Good morning Farmer Family …
USDA released its October WASDE report yesterday and, as expected, was a big market movers.
Soybean prices showed a 1.44% upside.
Meal went home with a 2.04% gain.
Soy oil lifted a 0.18% by the close.
However the report didn’t prove as helpful for corn and wheat prices, as corn prices were unchanged by the close, meanwhile wheat prices sank lower.
Particularly, Chicago SRW wheat prices fell 2.08%, Kansas City HRW lost 2.09%, and Minneapolis spring wheat dropped 1.88%.
The USDA reported that US soybean production fell via lower yield which was partially offset by higher carry in.
In detail, the agency pegged U.S. soybean yield at 49.8 bushels per acre, lower than 50.5 last month and the trade guess of 50.6, cutting production more than 3% from 2021 to 4.3 billion bushels.
Exports were dropped but crush was bumped up and the net result was unchanged ending stocks.
Global soybean ending stocks were slightly higher driven by Brazil.
The updated cash average price for soybeans was 35 cents lower at $14.00.
There were no changes to the cash price for the products, at $390/ton for meal and 69c/lb for soy oil.
As for corn USDA reported US corn lower supplies, while increased feed and residual use.
USDA showed lower exports and ethanol which resulted in US ending stocks moving from 1.219 bbu to 1.172bbu.
World corn called for lower production, mixed exports which ended with corn stocks dropping from 304.5Mt to 301.2Mt.
The updated USDA cash average price is a nickel higher to $6.80/bu.
As for wheat the USDA showed that US wheat was all down: production, domestic use, exports and stocks.
USDA cited the noncompetitive nature of US wheat prices and reduced exports accordingly.
Net result of all the changes was a lower ending stocks to 576mbu – the lowest in 15 years.
That was down 13.9% from a year earlier and the smallest since 306 million bushels in 2007/08.
Global wheat was a similar story.
The agency had lower supplies, consumption, trade and stocks.
Result was a 1Mt reduction of ending stocks.
The USDA cash average wheat price was 20 cents higher to $9.20.
Meantime, USDA had announced a private Export Sale for 526k MT of soybeans to China yesterday in the morning.
In this context, corn basis bids were mostly steady across the central U.S., but did tilt 5 cents lower at an Indiana ethanol plant.
Soybean basis bids trended 5 cents lower at two Midwestern processor and 5 cents higher at an Illinois river terminal while holding steady elsewhere across the central U.S..
Commodity funds were net buyers of CBOT soybean and soymeal futures, and net sellers of corn and wheat.
They were net even in soyoil futures.
On this morning, Chicago soybeans slid from the previous session’s two-week top, although the decline was limited by data from WASDE report.
Wheat gained for the first time in three sessions on concerns over tightening U.S. inventories, while corn was largely unchanged.
Particularly, the most-active soybean contract on the Chicago Board of Trade (CBOT) lost 0.3% to $13.92 a bushel, as of 03:37 GMT, after hitting its highest since Sept. 30 at $14.14 a bushel on Wednesday.
Wheat climbed 1% to $8.91-1/4 a bushel and corn was unmoved at $6.93 a bushel.
The market is monitoring grain shipments from the Black Sea region after the escalation in Russian missile strikes on Ukraine.
In energy markets, oil prices firmed on Thursday, finding continued support from an OPEC+ decision last week to cut supplies, as the International Energy Agency warned that those cuts may push the global economy into recession.
Thus, Brent crude futures rose 49 cents, or 0.5%, to $92.94 a barrel by 08:33 GMT.
U.S. West Texas Intermediate crude was up 37 cents, or 0.4%, at $87.64 a barrel.
On Wedsneday, Brent crude futures settled down $1.84, or 2%, to $92.45.
U.S. West Texas Intermediate crude ended down $2.08, a 2.3% drop, to $87.27 a barrel.
The IEA downgraded its oil demand growth estimates slightly for this year to 1.9 million bpd and by 470,000 bpd in 2023 to 1.7 million bpd.
This comes after OPEC on Wednesday cut its outlook for demand growth this year by 460,000 bpd to 2.64 million bpd, citing the resurgence of China’s COVID-19 containment measures and high inflation.
It lowered its 2023 oil demand forecast by 360,000 bpd to 2.34 million bpd.
Meantime, worsening demand for crude oil is contributing to inventory builds.
U.S. crude oil stockpiles rose by about 7.1 million barrels for the week ended Oct. 7, according to market sources citing API data.
The energy market is under pressure as well from the U.S. dollar, which has rallied broadly, including against low-yielding currencies like the yen.
In ocean freight markets, the Baltic Dry index, which measures the cost of shipping goods worldwide, extended losses for the fifth straight session on Wednesday, falling about 1.6% to an over one-week low of 1,873 points, amid lower demand across all vessel segments.
Particularly, the capesize index, which tracks iron ore and coal cargos of 150,000 tonnes, was down for the fifth consecutive session, decreasing about 2% to 2,199 points.
The panamax index, which tracks about 60,000 to 70,000 tonnes of coal and grains cargoes, slumped by 2.2% to 2,147 points.
Also, the supramax index shed 6 points 1,708 points.
In equity markets, on Wall Street, the S&P 500 gave up 0.3% to 3,577.03 for its sixth daily decline after a report showed inflation in producer prices is very hot .
The S&P 500 is down 25% so far this year and close to a two-year low.
The Dow Jones Industrial Average slipped 0.1% to 29,210.85.
The Nasdaq composite lost 0.1% to 10,417.10.
Both are on pace for a weekly loss.
Minutes from the Fed’s last meeting, released Wednesday, underscored the central bank’s commitment to taming “unacceptably high” inflation.
Meantime, Asian stock markets fell Thursday.
Shanghai, Tokyo, Hong Kong and Seoul declined.
The Shanghai Composite Index lost 0.1% to 3,021.76 and the Nikkei 225 in Tokyo sank 0.5% to 26,275.00.
Hong Kong’s Hang Seng tumbled 1.2% to 16,510.25.
The Kospi in Seoul fell 1.4% to 2,171.41 while Sydney’s S&P-ASX 200 gained less than 0.1% to 6,651.00.
India’s Sensex opened down 0.6% at 57,295.57.
New Zealand and Southeast Asian markets declined.
In currency trading, the dollar’s exchange rate has been rising against other currencies due to the Fed’s rate hikes and recession fears.
The yen declined further to 146.85 to the dollar after hitting a 24-year low of 145.85 on Wednesday.
The prompted expectations Japan’s central bank might intervene again to prop up the yen’s exchange rate following an earlier intervention in September.
The euro declined to 96.02 cents from 97.06 cents.
Also Wednesday, the British pound weakened against the U.S. dollar after the governor of the Bank of England , Andrew Bailey, confirmed Britain’s central bank will not extend beyond Friday an emergency debt-buying plan to stabilize financial markets.
From South America, Argentina’s government is set to meet with wheat millers and exporters this week amid concerns over the size of this year’s crop due to a severe and ongoing drought, a government official and an industry source said on Wednesday.
Domestic millers are worried about a lack of wheat after sharp cuts to production forecasts.
A spokesperson for the agriculture secretariat, said that there would be a meeting with the sector on Thursday.
Argentina, has seen its 2022/23 wheat harvest forecast slashed by the major Rosario grains exchange to 16.5 million tonnes, which would be the lowest in seven years and far below a bumper 23 million tonnes in 2021/22.
Meanwhile, the country’s producers have already formally declared overseas sales of 2022/23 wheat of 8.85 million tonnes, official data show.
There is an existing export cap of 10 million tonnes for the season’s wheat harvest.
In Europe, farm office FranceAgriMer on Wednesday raised its forecast for French soft wheat exports outside the European Union, now seen 15% above the last season, but said sales would depend on whether a Ukrainian grain export corridor was extended.
Particularly, FranceAgriMer is revising its estimate of wheat exports from third countries slightly upwards to 10.1 million tonnes against 10.0 last month.
Meantime, intra-community exports are revised down slightly to 7.07 million tonnes against 7.13 last month.
The end of season stock is estimated at 2.13 million tonnes against 2.36 million estimated last month.
As for corn, the end stock is estimated at 2.01 million tonnes against 2.23 estimated last month.
On the other hand, Romania has confirmed an outbreak of African Swine Fever at a large pig farm in the western county of Timis and that 39,000 animals will be culled, the county prefect said on Wednesday.
Hundreds of cases were reported in Romania and several other European Union states this year among pigs kept in backyards and smallholdings as well as several large private farms.
Outbreaks were also detected recently in Germanyand Italy.
Meantime, per latest data published by Euronext on Wednesday, non-commercial market participants reduced their net long position in Euronext’s milling wheat futures and options in the week to Oct. 7.
Particularly, non-commercial participants, which include investment funds and financial institutions, lowered their net long position to 121,668 contracts from 132,932 a week earlier, the data showed.
Commercial participants similarly reduced their net short position to 142,840 contracts from 154,159 a week earlier.
Commercials’ short positions accounted for 62.3% of the total short position, while commercial long positions accounted for 39.1% of total long positions.
Non-commercial short positions represented 37.8% of total short positions, while non-commercial net long positions accounted for 60.9% of the total longs.
In Euronext’s rapeseed futures and options, non-commercial market participants reduced their net long position to 18,717 contracts from 22,448 a week earlier.
Commercial participants similarly decreased their net short position in rapeseed to 17,729 contracts from 21,184 a week earlier.
From North Africa, Egypt’s supply ministry has said that it would allow mills producing 72% extraction wheat flour to buy wheat from the state grains buyer at a price of EGP 8700 ($442.52) per tonne, the ministry said in a statement on Wednesday.
The ministry will also sell flour to pasta factories operating within the state buyer’s framework at EGP 10,000 per tonne.
Both decisions will be implemented as of Oct. 15 and will be applicable for a month, the ministry added.
The move follows complaints from private sector importers and mills as they struggle to pay for around 700,000 tonnes of wheat stuck at ports amid a dollar shortage, traders and Egypt’s chamber of cereals said last week.
($1 = 19.6600 Egyptian pounds).
Moroccan phosphates and fertiliser producer OCP said on Wednesday it will allocate 4 million tonnes of fertilisers for the African market next year and it plans to boost output capacity to 15 million tonnes in the same period.
The state-owned company aims to address food security on the continent, where it is building blenders to customise fertilisers as well as soil nutrients and ammonia plants in Nigeria and Ethiopia.
The African Development Bank said in May that fertiliser prices on the continent had quadrupled since the beginning of the war in Ukraine, which has disrupted supply chains, and that Africa faced a shortage of 2 million tonnes.
In this context, the OCP saw fertilisers production this year at 11.9 million tonnes, up from 10.8 million tonnes in 2021, and it would add another 3 million tonnes of annual output capacity in 2023.
OCP exports rose 67.7% in the first eight months of this year to 77.8 billion dirham ($ bln) thanks to higher prices.
The company reported a 72% year-on-year increase in first-half revenue to 56 billion dirham ($5.67 bln), while its net profit tripled to 23 billion dirham ($2.3 bln) over the same period.
In July, the company was offering 180,000 tonnes of soil nutrients in aid and 370,000 tonnes at a discount to help African states cope with surging prices.
From Russia, weekly consumer prices in Russia rose for the third week running, data published on Wednesday showed, after almost three months of weekly deflation and a little over two weeks before the central bank next meets to decide on interest rates.
In a separate set of data, the economy ministry said annual consumer inflation slowed to 13.36% as of Oct. 10, down from 13.49% a week earlier.
Central Bank Deputy Governor Alexei Zabotkin said on Wednesday the bank was in inflationary risks.
But, addressing lawmakers the day before, he acknowledged that returning inflation to near the bank’s 4% target would take longer than in normal circumstances.
The Bank of Russia cut its key rate to 7.5% last month, but suggested its rate-cutting drive could end soon.
From the Middle Kingdom, China’s 2022/23 corn production is expected to reach 272.56 MMT, according to the latest estimates from the country’s agriculture ministry.
Despite that impressive amount, China will still import an estimated 22 MMT of corn this marketing year.
Brazil could prove to capture a bigger market share as early as December as China moves to reduce dependence on U.S. grain and seek less volatile options from outside the Black Sea region.
From Australia, prompt prices for feed wheat, barley and sorghum have rallied in the past week as rain and localised flooding limit access to stored grain in New South Wales.
Harvest is now under way in Queensland, Western Australia and South Australia, but showery and mild weather this week is certain to make an already late crop mature even later.
Recent rain, with more forecast, has forced some shorts into the market to look for whatever grain can be outturned at short notice.
While southern new-crop barley and SFW wheat prices are under forecast supply-side pressure, the northern market has firmed across the board.
Global factors, especially the weak Australian dollar, are supporting values for new-crop feedgrain.
On this wake, ASX wheat (ie min APW) traded to A$478 yesterday while SFW1 delivered Melbourne was quoted at $400 bid for Jan and this reflects the genuine concern around protein availability into the harvest slot.
Unfortunately, forecasts have built more rainfall into Vic and southern NSW with warnings for supercell/tornados being issued for Thursday.
In contrast, east coast markets have been extremely quiet with both buyers and sellers waiting to see what this means for quality.
The GIAV crop tour is underway with the first day showing the potential of the Vic crop.
The tour also indicates that the crop is at least a few weeks behind normal which creates a gap between old crop and new crop that will have some endusers nervous.
On the international trade scene, Algeria’s state grains agency OAIC is believed to have bought about 480,000 tonnes to 510,000 tonnes of milling wheat in an international tender which closed on Tuesday.
This was above the upper end of estimates of 400,000 to 480,000 tonnes on Tuesday evening.
The purchase was expected to be largely sourced from Russia and possibly some from Romania and Bulgaria, although technically supplies are optional origin.
It is thought one seller will provide about 60,000 tonnes sourced from France.
Estimates of the purchase prices on Wednesday were around $380 a tonne cost and freight (c&f) included for the lowest end of the range and up to $384 a tonne c&f at the high end, although some individual traders put the highest price at $385 a tonne c&f.
This was similar to estimates on Tuesday evening when was believed the bulk of the wheat was traded at between $382 and $384 a tonne c&f.
Feed barley tender from Jordan closed on 12/10/2022, got two participants: Cargill and Olam.
MIT cancelled the tender to be issued next week.
Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 94,140 tonnes of food-quality wheat from the United States, Canada and Australia in regular tenders that closed on Thursday.
That’s all, thank you.
We wish you a good day.
Author: Sandro F. Puglisi
