US farm markets, were mixed yesterday amid some uneven technical maneuvering.
Corn prices weren’t able to move the needle much in either directions, finishing the session up 0.22%.
Soybeans showed some moderate upside, in contrast, spurred by export optimism following a healthy round of sales data from USDA, and closed 1.67% higher.
Soymeal was a large supporting factor, ralling by 2.73%.
Soybean oil, in contrast, was a drag on the market, as was down 1.27%.
Wheat prices, on their part, continued to fade lower, despite some not-so-good yield reports coming out of Kansas.
The winter wheats led the way to the down side, as Chicago was 2.46% lower by the close while Kansas City shedded 2.21%.
MPLS spring wheat was down 1.64%.
In energy markets, oil prices fell on Friday as investors worried that weakening global economic growth and tighter central bank monetary policy could curb a recovery in fuel demand.
On this wake, the International Monetary Fund (IMF) urged Asian economies to be mindful of spillover risks from monetary tightening as they faced a choice between supporting growth with more stimulus and withdrawing it to stabilise debt and inflation.
Crude gains, however, have been limited this week, due to the uncertain path of demand.
In the United States, in contrast, Americans were getting back behind the wheel, despite higher fuel prices, according to a report from the Federal Highway Administration on vehicle miles.
On the gasoline supply side, South Korea’s third-largest refiner S-Oil halted production at its No. 2 alkylation unit and related processes at its Onsan refinery due to a blast.
On the other hand, Iran is having a tougher time selling its crude now that more Russian barrels are available.
Iran’s crude exports to China, indeed, have fallen sharply since the start of the Ukraine war as Beijing favoured heavily discounted Russian barrels, leaving almost 40 million barrels of Iranian oil stored on tankers at sea in Asia and seeking buyers.
In this context, Brent futures for July fell 59 cents, or 0.53%, to $111.45 a barrel by 0648 GMT, while U.S. West Texas Intermediate (WTI) crude for June fell 56 cents, or 0.5%, to $111.65 on its last day as the front-month.
The more actively traded WTI contract for July was down 0.8% at $109.01 a barrel.
U.S. crude rose $2.62 on Thursday to $112.21.
Brent crude gained $2.93 the previous session to $112.04.
In freight markets, the Baltic Exchange’s main sea freight index rose on Thursday, due to higher rates for all vessels.
The overall index, indeed, was up 100 points, or 3.1%, at 3,289 points, the highest since Dec. 9.
The capesize index gained 221 points, or 5.31%, to 4,385 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $1,837 at $36,368.
The panamax index was up 43 points, or 1.3%, at 3,370 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased $387 to $30,326.
The supramax index rose 42 points to 2,800 points.
In equity markets, U.S. stock indexes Thursday extended Wednesday’s sharp losses, with the S&P 500 and Nasdaq 100 falling to 1-week lows and the Dow Jones Industrials dropping to a 14-month low.
Concerns about economic growth prospects against a backdrop of rising inflation and tighter Fed policy, weighed on stocks.
Disappointing earnings results from Cisco Systems and Kohl’s weighed on the overall market.
Cisco Systems slumped 13.7% after the seller of routers and switches cut its profit forecast amid supply chain constraints.
Also, rail stocks tumbled Thursday after Citigroup downgraded the sector.
Weaker-than-expected U.S. economic data Thursday also weighed on stocks.
U.S. weekly initial unemployment claims, indeed, unexpectedly rose +21,000 to a 3-1/2 month high of 218,000, showing a weaker labor market than expectations of a decline to 200,000.
The U.S. May Philadelphia Fed business outlook survey fell -15.0 to a 2-year low of 2.6, weaker than expectations of 15.0.
U.S. Apr existing home sales fell -2.4% m/m to a 1-3/4 year low of 5.61 million, weaker than expectations of 5.64 million.
U.S. Apr leading indicators unexpectedly fell -0.3% m/m, weaker than expectations of unchanged.
On the positive side, Synopsis jumped 10.3% after the software company raised its financial forecasts for the year.
Retailers and other companies that rely on direct consumer spending mostly rose.
Amazon added 0.2% and Expedia climbed 5.3%.
In this context, on Wall Street, the S&P 500 fell 0.6% to 3,900.79.
The Dow Jones Industrial Average fell 0.8% to 31,253.13.
The Nasdaq slipped 0.3% to 11,388.50.
Meantime, Asian stock markets rose on Friday.
The Shanghai Composite Index rose 1.2% to 3,134.24 after the Chinese central bank reduced its rate on a five-year loan, which would shore up weak housing sales by cutting mortgage costs.
The one-year loan rate that affects commercial borrowers was left unchanged.
That suggests Beijing is “trying to keep easing targeted and that we shouldn’t expect large-scale stimulus,” analysts said.
The Nikkei 225 in Tokyo jumped 1.3% to 26,742.67 after Japanese consumer inflation rose to 2.5% in April from the previous month’s 1.3%.
It was the first time since 2008 that inflation was above the central bank’s 2% target.
Core inflation, which excludes fresh food and energy, rose to a seven-year high of 2.1% from March’s 0.8%.
Despite that, economists say the central bank is unlikely to change interest rates due to the weakness of the economy, which contracted in the last quarter.
The Hang Seng in Hong Kong gained 2% to 20,532.39 and the Kospi in Seoul advanced 1.8% to 2,638.28.
Sydney’s S&P-ASX 200 added 1.1% to 7,139.60.
India’s Sensex opened 2.1% higher at 53,920.39.
New Zealand and Southeast Asian markets also rose.
In currency trading, the dollar gained to 127.85 yen from Thursday’s 127.74 yen.
The euro declined to $1.0565 from $1.0598.
The dollar index on Thursday fell by -1.100 (-1.06%) tumbling to a 2-week low, on lower T-note yields and weaker-than-expected U.S. economic data.
On the weather side, more wet weather is rolling across the central U.S. later this week, with a band stretching from Arkansas to Michigan likely to see another 0.75” or more between today and Monday, per the latest 72-hour cumulative precipitation map from NOAA.
The agency’s new 8-to-14-day outlook predicts more seasonally wet weather for much of the Corn Belt between May 26 and June 1, with most of the U.S. likely to see warmer-than-normal conditions during that time.
On the supply side, the 2022 Wheat Quality Council’s Hard Winter Wheat Tour across Kansas wrapped up on May 19.
During the three days of wheat scouting, tour participants traveled six routes from Manhattan to Colby to Wichita and back to Manhattan.
This year’s tour hosted people from 24 U.S. states plus Mexico and Canada in 20 vehicles while traveling across the state.
The three-day average yield for the fields that were calculated was 39.7 bushels per acre.
While an estimated 7.4 million acres of wheat were planted in the fall, the Kansas wheat crop varies in condition based on planting date and amount of moisture received.
What Mother Nature has in plan for the wheat crop still remains to be seen, but the tour captures a moment in time for the yield potential for fields across the state.
The official tour projection for total production of wheat to be harvested in Kansas is 261 million bushels, indicating that tour participants thought abandonment might be higher than normal at 11%.
This number is the average of estimated predictions from tour participants who gathered information from 550 fields across the state.
Based on May 1 conditions, NASS predicted the crop to be higher at 271 million bushels, with a yield of 39 bushels per acre and abandonment at only 6%.
Overall, the Kansas wheat crop is spotty and short, but the eastern half of the state generally had better growing conditions than the western half.
On the first day of the tour, crop conditions started out above the tour average, but deteriorated as the groups made their way west from Manhattan to Colby.
Another surprise of this year’s tour was the lack of disease pressure, especially wheat streak mosaic virus.
Also, there was little to no insect pressure of concern for reducing yield.
The USDA estimate for the Nebraska wheat crop is 36.9 million bushels, down from 41.2 from last year.
The estimated yield average is 41 bushels per acre.
The Colorado crop is estimated at 49.6 million bushels, down from 69.6 million bushels last year.
The estimate is for an average of 31 bushels per acre across the state.
Brad Erker, executive director of Colorado Wheat, estimated the crop at 40.1 million bushels, based on a yield of 28.6 bushels per acre, 1.4 million acres harvested and 30% abandonment rate.
Oklahoma reported that the state’s production is estimated at 60 million bushels, down from 115 million bushels last year, with 25 bushels per acre yield.
These fields are still 3-6 weeks from harvest.
A lot can happen during that time to affect final yields and production.
On the demand side, the weekly Export Sales report showed 435,310 MT of old crop corn export bookings in the week that ended on May 12.
That was on the top end of estimates and more than double the previous week.
Sales were split between Taiwan, South Korea, China, ranging from 59,300 to 64,900 MT.
New crop sales totaled 588,462 MT, well above the week prior.
Much of the new crop total was to China, at purchases of 544,000 MT.
As for sorghum sales were reported at a net reduction of 67,323 MT.
China was the lead buyer of 63,700 MT, but 124,700 MT of that was switched from unknown, with cancelations of 63,100 MT (hints the net reduction).
Corn export shipments, however, shifted 8% lower week-over-week and 11% below the prior four-week average.
As for soybean, the report tallied old crop bean bookings at 752,689 MT, well above last week and above the trade range of estimates.
China got the largest chunk at 392,600 MT, with the Netherlands buying 84,600 MT.
New crop bookings were nearly double the previous week at 149,500 MT.
Unknown destinations was a bulk of the new crop purchases at 113,500 MT.
Soybean export shipments firmed 45% above the prior four-week average.
Soybean meal sales totaled 293,172 MT in the week of 5/12, with soybean oil at a net reduction of 495 MT.
As for wheat data indicated just 8,515 MT of old crop wheat booked in the week of May 12.
That is normal for this late in the MY.
New crop wheat bookings were above the expected range of estimates at 325,575 MT.
Wheat export shipments, meantime, inched 1% above the prior four-week average.
Clearly, the US export program is lagging for old crop significantly.
There has been rumblings from the Biden administration that they are going to get more active in the donation of grains from the US.
This could right the ship on the export front, despite the headline flashes coming in well under the need pace to hit the USDA export estimate.
In this context, corn basis bids were largely steady across the central U.S. on Thursday but did tilt 5 cents higher at an Illinois processor.
Soybean basis bids were steady to firm after trending 5 to 15 cents higher across seven Midwestern locations.
The funds were net sellers yesterday for 11,500 lots of wheat but neutral in corn and net buyers for 9,000 lots of soybeans.
In Canada, sowing is progressing but remains much lower than in previous years with only 29% of the wheat area sown on 16 May, i.e. 50% below normal for the season.
Only 27% of barley sowing has been completed, compared to 46% on average to date.
Ditto for canola where only 19% of the surfaces are planted.
From South America, Argentina, the world’s No. 2 corn exporter, could raise its limit for exports of the 2021/22 harvest of the grain to 35 million tonnes, from 30 million tonnes currently, a source at the ministry of agriculture said on Thursday.
The South American country, deep into its corn harvest, limited exports for the current cycle to 25 million tonnes in December from a 41.6 million tonne cap the season before, hoping to counter inflation.
It lifted it to the current level earlier in May.
“We are waiting for the late corn to be threshed, which is the one that is sown last, with the expectation that there will be 35 million” tonnes of the grains authorized for export, the source with direct knowledge of the plans said.
The country’s 2021/22 corn harvest, including grains not expected to be commercialized, is estimated at 57 million tonnes, government data show. The harvest is 44% complete. The Buenos Aires grains exchange forecasts corn production for commercial use at 49 million tonnes.
Exporters have made sworn declarations of 2021/22 corn sales for 27 million tonnes so far, Ministry of Agriculture data show.
According to state statistics agency INDEC, last year Argentina exported around 40 million tonnes of corn, of which 1.5 million tonnes went to Vietnam, 1.2 million tonnes to South Korea and 697,000 tonnes to Egypt.
The ministry source said that with 2022/23 wheat, the planting of which has just started, some 8.5 million tonnes had been registered for export of the 10 million tonne cap, a limit that could be “fine tuned” when the season was more advanced.
In Europe markets continued to pull back.
However, volatility remains very strong.
Extremely dry weather has caused severe damage to grain crops in some parts of France and substantial rain will be needed by early June to allow those in large producing regions to pull through, the technical institute Arvalis said on Thursday.
France, the European Union’s largest grain producer, has seen little rain in the past months and is experiencing record temperatures for May, a crucial month for winter crop development, prompting wheat prices to soar in recent weeks as concerns of tight global supplies worsened.
It usually rains about 200 millimeters between March and June but there were only 50-60 millimeters so far, he said.
In regions with superficial to mid-level soils, about a third of the crop potential had already been lost, with damage on some parcels reaching 50%.
However, it is too early to give a country-wide forecast.
For spring crops, which are at an early stage of development, water use would be crucial.
The French environment ministry on Thursday warned that more water restrictions would be imposed in the event of foreseeable water shortages.
“Whether it be for corn, sunflower or sorghum, when there is no water there is no plant”.
Meantime, many farmers are using their irrigation quota to “save their wheat crops”.
On this wake, farm office FranceAgriMer showed growing conditions for wheat and barley crops in France fell sharply for a second straight week.
An estimated 73% of French soft wheat was in good or excellent condition by May 16, against 82% the previous week.
That followed a 7-percentage-point decline in the previous week and meant the rating was now below a year-earlier score of 79%, the office’s data showed.
Durum conditions also moved down to 74% from 77% a week ago.
Regional data in FranceAgriMer’s cereal report suggested contrasts in growing conditions.
In the Ile de France region around Paris, just 45% of the soft wheat crop was rated good/excellent, while in the Hauts de France, a key production region in the far north, the score was 77%.
Showers on Friday and in the coming days could help crops recover although, as in a previous unsettled spell at the start of the week, rainfall may be erratic.
French barley conditions also dropped sharply, as in the previous week.
The good to excellent rating for winter barley fell 8 percentage points to 71%, while the corresponding score for spring barley dropped 7 percentage points to 69%, FranceAgriMer’s report showed.
Farmers were rounding off maize planting, with 98% of the expected area sown.
In a first published rating for emerged maize plants, FranceAgriMer said 93% of the crop was in good or excellent conditions against 95% a week earlier.
From North Africa, Morocco has wheat reserves sufficient for around four months of consumption, the state news agency (MAP) quoted the government spokesperson Mustapha Baitas as saying on Thursday.
On April 11, Agriculture Minister Mohammed Sadiki said Morocco expected to lose 53% of its cereals harvest after experiencing its worst drought in decades.
Governmental officials in Egypt report that the country’s strategic reserves of vegetable oils are sufficient for the next five and a half months.
Egypt is a major importer of several commodities, including vegetable oils, wheat and more.
From the Black Sea basin, Russia responded to the push from the UN to open some of the Ukrainian ports to allow exports to flow.
Predictably the Russians said (paraphrasing) “sure, no worries… just as long as all the sanctions against Russia are lifted, we will flick the ports back on”.
The UN amazingly buys 50pc of its grain food aid program from the Ukraine.
It’s an interesting one.
Meantime, the Russian Ag. Min has amended the export tax for wheat, barley and corn for the week of May 25-31, 2022.
Particularly, the export duty will be $110.5 on wheat, $76.5 on barley and $76.5 on corn.
Indicative prices will be $357.9 for wheat, $294.3 for barley and $294.3 for corn.
That is compared, with prior week (May 18-24) when the tax was $111.9 for wheat, $76.5 for barley and $77.3 for corn, while indicative price were $359.9 for wheat, $294.3 for barley and $295.5 for corn.
From the Middle Kingdom, China’s soybean imports from Brazil in April surged from the previous month, customs data showed on Friday, with the arrival of delayed cargoes.
China, received 6.3 million tonnes of the oilseed from Brazil in April, up 120% from 2.87 million tonnes in March, according to data from the General Administration of Customs.
The figures were also up from the 5.08 million tonnes China received from its top soybean supplier in the same month last year.
Also, China received 1.64 million tonnes of soybeans in April from the United States, down from 3.37 million tonnes in March.
The figures for U.S. supplies were also down from 2.15 million tonnes in the same month a year earlier.
In the first four months of the year, China’s soybean imports from Brazil stood at 12.7 million tonnes, up from 6.42 million tonnes in the same period a year before.
Shipments from the United States came in at 15 million tonnes, down from 21.27 million tonnes, according to customs data.
Soybean crush margins in China have plunged since early March and were at minus 282 yuan ($41.97) per tonne on Thursday.
($1 = 6.7192 Chinese yuan).
From South East Asia, India is likely to harvest 106.41 million tonnes of wheat in 2022, nearly 4.4% lower than the previous estimate, the farm ministry said on Thursday.
India was earlier projected to harvest a record 111.32 million tonnes this year.
The reduction in output and more than 50% drop in government procurement had prompted New Delhi to ban wheat exports last Saturday.
Meantime, India is considering allowing traders to ship out some of their wheat sitting at ports.
On Tuesday, the government allowed grain awaiting customs clearance to be shipped out.
But traders are pressuring the government to further relax its ban.
The sudden ban has halted trading in many wholesale grain markets.
Domestic wheat prices have dropped more than 4%.
Along with traders, transporters are also getting impatient, with their trucks waiting at ports to unload wheat.
Indonesia will lift its palm oil export ban from Monday, May 23, following improvements in the domestic cooking oil supply situation, President Joko Widodo said on Thursday.
The decision to lift the ban was taken despite the price of bulk cooking oil having not yet reached the targeted 14,000 rupiah per litre price, as the government considers the welfare of 17 million workers in the palm oil industry, the president said in a video statement.
Indonesia’s Palm Oil Association appreciates the government’s decision to lift a palm oil export ban.
Storage tanks, indeed, were reaching full capacity, secretary general Eddy Martono said on Thursday.
From Australia, wheat and barley prices surged this week, ending up anywhere between $15-$55/t for the week.
APW1 track Geel/Melb was up $35 to $510 while barley delivered Geel/Melb was up $40 for the week to $485/t.
H2 wheat hit $570 delivered Brisbane.
Canola prices were down $15-$25/t east coast yesterday with new crop down $50/t.
The latest three-month outlook issued yesterday by the BOM is still predicting above-average rainfall for both June to August and also July to September.
June to August rainfall is very likely to be above median for much of mainland Australia, but below median for south-west Western Australia.
The chance of exceeding median rainfall from July to September is similar although the chance of above average in WA increases from below 40pc to around a 50pc. Minimum temperatures for June to August are very likely to be warmer than median across almost all of Australia.
The BOM indicating that the continuing La Niña, the chance of a negative Indian Ocean Dipole, warmer than average waters around northern Australia, and other localised drivers are likely to be influencing this outlook
Weekly rainfall totals for parts of northern NSW and southern QLD have done nothing to help cotton picking, late sorghum harvest or winter crop sowing.
On the international trade scene, Jordan’s state grains buyer has issued a new international tender to purchase 120,000 tonnes of animal feed barley.
The deadline for submission of price offers in the tender is May 26.
A new announcement had been expected by traders after Jordan made no purchase in its previous tender for barley on Wednesday.
Jordan also issued a new international tender to purchase 120.000t of milling wheat from optional origins that closes on May 24.
This follows a similar tender that closed earlier this week with Jordan passing on the single offer submitted. If it closes a deal on this tender, the grain will be for shipment in August and September.
South Korea purchased 69,000 t of animal feed corn sourced from South America in an international tender that closed yesterday.
The grain is for arrival in late August.
“May 2022 IGC Update”
The International Grains Council on Thursday cut its 2022/23 forecast for world corn production by 13 million tonnes to 1.184 billion.
In its monthly update, IGC lowered its forecast for the corn crop in the United States – where excessive rains have slowed planting – by 9.3 million tonnes to 367.3 million.
It kept its forecast for the 2022/23 corn crop in Ukraine – the world’s fourth-largest exporter of the grain – at 18.6 million tonnes, less than half its 42.1 million tonne forecast for this season.
The IGC cut its 2022/23 wheat production forecast by 11 million tonnes to 769 million, reflecting a lower forecast in the United States (46.8 million versus 49.9 million) and India (105 million versus 111.3 million).
For Russia, the IGC lifted its 2022/23 wheat crop forecast to 84.7 million tonnes from 82.5 million.
The IGC kept its forecast for next season’s wheat crop in Ukraine – the world’s 6th largest exporter of the grain – at 19.4 million tonnes, about 40% lower than the 33 million tonne forecast for this season.
That’s all.
To all of you, we wish you a good day.
Author: Sandro F. Puglisi
