot, for Oct. ’21 was valued at $443.86/ mt FOB PNW (up $16.26/mt from last week).

FOB Gulf HRW 11.5 pro was valued at $361.55/mt (up $16.63/mt from last week).

From Canada, (Omissis …).

In this context, as of October 18, 2021, Canadian wheat prices for FOB delivery were (Cdn$/mt): 

– for the N1 class CWRS 13.5% – $502.83, up $3.61 per tonne; 

– for the N2 class CWRS 13.0% – $493.74, up $7.32/t;

– for the N3 CWRS – $418.72, up $1.34 ;

– for the N1 CWAD – $835.17, down $4.63 per tonne.

(1USD=Cnd$1.236).

From Central America, Mexico’s Ag Minister says Mexico Will Not Limit GMO Imports. 

In a meeting with U.S. Ag Secretary Tom Vilsack, Mexico Ag Minister Victor Villalobos said Mexico will not limit imports of GMO corn from the U.S.

Mexico published an executive order last year that sought to ban the use of GMO corn for human consumption in three years and pledged to substitute imports with local production.

Mr. Villalobos affirmed that the country would not allow the cultivation of GMO corn but would allow imports from the U.S.; Mexico is the number two buyer of U.S. corn after China.

The minister’s comments come on the heels of Mexico’s Supreme Court denying appeals against the ban on sowing GMO corn and the use of glyphosate.

Mexico imported 16 million tonnes of corn from the U.S. last year, almost all of it genetically modified, and is poised to import a record amount this year. 

While self-sufficient in terms of white corn, it is unlikely Mexico will grow enough yellow corn to meet its demands by 2024. 

Also during the meeting, Mr. Vilsack said seeds and patents are the next thing the USDA will examine under a Biden administration order on competition. 

(Omissis …).

From South America, recent rains in key production regions of Argentina has the country’s Buenos Aires Grains Exchange predicting a record wheat harvest this season, with an estimated total of 19,2 million tonnes.

Harvest has barely begun, with 2% progress, and will continue through January.

Argentinian harvests, however, showed very disappointing yields to begins, and unfavorable weather conditions could further eroding the country’s production potential.

Consequently, the Buenos Aires Stock Exchange has withdrawn two points from its ratings of “good to excellent”, which fell to 44% (10% last year).

(Omissis ..).

In this context, as of October 21, Argentina Wheat Grade 2 export price, (Up River) was at $296, down $4 from last week.

Argentina corn feed was up $2  for the week, closing at $246.

Brazilian corn feed (Paranagua) was at $275, up $13 from past week.

Argentina barley feed, was unchanged from last week, valued at $275.

Argentina soybean gained $3 to close at $540.

Brazilian soybean rose $1 finishing the week at $517.

On European market, Strategie Grain bumped its EU corn production number higher, pushing it to 67.5 MMT from the previous estimate of 64.9.  

Last year the EU produced 64.6 MMT of corn.  

Corn harvest progress in France doubled in the past week, according to AgriMer, reaching 32% complete.  

Regardless, this is still well behind last year when 75% of the crop was already out.  

They also report that 40% of the winter wheat was planted, up 27% for the week, and 59% of the winter barley was planted, up 35% for the week.  

(Omissis…).

In this context, Matif December wheat futures gained 4 euros from last week, closing at €280/t.

Matif corn November futures rose 3,25 euros to close the week at €249/t.

Matif rapeseed November futures, rose 2 euros, ending the week at €674.5/t.

Nov-21 UK feed wheat futures fell £1 from past week, closing at £207/t. 

Meantime, as of October 14, FOB prices in US dollar for French wheat with 11.5% protein and Oct. delivery, were at $ 327/mt, up $9/mt from last week.

French durum wheat, delivered La Pallice, basis closed at $546.61 per tonne, up $12.92 from last week.

Corn delivered Bordeaux Spot – July 2021 basis was at $288,42 per tonne, up $3.02 from last week.

FOB Rhin Spot – July 2021 basis was at $297.72 per tonne, up $1.87 week on week.

Feed barley delivered Rouen – July 2021 basis was at 287.26$/t, up $8.82.

Malting barley FOB Creil Spot – July 2021 basis was at $393.09 per tonne, up 10.23$ from past week.

Rapessed FOB Moselle Spot – Flat – 2021 harvest was at 782.69$/ton, up $16.96 compared to prior week.

Standard sunseed delivered St Nazaire Spot – Flat – 2021 harvest was up $19.12 from last week at $715.24 per tonne.

As of October 18, German wheat with 12.5% protein for Oct. delivery, closed at $322.80/mt, up $2.80/mt.

Baltic wheat with 12.5% protein was at $322.2/mt, up $2.70/mt.

(EUR/USD=> US$1.1630).

From North Africa, GASC, the Egyptian state commodities buyer, is suspending a 15% price advantage for the Egyptian state shipping line National Navigation Company (NNC) to transport wheat reported Reuters. 

GASC traditionally uses the Egyptian state-owned ships as a way to support Egyptian jobs. 

Ocean shipping prices have surged in the past few months. 

The traditional use of NNC has led to higher shipping costs, said traders.

(Omissis …).

From the Black sea basin, SoveEcon reported that export prices for Russian wheat with 12.5% dry basis protein (11.0% on a 12% moisture basis) rose to the highest level since August 2012 at $312/MT FOB from deep-water Russian ports. 

The analyst noted that “port demand is relatively weak, with traders talking about limited forward sales, a strong ruble, and a further increase in export duties.”

IKAR said prices had stabilized for the first time in 13 weeks. 

Russia has also again raised its export tax on wheat, which now stands at $ 67 / t.

Year-to-date Russian wheat exports are 26% behind the pace at the same time last year.

(Omissis…)

The Ukraine Ag Ministry reports that 76.5% of that country’s crops have been harvested.

(Omissis…).

From The Middle East, Iraq’s agriculture ministry said the 2021/22 all winter crop planting area will fall by 50% due to a water shortage. 

The United Nations (UN) Food and Agriculture Organization (FAO) said wheat production will be 70% lower compared to the previous season. 

Iraq is suffering from a drought compounded by water extraction upstream from the Euphrates and Tigris Rivers. 

Mercy Corps and the Norwegian Refugee Council warned that 7 million Iraqis risk losing access to water amid rising temperatures and record low rainfall.

The USDA most recently estimated Iraq’s wheat crop at 4.5 MMT with imports of 2.8 MMT.

(Omissis …)

From the Middle Kingdom, China imported 44.8% less wheat in September 2021 compared to September 2020 according to data published by the General Administration of Customs. 

Elevated wheat prices and falling domestic corn prices cut the demand for overseas shipments. 

Year-todate, China’s wheat imports are 5.2 MMT for the calendar year according to USDA. 

(Omissis …).

From Australia, Aussie wheat production is expected to be 31.9 MMT this year said a recent report from Rabobank. 

The USDA reported that Australian wheat production would be 31.5 MMT. 

While 4% less than last year’s production, it is still the second largest Australian crop in a row.

(Omissis…).

Indicative delivered prices in Australian dollars per tonne were:

Barley Downs: (Nearby) $280 down $2 – (New crop) $295 down $5;

Wheat Downs: (Nearby) $335 down $33 – (New crop) $335 down $15;

Sorghum Downs: (Nearby) $305 down $3 – (New crop) $290 steady;

Barley Melbourne: (Nearby) $290 steady – (New crop) $300 steady;

Wheat Melbourne: (Nearby) $365 steady – (New crop) $365 up $5.

(AUD/USD=> US$0.746).

On international trade scenario, the International Grain Council, IGC, raised its global corn estimate slightly this week, primarily through a boost in U.S. production.  

They now estimate that crop to total 1.21 billion metric tons, up 1 million from the previous estimate.  

Meantime, they left their global wheat and bean number unchanged at 781 MMT and 380 MMT, respectively.  

(Omissis …).

Watching next week market, we start Monday with soybean traders unloading any surprise positions inherited with the November options expiration and “pin” at the $12.20 strike price. 

We’ll also see USDA Export Inspections in the afternoon and the Crop Progress report overnigth. 

Fast forward to Wednesday and EIA will put out ethanol production and stocks data. 

On Thursday FAS will release their weekly Export Sales report.

Author: Sandro F. Puglisi

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