Good morning Farmer Family …
US farm markets, were mixed but mostly higher yesterday.
Corn moved modestly higher, up 0.87%, after hitting their highest in nearly two months.
Soybeans also tried to push higher but ultimately failed, closing with 0.38% losses, after rallying to a three-week high during the overnight trading session.
Even soybean meal price, closed off the highs and went home down 0.17%.
Bean oil stayed red most of the day, going home 1.18% weaker.
Wheat prices, meantime, stayed in the green notching their fourth straight day of gains.
Both Kansas City HRW and CBOT SRW wheats went home with 1.56% gains.
Minneapolis spring wheat was the laggard of the complex, having spent midday in the red, but ultimately settled with 0.86% gains.
Traders continued to watch weather trends, as well as the latest export trends.
Meantime, Pro Farmer’s highly anticipated crop tour showed in Nebraska and Indiana a 158.5 and 177.8 bpa result respectively.
For Nebraska that compares to last year’s 182.4, where as in Indiana their estimate last year was 102.
As for soybean, the tour showed Nebraska soy pods counts were 1,063 in a 3×3’ square.
In Indiana, pod counts were 1,166.
Last year the Nebraska pod counts were 1,226 and Indiana was 1,240.
Meantime, private exporters reported to the USDA having sold 517,000 metric tons of soybeans for delivery to China during the 2022/2023 marketing year.
On the other hand, the weekly EIA report showed an average of 983k barrels of ethanol production per day through the week that ended 8/12.
That compares to 1.022 million barrels per day during the week prior.
In this context, corn basis bids held steady across most Midwestern locations, but did drop 5 cents lower at an Illinois river terminal and an Iowa ethanol plant.
Soybean basis bids were mostly steady to firm across the central U.S., after rising 10 to 35 cents higher at four Midwestern locations.
An Ohio elevator bucked the overall trend after fading 6 cents.
Commodity funds were net sellers for 3,500 lots of soybeans and net buyers for 3,500 lots of wheat.
They were corn neutral.
On this morning, corn prices rose for a seventh straight session, to trade near a two-month high, supported by concerns that hot and dry weather in the Midwest during key crop development periods could reduce even more yields.
Corn yield prospects in Western Iowa are lower than last year, according to scouts of Pro Farmer’s tour.
In District 1, in the state’s northwest corner, they saw at 181.12 bushels per acre (bpa), down from 183.96 bpa last year and below the tour’s three-year average of 183.37 bpa.
Corn yields in west-central District 4 were pegged at 180.80 bpa, below the tour’s average yield of 201.10 bpa last year and its three-year average of 188.74, bpa for the district.
Corn yields in southwestern District 7 were seen at 173.70 bpa, down from 192.47 bpa a year ago and the three-year average of 187.83 bpa.
Soybeans edged higher on concerns over supplies from the United States, although an expected rise in Brazil’s output capped the upside.
Soybean pod counts in the western part of Iowa were mixed, with some districts surpassing last year and others below.
Illinois pod counts in the top soybean producing state were lower than last year but above the three-year average.
Wheat, on its part, rose for a fifth straight session on lower supplies from the Black Sea region amid strong demand.
Particularly, the Chicago most-active corn contract was up 0.65% at $6.61-1/2 a bushel, as of 03:28 GMT, not far from Wednesday’s peak of $6.71.
Wheat edged up 0.31% to $8.15-3/4 a bushel and soybeans rose 0.21% to $14.60-1/2 a bushel.
In energy markets, oil prices rose on Thursday on mounting supply tightness concerns amid disruptions to Russian exports, the potential for major producers to cut output, and the partial shutdown of a U.S. refinery.
Brent crude rose 45 cents, or 0.4%, to $101.67 a barrel by 0630 GMT, while U.S. West Texas Intermediate crude was up 32 cents, or 0.3%, at $95.21 a barrel.
Both crude oil benchmark contracts touched three-week highs on Wednesday after the Saudi energy minister flagged the possibility that the OPEC+, will cut production to support prices.
Discussions on an agreement on Iran’s nuclear programme remain stalled, calling into question any resumption of its exports.
In the United States, BP reported shutting some units at its Whiting refinery in Indiana after an electrical fire on Wednesday.
The 430,000 barrel-per-day plant is a key supplier of fuels to the central United States and the city of Chicago.
Falling U.S. crude and product stockpiles also added to the upward pressure on prices.
Oil inventories indeed fell by 3.3 million barrels in the week to Aug. 19 at 421.7 million barrels.
The bullish impact was countered by a drawdown in gasoline inventories that was less than expected, reflecting tepid demand.
U.S. gasoline stocks indeed fell by 27,000 barrels in the week to 215.6 million barrels, compared with earlier expectations for a 1.5 million-barrel drop.
In freight markets, the Baltic Dry index, fell 58 points, or 4.6% to 1,213 points on Wednesday, the lowest since December of 2020, after a marginal increase in the previous session.
The capesize index, which tracks iron ore and coal cargos of 150,000 tonnes, tumbled 14.7% to an over two-year low of 680 points; and the panamax index, which tracks about 60,000 to 70,000 tonnes of coal and grains cargoes, continued its month-long decline, slumping 5.2% to 1,491 points, on its worst day in more than seven months.
Meanwhile, the supramax index rose for a ninth consecutive session, adding 8 points to 1,773 points.
In equity markets, on Wall Street, the S&P 500 edged up 12.04 points, or 0.3%, to 4,140.77, as traders overall again held off on making big moves.
The Dow Jones Industrial Average added 59.64, or 0.2%, to 32,969.23, and the Nasdaq composite rose 50.23, or 0.4%, to 12,431.53.
Wall Street’s focus remains centered on Friday, when Fed Chair Jerome Powell gives a speech at an annual economic conference in Jackson Hole, Wyoming.
Treasury yields have been rising recently, partly in anticipation of the Fed continuing to lean toward raising rates aggressively to quash the worst inflation in decades.
The two-year yield, which tends to track expectations for the Fed, rose to 3.40% from 3.30% late Tuesday.
The 10-year yield, which helps set rates for mortgages and many kinds of loans, rose to 3.124% from 3.05% after a report showed that U.S. orders for long-lasting goods were flat in July.
Excluding transportation, though, growth was stronger than economists expected.
Particularly, capital goods new orders nondefense ex-aircraft, a proxy for capital spending, rose +0.4% m/m, slightly stronger than expectations of +0.3% m/m.
Also, July pending home sales fell -1.0% m/m, which was a smaller decline than expectations of -2.6% m/m.
Meantime, Asian shares gained on Thursday.
Benchmarks rose in Japan, Australia, South Korea and China.
Particularly, Japan’s benchmark Nikkei 225 edged up 0.6% to finish at 28,479.01.
Australia’s S&P/ASX 200 gained 0.7% to 7,048.10.
South Korea’s Kospi rose 1.0% to 2,471.68.
Hong Kong’s Hang Seng surged 2.2% to 19,696.67, after trading was delayed earlier because of a storm.
The Shanghai Composite rose 0.4% to 3,227.19.
Market watchers say share prices are likely to sway for some time, regardless of whether the focus is on controlling inflation or recession risks.
Chinese shares have declined this week, amid recent policy rate cuts from the People’s Bank of China, which also announced policies to try to stimulate the economy.
The Bank of Korea raised its key policy rate by 0.25% to 2.5% in an effort to fight inflation, even as signs of inflationary pressures appeared to be gradually easing.
The Bank of Korea said the nation’s GDP, or gross domestic product, is projected to grow by 2.6% in 2022 and 2.1% in 2023.
In currency trading, the U.S. dollar fell to 136.78 Japanese yen from 137.09 yen.
The dollar remains very firm against the euro, which is at 0.9990 this morning and at 58.85 against the rouble.
From South America, Conab is very optimistic about Brazil’s soybean production at the start of 2023, integrating an increase in surface areas of +3.54% and an increase in yields, leading to a first production estimate of 150.36 million tonnes, which would be a record.
Climatic conditions are currently favorable for future sowing.
Brazil could also reap a large corn crop this coming season, with Conab projecting a total of 125.51 MMT.
AgroConsult estimates Brazillian 2022/23 grain and oilseeds production at 300.0Mt (271.4Mt government estimate for previous year) with area seen expanding by 2.5Mha, mainly linked to larger projected soybean sowings.
Meantime, Brazil’s Anec estimates that the country’s corn exports will exceed 7.5 MMT in August.
That’s 7.3% below the association’s prior projection made a week ago.
Brazil’s Anec expects the country’s soybean exports in August will reach 5.5 MMT, which is moderately below its prior projection made a week ago.
Conab estimates that the greater soybean availability will lead Brazil to export an estimated 92 million tonnes.
If confirmed, this would represent an increase of 22.2% compared to soy exports during the 2021/2022 harvest, and record exports for the crop, Conab said.
Anec also estimates that Brazilian soymeal exports will reach 1.9 million metric tons this month.
In Argentina, the government has decided to increase its biodiesel incorporation rates to 12.5%.
In Europe, markets remain very volatile and yesterday we witnessed a fall in prices.
Euronext wheat retreated from a one-week high.
December wheat on Paris-based Euronext indeed was down 1.23% at 322.00 euros ($320.87) a tonne.
It earlier reached a new one-week high at 329.50 euros, on strong demand.
Importers in China bought several cargoes of French wheat last week.
that is the second time this summer.
The buyers are thought to have purchased at least three to four vessels of about 60,000 tonnes each, with some estimating the volume at six to eight cargoes, potentially approaching 500,000 tonnes.
Shipment was expected to be for between October and December, with the wheat understood to have 10-10.5% protein content.
While such protein content is below usual levels applied in Europe for flour-making, the crop sold last week was understood to be for milling rather than animal feed use.
The sales took place towards the end of last week after a market drop sent European wheat prices to their lowest in nearly six months, of 301.25 euros.
The lower protein quality cited had also an additional competitively priced on the French physical market.
Meantime, Russia’s wheat harvest looks big and the ships continue to sail from Ukraine regularly.
Some importers are expecting cheaper supplies from the Black Sea in coming weeks.
In Germany, the wheat harvest has been generally completed up to three weeks early.
The country’s 2022 winter wheat crop will increase to about 21.8 million tonnes from 21.0 million last year, the association of German farmers said on Tuesday.
Rapeseed gave up a bit of ground yesterday despite the palm’s good performance.
The market remains undecided given the demand.
European weather forecasts showing showers in the week ahead have eased concerns about corn crop losses and conditions for upcoming planting of winter grains, following the region’s worst drought in centuries.
Meantime, Refinitiv Commodities Research lowered 2022/23 EU maize production by 5.8Mt, to 60.3Mt (65.8Mt European Commission end-Jul, 72.7Mt previous year) reflecting the impact of hot and dry growing conditions.
It maintained its estimate of common wheat production estimate at 124.4Mt (123.9Mt European Commission end-Jul, 130.1Mt previous year).
Rapeseed production was forecast unchanged, from previous estimate, at 17.6Mt.
Per latest data published by Euronext on Wednesday, non-commercial market participants lowered their net long position in Euronext’s milling wheat futures and options in the week to Aug. 19.
Particularly, non-commercial participants, which include investment funds and financial institutions, cut their net long position to 68,164 contracts from 75,730 a week earlier.
Commercial participants similarly lowered their net short position to 81,238 contracts from 103,147 a week earlier.
Commercials’ short positions accounted for 64% of the total short position, while commercial long positions accounted for 50.3% of total long positions.
Non-commercial short positions represented 36% of total short positions, while non-commercial net long positions accounted for 49.7% of the total longs.
In Euronext’s rapeseed futures and options, non-commercial market participants raised their net short position to 24,754 contracts from 21,591 a week earlier.
Commercial participants similarly increased their net long position in rapeseed to 24,720 contracts from 21,636 a week earlier.
In other news, gas prices soared to a record high earlier this week on Russian supply risks.
Consequentially, Poland’s biggest chemicals firm Grupa Azoty said its subsidiary decided to limit to 43% of capacity fertiliser production.
On Monday, Azoty said it was halting production of nitrogen fertilisers and trimming ammonium output down to about 10% capacity.
Shares of the company closed 5% lower.
On this wake, CF Fertilisers UK, a subsidiary of CF Industries Holdings Inc, said on Wednesday it would temporarily halt ammonia production at its Billingham Complex due to high natural gas and carbon prices.
The company said that it intended to use the site’s capability to import ammonia to enable it to continue to run its ammonium nitrate and nitric acid upgrade plants, adding that it expects to fulfil its ammonia and nitric acid contracts for delivery in the coming months.
The date of the shutdown has not yet been determined.
The current cost of natural gas at National Balancing Point (NBP) is more than twice as high as it was one year ago.
In Britain, the contract for next day gas delivery was up by a quarter to 507.5 pence per therm on Wednesday and around 40% higher so far this week.
Norway’s Yara said on Thursday it was further curtailing output of ammonia, as a result of record high prices of gas.
Its European ammonia capacity utilisation stands at about 35% after the change.
“With this, Yara will have curtailed an annual capacity equivalent of 3.1 million tonnes ammonia and 4.0 million tonnes finished products” the company said in a statement.
In this context, ammonia prices could rally by around 30%, while urea and urea ammonium nitrate could rally between 50% and 65%.
From Africa, the European Bank for Reconstruction and Development signed a sovereign guaranteed loan deal worth 150 million euros with Tunisia’s state cereals office on Wednesday to support grain imports.
The agreement, to finance purchases of soft wheat, durum wheat and barley at a time of restricted supply and high prices, also includes promises by the Office des Cereales and the Tunisian government to reform the grain sector in Tunisia.
Flooding devastated rural areas south of Sudan’s capital.
A farming area about 150 km (90 miles) south of the capital Khartoum and lined with overflowing irrigation ditcheswith more than 100 villages had been cut off and 10,000 homes had been damaged or collapsed.
At least 3,000 people had sought shelter in makeshift camps.
By the end of the rainy season, which typically continues in September, the United Nations expects at least 460,000 people to have been hit, a higher number than most previous years, due to heavier rain as well as lack of mitigation.
From Russia, according to Russia’s Ag Ministry, as at 22 Aug, 2022/23 wheat harvesting was 59pc done at 75.0Mt, with productivity at 4.3t/ha (+35pc y/y), barley at 59pc complete at 15.7Mt, with productivity at 3.3t/ha (+31pc y/y).
Rapeseed collection at 24pc finished at 1.2Mt, with yields at 2.8t/ha (+25pc y/y)
Meantime, Russia’s SovEcon estimates the July-August wheat export at 5.9 MMT, the lowest pace in 5 years.
On the other hand, consumer prices in Russia declined for the seventh week running, as the rouble’s appreciation in the past few months and a drop in consumer demand slow the pace of price growth, although households’ expectations of future inflation increased.
Particularly, the consumer prices index (CPI) dipped 0.15% in the week to Aug. 22 after easing 0.13% a week earlier, the federal statistics service Rosstat said on Wednesday.
Annual inflation reached 15.1% in July, far above the central bank’s 4% target.
As of Aug. 22, annual inflation slowed to 14.60% from 14.87% a week earlier, the economy ministry said on Wednesday.
A sound harvest could pave the road for a decline in the CPI in August and September, which in turn could cement expectations for further rate cuts and steer yields of government bonds lower.
From South East Asia, India’s crude oil imports rose to 20.34 million tonnes in July, up 35.4% from a year earlier, helped by higher demand, government data showed on Wednesday.
The crude oil imports were up 6.4% from June.
Improved demand for crude oil was led by an increase in mobility and economic activity after the easing of pandemic restrictions.
India, which has been taking advantage of cheaper crude varieties, in July eased imports from Russia for the first time since March, while supplies from Saudi Arabia rebounded for the first time in five months.
Meanwhile, Indian refiners’ crude oil throughput in July rose 10.5% from a year ago, while crude oil production was 600,000 barrels per day (bpd), down 3.8% year on year.
Oil product imports rose 5.4% from a year earlier to 3.73 million tonnes, while exports fell by 0.4%.
Of the 4.68 million tonnes of exports in July, diesel accounted for 2.18 million tonnes, data from the website of the Petroleum Planning and Analysis Cell showed.
However, elevated crude oil prices, a depreciating rupee and inflationary pressure is expected to cap product consumption growth to 4-6% on-year for fiscal 2023.
From Australia, markets for feed wheat, barley and sorghum have softened this week to prices that most growers are not prepared to take, while consumers have ratcheted back their buying in the hope of further falls.
Overshadowing the market is the groaning supply chain, particularly into Brisbane, Newcastle and Port Kembla, which is redirecting some tonnages, bought with export in mind, into the domestic market.
Meantime, local markets continued to catch a bid yesterday and values were a touch firmer across the board.
Barley was the stand out, its current crop eastern states and South Australian bids picking up on Clear Grain Exchange and new crop attracted some buyers at current values domestically and offshore.
New season canola bids to growers were up $10-15/t in Vic/SA.
On the international trade scene, as for Jordan barley tender the ministry bought 120k t: 60k from Cargill at 328$ shipment SH Jan and 60k from Viterra at 328$ shipment FH Feb.
Other prices were Bunge at 335$ and Ameropa at 355$.
Jordan’s trade ministry is seeking also 120,000 tonnes of wheat in a tender, a government source said on Wednesday.
The deadline for submission of offers is Aug. 30.
A group of South Korean flour mills on Friday bought around 50,000 tonnes of milling wheat to be sourced from the United States.
The wheat was bought for shipment between Nov. 1 and Nov. 30 and the purchase involved a series of different wheat grades.
The wheat was all bought on an FOB basis.
The purchase involved soft white wheat of some 9.5% to 11% protein content bought at around $331 a tonne and soft white wheat of 9% protein bought at around $333 a tonne.
It also involved hard red winter wheat bought at an estimated $377 a tonne and northern spring/dark northern spring wheat bought around $375 a tonne.
All of the wheat was said to have been sold by trading house CHS.
Iraq’s state grains buyer is believed to have rejected all offers and made no purchase in a tender for a nominal 50,000 tonnes of wheat sourced from the U.S. which closed on Aug. 17.
Prices offered were not revealed.
Three trading houses were believed to have participated in the tender: CHS, Cargill and Andersons.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
