US farm markets spent another day in the red yesterday, as hopes for a ceasefire between Russia and Ukraine, triggered a broad commodities sell-off.
Funds were already reallocating and adjusting large commodity portfolios with respect to the month’s end asset allocation.
But, news from Turkey and more favorable weather forecasts for parts of the U.S. Plains, made an additional pressure.
Thus, corn prices dropped 2.97%.
Soybeans were down 1.28%.
Soymeal ended the session with 2.69% losses.
Soyoil pulled back with 1.09% losses.
The wheat complex suffered the heaviest blow, with most contracts tumbling more than 4% lower.
Particularly, Chicago wheat that was down more then 7% early in the session, bounced back in the afternoon, holding above the $10/bu mark at the close, limiting losses at 4.04%.
KC wheat futures also firmed up some in the afternoon, but were still down 4.3% for the session.
Spring wheat futures were down by 3.38%.
In enerhy markets, oil prices clawed back heavy losses both yesterday in the afternoon and this morning.
The market saw a sharp sell-off in yesterday’s session after Russia promised to scale down military operations around Kyiv.
Oil prices faced also pressure of weakening demand from China owing to tightened mobility restrictions and lockdowns in multiple cities.
Both benchmarks were around 6% down, however, closed the session limiting losses to 1.6% – 2%, as the focus then turned to tight supply after the American Petroleum Institute industry group reported crude stocks fell by 3 million barrels in the week ended March 25, according to market sources.
That was triple the decline that analysts had expected on average.
Thus, on this morning Brent crude futures were up $2.6, or 2.4% at $112.81 by 07:03 GMT, reversing a 2% loss in the previous session.
U.S. West Texas Intermediate (WTI) crude futures rose $2.7, or 2.5%, to $106.84 a barrel, erasing a 1.6% drop on Tuesday.
According to the Commonwealth Bank analyst Tobin Gorey “the (price) recovery suggests the oil market, at least, has a strong degree of scepticism about any ‘progress’ for a cesefire in Russia-Ukraine war.”
The OPEC+, meet on Thursday and major oil producers are unlikely to boost output above their agreed 400,000 barrels per day.
Saudi Arabia and the United Arab Emirates, indeed, said the group would not look to take action against Russia.
The group’s, indeed, aim only to stabilise the market and not to engage in politics.
In the freight market, the Baltic Exchange’s dry bulk sea freight index fell for a fourth straight session on Tuesday as rates across vessel segments declined.
The overall index, which factors in rates for capesize, panamax, supramax and handysize shipping vessels, indeed, dipped 67 points, or 2.7%, to 2,417 points.
Particularly, the capesize index fell 95 points, or 5.5%, to 1,639.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $784 at $13,596.
The panamax index slipped 79 points, or 2.31%, to 3,337 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, fell by $717 to $30,029.
The supramax index dropped 45 points to 2,946 points.
In equity markets, U.S. stock indexes rallied sharply, with the S&P 500 posting a 2-1/2 month high, the Nasdaq 100 posting a 2-1/4 month high, and the Dow Jones Industrials posting a 1-1/2 month high.
More than 85% of the stocks in the S&P 500 rose.
Tech and communication stocks helped power the rally, along with big retail chains, automakers and other companies that rely on consumer spending.
Apple rose 1.9% and Netflix added 3.5%.
Ford Motor climbed 6.5% and General Motors gained 4.6%.
Stock indexes pushed higher, as market sentiment improved about progress in cease-fire talks between Russia and Ukraine.
A -5.0 bp decline in the 10-year T-note yield also supported stocks.
However, a closely monitored section of the U.S. Treasury yield curve inverted on Tuesday for the first time since September 2019, a reflection of market concerns that the Federal Reserve could tip the economy into recession as it battles soaring inflation.
Oil prices, as we said, yesterday fell to a 1-1/2 week low and eased inflation concerns despite weighed on energy stocks.
Tuesday’s U.S. economic data was also bullish for stocks.
The Conference Board’s Mar U.S. consumer confidence index rose +1.5 to 107.2, stronger than expectations of 107.0.
Also, Feb JOLTS job openings fell -17,000 to 11.266 million, showing a stronger labor market than expectations of 11.000 million.
In addition, the Jan S&P CoreLogic composite-20 home price index rose +19.1% y/y, stronger than expectations of +18.6% y/y.
In this context, on Wall Street, the benchmark S&P 500 index rose 1.2% to 4,631.60 for its fourth straight daily gain.
The Dow Jones Industrial Average advanced 1% to 35,294.19.
The Nasdaq composite added 1.8% to 14,619.64.
Meantime, Asian stock markets followed Wall Street higher on this morning
Thus, the Shanghai Composite Index rose 1.7% to 3,258.22, rebounding from the previous day’s loss after Shanghai, China’s most populous city, closed most businesses to fight coronavirus outbreaks.
The Nikkei 225 in Tokyo fell 1.1% to 27,926.57 after the government reported February retail sales declined by a bigger-than-forecast 0.8%.
That left retail spending down 2% from its November peak.
The Hang Seng in Hong Kong gained 1.3% to 22,210.14 and the Kospi in Seoul added 0.2% to 2,746.20.
Sydney’s S&P-ASX 200 advanced 0.7% to 7,514.50.
India’s Sensex opened up 1.1% to 58,570.98.
New Zealand and Southeast Asian markets also rose.
In currencies trade, the dollar declined to 122.04 yen from Tuesday’s 122.91 yen.
The euro rose to $1.1111 from $1.1089.
The dollar index on Tuesday fell by -0.681 (-0.69%) and posted a 1-week low.
On the weather side, plenty of rain is on its way to the Midwest late this week.
A band stretching from Louisiana all the way through Michigan could deliver 1” to 1.5” or more between Wednesday and Saturday, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts more seasonally wet weather for most areas east of the Mississippi River between April 5 and April 11, with cooler-than-normal conditions developing in the Mid-South and Ohio River Valley.
The U.S. Department of Agriculture (USDA) is scheduled to release its report on plantings intentions at 16:00 GMT on Thursday.
Prospective Plantings report is one of the agency’s most highly anticipated reports of the entire year.
Analytsts expect lower corn seeding and higher soybean plantings.
On the demnad side, cases of avian flu have been confirmed in US turkey flocks.
The number of commercial and backyard detections of highly pathogenic avian influenza in Iowa this year is less than a 10th of the nation’s total, yet the state accounts for about 43% of the total birds affected, according to U.S. Department of Agriculture data.
That’s because Iowa’s infected flocks have been much larger than those of other states.
With the latest cases confirmed on Tuesday, March 29, a total of over 17.1 million birds have been affected by avian influenza.
In this context, corn basis bids were mostly steady to firm, after increasing 1 to 8 cents across four Midwestern locations.
An Ohio river terminal was the exception to the trend, sliding 4 cents lower.
Soybean basis bids were mostly steady to firm, after rising 2 to 8 cents higher at three Midwestern locations.
An Ohio river terminal bucked the overall trend after dropping 5 cents.
The funds were net sellers yesterday for 17,500 lots of corn, 10,000 lots of soybeans and 15,000 lots of wheat.
From South America, according to Conab, Brazilian soybean harvest reached 75.8%, corn at 47.1%.
Meantime, according to agribusiness specialists at investment bank Itau BBA, Brazil’s 2022/2023 soybean area will expand by 0.5%.
That is the slowest pace of growth in more than 15 years, as farmers face high costs to convert pastureland into soy plantations.
Brazil’s soy area grew by 3.8% to 40.7 million hectares (100.5 million acres) in 2021/22, according to government data.
Itau BBA projected soybean output in the world’s biggest soy supplier would reach 141 million tonnes in the 2022/2023 season, which will begin in the fourth quarter.
Meantime, Brazil’s Anec estimates that the country’s soybean exports will reach 12,96 MMT in March, which is slightly higher than its projection from a week ago.
Anec estimates that Brazil will also export 1.537 million metric tons of soymeal this month.
Brazil’s Anec now estimates that the country’s wheat exports will reach 500.762 t in March, which was slightly below its forecast from a week ago.
Argentina’s producers have sold 19.5 million tonnes of corn for the 2021/22 season, the ministry of agriculture said on Tuesday.
The ministry said that 744,000 tonnes of corn were traded between March 16 and 23, exceeding the 454,900 tonnes recorded the same period in the previous season.
At the end of last year, the Argentine government set a limit on corn exports for the 2021/22 cycle of 41.6 million tonnes in an attempt to control high domestic food prices.
Regarding 2021/22 soybean, Argentine farmers have sold 11.5 million tonnes of the oilseed, whose harvest will begin in the coming weeks, according to the government.
In Europe, another very sharp drop in prices for all products.
The main driver remains geopolitics.
However, weather will could affect the markets as little rain are forecasted in France and negative temperatures expected for the weekend.
Meantime, soft wheat exports from the European Union in the 2021/22 season that started in July had reached 19.87 million tonnes by March 27, according to data published on Tuesday by the European Commission.
That compared with 20.48 million tonnes by the same week in 2020/21, the data showed.
EU 2021/22 barley exports had reached 5.79 million tonnes, against 6.01 million a year ago, while EU maize imports were at 12.05 million tonnes, against 12.10 million.
Soybean imports were at 10.15 million tonnes against 11.04 million to date last year.
Rapeseed imports stood at 3.90 million tonnes against 5.13 million to date last year.
Meantime, the European Union will allocate 200 million euros ($220 million) to Maghreb countries to help counter grain shortages resulting from the crisis in Ukraine, the European Commissioner for Enlargement Olivier Varhelyi said on Tuesday.
Morocco, Algeria and Tunisia are significant importers of wheat from Russia and Ukraine and the conflict has caused sharp rises in grain prices.
From North Africa, Morocco’s crop outlook has improved with record rainfall this month.
Egypt is cutting back on grain purchases as two of its largest suppliers are locked in war.
Currently, increasing commodity costs in Egypt seem to be curbing demand.
Meantime, a delegation from Egypt will visit India in the first week of April to facilitate wheat imports.
India, the world’s second biggest wheat producer, has emerged as a leading supplier of the grain to a host of countries that are struggling with cargo disruptions and sky-high grain prices in the wake of the crisis in the Black Sea region.
Although Egypt has been a traditional buyer of Russian and Ukrainian wheat, India is willing to help Cairo by supplying the grain.
Egypt could buy up to 12 million tonnes of Indian wheat.
India is in a position to supply top quality wheat to Egypt and meet Egypt’s quality and other requirements.
On Monday, Egypt’s Prime Minister Moustafa Madbouly said Cairo was counting also on France to secure some supplies of basic commodities like wheat.
On March 24, Egyptian Supply Minister Ali Moselhy said Egypt was in talks with Argentina, India, France and the United States for future wheat imports but is in no rush to buy at the moment.
Earlier this month Egypt set a fixed price for unsubsidised bread to battle a sharp rise in bread prices that jumped 25% to 1.25 Egyptian pounds($0.07) per loaf in some bakeries.
From the Black Sea basin, Ukrainian farmers have started sowing on around 20% of the planned spring crop country.
Area limitations are due to fuel accessibility (army getting priority) and fertiliser supply although they do have access to seed.
Meantime, according to APK-inform, last week, the indicative offer prices of Ukrainian wheat started declining on the export market.
The prices were pressured by virtually absent trade, large stocks and good condition of winter grain in Ukraine as well as starting of spring planting campaign.
Thus, last week, the indicative offer prices of 12.5%, 11.5% and feed wheat decreased by 20-25 USD/t to 415-435, 405-425 and 390-410 USD/t FOB Black Sea (April).
The offer prices of new-crop wheat declined by 10-30 USD/t to 360-390, 350-385 and 330-365 USD/t (July-August).
Also, APK-Inform said that Russian export prices of crude sunflower oil have been declining since the beginning of the last week, due low demand from importers.
Some importers are trying to switch to alternative vegetable oils to offset the deficit of sunflower oil.
Additionally, some large trading companies suspended their activity in Russia that also weighted on the demand for Russian sunflower oil.
Thus, the offer prices of crude sunflower oil decreased by 100-130 USD/t to 2140-2170 USD/t FOB deep-sea ports (April-May).
The bid prices declined by average 150 USD/t to 1990-2015 USD/t FOB.
Meantime, Russia’s top lawmaker warned the European Union on Wednesday that if it wanted Russian natural gas then it would have to pay in roubles, and cautioned that oil, grain, metals, fertiliser, coal and timber exports could also soon be priced the same way.
From the Middle Kingdom, China’s central bank said on Wednesday it would step up monetary policy support for rural areas this year, including providing more financial support to ensure food security and the supply of soybeans and oilseeds.
It also encouraged firms to use the yuan currency for bilateral payments abroad, the People’s Bank of China said in a statement on its website.
From South East Asia, Malaysian palm oil reversed course to close higher on Tuesday on prospects of top producer Indonesia raising export tax, although expectations for stronger output and weaker exports capped gains.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange ended up 32 ringgit, or 0.54%, at 6,010 ringgit ($1,426.88) a tonne.
It had earlier declined as much as 2.64%.
Traders said a millers’ association on Monday estimated March 1-25 production rose 15.3% from the month before, while cargo surveyors said last week that exports during the same period fell 5% month-on-month.
The contract had rebound on expectations that Indonesia would hike its reference price used to determine the level of export tax and levy, according to traders.
Higher export duties in Indonesia makes rival Malaysian palm oil more competitive.
Indonesia raised CPO price for April to $1,787.50/mt.
However, Indonesia’s palm oil export levy collection in 2022 is estimated at 68.18 trillion rupiah ($4.76 billion), down from last year’s 71.6 trillion rupiah, said Eddy Abdurrachman, head of the palm oil fund agency.
The agency, which manages the fund, expects to distribute 57.92 trillion rupiah in biodiesel subsidies this year and spend 8.35 trillion rupiah to subsidise bulk cooking oil, Eddy said at a parliamentary hearing, as the government seeks to control food inflation.
Taiwan plans to extend its reduction of the commodity tax on gasoline and diesel along with tariff cuts on wheat, soybean, powdered milk, imported beef, butter and corn till the end of June to help ease inflation pressure and stabilise prices.
From Australia, wheat traded slightly firmer where buyers had demand, but elsewhere values were unchanged and volume was light.
Barley continued its strength with Port Kembla track trading around $330-335 for small parcels.
Canola bids were a touch stronger reflecting offshore moves.
Port terminal wait times are now starting to blow out with Adelaide’s waiting time has gone from 0 days last month to 12 this week, same situation for Brisbane, Geelong is out from 4 to 14, Kwinana 10 to 17, Newcastle 0 to 17, Port Kembla 3 to 17 days and Port Lincoln continues to have a steady long wait time 22 days last month and still the same this month.
The federal budget allocated $600 million to the agricultural sector with the focus on export, biosecurity, carbon/biodiversity projects and further funding to local regional agricultural shows and trade events.
On the international scene, Tunisia is buying 150,000 t of milling wheat and 100,000 t of fodder barley.
Algeria’s wheat tender ends today.
Turkey’s TMO launches sunoil tender for Apr-May as prices rise.
South Korea’s KFA snapped up corn from Cargill at $399.45/mt.
Korean KFA stepped in for 120k mt of July arrival corn.
The Taiwan Flour Millers’ Association purchased an estimated 40,000 tonnes of milling wheat to be sourced from the United States in a tender which closed on Wednesday.
The wheat was bought in one consignment comprising various wheat types for shipment from the U.S. Pacific Northwest coast between May 14 and May 28.
The purchase involved U.S. dark northern spring wheat of 14.5% protein content bought at $439.82 a tonne FOB U.S. Pacific Northwest coast.
Hard red winter wheat of 12.5% protein was bought at $462.94 a tonne FOB and soft white wheat of 10.5% protein was bought at $415.47 a tonne FOB.
The purchase has an additional freight charge of $74.14 per tonne for ocean shipping from the U.S. Pacific Northwest coast to Taiwan.
The seller of all the wheat was said to be trading house CHS.
That’s all.
To all of you I wish you a good day.
Author: Sandro F. Puglisi
