US farm markets reacted to this month’s Crop Production and WASDE reports completely differently than the last several months, as instead of sinking lower, grain prices received a nice lift during this week.
Traders, indeed, were expecting USDA to cut projected exports and raise projected ending stocks for soybeans.
Both of those bearish things happened.
However, corn futures gained 4,39% this week, more than the 15 ¼ cents they lost the previous week.
Soybeans rallied immediately upon the report release, and closed 24 ¾ cents higher on Tuesday and by Friday night, January beans were up 3,21% for the week, partially spurred by soybean meal prices that were up 8,83% for the week.
Soy oil was up 0.3% this week.
Wheat futures sprinted to new life of contract highs in KC, up 7% for the week.
Chicago tried to keep up, gaining 6.6%.
MPLS spring wheat was up 4% for the week, but didn’t make it back to the previous highs.
Particularly, CBOT soft red winter (SRW) futures gained 50,5 cents to $8.17/bu.
KCBT hard red winter (HRW) futures were up 54,3 cents to end at $8.33/bu.
MGE hard red spring (HRS) futures gained 40,5 cents to close at $10.50/bu.
CBOT corn futures were up 24,3 cents to $5.77/bu.
CBOT soybean futures rose 38,8 cents to close at $12.44/bu.
Meantime, high futures prices continued to pressure basis in both the Gulf and Pacific Northwest (PNW) this week.
In fact, export basis for PNW HRS 13,5% prot. valued at 175, down 5 points from previus week, while export basis for Gulf HRW was unchanged at 200.
Slow export demand is leaving little room for basis to go higher, even if FOB prices continue to rise.
In fact, as of November 12, 2021, US HRS 13,5% prot, for Dec. ’21 valued at $450.10/ mt FOB PNW (up $13.04/mt from last week).
FOB Gulf HRW 11.5 pro was valued at $379.56/mt (up $19.56/mt from last week).
On macro markets, oil prices fell on Friday, wiping out gains from the previous session, on worries that the U.S. Federal Reserve will accelerate plans to boost interest rates to tame inflation.
Thus, Brent crude futures fell 70 cents, or 0.8%, to settle at $82.17 a barrel.
U.S. West Texas Intermediate (WTI) crude fell 80 cents, or 1%, to settle at $80.79 a barrel.
Both benchmarks fell for a third consecutive week, hit by a strengthening dollar and speculation that President Joe Biden’s administration might release oil from the U.S. Strategic Petroleum Reserve to cool prices.
On a weekly basis, Brent fell 0.7%, while WTI declined 0.6%.
On freight market, the Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials such as grains, coal, and iron ore, increased 3% on the week to end at 2,807.
On equities markets, global equity markets rallied on Friday, with European shares hitting new highs on strong earnings, while the dollar eased but posted its biggest weekly gain since late August.
Thus, MSCI’s all-country world index closed up 0.64%, while the broad STOXX Europe 600 index rose 0.30% to a record closing high.
France’s CAC40 index and Germany’s DAX index also ended at record closing highs.
On Wall Street, the Dow Jones Industrial Average rose 0.50%, the S&P 500 added 0.72% and the Nasdaq Composite advanced 1.00%.
For the week, on the other hand, the three major indices were mixed, albeit mostly higher.
Indeed, the S&P 500 was up +33.58 points or 0.72%, the Dow Jones was down -316.15 or 0.87%, the Nasdaq Composite was up +156.68 points or 1%.
The U.S. Dollar Index increased from last week’s 94.302 to close at 95.128.
In Canada, as of November 08, 2021, Canadian wheat prices for FOB delivery were (Cdn$/mt):
– for the N1 class CWRS 13.5% – $514.20, down $24.47 per tonne;
– for the N2 class CWRS 13.0% – $459.30, down $70.20/t;
– for the N3 CWRS – $435.05, down $6.38 ;
– for the N1 CWAD – $840.37, up $6.02 per tonne.
(1USD=Cnd$1.2577).
From South America, as of November 11, Argentina Wheat Grade 2 export price, (Up River) was at $317, up $3 from last week.
Argentina corn feed was unchanged for the week, closing at $250.
Brazilian corn feed (Paranagua) was at $266, up $4 from past week.
Argentina barley feed, was up $5 from last week, valued at $290.
Argentina soybean fell $1 to close at $535.
Brazilian soybean shedded $1 finishing the week at $497.
On European market, prices were mixed, but mostly higher.
In particular, a stronger dollar weighed grain export prices, while futures were all higher for the week.
Indeed, Matif December wheat futures gained 9.5 euros from last week, closing at €297.25/t.
Matif corn January futures were up 5.25 euros to close the week at €243.75/t.
Matif rapeseed February futures, rose 25.25 euros, ending the week at €710.25/t.
Nov-21 UK feed wheat futures rose £5.15 from past week, closing at £218.40/t.
Meantime, as of November 11, FOB prices in US dollar for French wheat with 11.5% protein and Nov. delivery, were at $ 344/mt, up $5/mt from last week.
French durum wheat for human use, FOB Port la Nouvelle continue to be not quoted.
French durum wheat, feed use – basis La Pallice, quoted $509,25/mt, down $0.522 from prior week.
Spanish durum wheat Sevilla (DepSilo), closed at $617.98/mt, down $7.60 from prior week.
Italian durum wheat Bologna (Delivered to first customer), valued at $621.40/mt, down $7.71/mt from last week.
German wheat (Depsilo) with 12.5 pro closed at $335.30, up $13.73/mt from last week.
Nov. Baltic with 12.5 pro wheat (Delivery First) was at $280.38/mt, up $19.45/mt.
Corn delivered Bordeaux Spot – July 2021 basis was at $283.81 per tonne, down $2.63 from last week.
FOB Rhin Spot – July 2021 basis was at $289.53 per tonne, down $1.53 week on week.
Feed barley delivered Rouen – July 2021 basis was at 302.12$/t, up $2.98.
Malting barley FOB Creil Spot – July 2021 basis was at $389.09 per tonne, down 3.60$ from past week.
Rapessed FOB Moselle Spot – Flat – 2021 harvest was at 805.65$/ton, up $12.18 compared to prior week.
Standard sunseed delivered St Nazaire Spot – Flat – 2021 harvest was down $0.9 from last week at $720.97 per tonne.
(EUR/USD=> US$1.144).
From the Black Sea basin, Russian wheat prices gained again last week.
Indeed, according to the IKAR, Russian wheat with 12.5% protein loading from Black Sea ports for supply in the second half of November was $326 a tonne free on board (FOB) at the end of last week, up $2 from the previous week.
Also SovEcon registered an increas on wheat by $2, pegged it at to $327 a tonne.
Barley rose by $8 at $293 a tonne, meantime.
Russian domestic 3rd class wheat, European part of Russia, excludes delivery was valued at 14,900 roubles/t ($209.2), +50 rbls from previus week (Sovecon);
Russian sunflower seeds were at 35,500 rbls/t, -2,375 rbls wow (Sovecon);
Domestic sunflower oil, quoted at 87,675 rbls/t, -325 rbls from prior week (Sovecon);
Sunflower oil export price according to Sovecon was at $1,365/t, +$10 f.l. week (Sovecon)
Sunflower oil export price according to IKAR quoted at $1,375/t, +$15 (IKAR);
Soybeans were at 49,700 rbls/t -600 rbls (Sovecon);
White sugar, Russia’s south, quoted at $624/t, -$11(IKAR).
On the other hand, export duties on wheat, barley and corn for the period Nov. 17-23, 2021 will increase.
As for wheat the export duty will be increased to 77.1 USD/t, from 69.9 USD/t the prior week.
The indicative price moved up from 299.9 USD/t to 310.2 USD/t.
As for corn the export duty will grow to 62.90 USD/t from 50.10 USD/t prior week.
The indicative price moved up from 256.6 USD/t to 274.9 USD/t.
At the same time, the tariff for barley will increase to 66.0 USD/t from 54.8 USD/t prior week.
The indicative price moved up from 263.3 USD/t to 279.3 USD/t.
($1 = 71.615 roubles).
From the Middle Kingdom, on November 9, Dalian corn had yet another positive close, up CNY$13/t.
Meantime, cash corn prices in Shandong Province jumped from less than 2,650 to 2,890 yuan ($451.81) a tonne only in the last two weeks.
In Australia, indicative delivered prices in Australian dollars per tonne were mostly lower due to harvesting pressure:
Barley Downs: (Nearby) $278 up $8 – $282 down $3 Jan;
Wheat Downs: (Nearby) $345 up $5 – $340 steady Jan;
Sorghum Downs: (Nearby) $320 up $5 – $300 steady Mar;
Barley Melbourne: (Nearby) $302 up $27 – $295 up $10 Jan;
Wheat Melbourne: (Nearby) $375 up $52 – $365 up $35 Jan.
(AUD/USD=> US$0.7293).
On international trade scenario, Tunisia’s state grains agency this week purchased about 100,000 tonnes of soft wheat and about 50,000 tonnes of feed barley in an international tender.
The wheat have been bought in a series of 25,000.
Wheat purchases were from trading house Casillo at $380.89 a tonne c&f, from Cargill at $385.60 a tonne c&f and two from COFCO International at $380.30 and $381.30 a tonne c&f.
It was believed only 50,000 tonnes of barley was bought although 75,000 tonnes had been sought in the tender as prices were regarded as too expensive, they said.
Of these, Casillo sold 25,000 tonnes at $356.49 a tonne c&f and Viterra sold 25,000 tonnes at $358.49 a tonne c&f.
Shipment for wheat is between Dec. 1, 2021 and Jan. 15, 2022, depending on origin supplied.
Shipment for barley is between Dec. 15, 2021 and Jan. 20, 2022, also in this case, depending on origin supplied.
Watching next week market, we’ll see USDA Export Inspections on Monday in the afternoon and the Crop Progress report overnigth.
NOPA crush for October is also scheduled for Monday release.
On Wednesday EIA will also put out ethanol production and stocks data.
On Thursday FAS will release their weekly Export Sales report.
November feeder cattle futures and options also expire on Thursday.
Friday will feature the monthly USDA Cattle on Feed report.
Author: Sandro F. Puglisi
