Editor's note: Catch Randy Martinson and AgweekTV's Michelle Rook every Friday after markets close on the Agweek Market Wrap at agweek.com.
The grains closed out the month of November on a sour note. After seeing a strong performance for most of the month, the grains tanked on the last day of the month, which in turn brought a lot of the markets into negative territory for the month.
For the month of November, December Minneapolis wheat was down 32.25 cents, March Minneapolis wheat was down 23.0 cents, December Chicago wheat was up 1.0 cent, March Chicago wheat was up 2.25 cents, December Kansas City wheat was up 33.25 cents, and March Kansas City wheat was up 33.25 cents. December corn was down 1.25 cents and March corn was down 8.75 cents. January soybeans were down 32.25 cents, December soybean meal was up $16.20, December soybean oil was down $6.16, and January canola was up $27.30. In the livestock markets, December live cattle were up $6.60 and January feeder cattle were up $8.725.
The grains closed out the week of Thanksgiving by gapping lower on the opening bell only to claw their way back to end the session with gains in Minneapolis wheat and corn while the winter wheat contracts and soybeans closed lower. It was a rough start but the close showed promise. The major pressure point Nov. 26 came from reports of a new coronavirus variant. Thin, light trading volume was part of the reason why the market gapped lower on the opening. Friday was an example of what we talk about when breaking news collides with thin, light holiday trading.
Buying continued to spill over from Friday with once again wheat taking lead off of news out of Australia. The country’s wheat harvest is 40% complete and early estimates have 30% of the crop from the eastern and southern regions making feed grade. It appears the situation in Australia will get worse before it gets better as rain continues to cause problems. To add more support to wheat, Russia once again raised their wheat export tax, which will be in effect Dec. 1 to Dec. 7. The wheat export tax increased $2.25 per metric ton to $80.80 per metric ton. One would expect their export program will soon start to feel the effects of the high export tax. The U.S. Department of Agriculture's final Crop Progress report for the 2021 production year estimated that as of Nov. 28, winter wheat emergence is at 92% versus 86% last week and 91% average. Winter wheat’s crop rating was unchanged at 44% good/excellent, 33% fair, and 23% poor/very poor.
Wheat was under pressure from reports Egypt bought 600,000 metric tons of Russian, Romanian and Ukraine wheat. Even with the high export tax on wheat, Russia is still the better choice for importers.
Corn and soybeans were under pressure but performed better than wheat. Improving weather conditions in South America added to the selling pressure. Production estimates for South America were tweaked slightly but at this point it still appears that Brazil still has the potential for a record production year. And with Brazil’s early planting the expectation is that supplies will become available sooner than later and the U.S. opportunity for soybean exports is shrinking. It will take some sort of weather issue in South America to help soybeans at this point. Corn demand does look a little better due to strong ethanol margins. Traders are optimistic that China will at some point return to the U.S. to buy corn. Corn prices in China are much higher than what they would pay for U.S. corn as the U.S. continues to have the cheapest corn in the world.
Corn was able to trade with small gains early Nov. 29 with support coming from a stronger crude oil market. Good growing conditions in Brazil pressured corn late in the session. As of Nov. 25, Argentina was reporting corn planting progress at 51% complete, right in line with the five-year average. It is expected that Argentina will increase corn acreage at the expense of soybean acreage.
Soybeans opened the overnight session sloppy but recovered to post decent gains in the overnight session and even buck the trend and traded with gains once the day session started. Technical buying from the Nov. 26 late session recovery helped to push soybeans higher the night of Nov. 28. But the selling pressure from the other grains proved to be too much. Pressure was tied to USDA’s cut to 2022 export demand by $2 billion from their August estimate due to a slowdown in demand for U.S. soybeans. Losses were extended by ideal growing conditions in Brazil and the expectation of higher soybean acres in the U.S. in 2022 due to high input costs. As of Nov. 25, Argentina had 41% of their soybeans planted versus 42% average.
Soybeans were also pressured from reports of an unexpected rain event in Argentina over the weekend. As of now, Brazil and Argentina are sitting with close to ideal growing conditions. The forecast is calling for Argentina to turn dry over the next two weeks, but last weekend’s rain has bought the crop time. Dr. Cordonnier left Argentina’s corn production estimate unchanged at 53 million metric tons but lowered Brazil’s production 1 million metric tons to 117 million metric tons (due to dry conditions in south). For soybeans he left his Brazilian production estimate unchanged at 144 million metric tons and Argentina’s production unchanged at 50 million metric tons.
U.S. exports continue to be sluggish, but a few new sales were reported. On Nov. 30, USDA reported a sale of 132,000 metric tons of soybeans to unknown destination and Dec. 1, Columbia was in and bought 150,000 metric tons of U.S. corn. On Dec. 2, there were sales of 164,100 metric tons of soybeans to unknown destinations and 130,000 metric tons of soybeans to China.
Ethanol production estimate for the week ending Nov. 26 was slightly disappointing. Production was estimated at 1.035 million barrels per day, a drop of 44,000 from the previous week and a seven-week low. Stocks were estimated at 20.3 million barrels, up 137,000 barrels from the previous week. Seasonally gas demand declines this time of year, which it did, but demand remained at the high end of the five-year average.
USDA’s October crush report was released after the close on Dec. 1. October crush was estimated at 197 million bushels, higher than the average trade estimate of 195.6 million bushels and last October’s 196.6 million bushels, setting a new all-time record.
Canola rallied to another new contract high early in the week, but like the other grains sold off the rest of the week. Light selling was due to concerns that the new variant will reduce demand. And light pressure also came from ABARES increased canola production estimate for Australia. They increased production 700,000 metric tons to a record 5.7 million metric tons versus USDA’s projection of 4.7 million metric tons.
Stats Canada will release their final 2021 crop production estimate on Dec. 3. Early estimates have all wheat production at 21.2 million metric tons versus 21.72 million metric tons in September and 35.2 million metric tons last year. Spring wheat production is estimated at 14.7 million metric tons versus 15.3 million metric tons in September and 25.8 million metric tons last year. Canola production is estimated 12.8 million metric tons versus the September estimate of 12.782 million metric tons and last year’s 19.48 million metric tons.
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