US farm markets, on the whole, reacted well to the global sell-off last Friday, ending the week mixed but above all on the upside.
Corn prices came 20 cents off lower at the open and then posted a late session rally to come out of day with a 1,21% gain and a week’s gains about 2,8%.
Soybeans couldn’t pull off the same feat as the other grains.
Indeed, they closed the session down 1,09%, but still only slipped by 0.83% for the week.
Much of the pressure came via soybean meal, which was down 0.39% for the session and 4.2% for the week.
Soybean oil came out with a daily loss by 3.15%, however, was able to take 1.48% gain on the week.
The wheat complex endured another week of extending new life of contract highs with exception to a few nearby MPLS contracts.
Indeed, Chicago wheat in spite fell 1,34% on Friday session, squeezed out a weekly gain of 0.30%.
KC wheat was down 0,94% on Friday but was up a strong 3.62% for the week.
MPLS spring wheat was up 0.27% for the session and 2.9% for the week, recovering last week’s losses.
On macro markets, oil prices plunged more than 10% on Friday – their largest daily drop since April 2020 – but had partially recovered some of those losses by 03:55 GMT on this morning, standing up around 5%.
Analysts said the Friday sell-off had been excessive.
At the same time, investors looked for bargains after Friday’s slump.
Also, there are some speculation that OPEC+ may pause an output increase in response to the spread of Omicron.
However, the mood remained cautious as little is known about this new variant.
Thus, Brent crude futures climbed $3.5, or 4.82%, to $75.06 a barrel by 03:55 GMT GMT, after falling $9.50 on Friday.
U.S. West Texas Intermediate (WTI) crude was up $3.47, or 5.1%, at $71.62 a barrel, having tumbled $10.24 in the previous session.
On equities markets, global shares fell 1.81% on Friday, their biggest down day in more than a year.
MSCI’s index of Asian shares outside Japan dropped 2.44%, its sharpest fall since late July.
US shares tumbled on Wall Street as they reopened after Thanksgiving, with the Dow Jones Industrial Average closed down 2.53% at 34,899.34 in its largest percentage drop in more than a year.
For the week the Dow lost 979,75 points or 2,73%.
The S&P 500 lost 2.27%, its worst one-day drop since Feb. 25, closing at 4.594,62.
For the week was fell 113,82 points or 2,42%.
The index was dragged lower by everything from banks, travel companies and energy companies (Exxon shares fell 3.5% while Chevron fell 2.3%).
The Nasdaq Composite dropped 2.23%, the biggest one-day route in two months, closing at 15.491,66.
For the week shedded 550,51 points or 3,43%.
Dec T-notes on Friday closed up +1-11/32 points, a 2-week high, and the 10-year T-note yield fell -15.4 bp to 1.48%, a 2-week low.
Meantime, Asian stock markets fell further on this morning after the omicron variant of the coronavirus was found in more countries and governments imposed travel controls.
Tokyo, Shanghai, Hong Kong and Sydney declined, though losses were smaller than Friday’s fall after reports said the variant first spotted in South Africa appear to spread around the globe.
Thus, on this morning the Nikkei 225 in Tokyo fell 1.7% to 28,260.47 after Prime Minister Fumio Kishida announced Japan will bar entry by foreigners starting Tuesday.
The Shanghai Composite Index lost 0.4% to 3,548.13 and the Hang Seng in Hong Kong sank 1.2% to 23,811.17.
The Kospi in Seoul declined 0.9% to 2,910.74 and Sydney’s S&P-ASX 200 retreated 0.5% to 7,239.70.
India’s Sensex opened up 0.7% at 57,539.90.
New Zealand, Singapore and Bangkok fell while Jakarta advanced.
On the weather side, light to moderate rain showers to continue over portions of the Pacific Northwest.
Lake effect snow showers continue across Great Lakes region over the next couple of days.
Warmer temperatures ahead for much of the country.
Elevated Fire Weather Risk for southern California.
Particularly, a quieter and warmer pattern is in store for much of the USA as upper-level energy remains either over Canada or stationary off the Baja coast.
A deepening low pressure system off the Northeast coast will cause gusty winds across New England this afternoon through tonight.
A weak clipper system will bring yet another round of snow showers to the Great Lakes region over the next two days.
Snowfall totals will be less than the previous system, but areas downwind of the Great Lakes may receive higher amounts due to lake effect enhancement.
A weak atmospheric river will arrive over much of British Columbia, Canada and parts of the Pacific Northwest on Tuesday.
Rainfall amounts in the U.S. will be highest over areas that border British Columbia such as the northern Cascades and Olympic mountains due to orographic enhancement.
Only a few inches of rain are expected to accumulate by the time that the AR event ends on Tuesday night.
Persistent upper-level ridging in the West longwave troughing in the East and a cutoff low over Baja California will contribute to the spread of warm air across the much of the CONUS over the next several days.
Temperatures are expected to be between 25-30 degrees above average over much of the Northern/Central Plains today, while the east experiences a cooldown in the wake of a deepening area of low pressure system and its associated cold front moving into the North Atlantic.
Temperatures will moderate a bit on Tuesday before another substantial warm-up returns to the Northern Plains on Wednesday and spreads east through the end of the week.
The Rockies will experience this warm spell too, which should be disappointing to snow lovers, particularly in the Central Rockies area, as much of the region continues to experience a dryer than normal snow season.
Elevated Fire Weather Risk is in effect for parts of southern California through Tuesday due to marginally dry and windy conditions.
In this context, NASS will release on this afternoon their final Crop Progress report of the year.
Meanwhile, the weekly US export sales report, released late Friday, compared to the usual Thursday release, due to Thanksgiving holiday, showed weekly corn export sales set a new marketing year high of 1.429 MMT for old crop, and another 90,000 MTs were sold for 2022/23 delivery.
Corn export shipments faded 20% below last week’s pace but firmed 12% above the prior four-week average.
Total export commitments are 34.409 MMT, nearly 7% smaller than last year at this time.
They are 54% of the full year WASDE forecast, vs. the average of 46% in late-November and 54% last year.
As for soybean, the report showed soybean export bookings of 1.564 MMT of soybeans during the week ending November 18.
That was up 13% ahead of prior week’s pace and the prior four-week average.
That was the third largest weekly total this MY, with over half for China.
However, soybean export shipments tipped 4% lower week-over-week and tilted 18% below the prior four-week average.
Total US soybean export commitments are now 36.171 MMT, still 30% smaller than year ago.
US Exporters have now booked 65% of the USDA estimate, even with the average pace for this date.
Meal sales were on the low side of expectations at 136,900 MT, while soy oil bookings another strong week at 42,000 MT.
As for wheat, exporters were busy during the week ending 11/18, with 567,487 MT of sold.
That was the third largest weekly total this MY, improving 42% week-over-week and jumping 70% above the prior four-week average, and took the shipped and unshipped sales total to 14.24 MMT.
However, those export commitments are down 21% from last year at this time, though gaining with the most recent sale.
They are 62% of the full year WASDE forecast, vs. the 5-year average of 69% for this date.
Wheat export shipments, meantime, slid 10% below the prior four-week average.
Demand for ethanol remains strong, as ethanol production continues to post strong numbers, averaging 1.079 million bpd in the week ending November 19.
That was up another 19,000 bpd from previous week but still 29,000 bpd off the record.
In this context, corn basis bids were mostly steady to firm on Friday after rising 1 to 8 cents higher at four Midwestern locations.
An Iowa processor bucked the overall trend after sliding 2 cents lower.
Soybean basis bids were steady to slightly firm after tracking 1 to 2 cents higher at three Midwestern locations.
Meantime, the funds were net buyers in corn for 1,000 lots but net sellers in soybeans for 12,000 lots and wheat for 9,000 lots.
From South America, Brazil’s Agroconsult estimates the country’s 2021/22 corn production will reach 124 MMT, which would represent a substantial rebound (more than 44%) from last season’s drought-addled crop if realized.
Brazilian corn plantings are expected to trend 5.6% higher this season.
Also, Brazil’s Agroconsult is now predicting the country’s 2021/22 soybean production will reach 144 MMT, which is easily a record-breaking effort, if realized.
Brazilian soybean acres are expected to climb another 4.2% higher this season.
In Argentina, the Buenos Aires Grains Exchange reports that soybean plantings for the 2021/22 season have reached 39%, with an initial production estimate of 44 MMT.
Also the Buenos Aires Grains Exchange reported last Thursday that Argentina’s 2021/22 wheat crop could reach a record production of 20,3 MMT.
Harvest is already underway and progressing faster than usual, reaching 33% completion so far.
On European market, there was a very clear drop in prices on Friday in a context of fears related to the consequences of the omicron variant.
Wheat was dragged down by an increase in Argentina’s potential.
Corn prices also fell in the wake of wheat.
The violently shut down of crude prices into the red, weighened in particular on rapeseed.
Biodiesel demand in Europe has been a driver of the veg oil sector, something that would be instantly affected should countries adopt a lockdown policy such as Israel which took 5 minutes before banning all foreigners.
Meantime, the European Commission slightly raised its forecast for 2021/22 EU corn production to 68,4 MMT.
EU corn import estimates are unchanged from a month ago, with estimates holding steady at 14,5 MMT.
At the same time, the European Commission raised its common wheat export estimates for the 2021/22 season by 6.7% to 34,3 MMT.
Estimates for 2021/22 EU wheat ending stocks, in turn, fell 8.6% from October to 12,7 MMT.
Its should to note that, the EU wheat export figures only include 822,000 t of French origin due to technical problems related to the collection of volumes exported from third countries.
Thus, it is difficult to interpret the export activity from the EU knowing that since the start of the season, France has exported more than 3 million tonnes.
Meantime, per latest data released by FranceAgriMer, French farmers, had cut 97% of the grain corn crop area by Nov. 22, up from 91% 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 97% of the expected area had been drilled by Monday, compared with 93% a week earlier.
In its second rating for newly sown soft wheat, it estimated that 99% of crops were in good or excellent condition, substantially unchanged from a week earlier and above 93% a year earlier.
As for durum wheat, meantime, sowing was 79% complete.
That is up from 56% the prior week but lagging year-earlier progress of 84%.
As for winter barley, 99% of the expected area had been sown against 97% a week earlier, while 99% of crops continued to be in good or excellent conditions.
From South Africa, South Africa’s Crop Estimates Committee reported that the country’s 2020/21 corn production is expected to improve 6.1% over last year’s output, with an estimated 16.23 MMT.
White corn comprises roughly 53% of the crop, with the remaining acreage in yellow corn.
From the Black Sea basin, there is still around 12.5% of the corn areas to be harvested in Ukraine according to the Minister of Agriculture.
Meantime, Ukraine’s grain exports during the 2021/22 marketing year are trending 18% higher year-over-year so far, per the latest data from the country’s agriculture ministry.
That included 14.3 million tonnes of wheat, 4.9 million tonnes of barley and 5.2 million tonnes of corn.
Total wheat exports are expected to rise 48% higher after Ukraine hauled in a record grain harvest this fall.
Meantime, temperatures are currently returning to positive territory in Kiev at the start of the week, before a new winter episode expected in the coming days without however giving rise to fears.
The competitiveness of Russian origins will be tested today with the Egyptian tender.
Meantime, Russian Agriculture Ministry has amended export duties for wheat, barley and corn for the period Dec. 01-07, 2021.
As for wheat the export duty continue to increase from 78.3 USD/t the prior week, to 80.80 USD/t for the referred period.
The indicative price moved up from 311.9 USD/t to 315.5 USD/t.
As for corn, the export duty will increase to 54.30 USD/t from 53.60 USD/t prior week.
The indicative price moved up from 261.6 USD/t to 262.7 USD/t.
At the same time, also the tariff for barley will increase to 68.30 USD/t from 65.30 USD/t prior week.
The indicative price moved up from 278.3 USD/t to 282.6 USD/t.
From the Middle Kingdom, through the end of October, China’s hog herd moved 6.6% higher year-over-year but slumped 2.5% lower from a month ago, per the latest data from the Ministry of Agriculture and Rural Affairs.
The Chinese hog population is now pegged at 411.9 million head at the end of Sept, the most since 2015.
This fell to close to 200 million head at the height of the ASF.
From Australia, Aussie local markets closed last Friday yet again stronger.
Wheat cash bids were firmer on all grades by $3-5/mt.
Barley bids were stronger on the grower boards and barley trade markets moved upwards to 10/mt stronger for the day.
Canola bids to growers at prices posted were a fraction softer on the cash boards while NSW domestic crush bids were stronger by $5/mt.
Headers got back going on Sunday across parts of NSW with reports of growers getting back onto canola through southern NSW.
Quality is now a concern in shot and sprung canola.
With a clear run for most of the country over the next few days should see growers keen and eager to get stuck in and get as much off as they can.
Logistical issues in NSW will be a headache this week.
Flood waters still are lying around, roads are cut off and there are issues of getting trucks in and out of paddocks.
This may continue to put pressure on the short term domestic and export market for nearby slots.
On international trade scene, GASC is taking advantage of the fall in prices to launch a new call on this morning for tenders in wheat.
The loading period is from January 9 to 20.
Payment at sight.
Jordan issued an international tender to buy 120,000 tonnes of optional origin milling wheat.
The deadline is Dec. 2.
Jordan has also issued a separate tender for 120,000 tonnes of animal feed barley closing on Dec. 1.
Bangladesh issued tender to buy 50,000 tonnes wheat.
The deadline for submission of price offers is Dec. 8.
A previous tender from Bangladesh for 50,000 tonnes of wheat closed on Nov. 22, with no result reported yet.
Author: Sandro F. Puglisi
