Last week was marked by the release of the USDA’s December WASDE report which, while having made changes from nonexistent to insignificant, was still enough to inspire further selling in wheat and some new soybean purchases.
Some bargain buying, however, got involved in the wheat game after the USDA report had sent Chicago wheat futures to a one-month low, limiting the week’s losses with a rebound during weekend.
Meantime, lack of any revisions to US corn forecasts left corn markets stalling without any new information to support further price movement.
In this context, US farm markets ended the week in a mixed mode.
Particularly, corn prices were down 0,3% last Friday, but up around 1,3% for the week, offsetting most of the previous week’s losses.
Soybeans eked out a 0,26% for end week session and posted a 0,04% increase for the week.
Soybean meal was up 1,97% on Friday session and 2.29% for the week.
Soybean oil was down 2,11% for the session and by a sharp 6.17% for the week.
Friday wheat trading limited the week’s losses in wheat complex with a bounce into the weekend.
In fact, CBOT wheat futures were up 1,09% on Friday but were down 2.3% for the week,
Kansas wheat futures were up 1,13%, but were down 2,28% for the week.
Minneapolis spring wheat was down 0,05% on Friday session but up around 0,1% for the week.
On macro markets, oil prices rose slightly on Friday with Brent futures settled up 73 cents, or 1%, at $75.15 a barrel on Friday, after falling 1.9% on Thursday.
WTI rose 73 cents, or 1%, to $71.67 after sliding 2% in a volatile session the previous day.
However, both Brent and U.S. West Texas Intermediate (WTI) crude benchmarks posted for the week, their biggest weekly gain since late August, gaining around 8% past week.
That is their first weekly gain in seven, in spite a brief bout of profit-taking.
Meantime, oil prices extended their rally on this morning.
In fact, Brent futures climbed 72 cents, or 1.0%, to $75.87 a barrel by 07:44 GMT.
U.S. West Texas Intermediate (WTI) gained 85 cents, or 1.2%, to $72.52 a barrel.
On freight market, the Baltic Exchange’s dry bulk sea freight index fell on Friday, tracking larger capesize and panamax vessel segments.
The overall index (Baltic Dry Index – BDI), which factors in rates for capesize, panamax and supramax vessels, shed 71 points, or 2.1% to 3,272.
It had scaled its highest in over a month on Wednesday.
However, the main index gained 3.2% this week, registering its fourth weekly gain in five.
The capesize index was down 162 points, or 3.3%, to 4,827.
It rose 5.1% for the week.
Average daily earnings for capesizes, which transport 150,000-tonne cargoes such as iron ore and coal, decreased by $1,344 to $40,035.
The panamax index decreased 77 points, or 2.5%, to its lowest in over a week at 3,068.
It posted a 1.9% weekly decline.
Average daily earnings for panamaxes, which ferry 60,000-70,000 tonne coal or grain cargoes, fell $696 to $27,610.
On equities markets, US stock indexes on Friday finished moderately higher, with the S&P 500 posting a 2-1/2 week high and the Dow Jones Industrials climbing to a 3-week high.
Inflation concerns eased and pushed stocks higher after Friday’s data showed U.S. Nov consumer price data met expectations.
Also, strength in technology stocks supported the overall market after Broadcom and Oracle reported better-than-expected quarterly earnings.
Finally, stocks found support after the University of Michigan reported stronger than expected U.S consumer sentiment.
In this context, the S&P 500 rose 1%, enough to recoup its losses from a day earlier.
The benchmark index closed higher four of the last five days, finishing 3.6% higher for the week.
The Dow Jones Industrial Average rose 0.6% on Friday and 3,86% for the week.
The Nasdaq composite gained 0.7% on Friday and 3,39% for the week.
Both recovered from declines early in the week.
Smaller-company stocks lagged the broader market, leaving the Russell 2000 index 0.4% lower on Friday, but had weekly gains by 2,39%.
Particularly, the S&P 500 rose 163,65 points in five days to 4,712.02, a new high.
It set its previous record high on Nov. 18.
The Dow gained 1.337,56 points during the week, closing at 35,970.99.
The tech-heavy Nasdaq rose 512.97 points to 15,630.60.
The Russell 2000 rose 51.65 points during the week to close at 2,211.81.
Meantime, Asian stock markets rose Monday after Wall Street hit a new high.
Also, on Friday, Chinese leaders promised tax cuts and other support for entrepreneurs at an annual planning meeting that emphasized maintaining stability after economic growth fell to an unexpectedly low 4.9% over a year earlier in the latest quarter.
Consequentially, the Shanghai Composite Index rose 1% to 3,702.88 and the Hang Seng in Hong Kong gained 1% to 24,238.13.
The Nikkei 225 in Tokyo, on its part, advanced 0.9% to 28,691.98 after the quarterly Tankan survey showed stronger improvement in business conditions for service industries than expected.
The Kospi in Seoul added 0.2% to 3,017.36 and Sydney’s S&P-ASX 200 was 0.6% higher at 7,397.40.
India’s Sensex opened 0.4% higher at 58,985.13.
New Zealand and Southeast Asian markets also gained.
On the weather side, soil conditions deteriorated across the Plains and into Texas and Oklahoma with little rain and unseasonably warm temperatures during past week.
The Northern Plains received light to heavy snow.
A more active weather pattern in the PNW led to improvements for drought-affected areas of Washington, northeastern Oregon, and west-central Idaho.
In Montana, drought conditions expanded with no snowpack.
Meantime, a series of severe storms barreled across the U.S. Friday night, producing rare mid-December tornadoes.
The system proved deadly as it ravaged areas across the Midwest and South.
Officials said Sunday the current death toll in Kentucky could be as low as 50 or as high as 100, with at least 14 deaths reported in other states.
Kentucky Commissioner of Agriculture Ryan Quarles says the damage is mounting for the state’s agriculture industry.
He says the list of facilities impacted continues to grow, with extensive damage reported to Mayfield Grain Company, Hutson Deere dealership, Pilgrim’s hatcheries, as well as multiple chicken houses and grain systems that were also damaged by the storm.
He says the state is still assessing livestock losses.
The devastation could take weeks to assess.
The community works to not only account for all the damage, but also to start to clean up.
The Kentucky Department of Agriculture and other officials are working with producers and EPA to provide adequate plans for animal health and disposal efforts.
As for this week, there is a moderate risk of excessive rainfall over parts of Central California through Tuesday morning.
There is a Slight Risk of excessive rainfall over parts of Southern California on Tuesday into Wednesday morning.
Heavy snow over the Cascades, Sierra Nevada Mountains, and Northern Rockies.
Elevated Fire Weather risk for parts of the Southern High Plains.
Meantime, the weekly CoT report showed corn spec funds were 17,232 contracts more net long as a group from 11/30 to 12/7.
That was mostly short covering through the week, and left managed money 332,501 contracts net long.
Commercial traders added 46k new shorts against 17k new long hedges, which left their net short at a 30-week strong 635,001 contracts.
As for soybean, the weekly Commitment of Traders report showed managed money was 37,882 contracts net long in soybeans as of 12/7.
That was up from 33,425 last week, on an 11,391 contract lighter OI. As for commercial soybean traders, OI was only 7,970 contracts lighter and the group was still 168,583 contracts net short.
For the products, CFTC reported spec funds were closing longs and adding shorts in meal through the week that ended 12/2.
That left the group 9,783 contracts less net long at 27,898.
Managed money firms reduced their BO net long by 5,532 contracts to 58,828 through long liquidation.
As for wheat, CFTC data reflecting trader positions as of 12/7 showed managed money spec traders were just 721 contracts net long.
That was down 5,479 wk/wk from long liquidation.
In KC wheat, managed money was 2,793 contracts less net long to 59,575 – also by way of long liquidation.
The CoT report showed spring wheat spec traders reduced their net long by 1,659 contracts to an 18-wk low 12,545.
In this context, Mar 22 Corn closed at $5.90, down 1 3/4 cents, Nearby Cash was $5.77, down 1 3/4 cents, May 22 Corn closed at $5.92, down 1 1/4 cents, Jul 22 Corn closed at $5.91, down 3/4 cent, New Crop Cash was $5.32 5/8, up 1/2 cent.
As for soybean, Jan 22 Soybeans closed at $12.67 3/4, up 3 1/4 cents, Nearby Cash was $12.34 1/4, up 3 1/4 cents, Mar 22 Soybeans closed at $12.74 1/4, up 2 cents, May 22 Soybeans closed at $12.81 3/4, up 3 cents, New Crop Cash was $11.84 3/8, up 1 3/8 cents.
As for wheat, Mar 22 CBOT Wheat closed at $7.85 1/4, up 8 1/2 cents, Cash SRW Wheat was $7.38 3/8, up 8 1/2 cents, Mar 22 KCBT Wheat closed at $8.05 1/2, up 9 cents,
Cash HRW Wheat was $7.83 1/4, up 8 7/8 cents, Mar 22 MGEX Wheat closed at $10.21 3/4, down 1/2 cent.
Funds were net buyers on Friday for 2,500 lots of soybeans and 3,500 lots of wheat. They were neutral in corn.
From Canada, Canada’s common wheat exports fall 34% on week, durum wheat shipments rise.
Indeed, in MY 2021-22 common wheat exports to Dec 5 reach 4.3 million mt.
Durum wheat exports for MY 2021-22 reach 1.1 million mt to Dec 5.
From South America, crop conditions stretching from northern Argentina to southern Brazil are on a watch with hot dry weather persisting.
Meantime, the Buenos Aires Grain Exchange increased their 2021/22 Argentine wheat crop estimate by 0.7Mt to 21Mt compared with the USDA 20Mt estimate published last week.
On European market, few changes on Friday.
Physical activity is reduced as the end of the year approaches, still with logistical difficulties for many shippers.
However, Euronext ended the week on a slightly more positive note with a slight upturn in soft wheat and a good performance in rapeseed.
Particularly wheat was notably driven by technical considerations and a certain support on the demand side, like the recent Chinese purchases of French.
Feed barley prices changed little, nonetheless supported by good Chinese demand for French origin.
Corn prices remains firm, despite a good French harvest.
From North Africa, Algeria’s state grains agency OAIC has retained quality specifications favourable to offers of Russian wheat in its new international tender to buy wheat issued on Sunday.
According to Reuters, the bug (insect) damage limit was retained at 1% maximum.
Algeria had in its previous tender in November increased the bug damage level to 1% from 0.5%, a move which assists offers of Russian wheat.
From the Black Sea basin, markets without major changes in the Black Sea basin on Friday with reduced physical activity.
The operators scrutinize the movements of Russian troops at the border with this fear of seeing Ukraine invaded.
In Russia, the export taxes will be displayed at 91 usd / t in wheat, 78.7 usd / t in barley and 54.4 usd / t in corn for the period from December 15 to 21.
Ukraine corn crop is set to be 40 mmt with a higher bias.
Indeed, that was harvested from 97,8% of planted areas with an avg yields of 7,47 mt/ha.
Meantime, temperatures in Moscow are – 3 degrees Celsius this morning, while in Kiev or Krasnodar the thermometer is flirting around zero degrees.
From the Middle Kingdom, Chinese farmer sales of 2021/22 harvest of corn and soybeans picked up in recent weeks after a slow start this year whereas state-backed auctions of reserved grains stagnated.
As of the first week of December this year, Chinese farmers have sold a total of 65.5 million tons of rice, corn, and soybeans to agricultural companies, gaining 30% week on week, according to official government data.
Among the total volume sold last week, corn sales reached more than 26 million tons in main planting areas, up nearly 38% w/w, and soybean sales hit 1.13 million tons, up almost 23% from the previous week.
Despite that farmer sales have maintained at a rapid pace, the overall progress is still behind last year. By the same point in 2020, Chinese farmers had sold 82.75 million tons of rice, corn and soybeans, which was more than 26% higher than this year.
On the contrary, auctions of 73,186 tons of old crop soybeans by Sinograin achieved only 17% sales on Friday.
Another auction of imported corn only had a 31% sales rate of an offer of nearly 237,400 tons.
Even though auctions of state reserve seem unpopular in the Chinese domestic market at this stage, the volumes tend to pick up dramatically in the second quarter of the following year after the harvest season in China.
Chinese stockpiler auctions their reserves every year to balance market supply in China as annual domestic harvest runs out.
From Australia, Australia exported 1,478,241 tonnes of wheat in October, a rise of 16 per cent from the 1,277,616t shipped in September, according to the latest export data from the Australian Bureau of Statistics (ABS).
In bulk, China on 242,820t, Vietnam on 224,814t and Indonesia on 185,011t were the biggest markets for October-shipped wheat.
Vietnam on 73,147t, Thailand on 47,801t and Taiwan on 33,626t were the three biggest customers.
Australian wheat exports to Middle East, African and South Asian customers has dipped in October to reflect the continued availability of new-crop Black Sea and European shipments.
Particularly, Italy imported only 27.919 t of milling wheat in September.
At the same time, Italy imported 56.322 t of durum wheat in August, 50.500 t in September and 27.706 t in October for a total import of 134.528 t of durum wheat.
To note, that Australian wheat has remained extremely competitive.
Meantime, Aussie cash markets finished the week out softer with bids down $5-10/t on both wheat and barley late Friday afternoon.
With more harvest activity ramping up and yields still coming in above expectations growers are happy to continue to participate in the market.
Canola was down $15-20/t on the cash boards, the canola harvest through NSW is coming to the tail end now.
A fine week is expected for harvest as most growers still a good week or two behind their normal program given the delays.
The weather forecast for the next 8 days looks relative clear for WA, SA, Vic and some scattered showers along the coast for NSW but should all be smooth sailing for growers to get a good run into Christmas now.
On international trade scene, as we said, Algeria is using this relative calm to launch a new call for tenders.
Loadings are expected over 3 periods between January 15 and February 28.
Jordan issues new tender to buy 120,000 tonnes wheat.
Possible shipment combinations of 60k are in 2022 between June 16-30, July 1-15, July 16-31 and Aug. 1-15.
Closing date Dec 16, 2021.
Author: Sandro F. Puglisi
