US grain markets ended the week in a mixed mode, with some contracts incurred in moderate losses into Friday’s session.
Indeed, corn prices eased around 0.4% lower.
Soybean futures were mostly lower, ending the session 0,16% down, while new crop futures in November deadline were fractionally higher around 0,16%.
Soymeal closed the Friday session 0,38% higher, while soybean oil gave back triple digits on the last trade day of the week shedding 1,71%.
Wheat markets finished the week trading both sides of unchanged.
In fact, Chicago was 0,37% higher by the close.
Kanas finished up 0,91%.
While Minni lost 0,64%, printing a 39.75usc/bu loss of the week.
On macro markets, oil prices fell about 3% to below $80 a barrel on Friday as surging COVID-19 cases in Europe threatened to slow the economic recovery while investors also weighed a potential release of crude reserves by major economies to cool prices.
Thus, Brent futures for January fell $2.35, or 2.9%, to settle at $78.89 a barrel.
U.S. West Texas Intermediate (WTI) crude for December fell $2.91, or 3.6%, to $76.10 on its last day as the front-month.
WTI for January , which will soon be the U.S. front-month, was down about $2.65, or 3.4%, to $75.78.
Both benchmarks declined for the fourth consecutive week, for the first time since March 2020.
On the freight market, 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 2,552.
Shipping rates have eased the last two weeks as China’s iron ore and coal prices weigh on demand for capsize and panamax vessels reported AgriCensus.
On equities markets US stocks on Friday settled mixed, with the Nasdaq 100 climbing to a new all-time high and the Dow Jones Industrials falling to a 3-week low.
A more than +10% jump in Intuit to a record high led technology stocks higher Friday and pushed the Nasdaq 100 up to a new all-time high.
However, a worsening of the global pandemic has led to lockdowns in Europe that hammered crude prices and undercut energy stocks.
Also, the worsening pandemic weighed on travel stocks and cruise ship operators.
Comments on Friday from Fed Governor Waller were bearish for stocks when he said, “the rapid improvement in the labor market and the deteriorating inflation data have pushed me towards favoring a faster pace of tapering and a more rapid removal of accommodation in 2022.”
A worsening of the global pandemic is bearish for stocks after the 7-day average of new U.S. Covid infections rose to a 6-week high Thursday of 97,006.
Also, the 7-day incidence rate of new Covid infections in Germany rose to a record of 337 per 100,000 people on Thursday.
Thus Wall Street closed out a week of choppy trading with stocks mostly lower Friday.
In fact the S&P 500 index gave up 0.14% a day after setting an all-time high.
The Dow Jones Industrial Average fell 0.75% and the Nasdaq composite rose 0.55%.
Despite an up-and-down week, the S&P 500 and Nasdaq notched weekly gains, while the Dow posted its second straight weekly loss.
Particularly, the S&P 500 fell 6.58 points to 4,697.96, the Dow slid 268.97 points to 35,601.98, its third straight drop, the Nasdaq added 63.73 points to 16,057.44, for its sixth straight gain.
The U.S. Dollar Index, meantime, increased slightly from last week’s 95.128 to close at 96.028.
On the weather side, the eastern edge of the High Plains received significant rainfall last week, improving long-term drought conditions.
However, the western Plains stayed dry with warmer than average temperatures and saw soil moisture conditions deteriorate.
Short-term precipitation deficits led to worsening drought conditions in the Oklahoma Panhandle and Texas.
In the PNW, improvements were made to drought conditions in Washington, Oregon, Idaho and western Montana.
Conditions in Wyoming also improved.
North-central Montana saw an expansion of exceptional drought.
Meantime, holiday travelers thankful as Thanksgiving week kicks off on a tranquil note across much of the Lower 48.
Wet Monday morning along the East Coast.
Wettest and snowiest conditions in the Northwest.
Lake effect snow showers in the Upper Great Lakes.
Chilly temperatures in the East, warmer trend in the Heartland.
Critical fire weather areas in the central High Plains and Southern California.
Coming back on grains market, corn is finding some support in the ethanol sector, as demand and margins remain strong.
Indeed, USDA’s Ethanol Report showed ethanol cash prices at a $3.25 to $3.36/gal, compared to $2.20 on the board and $3.02 to $3.28 last week.
Corn oil prices, in contrast, were down about 2 cents to 58.5 c/lb.
DDGS FOB prices were steady in the PNW but up $13 to $253/ton in NOLA.
As for soybean complex, soybean oil cash prices were 8 cents higher on the week, as USDA saw the average price at $5.49/gal.
However, market was uncertain, particularly in the face of declining in soybean demand from China, since the latter only bought a little more than 775,000 t of soybeans from Usa in October against 3.5 million tonnes last year on the same month.
Wheat prices, on their part, were mixed but mostly higher as global demand optimism helped winter wheat prices overcome moderate overnight losses to close as much as 0.9% higher.
Thus, we have seen new highs since 2012 for wheat in Chicago on Friday in a context of tension, particularly in quality wheat, faced with the climate situation in Australia and rumors of export quotas in Russia.
Meantime, CFTC’s weekly Commitment of Traders report showed managed money funds extended their net long by 21,526 contracts to 341,135.
That was the most net long the group had been since May, led by net new buying interest through the week that ended 11/16.
Commercial corn traders added 15.6k new shorts, extending their net short by 19,475 contracts to 588,039.
As for soybean, spec traders were 29,488 contracts net long on 11/16.
That was a 17,351 contract stronger net long through the week, led by short covering.
Commercial soybean traders added hedges which netted 8,950 contracts to the short side on 32.8k increase to OI.
Commercials were net short 155,711 contracts of soybeans on 11/16.
In the meal, spec traders were 28,189 contracts more net long to 37,488 contracts on short covering.
Managed money funds were 76,212 contracts net long as of 11/16 after a 3,607 contract net boost.
As for wheat, managed money funds were reported at 15,930 contracts net long in SRW as of 11/16.
That was up by 11,930 contracts wk/wk mostly on net new buying interest.
In KC wheat, managed money firms were reported closing shorts during the week ending 11/16, which extended their net long 3,178 contracts to 60,560.
Spring wheat spec traders were 14,963 contracts net long, which was down 1,533 wk/wk on long liquidation.
In this context, corn basis bids were steady to mixed to close out the week, moving as much as 4 cents lower at an Illinois river terminal and as much as 10 cents higher at an Iowa processor on Friday.
Soybean basis bids improved 2 cents at two interior river terminals and added 3 cents at an Ohio elevator while holding steady elsewhere across the central U.S. on Friday.
Wheat basis was lower in the Gulf last week for HRS while HRW basis is steady into 2022.
Export sales pace was good for a second week in a row.
In the Pacific Northwest (PNW) HRS basis declined as grain traders held significant long positions.
Logistics challenges, however, are leaving little room for basis to move lower in both the Gulf and PNW.
Indeed, rail crew shortages have led to delays in delivery to grain terminals and caused secondary rail market rates to spike.
US mills also faced rail delays and have turned to trucks for grain delivery.
From South America, NOAA CPC and WMO maps show dryness during the past week in Central Mato Grosso, Parana, and RGDS.
Central and N.E. Goias received at least 100 mm (3.9”) of rain from 11/8-11/14.
The WMO soil moisture map showed spotty deficit was present in Parana through Rio Grande Do Sul, with MG and MGDS at a deficit, and Sao Paulo as very depleted.
Meantime, Brazil’s CONAB reported corn planting progress at 64% complete nationally for first crop, while planting in Parana and Sao Paulo has finished as of 11/13.
As for soybean, was reported at 79.2% planted (+10.2% points compared to 2020) as of 11/13’s progress report from CONAB.
In Argentina, BAGE maintained their Argentine corn area forecast at 7.1m HA (17.5m acres), while reported soybean planting at 28.6% of the expected area through 11/18.
That was a 9.8% advancement through the week.
On European market, the EU is being belted again with COVID.
Austria is the first country to go back to a full lockdown with Germany expected to follow suit.
Meantime, Euronext ended the week in disarray with a marked drop in rapeseed, a lack of direction in corn, and new wheat records on its nearby contract.
Indeed, wheat balance sheets remain very tight.
Tension also comes from rumors of new Chinese purchases from France.
In addition, fears about a deterioration in quality in Australia add to the current mood.
Thus, on Euronext the market is once again testing the resistance of € 300 / t on the December deadline, a psychological threshold which, if it manages to be passed, could encourage speculators to increase their long positions.
On the other hand, the fall in oil is pushing rapeseed into negative territory.
Meantime, per latest data released by FranceAgriMer, French farmers, had cut 91% of the grain corn crop area by Nov. 15, up from 82% a week earlier.
Sowing of soft wheat and winter barley for next year’s harvest is nearing the end, and there were very good growing conditions.
Particularly, as for soft wheat, according to FranceAgriMer 93% of the expected area had been drilled by Monday, compared with 87% a week earlier.
In a first rating for newly sown soft wheat, it estimated that 99% of crops were in good or excellent condition, against 95% a year earlier.
As for durum wheat, in contrast, sowing was only 56% complete.
That is up from 38% the prior week but lagging year-earlier progress of 72%.
As for winter barley, 97% of the expected area had been sown against 94% a week earlier, while 99% of crops were rated good or excellent, unchanged from the prior week.
From the Black Sea basin, grain prices rose again on Friday, amid fears of further measures that Russia could take to curb inflation and limit its exports through the establishment of export quotas.
This could concern the period mid-February – end of June and lead to export targets of only 31 million tonnes.
Indeed, as of November 18, 2021 FOB Novorossiysk prices for the Russian 4-class wheat (protein 12,5%) were at 347 USD/ton (+12 USD/ton within 1 week).
As for barley were at 305 USD/ton (+10 USD/ton within 1 week).
As for corn price was 276 USD/ton (+1 USD/ton within 1 week).
Meantime, according to the Russian regional agribusiness management bodies, as of November 17, 2021, the average Russian prices for the 3-class wheat were 15 105 rubles/ton (-0.1 % within a week).
For the 4-class wheat price was at 14 211 rubles/ton (+0,2 % within a week), for the 5-class wheat at 13 604 rubles/ton (+0.1 % within a week).
For feed barley price was at 13 075 rubles/ton (+0,8 % within a week), for food rye at 11 608 rubles/ton (+0.9 % within a week), for corn at 13 359 rubles/ton (+0,5 % within a week).
On the other hand, according to operational data of the Federal Customs Service of the Russian Federation (excluding data on mutual trade with the EAEU member States for October & November), as of November 18, 2021, 17,6 million tons of grain crops were exported in the current 2021/2022 agricultural year, which is 23 % less than in the same period of the last season (22,8 million tons).
The volume of the wheat exports for the season amounted to 14,8 million tons (21,6 % lower than the same period of the 2020/2021 season), barley – 2,0 million tons (-34,3 %), corn – 0.6 million tons (-13,8 %).
As for Federal Intervention Fund, as of November 19, 2021, the volume of the grain was 60.5 thousand tons for the amount of 620.2 million rubles.
During the sales of grain from the reserves of the Federal intervention Fund in 2020 – 2021, the total volume of exchange transactions as of November 19, 2021 amounted to 1 621,7 thousand tons in the amount of 19 358 million rubles, including the 3-class wheat for 810,5 thousand tons, the 4-class wheat for 690,8 thousand tons, wheat of the 5-class for 92,1 thousand tons and barley for 28,3 thousand tons.
In Ukraine, corn harvests are struggling to advance with only 80% complete, according to the country’s agriculture ministry.
Farmers have harvested more than 31,7 MMT so far, with expectations for a record-breaking grain harvest this fall.
Consequentially, corn exports are expected to climb nearly 34% higher year-over-year.
However there are drying difficulties due to high energy costs.
Ukraine’s 2021/22 wheat plantings are 94% complete, per the country’s agriculture ministry.
Ukraine raked in a bumper harvest of 32 MMT in 2020/21, the bulk of which will likely hit the export market.
From India, farmers are encouraged to grow more wheat in the current Rabi season by favourable weather conditions and expectations of remunerative prices, and India may set a new record for the seventh consecutive year, according to a top agricultural scientist, who expects wheat production to exceed 112 million tonnes in the current crop year 2021-22.
Indeed, according to Dr. Gyanendra Pratap Singh, Director of the Indian Institute of Wheat and Barley Research (IIWBR), the meteorological conditions are favourable for wheat farming, with an outstanding planting season currently underway.
From Australia weather and quality are the two main points of focus in this market as prices for good quality milling wheat continue to rally and the weather maps continue to build moisture for this week coming.
With markets being relatively steady again it lacked volumes of grower selling unless known quality was in the bin.
Thus, the APW-ASW spread in Western Australia blew out to $100/mt on Friday as a large portion of the crop has been running ASW1 grade there.
Headers in most of northern and central NSW knocked off Friday with weather coming.
It will be a frustrating start this week for most of NSW with the forecast giving another 2- or 3-day window before more weather arrives on Wednesday.
South Australian headers got a run at it over the weekend with some scattered showers expected across the state later in the week, meantime growers should be able to get a run at harvesting.
There is another interesting week ahead in the market with more rain on the way, more harvest delays and issues of site access for domestic and export programs.
On the international trade scenario, South Korean feed users continue to be active buyers of corn, with the KFA purchasing 64,000 t of animal feed corn from optional origins in an international tender.
The grain is for arrival in early March.
South Korea’s Major Feedmill Group (MFG) has issued an international tender to purchase between 48,500 and 58,500 tonnes of animal feed corn and between 8,000 and 16,000 tonnes of soymeal.
Bangladesh’s state grains buyer received offers in its today 50000 tonnes wheat tender as following:
Bagadiya Brothers $409.77; GTCS offered $441.00; Agrocorp $437.47 and Aston $431.83 all per tonne CIF liner out.
The Philippines issued two tenders to purchase at least 130,000 t of wheat.
Of the total, 41.000 t is sought from Australia, while the remainder can be sourced from optional origins.
The grain is for arrival starting in late January.
Turkey, for its part, is stepping up the volume of its feed barley tender launched last week for 320,000 t, rising to 370,000 t.
Turkey is on the hunt also for milling wheat.
Iran had imported four million tonnes of wheat since late April until now for a worth of $1.2 billion.
In addition to the wheat, Iran had imported 5.5 million tonnes of corn and 2.2 million tonnes of barley.
Author: Sandro F. Puglisi
