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US farm markets, have been “on roller coasters” this week.
Early in the week prices soared when Russia pulled out of the grain export corridor during the extended All Saint’s weekend.
Then, they quickly reversed the rout in midweek when Russia re-entered.
Ultimately, were on the rise again on Friday, as a general optimism on export sales, a sharply rising in energy prices and a softening U.S. Dollar pushed up prices.
Thus, corn prices were slightly firm on Friday, despite was a mostly uneventful session, and closed the session up 0.26%.
The soybean complex, saw the biggest boost, with soy oil ledding the rally, up 2.5% for the session.
Bean prices closed the end week session with 1.76% gains, while meal prices rose 1.47%.
The wheat complex, on its part, trended moderately higher on Friday.
Indeed, Chicago SRW wheat prices added 0.86%.
Kansas City HRW wheat prices rose 1.27%.
Minneapolis spring wheat gained 1.22%.
For the week, corn prices although posted a 21,5 cent range on the week, mostly to the high side, were unchanged from the prior Friday.
Soybeans gained some steam this week, as November contract was up 4.59% and January closed the week with 4.4% gains.
The product values were mixed on the week, with soy oil holding the complex up, rallying 7.49%.
Soybean meal has been weaker, with a 1.18% weekly loss.
The wheat complex, closed the week higher despite the turnaround in the middweek session.
Chicago SRW wheat prices, indeed, rallied 2.23% for the week.
Kansas City HRW wheat prices were 3.05% higher from the prior Friday.
Minneapolis spring wheat rose 1.01% from Friday to Friday.
Going inside numbers, for the week corn prices closed unchanged at $6.81/bu.
Soybean prices finished the week with the Nov contract $0.638 stronger at 14.52/bu and Jan $0.620 higher at 14.62/bu.
Soymeal sheded $5/smt, closing at $420.40 smt.
Soy oil soared by $5.38, to close at $77.17.
CBOT soft red winter (SRW) prices lifted $0.185 to close at $8.48/bu.
KCBT hard red winter (HRW) prices rose $0.283, ending at $9.53/bu.
MGE hard red spring (HRS) prices were $0.095 higher to close at $9.55/bu.
Meantime, corn basis bids were mostly steady across the central U.S. on Friday but did tilt 3 cents higher at an Ohio elevator and 5 cent slower at an Iowa processor.
Soybean basis bids were steady to firm, after rising 10 cents higher at an Ohio elevator and improving 5 to 10 cents at three Midwestern processors.
As for wheat, basis was mixed in both the Gulf and Pacific Northwest (PNW) during the week.
Gulf HRS and HRW basis were down while SRW remained flat.
In the PNW HRS basis was flat, while HRW basis and soft white prices were up.
Wheat prices remain high, and actions in the Black Sea makes day-to-day pricing challenging to predict.
In the Gulf, slow wheat demand has pushed basis down, except for SRW, which remains firm due to the Mississippi River issues.
Heavy rain in Australia, which has already led to speculation about milling quality, helped push U.S. soft white prices higher.
Steady demand for PNW wheat helped keep basis firm.
In this context, as at November 3, 2022, FOB prices saw US wheat No 2 Hard Red Winter (HRW) valued at $427/mt (down $2/mt from last week).
US wheat No 2 Soft Red Winter (SRW) was valued at $375/mt (down $8/mt from last week).
Northern Durum offers from the Great Lakes for December 2022 delivery was valued at $11.43/bu, unchanged wk/wk ($420.00/MT).
As for corn, US corn 3YC (Gulf) was at $356/mt (down $11/mt from last week).
As for soybean, US soybean 2Y (Gulf) quoted at $620/mt (up $17 from last week).
USDA reported the cash price for ethanol was mainly 11 to 13 cents higher for the week from $2.46 to $2.64/gal regionally.
Corn oil was seen 1 cents higher from 75 to 79 cents/lb regionally.
DDGS prices were mostly higher and renged from -$067 to +$46.67/ton, with sales from $204.33 to $291.67/ton regionally.
DDGS prices to the Export Point averaged between $248.00 to $355/ton
USDA quoted in IL the B100 cash price at $6.88/gal for the week.
After the sessions close, Friday’s weekly Commitment of Traders data showed that as of the 11/1 settle, managed money firms in corn had added 6,189 new longs and lifted 1.4k shorts.
That left the group 7,586 contracts more net long to 271,960.
Commercials added 34k new hedges through the week, including 9.8k longs and 24k shorts.
On net the commercial position was 14.2k contracts more short to 490,638 contracts.
As for soybean, the report showed spec traders 25,918 contracts more net long through net new buying as of 11/1.
That left them back above the 101,329 contract net long for the first time since 9/20.
Commercial soybean traders lifted 65,556 hedges through the week, with more long liquidation than short covering, for a 27.3k contract stronger net short of 140,670 contracts.
As for wheat the report had Chicago wheat specs adding 5k new longs and 6.1k new shorts through the week that ended 11/1.
That left thegroup 1,097 contracts more net short to 37,149 contracts.
That remains their strongest net short since June of 2020.
In KC wheat, managed money firms were 1,218 contracts less net long to 23,408 contracts as of 11/1.
That came mostly via net new selling.
In spring wheat, managed money had added 208 new longs and lifted 123 shorts for a 1,176 contract net long.
In energy markets, oil prices settled up by more than 5% on Friday amid uncertainty around future interest rate hikes by the U.S. Federal Reserve, while a looming EU ban on Russian oil and the possibility of China easing some COVID restrictions supported markets.
Though fears of global recession capped gains, Brent crude futures settled up $3.99 to $98.57 per barrel, a weekly gain of 2.9%.
U.S. West Texas Intermediate (WTI) crude futures were up $2.96, or 5%, at $92.61, a 4.7% weekly gain.
A former Chinese disease control official said substantial changes to the country’s COVID-19 policy are to take place soon.
Thus, China’s stock markets have been buoyed this week by this rumours, despite the lack of any announced changes.
Signals about the size of U.S. interest rate hikes had caused losses in oil prices during the week.
However, the U.S. Labor Department’s non-farm payrolls report on Friday showed a rise in the unemployment rate to 3.7% last month from 3.5% in September.
That suggested some loosening in labor market conditions that could give the Fed cover to shift towards smaller rate increases.
Consequentily the dollar weakened supporting oil demand.
Additionally, supply is expected to remain tight.
The upcoming ban on Russian oil sales are certainly supportive.
However, the main catalyst this week, was reports that China may ease its zero-Covid restrictions, which would be a boon to its economy and oil demand.
On the bearish side, fears of a recession in the United States, grew on Thursday after Fed Chairman Jerome Powell said it was “very premature” to be thinking about pausing interest rate hikes.
The Bank of England warned on Thursday that it thinks Britain has entered a recession and the economy might not grow for another two years.
Saudi Arabia lowered December official selling prices for its flagship Arab Light crude to Asia by 40 cents to a premium of $5.45 a barrel versus the Oman/Dubai average, although the cut was in line with trade expectations.
Looking into next week, investors are awaiting the U.S. Energy Information Administration’s short-term energy outlook and the November U.S. Consumer Price Index for insight on the pace of inflation.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index rose on Friday for the first time in 13 sessions, helped by an uptick in capesize rates.
The overall index, indeed, rose 33 points, or about 2.6%, to 1,323.
However, the index fell about 13.8% in its second straight weekly decline.
Particularly, the capesize index rose 118 points, or about 9.6%, to 1,343.
However, it recorded its worst week since late August, shedding about 19.6% this week.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron ore, were up $981 at $11,139.
The panamax index rose 1 point to 1,700. It fell about 6.4% for the week in its second consecutive weekly fall.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, rose $4 to $15,299.
The supramax index fell 19 points to 1,268.
It marked its worst week in a year with a drop of about 14.5%.
In equity markets, U.S. stocks closed higher on Friday.
The Dow Jones Industrial Average rose 401.97 points, or 1.26%, to 32,403.22, the S&P 500 gained 50.66 points, or 1.36%, to 3,770.55 and the Nasdaq Composite added 132.31 points, or 1.28%, to 10,475.25.
However, for the week, the Dow fell 1.39% to snap a four-week winning streak, the S&P dropped 3.34% and the Nasdaq slid 5.65% for its biggest weekly percentage decline since January.
The trade was volatile.
Investors wrestled with a mixed jobs report and comments from Federal Reserve officials on the pace of interest rate hikes.
The job report, as we said, showed an uptick in the unemployment rate in October, indicating some signs of slack may finally be starting to emerge in the job market and give the Fed room to downsize its rate hikes beginning in December.
But the data also showed average hourly earnings rose slightly more than expected, as did job growth, pointing to a labor market that largely remains on firm footing.
Thus, Fed officials echoed Powell’s comments about needing to continue to raise rates for a longer period of time and potentially above the 4.6% level the central bank penciled in at its September meeting.
In the mean time, as we said, hopes of an easing in China’s tough COVID-19 curbs supported Asian markets, but some areas of the US market too.
Stocks in Hong Kong, indeed, surged 5.4% Friday, while stocks in Shanghai jumped 2.4%.
Both markets finished the week with strong gains.
In the USA Alibaba closed up 7.05% and JD.com was up 9.74%.
Those hopes also helped boost prices of commodities such as copper, which in turn lifted the materials sector 3.41% as the best performing of the 11 major S&P sectors.
Shares of miner Freeport-McMoRan soared 11.5% for the biggest gain in the S&P 500.
Among others, Starbucks Corp jumped 8.48%, while DoorDash Inc’s shares were boosted by 8.32%.
Market focus will now turn to a key consumer inflation reading due next week as well as the U.S. midterm elections on Nov. 8, where control of Congress is at stake.
In currency trading, the dollar tumbled on Friday after the U.S. nonfarm payrolls report for October showed the world’s largest economy created more new jobs than expected, but also flashed signs of a slowdown with a higher unemployment rate and lower wage inflation.
Particularly, the dollar fell 1.1% against the yen to 146.65 yen , posting losses for a third straight week.
The euro, on the other hand, rose 2.2% to $0.9960 .
The dollar index, fell 1.9% to 110.77, for its largest one-day percentage loss since November 2015.
The greenback initially had rose immediately after the data, but fell as market participants digested the jobs report, noting the data was not all positive and supports the view the Federal Reserve could slow the pace of future rate hikes.
The yield on the two-year Treasury fell to 4.68% from 4.72% late Thursday.
Meanwhile, the 10-year yield, which helps dictate rates for mortgages and other loans, edged higher to 4.16% from 4.15%.
Going back to analyzing the other Ag markets …
In Canada, producers’ deliveries of common wheat in week 13 of the shipping season, were at 441,4k mt.
That was slightly lower from 491,5k posted a week erlier.
Deliveries of durum wheat also decreased to 96.7k mt from 148.2k mt a week earlier.
Meantime, Canada exported 424.4k mt of common wheat in week 13 of the shipping season.
That was down from 533.9k mt posted a week earlier.
Durum wheat exports, also were weaker at 101.5k mt, down from 161.7k mt a week earlier.
Consequentially, total Commercial Stocks of common wheat stood at 2.833,2k mt, down from 2.916,3k mt a week earlier.
As for durum, total commercial stocks were at 782,6k mt, down from 833k mt posted the prior week.
Cumulative exports for common wheat are now at 4.628,1k mt, up from 3.291,9k mt year ago to date.
As for durum wheat, cumulative exports reached 823,4k mt, that was down from 860,2k mt year ago to date.
Cash bids for durum wheat have been higher this week.
Indeed, looking at an average regional price of $498.53/mt as of Nov 4, that is $12.44/mt higher than the past week.
Going inside the numbers, as at October 31, 2022, Canadian wheat prices for FOB delivery West Coast were (Cdn$/mt):
– for the N1 class CWRS 13.5% – $533.22 per tonne, up C$3.99/t from prior week;
– for the N2 class CWRS 13.0% – $526.87/t, up C$4.04 wow;
– for the N3 CWRS – $550.26/t, up C$6.41 from prior week.
As at October 31, 2022, for the N1 CWAD 13% (durum wheat first class) average street price were at C$496.04, shedding by C$18.38 week on week.
The export basis West Coast & Central SK, in contrast, moved up from C$61.69 to 76.77 a tonne.
Thus, delivered FOB price Great Lakes was posted at C$572.81 (US$ 420.50/t +$0.10 wk/wk).
That represent a C$3.3/t decline from prior week.
Per latest data from European Commission, as at November 2, 2022, Durum wheat – FOB CA St Lawrence (CWAD) was offerd at C$630.66/t, up C$7.31/t week on week.
As at November 4, 2022, for the N1 CWAD 13% (durum wheat first class), average street price in REGIONAL ZONES was at C$498.53 per tonne, up C$12.44 from prior week.
(1USD=Cnd$1.3478 down from 1.3605 a week earlier).
From South America, as at November 3, 2022 – Argentina Wheat Grade 2 export price, (Up River) was at $413, down $7/t from prior week.
Argentina corn feed was up $2/t for the week, closing at $307.
Brazilian corn feed (Paranagua) was valued at $299, was up $8/t from prior week.
Argentina feed barley, was unchanged for the week to $330.
Argentina soybean was up $17 at $607.
Brazilian soybean was up $8, finishing the week at $613.
In Europe, December wheat prices on Euronext closed the week at 339.25 euros a tonne, up €1.75/t for the week.
December’s European Durum Wheat, settled at €513.5/t, up €16.5/t for the week.
November corn price, was down €8/t for the week, closing at 329 euros per ton.
Rapeseed Nov contract closed at €664.75/t, up €28.25/t for the week.
Nov-22 UK wheat feed contract, closed at £267.25/t, up £2.75/t week on week.
Meantime, as of November 3, 2022, FOB prices in US dollar for French wheat with 11.5% protein and Oct delivery, were at $337/mt, down $5 from prior week.
German wheat, Deposilo Hamburg, was valued at $334.59/t, down $5.21 from prior week.
Baltic wheat, delivery first Vilnius, N.Q., past week was at $327.85.
Spanish durum wheat Sevilla (Depo Silo), this week was valued at $497.9/t, down $0.35 from past week.
French durum wheat – delivered La Pallice Spot – July 2022 basis, this week was valued at $463.05/mt, down $0.32 from prior week.
French durum wheat – FOB Port la Nouvelle, this week was n.q..
Italian durum wheat Bologna (Delivered to first customer), was valued $490.93/t, down $0.34 from prior week.
Corn, delivered Bordeaux Spot – July 2022 basis, was at $343.55 per tonne, up $7.73/t from past week.
Corn FOB Rhin Spot – July 2022 basis, was up $2.75 to $335.58/t.
Feed barley delivered Rouen was at 303.72 $/t, up $3.77 per tonne.
Malting barley FOB Creil Spot – July 2022 basis was at $368.45 per tonne, up $2.73/t from prior week.
Rapessed FOB Moselle – 2022 harvest was at 657.23$/ton, up $7.51 compared to prior week.
Standard sunseed FOB Bordeaux – 2022 harvest was up 9.43$ from prior week at $736.89 per tonne.
(Eur/USD = 0.9958 vs last week 0.9965).
From Russia, the Russian agriculture ministry revised the export tax for wheat, corn and barley.
Particularly, as of Nov. 9, the export duty on wheat will increase to 3,012.0 from 2,923.2 rubles per ton a week earlier.
The duty on barley, also will increase to 2,495.6 rubles from 2,414.3 rubles per ton a week earlier.
For corn, in contrast, will down to 1,114.3 rubles from 1,637.3 rubles a week earlier.
This new duty rates will be in effect through November 15, inclusive.
The duties were calculated based on indicative prices: $314 per ton for wheat ($312.7 a week earlier), $283.7 for barley ($282.50), $251.6 for corn ($264.40).
From Australia, indicative delivered prices in Australian dollars per tonne for old crops past week were:
Barley Downs: $410, down $15 from Oct 27;
SFW wheat Downs: $412, down $13 from Oct 27;
Sorghum Downs: $422, up $7 from Oct 27;
Barley Melbourne: $410, up $5 from Oct 27;
ASW wheat Melbourne: $468, up $3 from Oct 27;
SFW wheat Melbourne: $460, up $5 from Oct 27.
As for new crops, past week indicative prices for delivery in Jan-Feb were:
Barley Downs: $490, up $5 from Oct 27;
SFW wheat Downs: $415, unchanged from Oct 27;
Sorghum Downs: $388, down $2 from Oct 27;
Barley Melbourne: $390, up $5 from Oct 27;
ASW wheat Melbourne: $460 up $5 from Oct 27;
SFW wheat Melbourne: $382, down $3 from Oct 27.
(AUD/USD=> US$0.6464 vs. US$0.6413 prior week).
Main News of the Week
- Russia, on October 29, suspended for an “indefinite term” its participation in the United Nations-backed Black Sea Grain Initiative that it signed in July.
The deal was set to expire this month, and Russian President Vladimir Putin had previously threatened to withdraw from the multiparty agreement.
Chicago Board of Trade (CBOT) wheat futures were up 6% Monday following the news.
On Wednesday, Russia reversed course and said it would rejoin the agreement while leaving open the opportunity to withdraw “if provoked.”
Lloyd’s of London, after suspended covering on the area was again underwriting insurance for the cargo vessels included in the Black Sea grain corridor.
Following Russia’s decision to rejoin the Black Sea grain deal on Wednesday, European Wheat futures fell 5.1%, nearly to their position before Monday’s market reaction.
Observers noted that the market retreat was more a correction to the initial reaction and underlined the uncertainty throughout the week.
- Canada’s exports rose in September, largely driven by better wheat volumes and prices, while imports were also up, with both import and export values impacted by the depreciation of the Canadian dollar, Statistics Canada said on Thursday.
The country’s trade surplus with the world widened to C$1.14 billion ($827.4 million) in September, below analyst forecasts of a surplus of C$1.34 billion, but up from a downwardly revised C$550 million surplus in August.
Exports rose 1.3% in September and were up 1.7% on a volume basis, though prices fell for the fourth consecutive month, Statscan said. Wheat led the gains, rebounding sharply as this year’s strong harvest began to impact exports.
A large share of Canada’s trade is done in U.S. dollars, which means converted values are higher when the Canadian dollar depreciates against the U.S. dollar, Statscan said.
- Brazil’s Paranagua Port was re-opened after protesters blocked access following President Bolsonaro’s loss to rival Luiz Ignacio Lula da Silva.
The protests cut port activity to a fraction of its daily activity.
Roads across the country were blocked in protest of da Silva’s narrow defeat of Bolsonaro.
- The Buenos Aires grains exchange on Thursday cut their forecasts for Argentina’s wheat production 2022/2023 to 14 million tonnes, down from 15.2 million tonnes previously.
Meantime the government has announced that due to severe drought conditions and a smaller than expected harvest, current wheat export licenses will be extended for up to 360 days.
The measure would apply to shipments originally scheduled to load between 1 Dec and 28 Feb.
Drought conditions have caused some delays for soybean plantings in Argentina.
“The extreme climatic conditions now put soybean planting on the ropes,” according to a recent report from the Rosario grains exchange.
“It is the most difficult and uncertain planting of the last 12 years.”
The Rosario grains exchange currently estimates that the country’s 2022/23 soybean footprint will be 42.008 million acres.
- In Europe, French farm office FranceAgriMer has marked 99% of the country’s corn harvest as complete through October 31, keeping it 28 days ahead of 2021’s pace and 18 days ahead of the prior five-year average.
Production is expected to fall to a three-decade low after suffering through widespread drought and multiple heatwaves.
French farm office FranceAgriMer also reported that the country’s 2022/23 soft wheat crop plantings were 84% complete through October 31, up from 63% a week ago.
Emergence is at 61% over the same period.
Farm field work has progressed faster than it has in recent years.
In Germany, tight port capacity carried an 11 euro premium over the Euronext December contract.
- Heavy rain and flooding in Australia’s wheat-growing areas is threatening wheat milling quality just before harvest.
Despite a third consecutive year of impressive wheat production, heavy rain may affect as much as half the crop in the eastern grain belt.
The rain will lead to quality issues and likely decrease the amount of quality milling wheat while increasing the amount destined as animal feed.
- On the international trade scene, a South Korean animal feed maker has passed on all offers in its tender to purchase 60,000 metric tons of soymeal.
Prices were regarded as too high.
The grain would have been for arrival in mid-April.
Iraq’s state grains buyer purchased about 150,000 tonnes of hard wheat expected to be sourced from Canada, Lithuania and Australia in an international tender.
The purchase was believed to involve at least 50,000 tonnes of Canadian wheat, said to have been bought at the lowest price of an estimated $489.80 a tonne c&f.
Trading house Viterra was said to be the seller.
About 50,000 tonnes of wheat sourced from Lithuania was also said to have been bought at about $499 a tonne c&f from trading house Hanalico.
Some 50,000 tonnes of Australian wheat was purchased at about $480 a tonne c&f from trading house Tiryaki.
The wheat could be sourced from optional origins but Russian wheat could not be offered.
Volumes in Iraq’s tenders are nominal and the country often buys more than sought.
Iraq said on Oct. 17 the country needs to import 5 million tonnes of wheat in 2023, including at least 2 million in the first four months of the new year.
FAO Food Price Index – November 2022 Update
The United Nations food agency’s world price index edged slightly lower in October, the seventh consecutive monthly fall and some 14.9% down from its all-time high recorded in March.
FAO, indeed, said on Friday that its price index, which tracks the most globally traded food commodities, averaged 135.9 points last month versus a revised 136.0 for September.
The September figure was previously put at 136.3.
The index has fallen from a record of 159.7 in March, but remained 2.0% higher than a year earlier.
The index dipped overall, although the cereal index rose 3.0%, with wheat up 3.2%.
International rice prices increased 1.0%.
That thanks as vegetable oil index which fell 1.6% in October and was down nearly 20% on its year-earlier level.
Rising international quotations for sunflower seed oil were more than offset by lower world prices of palm, soy and rapeseed oils.
Dairy prices also fell 1.7%, meat was down 1.4% and sugar eased 0.6%.
FAO Supply & Demand – November 2022 Update
In separate cereal supply and demand estimates, FAO lowered its forecast for global cereal production in 2022 to 2.764 billion tonnes from a previous 2.768 billion tonnes.
That is 1.8% below the estimated output for 2021.
The month-on-month downward revision almost entirely concerns the wheat crop in the United States.
World cereal use in 2022/23 is expected to surpass production at 2.778 billion tonnes, leading to a projected 2.0% fall in global stocks compared with 2021/22 to 841 million tonnes.
That would represent a stocks-to-use ratio of 29.4%, down from 30.9% in 2021/22 but still relatively high historically, FAO said.
World trade in cereals in 2022/23 was predicted to register a 2.2% contraction to 469 million tonnes.
Watching next week’s market …
The week starts with Monday’s Export Inspections report from USDA in the afternoon and the Crop Progress report overnight after the sessions close.
Wednesday is busy starting off with the EIA weekly ethanol production and stocks reports.
We will also get the monthly update to the Nov WASDE and Crop Production reports.
The weekly Export Sales report will be released on Thursday.
On Friday, the government will be closed in observance of Veterans Day, but the markets will be open.
That’s all, thank you.
We wish you a good day and a good weekend.
Author: Sandro F. Puglisi
