US farm markets were mixed but mostly higher on Tuesday.
Red-hot wheat prices once again led the way.
Tight global stocks and historically low crop quality in the U.S., indeed, pushed stiil more higher all the wheat complex.
Particularly, Chicago SRW contracts saw the biggest boost, rising 2.4% higher.
Kansas City HRW wheat prices gained 1.16%.
MGEX spring wheat prices added 0.61%.
Corn, in contrast, faced moderate cuts around 1,1%, as swift planting progress this past week generated some headwinds.
Soybeans on the other hand, has been 1.3% firmer, on sluggish planting progress in parts of the upper Midwest and Northern Plains.
Product values were mixed as soybean meal was down 0,44%, and bean oil was up 0,6%.
In energy markets, oil prices edged up on Wednesday on expectations that easing COVID-19 restrictions in China will push up demand.
The authorities allowed 864 of Shanghai’s financial institutions to resume work.
Meantime, raising supply concerns, U.S. crude and gasoline stocks fell last week, according to market sources who cited American Petroleum Institute figures on Tuesday.
Crude stocks fell by 2.4 million barrels for the week ended May 13, they said.
U.S. government data is due on Wednesday.
In this context, Brent crude was up 23 cents, or 0.2%, at $112.16 a barrel at 0633 GMT.
The benchmark lost on Tuesday $2.31 to $111.93.
U.S. West Texas Intermediate (WTI) crude climbed 71 cents, or 0.6%, to $113.11 a barrel, reversing partly $1.80 losses per barrel showed in previous session.
However, prices could still face some pressure after reports that the United States was allowing Chevron Corp to negotiate oil licences with Venezuela’s national producer.
In freight markets, the Baltic Exchange’s main sea freight index firmed on Tuesday on higher rates for capesize and panamax vessels.
The overall index, indeed, was up 10 points, or 0.3%, at 3,095 points.
Particularly, the capesize index gained 21 points, nearly 0.5%, at 3,950 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $173 to $32,754.
The panamax index was up 13 points, or about 0.4%, at 3,254 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased $122 to $29,290.
The supramax index fell three points to 2,745 points.
In equity markets, U.S. stock indexes on Tuesday rallied to 1-week highs and closed moderately higher.
Risk sentiment improved.
A rally in Chinese technology stocks on optimism that China may ease a year-long crackdown on the sector, supported stocks.
Big tech stocks led the rally.
Apple and Microsoft were among the biggest winners.
Small-company stocks rose more than the rest of the market, a signal that investors are feeling bullish about the economy.
Treasury yields rose.
In addition, hopes that lockdowns in Shanghai may soon be ended fueled gains in the overall market.
The Eurozone economy grew more than expected in Q1, that pushed up the Euro Stoxx 50 by +1,52% boosting also US stocks.
Investors welcomed a Commerce Department report that showed stronger-than-expected U.S. economic data on April retail sales and April manufacturing production.
Particularly, U.S. Apr retail sales rose +0.9% m/m, slightly weaker than expectations of +1.0% m/m, but Mar was revised upward to +1.4% m/m from the previously reported +0.5% m/m.
Apr retail sales ex-autos rose +0.6% m/m, stronger than expectations of +0.4% m/m.
U.S. Apr manufacturing production rose +0.8% m/m, stronger than expectations of +0.4% m/m.
U.S. May NAHB housing market index fell -8 to a 23-month low of 69, weaker than expectations of 75.
In this context, Fed Chair Powell said the “U.S. economy is strong, and we think it’s well-positioned to withstand less accommodative monetary policy.”
Also, St. Louis Fed President Bullard said a “super-strong” U.S. labor market will help support consumer spending and keep the economy on track, and he sees a “fairly good performance for the U.S. economy through 2022 and 2023.”
Thus, on Wall Street, the S&P 500 advanced 2,02% to 4,088.85.
The Dow Jones Industrial Average rose 1.3% to 32,654.59.
The Nasdaq gained 2.8% to 11,984.52.
Meantime, Asian stock markets were mixed Wednesday.
Shanghai and Hong Kong declined.
Tokyo and Seoul advanced.
Particularly, the Shanghai Composite Index lost 0.4% to 3,082.12 and the Hang Seng in Hong Kong sank 0.6% to 20,471.54.
The Nikkei 225 in Tokyo gained 0.6% to 26,824.46 after the government reported economic output shrank 0.2% in the first three months of 2022.
That was stronger than expectations.
The Kospi in Seoul gained 0.2% to 2,624.64 and Sydney’s S&P-ASX 200 advanced 0.9% to 7,187.10.
India’s Sensex opened up 0.5% at 54,590.12.
Bangkok declined while New Zealand and other Southeast Asian markets rose.
In currency trading, this morning the dollar declined to 129.11 yen from Tuesday’s 129.42 yen.
The euro sank to $1.0536 from yesterday’s $1.0543.
The dollar index on Tuesday fell by -0.777 (-0.75%) and posted a 1-week low.
The rally in stocks reduced the liquidity demand for the dollar.
Also, strength in GBP/USD weighed on the dollar as the British pound climbed to a 1-1/2 week high Tuesday on stronger-than-expected UK labor market data.
In addition, EUR/USD pushed higher Tuesday and weighed on the dollar on hawkish ECB comments and better-than-expected Eurozone economic data.
On the weather side, between today and Friday, much of the Midwest and Plains will see at least some measurable moisture.
The biggest rainfall totals will likely happen in an area stretching between northern Missouri and northern Minnesota, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s 8-to-14-day outlook predicts more seasonally wet and cool conditions in parts of the Northern Plains and upper Midwest between May 24 and May 30.
Meantime, per latest data released by the North Dakota Wheat Commission, producers in North Dakota have been able to make some planting progress in recent days after warmer temperatures over the weekend and windy conditions that helped dry soils.
However, producers in many areas have yet to start planting.
Precipitation over the last week ranged from around an inch to 4-5 inches or more in isolated areas.
The most recent USDA Crop Progress report indicates that spring wheat planting in North Dakota is 17% complete, up from 8% last week, but substantially behind both last year’s pace of 81% and the five-year average of 60%.
There are chances of precipitation towards the end of the week which could stall progress for some producers and further delay the start of planting for others.
Planting in Minnesota is also much delayed with only 5% of their spring wheat acres in the ground.
Producers in Montana and South Dakota have made more progress since they have had drier conditions with planting progress at 70 and 78%, respectively.
Emergence of the spring wheat crop is also slower than normal with only 16% of the U.S. spring wheat emerged, behind 44% last year and 30% on average.
Durum wheat planting also made some progress over the last week with 9% of the crop planted, well behind over 50% last year.
Many producers in the northwest part of the state (the largest durum producing region) received 2-4 inches of rain in the last week.
While the moisture was welcome to alleviate last year’s drought conditions, it continues to delay planting progress.
In Montana, about 50% of the crop has been planted, near average.
Worries about the drought in the United States remain however.
Crop scouts on the first day of an annual three-day tour of Kansas projected an average yield for hard red winter wheat in the northern portion of the drought-hit state at 39.5 bushels per acre, down from 59.2 bushels in 2021.
The Wheat Quality Council tour on Tuesday projected Colorado’s drought-hit 2022 wheat crop at 40.1 million bushels with a yield of 28.6 bushels per acre.
The figure is well below U.S. Department of Agriculture’s May 12 forecast for a 49.6 million-bushel Colorado crop.
Nebraska’s wheat crop should total 36.9 million bushels based on observations by the Nebraska Wheat Board.
The USDA last week also projected Nebraska’s crop at 36.9 million bushels.
In this context, corn basis bids were steady to firm across the central U.S. on Tuesday after rising 8 to 10 cents at two processors and trending 2 to 5 cents higher at two other Midwestern locations.
Soybean basis bids were mostly steady across the central U.S., but did firm 7 cents at an Iowa river terminal.
The funds were net sellers for 5,500 lots of corn but net buyers for 10,000 lots of soybeans and 13,000 lots of wheat.
From Canada, seeding progress is lagging in each of the Prairie provinces.
In Alberta, spring wheat seeding is 26% complete as of May 10th (compared to 42% at this time last year).
Seeding in Saskatchewan is 4% done as of May 9th (which is 23% behind average).
In Manitoba, there has been very little progress.
The Prairie provinces are suffering from a lack of moisture in the west and excessive moisture in the east.
As for durum, durum seeding is 3% complete in Saskatchewan.
There was no update for durum seeding progress in Alberta.
A large portion of the durum area in Canada and the Northern Plains are dry.
Meantime, Canadian wheat exports for week 40 ending May 8th were at 334.6k mt for a season total of 8.9 million mt.
Week 40 durum exports were 43.2k mt for a season total of 1.9 million mt.
From South America, on Thursday May 12, the Government of Brazil (GOB) cut import tariffs for several categories of goods, focusing on food staples in an attempt to reduce consumer inflation.
Import tariffs on beef, chicken, corn, wheat flour, wheat, cookies and bakery products were eliminated through the end of the year.
As a result, there may be a slight uptick in specialty, high-priced beef imports from the United States.
In addition, it is possible that wheat imports from the United States may rise marginally due to the lower tariffs.
Overall, given the global demand and price dynamics, as well as depreciated value of the Brazilian real, Usda attaché does not anticipate that the lower import tariffs will significantly alter Brazil’s agricultural trade dynamics.
In Europe, grain markets were hesitant after the very strong rise of the day before.
Rapeseed prices, meantime, fell slightly yesterday, in the wake of canola and oil prices.
In France, and generally in Western Europe, the water deficit combined with unprecedented temperatures for the season raise fears of a downward revision of yields.
Meantime, the EU exported 22.95 million tonnes of wheat as of May 15 against 23.87 million last year to date.
Barley exports are posted at 6.70 million tonnes against 7.07 last year.
Corn imports increased to 14.22 million against 13.37 in 2021.
Soybean imports reached 12,42 million tonnes, which is a year-over-year decline of 5.8% so far.
Rapeseed imports also fell to 4.73 million tonnes, against 5.86 last year.
Finally, soymeal imports are also trending slightly below last year’s pace, with 14.15 million metric tons during the same period.
From North Africa, Egypt’s supply minister said on Tuesday a deal with India to directly purchase 500,000 tonnes of wheat outside the usual tender system had been agreed but not signed yet.
Egypt was currently focussed on collecting wheat from the local harvest, which typically runs until July or August, rather than imports, Moselhy added.
India’s government confirmed on Tuesday that it would still allow shipments awaiting customs clearance and exports to Egypt.
From the Black Sea basin, Russia’s 2022/23 wheat crop may reach 85 million tonnes, Dmitry Rylko, the head of the IKAR agriculture consultancy, said on Wednesday, in what he called a “conservative” estimate.
Russia had the potential to export 39 million tonnes of wheat in 2022/23, he added in a presentation at the GrainCom conference in Geneva.
Meantime, U.N. chief Antonio Guterres is expected to publicly disclose on Wednesday that he is in talks with Russia, Ukraine, Turkey, the United States and the European Union aimed at restoring Ukraine grain shipments and reviving fertilizer exports from Russia and Belarus, U.N. officials said.
From the Middle East, deputy governor of the Saudi Grains Organization (SAGO), emphasized that there is no crisis in the grain supplies in the Kingdom.
There is plenty of stocks in the Kingdom as SAGO’s strategy relies on different sources from multiple countries and continents and not on a single source of grains.
Also, Al-Shabanat stated that a contract was signed last month to make available large quantities of grains, which will be in the Kingdom’s markets during the fourth quarter of this year.
Meanwhile, Oman also affirmed it currently has sufficient quantity of wheat in stock to sustain until the end of this year, a top official of Oman Flour Mills Company (OFMC) said.
“Two shipments of wheat arrived from India and the third shipment will arrive shortly.
Apart from that, we also have regular shipments coming from Australia and these stocks are sufficient until the end of this year,” said Haitham Mohamed Al Fanna, CEO of Oman Flour Mills Company in an interview.
Iraq‘s economic ministerial council agreed on increasing the price for state purchases of local wheat by 100,000 dinars to 850,000 dinars ($583) per tonne, state news agency reported on Tuesday.
Iraq, is taking urgent measures to secure strategic stocks of wheat and support a local food subsidies programme.
Iraq’s current wheat reserves are sufficient for four months after buying 800,000 tonnes from local farmers, a trade ministry spokesman, Mohammed Hanoun, told state news agency INA on Tuesday.
($1 = 1,458.5200 Iraqi dinars)
From the Middle Kingdom, China will buy 40,000 tonnes of local frozen pork for its state reserves on May 20, according to a notice on the website of the reserves management centre.
The country is buying up pork to support prices.
Meantime, per latest data released on Wednesday by the Chinese General Administration of Customs, corn imports in April, saw corn at 2.21 MMT, that was +19,4% compared to April 2021.
Year to date total corn imports were at 9,31 MMT, that represents a +8,5% y/y.
Wheat imports in April totalled 700.000t.
That was down 22,4% from April 2021 and down 1,8% y/y, as year to date total wheat imports stood at 3,75 MMT.
As for barley, total imports of 800,000t in April were down 30,3% from April 2021, and were down 28,6% y/y, as total barley imports reached 2,53 MMT.
As for sorghum, total imports of 820,000 t in April represented a 20,4% decline from the same month a year ago, but still 11% higher than last year as, total sorghum imports were at 3,41 MMT.
Pork imports in April were at 140.000t, that was down 67.6% from April a year ago, and 65.1% year to date as total imports were at 560,000t.
From Australia, strength to strength, local wheat values yet again firmed with the same theme continuing to drive the market.
Delivered Geelong/Melbourne wheat was up again; ASW1 and SFW1 prices bid around $500-505/t.
Northern feedgrain markets gained another $5-10/t.
Barley continues to gain as it just gets harder to get hands on stocks.
Price quotes were around $480/t delivered Geelong/Melbourne and delivered Downs.
New crop canola markets gained some ground with bids up $5-10/t.
WA grower bids were around $1220/t FIS Kwinana.
Congestion and port vessel waiting times at all Western Australian ports and most in the east, worsened again this week.
Average wait times at Kwinana have increased from 20 days last week to 23 days this week, with 10 vessels anchored.
Wait times in Brisbane have increased from 13 days last week to 21 days this week.
Over 4 million tonnes of grain currently is listed on Australia’ shipping stem for May.
It is a huge task to get this crop out the door before the next, potentially big, crop hits the bin.
On the international scene, Japan issued a regular tender to purchase 174,744 t of milling wheat from USA, Canada or Australia, that closes on Thursday.
Of the total, just over a third (34%) is expected to be sourced from the U.S. .
The grain is for shipment in July.
Bangladesh issued an international tender to purchase 50,000 t of milling wheat from optional origins that closes on May 29.
The grain is for shipment 40 days after a contract is signed.
Taiwan’s MFIG purchasing group bought about 55,000 tonnes of animal feed corn to expected to be sourced from South Africa in an international tender which closed on Wednesday.
The corn was purchased at an estimated premium of 248.39 U.S. cents a bushel c&f over the Chicago December 2022 corn contract.
Seller was believed to be trading house Viterra.
If sourced from South Africa, the tender had sought shipment between Aug. 16 and Sept. 4.
That’s all.
To all of you, we wish you a good day.
Author: Sandro F. Puglisi
