US farm markets, jumped back into the green past Friday, but ended the week in a mixed mode.
Corn and soybean prices went into the weekend each with gains around 0.60%.
However, they did have a different destine at the end of the week, as corn retreat 2.44% from the prior Friday while soybean completed the week with a 5.68% gain.
Soymeal, for its part, added another 1.56% to the upside on Friday and ended the week with a 7.95% gain.
Soybean oil were only 0.14% higher from Friday to Friday, limited in part by Friday’s 0.59% pullback.
Winter wheat contracts showed the most upside on the end week session.
Indeed, Chicago futures closed 1.53% higher on Friday, limiting the week’s drop to 2.93% from Friday to Friday.
KC wheat closed the last trade day of the week with 2.18% gains, but for the week, was still a 2.06% drop.
MPLS futures ended the session with 1.36% gains.
From Friday to Friday, March HRS futures were down 0.78%.
Going inside the numbers, corn futures were down 15.5 cents for the week, to close at $6.21/bu.
Soybean futures were up $0.835 at $15.54/bu.
Soymeal jumped by $32,7/smt at $443.90 smt.
Soy oil soared by $0.09 cents at $65.36.
CBOT soft red winter (SRW) futures fell 23 cents to close at $7.63/bu.
KCBT hard red winter (HRW) futures lost 16.5 cents to end at $8.02/bu.
MGE hard red spring (HRS) futures shedded during the week 7.20 cents, to close at $9.13/bu.
In energy market, oil prices surged to seven-year highs past Friday, extending their rally into a seventh week on ongoing worries about supply disruptions fueled by frigid U.S. weather and ongoing political turmoil among major world producers.
Thus, Brent crude rose $2.16, or 2.4%, to settle at $93.27 a barrel having earlier touched its highest since October 2014 at $93.70.
U.S. West Texas Intermediate crude ended $2.04, or 2.3%, higher at $92.31 a barrel after trading as high as $93.17, its highest since September 2014.
Brent ended the week 3.6% higher, while WTI posted a 6.3% rise in their longest rally since October.
Crude prices, which have already rallied about 20% so far this year, are likely to surpass $100 per barrel due to strong global demand, market strategists said past week.
Reflecting that bullish view, money managers raised their net long U.S. crude futures and options positions in the week to Feb. 1 by 6,616 contracts to 304,013, the U.S. Commodity Futures Trading Commission (CFTC) said.
Meantime, oil prices bounced around on this morning in see-saw trading, with some investors taking profits after signs of progress in the U.S.-Iran nuclear talks while others kept bullish sentiment bolstered by rising consumption amid ongoing supply constraints.
Particularly, U.S. President Joe Biden’s administration on Friday restored sanctions waivers to Iran to allow international nuclear cooperation projects, as the talks on the 2015 international nuclear deal enter the final stretch.
If the United States lifts sanctions on Iran, the country could boost oil shipments, adding to global supply.
Thus, on this morning, Brent crude was up 20 cents, or 0.2%, at $93.47 a barrel as of 06:01 GMT while, U.S. West Texas Intermediate crude fell 33 cents, or 0.4%, to $91.98 a barrel.
In the freight market, the Baltic Exchange’s dry bulk sea freight index slipped on Friday, as a dip in capesize rates overshadowed gains in the panamax and supramax segments.
The overall index, which factors in rates for capesize, panamax and supramax vessels, fell 2 points to 1,423.
However, the index is 3% higher for the week, its first time after four consecutive weekly decline.
Particularly, the capesize index slipped 49 points on Friday, or 3.8%, to 1,242, but for the week climbed 167 points, or 15.53%.
Average daily earnings for capesizes, which transport 150,000-tonne cargoes such as iron ore and coal, fell by $408 to $10,302.
The panamax index rose 25 points to 1,796 on Friday.
However for the week the index eased 44 points or 2.39%
Average daily earnings for panamaxes, which ferry 60,000-70,000 tonne coal or grain cargoes, increased by $226 to $16,165.
The supramax index gained 23 points closing at 1,594, but finished the week shedding 3 points from last Friday, its lowest level since February 2021.
In equities markets, Wall Street closed out a mostly upbeat week for stocks Friday with a mixed finish for the major indexes and a surge in Treasury yields after a blowout U.S. jobs report raised investors’ expectations that the Federal Reserve may soon start raising interest rates sharply.
Thus, on Friday session the S&P 500 settled for a 0.5% gain after swinging between a 0.6% drop and a 1.4% increase.
The Dow Jones Industrial Average slipped 0.1% after a last-minute burst of selling.
The Nasdaq composite rose 1.6%.
Particularly, the S&P 500 rose 23.09 points to 4,500.53, while the Dow slipped 21.42 points to 35,089.74.
The Nasdaq gained 219.19 points to 14,098.01, while the smaller stocks in the Russell 2000 rose 11.33 points, or 0.6%, to 2,002.36.
The three indexes posted a weekly gain for the second week in a row.
Indeed, for the week, the S&P 500 rose 68.68 points or 1.55%.
The Dow gained 364.27 points, posting a weekly gain of 1.05%.
The Nasdaq rose 327.44 points, that left the index 2.38% higher from prior week.
The latest monthly jobs data was a key focus for investors.
The Labor Department said employers added 467,000 jobs last month, triple economists’ forecasts.
Some economists were even expecting a loss of jobs amid January’s surge in coronavirus infections because of the omicron variant.
Also, Dec nonfarm payrolls were revised upward to +510,000 from the originally-reported +199,000.
Meantime, the Jan unemployment rate unexpectedly rose +0.1 to 4.0%, showing a slightly weaker labor market than expectations of no change at 3.9%.
U.S. Jan avg hourly earnings rose +0.7% m/m and +5.7% y/y, stronger than expectations of +0.5% m/m and +5.2% y/y.
Past week was marked by a historic plunge in the shares of Facebook’s parent erased more than $230 billion in market value.
That was the biggest one-day loss in value for a U.S. company.
Meta fell another 0.3% Friday.
However, of the 272 companies in the S&P 500 that have reported quarterly earnings results, 82% have met or beaten estimates, with profits coming in at 8.8% above projected levels.
Indeed, a 13.5% gain for online retail giant Amazon after the company delivered a strong earnings report helped lift the S&P 500.
Meantime, Snapchat parent Snap soared 58.8%, and Pinterest gained 11.2% following their own earnings reports.
In this context, the dollar index last Friday was up +0.11%, recovering from a 2-1/2 week low and moved higher on expectations of tighter Fed policy.
However the dollar index, which tracks the greenback versus a basket of six currencies,past week tumbled to 95.480, shedding for the week more then 1.8%.
Meantime, Asian shares mostly fell on this morning, though Shanghai’s benchmark jumped after markets reopened from the Lunar New Year holidays.
Investors were watching for moves by central banks in India, Indonesia and Thailand, which are all set to decide on monetary policy within the week.
This week brings earnings reports from some of the region’s biggest companies, including Japanese automakers.
That may provide updates on shortages of computer chips and other disruptions and pressures related to the pandemic.
In this context, Japan’s benchmark Nikkei 225 lost 0.7% to finish at 27,248.87.
Australia’s S&P/ASX 200 slipped 0.1% to 7,110.80.
South Korea’s Kospi declined 0.2% to 2,745.06.
Hong Kong’s Hang Seng was little changed, inching up less than 0.1% to 24,579.55, while the Shanghai Composite added 2% to 3,429.58.
On the weather side, conditions remained dry past week across most U.S. wheat-growing regions.
Extreme drought conditions persisted across northwest Texas and western Oklahoma.
In eastern Colorado and western Kansas and parts of Wyoming, heavy snow led to some improvement.
In the Dakotas, unusually warm and windy weather expanded severe drought.
Northwest North Dakota did see some improvement following increased snowpack.
Weather in the PNW was dry past week except for the Idaho-Montana border where some abnormal dryness was reduced.
Very little rain or snow is expected in the central U.S. until Tuesday.
Indeed, per the latest 72-hour cumulative precipitation map from NOAA, clipper System will produce light snow across the Upper Midwest through Monday morning.
A storm off the Southeast Coast will mainly produce rain along the East Coast and moderate snow for Maine on Monday evening into Tuesday.
A warm up for the Northern High/Northern Plains into the Central Plains.
NOAA’s 8-to-14-day outlook predicts seasonally dry weather returning to the Central Plains between February 11 and February 17, with widespread cooler-than-normal conditions likely east of the Mississippi River.
Expanding drought and lack of snow cover in the U.S. Plains HRW belt may lead to greater than usual acreage abandonment.
However, “completely dry weather is unlikely,” World Weather said.
“There will be some occasional shower activity even if the general pattern of unusual dryness will continue.
The need for greater moisture will be increasing later in February as spring gets closer”.
On the demend side, Weekly Export Sales data put corn bookings at 1.175 MMT for the week that ended 1/27.
The 21/22 marketing year export commitments (shipped plus outstanding sales) have risen to 45.123 MMT, down 20% vs. last year at this time reflecting the record 7 MMT during the same week in 2021.
But that is 73% of the full year WASDE forecast, compared to the average 63% by late-January.
Accumulated exports are 32% of the USDA projection, matching the average pace.
As for soybean the report showed 1.095 MMT of soybeans were booked during the week of 1/27.
Total US soybean export commitments are now 45.229 MMT, 23% smaller than last year’s record buying pace.
On the plus side, US Exporters have now booked 81% of the USDA full year estimate, matching with the average pace for this date.
Shipments have hit 65% of the full year WASDE forecast, running ahead of the 62% average pace.
As for wheat, USDA showed a sharp drop from the prior week to just 57,500 MT.
That pushed export commitments to 17.483 MMT, or 78% of USDA’s full year forecast, still lagging the average pace of 86% by now.
Shipments to date are still 22% smaller than year ago, at 12.601 MMT.
That is 56% of the USDA projection vs the average of 61% by now.
Meantime, private exporters reported on Friday sales of 295,000 metric tons of soybeans for delivery to unknown destinations.
Of the total, 252,000 metric tons is for delivery during the 2021/2022 marketing year and 43,000 metric tons is for delivery during the 2022/2023 marketing year.
In this context, corn basis bids dropped 2 cents lower at three separate Midwestern locations and firmed 4 cents at an Illinois river terminal while holding steady elsewhere across the central U.S. on Friday.
Soybean basis bids remained steady across the central U.S. on Friday.
Wheat basis past week in the Gulf were down for both HRW and SRW, HRS basis was flat.
In the Pacific Northwest soft white export prices were slightly lower (soft white unspecified was up slightly) while HRW and HRS basis was flat.
Disappointing export sales and the Lunar New Year have kept basis “boring” said traders.
On the other hand, the monthly NASS report showed December corn use for ethanol was the second most on record for any month, behind Dec ‘18, with 485.816 mbu of corn used.
Through December, 1.828 bbu of corn was used for ethanol production (34.3% of the Jan WASDE forecast).
NASS’s monthly Fats and Oils data showed a record 198.22 mbu of beans were processed in December.
Through the first 4 months, 747.15 mbu of beans have been crushed which is 34.1% of the Jan WASDE forecast.
In this context, the weekly CoT report showed managed money funds were net buyers of corn through the week that ended 2/1.
The additional 9,602 contracts of OI left the group 6,946 contracts more net long to a 5-week strong 372,551 contracts.
Commercial corn traders added 38,288 new hedges through the week.
That strengthened the groups net short by 7,284 contracts to the most since May 4th at 685,597 contracts.
As for soybean, CFTC data reported soybean spec traders at 154,488 contracts net long as of 2/1.
That net new buying interest was a 39,593 contract net long increase wk/wk, to a 38-week high of 154,488 contracts.
Commercial soybean traders added 76,707 contracts of short hedges expanding their net short by 33,573 contracts.
That was their strongest net short since Feb 9th of 2021.
The weekly CoT report also had managed money soymeal traders at 76,743 contracts net long as of the settle on 2/1.
That was a 12,409 contract boost.
In soybean oil managed money firms extended their net long by 11,703 contracts to 80,427.
As for wheat, the report had SRW wheat spec traders at 26,452 contracts net short as of 2/1’s settle.
That was a 13,025 contract stronger net short wk/wk.
In HRW, managed money funds were reducing exposure with a 3,355 contract lighter OI.
That left their net position 2,835 contracts weaker to 37,799 contracts net long.
Managed money was buying spring wheat through the week that ended 2/1, adding 709 longs against 89 new spec shorts.
That left the group at 3,906 contracts net long.
Meantime, the funds were net buyers on Friday for 1,500 lots of corn, 5,000 lots of soybeans and 6,000 lots of wheat.
Ahead to the WASDE report will out on Wednesday, traders surveyed estimates expect USDA to reduce domestic corn carryout by 41.8 mbu to 1.498 billion.
Global corn stocks are estimated at 299.5 MMT on average, which would be down by 3.6 MMT vs. the January report.
For South America, analysts expect to see between a 1.1 MMT boost to a 5 MMT cut from Brazil and between UNCH to 5 MMT for Argentina.
The average estimate is to see USDA go with 113.3 MMT for Brazilian corn production and 52.1 MMT for Argentinian output.
As for soybean, analysts surveyed are estimating the U.S. soybean carryout at 315.7 mbu on average.
That would be a 34.3 mbu drop from the Jan figure if realized.
For South American output the trade is looking for USDA to cut between 1.5 MMT and 12.5 MTM from Brazil’s output and 0.5 to 4 MMT from Argentina.
The average estimate is to see 133.5 MMT for Brazil and 443 MMT for Argentina.
As for wheat, the trade average guess ahead of USDA’s monthly WASDE report is to see USDA raise wheat ending stocks by 5.8 mbu to 633.8 mbu.
Global wheat stocks are expected to be 300k MT higher to 2280.3 MMT on average.
From South America, the Buenos Aires Commodity Exchange has reduced its estimate of the Argentine soybean harvest by 2 Mt this year, to 42 Mt, against 43.1 Mt last year.
The organization also lowered its soybean ratings from “good to excellent” by one point (37%), while those of corn were reduced by four points (28%).
Meantime, USDA’s Foreign Agricultural Service agricultural attaché raised a forecast for Argentina’s wheat exports for the 2021/22 marketing year to 15.2 MMT, up 32.2% year-over-year.
The projection is significantly higher than the latest WASDE estimate
of 13.5 MMT and higher than the Buenos Aires Grain Exchange’s estimate of 13.3 MMT.
In Europe, on this morning the euro remains firm against the dollar at 1.1440.
The rebound of the euro against the dollar penalized the competitiveness of the European origin past week.
Also, the withdrawal of Algeria from the French origins suggests a high carryover stock and exports to China in this context remain key to balancing balance sheets.
Meantime, the end of the Chinese New Year this week could lead to significant new buying from China.
This week there will be plenty of news and volatility will undoubtedly be part of it.
Between the geopolitical news, a trip by Emmanuel Macron today to Moscow.
Rapeseed prices lost ground on Friday in the wake of canola, despite the firmness of oil and soybean prices.
From the Black Sea basin, wheat was up US$1.75/t last friday.
Meantime, Russian wheat exports are 21% behind last year’s pace amounting to 23.6 MMT as of January 27 according to the Russian Federal Service for Veterinary and Phytosanitary Surveillance.
The Russian marketing year runs from July 1 through June 30.
SoveEcon past week raised its forecast of Russian wheat exports to 34.3 MMT, up 200,000 MT from previous expectations.
The state-imposed wheat quota capping total exports at 35.0 MMT begins February 15 and runs to June 30.
Meantime, the export duty for wheat, barley and corn during the week of February 09-15, 2022, will be $93.2 on wheat, $74.3 on barley and $52.7 on corn.
Indicative prices will be $332.2 for wheat, $289.8 for barley and $260.4 for corn.
That is compared, with prior week (Feb 02-08) when the tax was $93.2 for wheat, $74.60 for barley and $49.2 for corn, while indicative price were $334.2 for wheat, $291.7 for barley and $255.3 for corn.
Also, Russia has set its export tax for sunflower oil at $260.1 per tonne for March, up from $251.4 per tonne in February, the agriculture ministry said past Tuesday.
The government decided to launch a formula-based tax from Sept. 1 for one year as part of measures it hopes will help to stabilise domestic food price inflation.
The March tax is based on an indicative price of $1,371.7 per tonne, the ministry said.
In Ukraine, as of February 02, 2022, wheat prices were at $307/t, down $5 from prior week.
Corn price was at $287 per tonne, up $2/t week on week.
Barley was valued at 302 $/t, up $4 from last week.
Ukrainian wheat prices have plummeted past week in local and export markets, despite tensions easing in the Black Sea region, with a revival in global demand for Ukrainian old-crop product remaining in question in the light of depleted milling wheat stocks and strong competition on the feed wheat market.
Indeed, according to the Argus Media, Ukraine spot fob wheat price for 11.5pc protein grade (UW1) has dropped by $12/t on the week to close 2 February at $311/t — its lowest since 20 October last year.
Meanwhile, Ukraine’s spot cpt price for product (UW2) has fallen by $15/t week on week to close today at $288/t — its lowest since mid-September last year.
From the Middle Kingdom, China has allowed all Russian regions to export wheat and barley, opening its market to all Russian ports.
Previously, only seven regions could export grain to China, and the list did not include the country’s major producing regions.
Russian exports could thus take market share from European, North American and Ukrainian sources.
However, Russian exports to China are unlikely to increase significantly in the current campaign, as these are currently limited to test volumes.
From Australia, the sorghum harvest has gained momentum with no rain expected for the next eight days.
Reports indicate yields are above average and road freight remains tight.
Meantime, Aussie markets rounded out the week on high.
We saw wheat values in Western Australia firm and plenty of trade activity through the market, with ASW1 the main grade that continues to find a bid around $330 free in store across the WA port zones.
Eastern Australia’s wheat liquidity remains steady at relatively unchanged values, and March ASX wheat contract firmed.
Barley prices continued to firm in South Australia over the week, and we saw track Adelaide finish Friday around $318/t.
Canola buyers continue to step back into the market and more interest is gaining along the east coast and SA.
Meantime, Australia exported 19,199 tonnes of malting barley, 942,725t of feed barley and 78,574t of sorghum in December 2021, according to the latest data from the Australian Bureau of Statistics (ABS).
The malting figure was down 68 per cent from the November total of 60,431t to reflect the rundown on old-crop stocks, while the feed figure surged 58pc from the November total to reflect new-crop availability primarily out of Western Australia and South Australia.
Sorghum exports in December fell 32pc from the November total of 116,400t, again due to a rundown in stocks ahead of the harvest which has gotten under way in recent weeks.
On the international trade scene, South Korea’s Major Feedmill Group (MFG) purchased about 110,000 tonnes of animal feed wheat in private deals without issuing an international tender.
Some 55,000 tonnes expected to be sourced from India was purchased at $328.50 a tonne c&f plus a $2.00 a tonne surcharge for additional port unloading.
Shipment was by April 30 and seller was believed to be trading house CJ International.
Another 55,000 tonnes can be sourced from optional origins but not India.
It was bought at $331.90 a tonne c&f plus a $2.00 a tonne surcharge for additional port unloading.
Seller was believed to be ADM.
Shipment was from the U.S. Pacific Northwest coast, Australia or Canada between April 15-May 15 and from the Black Sea/east Europe between March 15-April 15.
The Korea Feed Association (KFA) purchased up to 65,000 tonnes of animal feed corn in an international tender on Friday but with the tonnage to be supplied varying according to origin supplied.
It was purchased in one consignment at an estimated $340.99 a tonne c&f including a surcharge for additional port unloading.
Seller was believed to be trading house Viterra with corn arrival in South Korea around May 25.
It was believed the KFA’s Busan section made no purchase of a second consignment of up to 69,000 tonnes of corn also sought in the tender for arrival in South Korea around May 20.
If the corn purchased by the KFA is sourced from the Black Sea region 63,000 tonnes can be supplied, if from South America 62,000 tonnes and if from South Africa 55,000 tonnes.
If sourced from the United States 65,000 tonnes can be supplied.
Shipment of the consignment was sought between April 21-May 10 if the corn is sourced from the U.S. Pacific Northwest coast, between April 1-20 if from the U.S. Gulf or Black Sea region/east Europe, between March 27-April 15 if from South America and between April 6-25 if from South Africa.
The tender was a sign Asian grain importers are resuming activities with some bargain-buying after the Lunar New Year holidays.
Jordan’s state grains buyer has issued a new international tender to purchase 120,000 tonnes of animal feed barley.
The deadline for submission of price offers in the tender is Feb. 8.
Shipment is sought in a series of possible combinations in 60,000 tonne consignments.
Possible shipment combinations are between July 1-15, July 16-31, Aug. 1-15 and Aug. 16-31.
Bangladesh’s state grains buyer has issued an international tender to purchase 50,000 tonnes of milling wheat.
The deadline for submission of price offers is Feb. 14.
Bangladesh has issued a series of wheat and rice tenders in recent months.
The country is importing grains to bolster reserves after extreme weather, from floods to heatwaves, damaged crops.
Price offers in the latest wheat tender are sought on CIF liner out terms, which include ship unloading costs for the seller.
The shipment is sought 40 days after the date of contract signing.
The wheat can be sourced from any worldwide origins except Israel and is sought for shipment to two ports, Chattogram and Mongla.
Tunisia’s state grains agency is believed to have purchased about 100,000 tonnes of soft wheat, 75,000 tonnes of durum and 75,000 tonnes of barley in a international tender which closed on Wednesday.
The grains can all be sourced from optional origins.
The soft wheat was sought in four 25,000 tonne consignments for shipment between March 20 and April 25, depending on origin supplied.
One wheat consignment was said to have been bought from Cargill at $350.64, Casillo at $348.69 and also a second consignment from Casillo at $350.69 and from Lecureur at $350.77, with all prices dollars a tonne c&f.
The durum was sought in three consignments of 25,000 tonnes for shipment between Feb. 25 and March 30 also depending on origin supplied.
The durum was all said to have been bought from trading house Viterra, in three consignments at $643, $646 and $649 all per tonne c&f.
The barley was sought in three 25,000 tonne consignments for shipment between March 5 and April 15 depending on origin.
The barley was bought in three consignments, from Aston at $342, from Casillo at $332.69 and from Cargill at $339.70 all per tonne c&f.
Jordan’s state grain buyer made no purchase in an international tender for 120,000 tonnes of animal feed barley which closed on Wednesday.
A new tender with the same shipment positions is expected to be issued closing on Feb. 8.
Trading houses participating on Wednesday were believed to be CHS, Cargill and Viterra, with price offers not disclosed.
Turkey’s state grain board TMO has issued an international tender to purchase about 325,000 tonnes of animal feed corn.
The deadline for submission of price offers is Feb. 8.
Shipment is sought between Feb. 25 and March 15.
The corn is sought for unloading at the Turkish ports of Derince, Iskenderun, Mersin, Izmir, Bandirma, Tekirdag, Samsun and Karasu in a series of consignments of 25,000 tonnes.
The TMO reserves the right to buy up to 5% more or less than the tender volume at its own discretion.
Supplies already in Turkey can also be offered.
South Korea’s leading feedmaker Nonghyup Feed Inc. (NOFI) has issued an international tender to purchase up to 138,000 tonnes of animal feed corn and up to 130,000 tonnes of animal feed wheat.
The deadline for submission of price offers in the tender is Monday, Feb. 7.
The corn is sought for May arrival in South Korea and the feed wheat for arrival in May and June.
Watching this week market, cattle traders will begin the week adjusting for any surprise positions from Feb options expiration on Friday.
The Dalian futures market in China reopens after the Lunar New Year holiday week and will have some catching up to do.
USDA Export Inspections data will be released on Monday.
Weekly EIA data will be released on Wednesday.
USDA will also release their monthly WASDE supply/demand estimates on Wednesday, with traders expecting major revisions in South American production and export numbers.
The weekly Export Sales report is expected on Thursday.
Author: Sandro F. Puglisi
