Agri- Commodities: 11-15/11/24

Grain markets began the week under pressure as a strengthening U.S. dollar weighed on dollar-denominated commodities. Corn and soybeans underwent expected corrections following recent gains, while Chicago wheat prices surprised the market by briefly touching 10-week lows. This decline was driven by improving U.S. weather, easing Russian cash prices, and the removal of some geopolitical risk premiums. Russian wheat prices fell, with 12.5% protein wheat quoted at $228/ton FOB, down $4 from last week. Notably, geopolitical tensions appeared to ease as U.S. President-elect Donald Trump encouraged de-escalation in Ukraine during a call with Russian President Vladimir Putin.

On Tuesday, the downward trend in grains persisted, with wheat leading the declines. Funds showed little hesitation in maintaining short positions in wheat amid improving U.S. crop conditions. Notable activity in international tenders included Jordan purchasing 60,000 tons of milling wheat for February shipment and Algeria's ONAB seeking up to 240,000 tons of feed corn. U.S. weekly export inspections exceeded expectations across soybeans, corn, and wheat. Meanwhile, European customs data showed soft wheat exports at 8.34 MMT as of November 10, although still trailing last year’s levels. French crop estimates were revised upward, with soft wheat pegged at 25.56 MMT and maize at 14.62 MMT. U.S. winter wheat conditions improved, with 44% rated good/excellent, up from 41% the previous week.

Middle of the week, wheat prices continued their steep decline, with CBOT futures nearing August lows as bearish sentiment dominated. Corn fared better, supported by robust U.S. export demand, narrowing the price spread between wheat and corn. FranceAgriMer reduced its soft wheat export forecast to third countries, and ending stocks were revised upward to 2.78 MMT. In Russia, winter wheat sowing estimates reached a five-year low, but production was still forecast at a solid 84.5 MMT. Argentine wheat production was downgraded to 18.8 MMT due to delayed rains. Meanwhile, U.S. export sales to Mexico and unknown destinations boosted corn sentiment. On the financial side, speculative traders increased net short positions in MATIF milling wheat, while maintaining huge long positions in rapeseed.

On Thursday, grain markets struggled again, with CBOT wheat marking its sixth consecutive decline. Russian wheat crop estimates were slightly trimmed by Sovecon to 81.4 MMT for 2024, with next year’s forecast raised to 81.6 MMT. Russian exports slowed notably, with November estimates at 4 MMT, down from 6 MMT in October. Brazil’s CONAB made minor upward revisions to corn and soybean estimates, but USDA projections remained more optimistic. On the tender front, Jordan and Algeria re-entered the market for barley and corn, respectively. The USDA confirmed a soybean sale to unknown destinations, adding a modest bullish factor amid a broadly weaker grain complex.

Markets rebounded sharply to close the week on a positive note, led by technical buying and position adjustments. December MATIF wheat surged nearly 3%, driven by options expiration. Supportive soybean news included a record October crush by NOPA, at 199.96 million bushels, and China’s decision to cancel export tax rebates for certain biofuel feedstocks, boosting U.S. soybean oil prices. U.S. weekly export sales revealed wheat near the middle of expectations and corn and soybeans at the lower end. A significant fund inflow saw net long positions in corn rise to 110,000 contracts, marking the second-largest weekly increase in five years.