US farm markets weren’t looking especially bullish last Friday.
However, by the close, the focus shifted back to dry South American conditions.
That pushed corn prices up by 0.5% higher, mainly thanks the spillover strength from soybean prices which were more then 1.6% higher.
Soymeal closed with 3.41% double digit gains.
Bean oil prices faded 0.2%, meantime.
Wheat prices were mixed but mostly higher.
Particularly we have seen double-digit gains for CBOT contracts up 1,68%.
Kansas was up 0.85%.
MGEX spring wheat contract was down 0.05%.
Thus, past week closed with corn prices that posted a 2.3% gain from the previous Friday.
Soybeans shot up by a net 5.3%.
Both meal and oil has been higher on the week, by 6.5% and 4% respectively.
In contrast, wheat futures were sharply lower in all three markets last week.
Indeed, Chicago SRW lost 1.6% for the week.
KC HRW was down 3.3%.
MPLS spring wheat was the biggest loser, down 6%.
In energy market, oil prices settled lower last Friday as the market weighed supply concerns from the unrest in Kazakhstan and outages in Libya against the mixed U.S. jobs report and its potential impact on Federal Reserve policy.
U.S. employment in the country increased less than expected in December.
U.S. energy firms kicked off the new year by continuing to add oil and natural gas rigs after increasing the rig count in 2021 after two years of declines.
The oil and gas rig count, an early indicator of future output, rose two to 588 in the week to Jan. 7, its highest since April 2020, energy services firm Baker Hughes Co BKR.N said in its closely followed report on Friday.
Thus Brent crude settled down 24 cents, or 0.3%, to $81.75 a barrel, while U.S.
West Texas Intermediate (WTI) crude was down 56 cents, or 0.7%, at $78.90 a barrel.
However, Brent gained 5.2%, while WTI gained 5% in the first week of the year, with prices at their highest since late November, spurred on by the supply concerns.
Meantime, oil prices edged up on this morning as supply disruptions in Kazakhstan and Libya offset worries stemming from the rapid global rise in Omicron infections.
Thus Brent crude rose 24 cents, or 0.3%, to $81.99 a barrel at 07:30 GMT, while U.S. West Texas Intermediate (WTI) crude was up 22 cents, or 0.3%, at $79.12 a barrel.
On the freight market, the Baltic Exchange’s dry bulk sea freight index edged lower last Friday, as a decline in panamax and supramax vessel rates outweighed gains in the capesize segment.
Indeed, the overall index, which factors in rates for capesize, panamax and supramax vessels, fell 7 points to 2,289.
However, the index has risen more than 3% past week, after posting two straight week of losses.
The capesize index rose 76 points, or 3.2%, to 2,432.
Average daily earnings for capesizes, which transport 150,000-tonne cargoes such as iron ore and coal, rose by $632 to $20,167.
The panamax index slipped 56 points, or 1.9%, to 2,957.
Average daily earnings for panamaxes, which ferry 60,000-70,000 tonne coal or grain cargoes, fell by $507 to $26,610.
The supramax index fell 50 points to its lowest level since April 2021 at 2,074.
On equities markets, U.S. stocks last Friday extended the weekly losses, with the S&P 500 falling to a 2-week low, the Dow Jones Industrials falling to 1-1/2 week low, and the Nasdaq 100 dropping to a 2-1/2 week low.
Investors were rattled last week after notes from the latest Fed meeting showed officials thought the U.S. job market is healthy enough that it might no longer need ultra-low interest rates and other stimulus.
In fact, investors are pricing a better than 79% probability that the Fed will raise short-term rates in March.
That was reinforced by U.S. employment numbers Friday that showed stronger-than-expected wages, though with only about half as much hiring as forecast.
In this context, the Dow Jones Industrial Average fell 4.81 points, or 0.01%, to 36,231.66 posting a weekly loss by 0,29%.
The S&P 500 lost 19.03 points, or 0.41% to 4,677.02 and fell 1,87% for the week.
The Nasdaq Composite dropped 144.96 points, or 0.96%, to 14,935.90 stumbling by 4,53% week on week.
The dollar index fell 0.63% at 95.722, and posted its biggest drop since Nov. 26.
Even with last Friday’s weakness, the dollar had a slight weekly gain around 0,13%, its first in three weeks.
Meantime, Asian stock markets were mixed on this morning.
In fact, the Shanghai Composite Index gained 0.2% to 3,587.69 and the Hang Seng in Hong Kong advanced 0.9% to 23,702.90.
The Kospi in Seoul fell 1.2% to 2,919.46 and Sydney’s S&P ASX 200 lost 0.1% to 7,444.70.
On the weather side, last week, winter weather, including significant snowfall, was seen on both coasts but not from the High Plains south into Texas.
The Texas and Oklahoma Panhandles, as well as central Oklahoma, have received only 25% of normal precipitation in the last 60
days while eastern Oklahoma benefited from rain that soaked the southeastern region of the U.S.
In the High Plains, eastern North Dakota saw improvements to drought conditions after reassessing the benefits of earlier weather patterns.
In southern Kansas, seasonal dryness persisted and conditions worsened with warmer than usual temperatures.
Wide swaths of Idaho and central Montana have benefited from rain in the PNW.
Meantime, a heavy lake effect snow for areas downwind from Lake Ontario is on into Tuesday.
There is a Slight Risk of severe thunderstorms over parts of the Lower
Mississippi Valley, Central Gulf Coast, and parts of the Southeast through Monday morning.
There is a Marginal Risk of excessive rainfall over parts of the Lower Mississippi Valley, Tennessee Valley, Southern Appalachians, and Southern Ohio Valley through Monday morning.
Rain/freezing rain for parts of the Pacific Northwest east of the Cascades through Tuesday evening.
On the demand side, last week Census showed that ethanol exports were 149.4m gallons during November, up 43% on the month and 40% above November 2020.
For DDGS, the U.S. shipped 1.019 MMT in November.
That was down 7% on the month but was just 46k MT under Nov 2013 for the 2nd largest November export on record.
Meantime, USDA showed a sharp drop in weekly corn export sales for the December 23-30 period, dropping to 256,100 MT.
Marketing year export commitments (shipped plus outstanding sales) are 40.997 MMT, 7% smaller than last year at this time.
That is 65% of the full year WASDE forecast, and on average we would be only at 58% by the end of December.
Accumulated export shipments are 23% of the USDA projection, 3% behind normal and 2% below year ago.
Meantime, private exporters reported to the USDA export sales for 176,784 metric tons of corn to delivery to Mexico during the 2021/2022 marketing year.
As for soybean, thursday’s Export Sales report indicated exporters sold only 382,700 MT of old crop soybeans during the week ending December 30.
Another 67,100 MT were sold for 2022/23 shipment.
Total US old crop export commitments are now 41.702 MMT, 24% smaller than year ago.
On the plus side, US Exporters have now booked 75% of the USDA full year estimate vs. the average 77% pace for this date.
Shipments have reached 55% of the USDA forecast, 3% points above the normal pace.
Meantime, the USDA’s mandatory reporting system notified the market of a 120k MT new crop soybean sale last Friday to unknown destinations.
Meal sales were a marketing year low 31,500 MT for the week.
Soy oil sales dropped to 2,900 MT.
As for wheat, weekly export sales dropped toa marketing year low 48,600 MT in the holiday week ending 12/30/21.
That figure took export commitments to 70% of USDA’s full year forecast.
They would typically be 80% by now, with export shipments 48% of the USDA number vs the 56% average pace.
In this context, prior to next Wednesday’s WASDE report from USDA, analysts expect the agency to lower its assessment of 2021/22 U.S. ending corn stocks from 1.493 billion bushels in December down to 1.472 billion bushels.
World ending stocks are also expected to face a modest decline, dropping to 11.971 billion bushels.
As for soybean, analysts expect the agency to slightly raise its estimates for 2021/22 ending stocks for U.S. soybean stocks, trending from 340 million bushels in December up to 348 million bushels.
World ending stocks are expected to face a modest decline, dropping to 3.672 billion bushels.
As for wheat, analysts think the agency will show 2021/22 ending stocks for U.S. wheat trending 10 million bushels higher, moving from 598 million bushels in December up to 608 million bushels.
World ending stocks are also expected to see a modest rise, moving to 10.239 billion bushels.
Analysts also weighed in on estimating U.S. winter wheat plantings for the 2021/22 season.
The average trade estimate was 34.255 million acres, with individual guesses ranging between 33.400 million and 35.550 million acres.
Meantime, the weekly Commitment of Traders report showed managed money firms were 365,905 contracts net long in corn.
That was down by 7,440 from last week on long liquidation.
Commercial corn traders reduced their board hedge by 21,450 contracts for a 648,855 contract net short as of 1/4/22.
As for soybean, CFTC data showed managed money firms were 839 contracts more net long soybeans, to 98,919 contracts as of 1/4/22.
Commercial soybean traders were 232,737 contracts net short, which was 4,504 contracts more net short than the week before.
For soymeal, spec traders were 9,606 contracts more net long on the week to 70,768 contracts driven by net new buying.
In BO, managed money was 7,794 contracts more net long at 53,188 contracts.
As for wheat, the weekly CoT report showed managed money went 8,072 contracts more net short in Chicago during the week that ended 1/4/22.
That left the group 19,845 contracts net short.
In KC wheat, spec funds were closing longs which reduced their net position 7,593 contracts to 51,813.
Spring wheat spec traders were shown 9,481 contracts net long as of 1/4/22.
That was down by 2,549 contracts from the previous week.
In this context, corn basis bids were steady to weak last Friday after sliding 1 to 2 cents lower at two Midwestern ethanol plants and dropping 10 cents at an Illinois river terminal.
Soybean basis bids held steady across the central U.S..
Funds were net buyers on Friday for 3,500 lots of corn, 12,500 lots of soybeans and 5,500 lots of wheat.
From South America, the Buenos Aires Grains Exchange mentioned Argentina has begun planting their late crop corn, with the national total (including both early and late seasons) having reached 77% of expected area.
The Rosario grains exchange mentioned the heat and dryness could lead to yield losses of up to 40% for the early planted corn in Eastern Argentina.
The Buenos Aires Stock Exchange, indeed posted a good to excellent condition at 40% against 58% last month.
Also, BAGE reported Argentina’s 81% planted for 21/22 soybeans.
The crop rating of soybeans according to the Buenos Aires Stock Exchange goes from 56% good to excellent to 48%.
On the other hand, Argentina’s Buenos Aires Grains Exchange (BAGE) raised its estimate for the current wheat harvest from 21.5 MMT to 21.8 MMT due to higher-than-expected yields.
The grains exchange has raised its forecast multiple times as good weather has improved the harvest, which is 99.3% complete.
BAGE past week warned that a “prolonged and intense heatwave” will affect most of the agricultural area while rain will be limited.
Meantime, Brazil’s AgRural reduced their soy crop estimate by 11.3 MMT to 133.4 MMT citing dryness in the South.
If realized that would be below Brazil’s standing 137.3 MMT record production.
On European market, we have seen a slight rise in wheat prices last Friday, while prices were unchanged in corn.
Wheat nevertheless posted a decline for the whole week.
On the other hand, fertilizer prices remain very high and deliveries also hampered by the Covid crisis, with logistical difficulties as a corollary.
Meantime, the attention was once again focused on rapeseed with prices showing record after record, particularly on the February deadline, closing at € 828 / t, a level never before reached.
Rapeseed is supported by a clearly negative balance sheet at European level and by increasingly reduced supplies from Canada.
Meantime, Euronext will launch trading in its durum wheat futures on tomorrow morning, Jan. 11, a week later than previously planned, the market operator said last Friday.
The durum contract marks a push by Euronext into cash-settled grain futures as a way to expand its commodity business currently focused on futures offering physical delivery.
The market operator had previously aimed to kick off trading in its durum futures on Jan. 3, but without any results.
On the other hand, African swine fever, a deadly hog disease, has been found in a wild boar in Italy’s Piedmont region, the regional government said in a statement last Friday.
Tests confirmed the disease in a dead boar in Ovada, located about 120 km southwest of Milan in northern Italy, the statement said.
The discovery in Italy could be a blow to the country’s meat producers as governments often block imports of pork products from countries where the disease has been found as a way to prevent transmission.
The Piedmont regional government asked city mayors to stop hunting following the discovery.
Wild boar can transmit the virus to other pigs.
The government also said it is raising its surveillance of wild boars and hog farms and increasing cleaning measures on farms as much as possible.
From the Black Sea basin, the government of Russia confirms the imposition of tariff quota on export of wheat and meslin, barley, rye and corn on the yearly base.
A corresponding decree No2595 as of December 31, 2021 is released at the official internet portal of legal information of Russia.
The quota on export of wheat is set at 8 mln tonnes for 2022, rye, barley and corn – at 3 mln tonnes cumulative.
“The tariff quotas for export of wheat and meslin, barley, rye and corn outside the EAEU should be determined on the yearly basis for a period from February 15 to June 30”, – the decree says.
The decree also determines a mechanism of allocation of the export quota that should be done by the Ministry of Agriculture annually not later than February 8.
Meantime, little development on Ukraine on Friday in a context of a narrow market due to a public holiday.
While wheat prices were virtually unchanged, there was a slight decline in corn prices.
In this context, Ukraine has exported 33.5 million tonnes of grain so far in the 2021/22 July-June season, up 23.2% from the same stage a season earlier, agriculture ministry data showed on this morning.
The total included 16.1 million tonnes of wheat, 5.3 million tonnes of barley and 11.8 million tonnes of corn, the data showed.
Also, agriculture minister Roman Leshchenko said last month the country harvested a record 84 million tonnes of grain in clean weight in 2021, up from 65 million tonnes in 2020.
On the weather side, we will note a clear drop in temperatures expected in the Black Sea basin in the middle of the week without, however, for the moment giving rise to fears about the state of the crops.
Ukraine has got a nice snow cover recently whereas some central and south regions remained vulnerable to any cold threats with the next cold air outbreak possible later this week.
If it could be intensive and long remains a question so far however.
From the Middle Kingdom, China sold 100% of the wheat put up for auction on Jan. 5, or 506,568 tonnes, said a statement from the National Grain Trade Center on this morning.
The grain, targeted only at millers, came from the 2014 through 2020 crop years and sold at an average price of 2,707 yuan ($424.73) per tonne.
From India, the government announced it will send 49.000 t of wheat to Afghanistan as humanitarian aid as the country struggles with food security.
India already sent half a million Covid-19 vaccines and additional medical supplies to Afghanistan in December.
Last week, India sent 2 batches of humanitarian aid to the country.
First one was sent on January 1st and the second was sent on January 7th.
The aid consisted of medical assistance.
November 2021 saw India delivering 1.6 tons of medical assistance to Afghanistan through World Health Organization (WHO).
Meantime, Iran has offered to transfer Indian wheat to Afghanistan.
The proposal was made by Iranian Foreign Minister Hossein Amir-Abdollahian during his telephonic conversation with India’s Minister of External Affairs S Jaishankar.
The conversation took place on Saturday (January 8) and came as India sent 3rd humanitarian support to Afghanistan after Taliban captured power in August 2021.
From Australia, last week again saw some big rainfall totals in eastern Australia.
Large parts of NSW received up to 100mm in the latter part of the week.
Victoria also received falls of 10-25mm which delayed harvest.
The ongoing delay is putting a question mark around the Western Districts wheat quality.
Meantime, Aussie local wheat markets rounded last week out a fraction softer with grower bids down A$4-5/t and trade wheat markets remained wide bid offer spread.
Liquidity struggled for the week with very little activity.
Barley was a touch firmer in places.
SA feed barley traded late trade at $300/t port level.
Cash canola bids were a mixed bag with Victoria sites firmer by $5/t, Port Kembla softer and WA values largely unchanged.
Watching this week’s market, USDA Export Inspections data will be released on later in the day.
Fast forward to Wednesday and we will see the
On Wednesday we will see a mega report day with the EIA report on weekly ethanol production and stocks.
Also we will see the final Crop Production, Dec 1 Grain Stocks, WASDE S&D updates and Winter Wheat planted acreage.
USDA’s Export Sales report will be out on Thursday.
Author: Sandro F. Puglisi
