Good morning Farmer Family …
US farm markets were mixed but mostly lower yesterday.
Corn prices traded mostly lower, with the market settling 0.75% in the red.
Soybean stayed firm through the session, closing just 0.16% higher.
Meal prices worked both sides of the market but ultimaltely ended the day with a 0.07% gain.
Soy oil prices closed 0.89% in the red.
The wheat complex, saw the most downtrend, after reaching three-month highs the previus session.
Chicago SRW went home 3.94% weaker.
Kansas City HRW closed 3.27% down, with the front months came back below the $10/bu mark.
Minneapolis spring wheat fell 2.86% by the close.
Evolution in grain prices, remain largely dictated by the evolution of the conflict in Ukraine.
Prices had risen sharply in September with the nuclear threats, but the Ukrainian advance continued without a military escalation on the Russian side until Sunday, while grains continued to come out of the Black Sea.
But the escalation in conflict over last weekend, generated new concerns about availability of Black Sea shipments.
That caused grain prices to jump substantially higher on Monday.
However, from the dark prospects things then moved to glimmers of hope both around the export corridor and potential talks between Russia and the US.
Russian Foreign Minister, Sergei Lavrov, indeed, indicated he was open to talks with the West but was yet to receive any serious proposal.
The White House national security spokesman John Kirby said they were willing to talk but Russia said no.
Russia not bombed grain infrastructure in Odessa (first Ukrainian port) and the UN chief Martin Griffiths was upbeat about the corridor staying open, adding the Russian fertiliser, and throwing Russia “a bone which seemed a little odd”.
Meantime, USDA’s weekly Export Inspections data showed 457,366 MT of corn were exported during the week that ended 10/6.
That was down from last week’s 673k MT and from 851k MT during the same week last year.
Mexico and Japan were the top destinations.
The USDA also added 11k MT of exports to the 9/26 report for a season total of 2.827 MMT.
Last year had shipped 3.12 MMT through the same time.
As for soybean, the report showed 969,212 MT of soybeans were exported during the week that ended 10/6.
That was up 384k MT wk/wk but was 775k MT below the same week last year.
USDA also included 10.5k MT of shipments to past reports for a season total of 2.8 MMT.
Last year we had 3.584 MMT at this point.
As for wheat, the report showed wheat exports were 614,371 MT for the week that ended 6/10.
That was down from 667k MT last week but was up from 447k MT during the same week last year.
Accumulated wheat shipments were 9.13 MMT trailing last year’s pace by just 0.73%.
In this context, corn basis bids were mostly steady to weak across the central U.S. after sliding 1 to 5 cents lower at four Midwestern locations.
An Illinois processor bucked the overall trend, firming 5 cents.
Soybean basis bids were mostly steady across the central U.S. but did tilt 7 cents lower at an Ohio elevator and 5 cents higher at an Illinois river terminal.
Commodity funds were net buyers of CBOT soybean futures.
They were net sellers of corn, wheat and soyoil futures.
They were net even in soymeal futures.
Thus, traders turned their focus again on the next World Agricultural Supply and Demand Estimates (WASDE) report from USDA, will out today in the afternoon.
The USDA will release its Oct estimates which will add another spin on the fundamentals.
They have the Ukraine in for 20.5Mt of wheat production along with 11Mt of exports.
Most seem happy that the Russian crop is closer to 100Mt vs the USDA at 91Mt but, with Russian exports pegged at 45Mt it will be hard for any increase in production to find its way into the global market.
Meantime, after the session close, the weekly NASS update showed the U.S. corn was 87% mature as of 10/9.
That was up from 75% last week but now 2% points ahead of the average.
Corn harvest was 31% complete, as of Sunday, up from 20% a week ago.
However, analysts were hoping to see even more progress this past week, offering an average trade guess of 34%.
The soybean harvest was 44% complete, as compared with 22% a week ago and above average analysts’ estimate of 41%.
That puts this year’s efforts behind 2021’s pace of 47% but, for the first time this fall, harvest progress for soybeans surpassed its five-year average, which was 38% for this week.
Nearly all (91%) is now dropping leaves, up from 81% a week ago.
From a quality standpoint, corn crop condition was rated 54% good/excellent, up 2% from last week.
USDA bumped soybean ratings two points higher, with 57% of the crop now in good-to-excellent condition.
Analysts thought the agency would hold ratings steady.
Another 28% of the crop is rated fair (down a point from last week), with the remaining 15% rated poor or very poor (also down a point from last week).
Winter wheat plantings for the 2022/23 season are running a bit behind the pace of recent years, moving from 40% a week ago to 55% through October 9.
That puts this year’s pace three points behind both 2021 and the prior five-year average, which are both 58%.
Crop emergence improved from 15% a week ago up to 26% through Sunday.
That’s six points behind the prior five-year average of 32%.
On this morning, Chicago soybean prices slid for the first time in four sessions, while corn ticked lower, with both markets under pressure from a rapidly progressing U.S. harvest.
Wheat lost more ground as Russia, the world’s biggest exporter, said it was considering abolishing limits on grain exports, raising supply expectations.
Thus, the most-active soybean contract on the Chicago Board of Trade was down 0.4% at $13.70-1/2 a bushel, as of 02:11 GMT, and corn lost 0.1% to 6.92-1/2 a bushel.
In energy markets, oil prices recouped some losses on Wednesday after dropping by 2% in the previous session, supported by supply worries stemming from OPEC+ production cuts.
Also on the supply side, Russia’s Transneft state-owned pipeline monopoly said on Wednesday it had received notice from Polish operator PERN about a leak on the Druzhba oil pipeline, Interfax reported.
However, a stronger dollar weighed on market sentiment.
Thus, Brent crude futures were down 2 cents, or 0.02%, to $94.27 a barrel by 07:27 GMT after hitting a session low of $93.33 a barrel.
U.S. West Texas Intermediate crude was at $89.14 a barrel, down 21 cents, or 0.24%.
The contract fell to a session low of $88.27 per barrel earlier in the day.
U.S. inventory data has been delayed by a day this week because of the holiday on Monday in the USA.
Industry data from the American Petroleum Institute is due at 4:30 p.m. EDT (20:30 GMT) on Wednesday while the U.S. Energy Information Administration, will release its data at 11 a.m. EDT (15:00 GMT) on Thursday.
In ocean freight markets, the Baltic Exchange’s main sea freight index extended its declines to a fourth session on Tuesday, pressured by a dip in the capesize and panamax vessel segments.
The overall index, indeed, fell 40 points, or about 2%, to 1,904.
Particularly, the capesize index also fell for the fourth consecutive session, losing 95 points, or about 4%, to 2,246.
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 $788 to $18,630.
The panamax index fell by 32 points, or 1.4%, to 2,196.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, dropped $285 to $19,763.
The supramax index was unchanged at 1,714.
In equity markets, on Wall Street, the S&P 500 fell 0.7% Tuesday, marking its fifth straight loss, closing at 3,588.84.
The Nasdaq dropped 1.1% to 10,426.19.
The Dow Jones Industrial Average added 0.1% to 29,239.19, while the Russell 2000 index rose 1 point, or about 0.1%, to 1,692.92.
Recession fears are weighing on markets as stubbornly hot inflation leads consumers to temper their spending and the Federal Reserve and other central banks to raise interest rates, slowing economic activity.
On this wake, the International Monetary Fund on Tuesday cut its forecast for global economic growth in 2023 to 2.7%, down from July’s estimate of 2.9%.
It said Europe faces a high risk of a recession with energy costs soaring amid Russia-Ukraine war.
The Fed will release minutes from its last meeting on Wednesday, possibly giving more insight into its views on inflation and next steps.
The government will also release its report on wholesale prices Wednesday, providing an update on how inflation is hitting businesses.
The closely watched report on consumer prices will be released on Thursday and a report on retail sales is due Friday.
Also coming up is a fresh set of corporate earnings, which could provide a clearer picture of inflation’s impact.
Meantime, Asian shares were mixed on this morning.
China’s Purchasing Managers Index (PMI) came in at 49.3 vs estimates of 54.5 which further supports the recent IMF growth downgrade for China, indicating that GDP growth would fall to 3pc, down from 8pc last year.
Benchmarks fell in Tokyo, Hong Kong and Taiwan but rose in Shanghai and Sydney.
South Korea’s Kospi added 0.5% to 2,203.47 after the Bank of Korea raised its key rate by 0.5 percentage points.
Japan’s benchmark Nikkei 225 was virtually unchanged, losing 4 points to 26,396.83.
Australia’s S&P/ASX 200 was up 2.5 points at 6,647.50.
Hong Kong’s Hang Seng slipped 0.8% to 16,693.18, while the Shanghai Composite climbed 0.7% to 3,001.83.
In currency trading, the Japanese yen declined to a 24-year low against the U.S. dollar at 146 yen-levels, raising expectations of another Japanese intervention to prop up the yen.
The dollar was trading at 146.26 Japanese yen, up from 145.80 yen.
The euro cost 97.13 cents, inching up from 97.07.
Going back to analyzing the other agricultural markets, in Canada, spring wheat harvest in Saskatchewan is 93% complete, up 10% from last week.
In Manitoba, spring wheat harvest is 85% complete while Alberta is essentially done at 99% harvested.
Saskatchewan Agriculture is still predicting a 43 bushel per acre yield.
Alberta Agriculture decreased their yield estimate by 1 bushel to 53 bushels per acre.
On paper, the decrease in yield would take Alberta’s production down by ~189k mt to 9.1 million mt and further widen the spread between Stats Canada’s spring wheat production estimate of 26.1 million mt and the now 23.9 million mt of production implied by provincial yields.
Wheat deliveries continue to be strong, but slow exports are resulting in a build-up of stocks.
Farmers delivered 459.8k mt of wheat while 380.4k mt was exported.
Stock grew to a large 3.3 million mt – 1.8 million mt is in elevators, 307.4k mt is in Vancouver/Prince Rupert, and 1.1 million mt is in the Great Lakes.
Producer’ durum deliveries also continue to almost double the amount and being exported.
This is resulting in a buildup of visible supplies to 760k mt.
Of note, is the strong to-date pace of domestic durum use.
As of week 9, durum use is two times larger than last year.
This could be indicative of just how low domestic mills were on supplies to start the year, but this could also be a reporting error.
Meantime, durum prices that the Saskatchewan elevators offered past week were roughly $12.50-$13.00.
From South America, Brazil’s Anec estimates that the country’s corn exports will reach 6.72 MMT in October, which is moderately higher than its prior projection from a week ago.
Meantime, Brazil’s Anec issued a new forecast for the country’s October soybean exports, now at 3.46 MMT.
That’s moderately above the group’s prior estimate from a week ago. Anec also expects Brazilian soymeal exports to reach 2.112 million metric tons this month.
On the other hand, Brazilian oilseed crushing group Abiove slightly raised its estimates for the country’s 2021/22 to 4.666 billion bushels while holding export estimates steady at 2.829 billion bushels.
Abiove also slightly raised its Brazilian soymeal production estimates to 37.5 million metric tons and made no changes to its soyoil production forecast of 9.9 MMT.
The Argentine wheat crop was pulled back another 500,000t yesterday with Rosario pegging production at 16Mt (USDA 19Mt).
According to the Argentine government, farmers sold a record volume of soybeans, more than 13.7 million metric tons (MMT) in September, after the government offered a special exchange rate for producers.
As a result, exporters booked nearly 4 MMT in export declarations, with China as the principal destination.
Consequentially, USDA attaché raised projected MY (marketing year) 2021/22 soybean exports to 5.5 MMT and reduced projected crush to 37.5 MMT.
Soybean ending stocks were lowered to 5.7 MMT, the lowest level since MY 2012/13.
MY 2022/23 production was lowered to 49 MMT, due to lower-than-anticipated area switching from corn to soybeans.
However, farmers may still make changes if dry weather persists.
In Europe grain prices dipped too yesterday.
Rapeseed prices lost ground in the wake of canola and soybean oil.
France’s farm ministry on Tuesday trimmed its forecast for the country’s 2022 grain maize production, excluding crop grown for seeds, to 11.15 million tonnes from 11.33 million projected last month.
The drought-affected harvest was now seen 26.6% lower than last year’s bumper crop and 18.4% below the average of the past five years, the ministry said in a report.
Soft wheat production is revised down to 33.7 million tonnes against 34.1 estimated last month.
Beet production is estimated at only 32.92 million tonnes.
Meantime, wheat exports from the EU have been posted since the start of the campaign at 9.81 million tonnes against 10.02 million last year to date.
France remains the leading exporter within the EU, followed by Romania and Germany.
EU barley exports are sharply lower from a year ago, with 2.25 MMT over the same period.
On the other hand, European Union corn imports are more than doubling last year’s pace so far, with 7.88 MMT through October 9, per the latest data from the European Commission.
European Union soybean imports during the 2022/23 marketing year reached 3.12 MMT through October 9, putting it slightly behind last year’s pace so far.
EU soymeal imports are also running below last year’s pace, with 4.21 million metric tons during the same period.
Rapeseed imports stand at 1.78 million tonnes within the EU compared to 1.38 million tonnes to date last year.
From Russia, the country is considering abolishing its grain export quota, which it usually sets up in the second half of the July-June marketing season, the Interfax news agency reported, citing Russia’s Deputy Prime Minister.
Russia, which supplies its wheat to Africa and the Middle East, usually sets up grain export quotas for the period from mid-February and until the end of June to secure enough supply for the domestic needs.
But the country is on track to harvest a record grain crop of 150 million tonnes, including 100 million tonnes of wheat, in 2022.
Particularly, as of October 10, 2022, according to the Ministry of Agriculture of the Russian Federation, a total of 143,2 thousand tons of grains and legumes were harvested, including:
102,700 thousand tons of wheat, 23,900 thousand tons of barley and 2,050 thousand tons of corn for grain.
About 90% of the area has been threshed, more than 142 million tons of grain have been harvested.
Average Yield since last year has increased from 26.2 to 33.3 c/ha.
Wheat in bunker weight was collected 101.9 million tons (last year on this date – 74.5 million).
The yield for the year increased from 28.1 to 36.1 q/ha. 28.2 million hectares or 95.8% of the plan have been harvested.
Barley was harvested from 7.7 million hectares (96.8%), the harvest amounted to 23.9 million tons (5.7 million more than a year earlier).
Corn despite also a higher yield (58 centners per hectare against 46.7), decreased by 910 thousand to 2.05 million tons. It is threshed from 353.7 thousand hectares or 12.4% of the total area.
Soybean yield decreased from 1.45 to 1.1 million tons, despite the increase in yield by 3 centners to 19.6 c/ha.
In total, as of October 10, 2022, according to the Ministry of Agriculture of the Russian Federation, sowing of winter crops was carried out on 9.564 million hectares against 10.762 million hectares on the same date last year.
In Ukraine, according to APK-Inform, the bid prices of Ukrainian corn were developing differently at the western borders.
Progress of the harvesting campaign, risks of disruption of export via seaports as well as expensive and overloaded logistics pressured the prices.
Moreover, costs of after-harvest grain treatment remained high due to high prices of electricity.
However, smooth export of corn by land and expected sharp decline of corn production in the EU that will lead to stronger demand for Ukrainian grain limited the development of the downward prices trend and even resulted in higher prices for some directions.
Particularly, the prices of importers for delivery in October-November increased slightly to 240-255 EUR/t DAP at the borders with Hungary and Slovakia, they decreased slightly to 215-235 and 225-245 EUR/t DAP at the borders with Poland and Romania.
The prices for delivery to the cities of Romania and Hungary stayed at 270-290 and 265-310 EUR/t DAP, and the prices for delivery for the port of Constanta decreased to 270-290 EUR/t DAP.
Meantime, according to the State Customs Service of Ukraine, since the start of 2022/23 MY (July 1) and as of October 7, Ukraine has exported 9.625 mln tonnes of grains and pulses, including 932 thsd tonnes so far in October, the Ministry of Agrarian Policy informed.
The total included 3.461 mln tonnes of wheat (420 thsd tonnes in October), 844 thsd tonnes of barley (70 thsd tonnes), 5.284 mln tonnes of corn (440 thsd tonnes), 4.6 thsd tonnes of rye (0.3 thsd tonnes).
Ukraine has exported 25.7 thsd tonnes of flour (1.1 thsd tonnes), including 23.2 thsd tonnes of wheat flour (1.1 thsd tonnes).
From the Middle Kingdom, China will auction another 500.000t of its state imported soybean reserves on Friday, per a statement issued yesterday by the country’s National Grain Trade Center.
The country has offered a series of similarly sized auctions throughout 2022 in an attempt to boost local supplies and quell high prices.
From Australia, local markets were stronger yesterday as offshore rallies coincided with a weaker AUD.
Although in eastern states we saw both wheat & canola push to short term highs there was limited selling liquidity from the grower as the next rainfall event arrived and threatened some production security.
Feed grain spreads weakened off the back of the forecast whilst milling grades continued to firm.
ASX eastern wheat January contract was up 3pc, touching A$480/t before relaxing slightly.
The stand-off continues as neither sellers nor buyers want to take on significant quality risk until closer to harvest.
WA canola showed some strength yesterday with most ports trading to $840/t for non-GM.
The rain keeps coming with model indicating a slab of Victoria is set to get close to 10mm for the next 15 days, the majority scheduled to fall in the next 2 days.
On the Queensland border region the rain is likely to be lower than previously forecast but indications are for more storm rain there than the south.
Widespread rains in Australia’s eastern grain-producing states are likely to hit the quality of the wheat crop, which is scheduled to be harvested at the end of the year.
On the international scene, Algeria’s state grains agency OAIC has bought about 400,000 tonnes to 480,000 tonnes of milling wheat in an international tender which closed on Tuesday.
Initial purchases reported were around $380 to $384 a tonne cost and freight (c&f) included.
It’s likely from Russian origin, even if the origins remain optional.
Turkey also bought nearly 500,000 t of fodder barley.
Taiwan’s MFIG purchasing group bought about 65,000 tonnes of animal feed corn, expected to be sourced from Brazil, in an international tender which closed on Wednesday.
It was believed to have been sold by trading house Pan Ocean.
The corn was purchased at an estimated premium of 189.00 U.S. cents a bushel c&f over the Chicago March 2023 corn contract CH3.
Only Brazilian corn was offered in the tender.
Offers had been sought for corn sourced from the United States, Brazil, Argentina and South Africa.
Shipment was sought between Dec. 5 and Dec. 24, if the corn is sourced from the U.S. Gulf, Brazil or Argentina.
If sourced from the U.S. Pacific Northwest coast or South Africa, shipment was sought between Dec. 20 and Jan. 8, 2023.
Japan issued a regular tender to purchase 94k MT of food-quality wheat from the United States, Canada and Australia that closes on Thursday.
Of the total, 27% is expected to be sourced from the U.S. The grain is for arrival by the end of January.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
