Good morning Farmer Family …
US farm markets were lightly mixed on Thursday session, with prices were mostly down by the end of the session.
Corn, indeed, eased 0.37%.
Soybeans, in contrast, closed with 0.18% gains.
Soymeal prices stayed red at the bell, giving back 1.42% on the day.
Bean oil closed with 2.14% gains, meantime.
Wheat losses were variable, led doward by SRW, as Chicago ended the day down by 1.81%.
Kansas City HRW closed with 0.94% losses.
Minneapolis spring wheats were the firmest of the complex, and gave back 0.19% on the day.
Traders began gearing up for the next WASDE report from USDA, which will be released on Monday.
Estimates show analysts expect USDA to lower the corn yield by an average of 3 bpa to 172.4.
As for soybean, the average of estimates is 51.5 bpa going in, which would be a 0.4 cut.
As for wheat, analysts expect to see a looser carryout on average compared to August.
The average estimate going in is 8.1 mbu above the 610 from August, though estimates range from a 40 mbu increase to a 16 mbu decrease.
NASS informed that they has sufficient data to include acreage survey responses from FSA in their Crop Production report essentially a month early.
As for corn, acreage estimates range 800k lower to 300k higher for a trade average production guess of 14.089 bbu.
USDA’s August output forecast was 14.359 bbu.
Traders anticipate seeing between 700k additional bean acres to 600k fewer.
As for output, analysts expect on average 4.5 bbu, a 31 mbu trim from August.
The latest ENSO forecast model runs by the US National Oceanic and Atmospheric Administration (NOAA) recently have suggested that La Niña may last longer than previously suggested.
The model runs had previously suggested La Niña would weaken greatly in December and dissipate in January, but now the model has delayed that decay another month.
Meantime, per latest data from U.S. Drought Monitor released Thursday, and covering the week through September 6, 63.7% of the USA is experiencing some level of drought, down slightly from the prior week’s tally of 64.4%.
Around 80% of the High Plains is under drought conditions, while only 28.4% of the Midwest is currently affected.
NOAA’s new 8-to-14-day outlook anticipates seasonally wet weather returning to the Northern Plains and upper Midwest between September 15 and September 21.
Hot and dry conditions continue to allow producers to make steady progress on the 2022 hard red spring wheat harvest in North Dakota and the region.
As of September 4, NASS estimates that 62% of the North Dakota crop was harvested, still well behind the normal pace of 80% for this date, but up by nearly 30 percentage points from the previous week.
Some areas in the southern half of the state are completed with harvest, or near completion, and most northern areas are one-third to one-half completed.
Extended forecasts look favorable for continued good harvest progress in the state.
In the region, harvest progress ranges from 57% complete in Minnesota, to 87 percent complete in Montana and 97% complete in South Dakota.
Nationally, about 70% of the spring wheat crop has been harvested, up from 50% the previous week, but still slightly behind the five-year average of 83 percent.
Harvest reports from producers and elevators continue to indicate above average yields in most areas, although some areas are reporting more disappointing yields.
Quality of the crop overall has been excellent.
Protein has been more variable compared to recent years, but most areas are reporting protein levels that only are 0.5% to 1% below the normal for their areas.
Harvest of the North Dakota durum crop has reached the half way point, up from 31 percent the previous week, but still well behind the more typical 70 percent for this date.
In Montana, harvest is 81 percent completed, well ahead of their five-year average of two-thirds, and up from just 60 percent the previous week.
Harvest reports indicate average to above average yields in most areas.
Quality has been very good for test weights, and kernel soundness in most areas, but lower than expected protein levels and hard counts are being reported in parts of the region.
On the demand side, USDA don’t released the usual export sales report this week, but analysts think corn sales for the week ending September 1 ranged between 300k mt and 1 million tonnes.
As for soybeans, analysts think soybean sales for the week ending September 1 came in between 700k mt and 1.5 million tonnes. Analysts also think there were an additional 50,000 to 450,000 metric tons of soyoil sales last week, plus up to 35,000 MT of soyoil sales.
As for wheat, analysts think wheat sales ranged between 250k mt and 550k mt.
Ethanol production for the week ending September 2 made modest improvements but stayed below the 1-million-barrel-per-day production benchmark for the fourth consecutive week, with a daily average of 989,000 barrels, per the latest data from the U.S. Energy Information Administration.
Stocks tightened by 2% last week.
In this context, corn basis bids were mostly steady to weak after tumbling 25 cents lower at an Iowa river terminal and dropping 5 to 15 cents lower at three other Midwestern locations a day before.
An Iowa ethanol plant bucked the overall trend after firming 2 cents.
Soybean basis bids showed plenty of volatility on Thursday after jumping as much as 30 cents higher at a Nebraska processor while tumbling as much as 50 cents lower at an Illinois river terminal.
Commodity funds were net sellers of CBOT corn, wheat, soybean and soymeal futures contracts on Thursday and net buyers of soyoil futures.
On this morning, Chicago wheat price rose.
Wheat markets strengthened earlier this week after President Vladimir Putin said Russia and the developing world had been “cheated” by the U.N.-brokered Ukrainian grain export deal, vowing to look to revise its terms to limit the countries that can receive shipments.
However, the White House said Thursday there was no indication the deal was unravelling, cooling markets.
Meantime, India’s move to reduce rice exports, underpinned the market, as could to have inflationary impact and lift prices of both wheat and corn.
Thus, the most-active wheat contract on the Chicago Board of Trade (CBOT) rose 0.8% to $8.35-1/2 a bushel, as of 02:46 GMT, and for this week, is on track to gain around 3%.
Soybeans rose, although the market is on track for a second week of losses on expectations of a record U.S. crop and higher South American planting.
Soybeans, indeed, have dropped around 1.5% this week, while corn has added around 1%.
In energy markets, oil prices rose on Friday, but crude was set for a second weekly decline, as central banks’ aggressive rate hikes and China’s COVID-19 curbs weighed on demand.
Both oil benchmarks, indeed, were headed for a weekly drop of 4%.
On this morning, however, Brent crude futures rose 22 cents, or 0.3%, to $89.37 a barrel by 06:35 GMT.
U.S. West Texas Intermediate (WTI) crude futures climbed 10 cents, or 0.1%, to $83.64.
The decline has beenchecked by underlying supply tightness amid Russia’s threat to cut oil flows to any country that backs a price cap on its crude.
Also, the U.S. Energy Information Administration on Thursday said it expected U.S. crude output to rise by 540,000 barrels per day to 11.79 million bpd in 2022, down from an earlier forecast for a 610,000 bpd increase.
In ocean freight markets, the Baltic Exchange’s main sea freight index extended gains on Thursday as rates for the panamax vessel segment rose for the sixth straight session.
The overall index, indeed, was up 45 points, or about 4%, at 1,178, a two-week high.
Particularly, the capesize index fell for the third consecutive session, losing 4 points, or about 0.6%, to 652.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as coal and steel-making ingredient iron-ore used in construction, fell $35 to $5,407.
The panamax index was up for the sixth consecutive session, gaining 180 points, or about 11.4%, to 1,757, a three-week high.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, were up $1,619 at $15,815.
The supramax index, which has not seen a single session of gains in two weeks, lost 5 points to 1,477.
In equity markets, US stocks on Thursday posted moderate gains as they added to Wednesday’s sharp rally.
Strength in bank stocks led the overall market higher.
Stocks also received a boost after the 10-year breakeven inflation expectations rate fell to a 6-week low Thursday of 2.411%.
Thursday’s U.S. economic news was mixed for Fed policy and stocks.
On the dovish side, July consumer credit rose +$23.811 billion, weaker than expectations of +$32.000 billion.
Conversely, weekly initial unemployment claims unexpectedly fell -6,000 to a 3-month low of 222,000, showing a stronger labor market than expectations of an increase to 235,000.
Stocks, however, were undercut Thursday by the ECB’s sharp rate hike.
The ECB expects prices to rise by +8.1% this year and +5.5% in 2023 and +2.3% in 2024.
Consequentially, the 10-year German bund yield climbed to a 2-1/2 month high of 1.730% after the ECB raised its main refinancing rate by +75 bp to 1.25% and said it “expects to raise rates further.”
US bond yields rose broadly after traders weighed Powell’s remarks and the ECB’s rate hike.
The two-year Treasury yield, which tends to track expectations for Fed action, indeed, rose to 3.52% from 3.44%.
The yield on the 10-year Treasury, which influences interest rates on mortgages and other loans, rose to 3.32% from 3.27% late Tuesday.
In this cotext, stocks bounced back on Wall Street, keeping the major indexes on track for their first weekly gain in four weeks.
The S&P 500 rose 26.31 points, or 0.7%, to 4,006.18.
The Dow swung from a 259-point loss to a gain of 193.24 points, closing at 31,744.52.
The Nasdaq gained 70.23 points to 11,862.13.
Smaller company stocks also gained ground after an initial pullback.
The Russell 2000 rose 14.90 points, or 0.8%, to 1,846.91.
Meantime, Asian benchmarks rose on Friday.
Japan’s benchmark Nikkei 225 rose 0.6% in afternoon trading to 28,242.31.
Australia’s S&P/ASX 200 added 0.7% to 6,894.20.
Hong Kong’s Hang Seng jumped 2.6% to 19,339.03, while the Shanghai Composite added 0.8% to 3,261.34.
Trading was closed in South Korea for a holiday.
China has been releasing a slew of economic data, with more expected next week.
Interest is high because of how China’s zero-COVID policy has impacted economic activity in the world’s second-largest economy.
In currency trading, the U.S. dollar was little changed at 143.08 Japanese yen, inching down from 144.09 yen.
The euro cost $1.0066, up from $1.0002.
From South America, Brazil’s CONAB trimmed their 21/22 corn crop by 1.2 MMT to 113.3 MMT in their Sep report.
Still, that’s much better over last season’s drought-stressed tally of 87.1 MMT.
CONAB sees Brazilian soybean output as 125.552 MMT for 21/22, which was up slightly from their August figure of 124.048 million tonnes.
That’s still well below year-ago totals of 139.4 MMT, however.
Per-acre yield estimates ranged between 50.7 bpa and 52.0 bpa.
Meantime, soybean exports are estimated at 77.19 million tonnes, up from CONAB’s previous estimate of 75.232 million tonnes.
On the other hand, Brazil is still processing the documentation from firms interested in exporting corn to China, as well as preparing to inspect grain warehouses at ports, the agriculture ministry said on Thursday.
Once this process is concluded and the information is sent to the Chinese, Brazil will remove the final obstacles to be able to export, the ministry added.
In addition to corn, Brazilians are also getting ready to sell other agricultural products such as soymeal to China, a country that is already the largest importer of soy, meat and sugar from Brazil.
The sale of Brazilian corn to China marks a historical moment in bilateral trade relations.
Still, Brazil’s corn exports to China are unlikely to be as large as those of soybeans, as the Chinese are also big corn producers.
Despite all the red tape, industry sources see as feasible that first shipments begin this year.
Frosts recorded in the last two weeks in Argentina have caused some damage to the South American country’s 2022/23 wheat crop, the Buenos Aires grains exchange said on Thursday.
Core farming zones saw areas where there was “yellowing of leaves and some damage to spikes, but significant losses have not yet been seen. Meanwhile, areas recently hit by rain had good conditions”.
In Argentina’s northern regions, where only 10% of the planted area is concentrated, the impact of the frosts was stronger.
The South American country’s wheat crop is currently in key stages of development, with harvest set to begin in November and finish in January.
Meantime, Argentine farmers sold a total of 2.13 million tonnes of soybeans on Monday and Tuesday, surpassing in just two days the 667,000 tonnes sold last week after the government established a preferential exchange rate for soybean exports, the Rosario Stock Exchange said Wednesday.
The exchange said a million tonnes of beans had traded on Wednesday, taking the total past 3 million tonnes since the policy went to effect.
In Europe, geopolitics events are still at the center of the news.
Rapeseed was the most volatile, yesterday.
Is expected a very good harvest in Europe coupled with that of Ukraine, despite the context.
The market, is pending an estimated harvest of around 20 million tonnes in Canada.
Also, the risk of an economic slowdown weighs on the market for biofuels and therefore vegetable oils.
A separate topic is French crop, as the current rains remain insufficient in France to reduce any fears about the emergence of rapeseed and the upcoming sowing of autumn cereals for the 2023 harvest.
Also, an estimated 43% of French grain maize crops were in good or excellent condition by Sept. 5, down from 45% the previous week, farm office FranceAgriMer said on Friday.
That compared with 89% a year earlier, the office said in a weekly cereal crop report.
FranceAgriMer also said that French farmers had harvested 5% of the area by Sept. 5, up from 1% a week earlier while the harvest had not yet started by the same time last year.
The maize harvest usually kicks off around mid-September in France.
From Levant, Turkish President Tayyip Erdogan said on Thursday, he wanted grain from Russia to be exported too through the Black Sea corridor.
Also, he said President Vladimir Putin was right about grains exported from Ukraine under a United Nations-backed deal going to wealthy countries, not poor ones.
Erdogan said Putin was uncomfortable with grain shipments going to countries that sanction Russia.
From Ukraine, though more than 2 million tonnes of cereals have been able to leave the Ukrainian ports since the establishment of the corridor, the fact remains that the silos are far from being able to accommodate the entire 2022 harvest, which also includes a production of maize estimated close to 30 million tons.
The deputy head of Ukraine’s Shipping Administration, said more use of the corridor was needed to bring down insurance costs but acknowledged that the war was constraining shipowners.
“Some of them are still afraid for their ships.”
Logistics bottlenecks have increased the cost of getting harvest to ports and storage silos, an issue farming minister Solsky acknowledged was hindering exports.
“Our main and biggest problem…is that our demand for logistics is several times higher than the supply.”
To date 103 ships have left Ukraine ports carrying 1.3Mt corn, 486,000t wheat, 161,000t sunflower oil, 139,000t of barley, 82,000t of canola and 73,000t of sunflower meal.
Meantime, autumn sowing work will begin in Ukraine, under difficult conditions linked to the economic situation, compromising the ability of farmers to pay for their seeds and inputs.
From Russia, Russian agriculture consultancy IKAR has raised its forecast for Russia’s 2022 wheat crop to 97Mt and pegged exports at 46Mt.
It claims that Russia has already broken its wheat harvest record of 86Mt.
As of September 1, indeed, Russia harvested 117.9 mln tonnes of grains and pulses from 32.5 mln ha with the average yield at 3.62 t/ha, the Ministry of Agriculture informed.
Particularly, farmers reaped 86.9 mln tonnes of wheat from 21.8 mln ha with the yield at 3.99 t/ha, 20.8 mln tonnes of barley (6.5 mln ha, 3.18 t/ha), 23.2 thsd tonnes of corn (4.5 thsd ha, 5.11 t/ha).
Moreover, agrarians harvested 175.2 thsd tonnes of sunflower seed (76.2 thsd ha, 2.3 t/ha), 2.1 mln tonnes of rapeseed (833.9 thsd ha, 2.53 t/ha), 50.2 thsd tonnes of soybean (24 thsd ha, 2.09 t/ha).
Farmers harvested 3.4 mln tonnes of sugar beet from 72.4 thsd ha with yield at 47.25 t/ha.
From Kazakhstan, farmers have harvested 9.2 mln tonnes of grains and pulses or more than 50% of the national plan.
Agrarians reaped 11.2 mln tonnes of grain with the average yield of 1.2 t/ha.
The year ago, the production volume amounted to 8.6 mln tonnes of grain so far, the Ministry of Agriculture informed.
Grain production is expected at 18.3 mln tonnes in Kazakhstan this year, including 13.4 mln tonnes of wheat.
Grain stocks is at 3.1 mln tonnes, including 2.5 mln tonnes of wheat.
This volume is sufficient for full provision of domestic demand and export of surplus.
From the Middle Kingdom, Dalian Corn Prices were 2,740 yuan/MT (~ $10/bu) at the close yesterday.
That is up 7.5% from the low into August, but still down 10% from the April high.
Dalian No2 Soybean Prices (or import quality beans) were 5,170 yuan/MT (~ $20.22/bu), and have remained between 5,000 and 5,250 since mid August.
At this time last year prices were 4,558 yuan.
(1 CNY = 0.144446 USD).
From South East Asia, India banned exports of broken rice and imposed a 20% duty on exports of various grades of rice on Thursday as the country is tring to augment supplies and calm local prices after below-average monsoon rainfall curtailed planting.
Rice exports after shipments jumped sharply in the past few months.
Broken rice prices jumped 38% so far in 2022 as exports during April-August rose to 2.13 million tonnes from 1.58 million tonnes a year ago, Sudhanshu Pandey, the most senior civil servant at the Ministry of Consumer Affairs, Food and Public Distribution, told reporters.
Meantime, the government on Wednesday set a food grain production target of 328 million tonne (MMT) for the 2022-23 crop year (July-June) which is 4% more than a record foodgrain output of 315.7 mt in the previous year.
Out of the total grain production, rabi crops such as wheat, mustard and chana (gram) would contribute 164.8 MMT in 2022-23 crop year.
Rabi crops are sown in the winter months of December-January and harvested from April onwards.
The government has a set target for higher food grains production for 2022-23 despite a marginal 1.2% decline in the area under all kharif crops – paddy, pulses, oilseeds, cotton and nutri-cereals etc -to 106.9 million hectares (mh) till last week.
Ppaddy sowing area across the country was reported at 38.3 mh which was 5.6% less than year ago.
Last month, the government had estimated overall foodgrain output in the 2021-22 crop year (July-June) had hit a record 315.7 MMT, buoyed by a record rice harvest of 130.2 MMT.
Wheat production has dropped almost 3% to 106.84 MMT.
The drop in wheat output is attributed to heat-wave between March and June .
Trade sources believe the actual wheat output could have been below 100 mt.
Pulses output rose by close to 27.69 mt in the 2021-22 crop year compared to 25.46 mt estimated in the previous crop year.
According to trade estimate rice production in the next crop year (2022-23) could decline by around 6 – 10 MMT because of fall in paddy acreage in the current kharif sowing so far because of deficiency in monsoon rainfall in key growing states of West Bengal, Bihar, Jharkhand and Uttar Pradesh.
The output of coarse cereals such as barley, bajra, maize and ragi is estimated to decline to 50.90MMT from 51.32 MMT reported in previous crop year.
According to the agriculture ministry, in the non-food grain category, oilseeds output rose more than 4% to 37.7 mt in the 2021-22 crop year compared to previous year. Rapeseed/mustard seed production is estimated at a record 11.74 mt, which was 15% more than the 2020-21 crop year.
Soybean output rose by 3% to 12.99 mt compared to previous year.
India imports about 56% of its edible oil requirement.
Sugarcane production in 2021-22 crop is estimated at record 431.8 mt compared to 405.39 mt in the previous year while cotton output is expected to drop to 31.2 million bales (170 kg each) from 35.24 million bales.
From Australia, the ACCC’s Bulk grain ports monitoring report industry update, released yesterday, summarised the views of Australia’s bulk grain exporters in the wake of the record 2020-21 shipping year.
Exporters are concerned about a lack of transparency in the way port operators allocate capacity to them.
“The bulk grain export industry has undergone some significant changes over the last five years, so we need to consider whether the current regulation of exporter access to port terminals is still fit for purpose,” ACCC deputy chair Mick Keogh said.
Meantime, local new crop markets gained some strength yesterday. Wheat values were up $5-7/t, barley up $4-5/t and canola was slightly firmer also by $5/t.
Grower selling activity picked up some interest and old crop liquidity continued to trickle out.
On the international trade scene, Taiwan’s MFIG purchasing group made no purchase in an international tender for about 65,000 tonnes of animal feed corn which closed on Sept. 7.
A new tender is expected to be issued soon.
The group had sought feed corn which could be sourced from the United States, Brazil, Argentina or South Africa.
The IGC reports that Taiwan Flour Millers’ Association bought 55,375t wheat from the US for shipment from PNW ports in Nov.
The purchase included DNS (min 14.5pc protein content), at $405.28 fob, HRW (12.5pc) at $437.16 fob and SW (max. 9.5pc) at $380.02 fob.
Japan’s MAFF is seeking 70,000t feed wheat and 40,000t feed barley in a SBS tender, for arrival by end Feb.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
