US farm markets, were mixed but mostly higher on Wednesday.
Corn prices closed with gains of more then 0.6%.
The soybean complex, fared even better as soybeans tracked 1.31% higher to move back above $17,18 per bushel, soymeal was up around 1.75% and soyoil climbed 1.92%.
Export optimism kept corn and soybeans prices in the green.
The wheat complex, in contrast, failed to follow suit, likely due to beneficial rains on the great American plains, and so, contracts lost between 0.5% and 1%.
Still, Chicago, Kansas City and Minneapolis remain above or very near $11 per bushel.
Indeed, May Chicago SRW futures dropped 1.12% to $11.0560.
May Kansas City HRW futures fell 0.45% to $11.1140.
May MGEX spring wheat futures lost 0.59% to $10.8920.
In energy markets, crude oil jumped more than 5% yesterday following reports that crude exports from Kazakhstan’s Caspian Pipeline Consortium terminal had completely halted following storm damage.
Also, Russia’s deputy prime minister said oil supplies could be stopped for two months.
U.S. oil production remained flat at 11.6 million barrels per day, according to EIA data.
Meantime, stockpiles in the United States fell by 2.5 million barrels last week while inventories from the U.S. Strategic Petroleum Reserve declined by 4.2 million barrels, according to data from the U.S. Energy Information Administration.
Market participants had expected a modest increase in supplies.
On this morning the U.S. President Biden is meeting with NATO allies and is expected to announce additional sanctions on Russia.
Consequentially, both contracts have posted steep gains this week, with Brent futures up more than $14 a barrel, or 13%, since Monday and WTI climbing over $10 a barrel, or 10%, as worries over supply disruptions intensified.
However, crude prices declined in volatile trading on this morning.
Investors, indeed, assessed the potential for a new supply amid prospects of a new Iran deal, after White House national security adviser Jake Sullivan said on Wednesday the United States and its allies have made progress in Iran nuclear talks but issues remain.
A lifting of Iranian export restrictions would help alleviate the immense tightness prevalent in crude markets right now.
Thus, Brent futures were down 15 cents, or 0.12%, at $121.45 a barrel, after falling more than $1 earlier in the session.
U.S. West Texas Intermediate futures fell 75 cents, or 0.65%, to $114.18 a barrel at 0729 GMT, after shedding over $2 earlier.
The contracts had gained $2 and $1, respectively, in morning trade.
In the freight market, the Baltic Exchange’s dry bulk sea freight index edged up on Wednesday as gains in the panamax and supramax segments offset a dip in capesize rates.
The overall index, which factors in rates for capesize, panamax, supramax and handysize shipping vessels, indeed, gained 29 points, or 1.1%, to 2,575 points.
Particularly, the panamax index gained 161 points, or 5.2%, to 3,272 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased by $1,451 to $29,450.
The capesize index dipped 75 points, or 3.5%, to 2,100.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $629 at $17,412.
The supramax index rose 33 points to 3,016 points.
In equity markets, U.S. stock indexes on Wednesday were down.
Weakness in technology stocks pressured the overall market.
Adobe fell -9%, after forecasting weaker-than-expected Q2 revenue warning that halting sales in Russia and Belarus will impact its revenue.
Also, U.S. stocks were undercut by the rally of more than +5% in crude oil, fueling concern that higher energy costs will eat into corporate profits and boost inflation pressures.
On this wake, metal manufacturer Worthington Industries slid 17% after reporting disappointing fiscal third-quarter profits.
Consequentially, several Fed presidents called for tighter Fed policy.
In addition, Wednesday’s U.S. economic data was bearish for stocks after U.S. Feb new home sales unexpectedly fell -2.0% to 772,000, weaker than expectations of a +1.1% m/m increase to 810,000.
Thus, the S&P 500 fell 1.2% to 4,456.24, with more than 80% of the stocks in the benchmark index closing lower.
The Dow slid 1.3% to 34,358.50.
Both indexes are now on pace for a weekly loss.
The Nasdaq fell 1.3% to 13,922.60. Smaller company stocks also lost ground.
The Russell 2000 fell 1.7% to 2,052.21.
Energy stocks rose on the wake of crude oil prices.
Thus, Hess rose 4.6% for the biggest gain in the S&P 500.
Bond yields have been rising overall as the market, thougth the yield on the 10-year Treasury fell to 2.33% from 2.37% from Tuesday.
Meantime, stocks were mixed on this morning in Asia following Wall Street.
Russia reopened its stock market for limited trading on this morning nearly one month after shares plunged and the exchange was shut down.
There are heavy restrictions on trading to prevent massive selloffs, thougth shares rose so far.
The MOEX index, indeed, was up 8.9% by mid-morning Moscow time.
Foreign shareholders are unable to sell shares — a restriction Russia put in place to counter Western sanctions against its financial system and the weakening ruble.
Trading is allowed in 33 of the 50 companies that are part of the country’s benchmark MOEX index, including air carrier Aeroflot, state-owned gas producer Gazprom and the oil company Rosneft, according to a central bank announcement about the reopening.
On the other hand, the U.S. Trade Representative’s office on Wednesday reinstated exemptions for some Chinese exports to tariff hikes imposed during a fight with Beijing over its trade tactics.
The exemptions, which expired earlier, apply to goods including breast pumps, swimming pool vacuum cleaners, electric motors and industrial components
In this context, Tokyo’s Nikkei 25 rose 0.3% to 28,110.39.
In Seoul, the Kospi declined 0.5% to 2,729.66, while the Shanghai Composite index gave up 0.6% to 3,250.26.
The Hang Seng in Hong Kong sank 1% to 21,929.68.
In Australia, the S&P/ASX 200 edged 0.1% higher, to 7,387.10.
In currency trading, the U.S. dollar rose to $121.22 Japanese yen from $121.15 yen late Wednesday.
The euro fell to $1.0986 from $1.1007.
The dollar index on Wednesday rose +0.13%.
On the weather side, a bit of additional rainfall could land on parts of the upper Midwest and eastern Corn Belt between today and Sunday, per the latest 72-hour cumulative precipitation map from NOAA.
NOAA’s 6-10 outlook shows above normal odds of rainfall for most of the CONUS.
The West Coast may remain drier than normal, as will Southern Texas.
NOAA’s 7-Day Precip Probability Forecast, however, shows less than 10% odds of rain for the Southern Plains of NE through TX.
CO wheat fields could see rainfall early next week, while the Probability Forecast reads high odds in the already wet ECB SRW region.
The agency’s new 8-to-14-day outlook predicts seasonally cool weather for the upper Midwest and Great Lakes region between March 30 and April 5, with widespread wetter-than-normal conditions across the Midwest and Plains during that time.
On the demand side, EIA reported 1.042m barrels of ethanol per day were produced during the week that ended 3/18.
That was a 16k bpd increase from the week prior and was a 9-week high.
Ethanol stocks built up by 203k barrels through the week to 26.148m.
Ahead the weekly Export Sales report the trade is looking for old crop corn sales to be between 800k and 1.8 MMT.
New crop bookings are estimated between 100k and 400k MT.
Export Sales estimates for old crop beans are running between 500k and 1.3 MMT for the week that ended 3/17.
New crop bookings are estimated between 300k and 800k MT.
Traders estimate USDA will report between 100k and 600k MT of old crop wheat sales from the week that ended 3/17.
New crop business is expected to be within 100k and 300k MT.
In this context, corn basis bids were steady to mixed, trending as much as 5 cents higher at an Iowa river terminal and as much as 20 cents lower at an Illinois processor.
Soybean basis bids were steady to firm, after rising 6 to 8 cents at two interior river terminals and moving 3 cents higher at an Ohio elevator.
The funds were net sellers yesterday for 5,000 lots of wheat but net buyers for 10,000 lots of soybeans and 3,500 lots of corn.
From Canada, Canada’s farmers may face another drought this year.
Southern Manitoba has collected heavy snowfall.
But much of the Canadian Prairies is still parched, with southern Alberta and central Saskatchewan in “extreme drought” conditions as of Feb. 28, according to Canada’s drought monitor.
Some analysts say there is not a reserve of moisture in the soil normally have after the winter because it was depleted so much last year and according to agroclimate specialists for Agriculture and Agri-Food Canada the country is extremely vulnerable to dry periods this year.
Drought concerns could influence what crops farmers choose to plant.
Canola grows relatively well even when moisture is scarce, but it requires a lot of fertilizer and is more expensive to plant than some crops.
Some analysts expects both canola and spring wheat plantings to rise only 2% from last year.
Statistics Canada will report on farmers’ planting intentions on April 26.
Meantime, Canadian Canola Prices were setting new record highs, reaching 1,177.80 CAD/MT before fading to 1,149 yesterday.
From South America, Brazil’s Ag Ministry announced the 18% ethanol import tariff is to removed for the balance of 2022, trying to limit fuel costs with cheaper imports.
Brazil’s Anec estimates that the country’s soybean exports will reach 12.9 MMT in March, which is steady from its forecast a week ago.
Anec also estimates that Brazilian soymeal exports will reach 1.845 million metric tons this month.
AgRural had 98% of the 2nd crop Brazilian corn planted as of 3/17.
That is up from 90% last year, with 58% of the 1st crop out.
Last year 47% of the 1st crop was harvested as of this time.
Brazil is much more well known for its corn and soybean exports, but the country’s Anec estimates that it will also export 523.000t of wheat in March.
Argentina’s Buenos Aires grains exchange cut its 2021/22 corn crop estimate to 49 million tonnes versus 51 million tonnes previously on Wednesday due to dryness that has hit the country’s crops since the start of the year.
Meantime, Argentina’s agriculture ministry reports that farmers have sold more than 18.8 MMT of their 2021/22 corn crop, plus 10.8 MMT of this season’s soybean crop.
In Europe, huge volatility continued yesterday.
In Germany, export demand is seen staying strong while the conflict lasts, although securing supplies was becoming increasingly difficult.
With Euronext rising so strongly, farmers are very hesitant about selling today because they may make a lot more money tomorrow.
Thus, before accepting a sale for export in German ports, traders are now first collecting the sales offers from farmers.
Sellers of standard 12% protein wheat for April onwards delivery in Hamburg were offering around 34 euros a tonne over the Euronext May contract.
European Rapeseed Futures breeched 1,000 Euros/MT for the first time on record yesterday.
May futures, indeed, topped at 1,021.75 before collapsing off the fresh high on a +4% pullback, posting a difference of more than €97/t between the day’s high and min.
Meantime, the European Union is set to distribute 500 million euros ($550 million) to help farmers and allow them to grow crops on fallow land as part of measures to mitigate food price spikes and potential shortages resulting from the conflict in Ukraine.
The European Commission proposals, published on Wednesday, also include assistance to Ukraine to help its farmers sow corn and sunflower seeds and tend to wheat.
The EU executive stressed on Wednesday that there was no immediate threat to EU food security, given the bloc is a net exporter of cereals.
However, recognising farmers will face higher fuel and feed prices, the EU will distribute 500 million euros to the 27 EU members to aid farmers hardest hit by the crisis, particularly if they are engaged in more environmentally friendly production.
EU members can add a further 1 billion euros to the aid budget.
The EU executive will also let farmers temporarily grow crops on the almost 6% of EU agricultural land that is set aside to boost biodiversity.
Meantime, the EU executive has proposed an emergency support programme of 330 million euros to Ukraine, some of which is designed to help farmers.
Meantime, non-commercial market participants reduced slightly their net long position in Euronext’s milling wheat futures and options in the week to March 18, data published by Euronext on Wednesday showed.
Non-commercial participants, which include investment funds and financial institutions, cut their net long position to 172,463 contracts from 176,064 a week earlier, the data showed.
Commercial participants narrowed their net short position to 193,900 contracts from 196,636 a week earlier.
Commercials’ short positions accounted for 66.5% of the total short position, while commercial long positions accounted for 34.3% of total long positions.
Non-commercial short positions represented 33.5% of total short positions, while non-commercial net long positions accounted for 65.7% of the total longs.
In Euronext’s rapeseed futures and options, non-commercial market participants increased their net long position to 5,444 contracts from 3,448 a week earlier.
Commercial participants expanded their net short position in rapeseed to 7,352 contracts from 6,167 a week earlier.
From the Black Sea basin, weather favours Russia’s winter grain sowings so far, signalling good prospects for the 2022 crop, state weather forecaster Hydrometcentre said on Wednesday.
Winter grains in the main producing regions – Russia’s south and the North Caucasus – are developing well, and only 10% of the sowings in other regions are at risk of poor condition.
Moisture reserves in soil are very good, and this will help protect the sowings if the weather in Russia’s south proves to be warmer and dryer than usual in April.
All farmers are optimistic about the future harvest.
However the Hydrometcentre did not provide an estimate of the upcoming crop.
According to the plans, in 2022 the total sown area will amount to 81.3 million hectares – almost 1 million hectares more than a year earlier.
Krasnodar Krai, one of the main agricultural regions of the country, expects that about 1.8 million hectares will be sown with spring crops – the volume of acreage will remain at the level of 2021.
At the same time, the acreage of soybeans, grain peas and sugar beet will increase.
In the Rostov region, since the autumn of 2021, more area has been sown with winter crops than last year – 2.9 million hectares (2.8 mln ha in 2020), more than 1.8 million hectares will be sown in the spring.
It is expected to increase the acreage in the Kurgan region (by 100 thousand hectares, up to 1.4 million hectares), in the Perm Region (by 30 thousand hectares, up to 243 thousand hectares of grain and leguminous crops), in Mordovia, in the Penza, Omsk and Kirov regions.
According to the forecasts of the Ministry of Agriculture, the grain harvest in the country should be about 123 million tons – up from 121.3 million tonnes in 2021-, oilseeds – 22.6 million tons, sugar beet – 41.5 million tons, potatoes – 6.8 million tons, open-ground vegetables – 5.2 million tons.
So, the authorities of the Kirov region in 2022 expect to increase the grain harvest to 604 thousand tons, or by 16% compared to last year.
The harvest in the Penza region is projected to increase to 2.5 million tons compared to 2.4 million tons last year.
Farmers of the Voronezh region plan to harvest 5.3 million tons of grain under favorable weather conditions, which is 1.1 million tons more than the level of 2021.
Meantime, Russia is looking for suppliers of packaging for baby food and dairy products due to disruption in supplies caused by the Western sanctions imposed on Moscow, the country’s agriculture minister, Dmitry Patrushev said on Wednesday.
Indeed, in order to maintain stability in this segment the ministry is working with the business community and the trade ministry to find opportunities to replace foreign suppliers of packaging.
Patrushev also said that the agriculture ministry had proposed that the government should set up export quotas for sunflower oil to “maintain the stability of situation.”
Many Russians have rushed to buy sugar, buckwheat and salt after sanctions weakened the rouble and sent food prices higher in late February-March.
The authorities have repeatedly told people there is no need to stockpile food products, as “Russia is fully self-sufficient in the main foodstuffs”
There are sufficient stocks in warehouses and distribution centres, which are constantly replenished, Patrushev said.
Ukrainian Agriculture Minister Roman Leshchenko has submitted his resignation on this morning, without stating a reason.
The Ukrainian Grain Association consider necessary to cancel previously imposed licensing of export of corn, wheat and crude sunflower oil, as this decision does not allow accelerating exports.
Additionally, there are a number of propositions promoting shift of export flows from ports to land routes.
Ukraine used to export about 200 thsd tonnes of grain per day through ports.
Now, land routes allows exporting about 20 thsd tonnes per day.
The UGA has already addressed to European operators and asked to the government to support this initiative to simplify trade between Ukraine and the EU.
Particularly, the UGA asked to cancel any internal permits (phytosanitary and veterinary certificates, laboratory studies, etc.), except those required by a buyer and stipulated in contracts.
Trading companies Kernel, Cargill, Bunge Ukraine and others have applied for export of more than 1 mln tonnes of grain from Ukraine by Danube.
Grain will likely be transported to Romania, where it will be reloaded to sea fleet.
Meantime, in March update, APK-Inform cut Ukrainian grain export potential for 2021/22 MY by 29% to 44 mln tonnes.
It is 3% lower than Ukraine exported in 2020/21 MY.
On average, Ukraine exports about 80% of wheat and 89% of barley within this period.
Usually, the country ships about 53% of corn within this period. In 2021/22 MY, Ukraine exported 81% of wheat, 95% of barley and 60% of corn.
Ukraine used to ship 99% of total grain exports through ports.
Higher transportation of grain by railway through western borders allows some exports.
However, railway capacity is much lower compared to ports. Additionally, further export of Ukrainian wheat and barley is limited by virtually no demand from the EU.
Therefore, APK-Inform cut their forecast of wheat export potential by 19% to 18.3 mln tonnes, barley – by 5% to 5.7 mln tonnes, corn – by 36% to 19.4 mln tonnes.
Also, the 2022/23 July-June grain export could fall 32% to almost 30 million tonnes, including 10 million tonnes of wheat and 19 million tonnes of corn, the consultancy said in a report.
Ukraine’s 2022 grain harvest is likely to fall 54.6% to 38.9 million tonnes.
According to APK-Inform, the indicative forward prices of Ukrainian feed barley of the harvest-2022 increased significantly.
The resumption of export through seaports is uncertain.
Safety of shipping in the Black Sea is doubtful too.
Additionally, the production will decrease due to the narrowing of planted area under spring barley and likely decline of the yields.
Moreover, barley stocks are limited that supports the prices as well.
Thus by the end of the past week, the forward bid/offer prices of new crop barley amounted to 330-350/370-395 USD/t FOB Black Sea (for delivery in July-August).
In contrast, the price of Ukrainian GM soybean have been declining on DAP basis, despite the upward trend on the world market.
The decline of the prices is based on higher number of offers of soybean from farmers, as they need to accumulate funds.
Indeed, the purchasing prices of GM soybean decreased by average 20 USD/t and totaled 520-550 USD/t DAP as of March 23.
According to the Bureau of National Statistics of the Agency for Strategic Planning and Reforms of the Republic of Kazakhstan, in July-December 2021/22 MY, Italy imported 154 thsd tonnes of Kazakh wheat, up 3.8 times y/y.
APK-Inform said that about 55% of wheat had been exported on FCA basis (85 thsd tonnes), 36% on CPT basis (56 thsd tonnes), 5% on CIF basis (7.2 thsd tonnes) and 4% on FOB basis (6.3 thsd tonnes).
Analysis of Kazakh wheat export to Italy on FCA basis showed that about 58% of the overall volume was presented by soft wheat and 42% by durum.
The average price of soft wheat export totaled 234 EUR/t FCA, while the average price of durum wheat totaled 405 EUR/t FCA.
“If we compare this to the supplies to the largest buyer of Kazakh wheat – Uzbekistan – we see that about 98% of total volume was exported on DAP basis and the average price was 245 USD/t.
Uzbekistan imported 1.4 mln tonnes of Kazakh wheat in July-December 2021/22 MY, down 25% y/y”, – APK-Inform said.
From the Middle East, due to lower area and yields, Pakistan wheat production in 2022/23 is forecast at 26.4 million metric tons (MMT), four percent lower than last year.
To make up for the expected domestic shortfall, in 2022/23 wheat imports are forecast at 1.5 MMT. Rice production is forecast at record 9 MMT, which will drive exports to a projected 5 MMT.
Benefitting from imported U.S. seed, corn production is forecast to reach another production record of 8.9 million tons in 2022/23.
From the Middle Kingdom, sanctions on exports of potash fertiliser from Belarus and Russia are not impacting supply in China, an executive from state-owned fertiliser maker Sinofert Holdings said on Wednesday, due to sufficient domestic stocks.
Belarus and Russia are among the world’s top three producers of the crop nutrient potash, and China is a major importer.
However, China produces about 5.5 million tonnes of potash, and also has some strategic reserves and commercial stocks.
On this wake, China said on Monday it was releasing 1 million tonnes of potash reserves ahead of spring planting.
Potash prices are near a 10-year high.
Fertiliser sales within China are also being affected by restrictions on movement in place to contain recent COVID-19 outbreaks.
Despite obtaining special passes for more than 1,000 vehicles to deliver fertiliser in the northeastern province of Jilin, between 80,000 and 100,000 tonnes of goods are still waiting to be shipped.
From Australia, short covering by exporters and consumers has pushed up prices for all quoted grains in the past week amid limited grower selling.
Barley and sorghum have posted the strongest gains, with the supply of no.
1 grade sorghum for export tight following rain earlier this month, and barley in strong demand from feedlots and export accumulators.
Damage to rail lines caused by torrential near Sydney is still being rectified, and the flow of bulk grain to Port Kembla by rail is not expected to return to capacity for another 10-14 days.
This is further upping the call for road transport, and has shifted a portion of demand to other ports in the interim.
Meantime, local markets have been mostly unchanged amid slow and steady liquidity yesterday.
Buyers continued to show interest in east coast wheat.
Barley values were also largely unchanged across the board, with some interest in Victorian malting and feed.
Canola markets were also unchanged through depot bids, while delivered-port bids for May were a fraction stronger.
On the international trade scene, Turkey’s state grain board TMO has started making provisional purchases of wheat in international import tenders which closed on Wednesday with about 100,000 tonnes initially bought.
Two separate tenders for 210,000 tonnes and 245,000 tonnes have been issued seeking wheat imports and wheat delivered from warehouses inside Turkey.
The first purchases were said to be one 45,000 tonne consignement of 12.5% protein wheat at an estimated $424.32 a tonne c&f from trading house Grain Star and 5,000 tonnes at $424.42 a tonne c&f from Alstin Ates, both for shipment to the port of Iskenderun, traders said.
In addition, TMO bought one consignement of 10,000 tonnes of 12.5% protein wheat from Grain Star at $423.90 a tonne c&f, and 15,000 tonnes from trading house Aston at $424,00 a tonne c&f, for shipment to the port of Mersin.
Purchases for shipment to the port of Bandirma included one consignment of 10,000 tonnes of 12.5% protein wheat from Aston at $420.00 a tonne c&f, 5,000 tonnes from Bek Tarim at $419.90 a tonne c&f and a consignment of 10,000 tonnes of 13.5% protein wheat from Erser at $423.00 a tonne c&f.
Jordan’s state grain buyer is believed to have cancelled an international tender to buy 120,000 tonnes of barley which closed on Wednesday.
Four trading houses were said to have participated, Cerealcom, Bunge, Vittera and Australian.
A new tender is expected to be issued next week.
That’s all.
To all of you I wish you a good day.
Author: Sandro F. Puglisi
