Good afternoon Farmer Family …
U.S. farm markets were firmer on Thursday.
Corn prices extended their recent strength, closing up 2.46%.
Soybean busted out another day of double digit gains, with the front month’s contract 1.93% higher.
Soymeal was weaker on the day, however closed the session up 0.16%.
Soybean oil was the shiny spot of the complex, with 7.62% gains.
In spite U.S. corn and soybeans have enjoyed seasonably cool, wet weather this week, with much of the U.S. corn crop pollinating during the month of July, expectations for hot and dry weather conditions in the coming weeks across parts of the U.S. Midwest threaten yields.
Ample rains will fall on parts of the lower Midwest and Mid-South between today and Monday, with most of these areas set to gather another 2” to 4” during this time, per the latest 72-hour cumulative precipitation map from NOAA.
However, the agency’s 8-to-14-day outlook predicts below-average precipitation for the Corn Belt between August 4 and August 10, with much warmer-than-normal temperatures likely for the entire central U.S.
Wheat prices, meantime, followed corn and soybean higher as there was still some uncertainty about the volume of Ukraine’s exports through the Black Sea despite expectations they could start to resume within days.
Thus, Chicago SRW, which led the way, closed up 3.39%.
Hard red winter was 3.25% stronger on the board at the close.
Spring wheat prices lagged a little, but still rose 1.98% on the day.
The average spring wheat yield in North Dakota, the top producing state, was estimated at 49.1 bushels per acre (bpa) on Thursday by the annual Wheat Quality Council tour as good weather and adequate moisture boosted harvest prospects.
The figure was above the crop tour’s five-year average of 39.4 bpa and its highest since 2015, but short of the U.S. Agriculture Department’s latest 2022 spring wheat yield estimate for the state of a record 51.0 bpa.
On the demand side, yesterday USDA reported 150k MT of corn was sold for old crop shipment during the week that ended 7/21.
That was in-line with estimates and was above the 4-week average. Mexico and Japan were the top buyers during the week, with minimal cancelations.
For new crop, bookings were 193.7k MT.
That was below the range of pre report estimates.
Corn shipments were 867,900 MT.
That was a 19% boost from the 4-wk average with nearly 400k MT to Mexico and over 200k MT to China.
Milo sales were reported at 3.4k MT for 21/22 delivery.
New crop sales were 67k MT and exclusively by China.
As for soybean, the report showed net reductions of 58,600 MT of old crop soybeans sales during the week of 7/21.
For new crop, USDA reported 748.8k MT was sold – mostly by China’s 538k MT in purchases.
Old crop shipments were 395k MT with Mexico as the top destination.
For the products, USDA reported 28k MT of old crop meal and 4,600 MT of soy oil was sold during the week of 7/21.
The trade was looking for at least 50k and 0k MT respectively.
USDA also reported 20k MT of soymeal was sold for 22/23 delivery.
As for wheat, FAS data showed 412k MT of wheat was sold during the week that ended 7/21.
That was in the middle of the 250-625k MT expectations.
Philippines and Mexico were the top destinations.
Wheat export shipments were reported at 345,800 MT.
That was up 47% from the prior 4-week average export.
Mexico and Philippines were also the top destinations during the week.
In this context, corn basis bids were mostly steady but did shift 3 to 5 cents lower at three Midwestern locations.
Soybean basis bids sank 15 to 20 cents lower at two Midwestern processors and fell 5 to 6 cents across three other locations.
Commodity funds were net buyers of CBOT corn, soybeans, wheat and soyoil futures contracts and net sellers of CBOT soymeal futures contracts.
On this morning, Chicago soybeans ticked higher, with the market poised for its biggest weekly rise in more than a year.
Corn is on track for its biggest weekly gain in almost five months, while wheat is set to finish the week in a positive territory after two weeks of decline.
Particularly, soybean contract by 06:07 GMT was up 9.6% this week, the biggest gain since early July 2021.
Corn has added 9.3%, for its biggest weekly rise since early March, and wheat is up 8% this week.
In energy markets, oil prices were broadly steady early in the morning.
Attention now turned to the next OPEC+ meeting on Aug. 3, though fears of US recession capped gains.
Producers have now unwound the record 9.7 million barrels per day (bpd) supply cut they agreed in April 2020, when the COVID-19 pandemic slammed demand.
Likely the group will consider keeping oil output unchanged for September, although some sources also said a modest increase would be discussed, after U.S. President Joe Biden visited Saudi Arabia this month.
In this context, U.S. West Texas Intermediate (WTI) crude futures for September delivery rose 67 cents, or 0.7%, to $97.09 a barrel by 06:40 GMT, reversing losses from the previous session and on track for a nearly 3% rise for the week.
Brent crude futures for September settlement, due to expire on Friday, dipped 12 cents, or 0.1%, at $107.02 a barrel.
The more active October contract climbed 48 cents, or 0.5%, to $102.31.
In freight markets, the Baltic Dry Index, which measures the cost of shipping goods worldwide, tumbled 3.1% to a 5-month low of 1,945 points, dragged by weak demand across all vessel categories.
The capesize index, which tracks iron ore and coal cargos of 150,000 tonnes, 143 points, or 6.1%, to 2,190 points, the lowest in three weeks. The panamax index, which tracks about 60,000 to 70,000 tonnes of coal and grains cargoes, went down 11 points, or 0.5%, to a 1-week low of 2,065 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down by $1,190 at $18,162.
The panamax index was down 11 points, or 0.53%, at 2,065 points, the lowest in a week.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased by $99 to $18,581.
The supramax index fell by 35 points to 2,003 points, the lowest since February 9th.
In equity markets, U.S. stock indexes on Thursday recovered from early losses and rallied moderately.
Fed may ease the pace of its interest rate increases.
Thus, the 10-year T-note yield dropped to a 3-1/2 month low of 2.647% Thursday.
Also boosting sentiment in the overall market Thursday was a rally in renewable energy stocks after Senator Manchin and Senate Majority Leader Schumer, late Wednesday, struck a deal on a tax and energy bill that could provide $369 billion for “energy and climate change.”
However, the U.S. economy may have entered into recession after Thursday’s data showed that U.S. Q2 GDP unexpectedly contracted for a second quarter.
Particularly, the U.S Q2 GDP fell -0.9% (q/q annualized), weaker than expectations of a +0.4% increase.
The GDP decline in Q2 was the second consecutive quarter of contraction, which some consider to be a definition of a recession.
Meantime, Q2 personal consumption rose +1.0%, weaker than expectations of +1.2%.
U.S. Q2 core PCE slowed to +4.4% q/q from +5.2% q/q in Q1, right on expectations.
The lower inflation figure was positive for the stock and bond markets.
U.S. weekly initial unemployment claims fell -5,000 to 256,000, showing a weaker labor market than expectations of 250,000.
Also, weaker-than-expected quarterly earnings results from Qualcomm and Meta Platforms led technology companies lower.
In this context, the S&P 500 rose 1.2% to 4,072.43, while the Dow added 1% to close at 32,529.63.
The Nasdaq gained 1.1% to 12,162.59.
The Russell 2000 rose 1.3% to 1,873.03.
Meantime, Asian shares were mixed on Friday, as Chinese shares sank after leaders acknowledged the official 5.5% growth target for this year won’t be met.
Investors were also cautiously eyeing regional tensions over China’s stance on Taiwan after President Joe Biden and China’s Xi Jinping spoke for more than two hours on Thursday.
China left no doubt it blames the U.S. for a deteriorating relationship, but the White House said call’s aim was to “responsibly manage our differences and work together where our interests align.”
Japanese government data showed factory output in June jumped 8.9% from the previous month, marking the first rise in three months.
In this context, Hong Kong’s Hang Seng index dropped 2.4% to 20,123.55 and the Shanghai Composite index declined 1% to 3,250.64.
Japan’s benchmark Nikkei 225 lost 0.2% to 27,801.64, while Australia’s S&P/ASX 200 gained 1.0% to 6,945.20.
South Korea’s Kospi added 0.7% to 2,451.50.
In currency trading, the U.S. dollar fell to 132.67 Japanese yen from 134.27 yen late Thursday.
The euro cost $1.0247, up from $1.0199.
From Canada, Canadian government is proposing to cut emissions from fertilizer by 30pc by 2030 as part of a plan to get to net zero in the next three decades.
But growers are saying that to achieve that, they may have to shrink grain output significantly at a time when the world is scrambling for more supplies.
Also at stake is the estimated C$10.4 billion farmers could lose this decade from the reduced output.
Production losses could be significant, according to an analysis commissioned by Fertilizer Canada.
Canada could lose over 160 Mt canola, corn and spring wheat between 2023 and 2030 due to the plan, according to the report.
From South America, the Buenos Aires Grain Exchange reports that the moisture condition of Argentine wheat has improved since last week thanks to rains across an area that accounts for 40pc of plantings.
An estimated 35pc of plants have a poor/dry moisture condition versus 44pc last week.
The rain, however, could delay the final stage of corn harvesting for the 2021/2022 season, which has advanced to about 74% of the area destined for commercial corn production.
Corn output for the cycle is seen at 49 million tonnes.
The Brazilian government confirmed that China has opened its market to soybean meal produced in the South American country, adding that shipments would begin after the removal of some bureaucratic hurdles.
In Europe, grain prices struggled to progress in the perspective of the first shipments of Ukrainian wheat.
Rapeseed, meantime, stood out with a strong bullish performance, in the wake of soybeans and palm oil.
The condition of France’s corn crop deteriorated sharply for a second consecutive week, data from farm office FranceAgriMer showed, in a sign that dry weather in the European Union’s biggest grain maize producer is taking a tolls.
An estimated 68% of the grain maize crop indeed, was in good or excellent condition in the week to July 25, down from 75% the previous week, 83% in the week to July 11 and 84% in the week to July 4.
This week’s rating compares to a year-earlier score of 90%.
More dry and hot weather is forecast in the coming weeks in key European maize growing regions, including France, and is expected to cause further damage to crops already stressed by a dry spring and sweltering temperatures earlier this month.
The condition of spring barley, which was 92% harvested by July 25, further deteriorated to 48% from 50% a week earlier.
In soft wheat, French farmers had harvested 95% of this year’s crop by Monday, compared with 84% a week earlier.
An estimated 63% of soft wheat was in good or excellent condition, unchanged from the previous week.
The winter barley and durum harvests were both over, well ahead of last year.
Hungary has harvested 3.9 million tonnes of autumn wheat and 1.4 million tonnes of barley.
The harvest season ended earlier than usual due to this year’s heat and drought, the Ministry of Agriculture said in a statement on Friday.
The total amount of wheat harvested in Hungary was about 25% less than the average yield in the past five years, the ministry said.
Last year the country harvested 5.3 million tonnes of wheat, data from the Central Statistical Office (KSH) showed.
This year’s barley yields also lagged behind the 1.7 million tonnes harvested in 2021.
Hungary harvested 450,000 tonnes of rapeseed, the ministry said, also well below about 722,000 tonnes last year.
The damage to the grains crop comes at a time when the country is struggling with food inflation running at 22% in annul terms in June.
From Levant, Lebanon’s Parliament voted to use a US$150m World Bank loan to pay for wheat imports to cope with a food security crisis.
According to the Economy Minister, the funds would help to stabilize domestic bread prices for more than six months, provided prices continue to decline.
From the Black Sea basin, the grain community “remains sceptical about the prospects for shipments”, Ukragroconsult analysts said.
Still, this week “the first caravan of ships, blocked in Ukrainian ports for five months, is being formed”.
Ukraine is ready to start shipping grain from two Black Sea ports under a U.N.-brokered agreement but no date has been set for the first shipment, Ukrainian Infrastructure Minister Oleksandr Kubrakov said on Friday.
He also told reporters in the southern port of Odesa that 17 vessels trapped by five-month, were already loaded with grain, and another was now being loaded.
It is being reported, indeed, that a 27,000mt vessel was reportedly able to complete loading at the port of Chornomorsk, likely with maize, and could set sail shortly.
Ukrainian farmers have threshed 11.8 million tonnes of grain of the 2022 grain harvest so far, Ukrainian grain traders union UGA said on Thursday.
The union said in a statement that the volume included 8 million tonnes of wheat with an average yield of 3.52 tonnes per hectare and 3.5 million tonnes of barley with a yield of 3.26 tonnes per hectare.
UGA said farmers also harvested 1.7 million tonnes of rapeseed with the yield of 2.52 tonnes per hectare.
As for Russia, SovEcon raised their wheat shipment outlook for Russia by 300k MT to a record 42.9 MMT for 22/23.
Their production estimate was up another 1.7 MMT to 90.9 MMT, yesterday has been reported for error 80.9 MMT.
Meantime, Russia has set out its grain export taxes for Aug 3 – 9.
According to the agriculture ministry the export duty will increase for all products wheat, barley and corn.
Particularly, for wheat will decrease to 4,626.8 roubles/tonne, from 4,951.7 roubles/tonne of a week earlier.
For barley, will move down to 2,945 roubles/tonne, from 3,002.6 roubles/tonne the prior week.
For corn, the tax will up to 3,311.4 roubles/tonne, from 2,923.4 roubles/tonne the previus period.
As for indicative price, for wheat will be 371.9 $/tonne, for barley 311.2 $/tonne, and for corn 320.2 $/tonne.
That is compared with 388.2 $/tonne for wheat, 321.0 $/tonne for barley, and 319.0 $/tonne for corn of a week earlier.
From Australia, local markets have been quiet this week with feed wheat, barley and sorghum prices remaining unchanged through northern markets, while southern wheat values have been off $15-20/t in thin trade.
The Blue Mountains rail line reopened this week allowing a backlog of containers carrying agricultural and other commodities to move from central New South Wales to Port Botany. The line has been open for 12 hours a day since Monday, and will be open around the clock from Saturday.
Australia’s inflation rate hit 6.1pc in the June quarter, the fastest annual pace since 2001 as consumers paid more for everything from fuel to food.
Transport costs alone increased 13.1pc as the price of fuel rose to record levels for the fourth quarter in a row.
The cost of new houses also rose 9pc from a year earlier.
“Annual trimmed mean inflation was the highest since the series commenced in 2003 and annual goods inflation was the highest since 1987, as the impacts of supply disruptions, rising shipping costs and other global and domestic inflationary factors flowed through the economy,” said Michelle Marquardt, head of prices statistics at the ABS.
On international trade scene, Bangladesh’s state grains buyer has purchased about 50,000 tonnes of milling wheat in an international tender which closed on July 14, officials in Bangladesh said on Thursday.
The purchase was made from trading house Intra Business of Singapore, said to be the only tender participant, at $476.38 a tonne c&f free out for optional origins including Australian, German, Bulgarian, Romanian, US and Canadian wheat.
Bangladesh on July 20 purchased about 50,000 tonnes of milling wheat in a tender which closed on July 5 at an estimated $448.38 a tonne CIF liner out.
Wheat shipment in the July 14 tender was sought 40 days after the date of contract signing.
The wheat can be sourced from any origin except Israel and was sought for shipment to two ports, Chattogram and Mongla.
A government agency in Pakistan is believed to have bought an estimated 186,000 tonnes of wheat in an international tender for up to 200,000 tonnes which closed this week.
The Trading Corporation of Pakistan (TCP) bought about 120,000 tonnes from trading house Falconbridge and some 66,000 tonnes from Viterra, all at $407.49 a tonne c&f.
Falconbridge had made the lowest offer at $407.49 a tonne c&f in the tender on Monday and the TCP had asked other tender participants to match the lowest price.
Shipment in the tender was sought in September.
That’s all, thank you.
To all of you, we wish you a good day and … Good Harvest 2022!
Author: Sandro F. Puglisi
