Good morning, Farmer Family …
US farm markets saw a “hot summer” start, on Wednesday, with corn, soybean and wheat prices all rising to multi-month highs.
Corn prices, indeed, jumped 4.23%.
Soybeans closed 2.54% higher.
The rest of the soy complex was mixed, as soymeal climbed 6.4% higher, while soyoil closed with 6.71% losses.
Wheat prices surged, with Chicago SRW rallying 5.57%, Kansas City HRW rose 4.52%, and MGEX HRS gained 3.50%.
The US weather remained the main driver of this market.
The U.S. Agriculture Department cut its good-to-excellent ratings for the U.S. corn, soybean and spring wheat crop by more than expected on Tuesday afternoon, including steep drops in top-producing states Iowa and Illinois.
Some parts of the Plains could gather as much as 3” or more between today and Sunday, while other areas will receive no measurable moisture during this time, according to the NOAA.
Thus, July corn prices were back up to Feb highs, while Dec contract set new highs for the calendar year reaching levels not seen since November ’22.
November soybeans were 34-1/4 cents higher at $13.77 a bushel after rising to $13.78, the highest peak for the new-crop contract since March 8.
Wheat prices also rallied closing near their daily highs, with July’s Chicago SRW going home reaching price levels not seen since February.
Concern also mounted about crops elsewhere, including Europe, after the European Union’s crop monitoring service MARS on Monday reduced nearly all its average yield forecasts for this year’s grain and oilseed crops in the bloc, citing adverse weather conditions.
However, further out, NOAA’s new 8-to-14-day outlook predicts seasonally wet conditions finally returning to the eastern Corn Belt between June 28 and July 4, though there will be warmer-than-normal temperatures likely for most of the central U.S..
Weekly EIA ethanol data delaied will be released today.
Meantime, the EPA finalized the RFS volumes for 2023-25.
Corn based ethanol was held at 15.25b gallons for 2023, but was reduced to 15b flat for ’24 and ’25.
In addition, EPA concluded that 250 of the 500m gallons from 2016 were illegally waived in 2022.
As for biomass-based diesel, it was set at 2.82b gallons for 2023, 3.04b for ’24, and 3.35b for ’25.
The proposed amounts were 2.89 and 2.95 billion gallons for 2024 and 2025 respectively.
On the other hand, grain traveling the US railways added another 15,795 carloads last week.
That brought the cumulative total for 2023 to 470,627 carloads, which is a year-over-year decline of 9.0% so far.
In this context, corn basis bids were mostly steady to soft across the central U.S. after dropping 2 to 7 cents at four Midwestern locations.
An Iowa river terminal bucked the overall trend after firming 3 cents higher.
Soybean basis bids were steady to mixed across the central U.S., after trending as much as 5 cents higher at an Iowa river terminal and as much as 15 cents lower at an Illinois river terminal.
Commodity funds were net buyers of CBOT corn, soybean, wheat and soymeal futures contracts.
They were net sellers of soyoil.
On this morning, Chicago corn prices edged lower, with traders locking profits after yesterday rally.
Soybean and wheat prices were also headed for losses.
Notably, corn prices were down 0.8% at $6.24 a bushel, as of 03:53 GMT.
The most-active soybean contract on the Chicago Board of Trade was down 0.6% at $13.68-1/2 a bushel, and wheat prices gave up 0.5% at $7.44-1/2 a bushel.
From Canada, the Manitoba Agriculture, Food and Rural Development crop report, for the week ending June 20 notes that sporadic showers across the province made little contribution to crop-moisture maintenance, with only some parts of the north-west receiving significant rains.
Especially dry conditions are noted in the central, Interlake and north-west regions.
However, crops have shown rapid development and remain in generally good condition, except for later-planted fields.
From South America, Brazil’s Anec estimates that the country’s corn exports will reach 1.5Mt in June, which is 100,000t below the group’s prior projection from a week ago.
Anec also estimates that the country’s soybean exports will reach 14.3Mt in June, which is 500,000t below its prior projection from last week.
Anec also expects to see Brazilian soymeal exports reaching 2.37 million metric tons this month.
Meantime, Argentina became the second main destination for Brazilian soybeans in the first five months of 2023, as it had to boost imports in response to a historic drought that severely affected its crop.
In Europe, grain prices soared in the wake of Chicago higher, while rapeseed lost ground on disappointing EPA’s biofuels mandate announcement.
In Germany, the association of cooperatives revised downwards its estimate of total wheat production to 21.87 million tonnes, compared with 22.31 million tonnes estimated last month.
As for rapeseed, the projected production this season has been revised to 4.14 million tonnes down from 4.28 million tonnes in May.
The water stress of recent weeks will also have an impact on spring malting barley production, anticipated at 1.74 million tonnes.
The very low level of the Rhine is also penalising shipping and grain movements in this region.
Volatility however dominates the markets prompting cautious price risk management in a context where the US weather remains the main driver.
From Russia, Russia’s TASS news agency is reporting that the UN has confirmed it is unable to address some of Russia’s grievances related to the Black Sea deal, in particular the resumption of piped Russian ammonia exports, the reconnection of its agricultural bank to the SWIFT payment system, or ensuring supplies of spare parts for agricultural machinery.
According to the Deputy Foreign Minister, the UN will decide whether the memorandum facilitating exports of local products will remain in effect in the event of the ending of the part of the deal connected with supplies of Ukrainian grain
Meantime, Sovecon said on Wednesday that it had lowered its forecast for the country’s 2023-24 wheat crop from 88 million tons to 86.8 million tonnes.
From South East Asia, Indian wheat production could be 10 percent lower than official government estimates, so closer to 101-103 million tonnes (Mt) rather than 113Mt, according to the Roller Flour Millers Federation.
From Australia, the arrival in Brisbane of a cargo of Western Australian barley has seen SFW wheat trade in the northern market trade at a premium to barley for the first time since January.
It has also made northern barley the only quoted market to ease in the past week, with ongoing dry conditions in northern New South Wales, and bullish factors offshore, lifting values.
As the financial year nears its last week, growers remain reluctant sellers of stored grain, and if northern NSW stays dry, those a long way from port are tipped to retain stocks until just before new-crop arrives and the inverse is at its height.
Meantime, local markets were firmer across the boards yesterday on wheat and barley.
Jan 24 ASX East Coast wheat contract was a mixed bag, trading up to $398/mt then down to $395/mt by the end of the day with some old crop to new crop rolls being placed.
Canola bids pulled back slightly over the day
Victoria has once again picked up the highest rainfall totals for the week ending June 21 with a widespread 10-25mm, while parts of the east have picked up 25-50mm.
Most cropping regions of South Australia picked up 5-25mm, while Western Australia and southern New South Wales have totals of 1-10mm.
Central and northern NSW and Queensland have been dry. It is wet in SA and western Vic today, with the rainfall hopefully extending through NSW tonight and tomorrow.
On the international trade scene, Taiwan’s MFIG purchasing group bought about 65,000 metric tonnes of animal feed corn expected to be sourced from Brazil in an international tender on Wednesday.
An importer group in Thailand was believed to have purchased about 55,000 metric tonnes of animal feed wheat expected to be sourced from the Black Sea region or Australia.
Algerian state agency ONAB has issued an international tender to purchase up to 120,000 metric tons of animal feed corn to be sourced from Argentina.
The deadline for submission of price offers in the tender is today, June 22.
Corn shipment is sought in three 40,000 metric ton consignments, one for prompt shipment by July 15 at the latest and the others for shipment between July 15-31 and Aug. 1-15.
In outside markets …
Energy markets saw oil prices rallying as grain markets tightened, and dollar fell.
Brent futures indeed rose $1.22, or 1.6%, to settle at $77.12 a barrel, while the U.S. West Texas Intermediate (WTI) crude futures rose $1.34, or 1.9%, to settle at $72.53 a barrel.
Both contracts hit two-week highs earlier in the session.
The grain markets are starting to wake up to the fact that inventories are low and it’ll only be a matter of time before the oil market wakes up to that fact.
Also, U.S. crude oil inventories fell last week, while gasoline inventories rose, according to market sources citing American Petroleum Institute figures on Wednesday.
Notably, crude stocks fell by about 1.2 million barrels in the week ended June 16, according to the sources.
Official U.S. oil inventory data from the Energy Information Administration will be released on Thursday.
Oil price gains were capped after data showed on Wednesday that British inflation defied expectations of a slowdown.
The rate indeed held at 8.7% in May, boosting expectations the Bank of England will raise interest rates by a hefty half a percentage point on Thursday.
On this morning, oil prices dipped amid demand fears.
Brent futures indeed eased by 47 cents, or 0.6%, to $76.65 a barrel at 0840 GMT and U.S. West Texas Intermediate (WTI) crude futures were down 44 cents, or 0.6%, at $72.09.
In ocean freight markets, the Baltic Exchange’s main sea freight index rose to a near four-week high on Wednesday, supported by strong demand for capesize vessels.
The overall index, indeed, gained 60 points, or about 5.6%, to 1,138, its highest since May 26.
Notably, the capesize index jumped 190 points, or 12.3%, to 1,730.
Average daily earnings for capesize vessels, which typically transport 150,000-tonne cargoes carrying commodities such as iron ore and coal, increased by $1,581 to $14,350.
The panamax index slipped 17 points, or about 1.5%, to 1,157.
Average daily earnings for panamax vessels, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased by $151 to $10,417.
Among smaller vessels, the supramax index edged two points higher to 761.
In equity markets, US stock indexes fell, as weakness in high-growth stocks mounted after Chair Powell reiterated Fed hawkish bias, hitting the Nasdaq Composite, which lost 1.2% closing to 13,502.20.
Powell, indeed, in his semi-annual testimony before the House Financial Services Committee, reiterated the Fed’s hawkish bias.
Mr. Powell will appear today before the Senate Banking Committee and repeat his prepared testimony, although he will answer different questions from panel members.
In other news Fitch Ratings said in its June Global Economic Outlook that the global growth outlook for next year has deteriorated, given the prospects of higher interest rates around the world.
“Global growth is showing near-term resilience but with core inflation remaining stubbornly high, central banks will have to continue tightening policy in the coming months,” it said
Still in this context, roughly as many stocks rose as fell on Wall Street, thus the Dow Jones Industrial Average dropped by a milder 0.3%, to 33,951.52, while the S&P 500 fell 0.5% to 4,365.69.
It was a third straight pullback for the index after it rallied last week to its highest level in more than a year.
On this morning, Asian shares were trading mixed.
Japan’s benchmark Nikkei 225 fell 0.9% to finish at 33,264.88. Australia’s S&P/ASX 200 declined 1.6% to 7,195.50.
South Korea’s Kospi gained 0.4% to 2,593.70.
Markets were closed in Hong Kong and Shanghai for the Dragon Boat Festival, a national holiday.
Shares rose in India.
The Chinese markets being closed brought a break from jitters about possible renewed tensions in the U.S.-China relationship after President Joe Biden referred to Chinese President Xi Jinping as a dictator.
Blinken was in Beijing recently where both sides agreed to “stabilize” badly deteriorated ties.
But Blinken said China was not ready to resume military-to-military contacts.
In currency trading, the dollar index fell -0.44% near to a 5-week low, despite Powell’s hawkish bias, on a general bearish sentiment.
The forex market remains focused on monetary policy differentials, with the ECB and Bank of England continuing to raise interest rates while the Fed is on pause for the time being.
Meantime, the EUR/USD rose by +0.61%, and USD/JPY rose +0.28%.
On this morning, the U.S. dollar edged up to 141.97 Japanese yen from 141.81 yen.
The euro cost $1.0993, little changed from $1.0990.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
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