US farm markets were mixed but mostly higher during the end week session.
Markets is trying to come to grips with reality, but it is really difficult to understand what’s really going on.
Thus volatility continued along all the week, to fed by political, economic and technical issues.
Once again, our thoughts go first of all to the civilian population of those places, which most of all are paying the price of this war.
Thus, we hope that this conflict can immediately cease.
Well, let’s move on to our usual “Grain & Prices Weekly Report”.
At the end of this week, all grain and oilseeds went home higher from prior week, with exception of wheat, which although bounces on Friday, it only limited weekly losses.
Wheat contracts, indeed, sold off hard this week.
Chicago was down 8.5% for the week.
KC HRW was down 10.3%.
MPLS tagged along for the ride, losing 6.7%.
Corn prices ignored the bearish influences of the wheat market and posted another gain this week, up 8.25 cents or 1.1%.
Soybean was up 0.9% for the week.
Soybean meal shot up $16.70/ton or 3.6%.
Soy oil rose 4.4% to new life of contract highs during the week.
Going inside the numbers, CBOT corn futures were up 8.25 cents/bu for the week to close at $7.63/bu.
CBOT soybean futures were up 15.5 cents, closing at $16.76/bu.
Soymeal rose by $16,7/smt at $477.10 smt.
Soy oil soared by $3.23 cents at $76.03.
May CBOT soft red winter (SRW) futures were down $1.025 to close at $11.07/bu.
May KCBT hard red winter (HRW) futures were down $1.253 to end at $10.89/bu.
May MGE hard red spring (HRS) futures fell 76.8 cents to close at $10.70/bu.
Meantime, as of March 10, 2022, US corn 3YC (Gulf) was at $371/mt (up $18/mt from last week).
US soybean 2Y (Gulf) quoted at $680/mt (up $16/mt from last week).
USDA’s National Ethanol report showed corn oil prices were another 425 points higher to between 81.50 and 85.14 cents/lb.
That compares to 77.50 to 80.50 cents seen regionally last week.
DDGS FOB prices were also higher, with NOLA quotes from $350 LW to $375 and PNW $35 higher to $355/ton.
Past week DDGS FOB export quotes were $300 – $315/ton in NOLA and $320 in the PNW.
Ethanol cash prices were between $2.28 MI to $2.53WI/gal EC.
Stronger compared to prior week when ranged between $2.33 NB to $2.49WI/gal IO.
Meanwhile gasoline futures ended the week at $3.2682, that was down from $3.4257/gal posted last week.
USDA’s weekly biofuels report showed B100 prices averaged $6.39/gal.
That was down last week’s $6.45/gal average price.
USDA’s weekly Crush report showed the estimated processing value of soybeans was $20.48/bu on $16.71 cash beans.
That compared to $19.60/bu reported prior week on $16.56 beans.
As for wheat, US wheat No 2 Hard Red Winter (HRW) was valued at $471/mt (down $34/mt from last week).
US wheat No 2 Soft Red Winter (SRW) was at $453/mt (down $19/mt from last week).
Northern Durum continue to be offered from the Great Lakes for April/May 2022 at at $595/MT ($16.19/bu) (unchanged from prior week).
Meantime, corn basis bids firmed 2 cents at an Ohio elevator and an Illinois river terminal while holding steady elsewhere across the central U.S. on Friday.
Soybean basis bids firmed 3 cents at an Indiana processor, while fading 5 cents lower at two other Midwestern locations and holding steady elsewhere across the central U.S..
As for wheat, basis this week were mixed in both the Gulf and Pacific Northwest (PNW).
Wheat traders continue to emphasize that market volatility is creating poor definition in the cash market.
Farmers want to sell wheat they still hold on the rally in futures prices.
However, the risk associated with prices and volatility is deflecting demand.
In energy market, oil prices settled higher on Friday but posted their steepest weekly decline since November.
The Russia-Ukraine conflict pushed the United States and many Western oil firms to stop buying Russian oil.
Both benchmarks hit their highest levels since 2008 this week, then pulled back sharply as some producing countries signalled they may boost supply.
Particularly, there was talk of potential supply additions from Iran, Venezuela and the United Arab Emirates.
Venezuela’s oil output could rise by at least 400,000 barrels per day (bpd) if the United States authorizes requests by state-run PDVSA’s partners to trade Venezuelan crude, the country’s petroleum chamber said on Friday.
The increase would allow the OPEC member’s oil production, which in January averaged 755,000 bpd according to official figures, approach some 1.2 million bpd.
Venezuela could ultimately add 1 million bpd of production, depending on capital injections allowed and trust by the parties in the dialogue.
However, experts have been less optimistic on the forecasts, as an urgent need for drilling rigs and massive capital is putting a ceiling on any increase of production, which is reaching capacity.
Years of underinvestment, mismanagement and, more recently, U.S. sanctions on PDVSA have hit Venezuela’s oil production, which in the late 90s reached some 3.7 million bpd.
U.S. rig data from energy services firm Baker Hughes Co showed drillers added 13 oil and natural gas rigs, bringing the total to 663, the ninth increase in 10 weeks.
The data is an early indicator of future output.
However, in the near term, supply gaps are unlikely to be filled by extra output from members of the OPEC+, given Russia is part of the grouping.
Meantime, on Friday, supply concerns grew again when talks to revive the 2015 Iran nuclear deal faced the threat of collapse after a last-minute Russian demand forced world powers to pause negotiations.
U.S. President Joe Biden said the G7 industrialized nations will revoke Russia’s “most favored nation” trade status, and announced a U.S. ban on Russian seafood, alcohol and diamonds.
Meantime, Russia urged India to deepen its investments in the country’s oil and gas sector, and is keen on expanding the sales networks of Russian companies in Asia’s third-largest economy.
“Russia’s oil and petroleum product exports to India have approached $1 billion, and there are clear opportunities to increase this figure,” said Russia’s Deputy Prime Minister Alexander Novak, according to a statement shared by Russia’s embassy in India late on Friday.
“We are interested in further attracting Indian investment to the Russian oil and gas sector and expanding Russian companies’ sales networks in India,” Novak told Indian Minister of Petroleum and Natural Gas Hardeep Singh Puri.
Indian state-run companies hold stakes in Russian oil and gas fields, while Russian entities including Rosneft own a majority stake in Indian refiner Nayara Energy.
Some Indian companies also buy Russian oil.
Russia expects both countries to continue cooperation on civilian nuclear power, including building new units at a nuclear power plant in the south Indian town of Kudankulam, Novak said.
In this context, Brent crude futures rose $3.34, or 3.1%, on Friday, settling at $112.67 a barrel, after hitting a session low of $107.13.
U.S. West Texas Intermediate (WTI) crude futures rose $3.31, or 3.1%, to settle at $109.33 a barrel, off the session low of $104.48.
Brent, which rose over 20% last week, was down 4.8% this week after hitting $139.13 on Monday.
U.S. crude recorded a weekly drop of 5.7% after touching a high of $130.50 on Monday.
Both contracts last touched these price peaks in 2008.
Meantime, Russian natural gas company Gazprom said on Saturday it was continuing gas shipments via Ukraine at an unchanged volume of 109.5 million cubic metres a day.
In the freight market, the Baltic Exchange’s dry bulk sea freight index rose on Friday, logging its best week since the week ended on Feb. 11, on higher rates across capesize segment.
The overall index, which factors in rates for capesize, panamax, supramax and handysize shipping vessels, indeed, rose 14 points to 2,718 points.
The index was up by almost 26.5% this week.
The capesize index gained 63 points on the session and 63.66% for the week to close at 2,676 points, registering so its best weekly gain since mid-2020.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, increased $527 to $22,195.
The panamax index was down 46 points on the end week session at 3,187 points, although the index was up this week by 14.43%.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, decreased $412 to $28,685.
The supramax index rose 16 points on the session, and up 13.7% for the week, to 2,939 points.
In equity markets, U.S. stock indexes Friday gave up early gains and closed lower.
Stocks jumped early Friday morning after market sentiment temporarily improved when Russian President Putin said he saw positive developments in his country’s talks with Ukraine.
However, stocks gave up their advance and sold off into the close after Ukrainian Foreign Minister Kuleba said that there was “zero progress” on talks with Russia.
Weakness in technology stocks also weighed on the overall market after the 10-year T-note yield climbed to a 3-week high.
In addition, stocks were undercut after the University of Michigan’s March U.S. consumer sentiment index fell more than expected to a 10-1/2 year low.
The University of Michigan’s March U.S. consumer sentiment index, indeed, fell -3.1 to a 10-1/2 year low of 59.7, weaker than expectations of 61.0.
Meantime, Goldman Sachs cut its U.S. GDP forecast to 1.75% from 2.0%.
In this context, world shares slid on Friday.
MSCI’s gauge of stocks across the globe was down 1.85%.
Europe’s benchmark STOXX 600 index closed 0.95% up, making this the first weekly gain after three consecutive weeks of losses.
Emerging market stocks lost 1.55%.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 1.67% lower, while Japan’s Nikkei lost 2.05%.
On Wall Street, the Nasdaq and the S&P 500 fell, weighed down by tech and growth stocks.
The Dow Jones Industrial Average fell 229.88 points, or 0.69%, to 32,944.19, the S&P 500 lost 55.21 points, or 1.30%, to 4,204.31 and the Nasdaq Composite dropped 286.15 points, or 2.18%, to 12,843.81.
The Russell 2000 index of smaller companies fell 32 points, or 1.6%, to 1,979.67.
For the week, the Dow Jones fell 2%, the S&P 500 lost 2.87%, the Nasdaq Composite, dropped by 3.53%.
In the currency markets, the dollar rose, notching a five-year high against the safe-haven yen, while commodity-linked currencies slumped.
The Japanese yen, indeed, was down 0.99% at 117.28 yen.
The euro was last down 0.65% to $1.0912.
The dollar index was last up 0.64% against a basket of six global peers at 99.183.
The index posted a 0.52% increase for the week, following last week’s 2.12% rise, which was its largest weekly percentage gain since April 2020.
On the weather side, weather this week varied across much of the wheat growing region.
HRW region conditions remain dry.
In Oklahoma and Texas areas of severe drought expanded to exceptional drought especially in the western panhandles of both states.
High Plains precipitation was mixed with some snow and rain in Kansas, Nebraska, and South Dakota.
In eastern Kansas and Nebraska, temperatures were above normal and severe drought expanded in the north central part of Kansas.
In the western U.S., cooler temperatures and wide-ranging precipitation provided general improvements to conditions in Montana, Idaho, Wyoming, Colorado, and Oregon.
Some additional rain and snow is possible for parts of the Midwest and Plains between today and Tuesday, with the Ohio River Valley likely to get the most moisture, per the latest 72-hour cumulative precipitation map from NOAA.
Seasonally wet weather should continue across the eastern Corn Belt between March 18 and March 24, per NOAA’s 8-to-14-day outlook.
Meantime, the National Agriculture Statistics Service (NASS) updated Field Crops Reports this week.
In Kanas, winter wheat conditions were rated 23% good, 37% fair, and 39% poor to very poor.
Topsoil moisture was rated 45% very short and only 18% adequate.
In Oklahoma, conditions were rated 15% good to excellent, 28% fair and 57% poor to very poor.
Topsoil moisture there is 30% adequate and 36% very short, a 9-point improvement from last week.
On the demand side, per the latest data from the U.S. Energy Information Administration, ethanol production saw moderate improvements this past week, up 31k bpd and reaching a daily average of 1.028 million barrels for the week ending March 4.
That was the highest weekly output since late January.
Ethanol stocks firmed 1.4% or 338k barrels to 25.271 million, from a week ago and are 14.5% higher year-over-year.
Thursday’s Export Sales report indicated excellent corn bookings in the week ending March 3, at 2.144 million metric tonnes.
That was a marketing year high, and bulls reacted accordingly.
A big chunk of that was for unknown destinations (800,600 MT). New crop sales totaled only 22,900 MT.
The US old crop corn marketing year export commitments (shipped plus outstanding sales) are now at 50.202 MMT.
That is down 16% vs. last year at this time.
They are 79% of the full year WASDE forecast, still ahead of the average pace of 78%.
Accumulated exports are 43% of the updated WASDE full year projection.
As for soybeans report showed a strong 2.204 MMT of old crop soybeans booked during the week of 3/3, with 895,000 MT for new crop.
US soybean exporters have either sold or shipped 52.371 MMT of the 21/22 crop, 13% smaller than last year’s record buying pace.
However, total export commitments are 92% of the USDA full year estimate, outpacing the 88% average for this date.
As for wheat, data indicated 307,200 t, up about 2% from the previous week.
That helped to push export commitments to 18.829 MMT, or 86% of USDA’s full year forecast, still lagging the average pace by 10%.
Shipments to date are still 19% smaller than a year ago, at 14.715 MMT.
That is 67% of the USDA projection vs the average of 72% by now.
Meantime, private exporters on Friday reported to the USDA sales for 128,900 metric tons of corn for delivery to unknown destinations during the 2021/2022 marketing year, and sales for 264,000 metric tons of soybeans for delivery to China during the 2022/2023 marketing year.
On the other hand the weekly Commitment of Traders report showed managed money spec funds were net long 368,784 contracts in corn as of 3/8.
That was up 19,562 contracts from the week prior and was a 6-week high.
Commercials were 14,576 contracts less net short – to 731,987 contracts.
As for soybean, report indicated spec traders in soybean futures and options trimming 4,007 contracts from their net long in a week.
That took the net position to long 171,714 contracts.
Commercial bean traders, meantime, were 3,126 contracts less net short to 302,167 on long hedges.
For the products, CFTC reported spec trader short covering in meal and soy oil.
For soy oil, managed money open interest dropped 11k contracts (11%) for a 4,238 contract stronger net long of 85,669 contracts.
As for wheat, the report showed spec funds in CBT wheat futures and options net long 20,048 contracts as of March 8.
They flipped from net short to net long, with a 27,244 contract shift in the net position for the week.
In KC wheat, they cut 775 contracts from their net long position in the week ending Tuesday, taking it to 44,706 contracts.
Spring wheat specs were 12,914 contracts net long on 3/8.
That was 2,312 contracts more wk/wk on reduced OI.
In Canada, as of March 7, 2022, Canadian wheat prices for FOB delivery West Coast were (Cdn$/mt):
– for the N1 class CWRS 13.5% – $587.34 per tonne, up C$65.76/t from prior week;
– for the N2 class CWRS 13.0% – $575.12/t, up C$60.53 wow;
– for the N3 CWRS – $633.86/t, up C$90.37 from prior week.
As of March 7, 2022, for the N1 CWAD 13% (durum wheat first class) deferred average prices for delivery in April-May ’22 were at C$551.16 unchanged week on week.
Meanwhile, export basis West Coast & Central SK eased from C$ 203.48 to 209.56 per tonne, as delivered FOB price Great Lakes was posted at C$ 760.72, up C$6.08 from prior week.
Meanwhile, as of March 9, 2022, durum wheat (CWAD) FOB price delivered in St. Lawrence, not quoted.
As of March 11, 2022, for the N1 CWAD 13% (durum wheat first class), average street prices in REGIONAL ZONES were at C$574.63 per tonne, up C$1.8 from prior week.
(1USD=Cnd$1.2767).
From South America, Brazil’s CONAB had corn output at 112.3 MMT, which was consistent with their prior estimate but below where USDA has chosen to go.
Also, CONAB data had Brazilian soy output figured at 122.8 MMT, or a 2.7 MMT dip from Jan’s estimate.
In Argentina, BAGE reported early corn harvest began this week for Argentina, with preliminary yields reflecting the dryness.
BAGE maintained their 51 MMT estimate as 53% of the corn was late planted, and recent rains for it have been timely.
Also, the Buenos Aires Grains Exchange left their soybean forecast for Argentina at 42 MMT, but cited beneficial rains.
Meantime, Brazilian consultancy T&F confirmed a deal to export 100,000 MT of wheat from Rio Grande do Sul.
The consultancy raised Brazilian wheat exports to 2.7 MMT, up 200,000 MT following strong sales in December and February.
Brazil is a net wheat importer, from Argentina especially, but a StoneX analyst said, “thanks to the high dollar and weak domestic demand, demand for exports grew.”
The USDA forecasts Brazilian wheat exports to reach 1.7 MMT, up from 1.5 MMT forecast in February.
In this context, as of March 10, 2022 – Argentina Wheat Grade 2 export price, (Up River) was at $421, up $3 from prior week.
Argentina corn feed was up $17/t for the week, closing at $360.
Brazilian corn feed (Paranagua) was valued at $380, up $29 from prior week.
Argentina feed barley, was up $35/t at $365.
Argentina soybean was up $15 at $710.
Brazilian soybean rose $6 finishing the week at $686.
In Europe, an estimated 92% of French soft wheat crops were in good or excellent condition by March 7, down from 93% a week earlier but above a year-earlier rating of 88%, farm office FranceAgriMer said on Friday.
Winter barley and durum wheat similarly saw slight declines in their weekly ratings but conditions remained favourable, with 89% and 88% of crops, respectively, rated good/excellent, FranceAgriMer said in a cereal crop report.
For spring barley, sowing accelerated last week.
Some 76% of the expected area had been sown by Monday compared with 36% a week earlier although still below 84% progress seen a year ago.
Like most of the European Union, France has seen generally favourable conditions for cereals.
However, dryness that has affected Spain and other parts of the Mediterranean rim has started to develop in France too.
France, is the EU’s biggest grain producer.
Showers forecast in the coming days could bring beneficial moisture, although a drier spell is expected from mid-March with mild temperatures.
Grains and oilseeds crop conditions in major production countries are in a particular focus as Russia – Ukraine war has disrupted massive Black Sea exports and threatens to further strain global availability of staple grains, corn, common wheat and sunflowerseeds particularly.
In this context, June corn price was up 6 euros for the week, closing at 349 euros per ton.
May wheat price on Euronext was down 1 euros per tonne from prior week, to close at 370.75 euros.
For rapeseed, the May 2022 contract jumped €84/t from prior week, to close €904.75/t.
May-22 UK feed wheat futures, rose £13 from prior week, closing at £298/t.
Meantime, as of March 10, 2022, FOB prices in US dollar for French wheat with 11.5% protein and March delivery, were at $436/mt, up $9 from prior week.
French durum wheat, FOB Port la Nouvelle was not quoted for the seventh consecutive week.
French durum wheat – basis La Pallice, was at $494.24/mt, up $46.15 from prior week.
Spanish durum wheat Sevilla (DepSilo), not quoted this week.
Italian durum wheat Bologna (Delivered to first customer), was valued this week at $563.43 per tonne down $4.15 from past week.
German wheat (Depsilo) with 12.5 pro was at $384.4/mt, up $61.33 from last week.
Baltic wheat (Delivery First) quoted this week at $330.59, up $15.27 from past week.
Corn delivered Bordeaux Spot – July 2021 basis was at $388.8 per tonne, up $15.95 from prior week.
FOB Rhin Spot – July 2021 basis was at $386.6 per tonne, up $15.96 week on week.
Feed barley delivered Rouen – July 2021 basis was at 404.17$/t, up $10.3.
Malting barley FOB Creil Spot – July 2021 basis was at $406.37 per tonne, up $24.67/t from prior week.
Rapessed FOB Moselle Spot – Flat – 2021 harvest was at 1002.75$/ton, up $86.66 compared to prior week.
Standard sunseed delivered St Nazaire Spot – Flat – 2021 harvest was up 235.63 $ from prior week at $1054.37 per tonne.
(Eur/USD = 1.0983 vs last week 1.1064).
Meantime, Britain’s wheat imports slowed in January and continue to run below last season’s pace, customs data showed on Friday.
Wheat imports for the month totalled 112,585 tonnes, down from 199,777 tonnes in December.
Denmark was the largest supplier in January, shipping 51,553 tonnes followed by Germany with 24,666 tonnes.
Cumulative imports since the start of the 2021/22 season, began on July 1, 2021 totalled 1.18 million tonnes, down from 1.60 million in the same period a year earlier.
Canada remains Britain’s largest supplier so far in the 2021/22 season with shipments of 296,079 tonnes.
Imports are expected to fall this season after the nation’s wheat harvest totalled 14.02 million tonnes last summer, an increase of 45.2% from the previous year.
From North Africa, Morocco has wheat stockpiles to cover five months of consumption, the head of the Moroccan federation of industrial millers said on Friday.
Last season, the domestic harvest of 10.3 million tonnes was more than three times larger than it had been a year earlier.
However, Moroccan soft wheat imports rose by 8.7% to 3.97 million tonnes, as traders, although prioritise the local harvest, sold to industrial mills only about half of the Moroccan crop, because small farmers hold back some for their own use.
Meantime, the worst Moroccan drought in 30 years has compromised this year’s harvest, leading traders to forecast a heavy import campaign in value and volume this year.
The kingdom has received 0.55 million tonnes of Ukrainian soft wheat from an order of 0.6 million tonnes covering November-February, and will seek more supply elsewhere.
Wheat stockpile capacity is estimated at 5 million tonnes and the government encourages investors to build more silos and storage capacity
The government is more concerned about high prices than availability, said its spokesperson Mustapha Baitais.
Morocco expects spending on soft wheat subsidies to rise by 15% from last year to 3.8 billion dirhams ($410 million).
Before 2020, the average cost of the subsidy was 1.3 billion dirhams.
From the Black Sea basin, Russia could ban grain exports to the Eurasian Economic Union (EEU) from March 15 to Aug. 31, Interfax news agency said on Thursday, citing a source familiar with legislation preparation.
The source added that Russia could also ban sugar exports to beyond the EEU, membership of which comprises Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia itself.
Meantime, according to APK-Inform, the export prices of new-crop Russian wheat surged this week due to the same development on the global market.
As of March 9, indeed, the offer prices of 12.5% wheat amounted to 385-400 USD/t FOB deep-sea ports (July-August), sometimes the prices reached 410 USD/t FOB.
However, they are just indicatives.
Russian operators hope that will get the opportunity to supply wheat to their traditional buyers.
However, there is no activity on the forward market now.
No one knows what currency rate will be, how shipping in the Sea of Azov and the Black Sea will function, how to perform exchange operations, etc..
The export duty remains in force in Russia, despite any critics.
Indeed, the Russian Ag. Min has amended the export tax for wheat, barley and corn for the week of March 16 – 22, 2022.
Particularly, the export duty will be $86.3 on wheat, $77.4 on barley and $54.1 on corn.
Indicative prices will be $323.3 for wheat, $295.7 for barley and $262.3 for corn.
That is compared, with prior week (March 11-15) when the tax was $86.9 for wheat, $72.3 for barley and $53.9 for corn, while indicative price were $324.2 for wheat, $288.4 for barley and $262 for corn.
However, at the current prices, the duty may reach 150 USD/t.
Meantime, under economic sanctions imposed on Russia, Georgia is looking for alternative sources of wheat import, head of Association of wheat and flour producers Levan Silagava said.
Georgia cannot import wheat and flour from Russia, as the country is not able to pay for the products in foreign currency.
Currently, the country has wheat stocks sufficient for one month, the same for flour.
Kazakhstan and Romania could be as the possible sources for wheat import.
In 2022, Kazakhstan to continue decreasing planted area under wheat, as the county is aimed on diversification of production of agricultural crops, declared the first vice-minister of agriculture Aydarbek Saparov.
Thus, the planted area under wheat will be cut by 285 thsd ha.
Area under ice will be decreased by 6.5 thsd ha to 89.9 thsd ha.
At the same time, the area under fodder crops will reach 3.6 mln ha.
Area under oilseed crops will be decreased by 61.7 thsd ha, including those under flaxseed, safflower, mustard seed, while the area under sunflower seed will be increased.
The total planted area under agricultural crops will increase by 125 thsd ha to 23.1 mln ha in 2022.
In Ukraine, according the deputy chairman of Ukrainian Agri Council Denys Marchuk, planting campaign in 2022 will be focused on spring crops that can be harvested as soon as in summer.
“We do not how the situation will develop. Thus, the focus will be on buckwheat, peas to cover the needs of population” – he said.
Most of agrarians from regions with quite calm situation informed that they mainly had all needed resources for planting campaign.
However, they provide 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.
In Ukraine this week there was no quote for grain prices.
From the Middle East, in a tender announcement this week, Iran’s state grain buyer, the Government Trading Corporation (GTC), permitted the United States as a possible origin for wheat purchase, a rare instance, one European trader noted.
Iran needs to import 8 MMT of wheat this year following the worst drought in 50 years.
The Board of Directors of the Saudi Grains Organization (SAGO) approved an increase in the purchase price of local wheat for the current agricultural season, bringing it to an amount of SR1,700 per ton ($453.14).
This is the second increase of wheat price for this season.
It is noteworthy that SAGO’s purchase of local wheat from farmers comes in implementation of a Cabinet decision and amendment, regarding the controls to stop the cultivation of green fodder.
The Cabinet had also directed SAGO to purchase wheat from farmers if they choose to grow wheat as an alternative to green fodder for a period of five years, and not exceeding one and a half million tons per year, at prices determined by the SAGO in line with the prevailing international prices.
($1=3.7516 riyals)
From the Middle Kingdom, China sold 59,452 tonnes of soybean oil from its reserves on Thursday, grains stockpiler Sinograin said.
In a notice on its website, the company said it sold 84% of the 71,126 tonnes of soybean oil it had offered for auction.
Late last month, Beijing said it would sell some soybeans and edible oils from state reserves to boost supplies.
The stockpiler also sold 10,172 tonnes of rapeseed oil, or 71% of the total on offer on Thursday, the company said in another notice.
The sales came after Sinograin sold 126,891 tonnes of soybean oil last Monday, it added on the website.
China will sell 295,596 tonnes of imported soybeans from its reserves on March 14.
Meantime, speaking to reporters this week, China’s Minister of Agriculture and Rural Affairs said that the winter wheat crop in China could be the “worst in history.”
The minister blamed heavy rainfall that delayed planting.
He added that he is confident of a bumper harvest of summer grains.
From South East Asia, Malaysian palm oil futures ended over 3% lower on Friday, dragged by unexpectedly high February end-stocks, but clocked a third weekly rise as global supply tightens.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange closed 251 ringgit lower, or 3.61%, to 6,710 ringgit ($1,600.67) a tonne.
For the week, palm is up 6.92%.
Malaysia’s end-February inventories fell less than anticipated, down 2% from the previous month to 1.52 million tonnes, the Malaysian Palm Oil Board (MPOB) said on Thursday.
Exports, which were pegged to climb, fell 5% to 1.1 million tonnes.
This may be early signs of demand rationing in some markets due to the sharp rise in prices recently, said Ivy Ng, regional head of plantations research at CGS-CIMB Research, said in a note.
The contract has already surged nearly 43% so far this year to unprecedented highs.
Indonesia end-January palm stocks rose to 4.68 million tonnes from 4.13 million tonnes a month earlier, while exports slumped 23.8% to 2.18 million tonnes, the Indonesian Palm Oil Association (GAPKI) said.
In India, MNC are buying wheat at 25,500 rupees which is a FOB equivalent cost of around $370 FOB, so export demand will only be attractive at above $370.
From Australia, Australia is expected to export 25.3 MMT of wheat this year but capacity constraints may keep the country from filling recent supply shortages say grain traders.
All the shipping slots are booked for the next few months.
One analyst noted that they couldn’t export enough “to benefit from the global prices.”
Meantime, indicative delivered prices in Australian dollars per tonne were:
Barley Downs: $330 up $15 from March 3;
SFW wheat Downs: $365, up $25 from March 3;
Sorghum Downs: $335, up $25 from March 3;
Barley Melbourne: $360, up $20 from March 3;
ASW wheat Melbourne: $392 up $2 from March 3.
SFW wheat Melbourne: $385 up $5 from March 3.
(AUD/USD=> US$0.7357).
On the international trade scene, the Taiwan Flour Millers’ Association purchased an estimated 50,000 tonnes of milling wheat to be sourced from the United States in a tender which closed on Friday.
The wheat was bought in one consignment comprising various wheat types for shipment from the U.S. Pacific Northwest coast between April 23 and May 7.
The purchase involved 30,970 tonnes of U.S. dark northern spring wheat of 14.5% protein content bought at $454.51 a tonne FOB U.S. Pacific Northwest coast.
Another 13,570 tonnes of hard red winter wheat of 12.5% protein was bought at $494.93 a tonne FOB and 5,460 tonnes of soft white wheat of 10.5% protein was bought at $437.98 a tonne FOB.
The consignment has an additional freight charge of $70.55 per tonne for ocean shipping from the U.S. Pacific Northwest coast to Taiwan.
Seller of all the wheat was said to be trading house CHS.
In its last reported tender on Feb. 18, the association purchased an estimated 54,920 tonnes of milling wheat also from the United States.
Tunisia’s state grains agency is believed to have purchased about 125,000 tonnes of soft wheat and about 100,000 tonnes of animal feed barley in an international tender that closed on Friday.
The wheat was bought in five consignments each of about 25,000 tonnes.
Trading house Casillo sold four at $491.68, $499.69, $505.68 and $508.89 per tonne c&f. Cargill sold one at $497.25 a tonne c&f, traders estimated.
The barley was bought in four 25,000 tonne consignments.
Casillo sold one at $484.68 a tonne c&f and Viterra sold three at $489.98, $492.49 and $494.97 per tonne c&f.
It is Tunisia’s second tender for wheat issued this week.
Only two trading houses submitted price offers for the soft wheat in Tunisia’s previous tender on Tuesday when no purchase was made, the lowest at $500.25 a tonne c&f.
In its last reported soft wheat tender on Feb. 2, Tunisia bought wheat at the lowest price of $348.69 a tonne c&f.
Ban on exports exacerbate price volatility, limit the buffer capacity of the global market, and have negative impacts over the medium term
High wheat prices have caused many countries to introduced export bans.
Moldova, Hungary, Serbia, Turkey, and Egypt have all implemented some sort of wheat export ban.
Millers in Kazakhstan asked their government to ban wheat exports.
Russia has banned shipments of wheat to trading partners in the Eurasian Economic Union, an economic bloc of former
Soviet states.
Argentina’s government introduced an export cap and Ukraine this week introduced a requirement for export licenses.
In this context, international food and feed prices could rise by up to 20% as a result of the conflict in Ukraine, triggering a jump in global malnourishment, the United Nations food agency said on Friday.
“The likely disruptions to agricultural activities of these two major exporters of staple commodities could seriously escalate food insecurity globally,” FAO Director General Qu Dongyu said in a statement.
FAO said only part of the expected shortfall in exports from Russia and Ukraine could be met by other countries.
“Worryingly, the resulting global supply gap could push up international food and feed prices by 8 to 22% above their already elevated levels,” it said.
FAO said 50 countries, including many of the least developed nations, depend on Russia and Ukraine for 30% or more of their wheat supplies, leaving them especially vulnerable.
“The global number of undernourished people could increase by 8 to 13 million people in 2022/23,” FAO said.
The most pronounced rises would be seen in the Asia-Pacific region followed by sub-Saharan Africa, the Near East and North Africa.
FAO urged other countries not to impose export restrictions on their own produce.
“They exacerbate price volatility, limit the buffer capacity of the global market, and have negative impacts over the medium term,” the agency said.
Meantime, G7 farm ministers urge an end to food export curbs as prices surge.
“We will not tolerate artificially inflated prices that could diminish the availability of food and agricultural products” the statment said.
Watching next week market, next week starts off with March grain futures expiring on Monday.
The weekly Export Inspections report will be released on Monday morning.
NOPA will release their monthly crush data from February on Tuesday.
The FOMC will meet on Tuesday and Wednesday, with most expecting an increase to short term interest rates.
Skip ahead to Thursday and USDA weekly Export Sales data will be released.
That’s all.
To all of you I wish you a good weekend.
Author: Sandro F. Puglisi
