US farm markets continued have not a clear direction on Thursday.
Corn prices faded 0.28% lower.
Soybeans again pushed higher, closing with gains more then 0.5%.
Soymeal ended the day with 1% gains.
Soy oil prices were up 0.64%.
In contrast, a quickly strengthening U.S. Dollar triggered more technical selling and profit-taking that slashed some wheat contracts more then 2.7%, posting another double digit loss day.
Particularly, CBOT SRW futures were 2.26% lower at the close.
KC HRW futures were 2.73% down at the bell.
MPLS spring wheat futures ended the day with 1.5% losses.
In energy market, oil prices rose on Friday, set for their sixth weekly gain, amid concerns of tight supplies as major producers continue their policy of limited output increases amid rising fuel demand.
Thus, Brent crude futures climbed 57 cents, or 0.6%, to $89.91 a barrel at 07:34 GMT, after falling 62 cents during the previous day. However, prices did reach $91.04 earlier in that session, the highest since October 2014.
U.S. West Texas Intermediate (WTI) crude futures rose 54 cents, or 0.6%, to $87.15 a barrel, having declined 74 cents on Thursday.
WTI also reached a seven-year high of $88.54 earlier in the session.
Both Brent and WTI are set to rise for a sixth week, the longest weekly streak since October, when Brent prices climbed for seven weeks while WTI gained for nine.
This year, prices have gained about 15% amid geopolitical tensions between Russia and the West over Ukraine as well as threats to the United Arab Emirates from Yemen’s Houthi movement that have raised concerns about energy supply.
On the demand side, crude oil imports in China, the world’s biggest importer of the commodity, could rebound by a much as 7% this year, reversing 2021’s rare decline as buyers step up purchases for new refining units and to replenish low inventories, analysts and oil company officials said.
In freight market, the Baltic Exchange’s dry bulk sea freight index stopped a 14-session losing streak on Thursday, as gains in capesize rates outweighed losses in the panamax and supramax segments.
The overall index, which factors in rates for capesize, panamax and supramax vessels, indeed, edged 6 points higher to 1,302.
Particularly, the capesize index gained 116 points, or 16.5%, to 818, crawling up from a 1-1/2 year low.
Average daily earnings for capesizes, which transport 150,000-tonne cargoes such as iron ore and coal, rose by $954 to $6,780.
Meantime, the panamax index fell 68 points, or 3.6%, to 1,846, its lowest since April.
Average daily earnings for panamaxes, which ferry 60,000-70,000 tonne coal or grain cargoes, fell by $609 to $16,615.
The supramax index dipped 41 points to its lowest level since February 2021 at 1,613.
On week 4 of the year 2022, freight rates in the Baltic market remain on the previous week’s level.
According to Sea Lines shipbrokers, rates for 3-5K dwt bulkers from Ust-Luga to Riga make €33 pmt, and those to Gdansk €35 pmt.
Freight rates from Ust-Luga made €36 pmt to Szczecin, €42 to Flensburg, and €58 to Hamburg.
Rates from Ust-Luga were €60 pmt to ARAG, €64 pmt to East Britain, €65 pmt to West Britain, and €69 pmt to Dublin.
In equities markets, U.S. stock indexes on Thursday erased an early rally and settled moderately lower.
Stocks on Thursday initially moved higher on optimism about the economic outlook after U.S. weekly jobless claims fell more than expected and U.S. Q4 GDP expanded at a faster-than-expected pace.
However, a sell-off Thursday in bellwethers Tesla and Intel undercut technology stocks and weighed on the broader market.
Particularly, Thursday’s U.S. economic datahad seen U.S. weekly initial unemployment claims fell -26,000 to 260,000, showing a stronger labor market than expectations of 265,000.
Also, U.S. Q4 GDP rose 6.9% (q/q annualized), stronger than expectations of 5.5% and the fastest pace of expansion in five quarters.
On the negative side, Dec capital goods orders nondefense ex-aircraft, a proxy for capital spending, was unchanged m/m, weaker than expectations of +0.4% m/m. Also, Dec pending home sales fell -3.8% m/m, weaker than expectations of -0.4% m/m and the biggest decline in 8 months.
In this context, on Wall Street, the benchmark S&P 500 index fell 0.5% to 4,326.51 after official data showed the U.S. economy grew 5.7% last year, its strongest rate since 1984’s 7.2% jump.
The index is within 10 points of entering a correction, meaning a drop of 10% from its Jan. 3 all-time high.
The Dow Jones Industrial Average slipped less than 0.1% to 34,160.78.
The Nasdaq composite dropped 1.4% to 13,352.78.
Meantime, Asian stock markets rose on this morning as traders looked ahead to data on U.S. employment costs that might influence Federal Reserve decisions on planned interest rate hikes.
The Employment Cost Index is expected to show the price of labor rose by about 1.2% over the previous quarter in the final three months of 2021.
Stocks have been on a roller coaster ride this week as investors try to figure out what the Fed will do after Powell said inflation pressures aren’t easing.
Thus, the Shanghai Composite Index rose less than 0.1% to 3,396.07 while the Hang Seng in Hong Kong sank 0.8% to 23,606.45.
The Nikkei 225 in Tokyo surged 2.1% to 26,731.91, recovering most of its losses from the previous day’s 2.5% slide.
The Kospi in Seoul rose 1.4% to 2,650.23 while Sydney’s S&P-ASX 200 advanced 2.3% to 6,993.80.
India’s Sensex opened up 1.1% at 57,883.16.
New Zealand declined 1.6% while Southeast Asian markets rose.
On the weather side, very little rain or snow is expected to fall on the Midwest or Plains between today or Monday, although some scattered moisture is possible during this time, per the latest 72-hour cumulative precipitation map from NOAA.
That is a favorable element for crops and therefore bearish for the price of wheat quoted in Kansas City.
The agency’s 8-to-14-day outlook predicts more seasonally dry weather for the Central Plains and western Corn Belt between February 3 and February 9, with widespread seasonally cool weather in the central U.S.
On the demand side, USDA’s weekly data showed 1.402 MMT of corn was sold during the week that ended 1/20.
That was above estimates, and included a previously announced sale of 247.8k MT to unknown.
Japan was the week’s top buyer with 563.7k MT booked, including 219.7k MT from previously unknown sales.
The weekly report showed a marketing year high for corn exports of 1.437 MMT.
Japan was the top destination for the exported corn.
For sorghum, the FAS data showed 328k MT were booked including an announced sale of 126k MT to unknown.
China and unknown destinations were the exclusive milo buyers from the week.
As for soybean, FAS report had soybean bookings at 1.025 MMT for the week that ended 1/20.
That was in line with estimates, and included two previously reported large sales to China and Mexico.
China was the week’s top buyer with 540k MT booked on the week.
Soybean exports were 1.594 MMT, which was a 12% dip from last week and was 28% lighter than the same week last season.
Accumulated bean shipments reached 35.032 MMT by 1/20 according to the weekly data.
For soymeal, USDA reported 330,069 MT were sold.
That was 4% higher wk/wk but 30% below the same week last year.
Meal exports were up by 25% on the week and 36% yr/yr to 327,074 MT.
USDA had soybean oil export sales at 12,153 MT.
That was down from 31k MT last week and from 52k MT during the same week last year.
Accumulated soy oil commitments were 480,639 MT as of 1/20.
As for wheat, USDA’s weekly Export Sales report showed wheat bookings were a MY high 676,681 MT during the week that ended 1/20.
That was also 77% above the same week last year.
The Philippines and Japan were the top buyers for the week, each booking over 100k MT.
USDA also reported 60k MT of new crop wheat sales – mostly as white wheat.
Of the total 215,980 MT on the books for 22/23, 33% is SRW with 19% white, 18% HRW, and 14% HRS.
That compares to old crop commitments of 39% HRW, 26% HRS, 18% white, and 15% SRW for the 17.2 MMT total.
In this context, corn basis bids were steady to slightly mixed, moving as much as 2 cents higher at an Illinois river terminal and as much as 3 cents lower at an Iowa ethanol plant.
Soybean basis bids were steady to mixed, after dropping 5 cents at a Nebraska processor while firming 2 to 4 cents higher at three other Midwestern locations.
The funds were net buyers yesterday for 4,000 lots of soybeans but net sellers for 4,500 lots of corn and 10,000 lots of wheat.
From South America, the USDA attaché is revising upwards its estimate of wheat production in Argentina.
Particularly, wheat production in marketing year (MY) 2021/2022 is estimated at a record 21.8 million tons, 1.3 million tons higher than the official USDA number.
In consequence, exports are increased to 15.2 million tons (including flour in its wheat equivalent).
Barley production in MY 2021/2022 is increased to 5.05 million tons, 250,000 tons higher than the official USDA number.
Conversely, corn production in MY 2021-2022 is forecast at 51 million tons, 3 million lower than the official USDA number due to dry conditions.
Exports are reduced accordingly.
Sorghum production is also reduced because of drought, but exports are forecast up at 2.6 million tons, 300,000 tons higher than the official USDA number.
Meantime, soybean shipments from Brazil were estimated to reach 85.5 MMT according to Safras and Mercado’s latest figure.
They also see Brazil’s domestic crush at 47.5 MMT.
That compares to the January USDA numbers for 94 MMT and 47.2 MMT respectively.
Looking at output, Planalytics reduced their average Brazilian yield forecast to 2.85 MT/HA (~ 42.4 bpa).
That compares to CONAB’s 3.478 MT/HA forecast and USDA’s 3.44 MT/HA (51.15 bpa).
In Europe, grain prices evolved in dispersed order yesterday.
Wheat continued its decline, meanwhile corn showed its firmness.
Rapeseed prices were up sharply, boosted by the surge in oil which dragged up all oils.
Geopolitical tensions between Ukraine and Russia continue to disturb the markets, with volatility considered excessive by many operators.
Meantime, the European Commission is revising upwards its estimate of ending wheat stocks for the EU to 13.3 million tonnes against 12.9 million posted in December.
This is mainly the result of an upward revision in imports as the European Commission slightly trimmed its estimates for 2021/22 EU wheat production to 130.5 MMT, while estimates for EU wheat exports in the current marketing year remained unchanged, at 32 MMT.
On the other hand, barley end stocks have been revised down to 4.15 million tonnes against 4.5 million estimated last month.
The European end stock of corn is also revised down to 17.3 million tonnes against 18.9 estimated last month.
This is essentially the result of third country exports posted at 5.0 million tonnes against 3.7 last month.
Also, the European Commission made modest reductions in its latest estimate for 2021/22 EU corn production, sliding to 69 MMT.
Corn export estimates held steady from a month ago, at 14.5 MMT.
From the Black Sea basin, the Ministry of Agriculture of Russia declares the aim to extend planted area under grains, oilseeds and sugar beet in the country in 2022.
The total planted area under agriculture crops is planned to be extended by 0.9 mln ha y/y to 81.3 mln ha.
The total will include 48 mln ha under grains and pulses, 13.9 mln ha under feed crops, 1.07 mln ha under sugar beet.
Planted area under winter crops of the harvest-2022 totaled 19 mln ha.
About 97% of crops are in good and satisfactory condition.
Meantime, according to Argus media, Indonesia has purchased
a decade-high volumes of Ukrainian corn, this marketing year.
Particularly, a 33,000t cargo of Indonesia-bound Ukrainian corn cargo was shipped from Mykolaiv port on 24 January.
This followed 27,833t that was shipped along the route in October, according to line-up data, the first such delivery in four years.
The 25,108t shipment in 2017 was the first since just over 2,000t was sent to Indonesia in 2012, customs data show.
From Australia, widespread thunderstorm activity pushed across Victoria yesterday as the state saw wild storm conditions, with strong winds and downpours of rain, and more wild weather is forecast for Victoria today.
Meantime, local markets remained steady yesterday with bids largely unchanged.
The main focus still remains in execution for the export pathway for the trade, and truck freight continues to be tight across the east coast.
Containers are still hard to secure for packing for the pulse market as more bulk shipments start to appear on the stem for February and into March.
The early sorghum harvest is under way amongst weather delays. Reports exist of some downgraded sorghum already coming off, but it is early days yet and the crop is staggered.
On the international trade scene, to note that Egypt’s General Authority for Supply Commodities (GASC) set a tender on Thursday to buy an unspecified amount of wheat from global suppliers for shipment from 5-15 March and/or 16-26 March.
That will be closely followed by operators given the renewed competitiveness of the French origin following the fall in prices, combined with a fall in the euro against the dollar.
Also, Algeria would have bought at least 80 kt of milling wheat during its previous tender, mainly of Black Sea origin, at an average price of $374.50/t for deliveries to the small ports of Mostaganem and Tenes.
France would again have been ruled out, this time for lack of competitiveness.
South Korea purchased 60,000 metric tons of soymeal, likely sourced from South America, in an international tender that closed earlier today.
The grain is for arrival in early May.
Turkey’s state grain board TMO has provisionally bought about 6,000 tonnes of crude sunflower oil in an international tender to purchase and import the same volume.
It was said to have been purchased at an estimated $1,410.90 a tonne c&f from trading house Yayla.
Purchases in TMO tenders are always provisional and subject to final confirmation in coming days.
Shipment was sought between Feb. 8 and Feb. 25 with unloading in the Turkish port of Tekirdag.
Author: Sandro F. Puglisi
