US farm markets finished Monday’s session with mixed but mostly lower results.
Wheat prices suffered the biggest cuts, with some contracts losing more than 3%.
Particularly, Chicago futures gave back 3.18% on the day.
KC HRW closed the day with 2.62% losses.
MPLS wheat gave back 1.49%, but held above the $9 mark for March and May contracts.
Corn prices followed suit, falling more than 1.5%.
Soybeans, in contrast, continued to climb higher and are closing in on $15 per bushel after a new flash sale to China and additional reports that question Brazil’s production potential.
Soymeal ended the first trade day of the week with 1.87% to $7.70/ton gains.
Soyoil 0.69% lower by the end of the session after sharp early gains led by palm oil.
In energy market, oil prices eased on this morning, giving up early gains as investors took profits, although expectations that supply will remain tight amid a limited output increase by major producers and a solid post-pandemic recovery in fuel demand checked losses.
Indeed, Brent crude for April delivery was down 10 cents, or 0.1%, at $89.16 a barrel at 07:48 GMT, off an intraday high of $89.70.
The front-month contract for March delivery expired on Monday at $91.21 a barrel, up 1.3%.
U.S. West Texas Intermediate crude slipped 6 cents, or 0.1%, to $88.09 a barrel, after gaining 1.5% on Monday.
It hit a high of $88.57 earlier in the session.
The benchmarks hit their highest levels since October 2014 on Friday, at $91.70 and $88.84, respectively.
They have gained about 17% in January, the biggest monthly gain since February 2021, amid a supply shortage and political uncertainty in Eastern Europe and the Middle East.
In the freight market, the Baltic Exchange’s dry bulk sea freight index edged higher on Monday, but registered its biggest monthly percentage decline in two years as seasonal weakness coupled with lower iron ore shipments from Australia weighed on vessel demand.
Particularly, yesterday the overall index, which factors in rates for capesize, panamax and supramax vessels, rose 37 points, or 2.7%, to 1,418.
However, the index has fallen 36% for the month, its fourth consecutive monthly decline.
The capesize index climbed 133 points, or 12.4%, to 1,208, its highest level in more than a week.
The index has fallen nearly 48% this month.
Average daily earnings for capesizes, which transport 150,000-tonne cargoes such as iron ore and coal, rose by $1,097 to $10,015.
The panamax index eased 12 points to 1,828, its lowest since April.
Average daily earnings for panamaxes, which ferry 60,000-70,000 tonne coal or grain cargoes, fell $103 to $16,454.
The supramax index slipped 10 points to its lowest level since February 2021 at 1,587.
In equities markets, U.S. stock indexes on Monday rallied to 1-week highs and settled moderately higher.
A sharp rally in technology stocks Monday lifted the overall market on optimism about quarterly earnings.
Of the 172 S&P 500 companies that have posted results so far, 81% have met or exceeded expectations, and profits have come in about 5% above projections on average.
Monday’s U.S. economic data was mixed for stocks.
On the positive side, the Jan MNI Chicago PMI unexpectedly rose +0.9 to 65.2, stronger than expectations of a decline to 61.5.
Conversely, the Jan Dallas Fed manufacturing outlook level of general business activity fell -5.8 to a 1-1/2 year low of 2.0, weaker than expectations of 8.0.
Fed comments Monday were mixed for stocks.
On the bullish side, San Francisco Fed President Daly said, “we are not behind the curve,” and the Fed should not overreact and ratchet up the funds rate so quickly that it disrupts the economy.
On the bearish side, Atlanta Fed President Bostic said the Fed could opt to raise the federal funds rate by 50 bp in March if a more aggressive approach to taming inflation is needed.
In this context, Wall Street closed a tumultuous January wracked by worries that interest-rate hikes will make everything in markets more challenging.
Thus, shares closed higher yesterday, but still logged their worst monthly loss since the early days of the pandemic.
Particularly, the S&P 500 came back from an early dip to close 1.9% higher at 4,515.55.
Even so, the benchmark index fell 5.3% in January, its worst month since falling 12.5% in March 2020.
The Dow Jones Industrial Average gained 1.2% to 35,131.86.
The Nasdaq jumped 3.4% to 14,239.88.
Both also ended in the red for January, with the Dow shedding 3.3% and the Nasdaq losing 9%.
Meantime, Asian shares gained on this morning, mirroring the broad overnight gains on Wall Street, while trading in China and most other regional markets was closed for Lunar New Year holidays.
Thus, Japan’s benchmark Nikkei 225 edged up 0.3% to finish at 27,078.48.
Australia’s S&P/ASX 200 gained 0.5% to 7,006.00.
On the weather side, a major winter storm is expected to impact much of the central U.S. beginning Tuesday night and continuing through Thursday morning.
Groundhog Day arrives on Wednesday and with this, Winter Storm Landon is also arriving later this week and could dump a foot or more of snow in a bandstretching from southeastern Kansas all the way through the Northeast.
Indeed, frigid arctic air will sweep south across Great Plains beginning Wednesday.
Next week, NOAA’s 8-to-14-day outlook predicts a return to seasonally dry weather in the Corn Belt between February 7 and February 13, with warmer-than-normal weather likely for the Northern and Central Plains during this time.
That has did a clear decline in wheat prices in Chicago, as the weather forecasts suggesting rains on winter wheat in the days to come.
Note however that it is about to get bitterly cold through the SRW belt, as right down to Texas is forecast to see minimum temperatures drop to minus 15-18 degrees Celsius.
On the demand side, USDA reported 1.035 MMT of corn was shipped during the week that ended 1/27.
That was down from 1.186 MMT last week and 1.116 MMT from the same week last season.
Mexico was the week’s top destination with 342k MT.
USDA also added 70,550 MT of corn shipments to past reports, which took the MYTD total export program to 17.534 MMT.
Last season’s pace was 20.017 MMT at the same point.
As for sorghum, USDA had 127,519 MT of sorghum exports shipped during the week that ended 1/27.
That was up from 77k MT last week by down from 247k MT during the same week last year.
MYTD milo exports are at 2.277 MMT, compared to 3.07 MMT at the same point last season.
As for soybean, weekly export Inspections data had 1.411 MMT of soybean shipments for the week that ended 1/27.
That was up from 1.35 MMT last week, but down 497k MT yr/yr.
The USDA added 82,015 MT of bean exports to past reports, which brought the MYTD export to 36.276 MMT.
At the same time last year, 47.468 MMT had been shipped.
As for wheat, USDA reported 361,375 MT of wheat shipments from the week that ended 1/27 in the weekly Export Inspections report.
That was 12% below last week and 12.7% under the same week last year.
Half of the week’s export was HRW wheat, with another 94k MT of the total as spring wheat.
The weekly report listed MYTD accumulated wheat shipments as 13.592 MMT as of 1/27.
That compares to 16.566 MMT through the same week last year.
Meantime, private exporters reported to USDA export sales of 129,000 metric tons of soybeans for delivery to China.
Of the total, 66,000 metric tons is for delivery during the 2021/2022 marketing year and 63,000 metric tons is for delivery during the 2022/2023 marketing year.
Ahead to the USDA monthly report out later in the afternoon, analysts estimates for December US soy crush average 197.7 mbu.
That would be a record if realized.
The full range of estimates is from 197.3 and 198.4 mbu.
Soy oil stocks are expected to be 2.565b lbs.
In this context, corn basis bids were steady to weak after tilting 2 to 7 cents lower across four Midwestern locations on Monday.
Soybean basis bids were mostly steady but did show some big volatility at a few locations, after sinking 9 cents lower at an Ohio elevator and jumping 35 cents higher at an Iowa processor.
The funds were net sellers yesterday for 8,000 lots of corn and 16,500 lots of wheat.
On the other hand, they were net buyers for 12,000 batches of soybeans.
Technically, soybeans are overbought.
The Relative Strength Index highlights the recent investment which now needs to be justified.
US operators are inclined to buy soybeans at the expense of wheat.
Corn, for its part, should find support in the rise in soybeans in order to remain attractive in the sowing intentions of farmers.
From South America, as the beans come off, Mato Grosso’s the 2nd crop corn planting has reached 23.7% of expected area according to IMEA.
Safras and Mercados reported Brazil’s soy harvest at 11.3% complete.
That compares to 1.4% harvest at the same point last year.
Mato Grosso was listed at 31.8% harvested, compared to 16% average and 4.7% last year according to IMEA.
The Ag Rural reduced their projection of Brazilian soy output to 128.5 MMT, compared to their prior estimate of 133.4 MMT.
In Europe, a less tense geopolitical situation and a purchase of Gasc at a reduced price caused wheat prices to bend yesterday.
Ukraine President, wanted to put the Russian threat into perspective and asked the Western media to stop dramatizing the situation.
The country’s authorities also called on the Russian and Western authorities to find a diplomatic solution to the rising tensions.
Thus we have seen an excessive volatility on Euronext with grain prices yielded 12 euros/t in wheat and 8 €/t in corn, without the fundamentals justifying such movements Agritel firm said.
Meantime, rapeseed prices continue to rise in the wake of soybeans, canola and oil despite Strategie Grains estimated the EU rapeseed output at 18.2 MMT.
That was up 7.4% from last year’s dryness affected crop, and 200k MT above their prior estimate.
From the Black Sea basin, Russian grain exports have doubled in a week, with operators ramping up their shipments ahead of the introduction of quotas from mid-February.
Grain exports, indeed, reached 800,000 t during the week of January 27, against 400,000 t the week before, according to data from the Veterinary and Phytosanitary Control Service.
This brings overall grain exports since the start of the season to 28.1 Mt, 7 Mt less than last year to date.
Particularly, 570,000 t of Russian wheat were exported from January 21 to 27, compared to 270,000 t during the previous seven days.
Russia’s total wheat exports since July stand at 23.57 Mt, compared to around 29.84 Mt in the same period last year.
SovEcon, however, raised its Russian export target by 200 kt, to 34.3 Mt.
Meantime, Black Sea wheat was down US$7/t yesterday.
From Australia, weather continues to look wet for large parts of Queensland, and along the NSW border region, with a widespread 50 millimetres forecast, while down is expected to get a dry run for the next eight to 10 days.
Meantime, a mixed bag of local trading activity yesterday kicked off the week, with values slightly firmer on the boards through wheat and barley markets.
Canola was a focus yesterday through the market, as one major buyer stepped back in, and up-country sites ticked over $800/t again.
A small volume traded late on Clear Grain Exchange at $890/t in the Portland zone in Victoria.
On the international trade scene, Gasc returned to business for 240 kt of milling wheat from the Black Sea.
French origins were again sidelined due to high freight costs, and the price traded at just $348.87/t C&F, the lowest rate recorded since last September.
Iran is buying 60,000 t of fodder barley.
Iran issued a new tender to purchase 60,000 metric tons of soymeal from optional origins that closes on Wednesday.
The grain is for shipment starting in February.
Iran is expected to be an active grain buyer this year after coming off the worst drought-stressed season in 50 years.
Author: Sandro F. Puglisi
