US farm markets were volatile again yesterday, trading limits up and, yo-yo-like, gapped firmer amid daily price ranges of up to 9%.
Particularly, corn prices finished with limit-up gains, jumping 5.76% at the bell.
Corn March contract, stuck up past the $7/bu mark, but closed First Notice Day at $6.97 1/2.
Soybeans raced 3.4% higher.
March prices closed at $16.44 1/4 for the last trade day of Feb – completing the month with a $1.54 1/4 gain and a $2.80 range.
Soy meal closed up 1.47%.
For the March contract, that was a $36.20/ton gain through February.
Soy oil closed Monday with sharp 6.02% gains.
March soy oil rallied 7.93 cents through the month and traded Feb within a wide 12 cent/lb range.
The wheat complex saw an even bigger bounce, with some contracts rising more then 10% higher.
Particularly, March SRW contract rallied 10.08%, with no daily limits for March during the delivery month.
KC HRW futures rallied 7.61% on the final trade day of Feb.
Through the month of Feb, March HRW rallied 22%.
Minneapolis wheat futures went home on the Monday session with 3.86% gains.
In energy market, oil prices climbed on this morning.
Concerns over potential supply disruption, outweighed talk of a coordinated global release of crude stocks to calm markets.
Particularly, as peace talks between Russia and Ukraine on Monday ended with officials heading back to capitals for further consultation, that suggesting conflict resolution is not imminent.
Thus, major oil and gas companies, including BP and Shell , have announced plans to exit Russian operations and joint ventures, as buyers of Russian oil are facing difficulty over payments and vessel availability.
Russia, exports some 4 million to 5 million barrels per day of crude oil, and 2 million to 3 million barrels per day of refined products.
Meantime, market mood was partially helped by the United States and allies, capping oil price rises for now, as they are discussing a coordinated release of crude stocks, between 60 million and 70 million barrels, to mitigate supply disruption.
Also, the International Energy Agency (IEA) is set to hold an extraordinary ministerial meeting on this morning to discuss what role its members can play in stabilising oil markets.
OPEC+ – including Russia – will also meet on Wednesday, however, are anticipated to maintain a gradual increase to supplies.
In this context, May Brent crude futures, which began trading as prompt on this morning, advanced 0.9% to $98.88 by 04:40 GMT.
The benchmark touched a seven-year high of $105.79.
U.S. West Texas Intermediate (WTI) April crude futures rose 0.8% to $96.5.
That contract touched a high of $99.10 a barrel the previous day, and had settled up more than 4%.
On the freight market, the Baltic Exchange’s dry bulk sea freight index fell for a third straight session yestserday on weaker rates for capesize and panamax vessels.
Indeed, the overall index, which factors in rates for capesize, panamax and supramax vessels, slipped 36 points to 2,040.
Particularly, the capesize index fell 74 points to 1,617.
Average daily earnings for capesizes, which transport 150,000-tonne cargoes such as iron ore and coal, decreased by $612 to $13,414.
The panamax index decreased 59 points to 2,599.
Average daily earnings for panamaxes, which ferry 60,000-70,000 tonne coal or grain cargoes, fell $533 to $23,389.
The supramax index gained 11 points to 2,428.
In equities market, U.S. stock indexes yesterday settled mixed, with the Nasdaq 100 climbing to a 1-week high, on strength in electric vehicle makers and cybersecurity stocks.
Strength in defense stocks and clean energy companies limited losses in the S&P 500.
However, the overall market has been under pressure.
The hostilities, indeed, threaten to stoke inflation by curbing flows of key resources such as grains, metals, and energy, which exacerbates price pressures that were already weighing on global economic growth.
Meantime, the Biden administration banned U.S. citizens from doing business with the Bank of Russia, the Russian National Wealth Fund, and the Ministry of Finance, aims “effectively immobilize” any Russian central bank assets held in the U.S. or by U.S. nationals.
$100 billion of Russian reserves were held in U.S. dollars as of June according to official data.
Monday’s U.S. economic data was mixed for stocks.
On the bearish side, the Feb MNI Chicago PMI fell -8.9 to a 1-1/2 year low of 56.3, weaker than expectations of 62.3.
Also, Jan retail inventories rose +1.9% m/m, above expectations of +1.0% m/m.
On the positive side, the Feb Dallas Fed manufacturing outlook level rose +12.0 to a 4-month high of 14.0, stronger than expectations of 4.3.
Also, the war in Ukraine is raising expectations that the Federal Reserve may have to adopt a gentler approach to raising interest rates in order to fight inflation, as seeking safer returns, investors have plowed into U.S. government bonds.
Consequentially, the yield of the 10-year Treasury fell 0.15 percentage points to 1.83%, its biggest drop since the omicron coronavirus variant first rattled investors.
Gold rose 0.7%.
In this context, on Wall Street, the S&P 500 fell as much as 1.6% Monday and then recouped much of that to finish 0.2% lower at 4,373.94.
The Dow Jones Industrial Average fell 0.5% to 33,892.60 and the Nasdaq composite rose 0.4% to 13,751.40, recovering from a 1.1% slide.
The Russell 2000 index of small company stocks gained 0.4% to 2,048.09.
The dollar index rose +0.121 (+0.13%), as a slump in stocks boosted the liquidity demand for the dollar.
Meantime, Asian shares mostly rose on this morning.
Global investors are hoping Ukrainians and Russians will continue to talk.
Thus, Japan’s benchmark Nikkei 225 gained 1.2% to finish at 26,844.72.
Australia’s S&P/ASX 200 surged 0.7% to 7,096.50.
Hong Kong’s Hang Seng added 0.2% to 22,761.71, while the Shanghai Composite rose nearly 0.8% to 3,488.83.
Markets were closed in South Korea for a holiday.
The Moscow Stock Exchange was closed.
The value of the Russian ruble plunged to a record low.
Early Tuesday, the ruble was down 3.2% at 104.51 to the dollar.
Deeper economic turmoil may loom if price shocks and supply-chain issues cause Russian factories to shut down due to lower demand.
On the weather side, a bit of additional rain or snow will be possible across the Northern Plains and extending through the Great Lakes Region between today and Friday, per the latest 72-hour cumulative precipitation map from NOAA.
Most of the Midwest and Plains could see seasonally wet weather between March 7 and March 13, per NOAA’s latest 8-to-14-day outlook.
Cooler-than-normal conditions will also be sweeping into the Plains and western Corn Belt during this time.
On the demand side, USDA’s weekly Export Inspections data showed 1.543 MMT of corn was shipped during the week that ended 2/24.
That was down just 34k MT from last week, but compared to 2.046 MMT during the same week last season.
Japan was the top destination, having been shipped 457k MT.
China and Mexico were also major destinations for the week’s corn shipment – at 319k and 319k MT respectively.
USDA had the season’s export at 23.187 MMT through 2/24.
That is 11.6% behind last year’s pace – compared to the WAOB’s 11.9% expected decline.
As for sorghum, exports from the weekly data release showed 146516 MT were shipped.
That was down from last week, but still up 25k MT yr/yr.
The full season’s export program reached 3.02 MMT through 2/24.
As for soybean, data showed 735,278 MT (27.02 mbu) of soybeans were shipped during the week that ended 2/24.
China was the destination for 61% of the week’s total. USDA also added 68.5k MT of exports to past reports, taking the season’s total to 40.605 MMT (1.492 bbu).
That is 73% of the WASDE forecasted total export, and 22% behind last year’s pace.
As for wheat, data showed 406,138 MT of wheat was shipped during the week that ended 2/24.
That was down from 570,859 MT last week but was 63k MT above the same week last year.
The full season’s export reached 1.585 MMT (569 mbu), or 70% of the USDA forecasted total.
MYTD shipments still trail last year’s pace by 2.66 MMT (97.7 mbu) – compared to the forecasted 182 mbu decline.
Meantime, private exporters reported to the USDA two large soybean sales, with Chinese importers having booked 136k MT of new crop and unknown destinations buying 120k MT of old crop.
In this context, corn basis bids were steady to weak across the central U.S., falling as much as 10 cents at an Indiana elevator and eroding 2 to 3 cents lower at three other Midwestern locations.
Soybean basis bids trended 6 cents higher at an Ohio elevator and 3 cents lower at an Indiana elevator while holding steady elsewhere across the Midwest.
The funds were net buyers yesterday for 325,000 lots of corn, 21,500 lots of soybeans and 28,000 lots of wheat.
From Canada, Canadian shipping week 29 wheat exports were 210.3k mt for a season total of 6.6 million mt, 60% (-4.5 million mt) less than last year.
Also, week 29 exports were below the average 279k mt of weekly exports needed to meet AAFC’s number.
As for durum, Canadian shipping week 29 exports were 5.4k mt for a season total of 1.4 million mt, 43% (-4.5 million mt) of last year’s amount.
Weekly export likely will pick up later in the year as producers sell into higher-priced deferred positions and the Lakes open in the spring.
The entirety of last week’s exports were out of Vancouver.
Meantime, new crop insurance prices are out for all provinces.
As for common wheat, in AB was $8.71/bu; in SK $8.71/bu; in MB was $9.53/bu.
As for durum, new crop insurance prices will be in AB at $10.89/bu; in SK at $11.16/bu; in MB at $10.89/bu.
This is well below posted bids and could be negative to farmers’ planting decisions compared to other crops which are more closely tied to actual market values.
From South America, Safras and Mercado estimate Brazilian soy exports to total 80.5 MMT in the CY 2022.
That is down 7% from 2021’s 86.1 MMT program.
Meantime, Brazilian consultancy Agrural reports that 44% of the country’s soybean harvest is now complete through February 24.
That’s up from 33% a week ago and well ahead of last year’s pace of 25%.
However, Agrural notes that some secondary production areas (Minas Gerais, Bahia, Piaui and Rondonia) could face some yield and quality concerns from excessive rains.
On corn, AgRural said the planting of Brazil’s second crop reached 64% of the area in the Center-South, from 53% a week earlier and 39% a year ago.
Second corn is sowed after soybeans are harvested in the same areas, accounting for 70-75% of overall annual output.
Meantime, USDA attaché posted a downward revision of the production estimate in Argentina to 41 million tonnes against 45 million estimated in the February report.
In Europe, market remain in turmoil, with a further sharp rise in grain and oilseed prices.
Euronext recorded extreme variations!
Forty per cent of global nitrogen trade originates from the Black Sea region and a prolonged conflict would impact EU most, given the intensity of farming systems, unable to maintain close to trend yields.
That would reduce yields in Europe by, say, 5pc.
Would be 8 million tonnes less production and would cut stocks-to-use ration of major exporters to an historic low of 15pc come June.
Also, in the absence of loading possibilities from Ukraine and a very marked reduction in possible flows throughout the Black Sea basin, buyers must turn to other origins, French first of all.
From North Africa, Egypt has extended by one year, to April 2023, its imported wheat moisture limit specifications, as part of a plan to diversify its sources of supply, the trade ministry said on this morning in a statement.
Moisture should not exceed of 13.5% of the weight of wheat shipments, the ministry said, adding the decision should allow the country to diversify its import origins.
The tolerance of moisture content is normally 13% in Egypt.
From South Africa, 2022 corn production is expected to tilt 11% lower this year after coming off a bumper harvest in 2021 that could be hard to duplicate given current weather trends so far.
The country’s Crop Estimates Committee currently estimates production will reach 571.9 million bushels this season.
From the Black Sea basin, Russia/Ukraine negotiations appear to have gone nowhere, and Russia continues to send troops toward major Ukrainian cities.
The war in Ukraine led to a total stoppage of loadings in Ukrainian ports, and only a few loadings in Russian ports were observed in a context of navigation that had become very dangerous throughout the Black Sea basin.
The head of the Ukrainian maritime administration said that Ukrainian ports will remain closed until the end of the Russian invasion and when the ability to provide maritime security for commercial vessels is restored.
Yesterday, Turkey closed the Bosphorus and the Dardanelles to all warships.
Russia is extremely important to fertilizer supplies, with export market shares of 27% for MOP (3rd largest share), 49% for ammonium nitrate (1st), 18% for urea (1st), 38% NPK’s (1st), 30% ammonia (1st), 14% DAP/MAP (4th), 9% for sulfur (3rd).
The fall in the Rouble will act to increase Russia’s wheat export tax as domestic prices rally via the lower currency.
The Russian grower doesn’t really benefit, and probably prefers to stay long inventory with all that is going.
That action might stem supply.
On the flip side, the Russian farm may be instructed it must sell. It is the timeline here which is the main unknown and is the most significant driver for global balances.
Meantime, spring sowing will be made very difficult in Ukraine, upsetting global balance sheets.
The Ukrainian farmer isn’t doing a lot of farming, nor has access to sprays/inputs which will unilaterally impact yields.
Also, stock carried over in Ukraine and Russia may not be available for shipment for a lot of time.
From the Middle Kingdom, China will buy 40,000 tonnes of pork for its central state reserves this week, in the first round of such stockpiling this year, China Merchandise Reserve Management Center said on Monday.
China is seeking to support hog prices after a sharp fall following the Lunar New Year holiday, when excess supply and flat demand weighed on the market.
Particularly, China will buy 19,400 tonnes of pork on Thursday, and then another 20,600 tonnes on Friday.
Hog prices in Luohe, located in major producer Henan province, fell 10% after the Lunar New Year holiday, to 12.6 yuan ($2.00) a kilogramme, with farmers in the region losing 408 yuan per pig as of last Friday.
Beijing last stockpiled pork for the reserves in 2021, after prices of pork plunged due to increased supply.
China’s sow herd by end of January, at 42.9 million heads, were at normal levels.
The figures fell 0.9% from the previous month, according to the agriculture ministry.
Meantime, Chinese auction for the sale of 126 thousand tons of imported soybean oil has ended.
100% of the declared volume was sold, the average selling price was 11,186 yuan.
($1 = 6.3072 Chinese yuan renminbi).
From the Middle East, in an attempt to provide relief to farmers, the Punjab government Saturday fixed the minimum wheat support price at Rs2,200 per 40-kg.
Meantime, Pakistani Prime Minister Imran Khan announced that his country will import about 2mmt of wheat from Russia and buy natural gas as well under bilateral agreements two sides signed last week during his official trip to Moscow.
From South East Asia, India may stand to benefit from the current turmoil in the Black Sea region.
India, which exported 6.12 million tonnes of wheat in 2021 against 1.12 million tonnes a year earlier, is likely to sell 4 million tonnes of the grain in the first half of 2022.
There are reports of increased purchase inquiries after Russia invaded Ukraine last week.
India’s typical wheat buyers include the Philippines, Sri Lanka, South Korea, Bangladesh and the United Arab Emirates.
“We haven’t seen such interest in Indian wheat, at least not in our recent memory” traders said.
Indian suppliers, who have been exporting wheat at $305 to $310 a tonne free on board, could sell at $330 a tonne, said trader Rajesh Paharia Jain at Unicorp Pvt Ltd.
From Australia, the Aussie dollar has been very firm in the last days when many would expect that the world would be running to the safe haven of the USD and pushing AUD rates down.
Australia likely will benefit from picking up export market share of not just agricultural commodities but also energy and minerals exports, even if Australian shipping stem is already at maximum capacity in the first half year and cannot bring more supply to market.
Also, the bid in the AUD has gained additional impetus from the likely downward pressure on the EU economy.
Meantime, Australian markets yesterday tried to muster.
Delivered bids nominally firmed but bid offer spreads mostly remained wide, execution pressure remaining the focus.
ASX Jan 23 wheat futures saw active trade and settled $5/t lower at $390/t.
Canola bids followed offshore lower.
Meantime, AUSTRALIA’S commodity forecaster ABARES has lifted its forecast for the sorghum crop now being harvested to 2.6 million tonnes (Mt) in its latest Australian Crop Report released today.
This is the third-largest sorghum crop on record, and is up from 2Mt forecast in its previous crop report released in December.
The national body has also lifted its forecast for the record 2021-22 (Oct-Sep) wheat crop to 36.3Mt from 34.4Mt seen previously, and canola is to 6.4Mt, up from 5.7Mt.
The 2021-22 barley crop is now also seen at a record at 13.7Mt, up from 13.3Mt seen late last year.
On the weather side, flooding in Queensland and northern NSW continues to put a strain on the execution program with limited freight access back into Brisbane ports and domestic markets.
Heavy coastal downpours are forecast over the coming days.
The BOM 8-day predicts up to 25mm rain through southern NSW and Victoria which is positive for the 2022/23 seasonal planting outlook.
On the international trade scene, Egypt once again canceled its call for tenders, judging the prices too high for their liking.
Gasc only received two French offers and one American.
The French offer was the cheapest at 429.22 usd/t delivered Egypt.
The best offer came from Soufflet at a price of 389.92 usd/fob to which 39.30 usd/t freight had to be added to obtain the price of 429.22 usd/t C&F.
The American offer was at $447 FOB, that meant $517 C&F.
In its last wheat purchase on Feb.17, GASC bought wheat at $338.55 a tonne C&F after receiving about 20 offers from trading houses.
Algeria is officially buying 50,000 t of durum wheat, although the country often ends up purchasing significantly more than the nominal amount listed.
The tender closes on Wednesday, and the grain is for shipment in April.
Japan’s Ministry of Agriculture, Forestry and Fisheries is seeking to buy 83,136 tonnes of food-quality wheat from the United States in regular tenders that will close on Wednesday.
Particularly Japan is seeking 17,080 t of U.S.
Western White, 8,950 t U.S. Hard Red Winter, 21,732 t of U.S. Western White, 11,300 t of U.S. Hard Red Winter, 8,475 t of U.S. Hard Red Winter, 15,599 t of U.S. Dark Northern Spring (protein minimum 14.0 pct).
That’s all.
To all of you I wish you a good day.
Author: Sandro F. Puglisi
