US farm marktes had all eyes on wheat prices once again, yesterday.
However it was soybean prices that quietly stole the spotlight by the close, capturing double-digit gains and rising 1.82%.
Soymeal was up a sharp 3.18%, with in-delivery March contracts jumping $22/ton higher.
Soy oil prices closed 2.06% up, and went to home with triple digit gains.
Corn prices made modest inroads, ending up 0.3% by the close.
Wheat prices, meantime, took a rollercoaster ride, as traders struggled to digest a decree from Russia President Vladimir Putin that blocks all exports to non Russian Federation nations, in responding of announcement from President Biden that U.S. is banning gas and oil from Russia.
Separately, Ukraine announced intentions to issue export certificates for private firms.
However, despite the afternoon rally, prices were moderatly lower by the close, as current price levels are prompting many producers to set sales, while some traders are squarring their positions ahead of tonight’s USDA report.
Thus, May SRW prices were down 0.58%.
HRW wheat prices were 4.16% lower after the bell rang.
Spring wheat closed down 4.47%.
In energy market, oil prices firmed higher again on this morning.
A potential supply shock due the United States ban of Russian oil imports, is doing rising concerns.
Britain said it would phase out Russian oil imports through the end of 2022.
Overnight the EU said it would slash the import of Russian natural gas by two-thirds over the course of this year.
Shell said it would stop buying Russian crude and phase out its involvement in all Russian hydrocarbons, becoming one of the first major Western oil companies to abandon Russia entirely.
Russian Deputy Prime Minister Alexander Novak, meantime, indicated Russia could retaliate by turning off Nord Stream 1, which supplies natural gas to Europe.
Thus, Brent crude futures were up $2.65, or 2.07%, at $130.63 a barrel at 07:20 GMT, after jumping 3.9% the previous day.
U.S. West Texas Intermediate (WTI) crude futures were up $2.21, or 1.79%, at $125.91 a barrel, after also surging 3.6% on Tuesday.
Oil prices have surged more than 30% since Russia, launched what it called a “special operation” in Ukraine.
Oil prices jumped on Monday to their highest levels since July 2008, with Brent hitting $139.13 a barrel and WTI $130.50.
Meanwhile, Goldman Sachs estimated that more than half of Russian oil exported from ports remained unsold, while JP Morgan estimated around 70% of Russian seaborne oil was struggling to find buyers.
On the other hand, U.S. crude stocks rose by 2.8 million barrels for the week ended March 4, against analysts’ forecast of a drop, but gasoline and distillate stocks fell, according to market sources citing American Petroleum Institute figures on Tuesday.
In the freight market, the Baltic Exchange’s dry bulk sea freight index rose to its highest level in 2-1/2 months on Tuesday, helped by higher rates across its vessel segments.
The overall index, which factors in rates for capesize, panamax, supramax and handysize shipping vessels, indeed, rose 117 points to 2,352 points, its highest since Dec. 20.
Particularly, the capesize index gained 147 points to 1,896 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, increased $1,213 to $15,721.
The panamax index was up 140 points at 3,041 points, its highest since Dec. 10.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, increased $1,254 to $27,367.
The supramax index rose 93 points, its highest in more than four months to 2,733 points.
In equity markets, U.S. stock indexes Tuesday fell to 1-1/2 lows and closed moderately lower.
Soaring in commodity prices boosted inflation expectations and sent the 10-year U.S. breakeven inflation expectations rate up to a record high.
The U.S. announced that it would ban all Russian energy imports, including crude oil, liquified natural gas, and coal.
That could send crude prices soaring and undercut economic growth.
Monday’s U.S. economic data was bearish for stocks after the U.S. Jan trade deficit expanded to a record -$89.7 billion (data from 1992), wider than expectations of -$87.3 billion.
The larger trade deficit indicated a weaker U.S. GDP report.
Bloomberg reported that the European Union would unveil a plan this week to jointly issue bonds to finance energy and defense spending, to cope with the fallout from Russia’s invasion of Ukraine.
The European Central Bank (ECB), is holding its monthly meeting tomorrow.
The combination of high inflation and the risk of a decline in economic growth following the war in Ukraine will make any decision on monetary policy difficult.
Russia said Tuesday it would keep its stock market shut indefinitely.
The trading halt, which began Feb 28, is already the longest the Russian stock market has ever been closed.
On Tuesday, the offshore climbed to 128.67 rubles/USD, moderately above Monday’s record low of 177.26 rubles/USD.
In currency markets, the dollar advanced to 115.80 yen from Tuesday’s 115.74 yen.
The euro gained to $1.0927 from $1.0908.
In this context, on Wall street, the S&P 500 fell to 4,170.70 for its fourth straight daily decline.
It is now 13.1% below its latest record high.
The Dow Jones Industrial Average lost 0.6% to 32,632.64.
The Nasdaq composite retreated 0.3% to 12,795.55.
On Monday, it closed 20% below its record high.
Meantime, most Asian stock markets rebounded on this morning, while Chinese shares sank after inflation edged higher.
Particularly, the Shanghai Composite Index tumbled 1.1% to 3,258.17 after China’s government reported consumer prices rose 0.6% in February from the previous month and producer prices gained 0.5%.
The Hang Seng in Hong Kong slid 2.2% to 20,311.23.
The Nikkei 225 in Tokyo gained 0.8% to 24,982.81.
Sydney’s S&P-ASX 200 climbed 1.2% to 7,064.10.
India’s Sensex opened up 1% at 53,947.58.
New Zealand and Southeast Asia markets advanced.
South Korean markets were closed for a presidential election.
On the weather side, some more wet weather is moving through the Midwest and Plains later this week.
Most areas outside of the Dakotas will see at least some measurable moisture between today and Saturday, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts near-normal temperatures for much of the Corn Belt between March 15 and March 21, with seasonally wet weather likely for the upper Midwest and eastern Corn Belt.
On the supply side, corn sowing in the USA is beginning with, in particular, about 16% of sowing in Texas.
Meantime, Senate Agriculture Committee ranking member John Boozman, has called for a deadline delay for the Conservation Reserve Program this year.
In a letter to Vilsack, Boozman stresses flexibility should be a “top priority” so that “millions of acres of cropland and pasture that would have otherwise remained idle” can be farmed to “address both inflation and food security concerns.”
On the demand side, private exporters reported to the USDA, having sold 193,000 metric tons of hard red spring wheat for delivery to the Philippines during the 2022/2023 marketing year;
Also reported sales of 132,000 metric tons of soybeans for delivery to China during 2022/2023 marketing year and sales of 126,000 metric tons of soybeans for delivery to unknown destinations during the 2021/2022 marketing year.
Official January Census export data was delayed due to technical issues.
In this context, corn basis bids were highly variable, after jumping as much as 30 cents higher at an Illinois processor while tumbling as much as 13 cents lower at an Ohio elevator.
Soybean basis bids showed some volatility in both directions, after firming as much as 20 cents at an Illinois processor and sliding as much as 14 cents lower at an Ohio elevator.
The funds were net buyers yesterday for 13,500 lots of soybeans and 2,500 lots of corn. On the other hand, they were net sellers for 14,000 lots of wheat.
From South America, in the first days of March, Brazil closed export deals for at least half a million tonnes of corn, a volume corresponding to February’s entire estimated corn exports.
Brazil’s higher corn export sales pose a problem to domestic corn buyers such as meatpackers, which are reeling from rising feed costs.
StoneX, estimates Brazil will export 40 million tonnes of corn in the 2021/2022 season, almost twice the amount from last year.
Forecasts estimate Brazil’s total corn production at 111-112 million tonnes of corn this season.
Also, T&F’s Pacheco said a deal to export 100,000 tonnes of wheat from Rio Grande do Sul was closed last week, compromising internal supplies and flour mill margins.
With that, T&F raised its estimate for Brazil’s 2021/2022 wheat exports to 2.7 million tonnes from 2.5 million tonnes after strong sales between December and February.
To note, that Brazil is a net wheat importer, getting most of its supplies from Argentina.
However, the price of Brazil’s wheat was very competitive, thanks to the high dollar and weak domestic demand, while demand for exports grew.
For the safrinha corn, it is estimated that this second corn crop is now 81% planted, which is 27% ahead of the pace last year.
The first crop is now 45% harvested.
Meantime, Dr. Cordonnier kept his estimate for the total corn crop unchanged at 112 MMT.
Soybean harvest is estimated to be 55% complete, a full 20% ahead of last year.
In Argentina, the first planted corn is now estimated to be 51% mature and 10% harvested.
45% of the early planted beans are filling pods, with 9% mature.
Dr. Cordonnier left the estimate for these crops unchanged at 49 MMT and 39 MMT, respectively, for corn and beans.
Meantime, according to the Minister of Agriculture, Argentina would have already sold 16.6 million tons of corn in the 2021/2022 campaign as of March 2.
According to the Ministry, the country recorded a 687,500 tonnes of corn sold between Feb. 23 and March 2, two times the volume registered in the same period one year ago.
For the 2021/22 soybean cycle, Argentine farmers have sold 9 million tonnes of the oilseed.
In Europe, yesterday we have seen a sharp decline in wheat prices on Euronext.
There are some difficulties for importers to position themselves at such price levels.
The session, indeed, was marked by several tender cancellations (see below).
The uncertainties about Ukraine’s ability to carry out field work under current conditions, however, limit the potential for a fall in prices, including for the next campaign.
Another determining factor is the surge in fertilizer prices, with in particular the risk of a supply disruption.
Rapeseed prices, in contrast, are reaching historic levels, as are those of canola, in the context of a crisis in the sunflower market and a rise in biofuels.
In this context, according to the CZAW, a sales organization for 3000 farmers and horticulturists in the south of the Netherlands, grain production at the affiliated farmers will increase by 5 to 10 percent, this season.
At Agrifirm (ten thousand affiliated farmers and horticulturists) it is also expected that more farmers will sow spring wheat in the coming days and weeks.
In terms of surface area, grains are one of the most important crops for Dutch farmers.
180,000 hectares, or 34 percent of the Dutch arable acreage, is full, according to figures from the CBS from 2021.
From North Africa, Egypt does not need additional wheat shipments in short- or medium-term as the supply situation is stable, supply minister Ali Moselhy said on Tuesday.
Egypt is often the world’s top importer of wheat.
Russia’s invasion of Ukraine has left Egypt’s wheat import prospects in turmoil.
Egypt currently has four and a half months in reserves of wheat, Alaa Ezz, Secretary General of the Federation of Chambers of Commerce, said.
Also, Egypt have three months of alternative reserves in corn, he added.
Egypt imports half of its food from abroad, therefore, President Abdel Fattah al-Sisi instructed to increase storage capacity and the Egyptian strategic stockpile of goods.
On this wake, new central and subsidiary silos were developed, which led to the expansion of storage capacity of wheat.
In contrast, there is a problem lies in edible oil because Egypt depended on Ukraine to import it, although Egypt had about five and a half months of reserves.
Egypt has a balance of about 40,000 tons of light oils and 80,000 tons of heavy oils.
From South Africa, the country is primed to benefit from Ukraine war it through maize exports, experts said on Tuesday.
South Africa, indeed, is a net exporter of corn, while imports about 40% of its wheat.
Last year, the country harvested 16.315 million tonnes of maize, its second-biggest crop on record.
Official data released last week forecasts an 11% decline in output this year, but the projected 14.528 million tonnes is still in excess of domesticc consumption.
For wheat, data from Grain SA shows South Africa had imported 40% of its import requirements by Feb. 25 and none of it came from Russia or Ukraine.
South Africa imported wheat from Lithuania, Argentina, Poland, Australia, Latvia and the United States.
From the Black Sea basin, planting campaign will start in those regions of Ukraine, where it is possible taking into account the military activity, declared the Minister of Agrarian Policy and Food, Roman Leschenko.
Winter weather was favorable for crops in Ukraine, informed the National Academy of Agrarian Science.
Higher temperatures, absence of long-lasting frosts and moderate soil moisture allowed winter grain crops to pass through winter successfully and even to develop slightly during the periods of temperatures above zero.
The conditions of most winter crops are good and satisfactory.
However, if the war is not stopped and Ukraine is not able to plant, the country will not export 50 mln tonnes of grain, said Alex Lissitsa general director of IMC.
In 2021, Ukrainian farmers harvested more than 160 mln tonnes of grain that was the record volume.
However, today, it is difficult to give even rough forecast for planted areas.
Likely Ukraine will be able to plant about 30% of planned area.
50% is the most optimistic scenario.
Initially, the farmers were aimed to plant 21 mln ha.
Most of agrarians from regions with quite calm situation informed that they mainly had all needed resources for planting campaign.
However, they are providing some part of the fuel they accumulated for army’s needs.
One more problem is the disruption of supply chain of crop protection products and seeds.
Farmers cannot receive products they paid for.
Generally, agrarians say that they are ready to start field works as soon as it will be possible physically, adding that the planting campaign will not be performed fully.
Meantime, Ukraine’s government has banned exports of rye, barley, buckwheat, millet, sugar, salt, and meat until the end of this year, according to a cabinet resolution published on this morning.
Meantime, Moldova’s Association Forța Fermierilor expressed disagreement with the decision to impose a ban on export of corn and considers it as an economic shock for farmers.
Farmers have send a letter to the government pointing that the decision was made spontaneously and without consulting with agrarians.
Moldova harvested record 2.6 mln tonnes of corn.
That does not include corn harvested in the smallest farms with area less than 10 ha.
About 10% of the corn area was harvested in January-February due to the lack of storing facilities.
Moldova have 3 mln tonnes of corn stocks, including last year’s volumes.
The annual domestic consumption is 600 thsd tonnes, as the livestock number decreased significantly, and the annual export is about 250-300 thsd tonnes.
Thus, farmers are sure that “there is no threat to the food security of Moldova and no need to ban corn export”.
Consequentially, farmer are urging to chancel the export restriction or to impose export quota in the volume of 250 thsd tonnes for March.
From the Middle East, Iraq’s strategic wheat reserves are sufficient until April 2022, which is when the local procurement season starts, the country’s trade minister Alaa al-Jubouri said on Wednesday in remarks carried by Al-Sabah newspaper.
Iraq has recevied offers from American and German companies to purchase wheat that the government is currently reviewing, al-Jubouri added.
From South East Asia, according to Malaysian Biodiesel Association, Malaysia will fully implement the B20 biofuel plan by the end of the year.
Sources expect an increase in biodiesel consumption of about 14% to 800k MT.
The association forecasts lighter biodiesel exports and an increase of 200k MT in production to 250k MT and 1.2 MMT respectively.
Meantime, India has signed contracts to export about 500,000 tonnes of wheat in recent days.
After five consecutive record annual crops, India has large wheat inventories, and traders are keen to capitalise on any export opportunity.
A high domestic price guaranteed by the government tends to deter exports unless world prices are high.
“The surge in global prices has made it easier for Indian suppliers to meet the rising demand for wheat”.
India guarantees producers about $257 a tonne for domestic sales, while benchmark European wheat jumped above 400 euros ($435) on Monday and benchmark wheat prices in Chicago settled at their highest in 14 years.
“Most suppliers have signed these deals at around $340 a tonne free on board (FOB) to $350 a tonne,” said trader Rajesh Paharia Jain at Unicorp Pvt Ltd.
Traders earlier sold wheat at $305 to $310 a tonne FOB.
India is set to export a record 7 million tonnes of wheat this year.
An Indian government official, who declined to be named, said New Delhi was “supportive of wheat exports and will facilitate” shipments by private players.
($1 = 0.9189 euros).
From Australia, floods have devastated Australia’s east coast and will be declared a national emergency, Prime Minister Scott Morrison said on Wednesday, as authorities look to deploy aid and urgent supplies to the worst-hit areas.
Australia’s east coast summer has been dominated by the La Nina weather phenomenon, typically associated with greater rainfall, with most rivers at near capacity even before the latest drenching.
Sydney has received nearly 900 mm (35 inches) of rain so far in 2022, or about 80% of its annual rainfall, official data showed, the wettest start to a year since records began.
Meantime, firmness in local markets continued yesterday, as wheat gained another $5-6/t, and barley rose $5-10 along the east coast and in South Australia.
Western Australian free-in-store barley was relatively unchanged, and canola bids bounced back up to $945/t east coast track.
Viterra released its latest monthly receival report, with SA’s big bulk handler stating a further 37,500t in total of wheat, barley and pulses had been delivered.
On the other hand, Australia exported 73,647 tonnes of malting barley, 549,451t of feed barley and 25,517t of sorghum in January, according to the latest export data from the Australian Bureau of Statistics (ABS).
While the malting figure is almost four times the 18,559t shipped in December, the feed barley and sorghum shipments were down 41 per cent from 938,295t and 62pc from 73,781t respectively shipped in December.
Vietnam was the biggest destination for January-shipped malting at 33,381t, and was followed closely by Mexico on 33,000t.
On feed barley, Saudi Arabia on 229,105t and Jordan on 126,000t were the biggest destinations by far, with the UAE on 57,829t in third place.
China on 23,330t accounted for 91pc of Australian sorghum exported in January.
According to Flexi Grain pool manager, January’s barley exports were around 330,000t lower than the December total, and well below last year’s January-to-May average export pace.
On the feed side, Middle East was unchanged month on month, while Asian demand dropped like a stone, down 350,000t to almost nothing.
On the international trade scene, Algeria has extended its tender by one day in order to facilitate offers in the current context.
Leading South Korean animal feedmaker Nonghyup Feed Inc. (NOFI) is believed to have rejected all offers and made no purchase in an international tender for up to 130,000 tonnes of animal feed wheat which closed on Tuesday.
Prices were regarded as too high.
The wheat in NOFI’s tender is sought in two consignments of 45,000 to 65,000 tonnes.
Wheat sourced from the Black Sea region was among origins excluded from the tender.
The first consignment was sought for arrival in South Korea between May 1 and June 30 with the seller free to offer shipment options in this period from the United States Pacific Northwest coast, U.S. Gulf, Canada, Australia, South America, India or South Africa.
The lowest price offered for the first consignment was said to be $428.86 a tonne c&f.
The second shipment was sought for arrival around July 15 with a series of fixed shipment periods.
The lowest price offered for the second consignment was said to be $435.00 a tonne c&f.
NOFI also bought about 50,000 tonnes of soymeal in a separate tender on Tuesday.
Tunisia’s ODC cancelled yesterday both tenders for milling wheat and barley, as deemed that the prices were too high.
Wheat prices were $527.4 and $500.25 C&F, offered respectively by Viterra (25.000t) and Cargill (25.000 t).
Barley prices ranged between $495 and $508,69 C&F, offered by Viterra (100.000t) and Casillo (25.000 t)
A Ukrainian ship loaded with 11,000 tonnes of wheat has arrived at the port of Tripoli in northern Lebanon on Tuesday, the state news agency NNA reported.
The Golden Bird ship has started unloading its cargo, the agency quoted the port director Ahmed Tamer as saying, adding that another Ukrainian wheat ship, Princess Mariam, had unloaded a cargo of 7,000 tonnes of wheat in Tripoli port on Feb. 28.
Princess Mariam, which had arrived from Ukraine’s Mariupol port, will return to Tripoli with a new wheat cargo, Tamer added without setting a date for its return.
Both ships left Ukraine shortly before the start of war, Tamer told NNA on Feb. 28.
An economy ministry official told Reuters last month that two wheat shipments to Lebanon that were being loaded in Ukraine had been delayed due to the war.
Lebanon has one month’s wheat reserves at most and is seeking import agreements from various countries, Economy Minister Amin Salam told Reuters on Feb. 25, amid supply fears in the market due to the Ukraine crisis.
That’s all.
To all of you I wish you a good day.
Author: Sandro F. Puglisi
