Good morning Farmer Family …
US farm markets ended Friday’s session with mixed results.
Corn prices, after a choppy session, were fractionally higher at the bell (+0.04%).
Soybeans held onto gains of around 0.8%.
Meal prices closed with 1.16% gains.
Bean oil prices ended 0.85% higher.
The wheat complex, in contrast, added more to the downside on Friday, as Chicago SRW closed 0.43% in the red; Kansas City HRW prices ended down by 0.4% and Minneapolis spring wheat closed with 0.24% loss.
Corn prices failed to find much momentum in either direction, as traders set their positions, ahead a shorted week due Thanksgiving holiday.
Soybeans firmed despite no fresh fundamental news have been, as the market still was digesting Thursday’s weekly export sales report from the USDA, which showed U.S. soybean sales for the last reporting week, above 3 million tonnes.
However, worries about future demand from China hung over the market, as the country is facing a rise in COVID-19 cases, raising fears that it could curb demand for commodities.
Wheat prices, meantime, extended their losses, following news of the extension of the corridor for grain exports from Ukraine.
Lack of fresh supportive news and a firmer dollar, made an additional down pressure.
Rumors of further sales of French wheat to China and of possible sales of northern European wheat to the United States underscored how U.S. wheat was uncompetitive globally.
For the week, corn prices saw a rebound, as December was up 1.48%, from priorFriday.
Soybeans dropped another 1.50% on the week.
Soybean oil was a large reason for the weakness, as December contract was down 5.5%.
Meal prices, in contrast, posted a 0.74% gain.
The wheat complex was mixed across the three exchanges past week.
Chicago was again the weakest, down 1.29%.
Kansas City HRW contracts were 0.98% lower from Friday to Friday.
Minneapolis, in contrast, was up 0.61%.
Meantime, corn basis bids rose 5 to 13 cents higher at three Midwestern ethanol plants last Friday, while were mixed across several other locations in the central U.S..
Soybean basis bids were mostly steady across the central U.S. but did tilt 5 cents higher at an Iowa river terminal while sliding 2 to 20 cents lower at two other Midwestern locations.
Wheat basis was mixed in both the Gulf and PNW past week.
Wheat traders noted that while export prices need to soften to attract export business, a strong domestic market was keeping basis from softening more.
Farmer selling has been slow, leading to a slight increase in HRS basis in the Gulf and a firm HRS basis in the PNW.
Railroads originated more grain carloads past week than previus, and secondary rail rates decreased week-over-week.
However, challenges with railroad logistics remain said one wheat trade.
Commodity funds, on Friday were net buyers in 4,500 lots of soybean and 500 lots of corn.
They were net sellers in 1,500 lots of wheat.
After the sessions close, CFTC’s weekly Commitment of Traders report showed managed money liquidating 57k longs in corn for a 176,831 contract net long as of 11/15.
That was their weakest net long since 8/16.
Commercials also reduced exposure, closing 36.4k shorts for a 424,628 contract net short as of the Tuesday close.
As for soybean, managed money weakened their net long by 10.9k contracts by rolling existing longs to shorts.
That left the group 92,965 contracts net long as of the 11/15 close.
Commercial soybean hedgers reduced their net short during the week by adding new long hedges, CFTC had them 134,665 contracts net short.
In the products, spec traders closed 14.9k meal longs for a 19.7k weaker net long of 75,710 contracts.
The funds were 5,161 contracts more net long in soy oil through the week to 110,371 contracts.
That was their strongest net long since Feb of 2021.
As for wheat, Weekly CFTC data showed CBOT wheat specs were 46,780 contracts net short as of 11/15.
That was a 3,878 contract stronger net short through the week, by more long liquidation.
In HRW, the funds were reducing their net long by 3,152 contracts to 21,281.
In MGE HRS wheat, managed money traders were 2,897 contracts less net long, to just 158 contracts, after a sharp long liquidation through the week (54% of existing spec longs were closed).
On this morning, Chicago corn and soybean prices ticked down, on uncertainty about demand from top buyer China amid rising COVID-19 infections.
Wheat rose for the first time in four sessions, although gains were limited.
Notabily, the most-active soybean contract on the Chicago Board of Trade lost 0.4% to $14.22 a bushel, as of 03:57 GMT.
Corn fell 0.3% to $6.65-1/2 a bushel.
Wheat added 0.2% to $8.23-3/4 a bushel.
In energy markets, recession concerns have dominated past week.
Oil dropped by about 2% on Friday, logging a second weekly decline, due to concern about weakened demand in China and further increases to U.S. interest rates.
Notabily, Brent crude settled at $87.62 a barrel, falling $2.16, or 2.4%.
U.S. West Texas Intermediate (WTI) crude settled at $80.08 a barrel, losing $1.56, or 1.9%.
Both benchmarks posted weekly losses, with Brent down about 9% and WTI roughly 10%.
A stronger U.S. dollar, pushed down crude prices.
China, which sources say is looking to slow crude imports from some sources, has seen a rise in COVID-19 cases, while hopes for less aggressive U.S. rate hikes have been dented by remarks from some Federal Reserve officials.
On this morning, oil prices dropped to trade near two-month lows, as supply fears receded while concerns over fuel demand from China and U.S. dollar strength weighed on prices.
Thus, Brent crude futures for January had slipped 74 cents, or 0.8%, to $86.88 a barrel by 07:15 GMT.
U.S. West Texas Intermediate (WTI) crude futures for December were at $79.40 a barrel, down 68 cents or 0.9%, ahead of the contract’s expiry later on Monday.
The more active January contract last fell 59 cents or 0.7% to $79.52 a barrel.
Risk sentiment becomes fragile as all the recent major countries’ economic data point to a recessionary scenario, especially in the U.K. and euro zone, while hawkish comments from the U.S. Federal Reserve last week also sparked concerns over the U.S. economic outlook.
Meantime, diesel markets remained tight, with Europe and the United States competing for barrels.
China nearly doubled its diesel exports in October from a year earlier to 1.06 million tonnes.
However, the volume was well below September’s 1.73 million tonnes.
Demand in China, indeed, remains bogged down by COVID restrictions.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index BDI, fell to a more than two-month low last Friday and posted a weekly decline as demand for capesize vessels dropped.
The overall index, indeed, shed 39 points, or 3.2%, to 1,189, its lowest since Sept. 8.
The main index dropped 12.3% for the week, its fifth weekly fall in six.
The capesize index lost 66 points, or about 5.6%, to 1,122, extending its declines to a sixth straight session.
The index posted a weekly fall of 27.3%.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes of coal and steel-making ingredient iron ore, decreased $550 to $9,305.
The panamax index fell 56 points, or 3.4%, to a 10-week low of 1,594.
It was down 2.6% for the week.
Average daily earnings for panamax vessels, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, decreased $507 to $14,343.
The supramax index lost 5 points to 1,170 and fell for a sixth straight week.
In equity markets, a late-afternoon rally, on Wall Street helped stocks close higher last Friday.
Notabily, the S&P 500 rose 18.78 points, or 0.5%, to 3,965.34.
The Dow rose 199.37 points, or 0.6%, to 33,745.69.
The Nasdaq added 1.10 points, or less than 0.1%, to close at 11,146.06.
Smaller company stocks also gained ground, as the Russell 2000 rose 10.61 points, or 0.6%, to 1,849.73.
Discount retailer Ross Stores surged 9.9%.
Clothing retailer Gap rose 7.6%.
Foot Locker climbed 8.7%.
These solid earnings from retailers had cap off a shaky week for Wall Street.
The markets were also pleased with the news that U.S., Trade Representative Katherine Tai, on Friday, met with Chinese Commerce Minister Wang Wentao on the sidelines of an Asia-Pacific Economic Cooperation ministers meeting in Bangkok.
That was the first meeting between the new U.S.-Chinese trade ministers and could signal that trade relations might thaw by enough for the Biden administration to drop some of the Trump-era U.S. tariffs on $300 billion of Chinese imports.
Dropping those tariffs could reduce U.S. inflation pressures and give the Fed a little more flexibility, and also boost U.S. corporate profits by allowing lower input prices.
However, the major indexes still wound up finishing lower for the week.
Investors, indeed, tried to get a better sense of inflation’s path and its impact on consumers and businesses.
Friday’s economic news showed Oct U.S. existing home sales, fell by -5.9% to 4.43 million units, which was a negative factor for the housing market.
However, that was at least slightly better than expectations for a decline to 4.40 million.
Friday’s Oct U.S. leading economic indicators report fell by -0.8% m/m, much weaker than expectations of -0.4%.
The Sep LEI was revised lower to -0.5% from -0.4% m/m.
Meantime, a Fed official, James Bullard, rattled investors by suggesting the central bank’s base lending rate might have to be raised to as much as almost double its already elevated level.
In this context, bond yields continued to rise.
The 10-year T-note yield on Friday rose by +6 bp to 3.82%, adding to Thursday’s +8 bp rise.
The 10-year yield is trading at a comfortable half-percentage-point below the mid-October 15-year high of 4.34%.
As a result, the major indexes all finished down for the week and remain sharply lower so far this year.
Notabily, the S&P 500 fell 0.7% this week, the Nasdaq fell 1.6%, while the Dow was basically unchanged.
On this morning, Asian stock markets sank.
Hong Kong’s benchmark fell more than than 2%.
Shanghai, Seoul and Sydney also retreated, while Tokyo was little-changed.
Notabily, the Hang Seng in Hong Kong was off 2.1% at 17,616.06 after the territory’s leader, John Lee, tested positive for the coronavirus after returning from an Asia-Pacific meeting in Bangkok.
The Shanghai Composite Index lost 0.8% to 2,072.08 and the Nikkei 225 in Tokyo lost less than 0.1% to 27,904.69.
The Kospi in South Korea fell 1.2% to 2,414.20 and Sydney’s S&P-ASX 200 lost 0.1% to 7,141.50.
India’s Sensex opened down 0.7% at 61.212.75.
New Zealand gained while Southeast Asian markets declined.
In currency trading, the dollar index last Friday was up 0.19% at 106.90 after falling 0.33% earlier in the day.
It was up about 0.58% for the week, in its biggest gain since early October and representing a partial recouping of prior week’s 4% losses.
Notabily, the dollar gained slightly on Friday, as investors eyed rising bond yields and continued to make bets on the U.S. Federal Reserve’s interest rate hiking path.
The euro was down 0.34% against the dollar at $1.0329 after earlier rising as much as 0.29%.
The pound pared gains against the greenback and was last up 0.22% after rising as much as 0.70% earlier.
Both the euro and sterling had hit multi-month highs against the dollar past week after inflation data showed an easing in U.S. price pressures.
Against the yen , the dollar was up 0.8% at 140.32 yen.
The Australian dollar was down 0.21% at $0.6672, below a two-month high reached earlier past week.
The New Zealand dollar , meanwhile, was up 0.28% and headed for its fifth straight weekly gain.
On this morning, the dollar rose to 140.41 yen from Friday’s 140.32 yen.
The euro fell to $1.0283 from $1.0329.
Going back to analyzing the other agricultural markets …
From Canada, Agriculture Canada forecasts Canadian wheat ending stocks to total 6.2 MMT, significantly higher than the 4.17 MMT
forecast by USDA in the latest WASDE report.
Market farm analyst Bruce Burnett said the significant difference is due to methodology.
Burnet said that if the Canadian export program is strong, ending stocks by the end of July 2023 will be extremely tight.
USDA’s forecast is the second lowest since 1960; the lowest was in 2021/22 at 3.67 MMT.
Meantime, producers’ deliveries of common wheat in week 15 of the shipping season, were at 280,1k mt.
That was sharply down from 428,9k posted a week erlier.
Deliveries of durum wheat, were also down to 105,6k mt from 147.7k mt a week earlier.
Meantime, Canada exported 417.9k mt of common wheat in week 15 of the shipping season.
That was down from 488.8k mt posted a week earlier.
Durum wheat exports, also were weaker at 97.4k mt, down from 179.2k mt a week earlier.
Consequentially, total Commercial Stocks of common wheat stood at 2.601,4k mt, down from 2.654,0k mt a week earlier.
Durum total commercial stocks were also weaker at 764,6k mt, sligthly down from 777,9k mt posted the prior week.
Cumulative exports for common wheat are now at 5.533,4k mt, up from 3.731.5k mt year ago to date.
As for durum wheat, cumulative exports reached 1.077,9k mt, up from 995,4k mt year ago to date.
Cash bids for durum wheat continued to be higher past week.
Indeed, looking at the average regional price of C$499.99/mt as of Nov 18, that was C$0.43/mt higher than the prior week.
From South America, Brazilian consultancy Pátria AgroNegócios is expecting an uptick in soybean planted acres for the 2022/23 season and also adjusted its production estimates higher, to 148.9 MMT – a record-breaking effort, if realized.
However, the group also noted that climate forecasts could bring drier-than-normal conditions to the country’s South and Southwest production regions.
Meantime, Argentina is looking into the possibility of reinstating a special exchange rate for soybean farmers, a move that is intended to boost exports.
However, Argentina’s Buenos Aires grains exchange reported last Thursday unless more rains arrive soon, it may make cuts to its soybean acreage estimates.
Plantings are only 12% complete, compared to 29% at the same time a year ago.
Current projections are calling for 41.3 million acres.
Argentina is the world’s No. 1 soymeal and soyoil exporter.
Prolonged drought conditions in Argentina has the country’s Buenos Aires grains exchange slashing its estimates on wheat for the 2022/23 season by nearly 40% to 12.4 MMT.
Argentina’s Economy Ministry estimates the wheat crop at 13.4 MMT for 22/23, a 39.4% drop from 21/22.
Harvest is 10% complete through November 16.
In this context, Argentina will only export 6.5Mt of wheat in the 2022-23 according to the Rosario Board of Trade, down from last week’s prediction of 7Mt (5-year average of 11.7Mt).
In Europe, markets have rebounded.
Demand on the French market remained strong with a return to competitiveness leading to an improvement of physical basis, especially in feed barley.
France, indeed, is reported to have recently sold wheat and feed barley to China.
The European Union’s (EU) non-durum wheat exports so far in 2022/23 are 13.25 MMT, according to data from the European Commission.
That was nearly 10% ahead of the same time a year ago.
France remains the largest wheat exporter at 5.46 MMT, while Romania, Germany, Latvia, and Poland followed, shipping less than 2.0 MMT each since the July 1 export calendar began.
Meantime, French farm office FranceAgriMer reported that 97% of the country’s 2022/23 soft wheat crop has been planted as of November 14.
As for durum wheat, 74% of the area is estimated to be completed.
The country struggled with widespread drought last season, but so far, weather has been mostly favorable for producing a high-quality, high-yielding crop.
The autumn’s weather conditions have been very favourable for sowing.
Nearly all (98%) of the crop is currently rated in good-to-excellent condition.
France is Europe’s top wheat producer.
From the Black Sea basin, Ukraine and Russia agreed to extend the Black Sea Grain Agreement last week.
The deal, which Turkey and the United Nations (U.N.) brokered, allows grain exports from Ukraine’s Black Sea ports.
The deal is good for at least 120 days (4 months).
United Nations Conference on Trade and Development secretary general Rebeca Grynspan said there was still work to be done, especially on fertilizers, as there are around 300,000 tonnes of fertilisers blocked at Russian ports.
She said there aren’t problems with US sanctions exemptions on Russian exports but the situation is more complex with the EU.
Meantime, a shipment of Russian fertiliser has been exported to Malawi.
Meantime, an onslaught of Russian missiles has left 10 million people in Ukraine without power, according to Ukrainian President Volodymyr Zelenskyy.
The situation has prompted the UN to warn of an even greater humanitarian crisis in Ukraine as winter approaches.
In this context, Russian officials signalled they are open to high level talks with the US on strategic stability, which is being taken as another small step towards hopes of an ultimate cease-fire.
From Ukraine, as the last few months have proven, Ukraine’s export abilities are highly dependent on the ability to ship cargo via the Black Sea.
Unfortunately, there’s not currently a viable “Plan B” to move grain by truck and/or rail.
The maximum export capacity via ground transportation is currently around 2.7 million metric tons per month, per data tabulated by European trade association Coceral.
Farmers have already completed the 2022 wheat and barley harvests, threshing 19.4 million and 5.6 million tonnes respectively.
Meantime, 12.3 Mt of corn were harvested as of 17 November, from 50% of the sowing area.
Analysts were expected the harvest could total 27.5 million to 27.9 million tonnes.
However, APK-Inform said in a report that the prospect is for a large part of the corn crop to stay in fields this winter, due to low domestic prices, difficulties with field work caused by the war and high fuel prices.
There are also concerns about grain drying capacity because of energy problems in the country.
From Russia, Sovecon on Friday had reduced its forecast for Russia’s sunflower seed crop this season due to rains.
Notabily, Sovecon reduced the crop estimate by 900,000 tonnes to 16.1 million tonnes due to significant delay in harvesting in the central and Volga regions of the country.
As of Nov. 10, Russian farmers had produced 11.6 million tonnes of sunseeds from 6.4 million hectares compared with 15.1 million tonnes from 9.5 million hectares around the same date a year ago.
The harvesting of the current sunseeds crop is lagging badly.
Only 64% of the area has been harvested so far, whereas typically it is above 90% at this time of the season.
The last time such a low harvesting pace was recorded was in 2017, when 15% of the fields were left unharvested, Sovecon said.
Meantime, on Friday the Russian agriculture ministry revised the export tax for wheat, corn and barley.
Particularly, as of Nov. 23, the export duty on wheat will decrease to 2,735.2 from 2,922.1 rubles per ton a week earlier.
The duty on barley, will also decrease to 2,430.0 rubles from 2,686.7 rubles per ton a week earlier.
Ditto for corn, that will be down to 193.8 rubles from 447.5 rubles a week earlier.
This new duty rates will be in effect through November 29, inclusive.
The duties were calculated based on indicative prices: $312.5 per ton for wheat ($312.3 a week earlier), $286.7 for barley ($288.5), $233.9 for corn ($236.4).
From the Middle Kingdom, China’s custom’s data showed 550k MT of corn was brought in during October – that was a 58% lower volume yr/yr.
Through the calendar year, China has imported 27.5% less corn than 2021 at 19.01 MMT.
China’s Customs also reported wheat imports were 1.24 MMT in October, a 157% increase yr/yr.
Through October of ’22, Customs tracked 7.87 MMT of wheat – a 2.6% lighter volume than the same time in 2021.
China’s soybean imports from Brazil fell 15% in October from the same month last year.
Meanwhile, imports from the United States were flat from a year earlier, data showed on Sunday.
Notabily, China imported 2.8 million tonnes of the oilseed from Brazil in October, down from 3.3 million tonnes a year earlier, according to the General Administration of Customs.
Overall soybean imports fell 19% in October from a year earlier to 4.14 million tonnes, the lowest for any month since 2014.
Arrivals from the United States, edged down to 772,938 tonnes from 775,331 tonnes a year earlier.
For the first 10 months of the year, China brought in 49.31 million tonnes of Brazilian beans, down from 52.75 million tonnes in the same period of 2021.
Imports from the United States for January to October came in at 20.1 million tonnes, down from 22.57 million tonnes the previous year.
From South East Asia, high commodity prices has lead to an increase in India’s wheat and canola acres, which are up 15% year-over-year, per the latest data from the country’s farm ministry.
Indian farmers have planted wheat on 4.5 million hectares since October 1, up 9.7% year-over-year, according to data from the Indian farm ministry.
Per latest data from the Ag Ministry wheat was planted on 10.1Mha as of 18 November, up from last year’s 8.8Mha.
Hot weather in March severely affected the 2022 crop and curtailed plans for Indian wheat exports while driving local prices up 27% since May.
Inventories are at a multiyear low, creating additional incentive to replenish domestic stocks.
Late rains in October and November increased soil moisture boosted planting, said growers.
India is the second largest wheat producer in the world.
Meantime, the area planted to rapeseed stood at 6.3Mha, up from last year’s 5.5Mha.
From Australia, local markets ended Friday mixed.
Prompt markets held for wheat and barley while out the curve APW1 bids pulled away aggressively at the back end of the week, more quality wheat being discovered as harvest progressed in parts of NSW.
Canola markets also started to lose ground late on Friday with bids coming off $15-20/t with a combination of weaker offshore prices and harvest pressure, with a bumper canola crop coming off in WA.
Eastern Australia’s rainy, hailing, windy and cold conditions did not make for ideal harvest weather!
The Bureau of Meteorology said another vigorous cold front and westerly winds should cross parts of the south and east today.
The forecast is looking promising for a dry week after today.
On the international trade scene, Egypt’s state grains buyer said on Saturday it was seeking vegetable oils in an international purchasing tender for arrival Jan. 10-31, 2023.
The General Authority for Supply Commodities (GASC) said traders should submit bids for payment via 180-day letters of credit.
The deadline for offers is Nov. 22.
GASC also set a tender for local vegetable oils, seeking at least 3,000 tonnes of soyoil and 1,000 tonnes of sunflower oil for delivery between Jan. 15-30.
The deadline for offers is also Nov. 22.
Watching this week’s market, the Thanksgiving week starts out with the weekly Export Inspections report today in the afternoon, and Crop Progress report, overnight after the sessions close.
USDA Cold Storage data will be released on Tuesday.
Skip ahead to Wednesday and EIA will release weekly ethanol production and stocks data.
US markets and government will be closed on Thursday in observance of Thanksgiving.
That pushes weekly Export Sales data to Friday in the afternoon.
The markets open back up on Friday at 8:30 CST, with a shortened session.
Friday will also mark expiration of the December grain options.
That’s all, thank you.
We wish you a good day and a good start to the week.
Author: Sandro F. Puglisi
