Good morning Farmer Family …
US farm markets closed mixed but mostly lower on Friday.
Corn price was 0.08% lower at the bell.
Soybean price closed 0.44% higher.
Soymeal gained 1.69%.
Soy oil tumbled 0.72% lower.
The wheat complex ended the session with losses in all three markets.
Notabily, Chicago SRW closed 0.5% weaker.
Kansas City HRW dropped 1.92%.
Minneapolis spring wheat prices closed 1.01% in the red.
First, also on Friday, we saw a broad financial markets jitter.
Fears of a potential global recession in 2023, continued to spill over into the commodity space weighening both on corn and wheat.
Corn and wheat markets showed some sign of worry early in the session about Ukrainian export paces as a result of the Friday’s Russian missile strikes.
Drought worries in Argentina also helped prop up the markets early in the session.
However, gains were limited by a stronger dollar.
Then, wheat prices faded, as a winter precipitation system this week, helped replenish depleted soil moisture levels across the U.S. Plains and Midwest.
Soybeans, on their part, were underpinned by a hot demand for soymeal, mainly due Argentina’s drought concerns.
Also, a robust weekly export sales report from USDA, which highlighted a 69% weekly increase in 2022/23 soybean export sales orders, surprised market watchers.
Soy oil, meantime, tumbled, as money managers liquidated their long positions.
For the week, corn prices achieved a 1.4% gain since the prior Friday, with much of the movement coming early in the week.
Soybeans pulled back some on the week, with January down 0.25%.
Meal was the weakness of the complex, with Jan down 1.82%.
Soybean oil, in contrast, bounced back with a 5.58% move higher week over week.
The wheat complex bounced on the multi-month weakness, with the three markets higher.
Chicago led the way with contracts up 2.62%.
Kansas City, had a 1.32% move higher,
Minneapolis spring wheat rounded out the strength, up 0.89% week over week.
Notabily, corn prices closed the week $0.090 higher at $6.53/bu.
Soybean prices finished $0.037 weaker at 14.80/bu.
Soymeal fell $8.6/smt, closing at $463 smt.
Soy oil rose $3.350, to close at $63.36.
CBOT soft red winter (SRW) prices gained $0.193 for the week to close at $7.54/bu.
KCBT hard red winter (HRW) prices rose $0.110, ending at $8.44/bu.
MGE hard red spring (HRS) prices were $0.080 higher to close at $9.10/bu.
Wednesday’s EIA report showed US ethanol production slipping 16,000 barrels per day to 1.061 million bpd during the week of December 9.
Meantime, stocks continued to build, this time by 1.152 million barrels, to 24.409 million barrels.
The monthly NOPA report from Thursday showed 179.18 mbu of beans crushed among members during November, just 0.15% below the previous year.
The weekly Export Sales report indicated corn bookings of 958,900 MT for 22/23 in the week that ended on 12/8.
That was up from the previous week.
Total commitments (shipped and unshipped sales) of 20.003 MMT, however, are down 48% vs. a year ago.
As for soybean, the report tallied soybean bookings at 2.943 MMT.
That was the second largest in this MY, and well above the large total in the week prior.
That pushed soybean export commitments to 41.817 MMT, which is 75% of the projected USDA total.
As for wheat, export sales data showed export bookings ticking higher in the week that ended on December 8th to 469,000 MT.
That took total export commitments of all wheat and wheat products to 14.192 MMT.
That is 67% of the USDA forecast.
In this context, as the market begins to move into the holiday lull, Gulf HRW basis only changed marginally this week.
Trade sources anticipate light demand and farmer selling until after the new year starts.
Meanwhile, Gulf HRS basis made a full return to pre-Thanksgiving values, following the resolution of the rail strike in mid-November.
PNW HRW and HRS basis firmed with severe winter weather advisories and expected higher transportation costs for Montana, North Dakota, and Minnesota.
SW prices and SRW basis continue to creep down, pressured by competition and a combination of low year-end demand and lack of farmer engagement.
Corn basis remained strong across the US this week, as farmer selling is slow and ethanol and feed demand remained strong.
As a results, as at December 15, 2022, FOB prices saw US wheat No 2 Hard Red Winter (HRW) valued at $386/mt (up $2/mt from last week).
US wheat No 2 Soft Red Winter (SRW) was valued at $337/mt (up $6/mt from last week).
Northern Durum offers from the Great Lakes for January 2023 delivery, were at $11.70/bu, ($430.00/MT -$5/MT), down $0.14/bu from past week.
As for corn, US corn 3YC (Gulf) was at $310/mt (up $4/mt from last week).
As for soybean, US soybean 2Y (Gulf) quoted at $602/mt (down $1 from last week).
USDA’s weekly ethanol report had the weekly cash ethanol prices from $1.87 to $2.20/gal regionally, mostly unchanged wk/wk.
Corn oil prices were mostly lower by 3-7 cents to 62 to 69 cents/lb regionally.
DDGS were higher by $8 to $23 to $217 to $285/ton regionally.
DDGS prices to the Export Point averaged between $255 to $363/ton, up from prior week.
The weekly average B100 price was $5.93/gal in MN, up by 3 cents through the week.
After the sessions close, Friday’s weekly CoT report showed corn spec funds were 127,106 contracts net long as of December 13.
That was a 6,893 contract stronger net long through the week given short covering.
Commercial corn traders closed out another 33k short hedges, reducing their net short by 11k to 367,770 contracts.
As for soybean, the report had the funds at 119,580 contracts net long in soybeans on 12/13.
That was a 20k contract increase through the week – mainly fueled by net new buying.
Commercial soybean hedgers added 24k new short hedges for a 160,124 contract net short as of 12/13.
In the products, CFTC had the funds 15,977 contracts more net long at 114,486 contracts in meal.
Soy oil spec traders dumped another 8.3k longs for a 9.2k contract weaker net long of 53,349 contracts as of 12/13.
As for wheat, CFTC’s weekly CoT report showed managed money was 63,004 contracts net short in CBT wheat as of 12/13.
That was 378 contracts less net short than the week prior.
The funds’ net new selling offset their net new buying in KC wheat, reducing their net long by another 1.1k contracts to 8,540.
In Spring wheat, managed money was 874 contracts more net short at 3,922 contracts.
In energy markets, oil fell by more than $2 per barrel on Friday.
Brent crude futures, indeed, settled at $79.04 per barrel, down $2.17 or 2.4%, while West Texas Intermediate futures fell by $1.82, or 2.4%, to settle at $74.29 per barrel.
The U.S. Federal Reserve, the Bank of England and the European Central Bank this week revived investors’ recession worries by signalling more interest rate rises to contain inflation.
However, both benchmarks finished the week higher, aided by rallies in the first three days.
Heavy crude benchmarks, indeed, have strengthened early the week, as the Keystone pipeline shutdown continues without a timetable for restart.
Oil prices were also supported this week, as officials said the U.S. Energy Department will repurchase 3 million barrels of domestic crude oil for the Strategic Petroleum Reserve.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index rose on Friday and posted its biggest weekly percentage gain since late-September, buoyed by strong demand for capesize vessels.
The overall index, indeed, rose 32 points, or about 2.1%, at 1,560, its highest since Oct. 27.
The main index gained 12.6% for the week, its biggest weekly gain since Sept. 23.
Notabily, the capesize index was up 113 points, or about 5.4%, to its highest in more than eight weeks at 2,208.
It posted a weekly gain of 31.2%.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes of coal and steel-making ingredient iron ore, increased $938 to $18,312.
The panamax index lost 6 points, or about 0.4%, at 1,652.
It was down 0.4% for the week.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, decreased $55 to $14,869.
The supramax index shed 10 points at 1,157, although it gained 0.4% for the week.
In equity markets, US stocks Friday extended Thursday’s rout on concern that the resolve of the Fed and ECB to keep raising interest rates to fight inflation will tip the global economy into recession.
Stocks remained lower Friday after economic news from S&P Global showed U.S. manufacturing activity contracted more than expected.
The U.S. Dec S&P Global manufacturing PMI, indeed, unexpectedly fell -1.5 to 46.2, weaker than expectations of an increase to 47.8 and the steepest pace of contraction in 2 years.
Thus, the S&P 500 fell 1.1%, its third straight drop.
The Dow Jones Industrial Average dropped 0.8% and the Nasdaq composite lost 1%.
Notabily, the S&P 500 fell 43.39 points to 3,852.36.
It’s now down about 19% this year.
The Dow dropped 281.76 points to finish at 32,920.46.
The Nasdaq slid 105.11 points to 10,705.41.
Small company stocks had more moderate losses than the broader market.
The Russell 2000 fell 11.19 points, or 0.6%, to 1,763.42.
The major indexes marked their second straight weekly loss.
For the week, indeed, the Dow lost 1.66%, the S&P fell 2.09% and the Nasdaq declined 2.72%.
Technology and health care stocks were among the biggest weights on the market.
Microsoft fell 1.7% and Pfizer slid 4.1%.
Bond yields were mixed.
The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.49% from 3.45% late Thursday.
The yield on the two-year Treasury, which closely tracks expectations for Fed moves, fell to 4.21% from 4.24% late Thursday.
In currency trading, the dollar rose on Friday in choppy trading, extending sharp gains in the previous session, as risk appetite soured and investors grappled with the prospect that borrowing costs still have a long way to climb.
The greenback briefly fell after data showed U.S. business activity shrank further in December as new orders slumped to their lowest in more than 2-1/2 years.
Thus, the greenback fell 0.77% against the yen to 136.76 , after hitting a two-week high in the previous session.
However, the dollar index rose 0.2% to 104.74 on Friday, after rallying more than 0.9% on Thursday.
Sterling slipped 0.28% against the dollar to $1.2142, with the euro falling 0.38% to $1.0586.
The risk-sensitive Australian dollar was 0.24% lower at US$0.6685.
The Aussie plunged more than 2% in the previous session – its biggest drop since March 2020.
The New Zealand dollar , however, rose 0.7% to US$0.6383.
Over all, the dollar index has surged around 9% this year.
Going back to analyzing the other agricultural markets …
In Canada, producers’ deliveries of common wheat in week 19 of the shipping season, were at 525,7k mt.
That was stronger from 446,5k posted a week erlier.
Deliveries of durum wheat, were also stronger at 172.9k mt, up from 105.1k mt a week earlier.
Meantime, Canada exported 336.6k mt of common wheat in week 19 of the shipping season.
That was up from 302.5k mt posted a week earlier.
Durum wheat exports, in contrast, were weaker at 96.4k mt, down from 152.4k mt a week earlier.
Meantime, total Commercial Stocks of common wheat stood at 2.929,5k mt, up from 2.839,8k mt a week earlier.
Ditto for durum, total commercial stocks were stronger at 712,6k mt, up from 625,6k mt posted the prior week.
Cumulative exports for common wheat are now at 7.041,1k mt.
That is compared with 4.519.0k mt year ago to date.
As for durum wheat, cumulative exports reached 1.725,1k mt, vs 1.123,1k mt year ago to date.
Meantime, cash bids for durum wheat trending higher week over week.
Indeed, looking at the average regional price of C$496.19/mt as of Dec 16, that is C$0.32/mt stronger from the prior week.
Going inside the numbers of the week, as at December 12, 2022, Canadian wheat prices for FOB delivery West Coast were (Cdn$/mt):
– for the N1 class CWRS 13.5% – $507.56 per tonne, up C$6.17/t from prior week;
– for the N2 class CWRS 13.0% – $500.54/t, up C$7.13 wow;
– for the N3 CWRS – $499.04/t, up C$8.62 from prior week.
As at December 12, 2022, for the N1 CWAD 13% (durum wheat first class) average street price were at C$499.35, unchanged week on week.
The export basis West Coast & Central SK, in contrast, moved up from C$91.35 to 93.88 a tonne.
Thus, delivered FOB price Great Lakes was posted at C$593.23 (US$ 433.05/t -$1.67 wk/wk).
That represent a C$2.53/t increase from prior week.
Per latest data from European Commission, as at December 15, 2022, Durum wheat – FOB CA St Lawrence (CWAD) was offerd at C$616.46/t ($450/t -$10), down C$11.5/t week on week.
As at December 16, 2022, for the N1 CWAD 13% (durum wheat first class), average street price in REGIONAL ZONES was at C$496.19 per tonne, up C$0.32 from prior week.
(1USD=Cnd$1.3699 up from 1.3652 a week earlier).
From South America, as at December 15, 2022 – Argentina Wheat Grade 2 export price, (Up River) was at $404, up $7/t from prior week.
Argentina corn feed was up $2/t for the week, closing at $311.
Brazilian corn feed (Paranagua) was valued at $297, was up $9/t from prior week.
Argentina feed barley, was down $5/t for the week to $350.
Argentina soybean was up $12 at $628.
Brazilian soybean was down $1, finishing the week at $586.
In Europe, March wheat prices on Euronext closed the week at 297.5 euros a tonne, down €5.25/t for the week.
March’s European Durum Wheat, settled at €488.5/t, down €7.5/t for the week.
March corn price, was down €3/t for the week, closing at 283.75 euros per ton.
Rapeseed Feb contract closed at €560/t, down €5.5/t for the week.
UK wheat feed, Jan 23 contract, closed at £234, down £2.5/t week on week.
Meantime, as of December 15, 2022, FOB prices in US dollar for French wheat with 11.5% protein and Oct delivery, were at $330/mt, down $4 from prior week.
German wheat, Deposilo Hamburg, was valued at $320.76/t, down $11.06 from prior week.
Baltic wheat, delivery first Vilnius, past week was at $301.7, down $21.69 from prior week.
Spanish durum wheat Sevilla (Depo Silo), N.Q. this week, past week was valued at $510.9/t.
French durum wheat – delivered La Pallice Spot – July 2022 basis, this week was valued at $486.96/mt, down $2.87 from prior week.
French durum wheat – FOB Port la Nouvelle, this week continued to be N.Q..
Italian durum wheat Bologna (Delivered to first customer), was valued $497.54/t, down $2.83 from prior week.
Corn, delivered Bordeaux Spot – July 2022 basis, was at $301.7 per tonne, down $8/t from past week.
Corn FOB Rhin Spot – July 2022 basis, was down $4.84 to $301.7/t.
Feed barley delivered Rouen was at 289$/t, down $5.95 per tonne.
Malting barley FOB Creil Spot – July 2022 basis was at $349.34 per tonne, down $8.83/t from prior week.
Rapessed FOB Moselle – 2022 harvest was at 590.7$/ton, down $10.79 compared to prior week.
Standard sunseed FOB Bordeaux – 2022 harvest was down 18$ from prior week at $624.57 per tonne.
(Eur/USD = 1.0586 vs last week 1.0534).
From Russia, the Russian agriculture ministry revised the export tax for wheat, corn and barley.
Particularly, as of Dec. 21, the export duty on wheat will slightly increase to 3,333.8 from 3,143.4 rubles per ton a week earlier.
Ditto on barley, the duty will increase to 2,686.9 rubles from 2,603.1 rubles per ton a week earlier.
For corn, in contrast, decrease from 78.2 rubles a week earlier to 0 rubles per ton.
This new duty rates will be in effect through December 27, inclusive.
The duties were calculated based on indicative prices: $314.4 per ton for wheat ($313.4 a week earlier), $281.8 for barley ($282.9), $218.5 for corn ($224.9).
From Australia, indicative delivered prices in Australian dollars per tonne for prompt crops this week were:
Barley Downs: $395, up $15 from Dec 8;
SFW wheat Downs: $400, up $10 from Dec 8;
Sorghum Downs: $400, unchanged from Dec 8;
Barley Melbourne: $355, down $10 from Dec 8;
ASW wheat Melbourne: $410, down $22 from Dec 8;
SFW wheat Melbourne: $400, down $27 from Dec 8.
For delivery in Jan-Feb indicative prices were:
Barley Downs: $392, up $7 from Dec 8;
SFW wheat Downs: $400, up $8 from Dec 8;
Sorghum Downs: $400, up $20 from Dec 8;
Barley Melbourne: $355, up $5 from Dec 8;
ASW wheat Melbourne: $410 up $5 from Dec 8;
SFW wheat Melbourne: $400, up $5 from Dec 8.
(AUD/USD=> US$0.6685 vs. US$0.6796 prior week).
Main News of the Week
From Brazil, StoneX reduced their corn crop estimate for Brazil’s Rio Grande do Sul to 4.51 MMT, from 5.38 MMT, citing a developing drought in the South.
Private firm Planalytics estimates the Brazil’s average soy yield at 3.51 MT/HA compared to 3.54 from USDA.
Brazil’s grain exporters association increased Brazil’s December wheat export estimates to 696.6 TMT, a 29% increase year over year.
If the pace is realized, Brazil’s 2022 wheat exports will surpass 3.2 MMT for a record volume and a 190% increase from 2021.
Commercial U.S. wheat sales to Brazil in 2022/23 as of Dec. 8 are 282.1 MMT compared to 95,000 MT at the same time in 2021/22.
From Argentina, the Buenos Aires Grains Exchange reported 42.6% of the corn area was planted as of 12/15 – trailing last year’s pace by 5.1%.
Refinitiv Commodities Research see Argentina’s 2022-23 maize production 500,000t higher from before at 48.5Mt, reflecting slightly improved soil moisture following good rains during early December.
Eastern Cordoba, Santa Fe and northern Buenos Aires received near to above normal rainfall during the past seven days, but the Pampas experienced continued warm and dry weather, albeit at a lower intensity than before.
Overall rains were insufficient to replace soil moisture levels.
BAGE reported 50.8% of the 2022/23 Argentina soy planting reached as of 12/15.
That is down 14.2% from last year’s pace.
Private firm Planalytics estimates the Argentina soy yield at 2.79 MT/HA – compared to USDA’s 3 MT/HA estimate.
The Rosario Grains Exchange decreased its wheat production forecast by 3% to 11.5 MMT.
Overall production estimates have fallen by 39% since May as Argentina continues to suffer from drought and-last season frosts at the start of the southern hemisphere spring.
From Europe, Strategie Grains forecasts 2023 EU soft wheat production at 128.7Mt, up 2.5pc from this year and corn up 26pc year-on-year to 63.7Mt.
Farm office FranceAgriMer increased its forecast for French soft wheat exports by 300.0 TMT to 10.3 MMT as recent shipments to China bolstered the already robust export activity.
The firm kept its ending stocks estimate steady at 2.55 MMT while cutting its forecast for intra-EU exports by 3% and lowering feed use by 100.0 TMT.
From the Black Sea basin, after a Russian attack over the weekend suspended the region’s energy system, the Ukrainian Black Sea port of Odesa resumed full operations on Dec. 12.
According to industry sources, as of Dec. 15, there were 21 vessels being loaded with 665.8 TMT of agricultural products in the ports of Great Odesa.
The sources say since Aug. 1, 2022, 554 ships left Odesa ports exporting 13.9 MMT of Ukrainian food to the countries of Asia, Europe and Africa.
From South East Asia, the Indian government announced Dec. 15 that wheat stocks in fell to their lowest level in six years as prices skyrocketed due to increased demand.
Wheat reserves fell to 19.0 MMT on Dec. 1, down from 37.8 MMT last year.
The statement comes as wheat prices in the country have surged due to a drop in yields.
The government blamed this on lower production last season and the fact that farmers sold the crop on the open market at prices higher than stateguaranteed prices.
Trade and industry officials from India report that higher prices are expected to result in 2022-23 rapeseed area expanding to 9.4-9.5Mha (9.1Mha previous year).
Output could potentially reach a record high of 12Mt (compared to 11Mt).
From Australia, surprisingly high quality from the Queensland harvest has tightened availability of nearby feedgrain in the northern market, while in the south, prices have eased.
A run of ideal harvesting weather has seen big tonnages of wheat and barley of variable quality hit the southern market.
While southern stockfeed millers know plenty of grain is available, short weeks and shutdowns over the Christmas and New Year period have quashed nearby demand.
A freight train derailment on the Blue Mountains line west of Sydney is expected to disrupt the flow of containers into Sydney’s Port Botany for the rest of this month.
Containers from central NSW can still get to port via northern and southern routes.
On the international trade scene, Algeria’s state grains agency OAIC is believed to have bought around 500,000 tonnes of milling wheat in an international tender which closed on Wednesday.
Trader estimates of the purchase on Thursday were similar to Wednesday night, ranging from 480,000 tonnes to 540,000 tonnes.
The top estimate on Wednesday night was slightly lower at 520,000 tonnes.
Price estimates on Thursday were again between $348 to $349 a tonne cost and freight (c&f) included, the same as reported on Wednesday night although some traders on Thursday said the highest price was around $350 a tonne c&f.
Technically supplies are optional origin, but it’s expect a range of source countries in the Black Sea region including Bulgaria, Romania and Russia and some from the west EU including France.
The wheat was sought for shipment in two periods in 2023 from the main supply regions including Europe: Feb. 1-15 and Feb. 16-28.
If sourced from South America or Australia, shipment is one month earlier.
Tunisia’s state grains agency has purchased 125,000 tonnes of durum wheat.
The grain can be sourced from optional origins.
The tender sought shipment in 2023 between Jan. 10 and Feb. 25, depending on origins supplied.
The purchases were:
25k MT from RICHARDSON at $504.50/t C&F.
25k MT from RICHARDSON at $511.90/t C&F.
25k MT from CASILLO at $513.68/t C&F.
25k MT from VITERRA at $514,09/t C&F.
25k MT from AMBER at $514.29/t C&F.
Watching next week’s market
Next week is the week leading up to Christmas!
We will starts regularly with the Export Inspections report on Monday afternoon.
On Wednesday, we will get the weekly EIA ethanol production and stocks report.
On Thursday we will see the usual Weekly Export Sales report.
Friday rounds out the week as January grain options expire.
We will also receive the Cattle on Feed and Hogs & Pigs reports on Friday.
The market will be closed the following Monday.
That’s all, thank you.
We wish you a good day and a good weekend.
Author: Sandro F. Puglisi
