Good morning Farmer Family …
US farm markets were mixed but mostly lower on Tuesday.
Corn eased 0.43%, while soybeans faded about 1%.
The rest of the soy complex also slumped lower, with soymeal posting 1.13% losses, while soyoil tumbled nearly 3% lower.
Winter wheats were firmer, with Chicago SRW picking up 0.4% and KC HRW adding 0.19%, while spring wheat incurred in 1.16% losses.
Corn prices faded amid some technical selling as traders prepared for today’s WASDE report.
Traders expect USDA to raise the U.S. corn carryout by 36 mbu on average to 13.03 billion.
A cut in projected US exports is the underlying theme.
Spillover weakness from soybeans also applied some downward pressure.
Soybean prices suffered a double-digit setback, as a record-breaking harvest in Brazil which continue to move forward, may help offset losses in Argentina.
Soymeal prices were lower after setting new contract highs.
Soy oil tumbled, amid economic uncertainty and increasing harbinger of recession within the next 12 to 18 months.
Chicago SRW wheat prices edged higher, consolidating above a 17-month low.
Weekly USDA data on Monday that showed a decline in winter wheat conditions in the top U.S. producing state, Kansas, kept the focus on persistent drought in part of the U.S. Plains.
Uncertainty over an extension of the Black Sea export corridor helped support prices.
Meanwhile, weather forecasts projecting showers in spring wheat regions have curbed HRS wheat prices.
In this context, corn basis bids were steady to firm across the central U.S. after improving 1 to 5 cents at two Midwestern ethanol plants and moving 2 cents higher at an Ohio elevator.
Soybean basis bids were steady to mixed across the central U.S., after trending as much as 5 cents higher at an Indiana processor and as much as 3 cents lower at a different Indiana processor.
Commodity funds were net sellers of CBOT soybean, soyoil, soymeal and corn futures contracts.
Funds were net buyers of CBOT wheat futures.
On this morning, Chicago wheat prices slid, giving up much of the previous session’s gains.
Soybeans eased, while corn firmed.
Notably, the most-active wheat contract on the Chicago Board of Trade fell 0.4% to $6.95-1/4 a bushel, as of 03:45 GMT, soybeans lost 0.2% to $15.13-1/4 a bushel, while corn rose 0.3% to $6.36-1/4 a bushel.
The wheat market is under pressure from Russian export competition and expectations that a wartime grain corridor from Ukraine will be extended beyond this month.
United Nations Secretary-General Antonio Guterres will meet Ukrainian President Volodymyr Zelenskiy in Kyiv today to discuss extending the deal with Moscow.
Meantime, traders are awaiting the USDA’s March supply and demand report scheduled this afternoon.
In energy markets, oil prices fell by $3 a barrel on Tuesday.
Brent crude futures shed $2.89, or 3.4%, to settle at $83.29 a barrel, while the U.S. West Texas Intermediate crude futures dropped by $2.88, or 3.6%, to close at $77.58 per barrel.
Those were the biggest single day percentage declines for both contracts since Jan. 4.
Powell told Congress the Fed would likely need to increase rates more than expected.
That pushed most commodities and financial markets lower.
The remarks boosted the U.S. dollar.
The dollar index rose as high as 105.65, up 1.3% on Tuesday and the highest since Dec. 6, weighing on dollar-denominated oil by making it more expensive for buyers paying with other currencies.
More pressure came from a contraction in China’s exports and imports in January and February, including crude oil imports.
Prices had been supported by forecasts for tighter supply and higher demand.
U.S. crude production and demand will rise in 2023 as Chinese travel drives consumption, the U.S. Energy Information Administration (EIA) said in its Short Term Energy Outlook.
Chevron Chief Executive had said “the global market vulnerable to any unexpected supply disruption”.
U.S. crude inventories were expected to post an 11th week of drawdowns for last week.
On this morning, oil prices fell for a second straight session.
Brent crude futures dipped 22 cents, or 0.3%, to $83.07 per barrel by 0730 GMT.
U.S. West Texas Intermediate (WTI) crude futures slid 34 cents, or 0.4%, to $77.24 a barrel.
Fed Chair Powell’s comments on ‘higher for longer’ rates spooked markets.
A short rebound in oil earlier on Wednesday, before a reversal, was probably due data from the American Petroleum Institute showed U.S. crude inventories fell by about 3.8 million barrels in the week ended March 3.
However, near-term drivers pointed towards a more bearish.
Gasoline inventories rose by about 1.8 million barrels, while distillate stocks rose by about 1.9 million barrels.
In ocean freight markets, the Baltic Exchange’s main sea freight index extended gains to a 13th straight session on Tuesday, as the index tracking capesize vessels marked its highest level since early-January.
The overall index, indeed, was up 40 points, or about 3.2%, to a more than ten-week high of 1,298.
Notably, the capesize index gained 142 points, or about 10.7%, to 1,471 — the highest since Jan. 10.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, gained $1,175 to $12,201.
The panamax index edged down 2 points, to snap its ten-session winning streak at 1,580.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, were down $21 to $14,219.
The supramax index was down 19 points to 1,161.
In equity markets, US stock indexes Tuesday sold off sharply.
Powell said the peak in interest rates could be higher than anticipated as recent U.S. economic news has come in stronger than expected.
As a result, expectations have increased for the Fed to raise interest rates by 50 bp instead of 25 bp at the March 21-22 FOMC meeting.
Another negative factor for stocks has been the inversion of the yield curve.
Notably, the yield curve Tuesday inverted by the most since 1981 after the 2-year T-note yield exceeded the 10-year yield by more than 100 bp.
The inverted yield curve is often seen as a harbinger of recession within the next 12 to 18 months.
Tuesday’s U.S. economic news was also bearish for stocks after Jan consumer credit rose +$14.799 billion, weaker than expectations of +$25.350 billion.
Negative corporate news on bearish sentiment.
DXC Technology closed down more than -7%.
Rivian Automotive closed down more than -14%.
Nutanix closed down more than -7%.
In this context, Wall Street declined with the S&P 500 dropping 1.5% for one of its worst days of the year so far, and closed at 3,986.37.
The Dow Jones Industrial Average lost 1.7% to 32,856.46, and the Nasdaq sank 1.3% to 11,530.33.
The yield on the 10-year Treasury touched 4%.
It helps set rates for mortgages and other important loans.
The two-year Treasury yield, which moves more on expectations for the Fed, shot up to 5.01% from 4.87% and is at its highest level since 2007.
The U.S. government’s monthly jobs report, due Friday, will provide an update on wages.
On this morning, Asian shares were mostly lower.
Japan’s benchmark Nikkei 225 edged up 0.5% to finish at 28,444.19.
Australia’s S&P/ASX 200 slipped 0.8% to 7,307.80.
South Korea’s Kospi dropped 1.3% to 2,430.93.
Chinese shares sank after officials in Beijing announced plans for a regulatory shakeup.
Hong Kong’s Hang Seng tumbled 2.6% to 20,005.12, while the Shanghai Composite shed 0.6% to 3,266.65.
Asian shares were also under pressure as global equities sold off after hawkish comments from Fed Chair Powell.
In currency trading, on this morning the U.S. dollar rose to 137.72 Japanese yen from yesterday 137.07 yen.
The euro cost $1.0537, down from $1.0551 the previus session.
Going back to analyzing the other agricultural markets …
From South America, Brazilian national agricultural agency, Conab reported at 4 Mar, the 2022-23 first (full season) maize harvest was 23pc complete (17pc previous week, 26pc previous year).
Early results from the harvest in Rio Grande do Sul indicated there were crop losses due to hot and dry conditions.
Precipitation hampered progress in Paraná, although rains were deemed beneficial for crops currently in the reproductive phase.
Second (safrinha) maize crop plantings were 64pc done (49pc previous week, 75pc previous year).
The optimal planting window in Mato Gross had closed, with about 8pc of fields not yet planted.
However, already sown area showed good initial crop development.
Soybean harvest was 44pc complete (34pc previous week, 53pc previous year).
Harvest in Mato Grosso was nearing completion, with the crop seen in satisfactory condition.
Rains in Paraná hampered progress, while results from the harvest in Rio Grande do Sul confirmed crop losses due to drought.
Brazil’s Safras and Mercado reported 1st crop harvest at 35.4% finished, slightly above the 5-yr average pace.
2nd crop planting was shown as 57% finished for the Center-South region as of 3/5, that trails the 5-yr average by 8.2% points.
AgRural reported the Center-South corn planting for Brazil reached 70% complete.
That compared to 55% last week and 80% last year.
AgRural also reported soybean harvest advanced by 10% points through the week to 43% complete.
Meanwhile, producer selling is accelerating due to harvest progress and a serious lack of on farm storage.
In other news, corn ethanol production is expected to jump nearly 37% higher in 2023/24 to 158.5 billion gallons, according to the country’s National Corn Ethanol Union.
That’s an exponential increase since 2017/18, when production totaled 137.4 million gallons, according to Unem’s chief executive, Guilherme Nolasco.
“Even with all the adversities faced by effects such as the pandemic, reduced economic activity, tax policies and the electoral process, we should close the next crop with growth of 1,053% compared to 2017,” he noted.
In Europe, grain and oilseed, continued to slump.
Prospects for a renewal of the Ukraine Grain Deal weighed on the grain market.
In Russia, exports remain dynamic and highly competitive.
Beneficial rains in France are also relieving the water stress observed this winter.
Rapeseed prices declined amid oils sold off and dynamic imports.
European Commission data show EU soft-wheat exports were 21.02Mt by 5 March, compared to 19.52Mt last year.
That represents nearly 8% increase.
Leading destinations include Morocco (3.12Mt), Algeria (2.85Mt) and Nigeria (1.82Mt).
As for barley, however, exports fell about 30% to 4.06 million tonnes against 5.83.
Corn imports were 18.57Mt, up from 11.61Mt last year.
Ukraine, Brazil, Canada, Serbia and Russia were the top five suppliers.
Ditto for rapeseed with to date 5.67 million tonnes against 3.54 last year.
Soybean imports have reached 7.48 MMT, which is moderately trailing last year’s pace so far.
EU soymeal imports are also down year-over-year, with 10.53 million metric tons during the same period.
However, the Commission said that it was still experiencing problems compiling grain trade figures from Germany and Italy.
Export data submitted by Germany from November may be inaccurate following the country’s switch to a new declaration system, while for Italy import data was available only until the end of November, it said in a note.
A breakdown of the EU data showed France remained by far the biggest EU soft wheat exporter this season, with 8.39 million tonnes shipped, followed by Romania with 2.58 million, Germany with 2.47 million, Latvia with 1.90 million and Lithuania with 1.85 million.
In maize, Spain remained the leading EU maize importer so far in 2022/23 with 6.56 million tonnes, ahead of the Netherlands at 2.21 million, Portugal with 1.51 million, Hungary with 1.36 million and Poland with 1.28 million, the data showed.
Meantime, France has reported an outbreak of highly pathogenic H5N1 bird flu among red foxes northeast of Paris, the World Organisation for Animal Health (WOAH) said on Tuesday, as the spread of the virus to mammals raised global concerns.
After three foxes were found dead in a nature reserve in Meaux near where gulls had died, one of the foxes was collected and tested, WOAH said in a report, citing French authorities.
The World Health Organization last month described the bird flu situation as ” worrying.
The virus infected a cat in France in late December.
It has also been detected in minks in Spain, foxes and otters in Britain, sea lions in Peru and grizzly bears in the United States.
From Ukraine, UN secretary-general António Guterres arrived in Poland on Tuesday, on his way to Ukraine.
He will meet with Ukrainian President Volodymyr Zelenskiy in Kyiv today.
A UN statement said the pair would discuss the continuation of the Black Sea Grain Initiative in all its aspects, and other pertinent issues.
Russia indicated it will agree to an extension as long as its own agricultural interests are also given consideration.
In other news, Ukrainian sunflower seed exports may decrease 29% to up to 1.2 million tonnes in the 2022/23 September-August season amid in a stable work of the Black Sea grain export corridor, analyst APK-Inform said on Tuesday.
From Russia, Russia will not change export duties on grains before the end of the current agricultural season on June 30, 2023, the country’s agricultural minister said in an interview with the Kommersant business newspaper on Tuesday.
Dmitry Patrushev told the paper: “I think the duty is managing itself, no adjustments should be made before the end of the year.”
Patrushev said Russia had exported more than 28 million tonnes of grain so far this season and planned to export another 25-30 million tonnes over the remaining four months.
Russia’s IFX reported 40 MMT of grain exports for the 22/23 MYTD.
Their full year forecast remains 55 – 60 MMT for all grain.
However, Sovecon said on Tuesday that it has lowered the 2022/23 Russian wheat export estimate by 0.1 million tonnes to 44.1 million tonnes.
The forecast has been revised due to noticeably lower February exports compared to the initial expectations amid a prolonged period of stormy weather, it said.
From the Middle Kingdom, according to Chinese customs data, cumulative 2023 (Jan/Dec) soybean imports at the end of Feb was estimated at 16.2Mt (up 16pc year on year).
The country seeks to boost local supplies to guard against the relatively late harvest commencing in Brazil.
China’s meat demand is likely to increase this year, which should accelerate soymeal sales.
China is by far the world’s top soybean importer.
From South East Asia, Malaysia benchmark crude palm oil futures will average 3,760 ringgit ($831.86) a tonne in 2023, down from 4,920 ringgit in 2022, pressured by lower gasoil prices, leading analyst James Fry said on Wednesday.
Palm oil futures contract will trade at 3,350 ringgit per tonne by the end of the year, Fry, the chairman of commodities consultancy LMC International, said at a conference.
“The futures markets indicate gently falling crude and slightly faster falls in gasoil prices”, he said.
Biodiesel exports are expected to decline in the coming years, as a result of the environmental policy imposed by importing countries.
Palm oil prices track movement on crude and gasoil futures as the vegetable oil is used as biodiesel feedstock.
However, another industry analyst, Dorab Mistry, said on Wednesday Malaysian palm oil is expected to trade between 4,000 and 5,000 ringgit ($1,106) per tonne from now until August as Indonesia’s ambitious biodiesel mandate will keep stocks tight in the first half of 2023.
Benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange fell to 4,195 ringgit a tonne by the midday break on Wednesday.
“The Indonesian B35 programme will keep stocks tight in the first half of 2023,” Mistry told an industry conference.
Indonesia raised the mandatory biodiesel blending level to 35% starting in February, from 30% earlier, to reduce diesel fuel imports amid high global energy prices and to reduce emissions.
In Malaysia stockpiles of the vegetable oil at the end of January expanded by 3.26% from the previous month to 2.27 million tonnes.
But Malaysian stocks could drop below 2 million tonnes because of output disruptions caused by heavy rainfall and rising exports said Mistry.
($1 = 4.5200 ringgit).
From Australia, local markets continued to produce a mixed bag.
Monday’s grower wheat bids were down a couple of bucks over the day along the East Coast, however buyers were happy to continue to look at stock in certain sites.
WA values remained flat over the course of the day.
ABS data has confirmed Australia managed to export a record 3.3Mt of wheat in January, easily beating the previously monthly record of 2.8Mt set in 2022.
China was the biggest buyer at 945,185 tonnes, followed by South Korea, 352,622 tonnes and The Philippines, 333,895 tonnes.
There is a decent rainfall event on the forecast for Qld with 25-100mm expected for central and southern cropping regions, except for the southwest which looks like it will miss out.
Northeast NSW looks set to receive 15-50mm.
As expected, the Reserve Bank of Australia lifted the official cash rate yesterday by 0.25 percent to 3.6pc, the 10th consecutive rate rise and the highest cash rate since 2012.
On the international trade scene, Jordan reportedly bought 60,000t wheat in a tender that closed Tuesday at US$315.30/t, for August shipment.
It issued a new tender for 120,000t wheat.
Offers line up, in today ODC Tunisia durum wheat tender, saw a ranging price between $455.89 and $485.00 per tonne C&F, with an average price of $468.16/t.
The lowest offer was made by the Italian trading house Casillo.
Others were AGT, Viterra, Richardsons, Finagrit and Amber.
South Korea’s Major Feedmill Group (MFG) has purchased an estimated 68,000 tonnes of animal feed corn expected to be sourced from South America in an international tender for up to 70,000 tonnes on Wednesday.
The tender sought corn sourced only from South America or South Africa.
It was bought partly at an estimated outright price of $339.98 a tonne c&f and partly a premium of 239.84 U.S. cents a bushel c&f over the Chicago September 2023 corn contract, both plus a $1.50 a tonne surcharge for additional port unloading.
Seller was said to be trading house Viterra.
About 37,000 tonnes was bought at the premium and the rest at the outright price.
The corn was sought for arrival in South Korea around July 20.
Shipment from South America was sought between May 12-June 10 and from South Africa between May 22-June 20.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
