Good morning Farmer Family …
US farm markets landed in the red on Tuesday.
Increasing concerns over rising interest rates sent lower a broad set of stocks and commodities yesterday.
In this context, the corn market partially faded Monday’s gains, as Sep contract ended the day with 0.59% losses.
September soybeans closed 1.42% weaker.
As for products meal traded 3.34% lower, while bean oil was only 0.27% weaker by the close.
Tuesday’s turnaround pulled the wheat market back following the sharp Monday rally.
Thus, Chicago SRW wheat prices, were 2.65% in the red by the close.
Kansas City HRW wheat ended the day 0.41% lower.
Minneapolis spring wheat went home with 1.42% losses.
Operators are monitoring supply prospects as U.S. corn and soybeans approach maturity ahead of the fall harvest.
Private analyst Cordonnier sees the ‘22 U.S. corn yield as 170 bpa flat, down 3 from his prior estimate.
As for soybeans, Cordonnier sees the ‘22 U.S. soybean yield as 50.4 bpa, which is steady with their prior estimate but 1.5 bpa below the current USDA number.
A survey by Farm Futures shows a projected 5% increase to 23/24 U.S. corn ground.
That would bring planted acres to 94.281 million, and production to 15.46 bbu on a trendline yield.
As for soybeans, Farm Futures estimated soybean acres for the 22/23 U.S. crop to be 87.331 million, down 0.8% yr/yr.
Trendline yield off that puts the output near 4.529 bbu.
As for wheat, Farm Futures put 22/23 winter wheat area near 36.553m acres.
That would be a 7.5% boost yr/yr if realized this fall.
However, total wheat area is only expected to increase 3.9% to 48.842m acres as spring wheat is expected to drop ~700k.
Meantime, US Agriculture Secretary Tom Vilsack told reporters on Tuesday that an estimated 1million acres (404.7k hectares) were taken out of the US Conservation Reserve Program, or CRP, and will return to agricultural production in 2023.
On the weather side, some scattered showers are possible later this week, but very little rainfall is expected in the central U.S. between today and Saturday.
Seasonally dry weather should remain in place for the Northern Plains and upper Midwest between September 6 and September 12, with widespread warmer-than-normal conditions likely during that time, per NOAA’s new 8-to-14-day outlook.
On the demand side, USDA issued a statement that it would not release additional weekly export sales data until further notice.
Last week, the agency botched its attempt to upgrade to a new reporting system called ESRMS 2.0.
There’s currently no timetable on when export sales data will start to be released again.
Meantime, private exporters reported to the USDA having sold 264,000 metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year
The U.S. soybean crush likely rose to 5.416 million short tons in July, or 180.5 million bushels, according to some analysts.
It would be the second-largest July crush on record.
The USDA is scheduled to release its monthly fats and oils report at 2 p.m. CDT (1900 GMT) on Thursday.
U.S. soyoil stocks as of July 31 were estimated to have dropped to 2.221 billion lbs.
The stocks would be down from 2.316 billion lbs at the end of June but up from supplies totaling 2.070 billion lbs at the end of July last year.
NOPA members, crushed 170.220 million bushels of soybeans last month, up 3.4% from June and up 9.7% from July 2021.
Soyoil supplies held by NOPA members as of July 31 fell to 1.684 billion lbs, the smallest end-of-month stocks since August.
In this context, corn basis bids were mostly steady across the central U.S. on Tuesday but did tilt 7 cents lower at an Illinois river terminal.
Soybean basis bids fell 10 cents lower at two Midwestern processors and firmed 12 cents at an Illinois river terminal while holding steady elsewhere across the central U.S..
On this morning, Chicago corn edged lower.
Wheat and soybeans also.
However, the corn market is up more than 9% in August, its biggest monthly climb in six months.
Wheat has added 1.2% in August, rising for the first time in three months, while soybeans have given up around 3% this month, after closing marginally higher in July.
In energy markets, oil prices recovered slightly on this morning after a 5% drop seen yesterday.
U.S. West Texas Intermediate (WTI) crude futures, indeed, jumped 85 cents, or 0.9%, to $92.49 a barrel at 04:56 GMT, after sliding $5.37 in the previous session driven by recession fears.
Brent crude futures for October, due to expire on Wednesday, climbed 70 cents, or 0.7%, to $100.01 a barrel, trimming Tuesday’s $5.78 loss.
The more active November contract was up 93 cents, or 1%, at $98.77 a barrel.
Supporting market sentiment on Wednesday, data from the American Petroleum Institute (API) showed gasoline inventories fell by about 3.4 million barrels, while distillate stocks, which include diesel and jet fuel, fell by about 1.7 million barrels for the week ended Aug. 26 .
However API data showed crude stocks rose by about 593,000 barrels.
A slightly weaker U.S. dollar also shored up the market.
Price gains were capped by worries that some of China’s biggest cities – from Shenzhen to Dalian – are imposing lockdowns and business closures to curb COVID-19.
Oil exports from Iraq were unaffected by clashes in Bagdad.
The main factor supporting prices at the moment is talk from members of the OPEC+, that they might cut output to stabilise the market.
In freight markets, the Baltic Dry index, extended losses for the fourth straight session on Tuesday, falling 6% to an over two-year low of 1,017 points, amid weakness across its vessel segments.
Particularly, the capesize index, which tracks iron ore and coal cargos of 150,000 tonnes, decreased for the fourth consecutive session, plunging 18% to an over two-year low of 337 points, pressured by lower Chinese steel consumption.
The panamax index, which tracks about 60,000 to 70,000 tonnes of coal and grains cargoes, continued its month-long decline, falling 6.4% to a near two-year low of 1,284 points.
At the same time, the supramax index was down for the third day, losing 53 points to 1,691 points.
In equity markets, US stocks on Tuesday fell for the third consecutive session.
U.S. July JOLTS job openings unexpectedly rose +199,000 to 11.239 million, showing a stronger labor market than expectations of a decline to 10.375 million.
The Conference Board U.S. Aug consumer confidence index rose +7.9 to 103.2, stronger than expectations of 98.0.
The U.S. June S&P CoreLogic composite-20 home price index rose +0.44% m/m and +18.65% y/y, weaker than expectations of +0.90% m/m and +19.20% y/y.
These better-than-expected economic reports, along with several hawkish Fed comments, pushed up T-note yields and weighed on stocks.
As a result, the 10-year T-note yield rose to a new 2-month high Tuesday of 3.149%.
Thus, tech stocks were among the biggest declines.
Chipmaker Nvidia fell 2.1%.
Stocks were also under pressure Tuesday after Credit Suisse recommended that investors go underweight global equities as the argument for an early dovish pivot by the Fed and other major central banks are now “clearly out the window.”
Markets are now confronted with slowing growth, rising recession risks, and elevated inflation, and “the next few months are thus likely going to be painful.”
In this context, on Wall Street, the benchmark S&P 500 index fell 1.1% to 3,986.16.
That brought its decline over the past five days to 5.5%.
The Dow Jones Industrial Average dropped 1% to 31,790.87.
The Nasdaq composite lost 1.1% to 11,883.14.
Meantime, Asian stocks followed Wall Street lower on this morning.
Shanghai, Tokyo, Hong Kong and Sydney declined.
Particularly, the Shanghai Composite Index fell 1.1% to 3,191.00 after an index of manufacturing showed activity contracted again in August.
The Nikkei 225 in Tokyo shed 0.5% to 28,063.06 and the Hang Seng in Hong Kong sank 0.4% to 19,867.17.
The Kospi in South Korea gained 0.7% to 2,467.38 after July factory output declined 1.3% compared with the previous month.
Sydney’s S&P-ASX 200 shed 0.2% to 6,984.10.
New Zealand advanced while Singapore and Indonesia declined. Indian markets were closed for a holiday.
In currency trading, the dollar edged down to 138.46 yen from Tuesday’s 138.67 yen.
The euro gained to $1.0026 from $1.0021.
From Canada, harvest progress sits at 3% complete across the Manitoba province, well behind the 5-year average of 39% done by week 35, a combination of delayed seeding and high humidity and frequent rains that have slowed crop drydown.
Crop condition looks good to very good in most parts of the province, and field pea harvest made good progress this past week, while the bulk of the crop has been desiccated.
Yield averages are close to 60 bu/acre.
Spring wheat harvest is expected to become widespread later this week as crops dry down and weather forecasts remain warm and sunny.
Lodged crops have disrupted smooth harvest operations in peas and some cereals so far, heavy rains and wind in the previous two weeks have resulted in lodged crops and increased losses at the cutterbar.
A limited start to soil testing has begun as crops are harvested.
Many winter wheat fields are harvested, yield reports are between 30 to 80 bu/acre, averaging in the 60 to 70 bu/acre range.
Winter wheat grain samples from the Eastern region are running into higher levels of fusarium.
Spring wheat is ripe in many places in all regions, but waiting for drydown and good harvesting weather.
The spring wheat crop is rated mostly good to excellent, harvest ongoing on the earliest crops.
Pre-harvest application on wheat is ongoing as crop maturity is less uniform in some locations due to
delayed seeding/emergence, or weed escapes are above crop canopy.
Harvest has progressed in fits as high humidity has not allowed for much natural drying, with only 2% of the crop combined to date.
Yield averages are reported between 70 to 75 bu/acre in the Central region.
Early harvest indications in the Eastern and Central regions are showing CWRS wheat protein ranging between 12.5 to 14.8%, with good test weight between 61 to 66 lbs/bushel.
Spring wheat is showing moderately higher FDK (fusarium damaged kernels) than recent years due to wetter conditions, but low DON levels, and nearly all grading № 1 CWRS.
Many barley crops have reached hard dough stage, with malt crops most advanced, and greenfeed or very late-seeded fields further behind.
Pre-harvest application has started in many fields intended for livestock feed, while malt fields are generally straight-cut.
Barley delivered to grain buyers has been tough (>13.5% seed moisture).
Oat swathing has just started, early harvest yields are above average in the Central region, between 150 and 170 bu/acre with good test weight.
Many oat fields remain standing at this time.
From South America, AgRural reported Brazil’s 2nd crop harvest reached 94.2% complete.
That was up from 89.5% last week and compares to 89% during the same week last year.
Datagro estimated the 2022/23 Brazilian corn crop at 120.5 MMT, on a 25.8 MMT first crop.
ABIOVE estimated that 2022/23 Brazilian soybean production would hit a record 151 MMT (5.548 billion bushels!) on 42 million planted hectares.
Datagro predicts the country’s soybean footprint could increase by as much as 6% in 2022/23 – the 16th consecutive season plantings have grown there.
Datagro currently anticipates a record-breaking production of 151.81 MMT and exports totaling 95 MMT.
In Argentina, Argentina’s grain producers have sold 51.6% of the 2021/22 soybean harvest so far, the country’s Ministry of Agriculture said on Tuesday, lagging behind the 62% sales rate reported at the same point in the previous season.
Argentina soybean production in the 2021/22 cycle was 44 million tonnes, down from 46 million tonnes the previous cycle.
Particularly, from Aug. 18 to 24, local producers sold 350,000 tonnes of 2021/22 soybeans to agro-exporters.
On the other hand, producers have already sold 64% of the corn for 2021/22 cycle, on par with the figures reported last August.
The 2021/22 corn harvest totaled 59 million tonnes, down from 60.5 million in the previous cycle.
While soybean and corn sowing for the 2022/23 cycle will begin between September and October, Argentina’s 2022/2023 wheat harvest will begin in November, with the latest official data showing the fields to be mostly in a positive condition after rains.
The government has not yet estimated the harvest for the new cereal campaign, although the Rosario grains exchange estimated wheat production for 22/23 at 17.7 million tonnes.
In Europe, the market remains extremely volatile recording significant amplitudes of variation during the day.
Germany’s Ag. Ministry announced grain and rapeseed crop conditions are better than expected, despite recent hot and dry weather, although maize production prospects may have been negatively impacted.
2022/23 grain production was forecast at 43.2Mt (+2pc y/y), incl. winter wheat at 22.0Mt (+5pc).
Maize output was projected at 3.5Mt (-22pc).
Rapeseed production was seen at 4.3Mt (+22pc).
Meantime, the demand outlook for western European wheat was being clouded by signs of renewed competition from Black Sea supplies, with increasing grain shipments from Ukraine and falling prices for Russian wheat.
Thus, wheat prices slipped from an earlier four-week high with December milling wheat, down 1.7% at 324.25 euros ($325.00) a tonne.
It earlier reached 332.00 euros.
There was talk of cheap offers of Russian wheat in the tender being held by Algeria’s state grain buyer on Tuesday.
Lower protein in this year’s French and German harvests was also raising questions about how export supplies will be sourced.
Meantime, consultancy Agritel increased its estimate of the French wheat crop by 200,000t to 33.63 million tonnes but was still below 1.3Mt the five-year average.
It was 35.4Mt last year.
Corn prices also gave up part of the rise of the previous day.
The November 2022 maturity indeed fell by -€5/t, in spite Agritel division of Argus Media calls a “catastrophic” corn harvest in France this year at 10.8Mt, the lowest in more than 20 years.
The heat wave in Europe has Romanian farmers considering an early corn harvest.
Faced with a European harvest now announced as disappointing, operators are paying close attention to import volumes in Europe on the one hand and, of course, to the price differential between maize and other fodder cereals.
In this context, the export activity from the Black Sea remains an important element to follow both from Ukraine and Russia.
Thus, after a fast early pace of French exports this season would need to slow.
Just for exemple, EU wheat exports to Pakistan in Jul-Aug hit a record 347.5k tonnes as the buyer partially diverted away from Black Sea to French supply.
But France’s rapidly rising export commitments and higher fob Rouen prices suggest EU share in PK market could fall later this year.
In currency trading, the euro rose slightly against the dollar yesterday and timidly rose above parity.
The economic situation is an important element to follow during this period, particularly with the issue of energy prices in the background.
From South Africa, South African farmers are expected to harvest 8% less maize in the 2021/2022 season compared with the previous season, the government’s Crop Estimates Committee (CEC) said on Tuesday.
The CEC’s latest summer crop forecast estimates the 2022 harvest at 15.004 million tonnes, down from the 16.315 million tonnes harvested last season.
The harvest is expected to consist of 7.637 million tonnes of white maize, used for human consumption, and 7.367 million tonnes of yellow maize, used mainly in animal feed.
From the Black Sea basin, Ukraine’s Ag Ministry predicts 2023/24 winter wheat area at 3.8Mha (4.6Mha).
Barley acreage expected to fall by 20pc y/y, while rapeseed area could remain unchanged.
Maize area may also fall y/y, and could be replaced by soybeans or sunflower seeds.
Meantime, a total of 61 cargo ships carrying around 1.5 million tonnes of food have left Ukraine under the grain deal, the Ukrainian infrastructure ministry said on Tuesday.
The ministry said six ships with 183,000 tonnes of agricultural products left Ukrainian Black Sea ports on Tuesday.
Meantime, according to APK-Inform, the bid prices of wheat increased slightly in Ukrainian ports of the Danube and Great Odesa last week.
Positive dynamics of Ukrainian grain export and hopes for further growth of shipments supported the prices.
However, the export from the Black Sea ports is slower than desired, so the prices remain low.
Particularly, the bid prices of 2-grade, 3-grade and feed wheat for delivery to the ports of the Danube and Great Odesa increased to 180-205, 170-200 and 140-170 USD/t, or 7500-8400, 7300-8200 and 6400-6800 UAH/t СРТ-port.
As for corn, the export bid prices of corn remained stable at western Ukrainian borders last week.
Excessive stocks and coming harvesting of new-crop corn did not allowed prices to increase.
Particularly, the bid prices of corn for delivery in September-October stayed at 205-220 EUR/t DAP Poland, 220-240 EUR/t DAP Hungary, Romania and Slovakia.
From Russia, SovEcon has raised 2022/2 wheat exports forecast by 0.2Mt, to 43.1Mt, which compares to 39.1Mt previous year.
Meantyime, Russia plans to extend its export tax on soybeans for two years until Aug. 31, 2024 and a partial ban on rapeseed exports for six months until Feb. 1 next year, the economy ministry said in a statement on Tuesday.
Exports of rapeseed will be allowed only from the Zabaikalsk region, which borders China, the ministry added.
The extension of the current export tax on soybeans – 20% but not less than $100 per tonne – will stimulate investment in domestic processing of the commodity, the ministry added.
From the Middle Kingdom, dryness in Chinese rice areas is thought likely to result in a greater drawdown on Chinese wheat stocks for food use.
USDA had China holding 54% of all 2022/23 global wheat ending stocks in their August WASDE report.
From Australia, trade new crop wheat and barley markets were firmer. Grower bids remained relatively unchanged east coast.
WA wheat multi grades were $5-7/t stronger.
On the weather side, rainfall totals between 10-50mm have been received in the past week over the far south of WA, southern SA, most of Vic, inland western and south east NSW and in parts of south west Qld.
Minor to moderate flooding continues along inland rivers of NSW, including the Darling, the Macquarie, the Murrumbidgee and the Lachlan rivers.
Minor flooding continues along rivers in the north east as well as the Yarra and Latrobe rivers in Victoria.
On the international trade scene, Algeria’s state grains agency OAIC has started buying milling wheat in an international tender which closed on Tuesday which sought limited shipment to two ports only.
The purchase was expected to be sourced from Russia, although technically supplies are optional origin.
Initial purchases reported were around $364 to $365 a tonne cost and freight (c&f) included.
No estimates of tonnes bought were initially available, the tender sought a nominal 50,000 tonnes.
The requirement to ship only to the Algerian ports of Mostaganem and or Tenes could indicate that only a small purchase is planned.
The wheat was sought for shipment in four periods from the main supply regions including Europe: Sept. 21-30, Oct. 1-10, Oct. 11-20 and Oct. 21-31.
If sourced from South America or Australia, shipment is one month earlier.
Jordan reportedly purchased about 60,000t hard milling wheat to be sourced from optional origins in a tender which closed on Tuesday at US$376.50/t c&f for January 2023 from CHS.
Other prices were, Ameropa at 397.20$ and Vittera at 405$.
MIT bougth $9 below what booked 2 weeks ago for Feb.
Japan’s MAFF is seeking to buy 95,497 tonnes of food-quality wheat from the United States and Canada in regular tenders closing on Thursday.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
