Good morning Farmer Family …
US farm markets were mixed but mostly lower on Wednesday.
Soybean and corn prices fell on forecasts for improving weather in the Midwest, including rains next week that should boost crop production prospects.
Corn, however, limited losses drewing support from bullish weekly ethanol data.
The U.S. Energy Information Administration, indeed, said weekly production of corn-based ethanol rose last week to 1.034 million barrels per day, the first increase in five weeks, meanwhile, ethanol stocks, were ~50k barrels lighter to 23.553 million.
Soybean recived some support when USDA announced a private export sale to China of 136k MT for 22/23 delivery.
In this context, corn closed the midweek session with 0.75% losses.
Soybean went home 1.91% weaker.
Bean oil prices led the downtrend slipping more then 3% on the day.
Soymeal prices, in contrast, closed with marginally gains of 0.34%.
The wheat complex was mixed, as Chicago and Kansas City contracts rose, with traders awaited the outcome of Egyptian wheat purchase negotiations, as well as talks on a possible deal to boost grain exports from war-torn Ukraine.
Turkish President Tayyip Erdogan said he wants a possible deal on resuming Ukrainian grain exports from the Black Sea to be put in writing this week after a general agreement was reached last week.
Meanwhile, Russian President Vladimir Putin said that Russia was ready to facilitate the exports but also wanted the remaining curbs on Russian grain exports to be removed.
In this context, Chicago wheat prices went home 0.89% higher, but Sep traded in a 42 cent range during the day.
Kansas City wheat price closed with fractional gains around 0.15%, but July ’23 ended 1 3/4 cents lower.
Minneapolis spring wheat prices ended the day 0.59% lower.
Commodity funds were net sellers of CBOT soybean, soyoil, corn and soymeal futures contracts on Wednesday and net buyers of wheat futures.
On this morning, Chicago corn price fell 0.7% to $5.85-3/4 a bushel, as of 02:23 GMT and soybeans lost 0.3% to $13.28 a bushel.
Wheat gained marginally to $8.19-3/4 a bushel.
Weekly Export Sales report will out this afternoon.
Traders are looking for between 100k MT of net cancelations and 200k MT of net new sales for old crop corn.
For new crop bookings, the trade expects between 10k and 500k MT were sold during the week that ended 7/14.
As for soybean, the trade expects +/- 200k MT of old crop beans were added to the books.
For new crop sales, the trade expects less than 500k MT were sold during the week that ended 7/14.
Meal and soy oil bookings are expected to be between 0-300k MT and 0-25k MT respectively.
Forward meal sales are estimated to be below 150,000 MT in the update, with fewer than 10k MT of soy oil sold for 22/23 through the week.
As for wheat traders are looking for between 300k MT and 850k MT of wheat bookings from the week that ended 7/14.
In energy markets, oil prices fell on Thursday for a second straight session.
U.S. government data showed tepid gasoline demand during the peak summer driving season, thus demand concerns outweighed tight global supply.
In this context, Brent crude futures dropped 77 cents, or 0.7%, to $106.15 a barrel by 04:27 GMT after slipping 0.4% in the previous session.
U.S. West Texas Intermediate crude futures fell 88 cents, or 0.9%, to $99.00 a barrel following a 1.9% drop on Wednesday.
U.S. gasoline inventories, rose 3.5 million barrels last week, far exceeding analysts’ forecasts for a 71,000-barrel rise.
Product supplied of gasoline, was about 8.5 million barrels per day, or about 7.6% lower than the same time a year ago, the data showed.
Concerns over Libya’s supplies have also eased as the National Oil Corp said on Wednesday crude production had resumed at several oilfields.
In freight markets, the Baltic Exchange’s main sea freight index slipped on Wednesday, as losses in the capesize segment countered strength in the panamax and supramax segments.
The overall index, indeed, was down 32 points, or 1.5%, at 2,113 points.
Particularly, the capesize index fell for the second straight session, losing 180 points, or 6.2%, at 2,719 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $1,491 at $22,552.
The panamax index was up 83 points, or 4.4%, at a one-week high of 1,972 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased by $745 to $17,746.
The supramax index rose by 18 points to 2,057 points, its highest since July 13.
In equity markets, U.S. stock indexes on Wednesday posted moderate gains.
A broad rally in technology stocks led the overall market higher as cloud software stocks climbed when Bernstein upgraded stocks in the sector.
Also, streaming service stocks rose after Netflix reported it lost fewer streaming customers in Q2 than feared.
A bearish factor for stocks was concern that an energy crisis in Europe could send the region into recession and undercut global growth prospects.
Russian President Putin, indeed, warned that if a pipeline part for the Nord Steam link that was caught up in sanctions isn’t returned to Russia, then gas flows to Europe will be cut to 20% of capacity as early as next week.
Weighing on stocks also was the news that U.S. June existing home sales fell -5.4% m/m to a 2-year low of 5.12 million, weaker than expectations of 5.35 million.
Citigroup, in a report to clients Tuesday, warned that a global recession is a “clear and present danger,” estimating a 50% probability of a recession over the next 12 to 18 months.
In this context, the S&P 500 rose 0.6% to 3,959.90.
The Dow Jones Industrial Average added 0.2% to 31,874.84, while the Nasdaq gained 1.6% to 11,897.65.
Smaller company stocks also gained ground.
The Russell 2000 climbed 1.6% to 1,827.95.
Meantime, Asian shares were mixed on Thursday.
The optimism over earnings was tempered by persistent concerns about inflation and the Chinese economy.
Thus, shares rose in Tokyo, Sydney and Seoul, but declined in China.
Particularly, Tokyo’s benchmark Nikkei 225 edged up 0.4% in afternoon trading to 27,803.00.
Australia’s S&P/ASX 200 advanced 0.4% to 6,784.00.
South Korea’s Kospi gained 1.1% to 2,411.86.
Hong Kong’s Hang Seng slipped 0.7% to 20,745.35, while the Shanghai Composite fell 0.4% to 3,291.77.
Eyes were on the Bank of Japan, which wrapped up a two-day policy meeting, without any major policy changes, as was widely expected.
The BOJ has not indicated it will follow the lead of other central banks.
Meantime, lingering caution persists for Chinese equities amid both virus and property sector risks.
In currency trading, the U.S. dollar inched down to 138.19 Japanese yen from 138.25 yen.
The euro cost $1.0228, up from $1.0179.
From Canada, other than the crop reports, there are not a lot of Canada specific news in the wheat market.
Rain in major North American growing regions added some bearish pressure.
Sask Ag rated spring wheat at 74% Gd/ Exc., 22% fair, and 4% poor.
Alberta Ag rated spring wheat at 83% Gd/Exc.
Sask Ag rated durum wheat at 58% Gd/ Exc., 32% fair, and 10% poor to very poor.
Alberta Ag rated durum wheat at 64% Gd/Exc.
Meantime, Canadian weekly wheat exports were poor at only 133k mt, for a YTD total of 10.5 million mt, compared to 18.8 million mt the year prior.
Durum exports for week 49 were an improved 105k mt, for a YTD total of 2.5 million mt, compared to 5.8 million mt last YTD.
On the other hand, Canada is said to have inked a deal to import new crop rapeseed supplies from Ukraine with shipments to be executed in August.
From South America, Brazil’s corn export line-up was 508.000t week-to-week on Monday at 5,99 MMT, an increase of 2.67 MMT or 125% compared to the numbers from a year ago.
ANEC expects Brazil’s July soybean exports to reach 7.9 MMT, below the 8.7 MMT shipped in July of 2021.
Shipments the first 11 days of the month are however, running 16% ahead of last year at 5.0 MMT.
Rather than declining seasonally, Brazil’s soybean export line-up increased 272.000t to 5.44MMT, 190.500t fewer than a year ago.
Soybean meal fell 97 K to 1.75 MMT but is 30%/400 K larger than a year ago.
Argentina’s June crush was a couple 100 Ks below expectations, coming in at 3.9 MMT and down a similar number vs 2021.
In Europe, wheat prices on Euronext showed a strong upward variation during the session, posting an increase of + €3/t at the end of the day for the short term of September.
The following maturities are progressing more timidly, like the December contract which ended the day at 327.25 €/t, up +0.25 €/t, after touching 335 €/t during the day.
On the oilseed market, the yield results in Germany are reassuring, like the yields also observed in France.
Thus, prices on Euronext’s early August 2022 deadline thus marked a sharp decline, sinking below €660/t and finding levels close to those of last February.
Temperatures cooled after a recent hot and dry spell that raised concern for spring crops in Europe.
Many parts of France experienced some storms and showers on Wednesday after two days of record heat but weather forecaster Meteo France warned that these would not be enough to compensate for the lack of rainfall seen since the start of the month.
Rainfall would mainly be a relief for maize crops as the soft wheat harvest is over in many parts of France after dry and warm weather allowed farmers to speed up field work.
In Germany, widespread and welcome heavy rain with lower temperatures arrived on Thursday after several days of sweltering heat.
That is helping stabilise the river Rhine in Germany as it suffers low water levels, but it is unlikely to be enough to solve freight shipping problems, navigation authorities said on Thursday.
Shallow water is hampering shipping on the entire river in Germany south of Duisburg and freight shipping on the river continues but with vessels carrying greatly reduced loads.
Commodity traders sending cargo by river said vessels at Kaub can only sail 30% full.
But sections of the south Rhine had risen 36 cm overnight so some relief was possible during Thursday.
The Rhine is an important shipping route for commodities including grains, chemicals, minerals, coal and oil products including heating oil.
On the other hand, early results of Germany’s wheat harvest are of good yields and mixed quality but no real quality concerns.
Barley harvesting is finishing with better-than-expected results.
Germany’s 2022 winter barley crop will increase to about 9 million tonnes which would be up from about 8.8 million tonnes last year, the association of German farmers DBV said on Wednesday.
But there is concern wheat in Germany is suffering heat stress.
Meantime per latest data from the European Commission, EU wheat exports have reached 363,944 t of common wheat since 1 to July 10.
Barley exports were at 195,687 t.
Corn imports were at 348,170t.
Soybean imports were at 318,094t.
Soymeal imports were at 440,619t.
Rapeseed imports were at 179,391t.
Meantime, non-commercial market participants cut their net long position in Euronext’s milling wheat futures and options in the week to July 15, Euronext data showed on Wednesday.
Particularly, non-commercial participants, which include investment funds and financial institutions, lowered their net long position to 80,188 contracts from 97,045 a week earlier, the data showed.
Commercial participants similarly decreased their net short position to 96,211 contracts from 114,677 a week earlier.
Commercials’ short positions accounted for 64.6% of the total short position, while commercial long positions accounted for 48.8% of total long positions.
Non-commercial short positions represented 35.4% of total short positions, while non-commercial net long positions accounted for 51.2% of the total longs.
In Euronext’s rapeseed futures and options, non-commercial market participants reduced their net short position to 17,852 contracts from 20,280 a week earlier.
Commercial participants lowered their net long position in rapeseed to 17,811 contracts from 18,688 a week earlier.
From North Africa, wheat traders yesterday have awaited results of wheat purchase negotiations by Egypt, the top global importer of the food grain.
GASC was believed to have bought an estimated 640,000 tonnes of wheat in direct negotiations with trading houses.
An estimated 15 trading companies are believed to be taking part in direct negotiations.
The purchase mostly involved wheat from Russia and France, with some from Germany and Lithuania.
Particularly, the European origin selected were for 420,000 t, while Russian one for 220,000 t.
The French origin is the first origin selected with sales reaching 360,000 t negotiated between 403 to 405 $/t CIF.
GASC on Tuesday had rejected offers in a separate tender for the same shipment periods, in which traditional supplier regions in the Black Sea and Europe were excluded, with only wheat from the United States offered.
Morocco’s state phosphates and fertiliser producer OCP will offer 180,000 tonnes of soil nutrients in aid and 370,000 tonnes at a discount to help African states cope with surging prices, a senior company executive said on Wednesday.
The donated and discounted volumes will represent 16% of African demand this year and a quarter of OCP group’s sales on the continent.
The African Development Bank said in May that fertiliser prices on the continent had quadrupled since the start of the war in Ukraine, which has disrupted supply chains, and that Africa faced a shortage of 2 million tonnes.
OCP, along with many other Moroccan state-owned and private companies, has been expanding its investments in Sub-Saharan Africa in recent years, boosting the kingdom’s economic clout as it also seeks to strengthen its diplomatic engagement.
OCP has dedicated 20% of its fertilisers output to meet the needs of the African continent, where it is planning to build soil nutrients and ammonia plants in Nigeria and Ethiopia.
OCP plans to raise production by a further 1 million tonnes this year and two million next year, compared with 10.8 million tones last year.
In the first five months this year, Morocco’s phosphates and derivatives exports nearly doubled to 47.6 billion dirhams ($4.65 bln), the foreign exchange regulator said.
OCP’s 2021 revenue rose 50% in 2021 to 84.3 billion dirhams, with fertilisers contributing 62%, according to company figures.
From the Black Sea basin, Russia, Ukraine, Turkey and the United Nations are expected to sign a deal later this week aimed at resuming the shipping of grain from Ukraine across the Black Sea.
Meanwhile, Russian President Vladimir Putin said that Russia was ready to facilitate the exports but also wanted the remaining curbs on Russian grain exports to be removed.
At the same time Russian Foreign Minister Sergei Lavrov said on Wednesday that the geographical objectives of Moscow’s “special military operation” in Ukraine are no longer limited to the eastern Donbas region but include a number of other territories, Russian state news agency RIA Novosti reported.
On the European side, the European Commission could review certain fund freezes of sanctioned Russian banks with the aim of promoting agricultural trade if, of course, the Member States validated this proposal.
There are still many questions concerning the concrete implementation of a solution to secure maritime traffic.
On this wake, insurers will only be willing to cover ships sailing through a proposed corridor to get Ukrainian grain out if there are arrangements for international navy escorts and a clear strategy to deal with sea mines.
Meantime, German national railways Deutsche Bahn (DB) plans to start freight train services to carry Ukrainian grain exports to German ports for loading on ships, DB said.
Grains will be brought by rail to German ports including Rostock, Hamburg and Brake, DB said.
Details of capacity were not given but several trains a week are planned, largely picking up Ukrainian grain in Romania.
Ukrainian agricultural exports were about 2.5 million tonnes in June.
Much of Ukraine’s current grain exports are moved by truck and river ships to neighbouring countries including Romania and Poland for loading on ocean ships but the different gauge of Ukrainian railway tracks means most EU trains cannot be used inside Ukraine.
Ukraine urgently needs to export grain as its harvest starts this summer with farmers facing a lack of storage capacity.
On the other hand, during January-June 2022, Russia loaded 520 thousand tons of grain for rail transportation Primorsky Kray destinations, Yevgeny Lyashenko, Deputy Chief of Far Eastern Railway, told speaking at the Far East Grain Forum.
Large shipments of grain are routed via the station of Grodekovo, the main railway border crossing checkpoint in the Russian Far East.
According to Russian Railways, 229.3 thousand tons of grain was exported by rail to China in Half 1, 2022.
Containerized grain loading designated for Primorsky Ktay sea port made 149.8 thousand tons in H1, 2022.
From the Middle Kingdom, China has decided to arrest a former official of state stockpiler Sinograins for suspected bribery and dereliction of duty, the top prosecutor said on Thursday.
The decision to arrest Xu Baoyi, former deputy general manager of the stockpiler, comes after he was investigated by supervisory authorities, the Supreme People’s Procuratorate said on its WeChat account.
In June the prosecutor said Xu had been expelled from the Communist Party and public office for “serious violation of discipline and law”, and faced a case review and investigation.
Xu illegally accepted gifts and cash, intervened and interfered with market activity, and exploited his position to make profit for others.
Last month, China’s discipline watchdog investigated the former head of the national reserves bureau for severe violations of law and discipline.
From Australia, Southern markets for wheat and barley firmed this week on renewed competition from container packers, while northern markets were mostly steady, despite some sell-side pressure.
A squeeze in the Sydney market tied to rail outages has now abated with the reopening of the Hunter and second Main South line.
Waterlogging remains an issue for some winter crops in southern Queensland and New South Wales, both of which had a mostly dry week which has enabled top-dressing and weed spraying to take place where paddocks are dry enough to allow field work.
Most of Western Australia’s growing areas had a welcome 15-30 millimetres of rain in the past week, and parts of Victoria and South Australia had a handy 5-10mm.
The rainfall forecast for WA, Vic and Qld has picked up with most cropping regions now expected to receive 15-50mm in the coming week.
SA also is set to pick up more, particularly in the South East.
Southern NSW is forecast to receive 5-15mm with lighter showers expected elsewhere.
On the other hand, Foot and Mouth Disease (FMD) fragments have been picked up in imported meat products in Victoria and in an undeclared beef product brought in from Indonesia.
In an increased protection measure sanitised foot mats will be deployed to all international airports in Australia, to service flights from Bali.
Darwin and Cairns will be the first airports to implement them.
On international trade scene, South Korea’s Major Feedmill Group (MFG) has issued an international tender to purchase up to 70,000 tonnes of animal feed corn.
The deadline for submission of price offers in the tender is believed to be Thursday, July 21.
The corn is sought in one consignment for arrival in South Korea around Nov. 21.
South Korean animal feed maker Nonghyup Feed Inc. (NOFI) has bought an estimated 138,000 tonnes of animal feed corn in an international tender which closed on Thursday.
The corn was bought for arrival in South Korea in two consignments in November in a combination of outright prices and premiums over Chicago corn futures.
The corn is expected to be sourced from South America and/or South Africa.
The outright prices were $319.45 and $319.45 a tonne plus a surcharge for additional port unloading.
Jordan’s state grain buyer is believed to have made no purchase in an international tender for 120,000 tonnes of animal feed barley which closed on Wednesday.
Trading houses participating were believed to be Bunge, Viterra, Ameropa, Australian Grain Export and Soufflet.
A new tender is expected to be issued in coming days closing on July 27 seeking similar shipment periods in the full month of December 2022 and January 2023.
Meantime, Jordan’s state grain buyer has issued an international tender to buy 120,000 tonnes of milling wheat which can be sourced from optional origins.
The deadline for submission of price offers in the tender is July 26.
The government’s Economic Coordination Committee (ECC) of Pakistan, has approved the purchase of the 300,000 tonnes at the price of $404.86 a tonne c&f which was the lowest offer in the tender from the state Trading Corporation of Pakistan (TCP) on Monday.
The offer was made by trading house Viterra originally for 120,000 tonnes, the ECC statement said.
The TCP must still make a formal award in the purchase.
Viterra is expected to be awarded 240,000 tonnes and trading house Aston 60,000 tonnes.
Meanwhile Pakistan has also issued an additional tender to buy 200,000 tonnes of wheat.
Bangladesh bought 50,000t at $448.86/t.
North American Durum Wheat Update
The recent rains have helped, but we are watching the heat this week.
Very hot and humid conditions, indeed, have prevailed over North Dakota hard red spring and durum wheat crops in recent days.
The hot temperatures have been beneficial in advancing crop maturity, but the extreme heat, and hotter than typical night time temps have likely added some yield stress to portions of the crop, dependent on soil moisture and stage of development.
Fortunately, soil moisture conditions remain adequate to surplus over the bulk of the North Dakota, limiting overall stress to the crop.
This was reflected in weekly crop condition ratings holding steady with the previous week for ND spring wheat, at 80% still rated good to excellent.
The US spring wheat crop is rated 71% good to excellent.
According to crop observation reports to NASS, the ND spring wheat crop is estimated to be 63% headed, well behind the 5-yr average of 91%, and just 6% of the crop is starting to turn color compared to the normal level of 27% for this date.
The US spring wheat crop is 68% headed with South Dakota the most advanced at 91% headed.
In this context, the North Dakota durum crop condition remains at an exceptionally high level, with 84% rated good to excellent, although this is down slightly from last week’s level of 89 percent.
Hot temperatures and elevated disease pressures are recent challenges to the crop, with some parts of the state also impacted by short term excess moisture in fields.
The Montana durum crop improved slightly in condition ratings to 59% good to excellent, up from 54% the previous week, as crops show the benefit of recent rains.
The maturity of the crop is most advanced in Montana, with 62% headed, near their 5-yr average.
In North Dakota, just 46% has reached the heading stage, well behind the 5-yr average of 85 percent.
There also remains about 20% of the ND crop that had not reached the jointing stage as of mid-July, compared to the 5-yr average of just 3% not jointed by this date
Despite durum crop ratings are not great in Canada, North Dakota and Montana durum ratings are very good.
According to the latest USDA crop production estimates, US durum wheat production is forecast at 2.1 million mt.
Based on July 1 conditions, yields are expected to average 40.3 bu/ac, up 16 bushels from 2021.
Area expected to be harvested for grain totals 1.92 million acres, up 25% from 2021.
Combined with the expected Canadian crop of 5.5-5.8 million mt, N American production should recover nicely from last year’s drought-induced tightness.
Nevertheless, record heat in N Italy and France (albeit at the end of the growing period) should keep EU buyers in the market.
That’s all, thank you.
To all of you, we wish you a good day and … Good Harvest 2022!
Author: Sandro F. Puglisi
