Daily International Grain Market View

US farm markets moved down on Thursday,?partially erasing Wednesday's gains.?

In fact, corn prices eased around 0.4% lower.

Soybeans faded more then 0.9% by the close.?

Wheat losses were variable, with CBOT wheat that fell 0,27%.

Kansas wheat eased 0,81%.

Minneapolis wheat shedded 1%.?

On macro markets, oil prices rose on this morning, after wild swings the day before, on investor concerns that potential coordinated releases by the world's major economies of their official crude reserves to try to lower pricesmay have less of an impact than expected.

The market gyrations on Thursday followed a Reuters report that the United States had asked China, Japan and other big buyers to join a release of crude stocks from Strategic Petroleum Reserves.

Thus, Brent crude was up 53 cents, or 0.7%, at $81.77 a barrel by 04:37 GMT, after falling to a six-week low on Thursday before rebounding to close 1.2% higher.

U.S. West Texas Intermediate (WTI) crude for December delivery was up 49 cents at $79.50 a barrel, having swung through a more than $2 range the previous session before closing up.

The December contract expires on Friday and most trading activity has shifted to the January future, which was up 60 cents, or 0.8%, at $79.01 a barrel.

Both Brent and WTI are set for a fourth week of declines.

On equities markets, US stocks on Thursday settled mixed, with the Dow Jones Industrials falling to a 2-1/2 week low and the Nasdaq 100 climbing to a new all-time high.??

An +8% jump in Nvidia on Thursday led technology stocks higher and was supportive of the overall market.??

Also, better-than-expected U.S. economic data on Thursday was bullish for stocks.??

Infact,?U.S. weekly initial unemployment claims fell -1,000 to a 20-month low of 268,000, although that was slightly weaker than expectations of a decline to 260,000.??

Also, the Nov Philadelphia Fed business outlook survey rose +15.2 to a 7-month high of 39.0, stronger than expectations of 24.0.??

In addition, Oct leading indicators rose +0.9% m/m, stronger than expectations of +0.8% m/m.

A worsening of the pandemic in the U.S. is bearish for stocks after the 7-day average of new U.S. Covid infections rose to a 1-1/4 month high Wednesday of 90,155.

A decline of more than -5% in Cisco Systems on Thursday knocked the Dow Jones Industrials lower.?

Thus, the S&P 500 Index closed up +0.34%, the Dow Jones Industrials Index closed down -0.17%, and the Nasdaq 100 Index closed up +1.07%.?

Meantime, Asian stock markets were mostly higher Friday after Wall Street hit a record and Japanese inflation eased.

Market benchmarks in Shanghai, Tokyo and Sydney advanced. Hong Kong declined.

Investors are shifting focus from corporate earnings to the longer-term outlook for global economies and whether central banks might feel pressure to cool rising prices by rolling back stimulus faster than planned.

Inflation is currently the main focal area for the markets.

On Friday, Japan's government reported October consumer inflation eased to 0.1% over a year earlier from the previous month's 0.2%.

Thus, the Shanghai Composite Index rose 0.3% to 3,531.26 and the Nikkei 225 in Tokyo gained 0.4% to 29,718.62.?

The Hang Seng in Hong Kong sank 1.7% to 24,878.87.

The Kospi in Seoul advanced 0.4% to 2,958.64 and Sydney's S&P-ASX 200 added 0.2% to 7,391.60.?

New Zealand and Singapore declined while Bangkok and Jakarta gained.

On the weather side, lake effect snow will develop downwind from the Great Lakes into the

interior Northeast ending overnight Friday.

Rain and higher elevation snow for the Pacific Northwest through Friday evening.

A front extending from the Northeast to the Central Gulf Coast will move eastward off the East Coast and southward off the Gulf Coast by Friday morning.??

Mainly rain will develop along the front from the Northeast to the Central Gulf Coast tonight into Thursday morning.??

The rain will move eastward off the East Coast by Friday.??

Behind the boundary, lake effect snow will develop over parts of the Great Lakes.??

Furthermore, lake effect snow will develop downwind from Lakes Erie and Ontario tonight.??

Snow will also develop over parts of interior New England, while coastal areas will emain rain.??

On Friday, the lake effect snow ends over the Upper Great Lakes, while lake effect snow continues downwind from Lakes Erie and Ontario through Friday evening.??

Likewise, the light snow will also continue over parts of Northern New England through Friday evening.??

Meanwhile, another front moves onshore over the Pacific Northwest, moving to the Northern High Plains/Great Basin by Friday evening.?

The system will produce rain and higher elevation snow will develop over parts of the Northwest and expand into Northern California overnight Thursday.??

Snow will develop over parts of the Northern Intermountain Region and into parts of the Northern Rockies through Friday evening.?Scattered light rain and higher elevation snow will linger over parts of the Northwest through Saturday.?

The front moves southeastward to the Southern Rockies and Southern Plains by Saturday evening.

Elsewhere, easterly flow off the Atlantic will aid in producing showers

and thunderstorms over Florida overnight.?

Then, the aforementioned East Coast front moves southward over Florida, confining the showers and thunderstorms to the southern third of Florida.??

However, after the front moves offshore, the easterly flow will again move over Florida producing scattered showers and thunderstorms over parts of the peninsula on Saturday.

In this context, corn should get a good run at finishing the US harvest with a break in the weather.?

Corn in the US was 91pc harvested last Tuesday, soybeans 92pc.

On the demand side, USDA’s FAS reported 904,565 MT of corn was booked during the week of 11/11 in the weekly Export Sales update.?

That was on the low end of pre report estimates, and down 16% from last week and 19% below the prior four-week average.

Canada was the week’s top buyer with 230k MT booked, while Mexico and Japan also bought +200k MT.?

Corn exports were reported at 1.168 MMT, with Mexico as the top destination.?

That was a MY high for shipments, and brough the MYTD total to 7.78 MMT.?

As for sorghum, the weekly Export Sales report showed 323,064 MT were booked during the week of 11/11.?

That was a MY high led by sales to unknown and China.?

Sorghum shipments were just 2,576 MT, bringing the MTYTD accumulated export to 352k MT.?

As for soybean, the report showed 1.383 MMT of soybeans were booked during the week that ended 11/11.?

That was in line with expectations and was 13% above last week’s sales, but were still 20% below the prior four-week average.

China was the week’s top buyer with 727k MT booked, though 394k were previously reported as unknown.?

The weekly report showed soybean exports were 2.34 MMT, which was a 3-week low, slipping 12% below the prior four-week average and 7% below the same week last season.?

China was the top destination with 1.66 MMT, that brought their season to date total to 11.3 MMT of the 16.56 MMT total to all destinations.?

As for soymeal sales were 182,988 MT during the week of 11/11. That was also a 3-week low and was on the low end of estimates. Soymeal exports during the week were 230,467 MT, bringing the MYTD shipment total to 1.31 MMT.?

As for soybean oil, FAS reported 67,480 MT were sold for export.?

That was a season high, and the most for a single week since November 5th of 2020. Unknown destinations and the Dominican Republic were the top buyers.?

The weekly report showed 1,825 MT were shipped, which was 87% below the same week last year and left the MYTD total at a 57% drop yr/yr of 28,994 MT.?

As for wheat data showed 399,100 MT of wheat was sold during the week that ended 11/1,1climbing 40% higher week-over-week and 21% above the prior four-week average.

That was inline with pre-report estimates, and more than double the same week last year.?

Nigeria was the top buyer.?

HRW was the top variety with 29% of the total, though SRW made up 27% and spring wheat was 23%.?

USDA also reported a 6-week high in exports, of 310,881 MT.?

That brought the MYTD total to 9.27 MMT. the week’s shipments were 65% above the prior four-week average, 15% above the same week last year and the season’s pace trials by 20%.?

The EPA, meantime, reported that the U.S. generated 1.2 billion ethanol blending credits in October, which was slightly above September’s total of 1.16 billion.

Also, the EPA reported that the U.S. generated 420 million biodiesel blending credits in October, which was an 9.1% increase from September’s tally of 385 million.

In this context, corn prices stabilized above $ 5.70 / b on the December 2021 Chicago deadline.?

As for soybeans, market in Chicago has tried, as the day before, to approach the level of $ 12.90 / b.

However without reaching those level.?

Thus soybean prices are returning to the equivalent price levels at the end of September, thus completely retracing the downward movement observed over the recent period as given the levels reached, some operators are looking to mark profit taking.

As for wheat, prices in Chicago yesterday marked another sign of firmness, trading for SRW wheat due December 2021 at over $ 8.40 / b during the session.?

This level had not been traded since December 2012.?

Prices nevertheless subsequently eased, justified by profit taking, to finally appear at the close below the resistance of $ 8.25 / b.

Meantime, corn basis bids moved 2 to 5 cents higher at three Midwestern locations, while holding steady elsewhere across the central U.S..

Soybean basis bids tilted 6 to 9 cents higher at two interior river terminals and firmed 5 cents at an Ohio elevator while holding steady elsewhere across the Midwest.

From Canada, flooding in Canada caused shipping delays.

The port of Vancouver, which is Canada’s largest port, has lost all rail access thanks to floods and landslides.

The severe weather has shut down rail routes which Canada Pacific Rail and Canadian National Railway operate, halting the country’s largest rail companies from hauling grain.

There are over 20 vessels at the Port of Vancouver waiting to be loaded.?

The term force majeure is now being thrown around given the monumental delays.

While concerns are present, this is not expected to significantly alter Canada’s export outlook, due to the light harvest.

But, the rail disruptions are serious and could harm Canada’s economy if not fixed soon, especially with the holiday season here.

While we do not expect this weather to result in any big export backlogs, the potential disruption to the economy is something that needs to be eyed.?

Already consumers are dealing with inflation and this hiccup could translate to even higher freight costs.?

This could result in Canada moving more grain to the US in the near term via rail rather than to the port system.?

January canola futures fell 1.5% Wednesday as traders factored in transportation problems.?

From South America, seeding pace was advancing fast on the year, according to Brazilian supply company CONAB.?

The seeding had reached 79.2% of the estimated area on Nov. 13, a 12% increase on the week and above the 69% seen in the same period in 2020.

Dec and Jan Brazilian corn exports can be higher than expected - ~ 20mmt?

On the other hand, Anec raised corn export estimates for Nov to 3.079mmt, 16% above 2.647mmt estimated LW, but 38% below 4.936mmt YoY with considering possibility of shorter cargo loading, leading to 2-3.079mmt

Anec estimates Jan-Nov Brazilian corn exports at 17.632mmt, 40% below YoY.

In this context, FOB Santos basis should remain steady as exporters lowering their longs,while farmers have already sold 85% of corn.?

If farmers increase their sale pace, then we could see some pressure on basis.

In Argentina, rains in mid-October and early November have helped subside some of the worries surrounding La Nina.

The rains were especially critical for wheat, with much of the crop entering key stages of the development when the rains started occurring.?

Harvest has slowed thanks to recent rains, though drier weather this week will support fieldwork.

Consequentially, the Buenos Aires Grains Exchange forecasts the 2021/22 wheat harvest at 19.8 million tonnes, while the Rosario exchange sees it at 20.4 million.

Both estimates would set a record for wheat, which was 19 million tonnes set in 2018.

Meantime, the rains have also helped boost corn and soybean planting.

Indeed, while bean plantings had been running near average, corn pace is behind.?

However, as most corn gets planted in December, the rains may help quicken the pace.?

In this context, BAGE sees 55 million tonnes for corn production and 44 million for beans; Rosario sees 55-56 million for corn and 48.8 million for beans.

Meantime, Argentinian farmers had sold 34.11m mt of soybeans from 20/21 through Nov. 10, still behind last year's pace of 35.11mmt by this time of cycle.?

For 21/22, 3.13m mt have already been traded, compared to 3.90m mt on year, according to official data.

On the other hand, Argentina was main supplier of soybean oil to India in Oct, with 148,730 mt. volume was 44.7% down on year, according to Solvent Extractors' Association.

On European market, Matif wheat made fresh contract highs last night, printing values not seen since 2007.?

Despite many of the more vocal global wheat traders taking the sword to the contract at the recent Global Grains conference in Geneva, citing a lack of delivery points it is still relevant to say it is a deliverable contract and, given the French quality problems and over exporting higher grades, it still reflects the underlying problem with the European wheat balance sheet.

Chinese purchases of French wheat were also reported during the meeting.

Thus, the close deadline of December 2021 thus marked a new high by trading during the day at 301.00 € / ton for at the end of the session to mark a more moderate increase.?

The upward movement was also very noticeable in corn where the prices on Euronext mark new highs coming to negotiate above 250 € / t on the January 2022 contract.

In oilseeds, prices for both rapeseed and sunflower rose slightly yesterday, correcting slightly after the decline the day before.?

European rapeseed has found its way back upwards, in the wake of crude oil prices and a Malaysian palm that is still trending well.?

Prices on the Kuala Lumpur Stock Exchange, indeed, are notably driven by an acceleration in Malaysian exports since the start of the month and the weakening of the ringgit against the dollar.

Meantime, Consultancy Strategie Grains sharply cut its demand forecast for European Union wheat in 2021/22 as high prices were seen eroding exports and leading industrial processors to switch to maize.

Indeed, in a monthly grain report, the consultancy lowered its outlook for EU exports of common wheat, or soft wheat, by 1.6 million tonnes to 30.4 million tonnes.

Along with a cut to projected wheat use in livestock feed in favour of maize (corn) within the EU, this led Strategie Grains to increase its forecast for EU soft wheat stocks at the end of the 2021/22 season next June by more than 2 million tonnes to just over 12 million tonnes.

The competitiveness of maize against wheat and also barley led Strategie Grains to revise up by 1.5 million tonnes its forecast for maize use in EU livestock feed.

At the same time, the increased demand prompted the consultancy to raise its outlook for EU maize imports in 2021/22 by 1.1 million tonnes to 15 million tonnes, despite an expected seven-year high for domestic EU maize production at 67.8 million tonnes.

For next year's harvests, Strategie Grains said it currently expected EU farmers to sow slightly less wheat and maize, but increase slightly the barley area.

From the Black Sea basin, IKAR forecasts 2022 Russian wheat output at 79 MMT, which is higher than their prior 75.6 MMT forecast, but still below Russia’s Ag Ministry’s 84 MMT estimate.?

Meantime, the Ministry of Agriculture of Kazakhstan announced that harvesting work was finalized for cereals.

Despite unfavorable weather, the cereal harvest is estimated to reach 16.4 million tonnes, all cereals combined.?

Although reassuring in terms of the ability to meet domestic needs, the export potential will be lower than last year, thus confirming the scenario already expected by the USDA.

Partly offsetting lower yields - last year the former Soviet republic harvested 20.1 million tonnes of grains - is the higher quality of this year's wheat, which accounts for a bulk of the harvest, the ministry said.

In Ukraine, meantime, corn harvest is continuing, bringing new supplies to the market.?

Nevertheless, the logistical problems linked to railway difficulties and the cost of road transport remain an important element to follow, particularly in port areas in the short term.

Meantime, yesterday Black Sea wheat was quoted at $30/t higher.?

From the Middle East, Iran’s Ag Ministry foresees as much as a 2 MMT wheat production deficit for the 21/22 season, citing water shortage.?

From the Middle Kingdom, yesterday the Dalian Iron Ore Futures made fresh contract lows – at CNY$512.50/mt we are now back to levels not seen since the end of 2018.?

Interestingly Chinese Steel Rebar futures have also traded lower.

That is a clear indication of the construction slowdown in China.

Meantime, Chinese customs showed Oct corn imports at 1.3 MMT.

That is +14% from last year, with cumulative Jan-Oct imports showed +236% y/y to 26.23 MMT.?

Oct wheat imports of 480 KMT were down?-23% from LY.

However, total Jan/Oct imports of 8.08 MMT still +21% from last season’s 10-month pace.

In this context, Dalian corn was CNY$13/t higher.

From Australia, there is a hard push for headers to strip as much as they can before the rain arrives today and tomorrow in eastern Australia.

NNSW and Queensland are on the home straight, but Southern New South Wales and the Central Western region are struggling to get a clear run at harvest as moisture continues to thwart progress.

Grain quality since the rain last week has been variable with eastern NSW seeing some downgrades and issues with falling numbers and test weight.?

Western areas have avoided significant rainfall and still are achieving good quality grades.

Consequentially, markets have been negotiating with the quality profile risk with premiums emerging for sellers willing to commit to fixed grade.?

Fair to say though the rain has spooked significant grower selling liquidity and is helping squeeze some trades with November commitments.

Meantime, Australia exported 104,564 tonnes of canola in September, up 13 per cent from the August total of 92,138t, according to the latest export data from the Australian Bureau of Statistics (ABS).

Japan on 91,176t was the biggest market by far, with Nepal on 5846t and Malaysia on 5376t the second and third-biggest destinations respectively.

In September last year, Australia shipped 11,893t to Japan, or 11pc of the September 21 total.

Western Australia has already started exporting new-crop canola, and the first cargo for the season ex New South Wales is due to start loading later this month.

However it should to note that LNG tanker rates in Asia surged to a record high as a steady flow of US cargoes to the region boosts demand for shipsNaveSacco di soldi.

LNG shipments from Australia to Japan have surged by more than 400% in the last two months to $316,750/day.

Internationally, the International Grains Council reported their November 21/22 corn production estimate at 1.212 billion MT.?

That was a 2 MMT increase from October, reflecting a boost to the U.S. - at 382.6 MMT (15.062 bbu).?

That confirmed its estimate of last month on a global scale with stocks up compared to last year but still lower than the 2018/2019 and 2019/2020 campaigns.

Projected world corn ending stocks indeed, were upped by 2 MMT to 287 MMT.?

IGC’s November soybean production forecast was unchanged from October, with global output figured at 380 MMT, and 60 MMT of carryover to 22/23.?

As for wheat the International Grains Council reduced their wheat forecast by 4 MMT from October to 777 MMT in their November release, thus confirming a prospect of lower stocks of wheat in the main exporting countries on the 2021/2022 campaign at 53 Mt (compared to 54 Mt last month and especially 60 Mt the previous campaign).?

IGC expects EU and Kazakhstan to produce 500k MT less each, for 138 and 12 MMT respectively, with the remaining change coming from non-reported countries.?

2021/22 ending stocks were only down by 2 MMT to 274 in their update.?

On international trade scenario, South Korea's largest feedmaker Nonghyup Feed Inc. (NOFI) purchased around 69,000 tonnes of corn expected to be sourced from either South America or South Africa in a private deal on Wednesday.?

The grain is for arrival by the end of February.

Jordan has issued an international tender to buy 120,000 tonnes of optional milling wheat.?

The deadline for submission of price offers in the tender is Nov. 25.

The grain is for shipment between March and May.

A separate tender from Jordan for 120,000 tonnes of?feed barley closes on Nov. 24.

Taiwan purchased nearly 49.000 t of milling wheat from the United States in a tender that closed earlier today.?

The grain is for shipment between January 9 and January 23.

Japan's MAFF buys 122k mt of Dec-Feb wheat in a tender.

Author:?Sandro F. Puglisi

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