After slumping significantly on Tuesday, US farm markets spent yesterday in recovery mode.
Wheat market moves were mixed and modest, while corn, oilseeds and products rose.
Particularly, corn prices finished the session up more then 1.4%.
Soybeans grabbed double-digit gains and raced 2,34% higher.
Meal prices ended the day 2.42% higher.
Bean oil rallied back with triple digit gains, closing up 2.04% and setting new LoC highs.
Wheat prices were narrowly mixed meantime.
Winter wheat prices ended higher, with front month SRW going home fractionally higher (+0.1%) and HRW closing up 0.25%.
Spring wheat, in contrast, althought traded within a 14 cent range, ultimately closed fractionally lower, down 0.1%.
In energy market, oil price yesterday recovered some of its more than 2% fall posted on Tuesday, after Russian-backed rebels in eastern Ukraine accused Kyiv government forces of shelling their territory with mortars.
Oil tumbled on Tuestday, after France and Iran said parties were closer to an agreement to salvage Iran’s 2015 nuclear deal with world powers, offsetting tensions over Ukraine and by Russia’s announcement of a partial pullback of troops from near Ukraine earlier this week.
However, on this morning U.S. West Texas Intermediate (WTI) crude was again trading down 0.7% at $92.98 a barrel at 04:22 GMT, after it ended up 1.7% the previous day.
Brent crude was trading down 0.6% at $94.2 at 04:20 GMT, after the contract closed up 1.6% in the previous day’s trade.
“Positive news from the U.S.-Iran nuclear negotiations is providing much-needed relief to global oil prices, as the possibility of new crude supplies reduces the supply-demand deficit,” said Claudio Galimberti, senior vice president of consultancy Rystad Energy.
On the freight market, the Baltic Exchange’s dry bulk sea freight index slipped on Wednesday as lower rates for capesize and panamax vessels outweighed gains in the supramax segment.
The overall index, which factors in rates for capesize, panamax and supramax vessels, was down 72 points, or nearly 3.7%, at 1,896, the lowest since Feb. 10.
Particularly, the capesize index dipped 237 points, or 13.8%, to a one-week low of 1,476.
Average daily earnings for capesizes, which transport 150,000-tonne cargoes such as iron ore and coal, fell by $1,970 to $12,239.
The panamax index eased 25 points, or 1%, to 2,375.
Average daily earnings for panamaxes, which ferry 60,000-70,000 tonne coal or grain cargoes, fell by $227 to $21,374.
The supramax index, in contrast, was up 43 points to 2,320.
Meantime, on the 7th week, freight rates continue to decrease in the Azov-Black Sea region.
Thus, the rate for a shipment of 3,000 tons of wheat from Azov to Marmara Sea ports is $ 33 per ton.
In equities markets, U.S. stock indexes on Wednesday settled mixed.
Stocks Wednesday morning initially opened lower on ongoing Russia-Ukraine tensions.
Weakness in technology stocks Wednesday also weighed on the overall market.
However, stock indexes recovered from early losses and settled mixed on strength in U.S. Jan retail sales, which posted their largest increase in 10 months.
Particularly, Wednesday’s U.S. economic data have seen on the positive side, Jan retail sales that rose +3.8% m/m and +3.3% m/m ex-autos, stronger than expectations of +2.0% m/m and +1.0% m/m ex-autos and the largest increase in 10 months.
Also, Jan U.S. manufacturing production rose +0.2% m/m, right on expectations.
On the negative side, the Jan import price index ex-petroleum rose a record +1.4% m/m (data from 1989), stronger than expectations of +0.4% m/m.
Stocks, also saw support on a rally in energy stocks.
Thus, on Wall Street the S&P 500 rose to 4,475.01.
The Dow Jones Industrial Average gained slipped 0.2% to 34,934.27 the Nasdaq composite fell 0.1% to 14,124.09.
Meantime, the dollar index fell -0.296 (-0.31%).
Strength in EUR/USD Wednesday pressured the dollar.
Also, a recovery in stocks, which erased early losses and moved higher, curbed the liquidity demand for the dollar.
Weakness in the dollar was limited by strength in Jan retail sales data.
Meantime, Asian stock markets were mixed on this morning, after Federal Reserve policymakers indicated they are leaning toward more decisive action on inflation but set no firm targets.
That suggests the Fed’s attitude might be “less hawkish than previously thought.”
Investors expect the committee to start raising interest rates by 50 basis points at its March 15-16 meeting, with more increases throughout the year.
In this context, the Shanghai Composite Index rose 0.2% to 3,472.16 to 3,474.98 while the Hang Seng in Hong Kong shed 0.4% to 24,618.20.
The Nikkei 225 in Tokyo gave up 1% to 27,190.83 after January exports rose by 9.6% over a year earlier, well below expectations.
The Kospi in Seoul advanced 1% to 2,755.56 after the government reported the economy added 1.1 million jobs in January and the unemployment rate edged lower.
Sydney’s S&P-ASX 200 was less than 0.1% higher at 7,323.80 while India’s Sensex opened down 0.1% at 57,924.85.
New Zealand and Singapore rose while Jakarta retreated.
On the weather side, the latest 72-hour cumulative precipitation map from NOAA shows the likelihood for significant amounts of rain or snow to fall in a band stretching from southern Missouri through the Northeastern U.S. between today and Sunday.
The agency’s 8-to-14-day outlook predicts seasonally wet weather will remain in effect for the Midwest and Plains between February 23 and March 1, with seasonally cool conditions developing in the Plains and western Corn Belt.
On the demand side, EIA data showed ethanol producers upped output to back above 1m barrels per day through the week that ended 2/11.
That was up 15k bpd from last week, but still under the 5-week average, with 1.009m bpd reported.
Ethanol stocks increased by 684k barrels to 25.48 million.
This increase in stocks was nevertheless anticipated by traders.
Meantime, private exporters reported to the USDA sales of 132,000 metric tons of soybeans for delivery to China during the 2022/2023 marketing year.
Ahead of the weekly Export Sales report, analysts are expecting between 500k MT and 1 MMT of corn were sold during the week that ended 2/10.
New crop bookings are expected to be below 250k MT from the same week.
As for soybeans, pre-report estimates are to see between 750,000 and 1.8 MMT of beans sold during the week that ended 2/10.
New crop bookings are estimated between 800k and 1.5 MMT.
Analysts surveyed expect soymeal sales were between 150k and 500k MT from the same week.
For soybean oil, the trade is looking to see less than 60k MT booked.
As for wheat, the trade is looking for between 75,000 and 5000k MT of wheat bookings for the week that ended 2/11.
For new crop wheat activity the trade is looking for less than 150k MT of sales.
Meantime, Louis Dreyfus Company (LDC) said on Wednesday a fire had broken out in a bag house at its Claypool, Indiana, soybean processing and biodiesel plant on Tuesday and the affected systems had been suspended.
LDC says Claypool is the largest fully integrated soybean processing and biodiesel plant in the United States.
The plant has a daily crushing capacity of 175,000 bushels.
The suspension of deliveries could slow production of soymeal and biodiesel at a time of high demand.
The funds were net buyers yesterday for 9,000 lots of corn and 21,500 lots of soybeans.
They were wheat neutral.
From South America, Brazilian President Jair Bolsonaro met Russian fertilizer makers in Moscow on Wednesday and said they will double their supplies to Brazil where farmers are facing shortages.
Brazil depends on imports for 95% of its potash and is a major buyer from top suppliers Canada, Russia and Belarus.
Last year, Brazil imported some 10 million tonnes.
In a reversal of normal trade patterns, Argentine farmers could occasionally make soybean sales to processing plants in Paraguay, where a severe drought is hammering crops, Argentina’s CIARA-CEC chamber of oilseed crushers and export companies said on Wednesday.
At the end of last year, 45% of Argentine crushing plants were idle and that figure could rise.
The trade with Paraguay, the world’s fourth-largest soybean exporter, is usually the other way around, with the larger neighbor normally importing Paraguayan beans to process.
But landlocked Paraguay is facing its worst soy harvest in a decade due to the drought and could see production cut in half from the previous season.
Paraguay’s trade industry body told Reuters earlier on Wednesday that the country’s soybean crushing industry will run out of beans to process by the middle of the year, adding it was in talks to import beans for the first time ever.
Importantly, Argentina is also suffering the effects of the drought, which has already led to significant losses of soybean and corn crops.
Last month Argentina’s Rosario exchange (BCR) slashed its estimates for 2021/22 soy production to 40 million tonnes from 45 million tonnes, or an 11% cut, due to the drought.
The rival Buenos Aires exchange followed with its own cuts, though not quite as deep.
In Europe, grain prices fell back again yesterday, while rapeseed showed great firmness yesterday in the wake of soybean oil and palm oil.
Farm office FranceAgriMer on Wednesday cut its forecast for French soft wheat exports outside the European Union this season for the fourth consecutive month on a gloomy outlook for sales to Algeria where it faces competition from the Black Sea region.
In its monthly supply and demand outlook for major cereal crops, the office reduced its forecast for soft wheat exports outside the European Union in 2021/22 to 8.9 million tonnes from 9.0 million in January.
Projected exports within the 27-member bloc, however, were increased to 7.8 million tonnes from 7.7 million tonnes last month.
Meantime, FranceAgriMer increased its forecast of wheat use in animal feed, reflecting improved competitiveness against maize.
Consequentially, the office cut slightly projected wheat stocks at the end of June, by 70,000 tonnes to 3.6 million tonnes, as the increased feed demand and intra-EU exports offset the reduced non-EU exports.
In parallel, the office cut projected maize use in animal feed, which led to a rise in the ending stocks to 2.0 million tonnes, from 1.9 million forecast last month.
The ending stock of barley is left unchanged at 1.4 million tonnes.
On the other hand, the areas under organic farming in the EU increased by 5.3% in 2020 (i.e. more than 700,000 additional hectares) and now represent 9.2% of the areas, according to the annual report of the FiBL (Institute for Agricultural Research biological) quoted by Inter-Courtage.
France, the country which has recorded the largest increase in surface area (with 307,000 hectares more than in 2019), becomes with nearly 2.5 million hectares the first country in the EU in terms of organic surface areas.
It is followed by Spain (2.4 million ha), Italy (2.1 million ha) and Germany (1.7 million ha).
Together, these four countries have more than half of the EU’s organic areas.
But the growth rate of surfaces in the EU tends to slow down from year to year: in 2019 the increase was 5.9% against 7.7% the previous year.
Meantime, durum wheat prices have suffered notable losses in recent days in a market mainly marked by a lack of buying interest.
Demand has indeed been in decline for more than two months now.
This decline in quotations is, however, for the most part without real business transacted and the availabilities themselves are not impressive, internationally.
Indeed, durum wheat delivered La Pallice Spot – July 2021 basis, was valued at €/t 410,00, down 35,00 euros per tonne, in two session only.
Meantime, non-commercial market participants cut their net long position in Euronext’s milling wheat futures and options in the week to Feb. 11, data published by Euronext on Wednesday showed.
Particularly, non-commercial participants, which include investment funds and financial institutions, lowered their net long position to 116,429 contracts from 120,292 a week earlier, the data showed.
Commercial participants similarly reduced their net short position to 125,599 contracts from 130,046 a week earlier.
Commercials’ short positions accounted for 65.3% of the total short position, while commercial long positions accounted for 44.5% of total long positions.
Non-commercial short positions represented 34.7% of total short positions, while non-commercial net long positions accounted for 55.5% of the total longs.
In Euronext’s rapeseed futures and options, non-commercial market participants increased their net long position to 3,994 contracts from 2,999 a week earlier.
Commercial participants raised their net short position in rapeseed to 4,907 contracts from 4,100 a week earlier.
From North Africa, Egypt is not concerned with the global decline in wheat stocks as it benefits from a diverse pool of suppliers, the supply ministry told Reuters in a statement.
“Our tender book includes 16 wheat import origins, which provides us with flexibility when it comes to managing the country’s needs for imported wheat,” the statement said.
Meantime, the ministry said that the expected start of the local harvest in April would provide it with protection against any market disruptions as the strategic reserves of wheat currently stand at 4.5 months.
The government expects local production of wheat to reach 10 million tonnes in this year’s harvest.
Meantime, according to U.N. data, Egypt’s wheat imports dropped 32% in 2021 likely due soaring global prices last year.
The increase in the country’s storage capacity from 1.2 million tonnes to 3.4 million tonnes annually decreased waste by 10%.
Also, a 2020 measure that shrank the weight of a subsidized loaf by 20 grams led to a 13% annual decline in imports.
From the Black Sea basin, according to the RF Federal Customs Service statistics, during 2021 Russia exported 32.9 mn tons of wheat and meslin, down 14.6% year-on-year. In terms of value, grain export grew by 8.1% up to $8.9 bn.
Wheat import into Russia during 2021 decreased by 35.1% down to 123.2 thousand tons.
Corn import declined by 31.8% down to 35 thousand tons.
Barley import made only 6.2 thousand tons, down 87.3% year-on-year.
In terms of value, wheat import declined by 24.1% down to $49.2 mn, corn import by 15.8% down to $110.9 mn, and barley import by 74.7% down to $1.9 mn.
In December 2021, wheat and meslin export made 2.9 mn tons, down 39.4% year-on-year and down 7.5% month-on-month. In terms of value, it decreased by 19.7% year-on-year and by 1.6% month-on-month to make $938.1 mn.
Wheat import in December 2021 made 4.8 thousand tons, down 88.6% year-on-year and up 50% month-on-month.
Value-wise, wheat import decreased by 85.6% year-on-year and grew by 60% month-on-month to make $2.4 mn.
Corn import was down 43.8% year-on-year and up 9-fold month-on-month making 2.7 thousand tons. In terms of value, it declined by 28.8% year-on-year and surged 15.6-fold month-on-month to make $10.9 mn.
Barley import was non-existent in December 2021.
Also, always according to the RF Federal Customs Service’s statistics, in 2021 Russia exported 14.5 mn tons of nitric fertilizers, up 5.3% year-on-year. In terms of value, nitric fertilizers export grew by 79.9% up to $4.5 bn.
Potash fertilizers export during 2021 increased by 24.2% up to 11.9 mn tons. In terms of value, it surged by 86.9% up to $3.3 bn.
Mixed fertilizers export amounted to 11.2 mn tons, up 3.2% year-on-year.
In terms of value, mixed fertilizers export increased by 71.8% up to over $4.7 bn.
In December 2021, nitric fertilizers export made 1.8 mn tons, up 26.7% year-on-year and up 44.5% month-on-month.
In terms of value, it surged 2.9-fold year-on-year and grew by 42.2% month-on-month to make $810.9 mn.
Mixed fertilizers export in December declined by 0.4% year-on-year and by 24% month-on-month to make 1.1 mn tons worth $645.8 mn, up 2.1-fold year-on-year, but down 10.3% month-on-month.
Potash fertilizers export decreased by 14.3% year-on-year and by 22.9% month-on-month making 790.8 thousand tons worth $374.1 mn, up 2.2-fold year-on-year and down 23% month-on-month.
Meantime, the total cargo throughput via the Caspian basin ports in December 2021 declined by 24.8% year-on-year.
According to SeaNews PORTSTAT analytic online service, export was down 6.2%, transit decreased by 42.7%, and cabotage by 57.3%.
Import surged 2.2-fold.
The share of the Caspian basin in the total cargo traffic via all the Russian seaports in December 2021 made 0.7%.
46.1% of the total cargo traffic was crude oil, grain accounted for 26.4% and timber and logs for 9.8%.
It should be noted that the highest growth was in other bulk (suction) (up 4-fold), piece cargo (up 3-fold), and other general cargo (up 2.4-fold).
The commodities that decreased were foodstuffs (-97.3%), Ro-Ro (-91.7%) and crude oil (-42.9%).
Makhachkala accounted for 62.1% of the aggregate cargo throughput via the Russian Caspian basin sea ports in December. Astrakhan handled 34.4%, and Olya 3.5% of the total.
From the Middle East, Saudi Arabia’s barley imports for the first six months of Marketing Year (MY) 2021/22 is estimated at 2.36 million metric tons (MMT), a 41 percent decrease compared to the same period last year.
According to local importers, the decline in barley imports thus far for this marketing year was caused by a shortage of vessels delivering competitively priced barley as well as a decrease in overall domestic demand.
Over the past several months, numerous farmers have departed the livestock sector due to increasing costs thus lowering demand.
As a result, USDA attaché current projection for total Saudi barley imports for this MY is 5.2 MMT, down 16 percent compared to the USDA official estimate of 6.2 MMT for MY 2020/21.
From the Middle Kingdom, China will collect data on soil quality and use in its third national soil survey running from 2022 until the end of 2025, as part of an effort to ensure grain security, the cabinet said on Wednesday.
Following the last such survey more than 40 years ago, in 1979, China has refocused on food security as a top policy and identified arable land and seeds as key priorities.
Meantime, China can reduce its soybean demand by 30 million tonnes by continuing to promote lower soymeal rations in feed and using alternative proteins, the official Xinhua news agency said on Wednesday, citing unnamed agriculture officials.
China imports almost 100 million tonnes of soybeans each year to make protein-rich soymeal for its huge livestock sector.
The portion of soymeal in feed dropped to an average 15.3% last year, down 2.4 percentage points compared with 2020, said Xinhua.
Among the top 33 feed companies, soymeal rations averaged 11.8%, a decrease of 1.6 percentage points from the previous year.
China could lower soymeal use by another 23 million tonnes, reducing its soybean needs by almost 30 million tonnes if it continues to promote low-protein livestock diets, added the report.
Meantime, China has said boosting soybean production will be a “major political task” this year, after output of the oilseed fell in 2021 as farmers planted more corn instead.
From South East Asia, India is likely to produce a record 316.06 million tonnes of grain in the current crop year to June, up from 310.74 million tonnes harvested in the previous year, the government said in its latest estimate released by the farm ministry on Wednesday.
Wheat output is expected at 111.32 million tonnes, up from the previous year’s 109.59 million tonnes, and farmers are likely to harvest 127.93 million tonnes of rice against 124.37 million tonnes produced the year before.
Oilseeds output is expected at 37.1 million tonnes against 35.9 million tonnes harvested in the previous year.
The output of rapeseed, the main winter oilseed with the highest oil content, is expected at 11.4 million tonnes, higher than a target of 10.97 million tonnes and the previous year’s production of 10.2 million tonnes.
Production of chickpeas, a popular variety of pulses, is likely to be 13.2 million tonnes against 11.91 million tonnes harvested in the previous year.
From Australia, moves in feedgrain prices have been limited in the past week as domestic consumers keep buying to a minimum in a tight road-freight market where export is the focus.
Strong bids from exporters accumulating downgraded wheat into southern ports in particular has caused some up-country consumers to follow the market up.
This is sparking interest from growers looking to sell some grain to pay for inputs for their 2022 winter crop as the main planting window nears.
In the north, the sorghum market is firing on all cylinders amid accumulation for a hectic bulk and containerised shipping program aimed at China.
Meantime, wheat bids fell A$5-6/t across the east coast, while offers were largely unchanged in South Australia and Western Australia.
Barley was also steady, and canola values were off $3-5/t with the softer MATIF and Winnipeg markets.
The market continues to price feed wheat from central and southern NSW that works back into South Australia’s domestic market as it continues to grow year on year.
We also saw strength in the quality wheat market along the Victorian-SA border sites that potential flow into SA.
On the weather side, models are forecasting 20-25 millimetres of rain for Queensland and northern New South Wales after a dry run.
Quality of sorghum currently being harvested is good, and meeting the top SORG1 grade.
On the international trade scene, Algeria would have concluded 2 boats yesterday at a price of 345.50 usd/cif, probably Black Sea origins.
However its call for tenders is extended until today.
Egypt’s General Authority for Supply Commodities (GASC) set a tender on Wednesday to buy an unspecified amount of wheat from global suppliers for shipment from April 1-10.
Deadline for offers is Feb. 17 and payment is at sight.
Jordan’s state grain buyer has issued an international tender to buy 120,000 tonnes of milling wheat sourced from optional origins.
The deadline for submission of price offers is Feb. 23, with shipment sought in a series of possible combinations in 60,000 tonne consignments.
Possible shipment combinations are July 16-31, Aug. 1-15, Aug. 16-31 and Sept. 1-15.
The country has also issued a tender for 120,000 tonnes of animal feed barley, closing on Feb. 22.
Iran issued an international tender to purchase 60.000 t of feed corn drop optional origins that closed yesterday, as the country continues to shore up supplies after a historic drought last season.
The grain is for shipment in February and March.
Iran issued an international tender to purchase 60,000 metric tons of soymeal from optional origins that closed yesterday.
The grain is for shipment in February and March.
South Korea purchased 82,000 t of milling wheat of USA or Canadian origin.
Of the total, 61% was sourced from the U.S.
The grain is for shipment in late April.
Syria passed on all offers in its tender to purchase 198.000 t of milling wheat that closed earlier this week.
The country will likely need to import as much as 1.5 million tonnes of wheat this year, with the majority of that grain expected to be sourced from Russia.
That’s all.
To all of you I wish you a good day.
Author: Sandro F. Puglisi
