Good morning Farmer Family …
It should be noted that starting past week, we no longer examining contracts expiring in December.
US farm markets were mixed but mostly lower past Friday.
Corn prices faded 2.16% lower.
Soybeans showed some upside recovering a portion of the steep losses incurred on Thursday, as closed 0.61% higher at the bell.
Meal stayed up 0.59% at the end of the session.
Soybean oil closed down another 3.21% in the end week session.
Wheat losses were variable, but still double digit.
Notabily, Chicago SRW ended the day 2.81% lower.
Kansas City HRW dropped 2.19% on the day.
Minneapolis HRS closed Friday 1.79% lower.
For the week, corn prices had a late week collapse, sending March down 3.72% week over week.
Soybeans had a strong start to the week that, joining with Friday’s gains, helped to offset a collapse on Thursday, pushing January contract up 0.16% from Friday to Friday.
Meal rallied 4.38% in the Jan contract.
Soybean oil has been the weak spot of the complex, with a 9.05% weekly loss.
Wheat headed lower across the complex along all the week.
Chicago were down 4.52% since prior Friday
Kansas tumbled 4.53% over the week.
Minneapolis spring wheat was down 2.97%.
Corn prices mainly dipped over concerns about export demand for U.S. supplies.
The United States is considering legal action against Mexico amid its plans to ban all GMO corn imports by 2024.
This move would be a violation of the USMCA trade pact, according to Secretary of Agriculture Tom Vilsack.
Also, in Brazil analysts are forecasting the country will produce a record of crop corn in 2022/23.
Past week, the EIA reported 1.108m barrels of ethanol were produced daily during the week that ended 11/25.
That was down 23k barrels per day from the week prior.
However, ethanol stocks were 105k barrels higher at 22.934 million, reaching a 25-week high.
Thursday’s very weak US export news, added more pressure on prices.
Notabily, the U.S. Agriculture Department (USDA) said export sales of wheat totalled 162,500 tonnes in the week ended Nov. 24, well below the low end of analysts’ forecasts that ranged from 300,000 to 725,000 tonnes.
Week’s export shipments were 271,230 MT for a season total of 9.495 MMT.
That is below last year by 3.4%.
The USDA reported weekly corn export sales of 632,700 tonnes.
The market had expected 475,000 tonnes to 1.1 million tonnes.
That was down from 1.85 MMT the week prior and was 59% of the sale made during the same week last year.
Accumulated shipments sat at 5.773 MMT (227 mbu) as of 11/24.
As for soybean, USDA confirmed Weekly Export Sales at 693,838 MT.
Analysts were expecting to see at least 550k MT.
The accumulated soybean export reached 19 MMT through 11/24.
As for products, FAS data had soymeal sales at 185k MT, compared to 516k MT last week and 150 – 500k MT expected.
Accumulated soymeal exports were 1.494 MMT through 11/24, trailing last year by 19.3%.
For bean oil the weekly report showed 2,306 MT of net cancelations, compared to pre-report estimates of 0-20k MT.
Soy oil exports were at 11,474 MT for the season through 11/24 – trailing last year by 78%.
However, corn, beans and soybean oil, got a most pressure, after some disappointing biodiesel blending recommendations were released by EPA, on Thursday.
The U.S. Environmental Protection Agency, indeed, boosted required biofuel use to 20.82b gallons of renewable fuels for 2023, of which 5.82 billion would be advanced biofuels (mostly from soy oil).
The prior requirement was 20.63b gallons, so the 2023 number is just a ~1% increase.
That suggests around 15b gallons of ethanol will be required under the new quotas in 2023, with a very small increase by 2025.
Ultmately, the USDA released past week their’s monthly Grain Crushing and Fat & Oil reports.
Notabily, data showed 448.895 mbu of corn was used for ethanol during October.
That was up 17% from September’s pull, but down 4% yr/yr.
With that, 1.745m tons of DDGS were produced, and 186,770 tons of corn oil – a 3-mo high.
NASS also confirmed 196.64 mbu of soybeans were processed during October.
That was above the average of pre-report estimates (195.9), was up 17.33% from September, and was just 0.8% below the all time record.
Soybean oil stocks, however, were 2.094b lbs, near what trade looking for 2.107b ahead of the report.
On Friday, the wheat complex extended losses to a fresh three-month low as modest weekly U.S. exports kept traders’ focus on competition from cheaper Black Sea supplies.
Wheat prices fell even as Canada’s all-wheat crop turned out smaller than expected due to dry conditions, Statistics Canada reported (read more below).
Corn also fell, while soybeans rebounded, consolidating after the selloff in the previous session.
Soybeans and wider commodity markets had been underpinned during past week by signs China was softening COVID-19 rules after rare public protests in the world’s second-largest economy.
In this context, on Friday corn basis bids slid 2 to 5 cents lower at three Midwestern ethanol plants while holding steady elsewhere across the central U.S..
Soybean basis bids were mostly steady across the central U.S., but did sink 10 cents lower at an Iowa processor and 10 cents at an Iowa river terminal.
Gulf HRS basis found considerable support past week as rail performance deteriorated in anticipation of the rail strike and demand from the US milling industry remained strong.
HRW out of the Gulf softened marginally.
As wheat futures decrease, many farmers may wait until after the new year to make any new sales.
According to one trader, inverted markets continued to create variability in the HRW basis.
Meanwhile in the PNW, HRW and HRS basis held strong due to domestic demand, despite low farmer engagement and sluggish export demand.
Soft white wheat prices dropped in search of support.
Commodity funds on Friday were net buyers for 1,500 lots of soybeans but net sellers for 10,500 lots of corn and 7,000 lots of wheat.
After the sessions close, CFTC’s weekly CoT report showed managed money funds were buying corn through the week that ended 11/29.
Their net long grew 20.8k contracts to 191,631 – with 14k new longs and 7k fewer shorts.
Commercial corn trader open interest shrank by 10.5% through the week as the Dec options expired and deliveries began.
More longs were closed than shorts, expanding the groups net short by 20k contracts to 440,927 contracts.
As for soybean, the report showed managed money was 102,104 contracts net long in soybeans as of the 11/29 settle.
That was a 20k contract increase through the week, mostly fueled by net new buying.
Commercial soybean traders added 12k short hedges, with 4k fewer longs, for a net short of 144,388 contracts.
Managed money firms were also net buyers in meal and soy oil through the week that ended 11/29.
As for wheat, Weekly CoT data showed CBOT wheat speculative traders extended their net short by 666 contracts to 54,068 during the week that ended 11/29.
The funds were little changed on net in KC wheat, with +1.5k contracts added on both sides their net long stayed at 17,129 contracts.
In MGE wheat, spec traders were 1,429 contracts net short at the 11/29 close.
That was 777 contracts more net short via light net new selling.
On this morning, Chicago soybeans rose for a second session, while wheat ticked up after dropping to a three-month low in the last session.
Corn, meantime, slid for a fifth consecutive session.
Notabily, the most-active soybean contract on the Chicago Board of Trade (CBOT) added 0.4% to $14.44-1/4 a bushel, as of 03:36 GMT. Wheat climbed 0.6% to $7.65-3/4 a bushel and corn fell 0.1% to $6.45-3/4 a bushel.
Demand, especially for soybeans, is likely to recover if China’s eases more restrictions.
Prolonged drought has left over a third of early planted soybeans in Argentina’s core farming region in regular to poor condition, the Rosario grains exchange said late Thursday, adding more dry and hot weather was expected in the days ahead.
Wheat has firmed today but overall we have record Russian supplies which are going to cap upside in prices.
Canada’s wheat and canola harvests turned out smaller than expected, but were still bigger than last year’s, a government report showed on Friday.
Indian farmers have planted wheat on 21.2 million hectares since Oct. 1, when the current sowing season began, up 6% from a year ago.
The United Nations food agency’s world price index fell marginally in November, marking an eighth straight monthly fall since a record high in March.
In energy markets, on Friday oil prices slipped 1.5% in a choppy session.
Brent crude futures settled down $1.31, a 1.5% drop, at $85.57 per barrel.
U.S. West Texas Intermediate (WTI) crude futures fell $1.24, or 1.5%, to $79.98 per barrel.
Both contracts, however, notched their first weekly gains at around 2.5% and 5%, respectively, after three consecutive weeks of drops.
Poland agreed to the EU’s deal for a $60 per barrel price cap on Russian seaborne oil, allowing the bloc to move forward with formally approving the deal over the weekend.
European Commission President Ursula von der Leyen said the Russian oil price cap will be adjustable over time so that the union can react to market developments.
Russian Urals crude traded at around $70 a barrel on Thursday afternoon.
The cap was designed to limit revenues to Russia while not resulting in an oil price spike, officials said.
However, Russian oil output could fall by 500,000 to 1 million bpd early in 2023 due to the ban on seaborne imports from today, two sources at major Russian producers said.
Traders closely watched over the weekend the OPEC+ meeting.
OPEC+ as expected, sticked to its target of reducing oil production by 2 million barrels per day (bpd).
Some analysts believe that crude prices could fall as the group does not made further cuts.
However, China is set to announce an easing of its COVID-19 quarantine protocols.
More Chinese cities eased COVID-19 curbs over the weekend, though a patchwork easing in policies sowed confusion across the country on Monday.
The U.S. oil rig count, an indicator of future production, remained unchanged past week, according to data from Baker Hughes.
Money managers cut their net long U.S. crude futures and options positions in the week to Nov. 29, the U.S. Commodity Futures Trading Commission (CFTC) said.
Thus, on this morning, oil prices rose as much as 2%.
Notabily, Brent crude futures were last up 72 cents, or 0.8%, to $86.29 a barrel at 04:30 GMT, while U.S. West Texas Intermediate (WTI) crude futures gained 70 cents, or 0.9%, to $80.68 a barrel.
In ocean freight markets, the Baltic Exchange’s dry bulk sea freight index marked its biggest weekly percentage gain in almost two months, although declining on Friday on a fall in capesize rates.
The overall index, indeed, shed 14 points, or about 1%, to 1,324.
However, the main index gained 11.4% for the week, its biggest rise since Oct. 7.
Notabily, the capesize index on Friday was down 51 points, or about 3.3%, at 1,519.
It posted a weekly loss of 5.8%.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes of coal and steel-making ingredient iron ore, decreased $422 to $12,598.
The panamax index on Friday rose 16 points, or about 1%, to 1,618.
It rose 9.4% for the week, its highest since Sept. 9.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, increased $142 to $14,564.
The supramax index lost 3 points to 1,162 on Friday, extending its decline for a fifth straight session.
In equity markets, US stocks past Friday settled mixed.
U.S. Nov nonfarm payrolls rose +263,000, stronger than expectations of +200,000.
The Nov unemployment rate was unchanged at 3.7%, right on expectations.
U.S Nov average hourly earnings eased to +5.1% y/y from +5.6% y/y in Oct but were still higher than expectations of +4.6% y/y.
After the payrolls report traders were betting that the Fed would raise its policy rate from the 3.75%-4% range implied earlier to 4.92% by March 2023 and to the 5%-5.25% range by May, based on futures contract prices and the CME Fedwatch tool.
Before the report, the rate was seen topping out at 4.75%-5%.
As a results, stocks initially have been sold off while bond yields jumped.
However, then stocks recovered from their worst levels as T-note yields fell back for the remainder of the day.
Notabily, the 10-year T-note yield Friday finished the day down -0.1 bp at 3.504% after initially climbing to 3.633%.
Benchmark 10-year note yields were up 2.7 basis points to 3.554%, from 3.527% late on Thursday.
The 30-year bond yield was last down 3.9 basis points at 3.594%, from 3.633%.
The 2-year note yield was last was up 7.1 basis points at 4.3255% from 4.254%.
In this context, the Dow Jones Industrial Average rose 34.87 points, or 0.1%, to 34,429.88.
The S&P 500 fell 4.87 points, or 0.12%, to 4,071.7 and the Nasdaq Composite dropped 20.95 points, or 0.18%, to 11,461.50.
The S&P, Nasdaq and the Dow all boasted their second weekly gains in a row, with the Nasdaq led the charge with a 2% advance.
The S&P added 1% for the week while the Dow was up 0.2%.
On this morning, Asian shares were mostly higher.
Notabily, Tokyo’s Nikkei 225 climbed 0.2% to 27,820.40 and the Kospi in Seoul shed 0.6% to 2,419.32.
The Hang Seng in Hong Kong was up 715 points or 3.8%, at 19,392.45 and the Shanghai Composite added 52 points, or 1.6%, to 3,207.94.
In Sydney, the S&P/ASX 200 advanced 0.3% to 7,325.60.
Hopes for fewer disruptions to manufacturing and trade have risen as Chinese authorities begin lifting some of the most onerous restrictions imposed.
In currency trading, on Friday the dollar gradually gave back its gains after Chicago Fed President Evans said in order to cool price pressures, “we probably are going to have a slightly higher peak of the fed funds rate, even as we likely will step down the pace of rate increases.”.
Earlier it had jumped sharply in response to the jobs data, gaining as much as 0.82%.
In this context, the dollar index was last down 0.13% on the day against a basket of currencies at 104.50, and the euro gained 0.10% to $1.0540, the highest since June 28.
The greenback slipped 0.71% on the day against the Japanese yen to 134.39.
It earlier reached 133.62 yen, the weakest since August 16.
The greenback had tumbled, past week, after Fed Chairman Jerome Powell said on Wednesday that it was time to slow rate hikes, raising hopes that the Fed was closer to the end of its tightening cycle.
On this morning, the dollar fell to 134.56 Japanese yen from 134.39 yen late Friday.
The euro rose to $1.0577 from $1.0540.
Going back to analyzing the other agricultural markets …
From Canada, despite improved growing conditions overall relative to 2021, weather in the southwestern and west-central Saskatchewan and southern Alberta remained dry, negatively impacting crop output.
Indeed, per latest data from Statistics Canada published on Friday, total Canadian wheat production is estimated at 33.8 MMT in 2022.
That is the largest crop since 2020 and the third highest production on record.
However, that was down 900,000 MT from the September forecast and at the bottom end of trade estimates.
Spring wheat output specifically was trimmed 421,000 MT from Statistic Canada’s September forecast to 25.679 MMT.
The major cut came in the durum crop estimate, which at 5.443 MMT was cut from 6.1 MMT in September.
Data from Statistics Canada also showed 2022/23 corn production at 14.539 MMT.
That was down 400k MT from the September report, and the average pre-report estimate had 14.8 MMT plugged in.
Canadian canola production is estimated at 18.17 MMT, down from the 19.1 MMT forecast in September and below even the lowest trade estimate.
Their soybean production is now forecasted at 6.543 MMT, mostly unchanged from Sept.
Meantime, producers’ deliveries of common wheat in week 17 of the shipping season, were at 669,9k mt.
That was stronger from 586,8k posted a week erlier.
Deliveries of durum wheat, were firmer at 170.6k mt, but sligthly down from 186k mt a week earlier.
Meantime, Canada exported 421.1k mt of common wheat in week 17 of the shipping season.
That was down from 447.8k mt posted a week earlier.
Durum wheat exports, also were weaker at 193.5k mt, down from 205.2k mt a week earlier.
Meantime, total Commercial Stocks of common wheat stood at 2.810,4k mt, up from 2.682,2k mt a week earlier.
Durum total commercial stocks, were also higher at 772,2k mt, up from 766,6k mt posted the prior week.
Cumulative exports for common wheat are now at 6.402,1k mt.
That is compared with 4.167.7k mt year ago to date.
As for durum wheat, cumulative exports reached 1.476,5k mt, vs 1.068,4k mt year ago to date.
Meantime, cash bids for durum wheat continued trending lower week over week.
Indeed, looking at the average regional price of C$490.33/mt as of Dec 2, that was C$2.74/mt weaker from the prior week.
From South America, Brazilian soybean crop, which farmers are finishing sowing, will reach an estimated record of 153.3 million tonnes in the 2022/2023 cycle driven by area growth, agribusiness consultancy Datagro said past Thursday.
If the projection is confirmed, production will rise by almost 21% from the previous season, Datagro said.
Farmers are planting an estimated 43.79 million hectares (108.2 million acres) with the oilseed this season, an increase of 762,000 hectares from the forecast in July and a 1.98 million hectare rise from the previous year.
“The increase in area takes place throughout Brazil, but more intensely in the states of the north, northeast and center west.”
However, Datagro also said farmers face concerns in the center-south region due to the La Nina weather phenomenon.
StoneX, on its part, pegged the current Brazilian soybean crop at 155.09 million tonnes, up from 154.35 Mt last month and up from 127.23 Mt last year.
StoneX also estimated the Brazilian 22/23 corn crop at 130.3 MMT, a 5.5% increase from their prior estimate.
They now have 2nd crop at 99.6 MMT, with the first crop UNCH at 28.6 MMT.
Meantime, Brazil’s corn exports hit 6 million tonnes in November, significantly higher than the 2.4 million tonnes exported in November last year.
Soybean exports in November were 2.6 million tonnes, up slightly compared to the 2.5 million tonnes shipped in November last year.
In Argentina, wheat production outlook is likely to face more cuts due to lower-than-expected yields, the Buenos Aires grains exchange said past Thursday, as the harvest of the grains advances.
In a weekly crop report, the exchange indeed said 2022/23 wheat production, which it current estimates at 12.4 million tonnes, is showing “yields below expected” as the harvest gained pace.
Until last Wednesday, Argentine farmers had harvested 23% of the wheat planting area, a 22 percentage point delay versus the harvest a year earlier.
According to the Rosario grains exchange (BCR) total harvest estimate is now to just 11.8 million tonnes.
On this wake, according to BCR, Argentine wheat exports could reach its lowest level in eight years in the 2022/23 campaign at just 6.5 million tonnes.
Meantime, the Buenos Aires grains exchange said the planting of 2022/23 soybeans continued to be delayed.
Soybean planting, was 29.1% complete.
That was 17.2 percentage points behind the previous season overall.
It’s estimates 16.7 million hectares will plant this season.
The Rosario grains exchange (BCR) said on Friday across the country, forecasts a total soybean planting area of 17.1 million hectares, with a harvest estimate of some 48 million tonnes, above the 42.2 million harvested in the previous season.
However, sowing was still being held up by “the lack of surface humidity and high temperatures”, despite some rains in recent days.
On the other hand, corn planting for the 2022/2023 season is 25.4% complete on the 7.3 million hectares projected, while producers have begun to sow batches of late-planted corn.
Refinitiv Commodities Research reports that due to persistent drought and planting delays in Argentina 2022-23 maize production forecast has been cut by 1.2Mt, to 48.0Mt.
Long-awaited rains during second the half of November were insufficient to recharge soil moisture reserves, which are at a five-year low in most major producing provinces.
The latest ENSO outlook indicates that the current La Niña event is expected to last until end 2022, and may not completely dissipate by early 2023.
In Europe, another day of decline on grain and oilseed prices was on Friday.
European Union soft wheat exports during the 2022/23 marketing year were 13.89 Mt through November 27, which is slightly ahead of last year’s pace so far.
France on its own accounted for 5.65 Mt of the total, with North Africa as the main destination.
Algeria, Morocco, Egypt, Nigeria and Saudi Arabia were the top five destinations.
EU barley exports were at 2.74 MMT vs 4.63 MMT last year’s pace so far.
Meantime, EU corn imports are more than doubling last year’s pace so far, with 12.12 Mt, through November 27.
Spain, the Netherlands, Poland, Portugal and Italy have been the top five buyers.
EU soybean imports reached 4.28 MMT through November 27, which is moderately below last year’s pace so far.
EU soymeal imports were also slightly lower year-over-year, with 6.54 million metric tons during the same period.
It should be noted, however, that rapeseed imports are estimated at 2.9 Mt by the European Commission so far, up 840 kt over one year.
However, recently the rise of the euro penalized EU export competitiveness.
Recession fears and competitiveness of Black Sea origins, made an additionally pressure on grain and oilseed prices past week.
Meantime, on Friday, French farm office FranceAgriMer reported that 2022/23 soft wheat crop quality continues to be pristine, with 98% rated in good-to-excellent condition through November 28.
Plantings are close to being finished, including 99% of the soft wheat crop and 89% for durum.
For winter barley, crop condition dipped to 97% in good/excellent condition by Nov. 28, from 98% the previous week.
Mild weather has kept physiological progress running six to seven days ahead of the prior five-year average.
From Russia, the Russian agriculture ministry revised the export tax for wheat, corn and barley.
Particularly, as of Dec. 7, the export duty on wheat will slightly increase to 2,806.8 from 2,788.0 rubles per ton a week earlier.
Ditto on barley, the duty will increase to 2,315.0 rubles from 2,308.6 rubles per ton a week earlier.
For corn, will continue to 0 rubles also this week.
This new duty rates will be in effect through December 13, inclusive.
The duties were calculated based on indicative prices: $313.1 per ton for wheat ($313.6 a week earlier), $283.0 for barley ($283.7), $215.4 for corn ($222.1).
From Ukraine, the country has exported almost 18.1 million tonnes of grain so far in the 2022/23 season, down 29.6% from the 25.8 million tonnes exported by the same stage of the previous season, agriculture ministry data showed on Friday.
The volume included more than 6.9 million tonnes of wheat, 9.7 million tonnes of corn and about 1.5 million tonnes of barley.
Last Saturday, Ukraine and allied nations launched a plan to export $150 million worth of grain to countries most vulnerable to famine and drought.
Meantime, the first ship had already arrived in Ethiopia with a cargo of wheat and would be followed by a second vessel.
A third charge will be loaded with wheat, destined for Somalia.
By early next year, a total of around 60 ships is expected will have taken part in the initiative.
From the Middle Kingdom, China’s central bank will focus on supporting the slowing economy, People’s Bank of China Governor Yi Gang said on Friday, adding that domestic consumer inflation is likely to stay moderate in 2023. The central bank’s accommodative policy will help support China’s economic recovery and employment, Yi said.
“Our focus is growth right now,” adding that China’s economic growth is slower than expected due to the impact from the COVID-19 pandemic and other headwinds.
Meantime, the country plans to auction off another 500k MT of its imported soybean reserves on December 9, according to a new statement from the country’s National Grain Trade Center.
China has offered a series of similarly sized auctions throughout 2022 to boost local supplies and quell high prices.
From South East Asia, Indian farmers have planted wheat on 21.2 million hectares since Oct. 1, when the current sowing season began, up 6% from a year ago, government data showed on Friday, as record high prices and higher soil moisture levels have encouraged planting.
Domestic wheat prices have increased 33% in 2022 to 29,000 rupees ($355.19), exceeding the government buying price of 21,250 rupees ($260.32).
With increased planted area due to high domestic prices and replenished soil moisture, forecasts indicate India may harvest a bumper wheat crop in 2023.
Farmers have also increased acreage under rapeseed, the key winter-sown oilseed, to 7.7 million hectares as of Dec. 2, up from last year’s 6.9 million hectares, the Ministry of Agriculture & Farmers’ Welfare said in its weekly update.
Between Oct. 1 and Dec. 2, the total oilseed area touched 8.3 million hectares, up from 7.5 million hectares during the same period last year.
From Australia, local markets rounded out the week down $20-30/t across all commodities.
Harvest pressure has hit and crops continue to come off in a rapid fashion now with clear weather.
ASX wheat contract settled at $399.50/t on Friday, the lowest since the middle of this year.
With clear skies and warmer weather harvest is finally getting a good run with some impressive yields and variable quality into bins.
Rainfall across southern Qld will be welcome for sorghum crops that are either in the ground or yet to be planted.
The forecast for the next 8 days has some widespread showers developing but totals are expected to be less than 10mm except for southern WA and southeast Vic where totals are expected to be 10-25mm.
On the international trade scene, importers in Thailand have reportedly purchased around 123,000t of feed wheat from Australia, at $349/t C&F for both Jan and June shipment.
Watching this week’s market, we start the first full week of December with the weekly Export Inspections report today in the afternoon.
Census will release monthly trade data on Tuesday.
On Wednesday the EIA will release the weekly ethanol production and stocks data.
Thursday will see the weekly Export Sales report.
Friday rounds out the week with the monthly USDA Crop Production and WASDE reports.
That’s all, thank you.
We wish you a good day and a good start to the week.
Author: Sandro F. Puglisi
