Good morning Farmer Family …
US farm markets found a some tailwinds past Friday.
Corn priceses, indeed, bounced back, gaining 0.73% on the session.
Soybeans found double-digit gains as closed up 1.9%.
Meal prices were up by 0.82%.
Bean oil prices rallied 1.16% higher.
The wheat complex also rose last Friday.
Kansas City HRW closed the strongest with 1.97% gains.
Minneapolis HRS wheat prices closed with 1.53% gains for the day.
Chicago SRW closed 1.28% higher.
Commodity funds were net buyers of CBOT corn, soybean, wheat, soymeal and soyoil futures contracts.
Prices, were underpinned on Friday by a strong performance in other commodities and in equity markets, as well as hopes that China’s easing of COVID-19 restrictions could boost demand.
China on Friday shortened quarantine by two days for close contacts of infected people and for inbound travellers, and removed a penalty for airlines for bringing in too many cases.
That cheered markets though experts cautioned that reopening probably remained a long way off.
Crude oil prices rallied, lending a certain support both to soybeans, as well as the corn market during the end week session.
A weaker dollar, which dipped for the second trading day in a row on Friday, due to a report showed monthly U.S. inflation eased, has bolstered agricultural commodities.
Wheat had an additional support, thanks to some bargain buying, as the CBOT December contract had dipped to a two-month low.
The continued uncertainty about grain exports from Ukraine, added some support too.
However, for the week, all markets posted weekly losses.
Corn prices, indeed, fell 3.38%, over the week.
Soybeans slipped 0.84%.
Soy meal fell 3.09%, while soybean oil lost just 0.26%.
Wheat saw a some weakness as well past week.
Indeed, Chicago, the biggest bear of the three markets, down 4.01%.
Kansas City HRW contracts were 1.02% lower.
Minneapolis spring wheat slipped 0.92% lower.
Meantime, corn basis bids were mostly steady to firm across the central U.S. after trending 2 to 11 cents higher at four Midwestern ethanol plants and moving as much as 15 cents higher at an Illinois river terminal on Friday.
An Iowa river terminal had bucked the overall trend after dropping 5 cents.
Soybean basis bids were mostly steady across the central U.S., but did track 5 cents lower at an Iowa river terminal and 9 cents higher at an Ohio elevator.
As for wheat, past week basis was flat for all wheat classes in the Gulf while in the PNW, basis was flat for HRS and down for HRW.
Soft white prices were also down.
Wheat traders cited lower secondary rail rates as one support for flat to lower basis.
The break past week in U.S. wheat futures has slowed farmer selling though coupled with the lower U.S. dollar and softer basis, U.S. wheat prices were becoming more competitive with other wheat exporters.
On this morning, Chicago soybeans, wheat and corn prices all ticked lower.
Particularly, the most-active soybean contract on the Chicago Board of Trade lost 0.4% to $14.44 a bushel, as of 03:32 GMT.
Wheat gave up 0.5% to $8.09-3/4 a bushel and corn fell 0.4% to $6.55-1/2 a bushel.
The U.S. dollar, indeed, held firm on Monday following last week’s bruising dive, as Federal Reserve Governor Christopher Waller said that the central bank was not softening its fight against inflation.
A stronger dollar makes the greenback-priced commodities expensive for importer holding other currencies.
Among other thinks, wheat was supported on Friday, also by continued uncertainty about grain exports from Ukraine.
However, senior United Nations officials met with a Russian delegation in Geneva on Friday to discuss Moscow’s grievances about the Black Sea grains export initiative and address the need for unimpeded food and fertilizer exports, rising hopes for an extension of the grain deal.
In energy markets, oil prices settled higher on Friday but fell week-on-week.
Brent crude futures, indeed, settled up $2.32 at $95.99 a barrel, extending a 1.1% rise from the previous session but falling 2.6% on the week.
U.S. West Texas Intermediate (WTI) crude futures settled up $2.49, or 2.9%, at $88.96 a barrel, after climbing 0.8% in the previous session but down nearly 4% on the week.
Both benchmark fell during past week due to rising U.S. oil inventories, and lingering fears over capped fuel demand in China.
China’s COVID-19 caseload soared to its highest since the lockdown in Shanghai earlier this year.
Both Beijing and Zhengzhou reported record daily cases.
But an easing in Chinese COVID mesures late in the week and a weaker U.S. dollar, supported oil prices.
Also, Saudi Arabia’s energy minister Prince Abdulaziz bin Salman said OPEC+ will remain cautious on oil production, noting that members saw “uncertainties” in the global economy ahead of the bloc’s next meeting in December, Bloomberg News reported on Friday.
OPEC+, last month agreed to steep production cuts, and will meet again on Dec. 4 to set its policy.
Thus, late-week gains only limited the losses.
On this morning, oil prices pared earlier gains and fell, dragged down by a firmer U.S. dollar and record high coronavirus cases in major Chinese cities.
Contracts for Brent crude and U.S. West Texas Intermediate had edged up nearly 1% earlier in the session but later reversed their trajectory and headed lower.
Thus, Brent crude futures were down 32 cents, or 0.3%, to $95.67 a barrel by 07:25 GMT, while WTI crude futures fell 39 cents, or 0.4%, to $88.57 a barrel.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index marked its first weekly gain in five, even as it slipped on Friday due to a fall in capesize rates.
The overall index, indeed, shed 35 points, or about 2.5%, to 1,355.
The main index gained 2.4% for the week.
Notabily, the capesize index was down 108 points, or about 6.5%, at 1,544.
It posted a weekly gain of 15%.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes of coal and steel-making ingredient iron ore, decreased $895 at $12,807.
The panamax index rose 18 points, or about 1.1%, to 1,637, snapping a four-session losing streak.
It fell 3.7% for the week.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, increased $161 to $14,735.
The supramax index lost 14 points to 1,213, extending its declines for a 15th straight session.
In equity markets, US stocks rallied on Friday extending Thursday’s sharp rally, with the S&P 500 posting an 8-week high, the Dow Jones Industrials climbing to a 2-1/2 month high, and Nasdaq 100 posting a 7-week high.
Notabily, the S&P 500 rose 0.92% or 36.56 points to 3,992.93, and its 5.9% gain for the week was its third in the last four and its biggest since June.
The Dow rose 32.49, or 0.1%, to 33,747.86, and the Nasdaq climbed 209.18, or 1.88%, to 11.323.33.
Both also notched hefty gains for the week.
The tech-heavy Nasdaq Composite index rose 8.1% over the week to notch its biggest weekly gain since March, and the Dow added 4.15%.
Stock indexes rose on hopes cooler U.S. inflation would lead to less aggressive interest rate hikes by the Federal Reserve.
That pushed the dollar down 1.6% on the day, posting so its biggest two-day drop in 13 years.
Gold prices rose to a near three-month high and headed to at least their best week since July 2020.
However, gains in the Dow Jones Industrials were limited by weakness in healthcare companies and drugmakers.
The sharp rally seen on Thursday and Friday prompted some liquidation of defensive stocks, as investors braced for the economic impact of sharply higher interest rates.
The yield on benchmark U.S. 10-year paper slipped below 4% on Thursday.
There was no trading in the cash U.S. Treasury securities market Friday, as was closed for Veteran’s Day.
Meantime, crypto exchange FTX filed for U.S. bankruptcy and founder Sam Bankman-Fried stepped down as chief executive.
On this morning, Asian stocks declined while Europe opened higher.
Shanghai and Tokyo retreated while Hong Kong rose.
Notabily, the Nikkei 225 in Tokyo tumbled 1.1% to 27,963.47 while the Hang Seng in Hong Kong advanced 1.7% to 17,619.71.
Shanghai Composite Index lost 0.1% to 3,083.40.
The Kospi in Seoul sank 0.3% to 2,474.65 and Sydney’s S&P-ASX 200 shed 0.2% to 7,146.30.
India’s Sensex edged down less than 0.1% to 61,760.42.
New Zealand, Bangkok and Jakarta declined while Singapore gained.
Investors were encouraging by lower U.S. inflation reported last week.
But forecasters warned it was too early to assume inflation that is near multi-decade highs is under control.
Also, the outcome of last week’s U.S. congressional elections might undercut investor sentiment as final results trickle in.
Republicans look likely to control the lower House of Representatives while the Democrats, hold the Senate.
And policy paralysis at a time of economic crisis is not a good look of course.
In currency trading, the dollar index on Friday fell by -1.67%, adding to Thursday’s -1.7% plunge, on negative carry-over from Thursday’s weaker-than-expected U.S. Oct CPI report.
The dollar extended its losses Friday after the University of Michigan U.S. Nov consumer sentiment index fell more than expected to a 4-month low.
EUR/USD on Friday rose by +1.44%, ralling sharply for a second day.
USD/JPY on Friday fell by -1.74%, ralling sharply for a second day and posted a 2-1/4 month high against the dollar.
On this morning, the U.S. dollar rose to 139.79 yen from Friday’s 138.76 yen.
The euro declined to $1.0339 from $1.0356.
Going back to analyzing the other Ag markets …
From Canada, Canadian Pacific (CP) said it broke its all-time monthly record for shipping Canadian grain and grain products in October, moving 3.14 MMT, 100,000 MT more than the previous record set in October 2020.
The company said it had moved 6.9 MMT of grain and grain products in the first 13 weeks of the 2022/23 crop year.
A CP executive said significant investment in new and upgraded grain-handling capacity, and high-capacity hopper cars have expanded the railroad’s capacity.
Meantime, producers’ deliveries of common wheat in week 14 of the shipping season, were at 428,9k mt.
That was slightly lower from 441,4k posted a week erlier.
Deliveries of durum wheat, in contrast, jumped to 147,7k mt from 96.7k mt a week earlier.
Canada exported 488.8k mt of common wheat in week 14 of the shipping season.
That was up from 424.4k mt posted a week earlier.
Durum wheat exports, also were higher at 179.2k mt, up from 101.5k mt a week earlier.
Consequentially, total Commercial Stocks of common wheat stood at 2.654,0k mt, down from 2.833,2k mt a week earlier.
Durum total commercial stocks were also weaker at 777,9k mt, sligthly down from 782,6k mt posted the prior week.
Cumulative exports for common wheat are now at 5.116,8k mt, up from 3.422k mt year ago to date.
As for durum wheat, cumulative exports reached 1.002,7k mt, supassing the 928,5k mt year ago to date.
Meantime, cash bids for durum wheat continued to be higher past week.
Indeed, looking at the average regional price of C$499.56/mt as of Nov 11, that was C$1.03/mt higher than the prior week.
From South America, Argentina’s wheat exports this season will not quite reach half of last season’s shipments, the Rosario Grains Exchange (BCR) said on Friday, with only 7 million tonnes of exports expected after months of dry weather halved the 2022/2023 harvest.
During the previous 2021/2022 crop, the South American agricultural powerhouse exported 14.5 million tonnes of wheat.
The wheat crop gathered between November and January is seen totaling just 11.8 million tonnes, according to the BCR, down by half compared to 23 million tonnes produced in the previous crop.
If the production forecast proves correct, it would mark the smallest wheat crop in seven years.
The separate Buenos Aires Grains exchange on Thursday lowered its 2022/2023 wheat harvest estimate to 12.4 million tonnes from 14 million tonnes previously.
The BCR estimated that $2.22 billion in export revenues would be lost this season due to lower wheat exports.
The weaker harvest is straining Argentina’s ability to meet domestic demand as well as already agreed exports.
The government gave exporters license to push back by 360 days some wheat shipments scheduled for between December and February due to worries about shortages.
According to official data, exporters have already made sworn declarations to ship 8.85 million tonnes of wheat in the 2022/2023 season.
Brazil’s Safras & Mercado, meantime, now estimates Brazilian’s 2022/23 soybean production will reach a record-breaking 154.5 MMT.
That’s nearly 2% higher than the group’s prior projection.
In Europe, European wheat prices were little changed on Friday, having hit seven-week lows hit on Thursday.
They were also underpinned by strength in U.S. markets and wider commodity.
December milling wheat on the Paris-based Euronext, indeed, closed unchanged at 327.25 euros a tonne.
A public holiday in France has meant some market participants were absent.
In Germany, attention was on a large tender from Saudi Arabia for 595,000 tonnes of wheat.
Thus, premiums in German ports remained supported by shipment of previous export sales and a lack of farmer selling.
Sellers of standard 12% protein wheat for November delivery in Hamburg, indeed, were seeking a premium of about 12 euros over Euronext December, with buying interest around 10 euros over.
Meantime, French farmers had sown 92% of the expected soft wheat area for next year’s harvest by Nov. 7, against 84% a week earlier and ahead of 86% progress a year earlier, farm office FranceAgriMer said on Monday.
FranceAgriMer’s weekly cereal crop progress report was delayed from Friday due to a public holiday in France.
From the Black Sea basin, a Kremlin spokesman said negotiations and contacts were continuing, but there was no agreement yet as officials from Russia and the United Nations met in Geneva on Friday to discuss a possible extension of the Ukraine grain-export corridorl.
Russia’s agricultural exports have not been directly targeted by western sanctions, but Moscow said blocks on Russia’s payments, logistics and insurance industries were a barrier to Russia being able to export its grain and fertiliser.
The UN, Ukraine and Turkey have said they plan to continue the grain-export initiative after November 19, even if Russia is not part of it.
Meantime, the Russian agriculture ministry revised the export tax for wheat, corn and barley.
Particularly, as of Nov. 16, the export duty on wheat will decrease to 2,922.1 from 3,012.0 rubles per ton a week earlier.
The duty on barley, in contrast, will increase to 2,686.7 rubles from 2,495.6 rubles per ton a week earlier.
For corn, in contrast, will down to 447.5 rubles from 1,114.3rubles a week earlier.
This new duty rates will be in effect through November 22, inclusive.
The duties were calculated based on indicative prices: $312.3 per ton for wheat ($314 a week earlier), $288.5 for barley ($283.7), $236.4 for corn ($251.6).
On the other hand, Russia plans to set its export tax for all types of fertilisers at 23.5% when the price is more than $450 a tonne, the Interfax news agency quoted Trade Minister Denis Manturov as saying on Friday.
Russia is a major producer of potash, phosphate and nitrogen fertilisers, with output of more than 50 million tonnes a year, equating to 13% of global production.
Phosagro PHOR.MM, Uralchem, Uralkali, Acron AKRN.MM and Eurochem are the biggest players.
Officials have prepared a draft of the government decree that would set the export tax at this level, Manturov was quoted as saying by Interfax.
From the Middle Kingdom, wheat prices in China jumped to a record high despite the summer’s bumper harvest as wheat farmers wait for still higher prices while pandemic control has hindered logistics, resulting in a limited supply.
After summer, the price of one jin or half a kilogram of wheat rose by CNY0.2 to a new high of CNY1.65 (up by US 3 cents to US 20 cents) in most regions from previous years.
Demand tends to pick up at this time of year as flour mills usually acquire more wheat as temperatures drop, but many Chinese farmers remained relatively reluctant to sell wheat as they expect to receive a higher price later.
Moreover, supply is lower than demand since farmers are now busy with autumn harvest and planting while Covid-19 restrictions affect regional logistics.
Feed processors have had to seek alternatives to corn in the past two years amid skyrocketing corn prices, and a large amount of wheat has been used for fodder.
The consequences of the Russia-Ukraine conflict have also affected price expectations in the Chinese market to some extent in the short term.
Still, international price swings are not likely to have a significant impact on the domestic wheat market, Lin Guofa, research director at Bric’s agriproduct bulk trade platform, told Yicai Global.
Since 2000, there have been three global rounds of wheat price surges, but none of them had such a big effect on China, Lin added.
Imports are only a drop in the bucket compared to domestic output.
Last year, China imported 9.7 million tons of wheat, accounting for 7 percent of the domestic total, according to customs data.
Meantime, China will again auction off another 500k mt of its state reserves of imported soybeans on November 25.
China has offered a series of similarly sized auctions throughout 2022 as it attempts to boost local supplies and quell high prices.
From South East Asia, soaring wheat prices in India could prompt price-cooling measures such as the release of state reserves into the open market, meanwhile operators hoping an easing the 40% tax on imports.
Local wheat prices jumped to a record 26,500 rupees ($324.18) a tonne on Thursday, up nearly 27% since the May ban on exports.
Demand is robust, but supplies are dwindling, thus, prices are rising and will remain firm until the new-season crop starts next year.
Consequentially, the country could consider offloading state stocks in the market for bulk consumers such as flour and biscuit makers to reduce prices.
However, New Delhi could not release massive stocks so far owing to low inventories.
This year’s production has been around 95 million tonnes, far lower than the government’s projection of 106.84 million tonnes.
At the start of October wheat stocks in state warehouses totalled 22.7 million tonnes, down from 46.9 million tonnes a year earlier, after 2022 domestic wheat purchases fell 57%.
Thus, the government could also drop the 40% wheat import tax.
($1 = 81.74 rupees).
From Australia, the market was focused on the impact of what the latest weather event has done across New South Wales, Victoria and South Australia over the weekend.
The market has plenty of bids, and very few grower offers along the east coast at present, and this is expected to be the case throughout the week.
Weekend rainfall totals were massive, and came with damaging winds.
There are currently 65,000 homes and businesses without electricity in SA after Saturday’s wild storms.
Massive rainfall totals have also smashed north-east Victoria, with a number of flood warnings in place.
The forecast is for rain to start to clear today before returning on Friday.
The question now is how much more adverse weather crops can take without significant yield and quality losses.
Meantime, the country exported a record 5.4 million tonnes (Mt) of canola in 2021-22 (Oct-Sep), according to data compiled from Australian Bureau of Statistics (ABS) data.
This is more than 50 per cent above the previous record seen by ABARES at 3.512Mt and set in 2012-13, with 2020-21 on 3.496Mt and 2016-17Mt on 3.458Mt not far behind.
The 2021-22 figure includes September data released earlier this month, with Belgium on 63,350t the biggest market, followed by the United Arab Emirates on 61,408 and Japan a distant third on 35,434t.
Total canola exports for September at 176,695t were up 17pc from 151,556t shipped in August.
In the year to September 30, Germany on 1.18Mt, Belgium on 1.11Mt, France on 702,353t and Japan on 661,859t were the four biggest customers.
On the international trade scene, Tunisia purchased 100k mt of soft wheat (at an avg price of $379.54/t C&F), 100k mt of durum wheat (at an avg price of $531.94/t C&F) and 50k mt of animal feed barley (avg price of $346.42/t C&F), from optional origins.
The grain is for shipment between December 5 and January 25.
Egypt’s state grains buyer, the General Authority for Supply Commodities, is believed to have bought 280,000 tonnes of Russian wheat via direct purchases, at $362.5/t.
Grain Flower sold 2x 40,000 t , with consignement in the first half of December.
Grain Flower sold 2x 40,000 t, with consignement in the second half of December.
Aston sold 60,000 t, with consignement in the second half of December.
Viterra sold 60,000 t, with consignement in the second half of December.
The purchases comes a few days after GASC cancelled its first international wheat tender since July on Monday, citing high prices.
The lowest C&F offer at the tender was $369.95 per tonne for 40,000 tonnes of Russian wheat, with traders adding that GASC was negotiating for a price of $360 per tonne.
South Korea purchased 69,000t of optional-origin corn and passed on another tender to buy up to 68,000t of the same.
Japan purchased 94,603t of wheat in its weekly tender, including 62,423mmt of US and 32,180t of Canadian wheat.
Indonesia purchased 60,000t of US milling wheat and 60,000t of Canadian milling wheat.
Saudi Arabia’s state grains buyer SAGO on Monday said it had bought 1,009,000 tonnes of wheat in an international tender for April-June shipment next year at an average price of $382.56 a tonne.
The tender had sought hard wheat with 12.5 percent protein content for arrival at Saudi Arabian ports between April and June.
The tender closed on Friday.
Origins offered were the European Union, Black Sea region, North America, South America and Australia, with the seller having the option of selecting the origin, SAGO governor Ahmad Al-Fares added in a statement.
SAGO said the folowing purchases were made on a cost insurance and freight (CIF) basis per tonne, with 2023 arrival periods in brackets:
Jeddah sea port
– 65,000 tonnes from Bunge at $379.90 CIF (April 10 – 20);
– 65,000 tonnes from ADM Hellas at $385.73 CIF (April 10 – 20);
– 63,000 tonnes from Holbud at $385.85 CIF (April 10 – 20);
– 63,000 tonnes from Holbud at $386.50 CIF (May 10 – 25);
– 65,000 tonnes from Olam at $379.65 CIF (June 10 – 25).
Yanbu sea port:
– 60,000 tonnes from Agricost at $374.25 CIF (April 10 – 20);
– 65,000 tonnes from Cargill at $380.60 CIF (April 10 – 20);
– 63,000 tonnes from Holbud at $385.90 CIF (April 10 – 20);
– 60,000 tonnes from Agricost at $375.25 CIF (May 10 – 25);
– 65,000 tonnes from Cargill at $384.10 CIF (May 10 – 25);
– 65,000 tonnes from Olam at $383.65 CIF (June 10 – 25).
Dammam sea port:
– 60,000 tonnes from Agricost at $381.00 CIF (April 10 – 20);
– 65,000 tonnes from Cargill at $382.62 CIF (April 10 – 20);
– 65,000 tonnes from Olam at $385.65 CIF (April 10 – 20);
– 65,000 tonnes from Cargill at $378.27 CIF (May 10 – 25).
Jizan sea port:
– 55,000 tonnes from Viterra at $392.59 CIF (June 10 – 25).
In its last reported tender on Oct. 24, SAGO bought 566,000 tonnes of hard milling wheat for arrival in March and April 2023.
Watching this week’s market, we start out with the US Export Inspections report today in the afternoon.
The Crop Progress report will out overnigth after the sessions close.
Tonday is also expiration day for November soybean futures.
On Tuesday, NOPA will release their monthly crush report for October.
On Wednesday, we will get the EIA weekly ethanol production and stocks report.
On Thursday, weekly Export Sales data will be published, with November feeder cattle futures and options also expiring.
Finally, to round out the week on Friday, NASS will release their monthly Cattle on Feed report.
FOOD IMPORT COSTS RISE TO RECORD IN 2022
Food imports costs across the world are on course to hit a near $2 trillion record in 2022, piling pressure on the globe’s poorest countries who likely shipped in considerably less volumes of food, the U.N. Food Agency said on Friday.
World food prices soared to record levels in March.
The increase is disproportionately affecting economically vulnerable countries, and is expected to continue doing so next year even as the overall agricultural supply situation is set to improve a bit.
The world’s food import bill is projected to reach $1.94 trillion this year, up 10% year-on-year and higher than previously expected, the FAO said.
It noted that low income countries’ food import volumes are seen shrinking 10% as their food import bill for the year remains almost unchanged, pointing to growing accessibility issues.
In terms of agricultural inputs like fertilisers, which require a lot of energy to produce, the FAO said global import costs are set to rise nearly 50% this year to $424 billion, forcing some countries to buy and use less.
This will inevitably lead to lower productivity, lower domestic food availability and “negative repercussions for global agricultural output and food security” in 2023, it said.
Looking to the 2022/23 season, the agency sees wheat production jumping 0.6% year-on-year to hit a record 784 million tonnes, but notes increases are expected mostly in China and Russia, leaving inventories down 8% in the rest of the world.
Production of coarse grains like corn, barley and sorghum is meanwhile seen falling 2.8% in the season.
On the plus side, however, the FAO said oilseeds output is seen rebounding 4.2% to hit an all time high, sugar output is seen rising 2.6%, while rice output is expected to remain at overall average levels thanks to resilient plantings in Asia and recovering output in Africa.
That’s all, thank you.
We wish you a good day and a good start to the week.
Author: Sandro F. Puglisi
