Yearly Archives: 2022

Mixed trade for wheat overnight

Better than expected inflation data saw pressure heaped on the USD which saw CBOT trade in to negative territory and took most of the gains out of KC and MGEX which both ended in slightly positive territory.  Matif closed only slightly lower, where as ASX finished another session higher with the Jan contract settling just shy of $400 at $398.

In cash markets, Philippines Import Group booked 2 x 55k FW cargoes from Australia for Mar/Apr shipment at a price of USD330-335/mt CFR.

Algeria’s tender results are expected later today after tendering for MW11.5 for Feb shipment.

Tunisia has tendered for 100k tonnes of optional origin durum wheat for Jan- Feb shipment, with a deadline set for tomorrow.

Brazil’s wheat harvest is nearly complete with 98.5% already harvested

Wheat, corn lower as Odesa disruption fears ease since Russian bombing power grid

 

China bought 40 soybean cargoes last week, some estimate China now 70-75 pct covered for Jan-Feb.

Canola is slightly weaker overnight.  Yesterday nearby canola months pushed to new highs for the move, with January leading the charge on late short covering/short rolling.  March rallied with the short covering strength in January due to scale-up Jan/March selling to $20.00 over with spec short covering and fresh trend following fund buying added to the supportive tone in March.

 

Soybeans dominated what there was of a weak overnight trade volume, back on the downside after two separate swings so far this week.  Soybeans continue to fare better than the feed grains in general, thanks to ongoing overall demand, with corn and wheat still lingering near move lows.

Tunisia has tendered for 100k tonnes of optional origin durum wheat for Jan- Feb shipment, with a deadline set for tomorrow.

Russia’s Interfax news agency said that the country could increase their remaining 2022/23 grain export quota, from the current 25.5 MMT level.

Brazilian government data showed cumulative soybean exports to China over the first 11 months of 2022 at 52.5 MMT, down 13% from last year’s 60.5 MMT, with Spain the second largest buyer at 3.3 MMT (-9% YoY).

Brazilian exporting agency Anec sees December soybean exports reaching 1.77 MMT, up from their previous 1.7 MMT projection last week; corn is seen at 6.70 MMT, up from 5.43 MMT expected previously, with meal up from 1.54 to 1.60 MMT as well, and wheat up from 659 to 670k tonnes.

FranceAgriMer raised their estimate for 2022/23 French soft wheat exports outside the European Union, from 10.0 to 10.3 MMT (a new three year high), with exports inside the Union falling from 6.94 to 6.73 MMT this month.

 

Mpls wheat -8

KC wheat -12

Chic wheat -8

Matif wheat -3

Canola -1

Rapeseed -6

Soybeans -8

Soybean oil -27

Crude +139

Corn -4

CAD -10

Wheat futures continued their sell off on Friday closing out the week, -21.50c lower for Chic Dec as funds continue selling wheat notching up 7 consecutive weeks as net sellers.

This week’s forecast is looking very hot and dry for Argentina with temps exceeding 30deg across much of the wheat belt.  The Rosaria Grains Exchange had already lowered their estimate to only 11.8MMT.  Their wheat harvest is currently at 23% complete although BAGE has said more cuts are likely due to poor yields so far.

Australia’s winter crop harvest has been picking up pace on the East Coast thanks to recent dry weather which looks set to continue this week.  The recent drop has seen the APW1 ASX contract drop from the high in November of AUD503/mt down to now AUD399.50 on the Jan contract.

 

Pakistan has approved 450k tonnes of Russian new crop wheat imports, offered at $372/tonne C&F for Dec-Jan-Feb shipment; the country also bought 500k tonnes of wheat in an international tender that closed late last week, also at $372/tonne C&F and also for D-J-F shipment (though optional-origin).

Ukraine’s Ag Ministry reported the country’s 2022 grain harvest at 41.9 MMT, or 85% complete, as of December 1; corn was 60% done at 15.5 MMT

The Ukraine grain traders Union UGA reported November wheat exports at 1.58 MMT, down from 1.98 MMT in Oct, with all grains at 2.3 MMT, down from 3.5 MMT last month.  Cumulative exports since July 1 remains down almost 30% year over year at 18.3 million tonnes.

Russian consultancy SovEcon reported November grain exports at 4.85 MMT, up from 4.70 MMT in Oct, with wheat even MoM at 4.30 MMT.

Statistics Canada on Friday reported 2022 all wheat production at 33.8 MMT, up from 22.3 MMT last year but below both 34.7 MMT in September and the 34.8 MMT trade estimate.  Canola output came in at 18.2 MMT, up from 13.8 MMT LY but below 19.1 MMT previously and the 19.2 MMT guess.  Corn output fell from 14.9 MMT 14.5 MMT, down from the 14.9 MMT estimate.

The Rosario Grains Exchange on Friday estimated 2022/23 Argentine wheat exports at just 6.5 MMT, down from 14.5 MMT in ‘21/22 and the lowest in eight years.  The current harvest is seen at 11.8 MMT, down from 19 MMT initially estimated in May and the record 22.1 MMT last season.

 

The much anticipated EPA announcement revealed the blending obligations for the fuel industry for the next 3 years.  They called for overall biofuels growth from 2023 to 2025 of about 2 billion gallons which also included a modest growth projection in corn based ethanol.  Growth and investment on the production side of biofuels, particularly renewable diesel, has been dramatic, quickly creating current production abilities equivalent to or beyond those projected by the EPA in these RFS projections.  Many companies have expanded or are building new soybean and canola plants to meet an obvious growing demand for “clean” renewable fuel which is plant based and which can replace fossil fuel carbon threats to our planet.

 

Then StatsCan printed a bullish canola number in Friday’s report.  Since the canola export program is frontend loaded and producers are content to sit tight, futures made a big move up Friday

Updated CGC weekly

This year             Last year

Supply                19,148                 15,614

Deliveries           6,075                   6,142

Exports               2,377                   2,142

Crush                  2,519                   2,335

 

Mpls wheat +3

KC wheat +4

Chic wheat +3

Matif wheat -1

Canola +1

Rapeseed +4

Soybeans +8

Soybean oil +5

Crude +246

Corn +2

CAD +22

 

Canola came in lower than the estimates.  If the trade believed that, I would think that the Jan/Mar spread would have ran back up, no change on the spread (+2.4) since the report was published

Spring wheat came in right in the middle of the estimates

Canola, rapeseed, soybeans and soybean oil got smacked yesterday as spec longs bail hard on the EPA’s proposal for Bio-diesel that was quite disappointing as it only slightly raises the biomass-based diesel blending mandate slightly over the next three years, rising from this year’s 2.76 billion gallons to 2.82 billion in 2023, 2.89 billion in 2024 and 2.95 billion gallons on 2025.  Some will argue this is mostly a moot point, though, as biodiesel production in 2022 is already expected to exceed 3.0 billion gallons, above the blending proposal for 2025 and supported by the incentives included in the Inflation Reduction Act.  On the other hand, though, the proposed levels essentially eliminate the “guarantee” of market ideas for a potential multi-billion gallon increase in biodiesel (including renewable diesel) production over the coming years heavily as discussed in the market of late, but supplying a floor for blending instead.  Demand and profitability appear likely to be the driving factors for biodiesel in the coming years rather than government mandated blending levels.  January, March and May soybean oil closed limit down, December being in delivery has no limit, closed 689 points or 6.89 cents/lb.

Russia export prices are near 320 vs US SRW 344, on a FOB Basis

Importers in Thailand reportedly bought around 123k tonnes of feed wheat yesterday from Australia, at $349/tonne C&F for both Jan and June shipment.

Algeria bought 500kmt Russian milling wheat at 355, $40 below US HRW on a CFR basis

French exporters are reporting massive wheat volumes leaving the Dunkirk port, including anywhere from 400-700k tonnes sent to China in recent weeks

StoneX Brazil raised their 2022/23 soybean production estimate from 154.35 to 155.0 MMT (due to small increase in plantings), with total corn production up from 129.9 to 130.3 MMT thanks to a slight gain in second-crop output.

Private analysts Datagro pegged the ‘22/23 Brazil soy crop at 153.3 MMT, up 21% year over year due to around a 4% increase in planted acreage.

Brazil reported November soybean exports at 2.64 MMT, up from 2.59 MMT a year ago, with corn exports at 6.06 MMT, up from 2.39 MMT last year.

The B.A. Exchange has the ‘22/23 Argentine wheat crop at 12.4 MMT, but is warning of further reductions due to lower than expected yields during harvest.  The crop was initially estimated at 20.5 MMT in May.  Harvest progress stands at 23% this week, vs 45% last year.  Argentine soy planting hit 29% done, down 17% from last year, with corn planting reaching just over 25%.

Ukraine’s Ag Ministry reported cumulative grain exports since July 1 at 18.1 MMT, down just under 30% from last year’s pace.

Mpls wheat -9

KC wheat -21

Chic wheat -14

Matif wheat -3

Canola +8

Rapeseed -5

Soybeans -1

Soybean oil -236

Crude -17

Corn -4

CAD -23

Ag markets retreat on escalating PRC covid protests with crude oil eroding to lowest level since Dec 2021.

Argentina announced a new soya peso deal that farmers could sell soybean at 230 peso/dollar versus current rate of 165.  This is expected to increase farmer selling and soybean crush and exports. This will compete with US Jan-Feb exports.

 

US wheat price premium to other origins narrowed last week but Russia prices still lowest to buyers.

Russia continues to bomb key Ukraine cities and power grids.

Egypt’s state buyer bought 175,000 tons of wheat in private negotiations late last week, bringing its total purchases of the grain for the 2022-23 season so far to at least 3.72 million tons.

Exports of Ukraine’s grain will not reach 3 MMT in November as Russia tries to limit ship inspections at ports.  That would be down from 4.2 MMT of grain that left Ukrainian ports in October. Since July 1, Ukrainian grain exports totaled 17.2 MMT, down 31.9% from the same period last year, including 9.1 MMT of corn, 6.6 MMT of wheat and 1.4 MMT of barley.

Russia will export 4.9 MMT of grain in November, up 200,000 MT from October, including 4.4 MMT of wheat.  Grain exports would be up from 3.958 MMT in November 2021.  After a slow start to 2022-23, Russian grain exports have gradually built after record production

 

Canola prices tried to stabilize Friday in early dealings following Thursday’s losses that came while CME markets were closed.

The lack of fresh export demand despite hefty losses over the past 2 weeks has allowed prices to work lower, while fund selling remained active both on a liquidation and new sales basis.

March canola has lost nearly $100 a tonne from the November 4 high and with it id believed to have triggered a little panic farmer selling has surfaced this week, especially with the 2022 crop roughly one third bigger than last year and the delivery pace lagging last year

Deliveries           6.075 MMT vs 6.142 LY

Exports               2.376 MMT vs 2.142 LY

Crush                  2.519 MMT vs 2.335 LY

Del to crushers 2.217 MMT vs 1.872 LY

 

Mpls wheat +4

KC wheat -3

Chic wheat -9

Matif wheat -4

Canola -3

Rapeseed -11

Soybeans -4

Soybean oil -84

Crude -209

Corn -5

CAD -44